scm 453x Exam 1 – Iowa State University – Flashcards

Focus on maintaining finished goods inventory ---When, how much, and how to replenish stock Customer service based on in-stock ---Trade-off between inventory and level of service Improvements are made by ---Improving forecasting ---Decreasing lead time ---Increasing flexibility

Configuration management becomes key ---Understanding how components combine to become finished goods ---Huge number of possible configurations, many of which will never be ordered Focus on inventory of components ---Easier than inventory of finished goods Must manage customer order process ---Lead times, availability, etc.

Engineering becomes a resource to be managed Order decoupling point may move to the supplier ---Coordination becomes essentiale is a manufacturing process in which manufacturing starts only after a customer's order is received

Demand Management provides forecasts to the SOP process SOP combines forecasts with resource planning to develop aggregate production plans

This situation reflects best practices in supplier relationships - customers provide suppliers with their longer-term production plans, not just current purchase orders. This allows suppliers to better plan their operations Provide suppliers with long-term production plans, not just current purchase orders. Suppliers can better plan their operations Must overcome trust issues Find ways to increase overall supply chain value

Quantitative Methods Used when situation is 'stable' & historical data exist Existing products Current technologies Involves mathematical models

Qualitative Methods Used when situation is vague & little data exist New products New technologies Involves Intuition Experience Judgment

Associative ---Causal relationships ---When demand is driven by changes in other factors Time Series ---Identify historical patterns and forecast into the future. ---If we know that sales are 20% above average each January, the forecast for next January should be upward 20%. ---This is an inappropriate method for weekly sales fluctuations that are the result of price and advertising changes.

Level Trend Seasonality Error

Large N Advantages: Smoothes out random variations in demand Disadvantage: reacts slowly to changes in demand Small N Advantages: Reacts quickly to shifts in demand Disadvantages: Doesn't smooth out random variation

Averaging method Weights most recent data more strongly Reacts more to recent changes Widely used, trusted method

Uses beta weight Trend changes from period to period

Set Level = Demand Set Trend = 0 No Forecast for period 1 P2 Forecast = Level from P1 + Trend P1

Need a whole cycle to initialize the model

absolute error / actual