FINAL PT 2 Flashcards
Prevention Costs
Costs incurred to prevent defects from happening
Appraisal Costs
Costs incurred during the process to monitor quality
Prevention Cost Examples
Training and Development, Product Design
Appraisal Cost Examples
Testing and Inspection, Quality audit
Cost of Quality =
Control Costs + Failure Costs
Internal Failure Costs
Defects discovered BEFORE reaching customer
External Failure Costs
Defects discovered AFTER reaching customer
Internal Failure Cost Example
Lost capacity, inc cycle times
External Failure Cost Example
Customer Service, warranties
Cost increases as…
The product moves through it’s cycle
Every Organization, Person, Product, and/or Service is Part of
The Supply Chain
Basic Components of a Supply Chain
(CS RWDFR) Customer, Service Provider, Retailer, Wholesaler, Distributor, Factory, Raw Materials
Customers define:
Product, Demand, Distribution
Customers
Public, Business, Govt, or any Component Within the Supply Chain
Service Provider
Typically provides people or a nonphysical product
Retailer
Has a place of business to provide direct sale of goods in small quantities to the public for use or consumption rather than resale
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Wholesaler
The sale of goods to anyone other than a standard consumer
Distributer
distribute goods in large quantities and have exclusive rights within a given territory
Factory
Business that produces materials/final product that is either used in other products or sold directly to consumers
The More Complex a Supply Chain Becomes,
THE HIGHER THE RISK
Procurement vs Purchasing
Procurement is purchased in BULK from wholesalers/distributers
Job of Stocking/Distribution?
Delivery to the shelves, kits, and internal consumers of the product
2 Ways to manage the Supply Chain:
By Inspection (less communication), by Certification (robust communication)
Supply Chain Management is a very BIG field and is getting ___________ and ________________
bigger; more complex
Bull Whip Effect
Product shortages or overstocks that increase in severity as one moves up
the supply chain and away from the customer
Bull Whip Effect Causes:
Demand Forecast Uprising, Order Batching, Price Fluctuation, Rationing
Bull Whip Effect Solutions:
Communication, Channel Alignment, Operational Efficiency
5 Reasons to Keep Inventory:
(LSU EA) Lead Time, Seasonal Demand, Uncertainty, Economies of Scale, Appreciation in Value
Stocks in Transit
Inventory in the Logistics Process
Consignment Stocks
Inventory possessed but not owned
Economic Ordering Quantity Formula
Square Root of (2 * Order Cost) * (Demand Rate / Holding Cost)
Optimal Service Level Formula
Stock Out Cost/ (Stock Out Cost + Ordering Cost)
Re-Order Point Formula
NORM.INV(OSL,Mean Demand,Std Dev)
Downsides to Inventory
Obsolescence, Overhead Exp, Space Usage, Complicated Inventory Control
4 Types of Inventory Ordering
Buffer Stock, Just-In-Time, Economic Ordering Quantities, Order Timing
Safety Stock
Minimum amount of inventory held based on std dev/volatility
Quality
The degree to which a product or service meets or exceeds a customer’s needs or expectations.
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Quality Management
Set of activities to maintain quality of products and services
Conformance Quality
The degree of match between specifications and the actual product or service
Barilla’s advertising strategy is
MODERN
Barilla’s promotional strategy is to
Offer discounts because it is expected by customers
