logistics management

Slide 6.1

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Chapter 6:

Supply chain planning and control

Slide 6.2

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Slide 6.3

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

The purpose of a manufacturing planning and control (MPC) system is to meet

customer requirements by enabling managers to make the right decisions.

The system coordinates information on key „source–make–deliver‟ processes to

enable material to flow efficiently and effectively.

Three time horizons are involved for all of these processes :

• Long term: to support decisions about capacity provision. These decisions are

essentially strategic, and answer the questions how much capacity is needed,

when and of what type?

• Medium term: to match supply and demand. Plan in more detail over the next 12

months to ensure that forecast demand.

• Short term: to meet day-to-day demand as it unfolds. Make weekly production

plans to meet specific customer orders.

Planning and control within manufacturing

Slide 6.4

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.1 The focal firm „game plan‟ (Source: From Manufacturing Planning and Control for Supply Chain Management, 5th Ed., McGraw-Hill (Vollman, T .E., Berry, W.L., Whybark, D.C. and Jacobs, F.R. 2005), reproduced with permission of the McGraw-Hill Companies.)

Slide 6.5

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

-The top section is called the „front end‟, and provides an overall match of demand

and resource.

- Demand management: collates demand from all sources – external (forecasts

and orders), internal (other firms within the organisation), and spares.

- Resource planning: pooling demand and passing it on to manufacturing must

be moderated by capacity to deliver. Otherwise, a focal firm is at risk of being

unable to fulfil marketing plans that do not take into account the realities of what

can be done.

- Sales and operations planning (SOP): is the module concerned with matching

of demand management and resource planning. The aim of SOP is to maintain

balance between demand and supply.

- Master production scheduling (MPS): is the disaggregated form of the SOP

Slide 6.6

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

-Material and capacity planning (engine room): from overall demand by SKU

(stock keeping unit) it is next necessary to develop detailed plans by part number.

For each part and subassembly, detailed plans show how many and when each

must be made.

- Bill of material: Is a list of the parts needed to manufacture any particular end

item in the master schedule. The required parts may include assemblies,

subassemblies, manufactured parts, and purchased parts.

- MPC execution systems (back end): the outputs from material and capacity

plans in the engine are sets of instructions to suppliers, manufacturing and

distribution. These schedules are in the form of purchase orders, works orders (or

schedules for MTS) and shipping orders – hence the familiar „source–make–

deliver‟ processes at the bottom of Figure 6.1.

Slide 6.7

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.2 Structured bill of materials for sponge cake

- Bill of material: Is a list of the parts needed to manufacture any particular

end item in the master schedule. The required parts may include assemblies,

subassemblies, manufactured parts, and purchased parts.

Slide 6.8

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Table 6.1 Master production schedule (MPS) for sponge cakes (before postponement)

- The plan indicates when and how much of each product will be demanded.

- While total daily cake demand is reasonably stable, at around 200 cakes, the

demand for each variant is highly erratic.

Slide 6.9

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Table 6.2 Gross and net requirement calculations for one week demand for sponge

cake (before postponement). „Exploding‟ is indicated by arrows

Slide 6.10

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

-The MRP (material requirements planning) calculations, which are shown for

the same 1 week period as the MPS, can be explained as follows:

1 „Gross requirement‟ for „total finished cakes‟, and each cake variant, is taken

from the MPS.

2 „Net requirement‟ of cakes is calculated by subtracting the existing inventory from

the gross requirement.

3 Inventory of finished cakes is high (equivalent to almost four days‟ demand)

because demand for each variant is highly variable and therefore sales forecasts

are inaccurate.

4 The net requirement for total finished cakes is exploded (by multiplying it by the BOM quantity for each cake mix ingredient plus icing) to give the gross requirement

for each of the cake mix ingredients and the icing.

5 The net requirement for each of the cake ingredients is calculated by subtracting

the existing inventory and any „scheduled receipts‟

Slide 6.11

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

6- The inventory of „cake mix‟ ingredients is low (equivalent to about one day‟s

demand with another day‟s demand scheduled for receipt). This is a result of the

relatively stable demand for the total number of cakes leading to accurate sales

forecasts.

7- The net requirement for each of the „finished cake variants‟ is exploded (by

multiplying it by the BOM quantity for jam) to give the gross requirement for each jam flavour.

The net requirement of jam is calculated in the same way as for cake mix

ingredients (point 5 above).

8- Inventories of the various jams are high (they cover requirements for the coming

weeks without need for scheduled receipts), and therefore the net requirement is

zero. This is due to inaccurate sales forecasts caused by the erratic demand for

each cake variant.

Slide 6.12

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

•The management of inventories of independent demand items using order point methods.

•These are aimed at optimising the trade-off between inventory holding costs and the preparation costs of changeover (manufacturing) or of placing an order

(retailing and manufacturing).

•While the concept of „economic‟ batch sizes and order sizes has been widely

superseded by other considerations, as we shall see, its principles help us to

grasp the nature of some of the hidden costs of inventory decisions.

Managing inventory in the supply chain

Slide 6.13

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.3 When: the re-order point

Slide 6.14

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

„Economic’ batch quantity (EBQ) formula: answers the question “ how many

parts to make at a time?”

- Similar principles are used to determine how many parts at a time to order from

suppliers in „economic‟ order quantities (EOQs).

- Both EBQ and EOQ assume that parts are used at a uniform rate (i.e. that

demand is stable), and that another batch of parts should be made or ordered

when stock falls below the re-order point.

- A buffer (or safety) stock line is shown below the re-order level. Buffer stock

acts as a „safety net‟ in order to cushion the effects of variability in demand and

lead times.

Buffer stock is a function of the service level (risk of stock outs), lead time

variability and demand variability.

The re-order point is therefore the sum of the forecast demand during the

lead time plus the buffer stock requirement

Economic’ batch sizes and order sizes

Slide 6.15

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.4 Economic batch quantity

Slide 6.16

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

• The EBQ increases with usage rate and changeover cost, and

reduces with manufactured cost per unit and inventory carrying cost.

• Figure 6.4 shows how changeover costs reduce as the batch size

increases: the bigger the batch size, the lower the changeover costs

per unit.

• Inventory carrying costs increase linearly with batch size: the bigger

the batch size, the bigger the carrying costs.

• A total cost line can be added, which is at a minimum when the two

lines cross.

Slide 6.17

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.5 As EBQ → 1

Slide 6.18

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Slide 6.19

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Table 6.3 Economic order quantity example

Slide 6.20

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Table 6.4 Periodic order quantity example

Slide 6.21

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Periodic Review

Slide 6.22

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Planning and control in retailing

• Retailing is faced with planning and control challenges which are quite

distinct from manufacturing:

- A retailer cannot generate sales without stock.

- The product range that has to be supported on the shelf is comparatively

wide.

- Several stages of the internal supply chain must be coordinated –

depots, back of store and front of store.

- Retail profit margins in grocery are tighter (2–4 per cent) than for large,

branded manufacturers (8–10 per cent).

- Demand can be affected by changes that are difficult to forecast, such

as seasonality, fashion, endorsements and promotions.

- „Best before‟ and „use by‟ dates for fresh produce increase obsolescence

pressures and inventory turns.

- Reverse logistics is more complicated because product is being reversed

from one point (the store) to a multitude of supply chains (suppliers).

Slide 6.23

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.6 EPOS data for last five weeks

- Examination of this very typical retail demand series shows that the overall demand

pattern for each week is similar, but is by no means identical. Peak demand is usually

(but not always) on a Saturday, while lowest demand is on Sundays when trading

hours are restricted.

Slide 6.24

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Inter-firm planning and control

Ccoordinating logistics between supply partners is

challenging,:

- The number of processes is so much greater.

- Differences in process technology. - Differences in working routines.

- Priority planning.

- Inadequacies in manufacturing planning and control (MPC)

systems design.

Slide 6.25

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Implications of poor coordination

• One consequence of poor coordination within a supply

network is amplification of changes in demand upstream.

• Amplification of demand changes has been called the

bullwhip effect.

Causes of the bullwhip effect:

- Updating of demand forecasts.

- Order batching.

- Price fluctuations.

- Rationing and shortage gaming.

• To make matters even worse, it is quite possible for

material movements in supply chains to descend into

chaos.

Slide 6.26

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.7 The „bullwhip effect‟ at work

Slide 6.27

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Overcoming poor coordination in retail supply chains

• A number of initiatives have been launched to promote better coordination

between supply chain processes in retailing.

• Efficient consumer response (ECR) is designed to integrate and rationalise

product assortment, promotion, new product development and replenishment

across the supply chain.

• Generally, ECR initiatives aim to promote greater collaboration between

manufacturers and retailers.

• The main areas addressed under ECR initiatives are category management,

product replenishment and enabling technologies. These can be broken down

into 14 areas where individual as well as well-integrated improvements can be

made in order to enhance efficiency ( Figure 6.8).

Slide 6.28

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.8 ECR improvement categories (Source: Fernie, 1998: 30)

Slide 6.29

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.9 An RFID system (Source: Beck, 2004)

-Figure 6.9 shows how the reader can relay this information to a management

system that can create a picture of what merchandise is where at a level of detail

that has not previously been possible.

Slide 6.30

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Collaborative planning, forecasting and

replenishment (CPFR)

• Collaborative planning, forecasting and replenishment (CPFR) is

aimed at improving collaboration between buyer and supplier so that

customer service is improved while inventory management is made

more efficient.

• A nine-step business model has been developed that provides an

insight into the effort required by both supplier and customer.

• CPFR focuses on the process of forecasting supply and demand by

bringing various plans and projections from both the supplier and the

customer into synchronisation.

Slide 6.31

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.10 A collaborative planning pilot

The manufacturer‟s national distribution centre (NDC) supplied one of the retailer‟s

regional distribution centres (RDCs), which in turn served ten stores in the pilot.

Slide 6.32

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.11 Pipeline map at start

- Figure 6.11 provides an inventory profile across the supply chain. The sum of

the vertical (average days of stock) and horizontal (average lead time in days)

gives the total time for a new batch of product to progress from manufacturing

site to shelf. This totals a massive four–five weeks!

Slide 6.33

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Figure 6.12 Pipeline map: at end of pilot

By tracking daily demand, it was possible to allow for the randomness without

anything like the current quantity of safety stock in the system. A new replenishment

algorithm was developed that was based on the daily error between forecast and

actual, and which added an extra day‟s buffer stock.

It soon became obvious that it was possible to run the system on far lower

stock levels at the retailer’s NDC.

Slide 6.34

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Benefits of electronic collaboration

• Nestlé UK states that the advantages of collaborative systems

are significant.

Some of theses benefits:

- Improved availability of product to the consumer.

- Total service is improved, total costs are reduced.

- Processes that span two or more companies become far

more integrated and hence simple, standard, speedy and

certain.

- Information is communicated quickly, in a more structured

way.

- Etc.

Slide 6.35

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Vendor-managed inventory (VMI)

• Vendor-managed inventory (VMI), is an approach to inventory

and order fulfilment whereby the supplier, not the customer, is

responsible for managing and replenishing inventory.

• How VMI works

The supplier tracks their customers‟ product sales and inventory

levels, sending goods only when stocks run low. The decision to

supply is taken by the supplier, not the customer as is the case

traditionally

The most widely used technology for broadcasting demand data

from the retailer customer is electronic data interchange (EDI).

Slide 6.36

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Potential benefits

The Immediate benefit to a supplier engaged in VMI is access

to data on:

 Customer sales;

 Iventory levels at the customer.

• The ability to dampen demand amplification caused by

infrequent, large orders from customers.

Slide 6.37

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Potential problems in setting up a VMI system

A number of problems can prevent the attainment of the above

benefits. Five of them are listed below.

• Unwillingness to share data

• Seasonal products

• Investment and restructuring costs

• Retailer vulnerability

• Lack of standard procedures

• System maintenance

Slide 6.38

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

Quick response (QR)

• Quick response (QR) is an approach to meeting customer

demand by supplying the right quantity, variety and quality

at the right time to the right place at the right price.

• The concepts behind QR are based on taking a total supply

chain view of an industry. From this perspective it is

possible to understand overall performance and the causes

of poor performance, and to identify opportunities for

improvement.

Slide 6.39

Harrison and van Hoek, Logistics Management and Strategy: Competing T hrough the Supply Chain , 4th Edition, © Pearson Education Limited 2011

QR and a time-based approach to improvement

• There are two main differences between QR and a time-

based approach to improvement:

- There is an emphasis on using actual customer

demand to pull products through the distribution and

manufacturing system.

- There is extensive use of information technology as

the preferred way to achieve pull.

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Chapter 7:

Just-in-time and the agile supply chain

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.1 The pyramid of key factors that underpin JIT

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.2 The Smog production process

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.3 Basic tasks in a car assembly plant

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.4 Lean thinking principles (Source: After Womack and Jones, 2003)

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Table 7.1 Comparison of lean supply with agile supply: the distinguishing attributes

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Table 7.2 Further characteristics of lean and agile supply

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.5 Supply capabilities supporting the agile supply chain

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.6 Segmenting the market

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.7 Supply chain response

Slide 7.*

Harrison and van Hoek, Logistics Management and Strategy: Competing Through the Supply Chain, 4th Edition, © Pearson Education Limited 2011

Figure 7.8 Classifying operating environments

MGT 322

Test Bank

Chapter 6

1. Corruption is displayed by ALL of the following EXCEPT: a. Poor customer service b. Stock write-offs or markdowns c. Outsource of production d. Resources devote to “firefighting”

2. Which of the following is a characteristic of the supply chain game plan? a. Planning and control in manufacturing b. Planning and control in logistics c. Planning and control in performance d. Planning and control in management

3. Overcoming poor coordination in retail supply chains includes: a. Efficient management response b. Efficient consumer response c. Inefficient management response d. Inefficient consumer response

4. Front end, engine and back end MPC modules are all connected to the __________________. a. Enterprise requirements project database b. Enterprise requirements product database c. Enterprise requisite product database d. Enterprise requirements planning database

5. Material planning and control in manufacturing is based on what three time periods? a. Long term, medium term, short term b. Long term, average term, short term c. Longest term, medium term, short term d. Long term, medium term, simple term

6. According to the textbook, the abbreviation EBQ is: a. Economic batch quantity b. Economic buyer quantity c. Economic best quality d. Economic buyer quest

7. The EBQ is determined by optimizing the ___________ between changeover cost between one batch and the next.

a. Risk b. Trade-off c. Time d. Logistics

8. What is the name of the formula used to find EBQ? a. Johnson formula b. Smith formula c. Wilson formula d. Simple formula

9. What is the widely used model for inventory control in retailing? a. Control review b. Product review c. Inventory review d. Periodic review

10. Retail margins are prone to erosion by __________________. a. Cost b. Erosion c. Profitability d. Loss

11. The core capability in retailing is ______________. a. Buying b. Selling c. Trading d. Profit

12. Which of the following is NOT one of the many factors that make life even more challenging, resulting from differences between the partners.

a. Differences in process technology b. Differences in working routines c. Priority planning d. Priority scheduling

13. Amplification of demand changes has been called the ___________________. a. Profit effect b. Bull-whip effect c. Change effect d. Demand effect

14. Chaos is characterized by ALL of the following EXCEPT: a. The same state is never repeated b. There is a definite rule with no random terms c. Two points that are initially close will drift apart over time d. Non successive iterations

15. Established as a grocery store initiative, ______________________________________ is designed to integrate and rationalize product assortment, promotion, new product development and replenishment across the supply chain.

a. Efficient consumer response b. Efficient chain response c. Product promotion d. Product replacement

16. Category management represents a focus on the development of ALL of the following EXCEPT: a. Account management b. Demand management c. Product management d. Price list restructuring

17. _______________ is a product tracking technology that is becoming applied widely in supply chain today.

a. UPC bar codes b. ISBN c. Radio frequency identification d. ISSN

18. Collaborative ____________, forecasting and replenishment (CPFR) is aimed at improving collaboration between buyer and supplier.

a. Processes b. Planning c. Production d. Placement

19. ________________ refers to the control of inventory management and replenishment by the supplier.

a. Vendor managed inventory b. Customer based preferences c. Inventory management d. Replenishment management

20. Quick response (QR) is based on taking a ____________________________, starting with supply chain mapping.

a. Product inventory b. Traditional inventory c. Total supply chain view d. Reduced supply chain view

MGT 322

Test Bank

Chapter 7

1. To meet demand instantaneously with perfect quality and not waste is the definition for __________________.

a. Waste management b. Just-in-time c. Quick production d. Quality management

2. A supply network can be conceived as ___________________. a. Chain of customers b. Chain of producers c. Chain of logistics d. Chain of factories

3. ______________ is a system of controlling materials whereby the user signals to the maker or provider that more material is needed.

a. Push scheduling b. Stop gap scheduling c. Pull scheduling d. Logistics scheduling

4. _____________ is a system of controlling materials whereby makers and providers make or send material in response to a pre-set schedule.

a. Pull scheduling b. Stop gap scheduling c. Logistics scheduling d. Push scheduling

5. How many factors determine the effectiveness with which JIT capability can be achieved? a. 4 b. 5 c. 7 d. 6

6. ____________ lead to delays, either through requiring rework or necessitating increased production to compensate for scrap.

a. Defects b. Waste c. Issues d. Shipping

7. Which of the following is NOT an issue of machine downtime? a. Unplanned downtime b. Planned maintenance c. Employee error d. Changeover times

8. _____________: making or delivering too much too early or ‘just in case”. a. Waste of defects b. Waste of unnecessary motions c. Waste of inappropriate processing d. Waste of overproduction

9. _________________: moving parts around from one process to the next adds no value. a. Waste of overproduction b. Waste of transporting c. Waste of unnecessary inventory d. Waste of defects

10. Which of the following terms refers to the elimination of waste in all aspects of business? a. Waste removal b. Production removal c. Lean thinking d. Reduced production

11. Which of the following principles is NOT involved in seeking perfection? a. Specifying value b. Identifying the value stream c. Making value flow d. Push scheduling

12. A focal firm should consider ALL of the following processes EXCEPT: a. Order to logistics b. Order to replenishments c. Order to production d. Product development

13. ____________ is quantified by taking measures of the different kinds of waste. a. Production b. Performance c. Supply chain d. Product development

14. Which of the following is NOT a distinguishing attribute of an agile system? a. Fashion goods b. Volatile c. Marketability costs d. Price

15. _______________ is a philosophy that has been derived from JIT principles. a. Agile systems b. Lean thinking c. Time-based mapping d. Customer service

16. The purpose of responding to customer demand is fundamental to the role of ___________. a. Customer service b. Production c. Logistics d. Agile thinking

17. Which of the following is NOT an example of the cost of complexity? a. Product, packaging, and stock keeping unit proliferation b. Delivery speed is too high c. Value of product is decreasing d. Promotions and special events that cause upswings in demand on sales efforts

18. The more accurate the _________________, the better a company can prepare in advance of demand occurring, avoiding the need for last minute response to unexpected demand as well as the cost of preparing for demand that might never occur.

a. Demand forecast b. Financial forecast c. Demand for services d. Expected demand

19. According to the textbook, the abbreviation S&OP represents? a. Standards and operation procedure b. Standard and operating procedures c. Sales and optional production d. Sales and operations planning

20. _____________ is usually much better downstream than upstream. a. Speed of replenishment b. Speed of production c. Speed of service d. Speed of shipping