310 exam 2

demand is measured by

customer services levels, aka the perfect order

inventory turnover

the number of times within a time period the inventory investment is recouped

order-to-delivery lead time

customer expectations; purchasing, manufacturing, and shipping lead time

pull processes

execution is initiated in response to a customer order

push processes

execution is initiated in anticipation of a customer order

push/pull boundary

separates push processes from pull processes

push process pro

less carrying costs

push process con

longer delivery lead time

pull process pro

faster order-to-delivery lead time

pull process con

carry costs

factors that determine pull or push strategy

customer expectations of order-to-delivery lead time and forecast accuracy

make-to-stock process

standard products

make-to-order process

custom products

assemble-to-order process

option products (requires WIP inventory, sub-assembly, components on hand)

production economies of scale

the cost advantage that arises with increased output of a product resulting from fixed costs being spread over a larger number of units

volume-variability profiling

to improve decision-making related to procurement, manufacturing, distribution, and inventory strategies

A

high volume products with low variability

B

Medium volume products with low-to-medium variability

C

All low volume products

D

medium-to-high volume products and high variability

assembly line

sequence of workstations connected together by a materials-handling system, which is used to assemble components into final product

batch & queue

all the units in a given lot complete a particular stage of production before they move onto the next stage

market mediation function

the variety of products reaching the marketplace matches what consumers want to buy

cellular manufacturing

manufacturing system where the equipment and workstations are arranged in an efficient sequence, continuous and smooth movement of inventories and materials to produce products from start to finish in a single process flow, while incurring minimal transport or waiting time

cellular manufacturing benefits

reduced inventory levels, reduced production time, increased customer responsiveness

cellular manufacturing cons

high production and shipping costs

demand management

the mutual modification or creation of demand across firms in the SC for the purposes of improving the long-term performance of the individual companies and the SC as a whole

collaborative forecasting

purposive exchange of specific and timely information (quantity, level, time horizon, location, probability of new business…) between trading partners to develop a single shared projection of end user demand

demand planning

coordination of the flow of derived demand through companies in the SC for the purposes of improving the long-term performance of the individual companies and the SC as a whole

independent demand is…

end user demand

CPFR stands for…

collaborative planning, forecasting, and replenishment

manufacturer strategy and planning

account planning and market planning

retailer strategy and planning

vendor management and category management

collaborative strategy and planning

collaboration arrangement

manufacturer demand and supply management

market data analysis and order planning

retailer demand and supply management

POS forecasting and replenishment planning

collaborative demand and supply management

sales forecasting and demand planning

demand planning

coordination of the flow of derived demand through companies in the SC for the purpose of improving the long-term performance of the individual companies and the SC as a whole

manufacturer execution

product & supply planning and logistics/distribution

retailer execution

buying/re-buying and logistics/distribution

collaborative execution

order generation and order fulfillment

manufacturer analysis

execution monitoring and customer scorecard

retailer analysis

store execution and supplier scorecard

collaborative analysis

exception management and performance assessment

order planning

order plan is created consistent with the sales forecast, capacity limits, MOQ, lead time, safety stock rules, and current inventory position

replenishment planning

reconciles customer demand with an organization’s inventory levels and policies to determine time-phased replenishment needs

barriers to CPFR

requires synchronous changes in corporate culture/trust, measuring value and financial results, insufficient organizations/process enablement, lack of scalability from the pilot stage

CPFR implementation

develop CPFR front-end agreement, create joint business plan, create sales forecast, identify exceptions for sales forecast, resolves/collaborate on exception items, create order plan, identify exceptions for order plan, resolve/collaborate on exception items, order generation

functional demand

predictable demand

innovative demand

unpredictable demand

functional product life cycle

> 2 years

innovative product life cycle

3 months to 1 year

functional contribution margin

5% to 20%

innovative contribution margin

20% to 60%

functional product variety

low

innovative product variety

high

functional average margin forecast error at the time production is committed

10%

innovative average margin forecast error at the time production is committed

40% to 100%

functional average stockout rate

1% to 2%

innovative average stockout rate

10% to 40%

functional average end-of-season markdowns

0%

innovative average end-of-season markdowns

10% to 25%

functional lead time required for make-to-order products

6 months to 1 year

innovative lead time required for make-to-order products

1 day to 2 weeks

two types of products

functional products and innovative products

physical function costs

converting raw materials into parts, components, FGs, and transporting and storing goods

market mediation costs

ensuring the variety of products reaching the marketplace matches what the consumers want to buy

return on assets

profit generated by the assets possessed by the firm

strategic profit model

a method for summarizing the factors that affect a firm’s financial performance, measured by ROA

profit planning

margin, income statement, gross margin, operating profit, net profit margin

margin

the difference between the price and the “cost” of a product or service

gross margin

total sales revenue - total COGS

operating profit

gross profit - operating expenses

net profit margin

operating profit - (taxes&interest)

current assets retailers own

inventory, cast, assets receivable

fixed assets retailers own

fixtures, equipment, vehicles, real estate

current assets retailers owe

payroll, accounts payable, rent/overhead, short term loans

fixed assets retailers owe

long term loans, mortgage

inventory turnover definition

the number of times within a time period the inventory investment is recouped

inventory turnover equation

COGS / average inventory at cost

net profit margin definition

how much profit (after taxes, interest income, and extraordinary gains & losses) a firm makes divided by its net sales.

net profit margin interpretation

reflects the profit generated from each dollar of sales

income statement

summarizes a firm’s financial performance over a period of time

net sales

total revenue received by a retailer that are related to sell merchandize during a time period

COGS

number a retailer pays to vendors for the merchandise the retailer sells and transportation costs

gross margin/profit definition

indicates how much profit the retailer is making on merchandise sold, w/o considering the expenses associated w/ operating the store and corporate overhead expenses

slotting fee/slotting allowance

charging vendors for space in their stores

chargeback fee

if merch bought from the vendor does not meet all the terms of the purchase agreement

operating expenses definition

overhead costs associated w normal business operations

operating profit margin equation

gross margin - operating expenses

net profit margin definition

other income or expenses not associated with the retailers fundamental operations

assets

economic resources owned or controlled by a firm

current assets definition

can be converted to cash within one year

fixed assets definition

not likely to be converted to cash within one year

performance objectives

a numerical index that can be measured, a timeframe within the object is to be achieved, and resources needed to achieve the objective

top-down planning

goals get set at the top of the org and are passed down to the lower operating levels

bottom-up planning

lower levels in the company developing performance objectives that are aggregated up to develop overall company objectives

output measures

assess the results of a retailers’ investment decisions

productivity measure

determines how effectively retailers use their resources- what they get on their investments in inputs

input measures

the resources or money allocated by a retailer to achieve outputs, or results