27 Multiple choice questions
- managing work-in-process inventory as it flows between stages of manufacturing. Master Production Schedule (MPS)
- 1.)Facility network
5.)Warehousing, Material handling and Packaging
- Service and Cost Minimization
-Firms must make appropriate tradeoffs between service and cost for each of their key customers
-Why would the tradeoff potentially be different by customer?
- Direct delivery is done through each stage of the ecelon process.
- 1.)Responsiveness - Satisfy customer requirements in a timely manner.
2.)Variance Reduction - The elimination of operations disruptions.
3.)Inventory Reduction - Control asset commitment and turn velocity.
4.)Shipment Consolidation - Reduce transportation costs through larger (and therefore fewer) shipments.
5.)Quality - Continuous improvement towards zero defects.
6.)Life Cycle Support - Cradle-to-cradle logistical support.
- Focused on achieving the lowest total cost across each function of logistics
A cost decision in one function should consider impact to costs of all other logistics functions
For example, transporting material the cheapest way is likely slower than other choices. This requires an increase in storage cost to hold the material longer
Therefore, would it still be the lowest total cost to use the cheapest mode of transportation?
- Focused on achieving the lowest possible cost for each individual function of logistics
For example, transport the material the cheapest way possible
Expected lowest cost based on decisions that were cheapest for individual functions
Ignored the impact of cost decisions across logistics functions
- Move goods and materials from suppliers to buyers
Move goods and materials between sites (internal & external)
Move finished goods to the customer
- -Cost -vs- Total Cost
-Balance Speed & Cost
- -1.)Availability - having inventory to consistently meet customer material or product requirements
-2.)Operational Performance - the time required to deliver a customer's order
Key metrics for this area involve delivery speed and consistency
Flexibility - to handle unexpected customer demand/requests
Malfunction and recovery time - logistical failures and corrections
-3.)Service Reliability - quality attributes of logistics
Key to quality is accurate measurement of availability and operational performance over time
->Industrial distribution/Consolidation warehouse
->Manufacturer->Wholesaler or distribution center ->Retailer
- -Nodes or "links" in the logistics supply chain
Base stock (sometimes also referred to as cycle stock)
Safety stock (possibly even strategic stock in addition to safety stock)
-Input and Output Requirements
Input = Demand (e.g., orders)
Output = Level of performance
May involve singe or multiple firms
- -Strategy & Design
and arranging inbound movement of materials, parts, and/or finished
inventory from suppliers into manufacturing or assembly plants,
warehouses or retail stores
-Sourcing or Strategic Sourcing
-Material Planning & Purchasing
- the movement of finished product to customers. The objective of logistics
- -Inventory Strategy
performance cycle represents elements of work necessary to complete the
logistics related to customer accommodation, manufacturing or
- Order processing
Warehousing/Materials Handling to support.... Procurement, Manufacturing, and Customer Accommodation
- -Order Processing
Integrated through a network of facilities
e.g., warehouses & distribution centers
- -(Dependent on other Logistics Areas
-Insourced -vs- Outsourced
- Value of the shipment = $25,000
Faster shipping is generally more expensive than slower shipping
Carrier 1 (slower/standard) costs $250 to make the shipment
Carrier 2 (faster/expedited) costs $20 more but delivers 1 day faster
Product in transit is a form of inventory
Holding costs for a shipment is 40% of value per year
No other cost differences across remaining logistics functions
Traditional cost you would choose carrier 1 beacause that is the lowest INDIVIDUAL cost. However Total cost method will consider more than that.
- (Annual holding cost X Product value) / 365
- -moved to the customer's point of consumption
-Products are delivered at the right time.
-Products are delivered to the desired location.
- Manufacturer -> Customer
- consists of a commitment to key customer expectations and requirements at a minimum cost
the design and administration of systems to control movement and
geographical positioning of raw materials, work-in-process, and finished
inventories at the lowest total cost.