Supply Chain and Operations Management

These flashcards cover key concepts and definitions from supply chain and operations management, helping students review essential material for their upcoming exam.

Where does the supply chain typically begin and end?

It begins with basic suppliers of raw materials and ends with the final customer.

What logistics process involves transferring shipments with little to no storage time?

Cross-docking.

What is Shared Destiny in strategic alliances?

A characteristic where both the buyer and supplier rely on each other's success.

How is a relationship classified without future business expectations?

Discrete Transaction (or Market-based exchange).

What is one major advantage of single sourcing?

Consistent quality of supplies and continuous learning/continuity.

What is one major disadvantage of single sourcing?

High risk if a supply disruption occurs at that specific supplier.

What is a primary advantage of making an item in-house in the 'make versus buy' decision?

Higher degree of control and protection of technological secrets.

What is a primary advantage of buying from an external supplier in the 'make versus buy' decision?

Higher flexibility to adapt to market changes and lower investment risk.

What is Design Capacity?

The maximum theoretical output of a system or facility, normally expressed as a rate.

What is Effective Capacity?

The capacity a firm expects to achieve given current operating constraints.

What is the formula for calculating Capacity Utilization (Design)?

$$ext{Utilization} = ( ext{Actual Output} / ext{Design Capacity}) imes 100\%$$

What is the formula for calculating Efficiency (Effective Utilization)?

$$ext{Efficiency} = ( ext{Actual Output} / ext{Effective Capacity}) imes 100\%$$

What are Economies of Scale?

Reductions in average unit cost that occur as a facility's size and output volume increase.

What is a common cause of economies of scale related to labor?

Increased division of labor and specialization.

What is a common cause of diseconomies of scale?

Management, coordination, and communication problems resulting from excessive size.

How is the Expected Value (EV) of a node calculated in a decision tree?

By multiplying each outcome by its probability and summing the results.

What type of layout is used by businesses with low-volume, high-variety production?

Process Layout.

What layout is organized for high-volume, low-variety products?

Product Layout.

Grocery stores are an example of what type of layout?

Hybrid layout.

Under what condition is a fixed-position layout used?

When the project is large or bulky and cannot be moved.

In an office layout, what trade-off must managers address?

The trade-off between proximity and intimacy.

What is the primary trade-off in a warehousing layout?

The trade-off between space utilization and material handling costs.

What is the primary goal of a retail layout?

To maximize profit per square foot of shelf space.

What metric is used to measure the effectiveness of a retail layout?

Profit per square foot.

What is Line Balancing?

The process of assigning tasks to workstations to minimize idle time.

How is the bottleneck workstation identified in production?

It is the slowest workstation with the longest task time.

What is Cycle Time?

The maximum amount of time allowed at each workstation to perform tasks.

What is the formula for the theoretical minimum number of workstations (TM)?

TM = ext{\lceil} \frac{\sum \text{Task Times}}{\text{Cycle Time}} \text{\rceil}

What is the formula for Line Efficiency?

$$\text{Efficiency} = \frac{\sum \text{Task Times}}{\text{Actual Number of Workstations} \times \text{Cycle Time}}$$

What is Safety Stock?

The amount of inventory held to buffer against fluctuations in demand.

What type of inventory consists of completed products awaiting shipment?

Finished Goods.

How is inventory holding commonly measured?

Inventory Turnover and Weeks (or Days) of Supply.

What criterion is used to segregate items in an ABC inventory analysis?

Annual Dollar Volume (Annual demand times Unit cost).

The ABC classification is based on which rule?

Pareto (or 80/20) rule.

What does EOQ stand for?

Economic Order Quantity.

In the basic EOQ model, what is assumed about lead time?

Lead time is known and constant.

What is the formula for the Economic Order Quantity (Q*?)

$$Q^* = \sqrt{\frac{2DS}{H}}$$

In the basic EOQ model, what is the average amount of inventory on hand if order quantity is Q?

$$Q / 2$$

What is the Reorder Point (ROP)?

The inventory level at which a new order must be placed before a stock shortage.

How does the Total Cost formula for the Quantity Discount model differ from the basic EOQ Total Cost?

It includes the additional term of Purchasing Cost.

When would a company prefer a fixed-period inventory model?

When inventory is only counted at specific review times.

How do you determine the order quantity (Q) in a Fixed-Period model?

$$Q = \text{Target Inventory} - \text{On-hand Inventory}$$

What is the primary goal of a level aggregate plan?

To maintain a constant workforce and output rate regardless of demand fluctuations.

What is a Chase Aggregate Plan?

A planning strategy that sets production capacity to exactly match period demand.

What is a Bill of Material (BOM)?

A hierarchical listing of all assemblies, parts, and raw materials needed to produce one unit.

What is the difference between Independent and Dependent demand?

Independent demand is for finished products; Dependent demand is derived from production.

What distinguishes MRP II from basic MRP?

MRP II includes additional resource data such as labor hours and material costs.

What is Enterprise Resource Planning (ERP)?

A computerized system designed to integrate all functional areas of a business.

What is considered at the country level in international location decisions?

Political risk, government rules, or exchange rates.

At what level are 'attractiveness of region' and 'labor availability' typically considered?

Regional level.

When is a factor-rating model most appropriate for location analysis?

When a wide variety of both qualitative and quantitative factors need evaluation.

What type of distance is used in the load-distance model?

Rectilinear distance.

What is the goal of the Center-of-Gravity method?

To find a central distribution location that minimizes total distribution costs.

What is the formula for rectilinear distance (dAB) in the load-distance model?

$$d_{AB} = |x_A - x_B| + |y_A - y_B|$$

What is the formula for calculating the x-coordinate of the center of gravity (Cx)?

$$C_x = \frac{\sum x_i L_i}{\sum L_i}$$

What is Process Flexibility?

The degree to which a system can adjust to changes in volume or product design.

What process type is used for unique, non-routine objectives?

Project Process.

What is a Continuous Process?

A process used for very high volumes of highly standardized output.

How are volume and variety generally related in the product-process matrix?

They are inversely related.

What is the Crossover Point in process selection?

The production volume at which two process alternatives yield the same total cost.

What is Servicescape?

The physical surroundings in which a service is delivered.

What is Takt Time?

The maximum time allowed per unit to meet customer demand.

What is the main disadvantage of a Chase Aggregate Plan?

The high cost and operational difficulty of constantly changing capacity.

What is Disaggregation?

The process of breaking down an aggregate plan into specific product requirements.

What is Backflushing in MRP?

Exploding an end item's BOM to determine component usage after production.

What is the purpose of a Time Fence in a Master Production Schedule?

To restrict changes to orders in the near-term.

What are MRO Inventories?

Maintenance, Repair, and Operating supplies used to keep processes productive.

How is Inventory Turnover calculated?

$$\text{Cost of Goods Sold} / \text{Average Inventory Value}$$