Ch 8

Question 1

Time-based strategies

Answer 1

Relate directly to the flow of materials and services, inventories, and related information and decisions

Question 2

Kanban

Answer 2

Pull system

Question 3

MRP

Answer 3

Material requirements planning
Attempt to support the activities, maintenance or use by meeting the needs of the master schedule,
-needs an accurate bill of materials for each final product or project

Question 4

Quantitative forecasting

Answer 4

Uses past data to predict the future

-causal madness are developed

Question 5

Dependent demand

Answer 5

Item is part of a larger component or product, and it’s use is dependent on the production schedule for the larger component
-derived demand

Question 6

Independent demand

Answer 6

Usage of the inventory item is not driven by the production schedule

• determined directly by customer orders, arrival of which is independent or production scheduling decisions
• ex: demand for energy drinks

Question 7

Fixed quantity model

Answer 7

To minimize the total annual costs

-Orders are placed when the reorder point is reached

Question 8

Fixed period models

Answer 8

Orders are placed only at review time.

• inventory level must be adjusted to prevent stock outs during the review period and lead time
• attempt to determine the optimal order period

Question 9

Buffer or safety stocks and service levels

Answer 9

The major decision variable is how much buffer inventory to carry to give the desired service coverage
-service coverage can be defines as the portion of users requests served, (portion of demand serviced immediately)

Question 10

MRP inputs

Answer 10

1. Master production schedule- how many end items are to be produced during a specified time period
2. Structured bill of materials (BOM)- info from engineering and/or process to detail the subcomponents necessary to manufacture one finished item
3. Inventory record- contains info such as open orders, lead times, and lot size policy to qty and timing of orders can be calculated

How much and when to order

Question 11

MRP lot sizing

Answer 11

Rules bust be assigned to each item before the MRP plan can be computed
-important because it affects inventory holding costs and operation costs, (setup costs)

Question 12

Lot sizing rules

Answer 12

1. Lot-for-lot : most common technique, does not take into account setup costs, carrying cost, or capacity limitations
2. Economic order quantity (EOQ): balances inventory holding and setup (or order) costs
3. Least total cost (LTC) : compare the cost implications of various lot sizing alts and selects the lot size that provides the least total cost
   - dynamic lot sizing technique
4. Least unit cost : dynamic, factors inventory holding and setup costs into the unit cost

Difficult with MRP, requires annual demand information, accuracy of the data will determine the effectiveness of the decisions made

Question 13

Transit or pipeline inventories

Answer 13

Used to stock supply and distribution pipelines linking an org to its suppliers and customers as well as internal transportation points.
- need to move material from one point to another

Question 14

Forms of inventory

Answer 14

1. Raw materials, purchased parts, and packaging
2. Work in process
3. Finished goods
4. MRO items
5. Resale items

Question 15

Carrying, holding, or possession cost

Answer 15

Handling charges, the cost of storage facilities or warehouse rentals, storage, labor and operating costs

-cost to carry inventory is very high

Question 16

Ordering or purchase costs

Answer 16

Managerial, clerical, material, telephone, mailing, fax, email, accounting, transportation, inspection, and receiving costs associated with a purchase or production order

Question 17

Set up costs

Answer 17

All the costs of setting up a production run

• substantial
• learning related factors as early spoilage and low production output until standard rates are achieved

Question 18

Stock out costs

Answer 18

Not having the required parts or materials on hand when and where they are needed
-lost contribution on sales, changeover costs necessitated by the shortage, sub of less suitable or more expensive parts or materials, labor and machine idle time, etc

• difficult to asses accurately
• larger than carrying cost
• similar for late delivery or quantify shortfalls

Question 19

Variation in delivered costs

Answer 19

Associated with purchasing in qtys or at times when prices or delivery costs are higher than at other quantities or times

Question 20

Kanban control systems

Answer 20

Make JIT production work

• not synonymous with JIT
• “card”
• require small lot size features of JIT and discrete production units
• most useful for high volumes parts used on a regular basis
• less useful for expensive or large items that cost a lot to store or carry, irregularly used items

Question 21

Two types of Kanban systems

Answer 21

1. Single card - c-kanban

2. Double card - conveyance (c-Kanban) and production (p-kanban) THEY HAVE RULES pg 225