week 7

Question 1

result of properly functioning SC

Answer 1

reduced inventory, lower costs, more effective flow of goods

Question 2

enhanced SCM steps

Answer 2

1- conduct planning: meet demand include forecasting (where and when goods ready for sale)
2- engage in sourcing activities: select most qualfiifed supplier that can ,eet required materials effeciently
3- produce goods: business manufactor goods, including quality assurance, testing, packaging
4- deliver the goods: most cost effective method to deliver including schedule, prep invoices
5- return goods: handle damaged, usable goods in disposition

Question 3

issues critical to design of SC

Answer 3

1- partner selection: which supplier integrate best with business
2- network configuration: cluster of business comprising SC must be appropriatley configured (location to most effeceint factories
3- info configuration: info share system make product and order info avaliable (shared DB)
4- forecasting system: breaks down demand info into component parts needed by each memeber of SC
5- anticiapte end user orders: software for order taking (spotting changes allow for change in production volume)
6- tax effeciency: configure SC to recognize lowest income tax
7- enviroemntal impact: reuce enviromental impact of activities

Question 4

advantages of SCM

Answer 4

1- allow business to reduce cost inccured
2- prsent opp to increase quality
3- fewer inv stockouts
4- higher level of data
5- reduced inv write offs
6- force business to communicate

Question 5

period order quanityt

Answer 5

standard number of units to be ordered over fixed time

Question 6

issues with period order Q

Answer 6

investment size: large inventory = costly
- dmenad variation: demand up or down risk of stockout –> resolve with saftey size but = more investment
- demand termination: continuing supplier delivery even when usage declined or terminated–> issue is lack of tracking of goods

Question 7

stock control is balancing the need to mantain inventory levels against costs, what is ideal outcome

Answer 7

o Ideal outcome is minimal investment in inventory, while fulfilling customer orders in timely manner

Question 9

stock control strategies

Answer 9

1- JIT: only build goods when dmeand for them(min investment and speed up deliery time
2- reduce product offering: reduce # of products offfered thereofre reducing total amount inventory investment
3- expand wharehouse location: set up near large customer concentrations (so rapidaly shifter to them but increased investment in them
4- minimize purchases: order min amount of RM needed for specefic production
5- production cells: cell in production area repsonsible for creating goods start to finish
6- automate picking: install auto system so goods shipped more rapidly
7- use adjacent suppliers: locating supplier near company production facility, so delivery lead times reduced
8- INV tracking: computerized inv tracking system so no inv is lost
9- manage bottle neck

Question 10

what is JIT

Answer 10

based on a cluster of lean manufacturing activity designed to only manufacture enough products to meet demand
o Pulling demand through production facility, where each step is only authorized to produce a limited amount of inventory

Question 11

concepts of JIT

Answer 11

1- pull: each step in production triggered by notification provided by downstream request vs traditional push which is based on forecast
2- smaller lot sizing: small production lot sizes, limits scrap generated
3- quicker machine set up: Shortening machine set up time makes cost effective to even manufacture single unit
4- min inv movments: moves workstations together, eliminate need fro moving personnel and equipment, reduce travel time to conveyer belts reduce WIP
5- quicker RM delivery

Question 12

saftey stock is what

Answer 12

excessinventory acts as buffer between forecasted and actual demand

Question 13

formula for saftey stock

Answer 13

Maximum period usage - Average period usage) x Lead time = Safety stock

Question 14

where does saftey stock matter

Answer 14

o Only safety stock that matters in manufacturing environment is inventory buffer located directly in front of bottleneck

Question 15

what is fixed saftey stock

Answer 15

nopt changed unless event occurs convincing materials management staff to alter

Question 16

when to reduce saftey stock

Answer 16

little to no demand, indifferent to delays, too expensive to maintain level
o Or when similar items in stock

Question 17

what is stock out cost

Answer 17

lost income and expense associated with inv shortage can arise, o Hard to tell what it is because lost sales not on inc statement and cost associated with rush purchases buried in COGS

Question 18

how stock out costs arise

Answer 18

o 1- sales related stock outs: wants to buy but no item company losses gross margin related to sale, in addition customer may be lost and margins along with future sales
o 2- internal process related stock outs: needs inv for production run and inv not available incurs cost required to acquire inv on short notice

Question 19

how to avoid stock out costs

Answer 19

• A business can avoid stock out issues by maintaining a high level of inventory record accuracy and a reasonable safety stock level that is adjusted to match ongoing changes in customer demand.

Question 20

what JIT allowed for

Answer 20

o lean production has significantly cut costs while allowing companies to pivot quickly to new products.

Question 22

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