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SCM 2160 > SCM 2160 - Midterm 2 > Flashcards

SCM 2160 - Midterm 2 Flashcards

1
Q

What is a forecast?

A

A prediction of future events used for planning purposes
Based on historical data

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2
Q

What is a time series pattern?

A

Repeated observations of demand for a product/service in order of appearance

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3
Q

What is a horizontal time series pattern?

A

Fluctuation of data around a constant mean (average demand, is relatively consistent)

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4
Q

What is a trend time series pattern?

A

Systematic increase or decrease in the mean over time. Looking at a long time (not just day to day, the long run trend)

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5
Q

What is a seasonal time series pattern?

A

Repeatable pattern of increases or decrease in demand, depending on time of day, week, month, season

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6
Q

What is a cyclical time series pattern?

A

Less predictable, gradual increases in demand over long periods of time (years / decades)

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7
Q

What is a random time series pattern?

A

Un-forecastable variation in demand

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8
Q

What are examples of inputs to use in forecasting?

A

History of past demand
Notes explaining past demand
Past forecasts
Customer research
Planned promotions
Inputs from partners via CPFR

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9
Q

What does CPFR stand for?

A

Collaborative Planning, Forecasting & Replenishment

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10
Q

What does CPFR do?

A

Generate a shared forecast,
independent forecasts are generated and compared, they are adjusted until the forecasts approach consensus

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11
Q

What can CPFR help avoid?

A

It can reduce the bullwhip effect
Avoid stock outs
You can feel more certain that you can satisfy demand (retailer)

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12
Q

What are four popular time series methods?

A

Naive
Simple moving average
Weighted moving average
Exponential smoothing

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13
Q

What is the naive forecast method?

A

Only appropriate for short term forecasts
Sensitive to random variation
Ft+1 = Dt
Forecast for future period = actual demand in most recent period (t)

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14
Q

What is the simple moving average forecast method?

A

Forecast for the next period equals the average demand for n most recent periods
This smooths out random variation

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15
Q

How many periods do you have to wait before starting a simple moving average

A

Since this formula takes the average of previous periods, you need at least two previous periods to take the average of before you can start forecasting with it.

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16
Q

What is a weighted moving average?

A

The forecast for the next period equals the average demand for n most recent periods. Each observation of demand can have its own weight, with the sum = 1
The weights represent the varying amounts of influence of past demand on the forecast

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17
Q

How many periods do you have to wait before starting a simple moving average?

A

You need 3 periods of information, assigning each of those 3 different weights

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18
Q

What is exponential smoothing forecast method?

A

A weighted moving average assigning different levels of weight to recent data compared to older historical data
This requires only three data points:
- last periods forecast
- last periods demand
- smoothing parameter

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19
Q

What does a low ‘a’ value mean for the exponential smoothing forecast?
What does a high a value mean?

A

low value = more smoothing
high value = more responsive to changes

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20
Q

How many periods do you have to wait before starting a exponential smoothing forecast?

A

One period before you can start

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21
Q

What is forecast error?

A

The difference between predicted demand and actual demand

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22
Q

What are the four different methods to measure forecast error?

A

Cumulative sum of forecast errors (CFE)
Mean squared error (MSE)
Mean absolute deviation (MAD)
Mean absolute percentage deviation

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23
Q

What is the cumulative sum of forecast errors (CFE)

A

Assess total error in forecasts overtime

Calculates the error for each forecast then sum

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24
Q

What does it mean when CFE is really negative?

A

forecasts are consistently higher than demand

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25
Q

What does it mean when CFE is highly positive?

A

That the forecast is consistently lower than demand

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26
Q

What is the mean squared error?

A

Indicates on average how close forecast is to demand
Magnifies large errors

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27
Q

What is the mean absolute deviation?

A

Simple measure of magnitude of error, does not reveal directional bias

28
Q

What is mean absolute percentage error?

A

Contextualizes magnitude of error relative to demand

29
Q

What is the definition of inventory?

A

A stock of items including materials, orders, information, and people that flow through or are used in a process to satisfy customer demand

30
Q

What does Little’s Law tell you?

A

That throughput time increases with work in progress

31
Q

What are inventory holding costs?

A

Variable costs of keeping items in inventory, a per unit cost

32
Q

What are ordering costs?

A

The costs associated with the act of placing an order. Fixed cost per order, regardless of the number of units ordered
Example: staffing costs for receiving

33
Q

What is safety stock?

A

Inventory that is held to protect against uncertainty in demand, lead time, processing time, quality and supply

34
Q

What is decoupling?

A

Inventory that accommodates different rates of production in a system

35
Q

What is pipeline inventory?

A

Inventory moving from point to point in the system
(including materials on their way from suppliers)

36
Q

What is anticipation inventory?

A

Inventory used to manage predictable variation in demand

37
Q

What is cycle inventory?

A

The portion of your total inventory that varies based on the size of an order or production batch

38
Q

How do you calculate total annual cost?

A

Average cycle inventory x holding cost + number of orders per year x cost per order (setup cost)

39
Q

What is economic order quantity (EOQ)?

A

it is the value of Q that gives you the lowest total annual inventory costs

40
Q

What are independent demand?

A

Demand, which is influenced by market conditions and is not related to inventory decisions for other items in stock.

41
Q

What is continuous review?

A

The system automatically orders new inventory when it reaches a set reorder point. The order sizes is consistent (time between the orders changes)

42
Q

What is periodic review?

A

Inventory review happens at fixed time intervals, the order size is determined by current inventory

43
Q

What is the protection interval?

A

The time interval for which inventory must be planned when each new order is placed

44
Q

What are the benefits of continuous review?

A

Can reduce holding and ordering costs by tailoring the reorder point
Fixed order sizes may support quantity discounts
Requires less safety stock

45
Q

What are the benefits of periodic review?

A

Supports standardization of deliveries scheduling of inventory assessments
Opportunities to combine orders for multiple products from same supplier
Does not require computerized inventory management system

46
Q

How long is a long term plan (in years)

A

2-10 years

47
Q

How long is a medium term plan?

A

6-18 months

48
Q

How long is a short term plan?

A

Weekly / daily

49
Q

What is a level strategy?

A

Constant production rate
Use of overtime and under time, no hiring or firing
Demand variability dealt by inventory, back orders, overtime, under time, subcontracting
Good workforce stability

50
Q

What is a chase strategy?

A

Production chases demand
You are hiring and firing workers often to keep inline with demand
Good for minimizing inventory, bad for employee morale

51
Q

What is material requirements planning (MRP)?

A

A computerized information system developed to help manage dependent demand inventory and schedule replenishment orders

52
Q

What is dependent demand?

A

The quantity required is a function of the demand for other items produced or held in inventory

53
Q

What is dependent demand based on?

A

Parents and components

54
Q

Break down a bike in terms of parents and components

A

The is a parent, the wheel is a component, the spokes on the wheel are sub components

55
Q

What is a bill of materials?

A

A record of all the parent component relationships for a particular item derived from engineering and process designs

56
Q

What is a end item?

A

The final product sold to the customer

57
Q

What is a intermediate item?

A

An item with at least one parent and at least one component
Example: A lamp shade

58
Q

What are subassemblies?

A

An intermediate item assembled from more than one component

59
Q

What is a purchased item?

A

A item with one or more parents, but no components because it comes from a supplier
Example: Lightbulb

60
Q

What are part commonality?

A

The degree to which a component has more than one parent

61
Q

What is inventory record?

A

Contains information about lot size policies, lead time, and different elements of time phased data

62
Q

What are gross requirements?

A

Total requirements for a component derived from all of its parent production plans, as well as demand for replacement parts

63
Q

What are scheduled receipts?

A

orders that have been placed by have not been received

64
Q

What is a fixed order quantity?

A

Same order quantity is placed each time an order is issued

65
Q

What is a periodic order quantity (POQ)?

A

Orders issued at pre determined intervals

66
Q

What is lot for lot L4L?

A

Lot size ordered covered gross requirements for a single week

67
Q

What are remnants?

A

When you hold onto some inventory longer than you want to, but it creates a buffer

SCM 2160 (1 decks)

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