Exam Revision (WK1 - WK4)

Question 1

Supply Chain Management

Answer 1

Activities conducted by interconnected businesses who are involved in the ultimate provision of the product and services required by end customers

Question 2

Logistics

Answer 2

Physical work required to move and position inventory throughout supply chain

Question 3

Demand Management

Answer 3

Focused efforts to estimate and manage customers demand, with the intention of using that information to shape operating decisions

Question 4

What are the areas of SCM?

Answer 4

Order Management
Inventory
Transportation
Warehousing
Material Handling & Packaging

Question 5

2 Internal Balancing Methods (Customer Demand)

Answer 5

Safety Stock - Emergency stock to handle sudden demand

Production Flexibility - Ability to change inputs, production parameters and more to cope with changes in demand

Question 6

2 External Balancing Methods (Customer Demand)

Answer 6

Controlling customer purchase behaviour

Price Method: Changing price

Lead Time Method: Changing fulfillment time

Question 7

Order Management

Answer 7

Everything involved in receiving, fulfilling and shipping customer orders

Question 8

Customer Service

Answer 8

All information flows, products flow and cash flows between an organisation and its customers

Question 9

Order to Cash Cycle

Answer 9

All activities that occur from when an order is received to its delivery

Question 10

Replenishment Cycle

Answer 10

Refers to acquisition of inventory, which is delivery inventory for someone else

Question 11

Aspects of Customer Service

Answer 11

PHILOSOPHY
Organisation wide commitment

PERFORMANCE MEASURE
Strategic, Tactical and Operational Metrics

ACTIVITY
Task to be performed

Question 12

Customer Relationship Management

Answer 12

Strategically positioning customers to improve profitability

Question 13

Steps of Customer Relationship Management

Answer 13

1) Segment the Customer Base by Profitability
2) Identify Product Package for each customer segment
3) Develop and execute best process
4) Measure performance and continuously improve

Question 14

Activity Based Costing

Answer 14

Resources assigned to activities, then activities assigned to cost objects based on use

Question 15

Cost of Stockouts

Answer 15

Customer waits then buys
Customer buys then waits

Customer buys elsewhere this time
Customer buys elsewhere from now on

Question 16

Ultimate measure of supply chain and logistics performance

Answer 16

Product Availability

Question 17

4 Metrics for Measuring Order Management Effectiveness

Answer 17

INTERNAL

• Item Fill Rate (% In Stock Available to Fill Order)
• Line Fill Rate (% Stock Available for Each Product in Mixed Order)

EXTERNAL

• Order Fill Rate (% Orders Filled Completely)
• Perfect Order (% on time, right stock, right billing)

Question 18

Logistics Operations Responsiveness

Answer 18

How well a seller can respond to buyers needs

By Customising to Unique Needs

By adapting to sudden change in demand pattern

Question 19

Inventory

Answer 19

Goods and materials held by organisation for sale or use

OR Items held in stock

Question 20

Why keep inventory?

Answer 20

• Reduce risk in Supply
• Combat Uncertainty in Demand
• Replenish in demand items quickly

Question 21

What is Just-In-Time Manufacturing?

Answer 21

• Zero Inventories
• Short, Consistent Lead Times
• Small, Frequent Replenishments
• Zero Defects

Question 22

Inventory Costs

Answer 22

CAPITAL COST
Capital spent on inventory, can’t invest elsewhere. Loans/Borrowed Money

STORAGE SPACE COST
Handling and moving products. Rent, Heat, Lights

INVENTORY SERVICE COST
Insurance and Taxes

INVENTORY RISK COST
Inventory value may decline beyond control

Question 23

Fixed Order Quantity Model (FOQ)

Answer 23

Ordering a fixed amount of product each time reordering takes place