APICS Basic Supply Chain Management – Flashcards

The 6 links in a supply chain are 1. Supplier 2. Producer 3. Retailer 4. Distributor 5. Customer 6. Service and Support

Factory Ordering Costs include Production control costs, setup and tear down costs, lost capacity costs, and purchase order costs. Average cost = fixed costs/ number of orders + variable costs (115000+20000)/1000+150= $285 cost per order

The three time period Ordering Methods are 1. Lot for Lot 2. Period Order Quantity, 3. Least Total Cost

Calculation for Service Level Step 1 - Calculate number of order for the period. =Total Demand / Order Qty 5200/520 = 10 orders Step 2 - Calculate Service Level = number of orders - n Stockout /Total number of orders = 10 orders - 1 Stockout / 10 orders

Concurrent engineering means while a group of engineers are working are working on one section of the product, other engineers are working on a different section and they will eventually come together. This is much quicker than having one group of engineers developing everything for a product. The advantage of concurrent engineering process is reducing the development time for a product.

The 5 types of Transportation Carriers are 1. Rail 2. Road 3. Air 4. Water 5. Pipeline

Formula for Target Inventory Level is Demand During Leadtime, plus Demand During Review Period, plus Safety Stock Target Inventory Level = DLT+DRP+SS DLT = Demand During Lead Time DRP= Demand during review period SS= Safety Stock Target Inventory Level =150*2 + 150*4 + 100 Target Inventory Level = 1000 Units

Take Absolute Error in each periods then divide by the number of periods Explanation: The formula is the absolute (positive only) deviation for each month divided by all months. (5+1+5+1+0)/5 = 2.4

Production Activity Control activities are: Rank the shop orders in desired priority sequence Track the actual performance of work orders and compare it to planned schedules monitor and control work-in-process Report work efficiency, operation times, order quantities, and scrap MPS explosion of materials into its components is a function of Material Requirements Planning, not PAC

Critical Ratio is a commonly used dispatching rule. It is based on the ratio of the time remaining to complete an order (time to due date) to work remaining (work hours to due date). Work remaining also is called lead time remaining. Critical Ratio equals Less than 0 the order is already past the due date Less than 1 then order is behind schedule Equal to 1 order is on schedule Greater than 1 Order is ahead of schedule

4 types of delivery methods are 1. Lot based deliveries 2. JIT Deliveries 3. Point of Use Delivery 4. Kanban Delivery

Theory of Constraints objectives are: 1. To maximize throughput now and in the future 2. To manage a system by identifying and managing a few leverage points 3. To decrease cycle time, continuous improvement, eliminate waste, and to increase productivity

A Work Center File contains 1. Work Center number 2. Alternate work center 3. Efficiency 4. Utilization 5. Queue Time

The 8 pricing strategies are 1. Market Skimming 2. Leader Pricing 3. Loss Leader Pricing 4. Perception Pricing 5. Cost Pricing 6. Value Pricing 7. Marginal Pricing 8. Full cost pricing

Normal distribution looks like a bell that the center of the bell is the mean for all values.

Objective for Lean is 1. Identifying and eliminating unneeded activities and resources (waste) 2. Creating continuous flow in manufacturing with pull system (customer pull) 3. Empowering employee 4. Continuous improvement

TQM (Total Quality Management) objectives are: 1. approaches long term success through customer satisfaction 2. Customer focus 3. Identify cost of Quality 4. Take action to solve problems 5. Continuous improvement

Six-Sigma objectives are: 1. Variation reduce defects 2. Goal to have a 3.4 defect per million equal to six sigma level 3. Continuous improvements & problem solving, to reduce variation & defects

TOC (Theory of Constraints) is a holistic management philosophy based on the principle that systems have constraints limiting their ability to meet goals. Its objective is to achieve throughput by identify and manage a few leverage points to achieve goal.

Five Manufacturing Objectives: 1. The right product 2. Of the right quality 3. In the right quantities 4. At the right time 5. At the minimum cost and at the right price

The role of Material Management is to balance the company's resources with demand. Balancing department conflicts. Two Major Areas in Material Management: 1. Manufacturing Planning & Control System (MPC) - MRPII , ERP 2. Physical Supply & Distribution - manage purchasing and control of production materials, controlling WIP, controlling storage, distribution of finished goods.

3 Types of KPI (Key Performance Indicators) 1. Strategic - Measures long term goals of a business. (Profitability, Market Share, Growth and Productivity 2. Tactical - Measures intermediate-term goals and objectives to support the Strategic Plan. (Production Plan & Budget, % of On-Time Delivery, Inventory Turns) 3. Operational - Measure daily work routines. (Work Center, Cycle Time, Utilization, Efficiency)

Supply Chain Management is the design planning, execution, control and monitoring of supply chain activities and the objective to creating net value building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.

Supply Chain is the Global network used to deliver products and services from raw materials to end customers through engineered flow of information, physical distribution, and cash.

Determinants for Each Manufacturing Environment (ETO, MTO, ATO, MTS, Mass Customization) 1. Lead-time 2. Product design input from Customer 3. Product volume and variety 4. Product Lifecycle (Introduction, Growth, Maturity, Decline, Phase-Out)

Four P's in Marketing Managements are 1. Product - examples: design, quality, cost, flexibility, features, sizes, brand name, returns service, warranty 2. Price - examples: commodity or premium price, market penetration price, loss leader, discounts, credit terms 3. Promotion - examples: sales promotion, advertising, campaigns, public relation 4. Place - examples: sales channel, delivery mode/speed/dependability/flexibility, distribution inventory policy

The Four Pattern of Demand are Trend, Seasonal, Random, and Cyclical. 1. Trend - Demand change at steady rate (increasing, decreasing, or level) 2. Seasonal - Repetitive pattern of demand in long or short intervals (in yearly, monthly, weekly, daily, or hourly) 3. Random - Demand fluctuation due to random occurrences. Demand vary near the average and variation will cancel themselves out. Can exist with trend and seasonal demand 4. Cyclical Demand ¬ - characterized by a wave-like fluctuation that take place over a long time span (several years). Ties to external influences such as Business Cycle) Forecasting of cycles is the domain of Economic Forecaster through business recognizes their impact on demand and sales.

Four Major Principles of Forecasting are 1. Rarely 100% accurate. Errors are inevitable and must be expected 2. Should include an estimate error 3. Forecast are more accurate for Family or Product Group of items 4. More accurate in short term

Most Forecasts are based on historical data, and the collection and preparation of the data for use in forecasting is of utmost importance. It requires judgment and sound analytical skills. 1. Record data in the term needed for the forecast • Record demand with customer request, not sales and order shipments • Use the same forecast periods • Item should match those controlled by manufacturing 2. Record the circumstances relating to the data (promotion, weather, price change, strikes) 3. Record demand separately for different customer group (variation in order cycle/lotsize, record separately to account for the lumpiness of demand)

Qualitative Techniques are subjective and based on intuition and informed opinion. 1. Used for new product through market research 2. Medium to long range planning

Exponential Smoothing Forecast Techniques is similar to Moving Average Techniques, but require less data management and easier calculate. Appropriate if demand is stable, not rising or falling. Run simulation in different value to see which one best fit historical data pattern. Exponential Smoothing Formula New Forecast = ( a ) ( latest demand ) + ( 1 - a ) ( previous Forecast )

Moving average principles are 1. Demand is stable 2. Use to reduce random variation Moving average lesson learned are 1. Moving average forecast will lag the development of a rising and falling trend 2. The further back the moving average forecast data used the grater the lag 3. Quicker to react in a spike in shorter term moving average

External Indicators of Quantitative Techniques - idea of correlation and cause & effectIntrinsic - Historical data (time series data) o Assume past data as future (past is an indicator of future) o Two Intrinsic Forecast Techniques (Moving Average / Exponential Smoothing)

Quantitative Techniques - idea of correlation and cause & effect 1. Rely on external indicators to make projection 2. External indicator are Intrinsic (historical data) and Extrinsic (External factores

3 Important Business Process are 1. Marketing Management - The process of planning, executing, controlling and monitoring the design, pricing, promotion, and distribution of products and services to bring about transactions that meet organizational and individual needs 2. Customer Relationship Management (CRM) - Collection and analysis of customer information to understand and support customer needs 3. Demand Planning - such as Forecasting and customer order. Demand planning is the strategically important for it facilities the planning and use of resources throughput the supply chain.

Order Qualifier - a company must exhibit to be a viable competition in the marketplace

Order Winner - a customer choose a company's product or service over competitors 1. Speed 2. Dependability 3. Flexibility 4. Cost

Customer Relationship Management (CRM) defines as The collection and analysis of information designed for sales and marketing decision support....to understand and support existing and potential customer needs. It includes account management, catalog, and order entry, payment processing, credit and adjustments and other functions.

Demand Planning is the recognition of demand and understanding the demand. Drives Operation to determine what is needed, how much is needed and when to produce to meet Priority Plan Demand Planning comes in two forms: 1. Demand Forecasts 2. Management of actual customer orders (internal and external customers)

The Characteristics of Demand are: Independent versus dependent demand Sources of demand Demand patterns

Five sources of Independent Demand 1. Forecasting - Production of future demand 2. Customer Orders - Actual orders from customer 3. Replenishment orders from distribution center - based on customer orders placed on distribution centers and on distribution center forecasts 4. Interplant Order - Parts or Components needed in other division 5. Other sources of demand - Marketing/Product Demo, Engineering requirements

Available Capacity is the capability of a resource to produce a quantity of output in a time period. In order to calculate or measure available capacity, you will need the following 1. Available Time 2. Utilization 3. Efficiency

Available Time - Available time depends on the number of machines (or the number of workers) and the hours of operation. It is sometimes refers to as clock time. If a work center has four machines and work eight hours a day for five days a week, what is its weekly available time? Available Time = 4 machines x 8 hours x 5 days = 160 hours

Efficiency - is a measure, shown in percentage, of the actual output compared with the standard expected output. What is the efficiency if a work center whose output is standard hours for the week was 150 hours and whose actual hours worked were 120 hours? Efficiency = 150 X 100% = 125% 120

Utilization - is based on the number of hours of work input (hours actually worked) at a work center in a period compared to available time in that period, expressed as rate or a percentage. In other words the utilization rate adjusts the available time. What is the Utilization if a work center is available for 160 hours a week about the hours actually worked only amount to 120 hours? Utilization = 120 X 100% = 75% =160

Rated Capacity is A measure of the output that can be expected of a resources Formula: Rated Capacity (Standard Hour) = Available Time x Utilization x Efficiency A work center consists of 3 machines and is operating 8 hours a day for 5 days a week. Past Utilization is 75% and efficiency is 110%. Calculate the Rated Capacity. Rated Capacity = (3 x 8 x 5) x .75 x 1.10 = 99 hours

If over the previous 4 weeks, a work center produced 110, 140, 120, 130 standard hours of work, what is the demonstrated weekly capacity? =110+140+120+130 4 = 125 hours

RESOURCE PLANNING - determines whether resources will be available to meet the demand for capacity created by the sales and operations plan and production plan in the medium to long term. Resource planning involves determining the need for resources with long-lead time to meet monthly, quarterly, or annual product priorities. It deals with capacity at the product family level and determines the need for long lead-time resources by the average product within a product family

ROUGH CUT CAPACITY PLANNING - determines whether resources will be available to meet the demand for capacity created by MPS. RCCP addresses the need for capacity at the end item level in terms of key resources...such as labor, machinery, warehouse space and supplier capabilities, and whether adequate resources will be available, using weekly time buckets.

Load is also "capacity requirement generated by the priority planning system" Calculate Load Formula: Total Load = Setup Time + (Runtime per piece x Order qty)

The established start and finish dates for all work orders and determining load in relevant period at each work center, a work center load profile can be established. A load profile is a graphic comparison of each work center's available capacity and the load established by the planned and released orders for each time period of the plan.

Production Activity Control - Consisting of Planning, Scheduling, and Control of Resources PAC is the function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. PAC encompasses the principle, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operation. PAC objectives: 1. Execute the MPS and MRP 2. Optimize use of resources 3. Minimize work in process (WIP) 4. Maintain Customer Service

PAC is a closed-loop system, monitor, and evaluate its progress and make adjustment as necessary 1. Plan / Re-Plan - getting ready to release the shop order to shop floor Ensure resources are available Schedule start and completion date Adjust if needed 2. Implementation - activities leading up to and including released of shop order Gather information from various sources to prepare a shop packet (shop order, assembly instruction, operator instructions) Release shop order to the manufacturing floor Executing the Plan - releasing Shop Order Packet to the shop floor, which must contain all the information needed by manufacturing to make the item? Information including: a) Order number, PN, Name, Description, Qty b) Engineering Drawing c) BOM d) Route Sheet e) Material issue ticket f) Tooling Requirement g) Job Ticket/Move Ticket/WO traveler 3. Control - Control begin at the time when shop order is released Establish and maintain order - Ranking of shop order by priority plan (aka priority control) Monitor and control WIP, leadtime and queue Track and report production status and completion - involve comparing work order to The Plan, and make necessary adjustments Report work center performance - including efficiency, operation time, order quantity and scrap

1. Scheduling of work 2. Loading of work 3. Operation Dates 4. Tracking work in progress 5. Accept detailed recording 6. Dispatch system 7. Status and production reporting 8. Customer Service A forecast would be a part of demand management

single level exponential smoothing should be used for an item that has trend or seasonal patterns

1. Price leadership 2. Product differentiation 3. Customer focus

1. Production worker skills acquired 2. Hours of unplanned overtime 3. Hours of unplanned subcontract time 4. Hours of expedite time 5. Number of unplanned subcontract orders placed

I. Time Buffers II. Stock Buffers III. Protective capacity

These stakeholders include 1. Managers 2. Employees 3. Stock holders 4. Customers 5. Suppliers

Preventative Maintenance includes the activities to adjust, replace, and basic machine cleanliness to forestall machine breakdowns

The super bill uses the concept that although annual sales of a product group may change, the percentage spread or mix of the individual items within that product would remain similar.

Assumptions of order point are 1. Due dates will remain unchanged 2. No need to look beyond the current order cycle 3. Should always have stock on hand 4. demand for item is independent (not dependent)

Net present value is a technique that examines the anticipated earnings of future periods by adjusting them by a factor to relate them to present earnings.

A mission statement is the tool used to formally announce the company's intention, its scope of operations, and its purpose.

By reducing the levels in the bills of material, the fewer steps in the process. It would lower lead times and costs because it is keeping the factory floor simple.

Poka yoke means "mistake proofing" and is a way of designing a product or process so no errors are possible to be made.

Basic Notes order status includes 1. Inquiry 2. Quotation 3. Confirmed 4. Picking 5. Delivered 6. Invoiced 7. Completed

The daily dispatch list is the document used to communicate requirements to a work center.

Calculation Return on Investment = Income minus Cost, divided by Investment

Product differentiation is when the company's products has a competitive advantage over their competitors. This includes design features.