Final Exam Review Flashcards
Order Management
The process you use to take, process and fill customer orders
Costs of stock-outs
Lost revenues, loss of reputation, loss of follow-on business
Costs of overstocks
Opportunity costs (money could be better spent elsewhere, on better selling products), holding costs, disposal costs
3 core questions for getting inventory right
- What does an effective and responsive order fulfillment system look like?
- How can you effectively coordinate order management across intra- and intro-firm decision makers?
- How can you improve quality of forecasts?
7 rights of logistics
Product, customer, place, time, condition, cost, quantity
____ is the most basic output of an order fulfillment system.
Product availability
The overall likelihood of a perfect order is ____%.
85%
An integrated business management process through which the executive leadership team continually achieves focus alignment and synchronization among all functions of the organization.
This includes product review, demand review and supply review.
Internal sales and operations planning (S&OP)
A global, industry-wide process for trading partners to increase forecasting effectiveness through use of joint business planning process and common interfaces.
This includes strategy and planning, demand and supply management, execution and analysis.
External CPFR
- Collaborate with internal departments
- Detailed sharing of information
- Break down barriers, promote responsibility
Features of S&OP
- Collaborate with major customers
- Detailed sharing of information to help lower inventory
- Deals with suppliers as well as customers
Features of CPFR
Complexity, ownership, uncertainty
Challenges of effective order management
2 types of forecasting methods
Quantitative and Qualitative
Forecasting demand through speaking to and surveying customers and experts
Qualitative forecasting
Either correlational or time-series forecasting
Quantitative forecasting
Forecasting using an “X predicts Y model”
Correlational forecasting
Forecasting new values through examining and analyzing old values
Time-series forecasting
2 forms of logistics information
Coordinating flows and operating flows
A type of logistics information which facilitates planning across a firm and supply chain
Coordinating flows
A type of logistics information which facilitates the day-to-day order fulfillment processes
Operating flows
4 components of logistics information systems
- Order processing
- Decision support team,
- Research and intelligence
- Reports and outputs system
- Deals with smaller, more frequent orders
- Involves extensive delivery networks
- Involves final consumers
Features of online retailing
- Deals with fewer, larger orders
- Transportation methods vary by request of buyer
- Involves resellers
Features of in-store retailing
Product movement
The movement of inventory to specified destinations
Transportation is more than ___% of the cost of logistics
60%
6 participants of transportation
- Shipper / consignee
- Carrier
- Agent
- Government
- Public
- Internet
2 concerns (regulations) of government with transportation
economic regulation and social regulation
Great access, high performing and reliable
Features of trucks
Large volume, long distance, best in USA
Features of rail
Cheap but slow
Features of water
Highest value / most time-sensitive products, fast + expensive + secure
Features of air
Economy of scale for transportation
The cost per unit weight decreases as the size of the shipment increases
Economy of distance for transportation
The cost per unit weight decreases as the distance increases
Economy of distance is also called the “_____.”
Tapering principal
Inventory turnover measures ____.
The number of times inventory is depleted and replenished in a year
Dwell time measures ____.
How efficiently inventory moves through a supply chain
In-stock rate measures ____.
Stock-out frequencies and in-stock frequencies
Fill rate measures ____.
How much customer demand was satisfied without any stock-outs - this is a compliment of the in-stock rate
2 major sources of uncertainty
- Demand
2. Performance cycle (our own logistics)
Lead-time demand ordering is used when ____.
Order quantities change based on projected demand
Lead-time demand ordering may be used when ordering ___ valuable products with ___ risk for obsolescence.
More, greater
Fixed-order quantity ordering
- Used when the interval between ordering new orders will vary based on demand, but the quantity of each order remains constant
- Requires constant monitoring of inventory
Fixed-order interval ordering
- Used when the quantity of orders varies based on demand, but the intervals between each order remain constant
- Requires demand forecasts for each interval
4 inventory carrying cost allocations
- Capital costs (the inventory itself)
- Inventory service costs (insurance, taxes)
- Storage space costs (warehouses)
- Inventory risk costs (damage, obsolescence, etc.)
Inventory turns equation
COGS / average inventory
4 inventory reduction strategies
- Forecasting
- Inventory centralization
- Postponement
- Supply chain inventory coordination
4 possible advantages of warehousing
- Quick lead times to customers
- Consolidation opportunities
- Storage of inventory
- Product mixing
Manufacturing support warehouses
Warehouses which help to bring manufacturing plants the exact mix of materials required, in order to increase efficiency
Mixing warehouses
Warehouses which help to bring customers specific mixes of products
Consolidation warehouses
Warehouses which help to consolidate many smaller orders into fewer larger ones
Breakbulk warehouses
Warehouses which help to breakdown and sort large shipments into smaller ones
- Operated by 3rd party
- Multiple customers
- Less customization
Features of public warehouses
- Operated by 3rd party
- Longer term contracts
- Usually 1 client per facility
Features of contract warehouses
Operated by a single organization using it for inventory
Feature of a private warehouse
____ warehouses are best.
Automated, private
Square root law definition
A law which determines how inventory will change to account for uncertainty in demand as number of warehouse locations changes
Square root law formula
Total inventory in potential facilities =
total inventory in existing facilities / square root of (number of potential facilities / number of existing facilities
