Week 1 - Introduction To Supply Chain Planning Flashcards
What is a supply network?
Is the set of relationships between a firm and its suppliers and customers
What is a supply chain?
Is one of the series of linkages from suppliers to customers within the supply network
What is the main difference between upstream and downstream supply chain?
• Upstream are the different suppliers and are the input side
• downstream are the different customers are in the output side
Examples of upstream suppliers (3)
• Materials suppliers (Third tier supplier)
• Components suppliers (second tier supplier)
• Sub-assembly suppliers (first tier supplier)
Examples of downstream suppliers (3)
• Wholesalers (first tier customer)
• Retailers (Second tier customer)
• End users (Third tier customer)
What are the different parties involved in the supply chain? (6)
• Manufacturers
• Suppliers
• Transportation providers
• Warehouses
• Retailers
• Customers
What are the different supply chain functions involved in fulfilling customer requests? (5)
• Operations
• Marketing
• Design
• Finance
• Distribution
What is the supply chain management?
Is the management of the flow of materials and information through the supply network
Supply chain flows example
What is the objective of supply chains?
To maximise the difference between the value of the final product to the customer and the costs incurred by the entire supply chain in meeting customer requests
Formula for supply chain surplus
Supply chain surplus = Customer value (price) - supply chain cost
3 phases of supply chain
• Supply chain strategy/design
• Supply chain planning
• Supply chain operations
What happens in the supply chain strategy/design phase? (2)
• Design the long term structure of the SC
• Strategic as it involves major resources and decisions
What happens in the supply chain planning phase? (3)
• Focus on the medium term supply chain operations
• Operations are under the constraints of the design to maximise the supply chain surplus
• This stage attempts to take information such as demand forecasts and make decisions regarding which markets will be supplied from which locations
What happens in the supply chain operations phase? (2)
• Operate supply chain over short term making decisions regarding individual customer orders
• Decisions regarding allocating inventory or production to indivisible orders and setting delivery schedules
What 4 ways can supply chain problems be analysed?
• Timescale
• Processes
• Products
• People
What is the role of processes in supply chain? (2)
• Manufacturing and services consist of processes broken down into activities
• The interdependence between connected processes and the variability in demand on processes and process activation can be analysed using tools such as simulation
What is the role of products in supply chain? (2)
• Most plants make multiple products so to maximise profit it is useful to optimise the product mix
• LP can be used to determine product mix
What is the role of people in supply chain? (2)
• Most plants have a workforce with a variety of skills with different availability (full-time, part-time, contracts)
• LP can be used to determine how we use the workforce
What is the planning hierarchy?
Spans long-term strategic issues to short-term control issues
What is the function at the strategy level of the planning and control hierarchy?
Is to establish a production environment capable of meeting overall goals
What is the function at the tactical level in the planning and control hierarchy?
Is to generate a plan of action that will help the organisation prepare for upcoming demand
What is the function at the control level in the planning and control hierarchy?
Is to control the real-time flow of material and people through the organisation
What is a qualitative forecasting? (2)
• Uses the expertise of people to develop likely future scenarios
• An example is Delphi
What is quantitative forecasting?
Methods are based on the assumption that the future can be predicted by using numerical measures of the past
What are the two models of quantitative forecasting?
• Causal models
• Time series model
What are causal models?
Predict a future parameter such as product demand from other parameters such as interest rates
What are time series models?
Predict future parameters such as product demand as a function of past values of that parameter such as historical product demand
What is capacity planning?
Involves making sure we have adequate capacity to fill forecast demand generated from marketing information
What decisions are made in capacity planning? (2)
• Decide how much and what kind of equipment to purchase and supporting facilities
• Example decisions include: floorspace, power supplies, spare parts inventories
What issues should be included with capacity planning? (3)
• Product lifetimes - how long will we make the product?
• Make-or-buy - should we be making a component it outsourcing its manufacturers to a supplier
• Pricing - we need to know revenue generated to make decisions about investments in equipment
What is workforce planning? (2)
• Ensures that an organisation has an adequate workforce to meet demand
• Important to determine how much and what kind of labour is required
What issues should be considered with workforce planning? (3)
• Worker availability - this must take account of breaks, holidays, training etc
• Workforce stability - it is not usually desirable to rapidly increase or decrease the workforce
• Workforce flexibility - are they cross-trained
What is aggregate Planning? (2)
• Consists primarily of determining how much of each product to produce for each period, subject to constraints on capacity
• The planning horizon is generally a year or more which will need to be re run to represent the current situation
What is tactical planning?
Use scheduling strategies to produce a feasible master production scheme
What is demand management?
Customer orders cannot be replaced to the facility in the random order that they are received but they must be collected and grouped to maintain a fairly constant load on the factory
Schedules in tactical planning
There’s a need to balance concern with the stability of the factory with the desire for dependable customer service and short competitive due date quotes
What happens in the operations control function? (3)
• Will follow the schedule whenever possible but also makes adjustments where necessary
• Adjustments may be needed due to incidences such as equipment breakdown
• Adjustments may also be needed for jobs that are given special treatment
3 basic choices in linear programming formulation
• Objective function
• Decision variables
• Constraints
Objective functions in linear programming (2)
• Typically want to maximise profit or minimise cost
• Is specified in terms of decision variables
Decision variables in linear programming (3)
These are quantities under control such as:
• Production quantities
• Number of workers
• Level of inventory
Constraints in linear programming formulation
Are restrictions on choices of decision variables and occur due to limitations in demand and capacity
How can linear programming provide sensitivity analysis regarding capacity and workforce constraints? (2)
• Can run a model without the constraint and a plan will be generated to produce less units/months of a product to achieve an increased profit
• Allows decisions to be made as to whether it was binding or does capacity need adjusting
What information can linear programming provide on analysing decisions? (5)
• What is the product mix that maximises net profit (supply chain surplus)
• Where the capacity bottleneck for a particular product mix
• How many days we should operate to fulfil a contract
• What mix of workers should be hire to minimise labour cost?
• What floorspace in a warehouse should be allocated to each product to maximise profit
