BUS 355 EXAM 2 ESTRELLA
Terms in this set (70)
What is Capacity?
The capability of a worker, a machine, a workcenter, a plant, or an organization to produce output in a time period.
What factors impact Capacity?
1)number of shifts or lines
What capacity strategy has several advantages?
Lead Capacity Strategy
What is Lead Capacity Strategy?
A capacity strategy in which capacity is added in anticipation of demand.
What is Lag Capacity Strategy?
A Capacity Strategy in which capacity is added only after demand has materialized.
What is an example of Lag Capacity Strategy?
What is Match Capacity Strategy?
A capacity strategy that strikes a balance between the lead and lag capacity strategies by avoiding periods of high under-or-over utilization.
What is Virtual Supply Chain?
A collection of firms that typically exists only for a short period. Virtual Supply Chains are more flexible than traditional supply chains, BUT they are also less effective
When may a Virtual Supply Chain exist?
During the Holiday Season
What is a relatively new concept in capacity planning?
A Match Capacity Strategy
What is Variable Costs?
Expenses directly tied to the level of business activity
What is the equation to find Total Cost?
TC= FC + (VC*X)
VC= VARIABLE COSTS PER UNIT OF BUSINESS ACTIVITY
X= AMOUNT OF BUSINESS ACTIVITY
What is the equation for Break-Even-Point?
FC= FIXED COSTS
R= REVENUE PER UNIT OF BUSINESS ACTIVITY
VC= VARIABLE COST PER UNIT OF BUSINESS ACTIVITY
What is the Break-Even-Point?
The volume level for a business at which total revenues cover total costs.
What is the "Theory of Constraints"?
An approach to visualizing and managing capacity which recognizes that nearly all products and services are created through a series of linked processes, and in every case, there is at least one process step that limits throughput for the entire chain.
What is a Constraint?
The process step (or steps) that limits throughput for an entire process chain.
What is a Decision Tree?
A visual tool that decision makers use to evaluate capacity decisions.
What is the main advantage of a decision tree?
It enables users to see the interrelationships between decisions and possible outcomes.
What are the basic rules for using decision trees?
1)Draw a tree from left to right.
2)represent each "decision point" with a square, with different branches coming out of the square representing ALT. choices.
3)Represent outcome points with circles. Each possible outcome is represented by a branch with a probability (all sums up to 100%)
4)For expected value problems, calculate the financial result for each of the smallest branches and move from right to left by calculating weighted AVG for the branches, based on the probabilities.
What is "Learning Curve Theory"?
A body of theory based on applied statistics which suggests that productivity levels can improve at a predictable rate as people and even systems "learn" to do tasks more efficiently. In formal terms, learning curve theory states that FOR EVERY DOUBLING OF CUMULATIVE OUTPUT, THERE IS A SET PERCENTAGE REDUCTION IN THE AMT. OF INPUTS REQUIRED.
What is the equation for "Little's Law"?
I = R*T
I= AVG # of units in the system (also called INVENTORY)
R= AVG arrival rate (ex. THROUGHPUT RATE)
T= AVG time a unit spends in the system (ex. THROUGHPUT TIME)
What is "Global Sourcing"?
Managers have come to realize that to compete globally they need to source globally. 50% of companies have outsourced some of their back-office activities.
For the AVG. manufacturer, What percentage of the value of shipments comes from materials?
What is Profit Margin?
The ratio of earnings to sales for a given time period.
What is the equation for Profit Margin?
Profit Margin= 100% X (earnings/sales)
What is Return on Assets (ROA)?
A measure of financial performance, generally defined as earnings/total assets. Higher ROA values are preferred because they indicate that the firm is able to generate higher earnings from the same asset base.
What is the equation for ROA?
ROA = 100% X (earnings/assets)
What is the Profit Leverage Effect?
A term used to describe the effect of $1 in cost savings increasing pretax profits by $1 and a $1 increase in sales increasing pretax profits only by $1 multiplied by the pretax profit margin.
What is "Spend Analysis"?
The application of quantitative techniques to purchasing data in an effort to better understand spending patterns and identify opportunities for improvement.
Is there a single correct approach to spend analysis?
No, because the approach depends on the questions on hand.
What is Outsourcing?
The use of the supply chain partners to provide products or services.
What is Insourcing?
The use of resources within the firm to provide products or services.
What are the advantages of outsourcing?
- High strategic flexibility
- Low investment risk
- Improved cash flow
- Access to state-of-the-art products/services
What is a preferred supplier?
A supplier that has demonstrated its performance capabilities through previous purchase contracts and therefore receives preference during the supplier selection process.
What are the advantages of Multiple Sourcing?
-Spread risk (in event of a fire, strike, etc. at one supplier)
-Required if the purchased volume is too great for one supplier
-Desired if firm wishes to meet obligations to support minority suppliers.
-Can ensure that suppliers do no become "complacent"
-Can help keep inventory levels down
What is Single Sourcing?
A sourcing strategy in which the buying firm depends on a single company for all or nearly all of a particular item or service.
What is Multiple Sourcing?
A sourcing strategy in which the buying firm shares its business across multiple suppliers.
What is cross sourcing?
A sourcing strategy in which a company uses a single supplier for one particular part or service and another supplier with the same capabilities for a different part or service, with the understanding that each supplier can act as a backup for the other supplier.
What is the equation for weighted-point evaluation system?
Score(of supplier x) = E(the sum of)--> [Performance(of supplier x in regard to dimension Y)] * [Weight(assigned weight for performance dimension Y)]
What does RFQ stand for?
Request for quotation
What is RFQ?
A formal request for the suppliers to prepare bids, based on the terms and conditions set by the owner.
What is "Description by market grade/industry standard"?
A description method that is used when the requirements are well understood and there is common agreement between supply chain partners about what certain terms mean.
What is "description by brand"?
A description method that is used when a product or service is proprietary or when there is a perceived advantage to using a particular suppliers products or services.
What is "description by specification"?
A description method that is used when an organization needs to provide very detailed descriptions of the characteristics of an item or a service.
What is "description by performance characteristics"?
A description method that focuses attention on the outcomes the customer wants rather than on the precise configuration of the product or service.
What are the 2 types of contracts?
1) Fixed-Price contract
2) Cost-based contract
What is a Fixed-Price contract?
A type of purchasing contract in which the stated price does not change regardless of fluctuations in general overall economic conditions, industry competition, levels of supply, market prices, or other environmental changes.
What is a cost-based contract?
A type of purchasing contract in which the price of a good or service is tied to the cost of some key input(s) or other economic factors, such as interest rates.
In a recent survey of senior executives at global 1000 companies, what did they identify as the single biggest threat to their companies revenue streams?
Supply Chain disruptions
Logistics covers a wide range of business activities including what??
-Logistics Information Systems
What is the cost of logistics in the US? (IN PERCENTAGE OF GDP)
The cost of logistics in the US is 7.7% of GDP.
What percentage do logistics costs account for Total Costs?
5-35% of TOTAL COSTS
What are the 5 widely recognized transportation modes?
What is the most used transportation mode?
The highway (trucking)
What type of product does Water transportation carry?
material with high weigh to value ratio; Examples include petroleum, farm produce and timber.
What type of product does Rail transportation carry?
material with high weight to value ratio; much like water however it is more flexible.
What type of product does Air transportation carry?
materials with low weight to value ratio; high priority (next day) delivery; materials like electronics
What is direct truck shipment?
A shipment made directly, with no additional stops, changing of trucks, or loading of additional cargo.
What does LTL stand for?
Less Than Truckload shipment
What is less than truckload shipment?
A smaller shipment, often combined with other loads to reduce costs and improve truck efficiencies.
What is a "Hub-and-Spoke system"?
A form of warehousing in which strategically placed hubs are used as sorting or transfer facilities. The hubs are typically located at convenient, high-traffic locations. The "spokes" refer to the routes serving the destinations associated w/ the hubs.
What is Postponement Warehousing?
A form of warehousing that combines classic warehouse operations with light manufacturing and packaging duties to allow firms to put off final assembly or packaging of goods until the LAST POSSIBLE MOMENT.
What strategy adds flexibility because goods and materials can be maintained in their most generic form?
logistics information systems fall into what 3 major categories?
1) decision support tools
2) Planning systems
3) Execution systems
What are Planning Systems?
they help managers with specific activities, such as selecting a carrier for an outgoing shipment or developing a weekly schedule of deliveries. Nowadays the aid of computer based planning systems allow logistic managers to analyze an array of wider range of options.
What are Common carriers?
Also known as a public carriers, a transportation service provider that handles shipments on a case-by-case basis; without the need for contracts, but usually will be on contracts.
What are Contract carriers?
A transportation service provider that handles shipments for other firms based on long-term agreements or contracts.
What is Third-party logistics provider (3PL)?
A service firm that handles all of the logistics requirements for other companies. 3PLs focus on their core competencies yet still enjoy state of the art logistics capabilities.
What is a perfect order?
A term used to refer to the timely, error-free provision of a product or service in good condition.
What is the equation to find percentage of a perfect order?
%PO= 100% * [(total orders-orders 1 or more defects)/total orders]