final

Question 1

Supply Planning

Answer 1

the element of supply chain management
responsible for determining how best to satisfy the requirements satisfy the requirements
created by the Demand Plan
* balance supply and demand while making company profitable/low cost

Question 2

Supply planning processes

Answer 2

Distribution Requirements Planning (DRP)

Production Planning and Master Production Scheduling (MPS)

Materials Requirement Planning (MRP)

Inventory Management (across all stages)

Question 3

Distribution Requirements Planning (DRP)

Answer 3

calculates the right amount of the right
product to go to the right place at the right time

Question 4

Production Planning

Answer 4

assess 1) if the site has the capacity to make the product, and 2) how to schedule the different
products effectively.

Question 5

Materials planning

Answer 5

calculates the need for additional
materials based on the quantities needed for production

Question 6

Make to Stock Strategy

Answer 6

In a Make to Stock Strategy, Finished goods inventory is placed at the warehouse based on a forecast. This supports immediate customer fulfillment. Inventory may be place in other stages as well to support the overall operation.

Question 7

supply chain tensions

Answer 7

max customer service, minimize inventory, min operating costs

Question 8

cycle stock

Answer 8

the inventory driven by order quantities. This can be in materials, production or transportation.
(average cycle stock = EOQ/2)

Question 9

safety stock

Answer 9

held to guard against variations in
demand and supply to prevent stock outs and maintain customer service levels
constant supply and demand you know exactly
when to order to bring your safety stock down to zero

safety stock = std dev demand x square root of lead time*z score for desired service level

Question 10

The Bullwhip Effect

Answer 10

small changes in the front of the supply
chain cause larger and larger distortions upstream

Question 11

Supply vs demand planning

Answer 11

Unlike demand planning, supply planning has less gray area
- More calculations and less guessing
- Scenario planning can help with input uncertainty
But supply planning must synchronize and check activities
between different stage

Question 12

chase strategy

Answer 12

Forecast customer demand
* Plan distribution, manufacturing, and materials sequentially
* Adjust to changes in plan through system

Question 13

pull based replenishment

Answer 13

Drive replenishment based on consumption, not forecast (but
with some estimation of demand, usually historical view)
- Common examples: Re-order point, Min-Max, Kanban

Question 14

Need inventory?

Answer 14

Organizations create inventory so that they can compensate for the
differences in timing between supply and demand

Question 15

too much inventory

Answer 15

• ties up capital (Inventory is a “controllable” part of Working Capital)
  -more space needed
  -holding costs
  -liability
• insurance

Question 16

types of inventory

Answer 16

work in process, raw materials, finished goods

Question 17

drivers of inventory

Answer 17

service, time, uncertainty, economics

Question 18

risk pooling

Answer 18

moving from two distributions to one center

Question 19

time phased planning method

Answer 19

use future requirements to order and place inventory in time of demand (DRP, MRP)

Question 20

consumption based planning methods

Answer 20

place inventory
up front, then use actual demand to trigger order for
replenishment (KanBan, Re order point, min max planning )

Question 21

EOQ economic order quantity

Answer 21

fixed-order quantity model where the sum of the annual order costs & the
annual inventory carrying costs is minimized annual inventory carrying costs is minimized

Question 22

EOQ equation

Answer 22

EOQ = sqrt( 2 x Order Cost x Annual Demand Volume/
Annual Carrying Cost % x Unit Cost)

Question 23

ROP (reorder point)

Answer 23

The lowest inventory level at which a new order must be placed to avoid a stock out

Question 24

ROP equation

Answer 24

D x LT + SS

Question 25

Kanban system (bin)

Answer 25

look only at the next stage of production
and determine what is needed there, and then we produce only that
When the inventory in the first bin has been depleted, an order is placed to
refill or replace the inventory.
 The second bin is set up to hold enough inventory to cover demand during the
replenishment lead time so as to last until the replacement order arrives

Question 26

push system

Answer 26

we look at the schedule to determine what to produce next

Question 27

Master Production schedule

Answer 27

lists the exact end
items to be produced by a specific period

Question 28

time fencing (firmed and planned time period)

Question 29

Firmed Time Period

Answer 29

established at the outer limit of this period to signify when changes can no longer be made by the MPS

Question 30

Planned Time Period

Answer 30

MPS is free to make changes

Question 31

discrete Available to Promise

Answer 31

(on hand + supply – ordered

Question 32

Cumulative Available-to-Promise

Answer 32

Current period (on hand + supply –
ordered) – all future ordered /
forecast demand until next MPS
quantity
Available to Promise (ATP)

Question 33

Planned utilization %

Answer 33

planned hours/ hours available *100%

Question 34

Theory of constraints

Answer 34

Schedules should be based on a view of all the constraints at any one time and
not based on lead times which arise from schedules that cannot anticipate bottlenecks

Question 35

Materials Requirement planning

Answer 35

uses the planned
production requirements as an input to understand what is
needed using bill of materials and schedule

Question 36

Bill of Materials

Answer 36

document that shows an inclusive listing of all
component parts and assemblies making up the final product.