Exam 3 Flashcards
What are the two broad categories of Forecasting Methods?
Qualitative and Quantitiative
What can Forecasts help with?
- Determining how much inventory is needed
- How much product to make
- How much material to purchase from suppliers
Is it possible to have completely accurate forecasts?
NO - they are NEVER possible
What are the three types of Forecasting Methods?
Time Series Methods: primarily uses historical data
Regression Methods: attempt to develop (or find) relationships between demand and factors that may affect it
Qualitative Methods: uses management judgement, expertise, and opinion to make forecasts
Who mostly does Consumer Research?
the marketing team
What is the Delphi Method?
acquire informed judgements and opinions from knowledgable individuals using a series of questionnaires
What is the objective of Inventory? What is key?
keep enough inventory to meet customer demand and also be cost effective
Key to find HOW MUCH to order and WHEN to order
What are the different types of Inventory Costs?
Carrying (or holding) Costs: facility storage (rent, depreciation, power, heat, etc.), material handling (equipment), labor, record keeping, borrowing to purchase inventory, production deterioration breakage, etc.
Ordering Costs
Shortage Costs - loss of sales
What is the ABC classification system?
a method for classifying inventory according to several criteria including its DOLLAR VALUE to the firm
-Typically a small percentage of items of very high dollar (5 - 15% of all inventory accounts)
-70-80% of the total dollar value of inventory
A - Tight inventory control
B and C - More relaxed
What is the Economic Order Quantity Basic Model?
Determine the optimal order size that minimizes the sum of carrying costs and ordering costs
What are the assumptions of the Economic Order Quantity Basic Model?
-Demand is known
-No shortages are allowed
-Lead time for the receipt of orders is constant
-The order quantity is received all at once
What is Lean Production?
An integrated management system that emphasizes the ELIMINATION of waste and the continuous IMPROVEMENT of operations
What are some benefits of Lean Production?
- Reduced Inventory
- Improved Quality
- Lower Costs
- Reduced Space Requirements
- Shorter Lead Time
- Increase Productivity
What are the Seven Wastes?
- Overproduction
- Waiting
- Transporting
- Overprocessing
- Inventory
- Movement
- Defects
What is Muda?
“Waste;” anything other than that which adds value to the product or service
