SCM 344 Exam 2 Study Guide
1. Inventory Management Approaches (3 key factors of difference) - 1. Dependent vs.
Independent demand
2. Pull vs. Push
3. System-wide vs. Single-facility solution
1.1 Dependent vs. Independent demand - - Independent demand is unrelated to the
demand for other items
- Dependent demand is directly related to, or derives from the demand for another
inventory item or product
1.2 Pull vs. Push - - The "pull" approach (Dell) relies on *customer orders* to *move
product through a logistics system*
- The "push" approach (Apple) uses *inventory replenishment techniques* in
anticipation of *demand to move products*
2. 3 type of Modeling approaches- Network design - 1. Optimization Models
2. Simulation Models
3. Heuristic Models (Experimental/ Exploratory)
Optimization models - - Find the "best" or optimum solution
- Recognizing relevant constraints
Simulation models - -Design to develop a computer representation of S/C Network
-Observe changes as cost structures, constraints, and other factors are varied.
3.1 Just in time (JIT) - - Design to manage lead time and to eliminate waste
- Saves money on downstream inventories by placing greater reliance on improved
responsiveness flexibility
- Place a high priority on efficient and dependable manufacturing processes.
- Demand effective and dependable communications & IT
- High-quality, consistent transportation services
MRP (Material Requirements Planning) - - Designed to translate a master production
schedule into:
+ time-phase net inventory requirements
+ the planned coverage of such requirements for each component item needed to
implement this schedule.
- Deals specifically with supplying materials & component parts whose demand
depends on the demand for a specific end product
DRP (Distribution Resource Planning) - - Accomplish for outbound shipments while
MRP accomplishes for inbound shipments
, - DRP is usually coupled with MRP to manage the flow and timing of inbound materials
and outbound FGs
- Determines replenishment schedules between a firm's manufacturing facilities & it's
DCs
VMI (Vendor Managed Inventory) - manages *outside* a firm's logistics network,
specifically inventories held in its customer's DC's
Inventory Classification - 1. ABC Analysis
2. Pareto's Law ( the "80-20" rule)
4.1 ABC Analysis ( according to the relative impact/ value of the items) - - A items - the
most important
- B items - lesser important
- C items- the least important
4.2 Pareto's Law (80-20 Rule) - A relatively small percentage of *INVENTORY* might
account for a large percentage of the *overall impact/value*.
5. Cost in a distribution center - 1. Transportation Costs
2. Cost of lost sales
3. Inventory costs
4. Warehousing costs
5.3 Inventory costs - A high stocking point increase:
- Safety stock levels
- Inventory carrying cost in the S/C
5.4 Warehousing costs - - A larger # of facilities increase:
+ Administrative costs
+ Operational costs
- A warehouse will require:
+ Its own leadership team
+ Support personel
+ Technology
+ Administrative space
6. Different forecast measures - 1. Cumulative sum of forecast errors (CFE)
2. Mean squared error (MSE)
3. Mean absolute deviation (MAD)
4. Mean absolute percentage error (MAPE)
5. Track signal
CFE (cumulative sum of forecast errors) - calculates the total forecast error for a set of
data, take both poz & neg errors into consideration.
1. Inventory Management Approaches (3 key factors of difference) - 1. Dependent vs.
Independent demand
2. Pull vs. Push
3. System-wide vs. Single-facility solution
1.1 Dependent vs. Independent demand - - Independent demand is unrelated to the
demand for other items
- Dependent demand is directly related to, or derives from the demand for another
inventory item or product
1.2 Pull vs. Push - - The "pull" approach (Dell) relies on *customer orders* to *move
product through a logistics system*
- The "push" approach (Apple) uses *inventory replenishment techniques* in
anticipation of *demand to move products*
2. 3 type of Modeling approaches- Network design - 1. Optimization Models
2. Simulation Models
3. Heuristic Models (Experimental/ Exploratory)
Optimization models - - Find the "best" or optimum solution
- Recognizing relevant constraints
Simulation models - -Design to develop a computer representation of S/C Network
-Observe changes as cost structures, constraints, and other factors are varied.
3.1 Just in time (JIT) - - Design to manage lead time and to eliminate waste
- Saves money on downstream inventories by placing greater reliance on improved
responsiveness flexibility
- Place a high priority on efficient and dependable manufacturing processes.
- Demand effective and dependable communications & IT
- High-quality, consistent transportation services
MRP (Material Requirements Planning) - - Designed to translate a master production
schedule into:
+ time-phase net inventory requirements
+ the planned coverage of such requirements for each component item needed to
implement this schedule.
- Deals specifically with supplying materials & component parts whose demand
depends on the demand for a specific end product
DRP (Distribution Resource Planning) - - Accomplish for outbound shipments while
MRP accomplishes for inbound shipments
, - DRP is usually coupled with MRP to manage the flow and timing of inbound materials
and outbound FGs
- Determines replenishment schedules between a firm's manufacturing facilities & it's
DCs
VMI (Vendor Managed Inventory) - manages *outside* a firm's logistics network,
specifically inventories held in its customer's DC's
Inventory Classification - 1. ABC Analysis
2. Pareto's Law ( the "80-20" rule)
4.1 ABC Analysis ( according to the relative impact/ value of the items) - - A items - the
most important
- B items - lesser important
- C items- the least important
4.2 Pareto's Law (80-20 Rule) - A relatively small percentage of *INVENTORY* might
account for a large percentage of the *overall impact/value*.
5. Cost in a distribution center - 1. Transportation Costs
2. Cost of lost sales
3. Inventory costs
4. Warehousing costs
5.3 Inventory costs - A high stocking point increase:
- Safety stock levels
- Inventory carrying cost in the S/C
5.4 Warehousing costs - - A larger # of facilities increase:
+ Administrative costs
+ Operational costs
- A warehouse will require:
+ Its own leadership team
+ Support personel
+ Technology
+ Administrative space
6. Different forecast measures - 1. Cumulative sum of forecast errors (CFE)
2. Mean squared error (MSE)
3. Mean absolute deviation (MAD)
4. Mean absolute percentage error (MAPE)
5. Track signal
CFE (cumulative sum of forecast errors) - calculates the total forecast error for a set of
data, take both poz & neg errors into consideration.
