scm test 2

  • Q: What is a bottleneck in a process?
    A: A bottleneck is the part of a process with the lowest capacity, which restricts overall process flow and reduces efficiency.

  • Q: What impact does allocating more resources to a bottleneck have?
    A: It increases the bottleneck’s capacity, improving the throughput and efficiency of the entire process.

  • Q: Define "critical path" in project management.
    A: The critical path is the sequence of activities that determines the minimum project completion time; delays in this path delay the project.

  • Q: What is "critical flow time"?
    A: Critical flow time is the total time needed to complete all activities along the critical path without delays.

  • Q: How can a bottleneck be identified?
    A: Identify the resource or stage with the lowest capacity relative to demand; this is where work accumulates and slows the process.

  • Q: Explain "Little’s Law" and its formula.
    A: Little’s Law relates the number of items in a system to arrival rate and lead time: L=λ×WL = \lambda \times WL=λ×W, where LLL is inventory, λ\lambdaλ is arrival rate, and WWW is wait time.

  • Q: What are the core principles of lean operations?
    A: Core principles include reducing waste, continuous improvement, optimizing flow, and respecting people to enhance process efficiency and customer value.

  • Q: Name the eight types of waste in lean thinking (DOWNTIME).
    A: 1) Defects, 2) Overproduction, 3) Waiting, 4) Non-utilized talent, 5) Transportation, 6) Inventory, 7) Motion, 8) Extra processing.

  • Q: What is the "5S" system in lean?
    A: 5S is a workplace organization method: Sort, Set in order, Shine, Standardize, and Sustain. It aims to maintain an organized and efficient work environment.

  • Q: Define "learning curve" in productivity.
    A: A learning curve represents how process time decreases with experience, showing how repetitive work improves efficiency and reduces costs.

  • Q: How do you calculate time for tasks using a learning curve?
    A: Time required for the nth task, Tn=T1×nbT_n = T_1 \times n^bTn​=T1​×nb, where T1T_1T1​ is time for the first task, nnn is task number, and bbb is the learning curve exponent.

  • Q: What is cycle time, and how is it calculated?
    A: Cycle time is the average time to complete one unit, calculated by dividing total time by the number of units completed.

  • Q: Explain a Z-score in cycle time analysis.
    A: A Z-score shows the number of standard deviations from the mean, helping estimate the probability of meeting certain cycle times.

  • Q: What is the definition of quality?
    A: Quality is meeting or exceeding customer expectations through reliability, durability, and consistency in products or services.

  • Q: What are control charts, and why are they used?
    A: Control charts are used to monitor process stability and identify whether a process is in control by tracking variations over time.

  • Q: Explain the concept of Cp in process capability.
    A: Cp measures a process’s ability to meet specification limits, calculated as Cp=USL−LSL6σCp = \frac{USL - LSL}{6\sigma}Cp=6σUSL−LSL​.

  • Q: Define Cpk and its role in quality management.
    A: Cpk is a measure of process capability adjusted for centering. A higher Cpk means the process is more capable of meeting specifications.

  • Q: How do you set up control chart limits?
    A: Control limits are typically set at three standard deviations above and below the mean to capture natural process variability.

  • Q: What is "Total Quality Management" (TQM)?
    A: TQM is a continuous effort to improve quality at every stage, involving all employees and focusing on meeting customer needs.

  • Q: Describe "Six Sigma" in quality management.
    A: Six Sigma is a data-driven approach to reduce defects and improve quality, aiming for a process mean within six standard deviations of specifications.

  • Q: What does it mean if a process is "in control"?
    A: A process is in control if it operates within established control limits without unusual variation.

  • Q: Why is forecasting important?
    A: Forecasting enables businesses to anticipate demand, optimizing inventory, staffing, and production to meet customer needs efficiently.

  • Q: Differentiate between qualitative and quantitative forecasting.
    A: Qualitative forecasting relies on expert opinion, while quantitative forecasting uses historical data and statistical models.

  • Q: Define "moving average" in forecasting.
    A: A moving average smooths demand data by averaging a set number of past periods, useful for stable demand patterns.

  • Q: What is "exponential smoothing"?
    A: Exponential smoothing gives more weight to recent data points, adjusting quickly to changes and reducing forecast error.

  • Q: Explain the purpose of Sales and Operations Planning (S&OP).
    A: S&OP aligns demand forecasts with production capabilities to balance resources and meet demand efficiently.

  • Q: How is "forecast error" calculated?
    A: Forecast error is the difference between actual and forecasted demand, often calculated as Mean Absolute Deviation (MAD) or Mean Squared Error (MSE).

  • Q: What is the difference between buying, procurement, and strategic sourcing?
    A: Buying is the act of purchasing, procurement involves the entire acquisition process, and strategic sourcing focuses on maximizing long-term supplier value.

  • Q: What are the risks and benefits of global sourcing?
    A: Benefits include cost savings and access to innovation; risks include longer lead times, quality issues, and supply chain disruptions.

  • Q: Define Total Cost of Ownership (TCO).
    A: TCO includes all costs over a product’s lifecycle, such as acquisition, usage, and maintenance, beyond the purchase price.

  • Q: What is a make-or-buy decision?
    A: It’s the choice between producing goods internally or purchasing them from an external supplier, based on cost, quality, and strategic factors.

  • Q: What is the "Profit Leverage Effect"?
    A: The Profit Leverage Effect is the impact of cost savings on profit; a dollar saved in purchasing improves profit more than an additional dollar in sales.

  • Q: What is a chase strategy in aggregate planning?
    A: A chase strategy matches production rates to demand, minimizing inventory but potentially causing workforce fluctuations.

  • Q: What is a level strategy in aggregate planning?
    A: A level strategy keeps production constant, using inventory to absorb demand fluctuations, which stabilizes the workforce but increases inventory costs.

  • Q: List the main pros and cons of a chase strategy.
    A: Pros: Low inventory costs, responsive to demand changes. Cons: High labor costs, workforce morale issues from frequent changes.

  • Q: What are the advantages and disadvantages of a level strategy?
    A: Pros: Workforce stability and planning simplicity. Cons: High inventory costs, risk of stockouts in demand surges.

  • Q: Explain "hybrid strategy" in aggregate planning.
    A: A hybrid strategy combines elements of chase and level strategies, using workforce adjustments and inventory as needed to balance costs.

  • Q: Why is inventory important in business?
    A: Inventory helps meet demand, manage supply variability, and ensure production continuity, directly impacting customer satisfaction and costs.

  • Q: How is Economic Order Quantity (EOQ) calculated?
    A: EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS​​, where DDD is demand, SSS is order cost, and HHH is holding cost per unit.

  • Q: Define the Reorder Point (ROP) formula.
    A: ROP is calculated as ROP=Lead Time×Average Daily DemandROP = \text{Lead Time} \times \text{Average Daily Demand}ROP=Lead Time×Average Daily Demand. Safety stock may be added to account for demand variability.

  • Q: How is safety stock calculated?
    A: Safety stock = Z×σLTZ \times \sigma_{LT}Z×σLT​, where ZZZ is the Z-score for desired service level, and σLT\sigma_{LT}σLT​ is the standard deviation during lead time.

  • Q: What do Z-scores represent in inventory?
    A: Z-scores indicate the number of standard deviations needed to achieve a specific service level, guiding safety stock decisions.

  • Q: How is total inventory cost calculated?
    A: Total cost includes order costs, holding costs, and stockout or backorder costs, balancing the expense of ordering against storage.

  • Q: Explain "service level" in inventory management.
    A: Service level is the probability that demand will be met without stockouts during the lead time, influencing safety stock levels.