Supply Chain Management 4230 Test1

refers to the use of responsiveness, competency, flexibility, and quickness to manage how well a supply chain entity operates on a daily basis
backward vertical integration
refers to acquiring sources of supply
break-even quantity
Model seeks to determine the point in units produced (and sold) where we will start making profit on the process or equipment

π΅π‘Ÿπ‘’π‘Žπ‘˜π‘’π‘£π‘’π‘› π‘„π‘’π‘Žπ‘›π‘‘π‘–π‘‘π‘¦=(π‘‡π‘œπ‘‘π‘Žπ‘™ 𝑓𝑖π‘₯𝑒𝑑 π‘π‘œπ‘ π‘‘π‘  π‘œπ‘“ π‘π‘Ÿπ‘œπ‘π‘’π‘ π‘  π‘œπ‘Ÿ π‘’π‘žπ‘’π‘–π‘π‘šπ‘’π‘›π‘‘)/(π‘ƒπ‘Ÿπ‘–π‘π‘’ π‘‘π‘œ π‘π‘’π‘¦βˆ’π‘£π‘Žπ‘Ÿπ‘–π‘Žπ‘π‘™π‘’ π‘π‘œπ‘ π‘‘π‘ )

Bulk Purchase Items
Low criticality, high value/cost
bullwhip effect
where variations of inventory are amplified as you move up the supply chain from consumer to end raw material supplier when there is a change in consumer demand and no information is being shared about consumer demand between all members in the supply chain which will leave suppliers, manufacturers, distributors, and retailers with very high or low inventory.
purchasing department located at the firm’s corporate office makes all the purchasing decisions.
collaborative forecasting
Synergy between supply chains
Ex: Publix tells they will do a sale on a product in advance, make sure every department is aware in that forecast
competitive strategy
the set of customer needs a firm seeks to satisfy through its products and services
critical iteams
High criticality, low value/cost
customer order cycle
cycle view
processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages
individual, local purchasing departments, such as plant level, make their own purchasing decisions.
is a structured communication technique or method, originally developed as a systematic, interactive forecasting method which relies on a panel of experts. The experts answer questionnaires in two or more rounds.
demand uncertainty
uncertainty of customer demand for a product
exponential smoothing
Form of weighted moving average
-Weights decline exponentially
-Most recent data weighted most
𝐹_𝑑=𝐹_(π‘‘βˆ’1)+ 𝛼(𝐴_(π‘‘βˆ’1)βˆ’πΉ_(π‘‘βˆ’1) )
forecast accuracy
Several measures of forecasting accuracy:
-Mean absolute deviation (MAD)
-Mean absolute percentage error (MAPE)
-Mean squared error (MSE)
forward vertical integration
refers to acquiring customer’s operations.
functional product
products with stable predictable demand
general items
Low critcality, low value/cost
global optimization
Look at each other and communicate how much surplus or products are needed and optimize every component not just own. Creates communication to avoid sequential optimization (buying in big quantities and setting quantity limits)
green sourcing
means the purchasing of products and services which take into consideration of the environmental factors..
Hau Lee
Hau Lee
industrial buyers
Purchase raw materials for conversion, fabrication services, capital equipment, & MRO supplies
-data and analysis regarding inventory, transportation, facilities throughout the supply chain
-potentially the biggest driver of supply chain performance
innovative product
products with short life cycles, less predictable demand
raw materials, WIP, finished goods within a supply chain
inventory policies
least squares method
minimizes the sum of the squared errors (deviations)
manufacturing cycle
marketing and sales strategy
specifies how the market will be segmented and product positioned, priced, and promoted
Mean absolute percentage error (MAPE)
provides a perspective of the true magnitude of the forecast error.

𝑀𝐴𝑃𝐸=𝑀𝐴𝐷/(π΄π‘£π‘’π‘Ÿπ‘Žπ‘”π‘’ π·π‘’π‘šπ‘Žπ‘›π‘‘)

merchant buyers
Wholesalers and retailers who purchase for resale
the practice of basing some of a company’s processes or services overseas, so as to take advantage of lower costs.
buying materials and components from suppliers instead of making them in-house. The trend has moved toward outsourcing
process focus (layout)
-Facilities are organized by processes
-Similar processes are together
-Example: All drill presses are together
-Low volume, high variety products
‘Jumbled’ flow
-Other names: intermittent process, (job shop)
procurement cycle
product development strategy
specifies the portfolio of new products that the company will try to develop
product focus (layout)-Assembly Line
-Facilities are organized by product
-equipment or work processes are arranged according to the progressive steps by which the product is made.
-High volume, low variety products
-Discrete unit manufacturing
-Continuous process manufacturing
Other names: Line flow production (flow shop)
product life cycle(s)
The demand characteristics of a product and the needs of a customer segment change as a product goes through its life cycle (introduction, growth , maturity, decline )
pull processes
execution is initiated in response to a customer order (reactive)
push processes
execution is initiated in anticipation of customer orders (speculative)
push/pull view
processes in a supply chain are divided into two categories depending on whether they are executed in response to a customer order (pull) or in anticipation of a customer order (push)
qualitative forecasting
is based on opinion & intuition.
Quantitative forecasting
uses mathematical models & historical data to make forecasts.
Time series
models are the most frequently used among all the forecasting models.
replenishment cycle
reverse logistics
is for all operations related to the reuse of products and materials. It is “the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.
Low demand uncertainty, high supply uncertainty
EX: hydro electric power
Running Sum of Forecast Errors (RSFE)
-indicates bias in the forecasts or the tendency of a forecast to be consistently higher or lower than actual demand.
𝑅𝑆𝐹𝐸= βˆ‘β–’π‘’_𝑑
et = forecast error for period t
safety inventory
inventory held in case demand exceeds expectations
Β· keep in mind the cost of carrying too much vs cost of losing sales
– During supplier evaluation and certification, a score card is used with the performance measure’s (E.G. technology, quality) rating X its weight to give a value. Then all values are added up to get a final score.
Β· Part of Supplier relationship management
Β· Inventory built up to counter predictable variability in demand
Β· Keep in mind cost of carrying additional inventory vs cost of flexible production
seasonal variation
Β· Show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, months, years, or seasons
sequential optimization
-demand planning goes into distribution planning then manufacturing planning and finally, procurement planning
Β· in contrast to global optimization
simple moving average
Β· forecasting method for 6-12 months; weekly data is often used
Β· Stationary (no trend or seasonality)
Β· Add up all occurrences and divide by n (number of occurrences)
Speed refers to the responsiveness of the supply chain rather than efficiency
strategic alliances
Β· Firms emphasize long-term strategic supplier alliances consolidating volume into one or fewer suppliers, resulting in a smaller supply base
Β· Used as a tool for global optimization and to deal with uncertainty
strategic items
Β· High value/cost high criticality
supplier assessment
supplier assessment factors
Β· Replenishment lead time
Β· On-time performance
Β· Supply flexibility
Β· Delivery frequency
Β· Supply quality
Β· Inbound transportation cost-pricing terms
Β· Information coordination capacity
Β· Design collaboration capability
Β· Exchange rates, taxes, duties
Β· Supplier viability
supplier commitment
Β· strong supplier partnerships involve commitment of not only the buyer but also the seller
supplier criteria
process of selecting suppliers is complex and should be based on multiple criteria:
o Product and processes technology
o Willingness to share technologies and information (early supplier involvement [ESI] and concurrent engineering [ce])
o Quality
o Cost
o Reliability order system & cycle time
o Capacity
o Communication capability
o Location
o Service
supplier development
Β· Used to develop supplier capabilities
Β· A buyers activities to improve a supplier’s performance and/or capabilities based on the following approach
o Identify critical products & services
o Identify critical suppliers
o Form a cross-functional team
o Meet with top management of supplier
o Identify key projects
o Define details of agreement
o Monitor statues and modify strategies
o (Vaguely remember her saying we didn’t need to memorize this)
supplier hybridization
supplier rating factor
when evaluating supplier scoring, each category is rated based on how important each category is
supplier sourcing factorsΒ·
Β· supplier scoring and assessment
Β· Supplier selection and contract negotiation
Β· Design collaboration
Β· Procurement
Β· Sourcing planning and analysis
supply chain operation
goal is to implement the operating policies as effectively as possible
supply chain planning
Β· definition of a set of policies that govern short term operations
Β· fixed by the supply configuration from the design phase
Β· starts with a forecast of demand in the coming year
Β· demand uncertainty, exchange rates, and competition over the time horizon must be considered
supply chain profit (surplus)
total profit shared across all stages of the supply chain
supply chain strategy/design
Β· decisions about the structure of the supply chain and what processes each state will perform
Β· design must support strategic objectives
Β· supply chain design decisions are long term and expensive to reverse
supply process
Β· Cycle view
Β· Push/pull view
TCO, Total Cost of Ownership
Β· Made up of all costs associated with acquisition, use, and maintenance of a good or service
time series
Β· most frequently used among all forecasting methods
Β· based on the assumption that the future is an extension of the past. Historical data is used to predict future demand
tracking signal
Β· determines if forecast is within acceptable control limits. If the tracking signal falls outside the pre-set control limits, there is a bias problem with the forecasting method and an evaluation of the way forecasts are generated is warranted
Β· moving inventory from point to point in a supply chain
Β· Combinations of transportation modes and routes
trend projection
Β· fitting a trend line to historical data points to project into the medium-to-long-range
trend variation
Β· Increasing or decreasing
Matching supply and demand is difficult
Β· Forecasting doesn’t solve the problem
Β· Demand is not the only source of uncertainty
vertical integration
Β· traditional way of supply chain management
Β· when a firm moves towards making a product in-house instead of outsourcing
Β· Where inventory is stored, assembled, or fabricated
Β· Production sites and storage sites
weighted moving average
Β· Permits unequal weighting on prior time periods

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