Supply Chain Exam 1

Operations Management

How an organization turns inputs (people, materials, money, information) into outputs(goods and services) that customers value — as efficiently and reliable as possible

Supply Chain Management

planning and coordinating sourcing, production, logistics and the flows of information and money across the companie sthat bring a product to the customer.

Coordinates flow across many orgs(supplies, makers, carriers, retailers) to serve end customer

3 Flows through every Supply Chain

Material —> move downstream TOWARD customer

Information —> orders & forecasts flow upstream and downstream

Money —> payments flow upstream toward SUPPLIER

Operations Strategy

set of choices a firm makes about how it designs and runs its operations in order to support the way it competes

3 pillars:

1. aligns with delivers on the firms value proposition -> externally consistent

2. Develops operational capabilities that align with and reinform one another -> internally consistent

3. Evolves over time to maintain or extend competitive advantage -> dynamic

Firms Value Proposition

Low Cost, Quality, Time, Flexibility

Order Qualifier

minimum level of value required from a set of criteria for a firm to do business (minimum level to attract customers)

Order winner

dimension of value that differentiates one firm from another

Value Proposition

combination of value dimensions that matter to a customer, with some of those dimensions qualifying the product or service for consideration, one dimension distinguishing it from competition

Operational Capabilities

unique and superior abilities based upon the firm’s routines, skills and processes that enable the firm to meet customer expectations and are difficult to imitate

Efficient Supply Chain

designed for low cost by minimizing inventory and maximizing efficiencies in process flow

Characteristics:

Highly predictable demand

Long life cycles

Low contribution margins

Responsive Supply Chains

Designed for flexibility and can react quickly to changing market demand and requirement(focus on flexibility + speed)

Unpredictable demand

Short life cycles

Changing innovative products

High contribution margins

ex) fashion products, tech, emergency supplies

Push System

supplier driven —> facctories produce at maximum efficiency dealers sell the product

Pull System

customer driven —> customer orders drive manufacturing process. products are pulled from factory to meet demand

Push-Pull Supply Chain

Take best from push and pull supply chains

Some stages of the supply chain operated in a push-based manner are typically the initial stages

Newsvendor Problem

is a classic mathematical model in operations research and supply chain management used to determine the optimal inventory order quantity under uncertain demand. Goal is to maximize expected profit

Cost of Understocking

Cost of ordering one fewer units than what you would have ordered had you known

Cu = Price - Cost

Cost of Overstocking

Cost of ordering one more unit than what you would have ordered had you known demand

Co = Cost - Salvage Value

Critical Ratio

represents target service level

CR = Cu/(Cu+Co)

Optimal Quantity

Q* = min + CR * (max - min)

Bullwhip Effect

Small fluctuations in consumer demand get amplified as orders move upstream thru supply chain — like cracking a whip

Analytics & Optimization

people write the rules and the goal; the computer searches for best answer

Conventional Machine Learning

computer learns patterns from data and uses them to predict, classify, recommend, or decide

Generative AI

a brand of machine learning that learns the structure of its training data nd generates new content — text, images, audio, video, or code

Failure modes

Hallucinations, Bad/dirty data, Regime change, No human check

Hallucinations

Invented demand that never existed

bad/dirty data

trained on messy, incomplete history

Regime change

past no longer predicts future

No human check

nobody sanity checks outputs