Supply Chain & Management Exam Review

Flashcards covering key terms and concepts related to supply chain management and forecasting methods, created to aid in exam preparation.

Demand Planning

The process by which companies forecast sales to make informed decisions.

Point Forecasts

A single number forecast, such as predicting that the temperature will be 70 degrees.

Range Forecasts

A forecast that provides a range of numbers, indicating more flexibility and accuracy.

Forecasting Process

Steps to create an effective forecast, including defining users, identifying data sources, selecting techniques, and monitoring accuracy.

Qualitative Forecasting

Forecasting based on subjective opinions and insights, often used when numerical data is unavailable.

Quantitative Forecasting

Forecasting based on numerical data, utilizing statistical methods for predictions.

Causal Modeling

A forecasting method that assumes demand is influenced by one or more identifiable factors.

Time Series Analysis

A forecasting technique that uses past demand data to identify patterns and predict future demand.

Delphi Method

A forecasting technique that gathers anonymous forecasts from a panel of experts to reach a consensus.

Weighted Moving Average

A forecasting method that assigns different weights to recent data points to enhance accuracy.

Mean Absolute Deviation (MAD)

A measure of forecasting accuracy calculated by averaging the absolute errors.

Mean Forecast Error (MFE)

The average of forecast errors used to evaluate bias in a forecasting model.

Mean Squared Error (MSE)

The average of the squared difference between forecasted and actual values.

Inventory Carrying Cost

The total costs associated with storing and managing inventory.

Safety Stock

Buffer inventory kept on hand to prevent stockouts caused by unpredictable demand.

ABC Analysis

A method of classifying inventory items based on their importance, often using sales volume.

Economic Order Quantity (EOQ)

A formula used to determine the optimal order quantity that minimizes total inventory costs.

Pareto’s Rule (80-20 Rule)

The principle stating that 80% of effects come from 20% of causes, often used in inventory management.

Kanban

A scheduling system for lean and just-in-time production that signals the need to replenish stocks.

Aggregate Production Planning

The process of developing, analyzing, and maintaining a preliminary, approximate schedule of overall operations.

Just-In-Time (JIT)

Inventory strategy that aims to increase efficiency by receiving goods only as they are needed in the production process.

Forecast Accuracy

A measurement of how closely a forecast aligns with actual demand.

Chase Strategy

A production strategy that involves changing production rates to meet demand while keeping inventory low.

Level Strategy

A production approach that maintains a constant production rate while using inventory to absorb fluctuations in demand.

Simulation Models

Forecasting models that use simulations to replicate demand scenarios and assess their effects.

Sales and Operations Planning (S&OP)

A process for aligning sales and marketing with production planning to ensure a balanced supply and demand.

Data Sources

The origins of information used in forecasting, which can be internal or external.

Quality of Data

The accuracy, relevance, and reliability of data used in the forecasting process.

Aggregate Level Planning

Planning that focuses on product lines rather than individual items or SKUs.

Forecast Bias

The tendency of a forecast to systematically overestimate or underestimate actual demand.

Executive Support

The involvement and backing of top management in the forecasting and decision-making processes.

Cross-Functional Participation

Involvement of multiple departments or areas in the decision-making and planning process.

Production Schedule

Planning that outlines when production will occur and the resources required.

Backorder

An order that cannot be filled when presented and is fulfilled later when stock becomes available.

Obsolete Inventory

Stock that is no longer sellable or useful, often leading to increased storage costs.

Customer Service Levels

The measure of the service provided to customers through timely and accurate order fulfillment.

Inventory Turns

A financial ratio showing how many times a company's inventory is sold and replaced over a period.

Raw Materials

Basic materials that are used to produce finished goods.

Work-In-Progress (WIP)

Goods that are partially finished and in the production process.

Finished Goods (FG)

Products that are completed and ready for sale to customers.

Service Level Requirement

The target level of service that a company aims to achieve in fulfilling customer orders.

Inventory Risk Cost

Costs associated with potential losses due to damage or theft of inventory.

Fixed Order Quantity

A model that involves ordering a specific quantity of items each time an order is placed.

Fixed Order Interval

A model where orders are placed at regular intervals but the quantity varies based on demand.

Market Research

The process of gathering, analyzing, and interpreting information about a market.

Trivial Many vs. Vital Few

The concept that a small number of factors or items (the vital few) typically account for a large proportion of impact.