Exam 3 Flashcards
What is sales and operations planning?
a process that helps firms provide better customer service, lower inventory, shorten customer lead times.
What does the sales and operations planning process consist of?
The process consists of a series of meetings, finishing with a high-level meeting where key decisions are made
What is a pure strategy?
when just one of these approaches is used to absorb demand fluctuations
What is a mixed strategy?
when two or more of the approaches are used
What are the pure planning strategies?
- chase
- stable workforce (variable work hours)
- level
What is a chase strategy?
Match the production rate by hiring and laying off employees
What is a stable work force (variable work hours strategy)?
Vary the number of hours worked through flexible work schedules or overtime
What is level strategy?
Demand changes are absorbed by fluctuating inventory levels, order backlogs, and lost sales
What are the relevant costs?
- basic production costs
- changes in production rate
- inventory holding costs
- back order costs
What is yield management?
variable pricing strategy based on anticipating and influencing customer behavior. Example airlines
When can you use yield managment?
- fixed costs are high and variable costs are low
- inventory is perishable
- product can be sold in advance
- demand is highly variable
- demand can be segmented by customer.
What is dependant demand?
the demand for a product or service caused by the demand for other products or services
What is independent demand?
the demand for a product or service that cannot be derived directly from that of other products
What are the types of forecasting?
- Causal relationships (e.g. regression)
- Time series analysis (e.g. moving averages)
- Qualitative (e.g. focus groups)
- Simulation (e.g. climate models)
What are the components of demand?
- Average demand for a period of time
- Trend
- Seasonal element
- Cyclical elements
- Random variation
- Autocorrelation
What are the types of trends?
- linear
- s curve
- asymptotic
- exponential
What are the inventory costs?
- Holding (or carrying) costs
- Setup (or production change) costs
- Ordering costs
- Shortage costs
What is the purpose of inventory?
- To maintain the independence of operations
- To meet variation in product demand
- To allow flexibility in production scheduling
- To provide a safeguard for variation in raw material delivery time
- To take advantage of economic purchase-order size
What is single-period inventory model?
One time purchasing decision where after the time has passed the inventory has no value. (Example: vendor selling t-shirts at a football game)
Seeks to balance the costs of inventory overstock and under stock
What is fixed order quantity model?
An inventory management system in which replenishment stock is ordered when the stock reaches a reorder point
What is fixed time period model?
This is an inventory management system in which inventory is counted and reorder is placed in pre-determined intervals, such as a week or a month.
What is inventory accuracy?
refers to how well the inventory records agree with physical count
What is cycle counting?
a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year
What is logistics?
the art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities
What is third party logistics?
an outside company used to handle logistics functions
What are links?
How the material will be transported. Example truck or ship.
What is the benefit of using a truck?
great flexibility
What is the benefits and cons of using a ship?
high capacity and low cost but slow.
What are the pros and cons of using a plane?
fast but expensive
What is the pros and cons of using a train?
low cost but slow and variable
What are the pros and cons of using a pipeline?
highly specialized and limited to liquids, gases, and solids in slurry form
What is hand delivery?
The last step in many supply chains
What is hub and spoke system?
the sole purpose of the warehouse (the hub) is sorting goods to consolidation areas, where each area is designed for shipment to a specific location
What is cross docking?
Cross-docking is an operational procedure where products are directly transferred from incoming to outbound transport. Example buildings by NM Elite
What are the issues in facility location?
- proximity to customers
- business climate
- total costs
- infastructure
What is proximity to customers
makes rapid delivery easier
What is business climate?
if you are welcome in the community
What is total costs
object is to minimize overall costs
What is infrastructure?
adequate road, rail, air, and sea transportation along with energy and telecommunications
What is the essence of lean?
- customer value
- waste
- value chain
What is customer value?
something for which the customer is willing to pay
What is waste?
anything that does not add value from the customer’s perspective.
What is value chain?
each step in the supply chain should create value
What are the seven common forms of waste?
- Waste from overproduction
- Waste of waiting time
- Transportation waste
- Inventory waste
- Processing waste
- Waste of motion
- Waste from product defects
What is value stream mapping?
a special type of flowcharting tool for development of lean processes
What are lean design principles?
- lean layouts
- lean production schedules
- lean supply chains
What are the lean layouts?
- group technology
- quality at the source
- JIT production
What is group technology?
Lean layout principle in which similar parts are grouped into families. eliminates extra movements and que time between operations. reduces inventory and reduces employees.
What is quality at the source?
Do it right the first time and if something goes wrong stop the process immediately.
What is inventory reduction?
Producing what is needed and nothing more. Anything over the minimum is waste. Reducing inventory exposes problems that where otherwise hidden example the river problem.
What are the production schedules?
- level schedules
- freeze windows
- backflush
- uniform plant loading
What is level schedules?
A schedule that pulls material into final assembly at a constant rate.
What is freeze windows?
that period of time during which the schedule is fixed and no changes are possible
What is backflush?
Calculating how many of each part were used in production and then using that to update the inventory
What is uniform plant loading?
smoothing the production flow to dampen the reaction waves that normally occur from schedule variations. AKA making small and minor adjustments
What is minimized setup times SMED?
Reductions in setup and change over times are neccessary to achieve a smooth flow. SMED single minute exhchange of die is a method used to reduce setup times and therefore cost.
What are lean suppliers?
able to respond to change and have lower prices with higher quality.
What is lean procurement?
the key is automation e-procurement. Suppliers must see into the customer’s operations and customers must see into their supplier’s operation.
What is lean warehousing?
eliminate nonvalue added steps and waste in the storage process.
What makes up Lean logistics/ what is it?
Optimized mode selection and pooling orders Combined multi-stop truckloads Optimized routing Cross docking Import/export transportation processes Backhaul minimization
What is lean customers?
Understand their business needs
Value speed and flexibility
Establish effective partnerships with suppliers
What are specialized plants?
Small specialized plants rather than large vertically integrated manufacturing facilities. Can be constructed and operated cheaper
What does it mean to work closely with suppliers?
Share projections with suppliers, and Link with suppliers online
Why must firms work together in the supply chain?
Firms must work together to eliminate waste so overall target cost and ROI targets are met
What is lean layouts?
plant layout designed to ensure balanced workflow with minimum WIP inventory. Preventative maintenance is done by the workers to prevent down time
What is a pull system?
system that is based on providing the next downstream customer with what they need when they need it. Enables JIT production. Replenshing resources when they are needed.
What is a kanban?
Japanese word for sign or instruction card. Used to let people know when the optimal time to replace materials is.
What are the tradeoffs of fixed order quantity models?
Cannot combine deliveries. Inventory remaining must be continually monitored.
What are the benefits of fixed order quantity models?
Event triggered, requires less average inventory
What are the tradeoffs of fixed time period models?
requires a larger average inventory.
What are the pros to fixed time period models?
counting takes place only at the review period. Can combine deliveries.
What is an asymptotic trend
Opposite of an exponential trend.
What is casual relationships forecasting?
the technique that assumes that the variable to be forecast has a cause-effect relationship with one or more other independent variables. Example regression
What is time series forecasting?
A forecast in which past demand data is used to predict future demand. Examples moving averages
What is qualitative forecasting?
using the opinions of experts. Example focus groups
What is simulation forecasting?
Simulations allow you to perform automated what-if analysis on your Strategic Modeling models, optimizing your decision making
When should you use linear regression?
10-20 observations for seasonally at least 5 observations per season. The data pattern is stationary trend and sesonality. and forecast horizon is short to medium
When should you use a simple moving average?
6-12 months of weekly data. Data should not be stationary and the forecast horizon is short.
When should you use weighted moving average and simple exponential smoothing?
5-10 observations needed. data should be stationary. and forcast horizon is short.
When should you use exponential smoothing with trend?
5-10 observations needed to start. data pattern is stationary and trend. forecast horizon is short.
