Supply Chain Flashcards
What are characteristics of a Responsive Supply Chain?
-High demand uncertainty
-High profit margins
-High levels of safety stock
-Prioritizes reducing lead time
-Suppliers are chosen for speed, flexibility, responsiveness and quality
-Have a greater reliance on fast/speedy modes of logistics
What are the characteristics of an Efficient Supply Chain?
-Predictable/Stable Demand
-Low demand uncertainty
-Low Profit Margins
-High average utilization rates
-High inventory turns and minimize inventory through the supply chain
-Reduce lead time as long as it doesn’t increase cost
-Suppliers selected for cost and quality
-Relies on low cost modes of logistics
When is a Decentralized Supply Chain more appropriate?
When there are many points of sale
How do Efficient and Responsive supply chains relate to Centralized vs Decentralized strategies?
-A centralized strategy needs an efficient supply chain
-A decentralized strategy needs a responsive supply chain
Why would a company consider Outsourcing?
-Lack of capacity in house
-Supplier has better technical capabilities
-To focus more on core capabilities
Why would a company want to Offshore?
-To be closer to offshore customers
-Offshore has better cost/price
-Offshore has better technical capabilities
-Faster response to offshore customer
What are some pitfalls of Offshoring?
-You may lose the ability to do the task offshore
-You many not get a good understanding of your overall product cost
-Exchange rates can be volatile
-you give up control over quality & cost
What is NOT a cost factor when considering offshoring that is not captive?
Real Estate costs
What are some conditions that are more conducive to a Centralized supply chain?
-Demand is stable
-Higher product availability
-Low distribution complexity
A centralized network configuration lends itself to which type of supply chain model?
Efficient
What are some supply chain characteristics (demand, inventory, lead times) of a Functional product?
-Low demand uncertainty
-Stable demand
-Long product life
-Low inventory costs
-Low profit margins
-Low product variety & high volume
-Low stockout & obsolescence cost
What’re reasons for outsourcing?
-Reduce and control costs
-increase flexibility and speed
-decrease lead times
-increase innovation capability
-focus on core capabilities & competencies
-gain access to world class capabilities
-free internal resources for other purposes
-insufficient resources are available internally
-share risks with partner company
What is NOT a driver of offshoring?
social drivers
What are cost drivers for offshoring?
-Exchange rate fluctuations
-Lower comparative cost factors: labor, material
-Falling communication, coordination, and material movement costs
- Economies of scale
-Cost and risk sharing in joint ventures
What are some pitfalls of offshoring?
-Inaccurate determination of overall product costs
-Lack of control over costs and quality
-Exchange Rate volatility
-Political uncertainty in the target market
What are some characteristics of a PULL system?
-Faster reactions to defects
-Operators only work when signalled
-No slack in the system
What is an advantage that a Decentralized strategy has over a Centralized strategy?
shorter shipping distances
What is the philosophy of Lean?
Eliminate waste
T/F In a traditional push system, throughput time will usually increase as WIP increases.
True
What’s the difference between a push and pull system?
A PUSH system keeps operators and materials busy while a PULL system keeps operators idle and material busy
What are some characteristics of a PULL system?
- Faster reaction to defects
- Operators only work when there’s a signal to produce
- There’s no slack in the system(?)
T/F In a PULL system the production line is controlled by the first operation
False
What is a common internal strategy to match supply with demand?
sub-contract
What’s a common external strategy for matching supply and demand
promotion or sales
What’s the equation for Economic Order Qty?
Q=Sqrt(2S*D/H)
S = Ordering Cost
D = Yearly Demand
H = Holding Cost
Where would the newsvendor model be least useful?
Items with long selling season
T/F In the newsvendor problem, the optimal order quantity depends on the relative cost of stocking too much and stocking too little.
True
What are causes of the Bullwhip Effect?
-Order Batching
-Gaming
-Inaccurate Forecasts
-Price Fluctuations
What’s the definition of a forecast?
A prediction of future events that’s used for planning purposes.
T/F Forecasts are almost always wrong
True
T/F Demand can show random variation over time
True
What are some patterns of demand?
Trends
Randomness
Autocorrelation
Seasonality
What is the Bullwhip Effect?
The Increasing fluctuations in demand as one moves upstream in the supply chain
T/F Trial and error can be used to determine the weights for a weighted moving average forecast
True
What are the characteristics of Innovative products?
-High demand uncertainty
-Difficult to forecast/variable demand
-Short Product Life
-High Inventory cost
-High Profit margins
-High product variety & lower volume
-High stockout & obsolescence cost
High demand uncertainty is associated with what type of product and supply chain?
Innovative Products and Responsive supply chains
Difficult to forecast and variable demand are characteristics of which type of product and supply chain?
Innovative Products and Responsive supply chains
Short Product life is associated with which type of product and supply chain?
Innovative products and Responsive supply chain
High Inventory Costs are associated with which type of product and supply chain?
Innovative and Responive
High profit margins are associated with which type of product and supply chain?
Innovative and Responsive
High product variety and low volumes are associated with which type of product and supply chain?
Innovative & Responsive
High stockout and obsolescence costs are associated with which type of product and supply chain?
Innovative and Responsive
Low demand uncertainty is associated with which type of product and supply chain?
Functional and Efficient
More predictable/stable demand is associated with which type of product and supply chain?
Functional and Efficient
Long product life is associated with which type of product and supply chain?
Functional and Efficient
Low inventory cost is associated with which type of product and supply chain?
Functional and Efficient
Low profit margins are associated with which type of product and supply chain?
Functional and Efficient
Low product variety and higher volumes are associated with which type of product and supply chain?
Functional and Efficient
Low stockout and obsolescence costs are associated with which type of product and supply chain?
Functional and Efficient
Logistics Strategy of Greater reliance on low cost modes
Efficient SC
Logistics Strategy of Greater reliance on fast/speedy modes
Responsive SC
Supplier Capability: primarily for cost and quality
Efficient
Supplier Capability: Speed, Flexibility, and quality
Responsive
Lead Time Strategy: Reduce lead time as long as it doesn’t increase cost
Efficient
Lead Time Strategy: Invest aggressively in ways to reduce lead time
Responsive
Inventory Strategy: Generate high turns an dminimize inventory throughout the supply chain
Efficient
Inventory Strategy: Deploy significant buffer/safety stock of parts or finished goods
Responsive
Capacity Strategy: Maintain high average utilization rate
Efficient
Capacity Strategy: Deploy excess buffer capacity/capacity flexibility
Responsive
Is Centralized or Decentralized most appropriate for High distribution cost per weight?
Decentralized
T/F Decentralized SC have lower total inventory and safety stock
False, Centralized has lower inventory because of the pooling effect
