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APICS Exam 02 -- Master Planning of Resources
APICS Exam 02 Flashcards: Vocab words, concepts, etc
337
Business
Professional
10/21/2012

Additional Business Flashcards

 


 

Cards

Term
What decisions does master scheduling and control support?
Definition

The decisions supported by ____ are:

  • MPS
  • RCCP
  • Schedule control
Term
What are the forecasts techniques for strategic and business planning?
Definition

The forecast techniques for ____ are:

  • Market research
  • Expert opinion
  • Management estimation
  • Casual analysis
Term
It is the role of management to reconcile the differences between the ____ forecast and the ____ forecast
Definition
It is the role of ____ to reconcile the differences between the business forecast and the roll-up forecast
Term
What are the 3 keys to successful forecasting, in order of importance?
Definition
The 3 keys to successful ____ are, in order of importance:
1) People (make the right decisions on which model to use)
2) Data (access to, and whata data are relevant)
3) Software (support forecast requirements)
Term
What are the 4 components of accountability and responsibility to the managing the forecast?
Definition
The 4 components of ____ and ____ to managing the forecast are:
1) Ownership
2) Forecast analyst
3) Inputs from other departments
4) One set of numbers
Term
How long should the forecast horizon be?
Definition
The ____ horizon should be as long as required by the process it supports (per APICS book, no more specific than that)
Term
For strategic and business planning, how long should the forecast time horizon be?
Definition
For ____ the forecast time horizon should be 3 years or longer
Term
For sales and operation planning, how long should the forecast time horizon be?
Definition
For ____ the forecast time horizon will vary depending on the order fulfillment lead time for the product lines. Could be from several months to a year or more
Term
For master scheduling, how long should the forecast time horizon be?
Definition
For ____ the forecast time horizon is derived from the S&OP by dividing months up through the planning time fence (and slightly beyond) into weeks by 4, 4.3, or 5
Term
For annual budget planning, how long should the forecast time horizon be?
Definition
For ____ the forecast time horizon should span 15 months (start 3 months before the budget year)
Term
For financial planning, how long should the forecast time horizon be?
Definition
For ____ the forecast time horizon should be rolling, extending at least 12 months
Term
Forecast interval
Definition
The duration of the time period used in the forecast
Term
What are the 3 durations of forecast intervals?
Definition
The 3 durations of ____ are:
1) Weekly
2) Monthly
3) Quarterly
Term
What are the advantages of weekly intervals?
Definition
The advantages of ____ intervals for forecasting are:
- Necessary for master scheduling
- Can be easily achieved by dividing monthly product family forecasts into buckets for individual products
Term
What are the disadvantages of weekly intervals?
Definition
The disadvantages of ____ intervals for forecasting are:
- Increases data management
- Imparts a false sense of precision (in some industries)
Term
What are the advantages of monthly intervals?
Definition
The advantages of ____ intervals for forecasting are:
- Gives adequate level of forecasting (Not too detailed)
- Allows detection of seasonal patterns that might be hidden in other forecast intervals
Term
What are the advantages of quarterly intervals?
Definition
The advantages of ____ intervals for forecasting are:
- Great for industries with long production lead times (ETO)
- Appropriate in later years of a multi-year forecast
Term
What are the disadvantages of quarterly intervals for forecasting?
Definition

The disadvantages of ____ intervals for forecasting are:

  • May hide seasonal demand patterns
Term
Overall, what seems to be the most versatile and useful forecast interval?
Definition
Overall ____ seems to be the most versatile and useful forecast interval
Term

FORMULA:

Coefficient of variation (CV)

Definition

FORMULA:

=(standard deviation of period demand)/(average period demand)

Term
What are 4 examples of forecasting models?
Definition
4 examples of ____ models are:
1) Judgmental
2) Quantitative
3) Statistical
4) Mathematical
Term
What are some examples of factors that have to be considered for selection of forecasting models?
Definition

Some examples of factors that have to be considered for selection of ____ models are:

  • Manufacturing environment (MTO, ATO, MTS)
  • Customer service
  • Safety stock implication
  • Profitability
Term
On the forecast model grid, what factor is on the Y-axis?
Definition
On the forecast model grid, the factor on the ____-axis is volume (high, low demand)
Term
On the forecast model grid, what factor is on the X-axis?
Definition
On the forecast model grid, the factor on the ____-axis is variance (high, low variance)
Term
On the forecast model grid, what are the implications for Position 1 (High demand, high variance)
Definition

On the forecast model grid, what are the implications for ____:

  • Use aggregate forecast and then ATO
  • Collaborate with customer on demand planning
Term
On the forecast model grid, what are the implications for Position 2 (Low demand, high variance)
Definition
On the forecast model grid, what are the implications for ____:
- High risk of obsolete inventory
- Check profitability
- Customer service risk
- Consider MTO only
Term
On the forecast model grid, what are the implications for Position 3 (Low demand, low variance)
Definition
On the forecast model grid, what are the implications for ____:
- Aggregate forecast and inventory if possible
- Consider MTO
Term
On the forecast model grid, what are the implications for Position 2 (High demand, low variance)
Definition
On the forecast model grid, what are the implications for ____:
- Use statistical forecasting techniques
- MTS
Term
The forecasting grid relates forecasting to which 3 things?
Definition
The ____ relates forecasting to:
1) Inventory
2) Safety stock
3) Manufacturing environment choices
Term
A CV of (less than)/(greater than) 1 is considered ____/____
Definition
A CV of (____ than)/(____ than) 1 is considered (low-variance)/(high-variance)
Term
What are the 8 steps of the forecasting process?
Definition
The 8 steps of the ____ process are:
1) Data gathering and preparation
2) Forecast generation
3) Volume and mix reconciliation #1
4) Applying judgement
5) Volume and mix reconciliation #2
6) Decision making and authorization
7) Volume and mix reconciliation #3
8) Documenting assumptions (all feed into)
Term
What happens during the data gathering and preparation step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Complete data gathering from last period's demand
- Use bookings or incoming orders (as opposed to shipments)
- Send requests for forecast data and judgement inputs to teams
Term
What happens during the forecast generation step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Run statistical forecasting application
- Collate and analyze demand data, information from promotions, and judgmental data
Term
What happens during the volume and mix reconciliation #1 step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Ensure aggregate product-volume and product-mix forecasts are the same (in terms of physical units)
- Either disaggregate S&OP product family into end items OR forecast at both aggregate and mix levels
Term
What happens during the applying judgement step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Analyze the statistical sales forecast
- Apply new judgments/validate earlier judgments
- Synthesize statistical forecast data and management inputs and judgments
Term
What happens during the volume and mix reconciliation #2 step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Reconcile volume and product mix forecasts
Term
What happens during the decision making and authorization step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Selection of appropriate time series and causal forecasting techniques
Term
What happens during the volume and mix reconciliation #3 step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Reconcile any differences in volume and product mix forecasts
Term
What happens during the documenting assumptions step of the forecasting process?
Definition
During the ____ step of the forecasting process:
- Record explain assumptions, inputs from stakeholders, decisions made
Term
Why is it particularly important to document assumptions made in the forecasting process?
Definition
It is particularly important to ____ in the forecasting process for:
- Review and authorization by senior executives
- Evaluating the forecast later to explain the discrepancies between forecast and actual demand
Term
What are the 2 main categories of forecasting techniques?
Definition
The 2 main categories of ____ techniques are:
1) Quantitative
2) Qualitative
Term
What are the 2 types of quantitative forecasts?
Definition
The 2 types of ____ forecasts are:
1) Time series (intrinsic)
2) Causal (extrinsic)
Term
What are the 2 types of qualitative techniques?
Definition
The 2 types of ____ techniques are:
1) Subjective
2) Judgemental
Term
What are some external factors of forecasting?
Definition
Some ____ factors of forecasting are:
- Customers
- Competition
- Economic outlook
- Demographics
- Disruptive events
- Market life cycle
- Emerging technology
Term
What are 7 internal factors of forecasting?
Definition
Some ____ factors of forecasting are:
- New products
- Product life cycle
- Pricing and promotions
- Bids
- Historical data
- Management judgement
- Intra-company demand
Term
External factors are things that you (can)/(can't) control
Definition
____ factors are things that you can't control
Term
Internal factors are things that you (can)/(can't) control
Definition
____ factors are things that you can control
Term
What effects do customers have on the the external factors of the forecasting?
Definition
Some effects that ____ have on the external factors of the forecasting are:
- Dependability of ordering processes
- New prospects and advance notification
- Closeness of relationships with suppliers
Term
What effects does competition have on the the external factors of the forecasting?
Definition
Some effects that ____ have on the external factors of the forecasting are:
- Long-term strategic moves
- Manufacturing (plant closures, quality issues)
- Recent moves and announcements that affect sales
Term
What effects do economic outlook and demographics have on the the external factors of the forecasting?
Definition
Some effects that ____ have on the external factors of the forecasting are:
- Sales of certain products correlate with leading economic indicators (house sales, employment levels)
- Sales correlate with demographic factors (income levels, population growth)
Term
What effects do disruptive effects have on the the external factors of the forecasting?
Definition
Some effects that ____ have on the external factors of the forecasting are:
- Politically-related (strikes, terrorism)
- Weather-related (storms, etc)
Term
What are some examples of time series (intrinsic) forecasting techniques?
Definition
Some examples of ____ forecasting techniques are:
- Simple average
- Moving average
- Exponential smoothing
- Time series decomposition
Term
What are some examples of causal (extrinsic) forecasting techniques?
Definition
Some examples of ____ forecasting techniques are:
- Regression
- Multiple regression
Term
What are some examples of qualitative (subjective or judgmental) forecasting techniques?
Definition
Some examples of ____ forecasting techniques are:
- Expert opinion
- Management estimation
- Pyramid forecasting
- Focus group
- Survey
- Panels
Term
What are some issues that affect the forecast with the internal factor of new products
Definition
Some typical issues that affect the forecast that come from the internal factor of ____ are:
- Difficulty of forecasting when new products are introduced
- Need for initial forecast estimate
- Ability to manage capacity or flex production
Term
What are some issues that affect the forecast with the internal factor of product life cycle
Definition
Some typical issues that affect the forecast that come from the internal factor of ____ are:
- Need to account for rising, level, and then falling sales as products progress through growth, maturity, and decline stages
- Managing product lines so that new products continuously replace phased-out ones
Term
What are some issues that affect the forecast with the internal factor of pricing and promotion
Definition

Some typical issues that affect the forecast that come from the internal factor of ____ are:

  • Effect of price changes on dampening/stimulating of demand
  • Effect of promotions on stimulating and changing the time of demand
Term
What are some issues that affect the forecast with the internal factor of competitive bids
Definition
Some typical issues that affect the forecast that come from the internal factor of ____ are:
- Dependence on awards earned
- Need to estimate probability of successful bids
Term
What are some issues that affect the forecast with the internal factor of historical (intrinsic) data
Definition
Some typical issues that affect the forecast that come from the internal factor of ____ are:
- Adequacy and accuracy of time series data
- Useful in estimating effects of promotions
Term
What are some issues that affect the forecast with the internal factor of management judgment
Definition
Some typical issues that affect the forecast that come from the internal factor of ____ are:
- Input on long-range business activity levels
- Setting revenue growth goals that are more aggressive than historical demand
Term
What are some issues that affect the forecast with the internal factor of intra-company demand
Definition
Some typical issues that affect the forecast that come from the internal factor of ____ are:
- Recognize orders from other plants
- Demand for promotional purposes and testing
Term
What are 5 categories of qualitative techniques?
Definition
The 5 categories of ____ techniques are:
1) Independent judgment of experts
2) Judgments of executives and managers
3) Market research relating to specific customer groups in specific markets
4) Sales estimates made by sales team
5) Historical analogy
Term
The qualitative techniques are supported by which 5 things?
Definition
____ techniques are supported by the following 5 things:
1) Structured data collection
2) Survey research methods
3) Statistical modeling
4) Subjective assessment
5) Intuition
Term
What are some example techniques of independent judgement
Definition

Some example techniques of ____ are:

  • Expert opinion
Term
What are some example techniques of executive/management judgement
Definition
Some example techniques of ____ are:
- Management estimation
- Pyramid forecasting
Term
What are some example techniques of market research
Definition

Some example techniques of ____ are:

  • Focus group
  • Survey
Term
What are some example techniques of sales force estimate
Definition

Some example techniques of ____ are:

  • Panel consensus
  • Delphi technique
  • Sales force composite
Term
What are some example techniques of historical analogy
Definition

Some example techniques of ____ are:

  • Product life-cycle analysis
Term
What are some advantages of qualitative forecasting techniques?
Definition
Some advantages of ____ forecasting techniques are:
- Support forecasts for products that lack initial quantifiable data
- Develop forecasts when stable demand patterns are impossible
- Leverage valuable insight
- Provide behavioral insights into customer demand
- Develop fairly quickly
Term
What are some disadvantages of qualitative forecasting techniques?
Definition
Some disadvantages of ____ forecasting techniques are:
- Developers are often biased/overconfident
- Documentation for assumptions is often incomplete
- Not suited to companies with thousands of SKUs
- Panels/focus groups tend to be affected by peer pressure/lose independence
Term
When is the best time to use intrinsic/time series forecasting techniques?
Definition
The best time to use ____ forecasting techniques are when demand patterns can be assumed to continue into the future
Term
What are 5 time series methods of forecasting, in order of increasing complexity?
Definition
5 ____ methods of forecasting in order of ____ complexity are:
1) Simple average
2) Moving average
3) Weighted moving average
4) Exponential smoothing
5) Time series decomposition
Term
SAF
Definition
Simple average forecast
Term
Simple average forecast
Definition
A quantitative, intrinsic forecasting technique known for its simplicity and ease of use. Forecast for a period is the average of the actual demand for the previous two periods
Term

FORMULA: SAF

ForecastN+1 =

Definition

FORMULA: SAF

= (DemandN-1 + demandN)/2

Term
MAF
Definition
Moving average forecast
Term
What does MAF assume for forecasting?
Definition
___ forecasting assumes that demand in the near future will exhibit the same random fluctuation about the average shown in the past
Term

FORMULA: MAF (5 month)

ForecastN

Definition

FORMULA: MAF (5 month)

Sum of demand(N-1+N-2+N-3+N-4+N-5)/5

Term
Exponential smoothing
Definition
A forecasting technique that enables forecasters to assign weights to historical and current demand data and to calculate forecasts that take into account trend and seasonality
Term
What is one of the advantages of ESF
Definition
One of the advantages of the ____ forecasting techniques is that it requires minimal data management because it only uses data for the latest period
Term
ESF
Definition
Exponential smoothing forecast
Term

FORMULA: ESF

ForecastN1 =

Definition

FORMULA: ESF

= (α)(DemandN0)+(1-α)(MAFN0)

Term
What is "α"
Definition
____ is the smoothing constant used for ESF
Term
How does a low α affect the forecast?
Definition
A ____ α gives less weight to the latest demand
Term
How does a high α affect the forecast?
Definition
A ____ α gives more weight to the latest demand (reacts to, but still lags, trend)
Term
What level of α is used when demand is random with low variability
Definition
The level of α used when demand is ____ with ____ variability is:
- Low (keeps forecasting the average)
Term
What level of α is used when demand shows trend volatility
Definition
The level of α used when demand shows ____ is:
- Medium (don't chase demand)
Term
What level of α is used when demand shows trend with low variability
Definition
The level of α used when demand shows trend with ____ variability is:
- High (risk of chasing demand is lower)
Term
When demand is trending upward or downward, is a high or low α used?
Definition
When demand is trending upward or downward, a high ____ is used
Term
What are the 4 components into which time series data can be divided?
Definition
The 4 components into which ____ data can be divided are:
1) Trend
2) Seasonal
3) Cyclical
4) Random (a component without a pattern)
Term
What are the 3 steps of time series decomposition?
Definition

The 3 steps of ____ are:

  1. Plot the seasonal data and calculate the trend line
  2. Calculate the trend-adjusted seasonal factor
  3. Calculate the trend-adjusted seasonal factor
Term
How do you complete Step 1: Plot the seasonal data and calculate the trend line?
Definition
To perform Step 1: ____, you:
1) Calculate the trend line, using a spreadsheet application
2) Note the left intercept (B)
3) Determine M (total increase of trend line/number of periods)
Term
FORMULA
Trend ratio=
Definition
FORMULA
= actual period data/trend period data
Term

FORMULA

Seasonal factorQ1 =

Definition

FORMULA

= (Q1Y1+Q1Y2 +...Q1YN)/N

Term
How do you complete Step 2: Calculate the trend-adjusted seasonal factor?
Definition

To perform Step 2: ____, you:

  1. Calculate the trend ratio for each quarter
  2. Average the trend ratios for each quarter
Term
How do you complete Step 3: Calculate the trend-adjusted seasonal forecast?
Definition
To perform Step 3: ____, you:
1) For each quarter of the forecast year, multiply the trend value by the quarter's trend-adjusted seasonal factor
Term

FORMULA

Q1Forecast year =

Definition

FORMULA

= (M(t)+ B)*Seasonal FactorQ1

Term
What are 3 things that quantitative intrinsic forecasting techniques focus on?
Definition

3 things that ____ forecasting techniques focus on are:

  1. Analyzing time series data
  2. Decomposition of demand patterns into trend, seasonal, cyclical, and random demand patterns
  3. Determining mathematical relationships within the data and demand patterns, and extending them into the future
Term
What do causal forecasting techniques do?
Definition
____ forecasting techniques:
- Analyze and predict based on relationships between events or occurrences
- Attempt to explain/quantify the relationship in order to predict future demand
Term
Define predictor (independent variable), in terms of causal forecasting
Definition
In terms of causal forecasting, ____ is the cause of influence on the predicted (dependent variable)
Term
Define predicted (dependent variable), in terms of causal forecasting
Definition
In terms of causal forecasting, ____ is the effect (associated result) of the predictor (independent variable)
Term
What are 3 common examples of relationships between events (predictor/independent variable v. predicted/dependent variable)
Definition
3 common examples of ____ are:
1) Cause and effect
2) Leading indicator
3) Historical analogy
Term
What is an example of a cause and effect predictor?
Definition
An example of a ____ predictor is a marketing program (promotion and price reduction)
Term
What is an example of a leading indicator predictor?
Definition
An example of a ____ predictor is a business index (housing starts)
Term
What is an example of a historical analogy predictor?
Definition
An example of a ____ predictor are sales of similar products during the same stage of the product life cycle
Term
Simple regression (causal analytical tool)
Definition
Models past relationships between an independent and dependent variable
Term
Simple regression (causal analytical tool)
Definition
Models past relationships between more than one independent variable and a dependent variabale
Term
What are some advantages of causal techniques?
Definition
Some advantages of ____ techniques are:
- Relate internal and external market factors
- Provide key insights into demand patterns/time series data
- Projecting aggregate demand
- Available in many software packages
Term
What are some disadvantages of causal techniques?
Definition
Some disadvantages of ____ techniques are:
- Subject and sensitive to changes in relationships
- Require high levels of external data collection
- Not easy to systematize
- Higher data management, modeling, and storage costs
- Require extensive training in statistics
Term
Are causal forecasting techniques more effective in long- or short-/medium-ranges?
Definition
____ forecasting techniques are more effective in long-term ranges (as opposed to short-/medium-range)
Term
CPFR
Definition
Collaborate planning, forecasting, and replenishment
Term
What were the 2 objectives of CPFR?
Definition
The 2 objectives of ____ were to:
1) Use one set of numbers in planning and forecasting by manufacturers and retailers
2) Adopt standards for electronic communication and sharing of data
Term
The CPFR model sets guidelines for collaboration at which 4 levels of the partnering enterprises?
Definition
The ____ model sets guidelines for collaboration at the below 4 levels of the partnering enterprises:
1) Strategy and planning
2) Demand and supply management
3) Execution
4) Analysis
Term
What are the two components of CPFR: strategy and planning
Definition
The two components of CPFR: ____ are:
1) Collaboration arrangement (planning)
2) Joint business plan
Term
What are the two components of CPFR: demand and supply management
Definition

The two components of CPFR: ____ are:

  1. Sales forecasting
  2. Order planning and forecasting
Term
What are the two components of CPFR: execution
Definition
The two components of CPFR: ____ are:
1) Order generation
2) Order fulfillment
Term
What are the two components of CPFR:
analysis
Definition
The two components of CPFR: ____ are:
1) Exception management
2) Analysis
Term
Collaboration arrangement (planning)
Definition
Setting of business goals, scope of collaboration, and roles and responsibilities of the partners
Term
Joint business plan
Definition
Identifying significant events such as promotions, inventory policy changes, store opening, and product introduction
Term
Sales forecasting
Definition
Analysis of market data by the manufacturer and replenishment planning by the retailer
Term
Order generation
Definition
Production and supply planning by the manufacturer and replenishment planning by the retailer
Term
Order fulfillment
Definition
Logistics and distribution management, both by the manufacturer and retailer
Term
Exception management
Definition
Execution monitoring by the manufacturer; store execution by the retailer
Term
Performance assessment
Definition
Keeping of scorecards
Term
Causal forecast
Definition
A type of forecasting that uses cause-and-effect associations to predict and explain relationships between the independent and dependent variables
Term
CPFR
Definition
A collaboration process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers
Term
Decomposition
Definition
A method of forecasting where time series data are separated into up to 3 components: trend, seasonal, and cyclical
Term
Exponential smoothing forecast
Definition
A type of weighted moving average forecasting technique in which past observations are geometrically discounted according to their age
Term
Qualitative forecasting technique
Definition
An approach to forecasting where historical demand data is used to project future demand
Term
Regression analysis
Definition
A statistical technique for determining the best mathematical expression describing the functional relationship between one response and one (or more) independent variables
Term
Seasonal index
Definition
A number used to adjust data to seasonal demand
Term
Simple moving average
Definition
A moving average where the oldest data point is dropped and the newest data point is included in the calculation
Term
Time series analysis
Definition
Analysis of any variable classified by time in which the values of the variable are functions of the time periods
Term
Weighted moving average
Definition
An averaging technique in which the data to be averaged are not uniformly weighted but are given values according to their importance
Term
What are some desired outcomes of forecast evaluation and monitoring?
Definition
Some desired outcomes of ____ are:
- Correction of bias through realistic forecasts and better techniques
- Improvement of forecasts to reduce forecast error
- Identification of process improvements that reduce demand variation
- Working with customers to anticipate demand
- Leveraging latest forecast error to calculate safety stock
- Inventory reduction and improvement in customer service
Term
MAD
Definition
Mean absolute deviation
Term

FORMULA

MAD =

Definition

FORMULA

= (Σ|Actual- Forecast|)/n

Term

FORMULA

Period forecast error =

Definition

FORMULA

 = Actual demand - forecast demand

= A - F

Term
MAPE
Definition
Mean absolute percent error
Term

FORMULA

MAPE =

Definition

FORMULA

= ((Σ|A-F|)/A)/n

Term
APE
Definition
Absolute percent error
Term

FORMULA

Bias =

Definition
FORMULA
 = Σ(A-F)/n
Term
RSFE
Definition
Running sum of forecast error
Term
What is the purpose of a tracking signal?
Definition
The purpose of a ____ is to track variation in demand. They are used to alert the forecast evaluator to this situation by setting a limit or trip value
Term
What are commonly used trip values?
Definition
Commonly used ____ values are 3.0 or 4.0
Term
FORMULA
Tracking signal =
Definition
FORMULA
= RSFE/MAD
Term
Demand filter
Definition
A quantity limit setting on actual orders for specific products
Term
What are 4 things that a demand filter does?
Definition
What are 4 things that a ____ does?
1) Identifies orders that would absorb too much of existing capacity
2) Detects order entry errors such as incorrect quantity
3) Identifies abnormal variability of demand, and enables the master planner to asses its effect on the stability of the MS
4) Lead to negotiations with customers on flagged orders
Term
What does the standard deviation measure?
Definition
The ____ measures forecast error
Term

FORMULA

Standard deviation (σ) = 

Definition

FORMULA

= √(∑(A-average forecast)2)/n-1))

Term
For standard deviation, use n when the number of periods is (=) 30
Definition
For standard deviation, use ____ when the number of periods is >= 30
Term
For standard deviation, use n-1 when the number of periods is (=) 30
Definition
For standard deviation, use ____ when the number of periods is < 30
Term

FORMULA

σ =

Definition

FORMULA

= (1.25)MAD

Term

FORMULA

MAD =

Definition

FORMULA

= σ/1.25

Term
What is the value proposition of CRM?
Definition

The value proposition of ____ is:

  • Differentiate the customers' experience from rivals
  • Increase lifetime customer retention
  • Provide insight into impending customer orders
Term
What are the 2 aspects of the scope of CRM
Definition

The 2 aspects of the scope of ____ are:

  1. Differentiation based on customer segments
  2. Use of data and analytics to improve sales performance
Term
What are the 3 most important criteria for customer segmentation?
Definition

The 3 most important criteria for ____ are:

  1. Profitability
  2. Strategic importance
  3. Special customer needs
Term
What are some examples of profitability segmentation?
Definition

Some examples of ____ segmentation are:

  • Volume discounts
  • Priority attention from sales/marketing/R&D
Term
What are some examples of strategic importance segmentation?
Definition

Some examples of ____ segmentation are:

  • Considerable leverage with respect to suppliers' overall profitablity
  • The most strategic customer may impose terms and conditions when suppliers do business with them
Term
What are some examples of special customer needs segmentation?
Definition

Some examples of ____ segmentation are:

  • For MTO products, the customer might require deign and engineering services
  • Provide services to meet customers' need for better designs, support lean or green goals, provide flexible manufacturing environment
Term
What are some of the primary data sources on customers ?
Definition

Some of the primary ____ sources on customers are:

  • Transaction records
  • Sales representatives
  • Service representatives
  • Market intelligence
Term
Analytics
Definition
The use of customer data to develop insights and suggest actions to improve customer service, retention, and sales
Term
What are some examples of analytics activities?
Definition

Some examples of ____ activites are:

  • Predict broad-scale consumer preferences
  • Predict individual consumer preferences
  • Replace forecats with knowledge of impending orders
Term
What are the desired results of analyzing broad scale consumer behaviors?
Definition
Some desired results of analyzing ____ are conceiving, designing, positioning, and placing products in the marketplace
Term
What are the desired results of analyzing personal consumer behavior?
Definition
Some desired results of analyzing ____ are predicting and suggesting products for a customer to purchase (as an individual or as a member of a customer segment)
Term
What are the desired results of analyzing business customer demand information (from various sources)
Definition
Some desired results of analyzing ____ are gaining insights into customer demand that enables an organization to replace the forecast with knowledge-based plans for specific customers
Term
What are the 4 main steps in the Customer Order Fulfillment Cycle?
Definition

The 4 main steps in the ____ cycle are:

  1. Customer inquiry and order
  2. Order entry
  3. Shipping and delivery
  4. Invoicing
Term
What are the key activities associated with "Customer order and inquiry"
Definition

The key activities associated with the ____ step in the Customer Order Fulfillment cycle are:

  • Request price and availability
Term
What are the key activities associated with "Order entry"?
Definition

The key activities associated with the ____ step in the Customer Order Fulfillment cycle are:

  • Check price and inventory ATP
  • Configure as necessary
  • Promise and send order confirmation to the customer
  • Create sales order in system
  • Reserve or allocate inventory items to specific sales orders
Term
What are the key activities associated with "Shipping and delivery"?
Definition

The key activities associated with the ____ step in the Customer Order Fulfillment cycle are:

  • Consolidate and route shipments
  • Prepare pick lists
  • Prepare bills of lading and packing slips
  • Send advance ship notices
Term
What are the key activities associated with "Invoicing"?
Definition

The key activities associated with the ____ step in the Customer Order Fulfillment cycle are:

  • Prepare invoices
  • Transmit electronically or by other means
Term
Customer order fulfillment
Definition
A set of actions that results in the production and/or shipping of goods to customers
Term
ATP
Definition
Available-to-promise
Term
CTP
Definition
Capable-to-promise
Term
Order promising
Definition
Letting customrs know if their orders can be fulfilled in the quantities ordered by a certain delivery date
Term
What are the 2 types of order promising?
Definition

The 2 types of ____ are:

  1. ATP (available-to-promise)
  2. CTP (capable-to-promise)
Term
In ATP, what is the source of data for customer order promises?
Definition
In ____, the source of data for customer order promises is the master production schedule (MPS)
Term
ATP makes promises from which 2 places?
Definition

____ makes promises from the following 2 places:

  1. On-hand inventory balances
  2. Future supply (shown as scheduled receipts in the MPS)
Term
ATP relies on master scheduling software to ____, but defers to the planner's judgement for ____
Definition
ATP relies on ____ to calculate whether it is possible to promise an order from inventory or production, but defer's to the ____ for the final decision
Term
ATP works for which 2 manufacturing environments?
Definition

____ works for the below 2 manufacturing environments:

  1. MTS
  2. MTO (promises made only from customer orders)
Term
In the case of MTO products, ATP only promises from what?
Definition
In the case of ____ products, ATO only promises from customer orders
Term
When is CTP, an alternative form of ATP, used?
Definition
____ is used when the MPS for a product is not able to accommodate a customer order from current or future inventory
Term
What are the 2 things that CTP attepms to do?
Definition

____ attempts to:

  1. Set up a new MPS for the same product if capacity and material are available
  2. "Borrow" capacity and material allocated to the MPS for another product if the capacity and material is not available
Term
What are the 4 characteristics of abnormal demand?
Definition

The 4 characteristics of ____ are:

  1. Not in the forecast
  2. From a non-regular customer
  3. Random, non-recurring, highly-variable
  4. Not received through normal channels
Term
Upon receiving abnormal demand, what are the first 2 things that customer service should do?
Definition

Upon receiving ____, the first 2 things that customer service should do are:

  1. Check ATP data to see if the order can be accommodated
  2. Run through a decision process to determine whether to promise and confirm the order
Term
Who are the 3 decision makers for abnormal demand?
Definition

The 3 decision makers for ____ are:

  1. Sales
  2. Marketing
  3. Operations
Term

In the case of abnormal demand, what is operation's input into the decision?

Definition

In the case of abnormal demand, ____ inputs on changeover costs and the impact on other customers' orders

Term

What are 4 key questions to ask when considering abnormal demand?

Definition

The 4 key questions to ask when considering ____ are:

  1. Financially attractive?
  2. Recurring demand?
  3. Flexibility of quantity and due date?
  4. Impact on other customers' orders?
Term
Are abnormal demand orders usually or usually not accepted? Why?
Definition
____ orders are usually not accepted because of capacity and material problems
Term
What are the internal communications related to S&OP?
Definition

The internal communications related to ____ are:

  • Agree on the production plan
Term
What are the communications with the customer related to S&OP?
Definition

The communications with the customer related to ____ are:

  • Medium-term demand
Term
What are the internal communications related to Master Scheduling?
Definition

The internal communications related to ____ are:

  • During order processing
  • Continually, on demand flexibility
Term
What are the communications with the customer related to Master Scheduling?
Definition

The communications with the customer related to ____ are:

  • During order promising
  • Continually on demand flexibility
Term
What are the communications with the customer related to Demand Management?
Definition

The communications with the customer related to ____ are:

  • Performance measures
Term
What are the internal communications related to Order Management?
Definition

The internal communications related to ____ are:

  • Forecasts and electronic point-of-sale sata from customers for VMI
  • Kanban (lean) replenishment signals from customers
Term
What are the communications with the customer related to Order Management?
Definition

The communications with the customer related to ____ are:

  • Engineering and due-date changes
  • Price and availability of MTS products
Term
What are the 2 approaches to measuring performance?
Definition

The 2 approaches to measuring ____ are:

  1. Functional approach (traditional silo approach)
  2. Cross-functional approach
Term
What is another name for the Functional approach to performance measurement?
Definition
Another name for the ____ approach to performance measurement is the Traditional Silo approach
Term
What are some characteristics of the Functional approach to performance measurement?
Definition

Some characteristics of the ____ approach to performance measurement are:

  • Functions have their own set of metrics
  • Conflicts exist among functional objectives
  • Metrics are in silos
Term
What are some characteristics of the Cross-Functional approach to performance measurement?
Definition

Some characteristics of the ____ approach to performance measurement are:

  • Meterics to not conflict cross-functionally
  • Reflects an integration of supply chain processes
  • Includes aggregate and detailed order delivery metrics
Term
What are the 3 components of a metric?
Definition

The 3 components of a ____ are:

  1. Criterion
  2. Standard
  3. Measure
Term
Metric
Definition
A performance measurement system consisting of a criterion, a standard, and a measure
Term
SCOR
Definition
Supply Chain Operations Reference®
Term
What are the 5 performance attribute categories of order delivery metrics?
Definition

The 5 performance attritibute categories of ____ metrics are:

  1. Agility
  2. Reliability
  3. Cost
  4. Responsiveness
  5. Asset Management

"ARCRA"

Term
On what does the Reliability performance attribute category focus?
Definition
The ____ performance attribute category focuses on quality of product and service
Term
On what does the Responsiveness performance attribute category focus?
Definition
The ____ performance attribute category focuses on the average cycle time that a manufacturer requires to respond to and deliver customer orders
Term
What is another name for the performance attribute category of Reliability
Definition
Another name for the performance attribute category of ____ is the Perfect Order category
Term

FORMULA

Perfect order fulfillment =

Definition

FORMULA

= (Number of perfect orders)/(Total number of orders)

Term
What is the Level 1 Metric for Reliability?
Definition

The Level 1 Metric for ____ is:

  • Perfect order fulfillment
Term
What is the Level 1 Metric for Responsiveness?
Definition

The Level 1 Metric for ____ is:

  • Order fulfillment cycle time
Term
What are the Level 1 Metrics for Agility?
Definition

The Level 1 Metrics for ____ are:

  • Upside supply chain flexibility
  • Upside supply chain adaptability
  • Downside supply chain adaptability
Term
What are the Level 1 Metrics for Cost?
Definition

The Level 1 Metrics for ____ are:

  • Supply chain management cost
  • Cost of goods sold (COGS)
Term
What are the Level 1 Metrics for Asset Management?
Definition

The Level 1 Metrics for ____ are:

  • Cash-to-cash cycle time
  • Return on supply chain fixed assets
Term
What are the Level 2 Metrics for Reliability: Perfect Order Fulfillment?
Definition

The Level 2 Metrics for ____ are:

  • Delivered on time
  • Delivered in full
  • Correct condition
  • Correct place
Term
What are the Level 2 Metrics for Responsiveness: Order Fulfillment Cycle Time?
Definition

The Level 2 Metrics for ____ are:

  • Order entry time
  • Dwell time for future dated orders
  • Make, distribute, transport time
Term
What are the Level 2 Metrics for Asset Management: Cash-to-Cash Cycle Time?
Definition

The Level 2 Metrics for ____ are:

  • Days supply of inventory
  • Days sales outstanding
  • Days payable outstanding
Term
What is another name for Delivered in Full?
Definition
Another name for ____ is Line Fill Rate
Term
Upon what is the Order Fulfillment Life Cycle based?
Definition
The ____ cycle is based on the time from acceptance of a sales order to customer receipt of the product
Term

FORMULA

Order fulfillment life cycle = 

Definition

FORMULA

= (Sum of actual cycle times for all orders delivered)/(Total number of orders delivered)

Term
What is the main purpose for Level 2 Metrics in performance measurement?
Definition
The main purpose of ____ in performance measurement is to help diagnose the root causes of shortcomings in Level 1 Metrics
Term
What does the Agility performance attribute category evaluate?
Definition
The ____ performance attribute category evaluates the ability of a supply chain to deal reliably with demand variation in the near and long terms
Term
What are the 2 components of the Cost performance attribute category?
Definition

The 2 components of the ____ performance attribute category are:

  1. Supply chain management cost
  2. Cost of goods sold
Term
What are the 2 components of the Asset Management performance attribute category?
Definition

The 2 components of the ____ performance attribute category are:

  1. Cash-to-cash cycle time 
  2. Return on supply chain fixed assets
Term
How is Upside Supply Chain Flexibility Measured?
Definition
____ is measured by the number of days required to meet an unplanned and sustinable increase of 20% in delivery quantities to meet market demand
Term
Upside Supply Chain Flexiblity
Definition
The speed with which a 20% increase in required production occurs
Term
Upside Supply Chain Adaptability
Definition
The maximum sustainable percentage increase in quantity delivered that can be acheived in 30 days
Term
Downside Supply Chain Adaptability
Definition
The ability to handle a reduction in orders
Term
How is Downside Supply Chain Adapability measured?
Definition
____ is measured as a percentage reduction in quantities ordered that are sustainable 30 days prior to delivery with no inventory or cost penalties
Term
Supply Chain Management Cost
Definition
The fixed and operational costs of the plan, source, deliver, and return processes
Term
How is Supply Chain Management Cost measured?
Definition
____ is measured per $1000 in revenue
Term
What does Cash-to-Cash Cycle Time measure?
Definition
____ measures the efficiency of the use of assets on a cross-functional basis by planning, procurement, manufacturing, and distribution
Term
Cash-to-Cash Cycle Time
Definition
The number of days of working capital tied up in managing the supply chain
Term

FORMULA

Cash-to-Cash Cycle Time =

Definition

FORMULA

= Number of days of inventory + Days of accounts receivable - Days of accounts payable

Term
Return on Supply Chain Fixed Assets
Definition
The effectiveness of the manufacturer in generating revenues from its capital investment in fixed assets
Term

FORMULA

 Return on Supply Chain Fixed Assets = 

Definition

FORMULA

= (Supply chain revenue - COGS - Supply chain management costs)/Suppy chain fixed assets

Term
What are some ways by which Standards can be developed?
Definition

Some ways by which ____ can be developed are:

  • Using internal best estimates
  • Collaboration with customers
  • Benchmark information
Term
Supply Chain Council
Definition
A membership organization of several hundred companies that report performance data for metrics at level 1 to 4 in five performance attribute categories
Term
Safety Stock
Definition
(aka buffer inventory) addresses demand uncertainty by providing an incremental quantity of finished goods or components
Term
What is the purpose of safety stock?
Definition
The purpose of ____ is to provide additional inventory to cover adverse consequences of stockouts caused by demand and supply uncertainty
Term
What are 2 adverse consequences of stockouts caused by demand and supply uncertainty?
Definition

The 2 adverse consequences of ____ caused by demand and supply uncertainty are:

  1. Customer dissatisfaction
  2. Loss of sales revenue
Term
What are teh 2 ways to set customer service levels?
Definition

The 2 ways to set ____ levels are:

  1. Mathematical
  2. Judgmental
Term
Mathematical (approach to customer service)
Definition
The ____ approach to customer service is based on the number of stockouts tolerable during the forecast horizon
Term

FORMULA

Stockout rate =

Definition

FORMULA

= n (number of stockouts) / t (total number of orders)

Term

FORMULA

Service level =

Definition

FORMULA

= 1 - (n (number of stockouts) t (total number of orders))

 

Term
What are the 3 components of a Judgmental approach to customer service?
Definition

The 3 components to a ____ approach to customer service are:

  1. Defining the customer service level that equals an acceptable fill rate
  2. Bases the acceptable fill rate on a best-in-class benchmark
  3. Can also be a rate negotiated with the customer
Term
What are the 3 components to calculating safety stock?
Definition

The 3 components of calculating ____ are:

  1. Statistical basis for the calculation
  2. Role of standard deviation
  3. Role of the safety factor
Term
1 Standard Deviation (σ) =
Definition
____ standard deviation (σ) = 68.26
Term
2 Standard Deviation (σ) =
Definition
____ standard deviation (σ) = 95.44
Term
3 Standard Deviation (σ) =
Definition
____ standard deviation (σ) = 99.77
Term
Statistical Basis (for the safety stock calculation)
Definition

The ____ calculation is based upon the proven statistical  probability that actual period demand values within the forecast horizon will:

  • Deviate from the demand forecast
  • Fall symmetrically around the period average forecast in what is called a normal distribution or a bell-shaped curve
Term
Normal distribution
Definition
Bell-shaped curve
Term

FORMULA:

Standard deviation (σ) =

Definition

FORMULA:

√(Σ(actual-average forecast)2)/(n-1))

Term

FORMULA:

Error = 

Definition

FORMULA:

= Actual - average forecast

Term
Z value
Definition
σ safety factor
Term

FORMULA:

Safety Stock =

Definition

FORMULA:

σ (Standard Deviation) x Z-value (Safety Factor)

Term
LTI
Definition
Lead time interval
Term
What are some sources of uncertainty that affect replenishment of the inventory used to fulfill customer orders?
Definition

Some sources of uncertainty that affect ____ are:

  • Transportation delays
  • Miscommunications
  • Production shortages
  • Quality issues
Term
FI
Definition
Forecast interval
Term
If the replenishment lead time (LTI) is less than the forecast interval (FI), the σ will (increase/decrease)
Definition
If the replenishment lead time (LTI) is (less/greater) than the forecast interval (FI), the σ will decrease
Term
If the replenishment lead time (LTI) is greater than the forecast interval (FI), the σ will (increase/decrease)
Definition
If the replenishment lead time (LTI) is (less/greater) than the forecast interval (FI), the σ will increase
Term

FORMULA:

σ adjusted for LTI =

Definition

FORMULA:

= (σ for FI) x √(LTI/FI)

Term

FORMULA:

SS adjusted for LTI =

Definition

FORMULA:

= SF x (σ adjusted for LTI)

Term
Safety factor
Definition
The statistical value that corresponds to an estimated service level. The higher the service level percent, the greater the safety factor (Z value)
Term
A Z value of 0 statistically results in what service level percent?
Definition
A Z value of ____ results in a service level percent of 50 (IE: 50% stock out probability)
Term

FORMULA:

Stockout probability percent =

Definition

FORMULA:

= 1 - service level percent

Term
What is the general concept of the LTI-adjusted SS?
Definition
The general concept of the ____ is that if it takes longer to replenish stock than the time you take to plan inventory, you have more uncertainty and need to make up for that with SS. (IE: You cannot react quickly enough with replenishment and need to buffer to hold the same SL%)
Term
What are some examples of customer service policies?
Definition

Some examples of ____ policy are:

  • Customer focus
  • Service levels
  • Performance management
  • Systems support
  • Customer interface
  • Culture
  • Top management leadership
  • Integration with strategic goals
Term
What is "customer focus", in the context of a customer service policy?
Definition
____ is defining customer needs, conducting customer satisfaction surveys, and facilitating feedback from customers
Term
What are "service levels", in the context of a customer service policy?
Definition
____ is determining appropriate levels for backlog, inventory including safety stock, and delivery speed and reliability
Term
What is "performance measurement", in the context of a customer service policy?
Definition
____ is deciding how customer service will be measured and what performance standards to use; seeking customer input on performance expectations and targets; monitoring delivery and product quality performance
Term
What is "systems support", in the context of a customer service policy?
Definition
____ is ensuring that product information such as inventory, backlog, and customer promise information is accurate and up-to-date
Term
What is "customer interface", in the context of a customer service policy?
Definition
____ is training and empowering employees on delivering  customer satisfaction, maintaining integrity in customer relationships, and ensuring that all customer-facing employees provide a consistent level of service in sales, product and technical support, customer inquiry, order entry, and more
Term
What is "culture", in the context of a customer service policy?
Definition
____ is reinforcing the focus on customer satisfaction through frequent training, incentives, and continuous improvement
Term
What is "top management leadership", in the context of a customer service policy?
Definition
____ is ensuring that senior executives are able to express a stategic vision and clear organizational expectations for customer service
Term
What is "integration with strategic goals", in the context of a customer service policy?
Definition
____ is ensuring consistency with supply chain management strategy and business objectives such as profitability, return on investment, brand strengthening, and market share
Term
What are the 4 steps of the Performance Management Process?
Definition

The 4 steps of the ____ process are:

  1. Evaluate generic performance objectives
  2. Define performance metrics
  3. Determine lower level performance measures
  4. Develop standards or targets
Term
Describe the "evaluate generic performance objectives" step of the performance measurement process
Definition
The ____ step of the performance measurement process assumes a company's operations strategy is aligned with its overall business strategy and goals. The objective is to determine which generic performance objectives are most important (EX: speed, flexibility, cost)
Term
Describe the "define performance metrics" step of the performance measurement process
Definition
The ____ step of the performance measurement process is the defining of metrics appropriate for each generic performance objective, that can have its own performance target and be benchmarked against a standard (EX: perfect order fulfillment as a metric for quality and dependability)
Term
Describe the "determine lower level performance measures" step of the performance measurement process
Definition
The ____ step of the performance measurement process (also called criteria) provide a lot more granularity and diagnostic information to the measurement process
Term
Describe the "develop standards or targets" step of the performance measurement process
Definition
The ____ step of the performance measurement process provides more meaning to measurements (by allowing them to be compared)
Term
Lower-level performance measures
Definition
Criteria
Term
What is the value of lower-level performance measures (aka criteria)?
Definition
The value of ____ is in suggesting remedial action
Term
Allocation
Definition
The classification of quantities of items that have been assigned to specific orders but have not yet been released from the stockroom to production
Term
Available-to-promise
Definition
The uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order purchasing
Term
Bias
Definition
A consistent deviation from the mean in one direction--either high or low; a normal property of a good forecast is that it does not exhibit ____
Term
Capable-to-promise
Definition
The process of committing orders against available capacity as well as inventory. Used to determine when a new or unscheduled customer order can be delievered
Term
Demand filter
Definition
A standard that is set to monitor sales data for individual items in forecasting models. It is usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations
Term
Metric
Definition
A system for collecting, measuring, and comparing a measure to a standard for a specific criterion for an operation, item, good, service, business, and so on
Term
Normal distribution
Definition
A particular statistical distribution where most of the observations fall fairly close to one mean, and a deviation from the mean is as likely to be plus as it is to be minus
Term
Running sum of forecast errors
Definition
The arithmetic sum of the differences between actual and forecasted demand for the periods being evaluated
Term
Safety factor
Definition
The numerical value used in the service function, based on the standard deviation or mean absolute deviation of the forecast, to provide a given level of customer service
Term
Service level
Definition
A measure, usually expressed as a percentage, of satisfying demand through inventory or by the current production schedule in time to satisfy the customers' requested delivery dates and quantities
Term
Tracking signal
Definition
The ratio of the cumulative algebraic sum of the deviations between the forecasts and the actual values to the MAD
Term
Standard deviation
Definition
A measurement of dispersion of data or a variable
Term
What are the 4 factors that influence distribution network planning?
Definition

The 4 factors that influence ____ are:

  1. Distribution channel design considerations
  2. Network configuration alternatives
  3. Selection of transportation modes
  4. Inventory location decisions
Term
Manufacturer's distribution channel
Definition
The route along which products flow to end users
Term
What are the 2 types of distribution channels
Definition
The 2 types of ____ are functional and institutional channels
Term
What are some examples of functional channels?
Definition

Some examples of ____ channels are:

  • Marketing and sales
  • Storage/break-bulk/cross docking (warehouse)
  • Consolidation
  • Transportation
Term
Functional channel
Definition
A series of business functions (all of which need to be completed in some capacity)
Term
Institutional channels
Definition
The components that connect the channels of distribution
Term
Intermediary organizations
Definition
Channels of distributions (or channel membersS0
Term
What are some examples of institutional channels?
Definition

Some examples of ____ channels are:

  • Manufacturers
  • Brokers
  • Distributors
  • Dealers
  • Retailers
Term
What is the relationship between institutional and functional channels?
Definition
Institutions performs functions
Term
What are the 2 things by which the strategic distribution design is chosen?
Definition

The 2 things by which the strategic ____ design is chosen are:

  1. Is it feasible to perform distribution channel functions internally? --OR--
  2. Would it be advisable to utilize other institutional channels to perform some or all functions
Term
What are the 3 basic options that manufacturers have to consider in terms of channels of distribution?
Definition

The 3 basic options that manufacturers have to consider in terms of ____ are:

  1. Direct/internal channel
  2. Exclusive and selective channel
  3. Complex channel
Term
Direct/internal channel
Definition
The manufacturer performs all marketing and distribution sales functions internally (IE: Sell directly to consumers)
Term
What is an example of a direct/internal channel?
Definition

An example of ____ channels is:

  • A jet engine company selling to the airplane manufacturer
Term
Exclusive and selective channel
Definition
The manufacturer relies on a limited number of distributors and retailers for customer sales and support
Term
What are some examples of exclusive and selective channels?
Definition

Some examples of ____ channels are:

  • Automobile dealers
  • Branded high-end apparel stores
Term
Complex channel
Definition
The manufacturer relies on its own internal distribution functions in combination with external institutional channels
Term
What are some examples of complex external channels?
Definition

Some examples of ____ channels are:

  • Regional, national, and global distributors and retailers
  • Mass merchandisers
Term
What is an example of a complex internal channels?
Definition

An example of ____ channels is:

  • Regional warehousing
Term
What are 3 factors that affect the channel structure design decision?
Definition

3 factors that affect the ____ decision are:

  1. Customer service criteria
  2. Distribution intensity
  3. Channel dependence
Term
What are the 4 criteria that channel structure design must address relating to basic customer or market requirements (IE: Customer service criteria)?
Definition

The 4 criteria that channel structure design must address relating to ____ requirements are:

  1. Product variety
  2. Lead time
  3. Lot size
  4. Location (spatial convenience)
Term
Lead time (customer service criterion)
Definition
The time between order placement and delivery of products
Term
What is the relationship between lead time and safety stock?
Definition
The lower the ____ the lower the safety stock requirement
Term
What is the relationship between lead time and forecasts?
Definition
The lower the ____ the lower the need to rely on forecasts for demand periods further into the future
Term
End users of highly-specialized MTO and ETO items purchase in what size lots?
Definition
End users of ___ purchase in smal lot sizes
Term
End users of MTS items purchase in what size lots?
Definition
End users of ___ purchase in smal lot sizes but in high variety from retailers
Term
For purchases by distributors or retailers, smaller lot sizes lead to what?
Definition
For purchases by ____, smaller lot sizes lead to better customer value and service (through lower payables cash flow, storage requirements, and risk from damage or obsolescence)
Term
How do distributors and retailers add value?
Definition
____ add value by breaking large bulk loads into smaller shipments to retailers and retail customers
Term
Location (spatial) convenience
Definition
The time and place utility of access to products. The closer and more convenient the sales point to the customer, the lower the customer's acquisition cost
Term
A complex distribution channel has a ____ level of intensity and a ____ level of manufacturer control
Definition
A ____ distribution channel has a high level of intensity and a low level of manufacturer control
Term
A selective distribution channel has a ____ level of intensity and a ____ level of manufacturer control
Definition
A ____ distribution channel has a medium level of intensity and a medium/high level of manufacturer control
Term
An exclusive distribution channel has a ____ level of intensity and a ____ level of manufacturer control
Definition
A ____ distribution channel has a low/medium level of intensity and a high/medium level of manufacturer control
Term
An internal/direct distribution channel has a ____ level of intensity and a ____ level of manufacturer control
Definition
A ____ distribution channel has a low level of intensity and a high level of manufacturer control
Term
Complex distribution channel
Definition
Manufacturer seeks to maximize distribution points to attain proximity and exposure to customers
Term
Selective distribution chanel
Definition
Manufacturer limits sales to a select group of intermediaries that provide high levels of marketing, sales support, and customer service. Retailers and dealers are attracted by prospects of exclusive product distribution
Term
Exclusive distribution channel
Definition
More selective intermediaries, often with restrictions on their ability to represent competing product lines
Term
Internal/direct distribution channel
Definition
Manufacturers fulfill orders for unique MTO or ETO products, partly from components on hand and components yet to be specified in engineering drawings or ordered from suppliers
Term
Channel dependence
Definition
The degree to which channel members need to collaborate
Term
A single transaction channel dependence exhibits what level of dependence
Definition
A ____ channel dependence exhibits temporary channel cooperation (one-time transactions)
Term
A conventional channel dependence exhibits what level of dependence
Definition
A ____ channel dependence exhibits opportunistic cooperation
Term
A networked supply channel dependence exhibits what level of dependence
Definition
A ____ channel dependence exhibits collective commitment to efficiency of the channel
Term
Single transaction channel dependence
Definition
Channels of distribution are established to facilitate single transactions, as in many purchases of capital equipment or facilities. Channels are short-lived; they disappear upon completion of a transaction
Term
Conventional channel dependence
Definition
There is a lasting relationship among channel members, but cooperation is opportunistic and not stable. Parties are individually efficient but not fully commited to or dependent on an efficient supply chain
Term
Networked supply channel dependence
Definition
Channel members acknowledge and value interdependence as a way of reducing overall supply chain costs and meeting customer needs
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