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| How effectively an organization meets the wants and needs of customers relative to others that offer similar goods/services. |
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Identifying consumer wants/needs
Pricing
Advertising/promotion |
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| The reason for an organization's existence. |
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States the purpose of the organization.
Serves as the basis for organizational goals.
Should answer the question of "What business are we in?" |
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Provide detail and the scope of the mission.
Can be viewed as organizational destinations.
Serve as the basis for organizational strategies. |
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A plan for achieving organizational goals.
Serves as a roadmap for reaching the organizational destinations. |
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| Organizational Strategies |
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Overall strategies that relate to the entire organization.
Support the achievement of organizational goals and missions. |
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| Functional Level Strategies |
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| Strategies that relate to each of the functional areas and that support achievement of the organizational strategy. |
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The methods and actions taken to accomplish strategies.
The "how to" part of the process. |
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| The actual "doing" part of the process. |
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the special attributes or abilities that give an organization a competitive edge.
Must be aligned with strategies. |
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| Characteristics that customers perceive as minimum standards of acceptability to be considered as a potential purchase. |
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| Characteristics of an organization's goods or services that cause it to be perceived as better than the competition. |
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| The approach, consistent with organization strategy, that is used to guide the operations function. |
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| Strategy that focuses on quality in all phases of an organization. |
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| Strategies that focus on the reduction of time needed to accomplish tasks. |
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| A strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change. |
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| A measure of the effective use of resources, usually expressed as output:input. |
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| Output/(Labor+Material+Overhead) |
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(Current Productivity - Previous Productivity)/Previous Productivity
Expressed as percentage. |
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Ratio of output of good product to input.
(defective product is not included in the output) |
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| Prime location can be barrier to entry. |
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| Diverse set of market generators. |
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| Plan for future economic changes and portfolio effect. |
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| Contiguous, regional followed by "fill-in," or concentrated. |
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| Substitute Communication for Travel |
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| Separation of Front from Back Office |
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| (Profit+Depreciation+Interest)/Revenue |
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| Room rate, hotels within one mile, competitive room rate |
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| College, Hospital beds within one mile, annual tourists |
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| Family income, residential population |
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| State population per inn, distance to nearest inn |
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| Sign visibility, distance to downtown, accessibility |
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The sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service.
Sometimes referred to as value chains. |
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| The strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management. |
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| Flow Management (Three Types) |
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Definition
Product/Service Flow - movement of goods and services from suppliers to customers as well as handling customer service needs and product returns.
Information Flow - sharing forecasts and sales data, transmitting orders, tracking shipments, and updating order status.
Financial Flow - credit terms, payments, and consignment and title ownership arrangements. |
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| Responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service. |
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| Goal is to develop and implement purchasing plans for products and services that support operations strategies. |
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| Evaluating the sources of supply in terms of price, quality, reputation, and service. |
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| A means of keeping current on suppliers' production (or service) capabilities, quality and delivery problems and resolutions, and performance on other criteria. |
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| Involves a detailed examination of a supplier's policies and capabilities. The process verifies the supplier meets or exceeds the requirements of a buyer. |
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| Collaborative Forecasting, Planning, and Replenishment (CFPR) |
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Definition
| A supply chain initiative that focuses on information sharing among supply chain trading partners in planning, forecasting, and inventory. |
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| Variations in demand cause inventory fluctuations to fluctuate and get out of control. |
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| Vendors monitor goods and replenish retail inventories when supplies are low. |
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| Process involved in responding to customer orders; often a function of the degree of customization required. |
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| Refers to the movement of materials and information within a facility and to incoming and outgoing shipments of goods and materials in a supply chain. |
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| Radio Frequency Identification (RFID) |
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Definition
| A technology that uses radio waves to identify objects, such as goods in supply chains. |
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| Third-Party Logistics (3-PL) |
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| The outsourcing of logistics management, including warehousing and distribution. |
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| The process of transporting returned items. |
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| Screening returned goods to prevent incorrect acceptance of goods. |
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| Finding ways to minimize the number of returned items. |
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| Analyzing the procurement process to lower costs by reducing waste and non-value-added activities, increase profits, reduce risks, and improve supplier performance. |
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| Lot-Size-Inventory Trade-Off |
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Definition
| Large lot sizes yield benefits in terms of quantity discounts and lower annual setup costs, but it increases the amount of safety stock (and inventory carrying costs) carried by suppliers. |
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| Inventory-Transportation Costs |
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Definition
| Suppliers prefer to ship full truckloads instead of partial loads to spread shipping costs over as many units as possible. This leads to greater holding costs for customers. |
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Definition
| A technique whereby goods arriving at a warehouse from a supplier are unloaded from the suppliers truck and loaded onto outbound truck, thereby avoiding warehouse storage. |
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| Lead Time-Transportation Costs |
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Definition
| Suppliers like to ship in full loads but waiting for sufficient orders and/or production to achieve a full load may increase lead time. |
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| Product Variety-Inventory |
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Definition
| Greater product variety usually means smaller lot sizes and higher setup costs, as well as higher transportation and inventory management costs. |
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Definition
| Production of standard components and subassemblies which are held until late in the process too add differentiating features. |
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| Producing and shipping in large lots reduces costs, but increases lead time. |
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| Reducing one or more steps in a supply chain by cutting out one or more intermediaries. |
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| The limitations on decision making caused by costs, human abilities, time, technology, and availability of information. |
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| The results of different departments each attempting to reach a solution that is optimum for that department. |
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| Environment in which relevant parameters have known values. |
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| Environment in which certain future events have probable outcomes. |
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| Environment in which it is impossible to assess hte likelihood of various future events. |
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| Choose the alternative with the best of the worst possible payoffs. |
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Definition
| Choose the alternative with the best possible payoff. |
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| Choose the alternative with the best average payoff. |
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| Choose the alternative that has the least of the worst regrets. |
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Definition
(Expected Monetary Value)
Determine the expected payoff of each alternative, and choose the alternative that has the best expected payoff. |
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Definition
| A schematic representation of the available alternatives and their possible consequences. |
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(Expected Value of Perfect Information)
The difference between the expected payoff with perfect information and the expected payoff under risk. |
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| Inventory Management Functions |
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Definition
1. Establish a system for tracking items in inventory.
2. Make decisions about when to order and how much to order. |
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Term
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Definition
| Inventory counting system which takes physical count of items in inventory made at periodic intervals. |
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| Perpetual Inventory System |
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Definition
| Inventory counting system that keeps track of removals from inventory continuously, thus monitoring current levels of each item. |
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Definition
| Two containers of inventory; reorder when the first is empty. |
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Definition
(Universal Product Code)
Inventory counting technology which uses a bar code printed on a label that has information about the item to which it is attached. |
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Definition
(Radio Frequency Identification)
Inventory counting technology that uses radio waves to identify objects, such as goods in supply chains. |
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Definition
| Inventories are necessary to satisfy customer demands, so it is important to have a reliable estimate of the amount and timing of demand. |
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Definition
| Time interval between ordering and receiving the order. |
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Term
| Point-of-Sale (POS) Systems |
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Definition
| A system that electronically records actual sales. |
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Definition
| Classifying inventory according to some measure of importance, and allocating control efforts accordingly. |
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| A physical count of items in inventory. |
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Term
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Definition
Annual Holding Cost + Annual Ordering Cost
= (Q/2)H + (D/Q)H
where:
Q = order quantity in units
H = holding (carrying) cost per unit
D = demand, usually in unit per year
S = ordering cost |
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Definition
Economic Order Quantity
Q* = sqrt(2DS/H) |
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Definition
| Price reduction offered to customers for placing large orders. |
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Definition
Economic Production Quantity
Q*p = sqrt(2DS/H) x sqrt(p/(p-u)) |
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Definition
When the quantity on hand of an item drops to this amount, the item is reordered.
(ROP) |
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Definition
ROP = d x LT
where
d = demand rate
LT = lead time |
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Definition
| Stock that is held in excess of expected demand due to variable demand and/or lead time. |
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Term
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Definition
The probability that demand will not exceed supply during lead time.
Service Level = 100% - Stockout Risk |
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| Fixed-Order-Interval (FOI) Model |
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Definition
| Orders are placed at fixed time intervals. |
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Term
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Definition
| Model for ordering perishables and other items with limited useful lives. |
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