Final Exam Review

Question 1

Order Management

Answer 1

The process you use to take, process and fill customer orders

Question 2

Costs of stock-outs

Answer 2

Lost revenues, loss of reputation, loss of follow-on business

Question 3

Costs of overstocks

Answer 3

Opportunity costs (money could be better spent elsewhere, on better selling products), holding costs, disposal costs

Question 4

3 core questions for getting inventory right

Answer 4

1. What does an effective and responsive order fulfillment system look like?
2. How can you effectively coordinate order management across intra- and intro-firm decision makers?
3. How can you improve quality of forecasts?

Question 5

7 rights of logistics

Answer 5

Product, customer, place, time, condition, cost, quantity

Question 6

____ is the most basic output of an order fulfillment system.

Answer 6

Product availability

Question 7

The overall likelihood of a perfect order is ____%.

Answer 7

85%

Question 8

An integrated business management process through which the executive leadership team continually achieves focus alignment and synchronization among all functions of the organization.

This includes product review, demand review and supply review.

Answer 8

Internal sales and operations planning (S&OP)

Question 9

A global, industry-wide process for trading partners to increase forecasting effectiveness through use of joint business planning process and common interfaces.

This includes strategy and planning, demand and supply management, execution and analysis.

Answer 9

External CPFR

Question 10

• Collaborate with internal departments
• Detailed sharing of information
• Break down barriers, promote responsibility

Answer 10

Features of S&OP

Question 11

• Collaborate with major customers
• Detailed sharing of information to help lower inventory
• Deals with suppliers as well as customers

Answer 11

Features of CPFR

Question 12

Complexity, ownership, uncertainty

Answer 12

Challenges of effective order management

Question 13

2 types of forecasting methods

Answer 13

Quantitative and Qualitative

Question 14

Forecasting demand through speaking to and surveying customers and experts

Answer 14

Qualitative forecasting

Question 15

Either correlational or time-series forecasting

Answer 15

Quantitative forecasting

Question 16

Forecasting using an “X predicts Y model”

Answer 16

Correlational forecasting

Question 17

Forecasting new values through examining and analyzing old values

Answer 17

Time-series forecasting

Question 18

2 forms of logistics information

Answer 18

Coordinating flows and operating flows

Question 19

A type of logistics information which facilitates planning across a firm and supply chain

Answer 19

Coordinating flows

Question 20

A type of logistics information which facilitates the day-to-day order fulfillment processes

Answer 20

Operating flows

Question 21

4 components of logistics information systems

Answer 21

• Order processing
• Decision support team,
• Research and intelligence
• Reports and outputs system

Question 22

• Deals with smaller, more frequent orders
• Involves extensive delivery networks
• Involves final consumers

Answer 22

Features of online retailing

Question 23

• Deals with fewer, larger orders
• Transportation methods vary by request of buyer
• Involves resellers

Answer 23

Features of in-store retailing

Question 24

Product movement

Answer 24

The movement of inventory to specified destinations

Question 25

Transportation is more than ___% of the cost of logistics

Answer 25

60%

Question 26

6 participants of transportation

Answer 26

1. Shipper / consignee 2. Carrier 3. Agent 4. Government 5. Public 6. Internet

Question 27

2 concerns (regulations) of government with transportation

Answer 27

economic regulation and social regulation

Question 28

Great access, high performing and reliable

Answer 28

Features of trucks

Question 29

Large volume, long distance, best in USA

Answer 29

Features of rail

Question 30

Cheap but slow

Answer 30

Features of water

Question 31

Highest value / most time-sensitive products, fast + expensive + secure

Answer 31

Features of air

Question 32

Economy of scale for transportation

Answer 32

The cost per unit weight decreases as the size of the shipment increases

Question 33

Economy of distance for transportation

Answer 33

The cost per unit weight decreases as the distance increases

Question 34

Economy of distance is also called the "_____."

Answer 34

Tapering principal

Question 35

Inventory turnover measures ____.

Answer 35

The number of times inventory is depleted and replenished in a year

Question 36

Dwell time measures ____.

Answer 36

How efficiently inventory moves through a supply chain

Question 37

In-stock rate measures ____.

Answer 37

Stock-out frequencies and in-stock frequencies

Question 38

Fill rate measures ____.

Answer 38

How much customer demand was satisfied without any stock-outs - this is a compliment of the in-stock rate

Question 39

2 major sources of uncertainty

Answer 39

1. Demand | 2. Performance cycle (our own logistics)

Question 40

Lead-time demand ordering is used when ____.

Answer 40

Order quantities change based on projected demand

Question 41

Lead-time demand ordering may be used when ordering ___ valuable products with ___ risk for obsolescence.

Answer 41

More, greater

Question 42

Fixed-order quantity ordering

Answer 42

- Used when the interval between ordering new orders will vary based on demand, but the quantity of each order remains constant - Requires constant monitoring of inventory

Question 43

Fixed-order interval ordering

Answer 43

- Used when the quantity of orders varies based on demand, but the intervals between each order remain constant - Requires demand forecasts for each interval

Question 44

4 inventory carrying cost allocations

Answer 44

1. Capital costs (the inventory itself) 2. Inventory service costs (insurance, taxes) 3. Storage space costs (warehouses) 4. Inventory risk costs (damage, obsolescence, etc.)

Question 45

Inventory turns equation

Answer 45

COGS / average inventory

Question 46

4 inventory reduction strategies

Answer 46

1. Forecasting 2. Inventory centralization 3. Postponement 4. Supply chain inventory coordination

Question 47

4 possible advantages of warehousing

Answer 47

1. Quick lead times to customers 2. Consolidation opportunities 3. Storage of inventory 4. Product mixing

Question 48

Manufacturing support warehouses

Answer 48

Warehouses which help to bring manufacturing plants the exact mix of materials required, in order to increase efficiency

Question 49

Mixing warehouses

Answer 49

Warehouses which help to bring customers specific mixes of products

Question 50

Consolidation warehouses

Answer 50

Warehouses which help to consolidate many smaller orders into fewer larger ones

Question 51

Breakbulk warehouses

Answer 51

Warehouses which help to breakdown and sort large shipments into smaller ones

Question 52

- Operated by 3rd party - Multiple customers - Less customization

Answer 52

Features of public warehouses

Question 53

- Operated by 3rd party - Longer term contracts - Usually 1 client per facility

Answer 53

Features of contract warehouses

Question 54

Operated by a single organization using it for inventory

Answer 54

Feature of a private warehouse

Question 55

____ warehouses are best.

Answer 55

Automated, private

Question 56

Square root law definition

Answer 56

A law which determines how inventory will change to account for uncertainty in demand as number of warehouse locations changes

Question 57

Square root law formula

Answer 57

Total inventory in potential facilities = total inventory in existing facilities / square root of (number of potential facilities / number of existing facilities