5.5 Production planning Flashcards
Supply chain
The sequence of activities from the production of a good or service to it being delivered to the end customer.
Supply chain management
Managing and controlling these logistics, which must be efficient and cost effective for a business to be profitable.
Key functions of supply chain management:
- stock control
- quality control
- supplier networks
- transportation
Stock control
Examines the need for businesses to identify their optimum stock levels in order to remain competitive:
- just-in-case (JIC)
- just-in-time (JIT)
Just-in-time (JIT) - stock control
System based on stocks being delivered as and when they are needed in the production process.
Just-in-case (JIC) - stock control
Traditional stock management system that maintains buffer stocks in case there are unexpected fluctuations in supply or sudden changes in demand.
Categories of stock
- raw materials
- work-in-progress
- finished goods
Stock control chart key features:
- buffer stock
- lead time
- re-order level
- re-order quantity
Buffer stock (stock control)
The minimum stocks that should be held to ensure that production could still take place should a delay in delivery occur or production rates increase.
Lead time (stock control)
The normal time taken between ordering new stocks and their delivery.
Re-order quantity (stock control)
The amount of new stock ordered.
Re-order level (stock control)
The level of stocks that will trigger a new order to be sent to the supplier.
Capacity utilization rate
The proportion of maximum output capacity currently being achieved.
Productivity rate
The ratio of outputs to inputs during production.
Cost to buy (CTB)
expected volume x the unit cost from an external supplier (including transport costs)
