Term
|
Definition
| the capability of a worker, machine, work center, plant, or organization to produce output per time period. |
|
|
Term
| companies measure capacity in what ways? |
|
Definition
| inputs, outputs, or a combination of the two. |
|
|
Term
| what is theoretical capacity? |
|
Definition
| the maximum output capability, allowing for no adjustments for preventive maintenance, unplanned downtime, or the like |
|
|
Term
|
Definition
| the long term, expected output capability of a resource or system. |
|
|
Term
| What are some factors that affect capacity? |
|
Definition
| number of shifts or lines active at any time. product variations, conformance quality. |
|
|
Term
| What is the formula for capacity? |
|
Definition
| capacity = ( 800 units per line per shift )( number of lines)(number of shifts) |
|
|
Term
| A firm's capacity concerns certainly arent limited to just its activities, what else must it consider? |
|
Definition
| capacities of key suppliers and distributions. |
|
|
Term
| What is lead capacity strategy? |
|
Definition
| a capacity strategy in which capacity is added in anticipation of demand. |
|
|
Term
| What is lag capacity strategy? |
|
Definition
| a capacity strategy in which capacity is added only after the demand has materialized. |
|
|
Term
| What is match capacity strategy? |
|
Definition
| A capacity strategy that strikes a balance between the lead and lag capacity strategies by avoiding periods or high under or over utilization. |
|
|
Term
| what is the virtual supply chain? |
|
Definition
| a collection of firms that typically exists for only a short period. virtual supply chains are more flexible than traditional supply chains but less efficient. |
|
|
Term
|
Definition
| the expenses an organization incurs regardless of the level of business activity. |
|
|
Term
|
Definition
| expenses directly tied to the level of business activity. |
|
|
Term
| What is the indifference point? |
|
Definition
| the output level at which two capacity alternatives generate equal costs. |
|
|
Term
| Knowing the cost structure and capacity alternatives is important, but not enough, what else is needed. |
|
Definition
| managers must also know something about the expected demand levels. |
|
|
Term
| what is the expected value? |
|
Definition
| a calculation that summarizes the expected costs, revenues, or profits of a capacity alternative based on several demand levels, each of which has a different probability. |
|
|
Term
| What are the major steps of the expected value approach? |
|
Definition
1.) identify several different demand level scenarios. These scenarios are not meant to identify all possible outcomes. Rather, the intent is to approximate the range of possible outcomes.
2.) assign a probability to each demand level scenario.
3.) calculate the expected value of each alternative. this is done by multiplying the expected financial result ( cost, revenue, or profit) at each demand level by the probability of each demand level and then summing across all levels. |
|
|
Term
|
Definition
| a visual tool that decision makers use to evaluate capacity decisions. the main advantage of a decision tree is that the users can see the interrelationships between decisions and possible outcomes. |
|
|
Term
| what are the basic rules for a decision tree? |
|
Definition
1.) draw the tree from left to right, starting with a decision point or outcome point, and develop branches from there.
2.) each decision point is represented by a square, with the different branches coming out of the square representing alternative choices.
3.) outcome points ( which are beyond the control of the decision maker ) are represented by circles. each possible outcome is represented by a branch off of the circle. each branch is assigned a probability, indicating the possibility of that outcome, and the total probability for all branches coming out of an outcome point must equal 100%.
4.) for expected value problems, calculate the financial result for each of the smaller branches, and move backward by calculating weighted averages for the branches, based on their probabilities. |
|
|
Term
| What is the break even point? |
|
Definition
| the volume level for a business at which total revenues cover total costs. FC / R - VC . R= revenue per unit of business activity. |
|
|
Term
| not all capacity problems can be solved using quantitative models, what are some other considerations? |
|
Definition
the strategic importance of an activity to the firm.
the desired degree of managerial control
the need for flexibility. |
|
|
Term
| What is the theory of constraints? |
|
Definition
| An approach to visualizing and managing capacity that recognizes that nearly all products and services are created through a series of linked processes, and in every case there is at least one process step that limits throughput for the entire chain. |
|
|
Term
|
Definition
| the process step or steps that limits throughput for an entire process chain. |
|
|
Term
| what is the constraint process? |
|
Definition
1.) identify the constraint
2.) exploit the constraint
3.) subordinate everything to the constraint
4.) elevate the contraint
5.) find the new constraint and repeat the steps. |
|
|
Term
| What is the waiting line theory? |
|
Definition
| A body of theory based on applied statistics that helps managers evaluate the relationship between capacity decisions and such important performance issues as waiting time and line lengths. |
|
|
Term
| what questions arise from the waiting line theory? |
|
Definition
1.) what percentage of the time will the server be busy?
2.) on average how long will a customer have to wait in line.
3.) how many customers will be in line.
4.) how will these averages be affected by the arrival rate of customers and the service rate of the drive up window personnel. |
|
|
Term
|
Definition
| rules for determining which customer, job, or product is processed next in a waiting line environment. |
|
|
Term
| In operations and supply chain environments that must deal with random demand, it is virtually impossible to achieve very high capacity utilization levels and: |
|
Definition
| still provide acceptable customer service. |
|
|
Term
| What is the learning curve theory? |
|
Definition
| a body of theory based on applied statistics that suggests that productivity levels can improve at a predictable rate as people and even systems learn to do tasks more efficiently. In formal terms, the theory states that for every doubling of cumulative output there is a set percentage reduction in the amount of inputs required. |
|
|
Term
| What are some assumptions behind the waiting line theory. |
|
Definition
arrivals- customers are assumed to arrive at random intervals
service times- will be either constant or vary
customers are served on a first come first serve basis.
customers enter the system and remain there until they are served, regardless of the length of the line or time spent waiting. |
|
|
Term
| What does APICS define simulation as? |
|
Definition
| the technique of using representative or artificial data to reproduce a model various condition that are likely to occur in the actual performance of a system. |
|
|
Term
| what are some advantages of simulation models? |
|
Definition
1.) offline evaluation of new processes or process changes.
2.) time compression
3.) What if analyses |
|
|
Term
| What are some disadvantages of simulation. |
|
Definition
1.) it is still a simulation
2.) the more realistic a simulation model is, the more costly it will be to develop and the more difficult it will be to interpret.
3.) simulation models do not provide an optimal solution. |
|
|
Term
| What is a monte carlo simulation? |
|
Definition
| a technique in which statistical sampling is used to generate outcomes for a large number of trials. the results of these trials are then evaluated to gain insight into the system of interest. |
|
|
Term
| What are the steps in building and evaluating simulation models with simquick |
|
Definition
1.) develop a picture of the system to be modeled. the process mapping material is useful.
2.) Identify the objects, elements, and probability distributions that define the system. Objects are the people or products that move through the system, and elements are peices of the system itself, such as lines, workstations, and entrance and exit points.
3.) determine the experimental conditions and required output information. Many simulation packages provide the user with options regarding the output reports that are generated.
4.) build and test the simulation model for your system, and capture and evaluate the relevant data. |
|
|
Term
|
Definition
| An estimate of the future level of some variable. Common variables that are forecasted include demand levels, supply levels, and prices. |
|
|
Term
| what do forecasting approaches depend on? |
|
Definition
| informal human judgements, statistical models and past data. |
|
|
Term
| What are some laws of forecasting? |
|
Definition
1) forecasts are almost always wrong
2.) Forecasts for the near term tend to be more accurate.
3.) forecasts for groups of products or services tend to be more accurate.
4.) forecasts are no substitute for calculated values. |
|
|
Term
| What is quantitative forecasting models? |
|
Definition
| forecasting models that use measurable, historical data to generate forecasts. Quantitative forecasting models can be divided into two major types: time serious models and causal models. |
|
|
Term
| What is qualitative forecasting techniques? |
|
Definition
| forecasting techniques based on intuition or informed opinion. These techniques are used when data are scarce, not available, or irrelevant. |
|
|
Term
|
Definition
| structured questionnaires submitted to potential customers, often to gauge potential demand. |
|
|
Term
| What is panel consensus forecasting? |
|
Definition
| A qualitative forecasting technique that brings experts together to jointly discuss and develop a forecast. |
|
|
Term
| What is the delphi method? |
|
Definition
| a qualitative forecasting technique that has experts work individually to develop forecasts. The individual forecasts are then shared among the group, after which each participant is allowed to modify his or her forecast based on information from the other experts. This process is repeated until a consensus is reached. |
|
|
Term
| What is the life cycle analogy method |
|
Definition
| a qualitative forecasting technique that attempts to identify the time frames and demand levels for the introduction, growth, maturity, and decline life cycle stages of a new product or service. |
|
|
Term
| What are build up forecasts? |
|
Definition
| a qualitative forecasting technique in which individuals familiar with specific market segments estimate the demand within these segments. These individual forecasts are then added up to get the overall forecast. |
|
|
Term
| what are some questions that arise due to life cycle? |
|
Definition
how long will each stage last?
how rapid will the growth be? how rapid will the decline be?
how large will the overal demand be, especially during the maturity phase. |
|
|
Term
|
Definition
| a series of observations arranged in chronological order. |
|
|
Term
| What are time series forecasting models |
|
Definition
| quantitative forecasting models that use time series to develop forecasts. With a time series model, the chronology of the observations, as well as their values, is important in developing forecasts. |
|
|
Term
|
Definition
| within the context of forecasting, unpredictable movement from one time period to the next. |
|
|
Term
|
Definition
| long term movement up or down a time series. |
|
|
Term
|
Definition
| a repeated pattern of spikes or drops in a time series associated with certain times of the year. |
|
|
Term
| What is the moving average model? |
|
Definition
| a time series forecasting model that derives a forecast by taking an average of recent demand values. |
|
|
Term
| What are smoothing models? |
|
Definition
| Another name for moving average models. The name refers to the fact that using averages to generate forecasts results in forecasts that are less susceptible to random fluctuations in demand |
|
|
Term
| What are weighted moving average models? |
|
Definition
| A form of the moving average model that allows the actual weights applied to past observations to differ. |
|
|
Term
| What is exponential smoothing model |
|
Definition
| a special form of the moving average model in which the forecast for the next period is calculated as the weighted average of the current period's actual value and forecast. |
|
|
Term
| What is adjusted exponential smoothing model? |
|
Definition
| An expanded version of the exponential smoothing model that includes a trend adjustment factor. |
|
|
Term
| What is linear regression? |
|
Definition
| a statistical technique that expresses the forecast variable as a linear function of some independant variable. linear regression can be used to develop both time series and causal forecasting models. |
|
|
Term
| What is the four step process for developing seasonal adjustments? |
|
Definition
1.) For each of the demand values in the time series, calculate the corresponding forecast, using the unadjusted forecast model.
2.) For each demand value, calculate ( demand/ forecast). If the ratio is less than 1, then the forecast model is overforecasted; if it is greater than 1, the model is underforecasted.
3.) If the time series covers multiple years, take average demand/ forecast for corresponding months or quarters to derive the seasonal index, otherwise use demand/ forecast caluclated in step 2 as the seasonal index.
4.) multiply the unadjusted forecast by the seasonal index to get the seasonally adjusted forecast value. |
|
|
Term
| What are causal forecasting models? |
|
Definition
| a class of quantitative forecasting models in which the forecast is modeled as a function of something other than time. |
|
|
Term
| Linear regression can be used to develop causal forecasting models as well as time series forecasting models, the only difference is... |
|
Definition
| that the independant variable, x, is no longer a time period but some other variable. |
|
|
Term
| What is multiple regression? |
|
Definition
| a generalized form of linear regression that allows for more than one independent variable. |
|
|
Term
| What are some measures of forecast accuracy? |
|
Definition
| forecast error, mean forecast error, mean absolute deviation,and tracking signal. |
|
|
Term
| in situations where a company needs to forecast next months demand for thousand of different items, what do they use? |
|
Definition
| computer based forecasting models. |
|
|
Term
| What is Collaborative planning, forecasting, and replenishment? |
|
Definition
| A set of business processes, backed up by information technology, in which members agree to mutual business objectives and measures, develop joint sales and operational plans, and collaborate to generate and update sales forecasts and replenishment plans. |
|
|
Term
| What are some strategic questions raised by the decision to outsource a good? |
|
Definition
What are the pros and cons.
what sourcing strategy would we follow
which supplier is best at meeting out needs.
how many supplier should be used
what major trends will impact the supply market in the years to come. |
|
|
Term
| What is a sourcing decision? |
|
Definition
| High level, of strategic, decisions regarding what products or services will be provided internally, and which will be provided by external supply chain partners. |
|
|
Term
|
Definition
| the use of resources within the firm to provide products or services. |
|
|
Term
|
Definition
| the use of supply chain partners to provide products or services. |
|
|
Term
| What is a make or buy decision? |
|
Definition
|
|
Term
| What are core compentencies? |
|
Definition
| organizational strengths or abilities, developed over a long period, that customers find valuable and competitors find difficult or even impossible to copy. |
|
|
Term
| How can insourcing be risky? |
|
Definition
| it decreases a firms strategic flexibility. Product decisions cannot be easily reversed. |
|
|
Term
| What are some advantages and disadvantages of insourcing. |
|
Definition
adv- high degree of control, ability to oversee the entire process, economies of scale.
disadv- reduced strategic flexibility, required high investment, potential supplers may offer superior products and services. |
|
|
Term
| What are some advantages and disadvantages of outsourcing? |
|
Definition
adv- high strategic flexibility, low investment risk, improved cash flow.
disadv- possibilty of choosing a bad supplier, loss of control over the process and core technologies. |
|
|
Term
| What is total cost analysis? |
|
Definition
| A process by which a firm seeks to identify and quantify all of the major costs associated with various sourcing options. |
|
|
Term
|
Definition
| costs tied directly to the level of operations or supply chain activities, such as the production of a good or service or transportation. |
|
|
Term
|
Definition
| Costs that are not tied directly to the level of operations or supply chain activity. |
|
|
Term
| based on portfolio analysis, how are products sourced? |
|
Definition
based on there...1) their relative complexity and/or the risk impact to the firm
2.) value potential. |
|
|
Term
| What is electronic data interchange? |
|
Definition
| An information technology that allows supply chain partners to transfer data electronically between their information systems. |
|
|
Term
| What is a preferred supplier? |
|
Definition
| A supplier that has demonstrated its performance capabilities through previous purchase contracts, and therefore receives preference during the supplier selection process. |
|
|
Term
|
Definition
| the buying firm depends on a single company for all or nearly all of a particular item or service. |
|
|
Term
| What is multiple sourcing? |
|
Definition
| A sourcing strategy in which the buying firm shares its business across multiple suppliers. |
|
|
Term
|
Definition
| A sourcing strategy in which the company uses a single supplier for a certain part or service in one part of the business, and another supplier with the same capabilities for a similiar part in another area of the business. Each supplier is then awarded new business based on their performance, creating an incentive for them to improve. |
|
|
Term
|
Definition
| A sourcing strategy in which two suppliers are used for the same purchased product or service. |
|
|
Term
| What are some qualitative areas a firm might judge suppliers on? |
|
Definition
1.) process and design capabilities.
2.) Management capability.
3.) financial condition and cost structure.
4.) Environmental regulation compliance'
5.) Longer term relationship potential. |
|
|
Term
| What are multicriteria models? |
|
Definition
| models that allow decision makers to evaluate various alternatives across multiple decision criteria. |
|
|
Term
| What are two trends in supply chain management? |
|
Definition
| supply base reduction, global sourcing. |
|
|
Term
| What are supply chain disruptions. |
|
Definition
| when something like a natural disaster, political events, or anything stops the supplier from delivering the goods to the firm. |
|
|
Term
|
Definition
| the activities associated with identifying needs, locating and selecting suppliers, negotiating terms, and following up to ensure supplier performance. |
|
|
Term
|
Definition
| An activity, typically carried out by purchasing professionals, in which a firm examines spending patterns to identify irregularities or improvement opportunities. |
|
|
Term
| Why is purchasing critical? |
|
Definition
| the changing global competitive landscape, the financial impact of purchasing, and its impact on such performance dimensions as quality, delivery, and technology utilization. |
|
|
Term
|
Definition
| you need to purchase globally. |
|
|
Term
| When much of the firm's revenue is spent on materials and services, purchasing represents a major opportunity to increase profitability through what is known as the |
|
Definition
|
|
Term
| What is cost of goods sold? |
|
Definition
| The purchased cost of goods from outside suppliers. |
|
|
Term
| What is merchandise inventory? |
|
Definition
| A balance sheet item that shows the amount a company paid for the inventory it has on hand at a particular point in time |
|
|
Term
|
Definition
| the ratio of earnings to sales for a given time period. |
|
|
Term
| What is return on assets? |
|
Definition
| A measure of financial performance, generally defined as Earnings/ Total Assets. Higher ROA values are preferred since it indicated that the firm is able to generate higher earnings from the same asset base. |
|
|
Term
| What is the profit leverage effect? |
|
Definition
| A term used to describe the effect that a dollar in cost savings increases pretax profits by one dollar, while a dollar increase in sales only increases pretax profits by the dollar multiplied by the pretax profit margin. |
|
|
Term
| purchased goods and services can have a major effect on other performance dimensions such as: |
|
Definition
| quality, delivery, and the ability to of companies to exploit new technologies. it can also help an organization incorporate state of the art technologies into its products and services. |
|
|
Term
| What is purchasing process? |
|
Definition
1.) needs identification
2.) description
3.) supplier selection and contacting
4.) ordering
5.) follow-up and expediting
6.) receipt and inspection
7.) settlement and payment
8.) records maintenance. |
|
|
Term
| What is the purchase requisition? |
|
Definition
| An internal document completed by a user that informs purchasing of a specific need. |
|
|
Term
| What is a reorder point system? |
|
Definition
| A method to initiate the purchase of routine items. |
|
|
Term
| What is statement of work or scope of work? |
|
Definition
| terms and conditions for purchased service that indicate, among other things, what services will be performed and how the service provider will be evaluated. |
|
|
Term
|
Definition
| the communication of a user's needs to potential suppliers in the most efficient and accurate way possible. |
|
|
Term
| What is description by market grade or industry standard? |
|
Definition
| A description method used when the requirements are well understood and there is a common agreement between supply chain partners about what certain terms mean. |
|
|
Term
| What is description by brand? |
|
Definition
| a description method used when a product or service is proprietary, or when there is a perceived advantage to using a particular supplier's products or services. |
|
|
Term
| What is description by specification? |
|
Definition
| A description method used when an organization needs to provide very detailed descriptions of the characteristics of an item or service. |
|
|
Term
| What is description by performance characteristics? |
|
Definition
| A description method that focuses attention on the outcomes the customer wants, not on the precise configuration of the product or service. |
|
|
Term
| What is maverick spending? |
|
Definition
| spending that occurs when internal customers purchase directly from nonqualified suppliers and bypass established purchasing procedures. |
|
|
Term
| What is a preferred supplier? |
|
Definition
| A supplier that has demonstrated its performance capabilities through previous purchase contracts, and therefore receives preference during the supplier selection process. |
|
|
Term
| What is a request for quotation? |
|
Definition
| A formal request for the suppliers to prepare the bids,based on the terms and conditions set by the buyer. |
|
|
Term
| Competitive bidding is most effective when.. |
|
Definition
| the buying firm can provide qualified suppliers with clear description of the items or services to be purchased. volume is high enough to justify the cost and effort. the buying firm does not have a preferred supplier. |
|
|
Term
| Face to face negotiation is best when? |
|
Definition
| the item may be new or technically complex item with only vague specifications. the purchase requires agreement about a wide range of performance factors. the buyer requires the supplier to participate in the development effort.the supplier cannot determine risks and costs without additional input from the buyer. |
|
|
Term
| What is a price fixed price contract? |
|
Definition
| A type of purchasing contract in which the stated price does not change, regardless of fluctuations in general overall economic conditions, industry competition, levels of supply, market prices, or other enviromental changes. |
|
|
Term
| What is a cost based contract? |
|
Definition
| A type of purchasing contracting in which the price of a good or service is tied to the cost of some key input or other economic factors such as interest rates. |
|
|
Term
| What is a purchase order? |
|
Definition
| A document that authorizes a supplier to deliver a product or service and often includes key terms and conditions such as price, delivery, and quality requirements. |
|
|
Term
| What is electronic data interchange? |
|
Definition
| An information technology that allows supply chain partners to transfer data electronically between their information systems. |
|
|
Term
| What is electronic funds transfer? |
|
Definition
| the automatic transfer of payment from the buyer's bank account to the supplier's bank account. |
|
|
Term
| What is purchase consolidation? |
|
Definition
| the pooling of purchasing requirements across multiple areas in an effort to lower costs. |
|
|
