SCM Final Exam
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1. Competitive Priorities: Cost - Material costs, production costs (machine and labor), Packaging, trans-
portation, storage costs, Quality costs- (returns, warranties, repairs, rework, errors, time), Customer service costs, other
organization costs (marketing, finance, technology, waste disposal, rent, insurance, legal, human resources).
Quality- Design quality (Toyota), Material & Production quality, Quality level delivered, Consistent quality (McDonalds),
Service quality (IPad).
Speed/Time- Delivery time, On-time delivery
Flexibility- Product or Customization Flexibility, Volume flexibility, Mass Customization (Both Customization and Volume)
For example Oreganos vs. Little Caesars.
Others: Design Flexibility, Materials/parts flexibility, facility flexibility, Tools/Machinery Flexibility, employee flexibility,
Service flexibility.
Red Robins vs. Mcdonalds
2. Productivity and Value: Productivity- Organizational Perspective, What did I make (Outputs)/What was
the cost (Inputs)
Value- Customer perspective, What do I get? (Quantity, quality, size..)/what is the price? (Money, waiting time,
warranty...)
Ex: Two cans of corns, price might not be the deciding factor.
3. Supply Chain: Supply Chain Management is the Efficient Integration of suppliers, transporters, manufacturers,
warehouses, retailers, and all other parties associated with the delivery of the final product.
4. Operations Management: Design, operation, and improvement of the productions systems the effi-
ciently transform INPUTS into Finished Goods & Services, maximizing productivity.
Examples of duties:
Process management, plant management, capacity planning, scheduling jobs/people, waiting line management,
process improvement projects.
5. Logistics: Is the COORDINATED Planning and Execution of the following:
Preparation of Packaged Product
Movement Itinerary (Transport)
, SCM Final Exam
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Storage Itinerary (Warehousing)
Product distribution throughout the Supply Chain
Examples of duties:
Distribution/Warehousing Infrastructure Mgmt.
Packaging, containerization, transportation, Management and communication
6. Procurement: The process of obtaining services, supplies, and equipment in conformance with corporate
regulations.
Examples of duties:
Supplier selection
Purchasing regulations
Managing supplier relationships - Motivation, Development
Materials/Inventory Management
7. Upstream: In supply chain, the direction that points toward the suppliers. Is to the left.
Explained: In a company an executive that works in upstream supply chain management might be responsible for:
ensuring that empty boxes at the retail level are returned to the distributor for reuse, developing relationships with a
company's first tear suppliers in order to better communicate the needs of the present and the future.
8. Downstream: In a supply chain, the direction that points toward the end customer. The downstream direction
is to the right.
In a company an executive that works in downstream supply chain management finds ways to get goods and services
closer to the customer in an effective and efficient manner.
9. Reverse Logistics: The management of products that flow backward in the supply chain, away from the
consumer and back in the direction of manufacturers. (The management of materials moving upstream in the supply
chain)
10. 1st and 2nd tier suppliers: 1st tier- A company's direct suppliers. A firm that directly provides goods
and/or services to a company.
2nd tier- A firm that provides goods and/or services to a company's first tear supplier.
11. Safety Stock: (buffer stock)
Inventory kept to account for variation/uncertainty of demand. (Example: 100 shovels are sold per week Sunday to
, SCM Final Exam
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Saturday. Shipments arrive Sunday morning. Stores always wants to start Sunday with 125 units of inventory. The
additional 25 units are safety stock.
12. Pipeline Inventory: Inventory in transit between two points. Those two points establish the pipeline. So
the inventory does not necessarily need to be on a truck or train.
The pipeline should have enough inventory to account for the demand for the period of time it takes a product to move
from point A to point B-lead time. The required pipeline inventory is typically calculated as:
=periodic demand * Lead time
13. Vertical Integration: The act of a company taking additional supply chain responsibilities that were
formerly done by outside parties. There are two classes of vertical integration:
Forward Integration: Taking over supply chain responsibilities formerly performed by downstream supply chain
partners.
Backward Integration: Taking over supply chain responsibilities formerly performed by upstream supply chain partners.
14. Benefits of high and low inventory levels/purchases: Pros of high inventory levels- Higher
levels of customer service, quantity discounts may be possible, fewer orders will need to be placed, greater security
against unexpected demand variability.
Pros of Low inventory levels- Less storage space required, lower chance of inventory obsolescence and shrinkage, less
inventory typically means less materials handling requirements. Less money invested in inventory means more money
available for investment opportunities.
15. What is EOQ?: Economic Order Quantity- It's the lot size that will minimize total annual inventory cost (TC);
it is therefore seen as the optimal lot size. EOQ= Sqrt[(2DS)/H]
16. EOQ's relationship to holding costs and ordering costs?: Basically, if a manager wanted
to minimize total inventory cost they could calculate EOQ and find the optimal order size. EOQ can also be described
as the lot size where annual holding costs is equal to annual ordering costs.
17. What does it mean AHC > AOC? AHC < AOC? Should you increase or decrease
Q in each case?: AHC is greater than AOC - Holding costs are too high - You are to the right of EOQ. Decrease
lot size to reduce TC.
AOC is greater than AHC -Holding costs are too low, you are to the left of EOQ, increase lot size, to reduce TC.
Study online at https://quizlet.com/_hmtwzs
1. Competitive Priorities: Cost - Material costs, production costs (machine and labor), Packaging, trans-
portation, storage costs, Quality costs- (returns, warranties, repairs, rework, errors, time), Customer service costs, other
organization costs (marketing, finance, technology, waste disposal, rent, insurance, legal, human resources).
Quality- Design quality (Toyota), Material & Production quality, Quality level delivered, Consistent quality (McDonalds),
Service quality (IPad).
Speed/Time- Delivery time, On-time delivery
Flexibility- Product or Customization Flexibility, Volume flexibility, Mass Customization (Both Customization and Volume)
For example Oreganos vs. Little Caesars.
Others: Design Flexibility, Materials/parts flexibility, facility flexibility, Tools/Machinery Flexibility, employee flexibility,
Service flexibility.
Red Robins vs. Mcdonalds
2. Productivity and Value: Productivity- Organizational Perspective, What did I make (Outputs)/What was
the cost (Inputs)
Value- Customer perspective, What do I get? (Quantity, quality, size..)/what is the price? (Money, waiting time,
warranty...)
Ex: Two cans of corns, price might not be the deciding factor.
3. Supply Chain: Supply Chain Management is the Efficient Integration of suppliers, transporters, manufacturers,
warehouses, retailers, and all other parties associated with the delivery of the final product.
4. Operations Management: Design, operation, and improvement of the productions systems the effi-
ciently transform INPUTS into Finished Goods & Services, maximizing productivity.
Examples of duties:
Process management, plant management, capacity planning, scheduling jobs/people, waiting line management,
process improvement projects.
5. Logistics: Is the COORDINATED Planning and Execution of the following:
Preparation of Packaged Product
Movement Itinerary (Transport)
, SCM Final Exam
Study online at https://quizlet.com/_hmtwzs
Storage Itinerary (Warehousing)
Product distribution throughout the Supply Chain
Examples of duties:
Distribution/Warehousing Infrastructure Mgmt.
Packaging, containerization, transportation, Management and communication
6. Procurement: The process of obtaining services, supplies, and equipment in conformance with corporate
regulations.
Examples of duties:
Supplier selection
Purchasing regulations
Managing supplier relationships - Motivation, Development
Materials/Inventory Management
7. Upstream: In supply chain, the direction that points toward the suppliers. Is to the left.
Explained: In a company an executive that works in upstream supply chain management might be responsible for:
ensuring that empty boxes at the retail level are returned to the distributor for reuse, developing relationships with a
company's first tear suppliers in order to better communicate the needs of the present and the future.
8. Downstream: In a supply chain, the direction that points toward the end customer. The downstream direction
is to the right.
In a company an executive that works in downstream supply chain management finds ways to get goods and services
closer to the customer in an effective and efficient manner.
9. Reverse Logistics: The management of products that flow backward in the supply chain, away from the
consumer and back in the direction of manufacturers. (The management of materials moving upstream in the supply
chain)
10. 1st and 2nd tier suppliers: 1st tier- A company's direct suppliers. A firm that directly provides goods
and/or services to a company.
2nd tier- A firm that provides goods and/or services to a company's first tear supplier.
11. Safety Stock: (buffer stock)
Inventory kept to account for variation/uncertainty of demand. (Example: 100 shovels are sold per week Sunday to
, SCM Final Exam
Study online at https://quizlet.com/_hmtwzs
Saturday. Shipments arrive Sunday morning. Stores always wants to start Sunday with 125 units of inventory. The
additional 25 units are safety stock.
12. Pipeline Inventory: Inventory in transit between two points. Those two points establish the pipeline. So
the inventory does not necessarily need to be on a truck or train.
The pipeline should have enough inventory to account for the demand for the period of time it takes a product to move
from point A to point B-lead time. The required pipeline inventory is typically calculated as:
=periodic demand * Lead time
13. Vertical Integration: The act of a company taking additional supply chain responsibilities that were
formerly done by outside parties. There are two classes of vertical integration:
Forward Integration: Taking over supply chain responsibilities formerly performed by downstream supply chain
partners.
Backward Integration: Taking over supply chain responsibilities formerly performed by upstream supply chain partners.
14. Benefits of high and low inventory levels/purchases: Pros of high inventory levels- Higher
levels of customer service, quantity discounts may be possible, fewer orders will need to be placed, greater security
against unexpected demand variability.
Pros of Low inventory levels- Less storage space required, lower chance of inventory obsolescence and shrinkage, less
inventory typically means less materials handling requirements. Less money invested in inventory means more money
available for investment opportunities.
15. What is EOQ?: Economic Order Quantity- It's the lot size that will minimize total annual inventory cost (TC);
it is therefore seen as the optimal lot size. EOQ= Sqrt[(2DS)/H]
16. EOQ's relationship to holding costs and ordering costs?: Basically, if a manager wanted
to minimize total inventory cost they could calculate EOQ and find the optimal order size. EOQ can also be described
as the lot size where annual holding costs is equal to annual ordering costs.
17. What does it mean AHC > AOC? AHC < AOC? Should you increase or decrease
Q in each case?: AHC is greater than AOC - Holding costs are too high - You are to the right of EOQ. Decrease
lot size to reduce TC.
AOC is greater than AHC -Holding costs are too low, you are to the left of EOQ, increase lot size, to reduce TC.
