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supply chain final
supply chain final
61
Business
Undergraduate 3
12/14/2011

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Term
Definition of S and OP
Definition
- Monthly meeting by senior management
- Evaluates supply, demand, and cash flow for future periods
- ALigns tactical plans - consensus on single operating plan
- allocated critical resources of people, capacity, materials, time and money
Term
What is the time range for long range plans, s and op, and short range plans?
Definition
long range 18+ , s and op 2-18, short range less than 2 months
Term
What are some decisions related to s and op?
Definition
Employment and overall inventory levels
Demand levels to meet at the product family level
Term
What decisions are involved with long range plans and short range?
Definition
long range: products and process
short: Specific products and times
scheduling of people and equipment
Term
What is the purpose of s and op?
Definition
select capacity options over the intermediate time horizon
capacity options include workforces, shifts, overtime, subcontracting, and inventories.
Term
What are the inputs to the S and OP process?
Definition
strategic capacity levels: existing buildings and processes
external capacities: Suppliers and supcontractors
demand management- forecasts of customer demand, need for spares, pricing and promotions
Term
What are planning values?
Definition
values that decision makers use to translate the sales forecasts into resource requirements and to determine the feasibility and costs of alternative sales and operations plans.
includes how many labor hours per unit, machine hours, etc.
Term
What is top down planning?
Definition
where resources are similiar and the mix of products and services is the same from one period to the next
Term
What is bottom up planning/
Definition
where resources are not similiar, and the mix of products and services is not the same from one period to the next.
Term
What are the steps to top down planning?
Definition
1.) develop aggregate sales forecast and planning values,
translate sales forecast into resource requirements, generate alternative production plans ( personnel, equipment, materials)
3.) Generate alternative production plans ( chase level mixed)
4.) select best method
Term
S and OP is critical for services: why?
Definition
services connot be built in advance
you need to align resources with demand
you need to make sales match capacity, or the capacity match sales
Term
what are some options for services?
Definition
1.) yield management- prices are regularly adjusted to maximize total profit. ( flights hotels, etc)
2.) Smooth out demand - appointments, discounts/promotions, seasonal complements.
3.) Tiered workforce - fulltime and part time, or seasonal workforce
4.) offloading/ minimizing personnel intensive activites
Term
What is the definition of inventory?
Definition
those stocks or items used to support production ( raw material ), supporting activites ( maintenance, repair and operations, such as drill bits) and customer service ( finished goods and spare parts)
Term
what are the three types of inventory?
Definition
raw material, work in process, and finished goods
Term
What is cyclestock?
Definition
components or products that are recieved in bulk by a downstream partner, gradually used up, then replenished.
Term
What are safety stock inventories?
Definition
extra inventory that the companies hold to protect themselves against uncertainties in either demand or replenishment time
Term
What are anticipation inventories, hedging inventories, and transportation inventories?
Definition
anticipation- held in anticipation of customer demand.
hedging inventories- buffer against strikes price increases and civil unrest
transportation is inventories that are in the pipeline
Term
What are smoothing inventories?
Definition
inventories used to smooth out differences between upstream production levels and downstream demand
Term
uncertainty in supply or demand would cause?
Definition
safety stock or hedge inventory
Term
a mismatch between downstream partners demand and most efficient production or shipment volumes for upstream partner
Definition
cycle stock
Term
what is a mismatch between downstream demand levels and upstream production capacity?
Definition
smoothing inventory
Term
mismatch between timing of customer demand and supply chain lead times
Definition
anticipation inventory, and transportation inventory
Term
What is a periodic review?
Definition
an inventory system used to manage independant demand inventory. the inventory for an item is checked at regular intervals and restocked to some predetermined level.
Term
what is service level?
Definition
a term used to indicate the percentage of time inventory levels will be high enough to meet demand during the reorder point.
Term
What is a continuous review system?
Definition
An inventory system used to manage independant demand inventory. the inventory level for an item is constantly monitored and when the order point is reached, and order is released.
- better for critical or expensive items
- size of the replenishment order based on trade offs between holding costs and ordering costs.
- reorder point is based on both demand and supply consideration and how much stock is desired.
Term
Average inventory:
Definition
as the order quantity doubles, so does the average inventory q/2
Term
What are some costs that increase as order size goes up?
Definition
invested funds, storage space, and insurance
Term
what are some costs that decrease as order size goes up
Definition
ordering
stock out
transportation
potential for quanitity discounts
Term
true or false, inventory holding costs increase as Q increases
Definition
true
Term
true or false, ordering costs per year decrease as Q increases
Definition
true
Term
what is safety stock?
Definition
additional inventory beyond amount needed to meet average demand during lead time
it protects against uncertainties in demand or lead time
it balances the costs of stocking out against the cost of holding extra inventory.
Term
the higher z is
Definition
the lower the risk of stocking out and the higher the average inventory level.
Term
what is a single period inventory system?
Definition
a system used when demand occurs in only a single point in time ( xmas trees / fresh fish )
- must weigh the cost of being short against the cost of having excess
Term
what is the shortage cost?
Definition
value of the item if demandanded - item cost
Term
what is excess cost?
Definition
item cost + disposal cost - salvage value
Term
ABC method
Definition
A- top 20% used, 80% of total $
B- middle 30% - 15% of total $
C - Bottom 50% 5% of total $
Term
Northcut bikes
Definition
timing and quantities were incorrect
need inventory management system that addresses ordering policy
order quanitity
and reorder point
Term
In summary for northcut
Definition
order the right amount at the right time
ABC analysis to identify most important items, developed inventory policies for these first
Term
What is master production scheduling?
Definition
a detailed planning process that tracks production output and matches this output to actual customer orders.
- controls the timing and quantity of production for products or product families
- primary interface point for actual customer orders.
- coordinates forecasted demand/ actual orders with production activity
- serves as a tool for agreement between marketing and operations ( more details than S a OP )
feeds more detailed material requirements planning
Term
what is the link between MPS and S and OP?
Definition
S and OP - overall production workforce and inventory levels by month
MPS - when items are made ( by week ) when customers orders are filled, and what capacity is left
MRP - Timing and quantity of material orders to meet the MPS
Term
the master production schedule should
Definition
satisfy the needs of marketing
be feasible for production
Term
Realco breadmaster
Definition
- successful new breadmaker model which has competitive pricing and excellent features, but there is lack of formal planning ( do we have enough product to meet orders, do we have enough to meet future demand?)
Term
What is the definition of MRP?
Definition
A planning process that translates the master production schedule into planned orders for the actual parts and components needed to produce the master production schedule items
Term
What is the MRP based on?
Definition
the bill of materials
explosion of the BOM
backward scheduling
determines what should be ordered when and how much to order
Term
What is JIT?
Definition
synonymous with lean- a philosophy of manufacturing based on planned elimination of waste and on continuous improvement of productivity.
Term
What is lean?
Definition
A philosophy of production that emphasizes the minimization of the amount of resources including time used in the various activities of the enterprise. it involves identifying and eliminating non value added activities in design, production, supply chain management, and dealing with customers.
Term
What are some JIT approaches to operations?
Definition
simplify first, add technology second
gradual but continuous improvement
minimize waste
maximize use of people
Term
what are some personnel and organizational elements
Definition
workers as assets
cross trained workers
greater responsibility at lower levels
leaders as faciliators not order givers.
Term
describe JIT and the supply chain
Definition
tighet coordination along the supply chain. goods are pulled along. you only make and ship what is needed.
Term
some JIT goals
Definition
eliminate disruptions
make the system flexible
reduce setup times and lead times
minimize inventory
eliminate waste
Term
What is waste?
Definition
activities that dont add value
Term
what are some forms of waste
Definition
overproduction
waiting
unneccessary movement
wrong process
excess motion
defects
underutilization of employees
Term
inventory as waste
Definition
requires more storage space
requires tracking and counting
increases movement activity
hides yield scrap and rework problems
increases risk of loss from theft, damage, and obsolescence
Term
What is the lean perspective?
Definition
process of reducing inventory leads to reduction of the other wastes and exposes problems in order of severity
Term
what are some causes of excess inventory?
Definition
equipment breakdowns
absenteeism
poor quality
Term
what are some ways to reduce excess inventory?
Definition
work centers closer together
set up times reduced
inventory reduced dramatically
Term
what is the definition of a pull system?
Definition
a production in which actual downstream demand sets off a chain of events that pulls material through the various process steps.
Term
what is a kanban system?
Definition
a production control approach that uses containers, cards, or visual cues to control the production and movement of goods through the supply chain
Term
Kanban system:
Definition
Work centers A's finished material becomes work centers b raw material
Term
box of finished material is pulled out of work center B
Definition
freed up production is signal to produce more
Term
freed up move card is signal to move material from work center A
Definition
box of raw material is pulled into production at work center B
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