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UA / Marketing / MKT 300 / What are the four stages of supplier selection?

What are the four stages of supplier selection?

What are the four stages of supplier selection?

Description

School: University of Alabama - Tuscaloosa
Department: Marketing
Course: Marketing
Professor: Susan fant
Term: Spring 2015
Tags: OM 300, OM, and Operations Management
Cost: 50
Name: OM 300 Study Guide for Test 2
Description: This study guide covers chapters 6s, and 11 as well as spreadsheet modeling and optimization. There are also numerous practice problems for chapter 6s and 11.
Uploaded: 03/05/2016
14 Pages 97 Views 6 Unlocks
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OM 300  


What are the four stages of supplier selection?



Andrea Marks

Operations Management Test Review (Chapters Spreadsheet Modeling, 6s, 11, and Linear Programming and Optimization) 

Spreadsheet Modeling: 

∙ Mental model- a decision-making process we conduct in our heads. ∙ Visual model- a model in which graphics or diagrams are used to convey real  objects or situations

o Ex: map and graph

∙ Physical model- a model in which physical objects are used to represent the real  objects or situations, usually on a smaller scale

o Ex: model cars and buildings  

∙ Mathematical model- a model in which quantitative relationship are used to  represent a real situation or phenomena


A major issue in logistics is what?



o Ex: a weather prediction model

o

∙ Spreadsheet model- a mathematical model implemented in the form of a  computer spreadsheet

∙ Inputs- quantities or factors that affect the decision making situation ∙ Controllable inputs (decision variables)- quantities or factors that a decision  maker can change for the current situation


What are the three issues complicate the development of an efficient, integrated supply chain?



o Ex: the order quantity in an inventory planning situation

∙ Uncontrollable inputs (parameters)- quantities or factors that a decision maker cannot control for the current situation If you want to learn more check out In the visual system, what is fovea?

o The unit cost of a raw material that must be purchased to produce a product ∙ Output- a quantity or factor that is calculated from the inputs of a model and is of  interest of the decision maker

∙ Model- a purposeful representation of the key factor in a situation and the  relationships among them

∙ Base case- the model containing the “default” or “given” values for the inputs;  this is normally the starting point for the analysis

∙ Correct model- a model is correct if it produces the numerically correct values for the outputs for the current values of the inputs

∙ Flexible model- a model is flexible if it produces the numerically correct values  for the outputs for any legitimate values of the inputs, without making any  changes to the formulas in the model

∙ Documented model- a model is documented if someone else generally familiar  with the situation can understand the model without having the model developer  explain it in detail; can be put away for months at a time, and when viewed again  by the modeler, is readily understandable

∙ Goal seek- an analysis tool in Excel that allows one to search for the value of an  input that results in an output becoming a specific valueDon't forget about the age old question of Why is hemispheric lateralization important?

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o

∙ Data table- an analysis tool in Excel that allows one to vary one (or two, in a two way Data Table) input and automatically calculate the value of an output ∙ Relative reference- a cell reference that changes when it is copied  ∙ Absolute reference- a cell reference that stays the same when copied  

Chapter 6s: Statistical Process Control If you want to learn more check out What is unique about make-believe play in early childhood?

∙ Statistical process control (SPC)- a process used to monitor standards by  taking measurements and corrective actions as a product or service is being  produced  

∙ Control chart- a graphical presentation of process data over time ∙ Natural variations- variability that affects every production process to some  degree and is to be expected; also known as common cause

o

∙ Assignable variation- variation in a production process that can be traced to  specific causes

oDon't forget about the age old question of Who is the brother of zeus?

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∙ X bar chart- a quality control chart for variables that indicates when changes  occur in the central tendency of a production process  

∙ R chart- a control chart that tracks the “range” within a sample; it indicates that a  gain or loss in uniformity has occurred in dispersion of a production process ∙ Central limit theorem- the theoretical foundation for x-bar charts, which states  that regardless of the distribution of the population of all parts or services, the  distribution of x-bars tends to follow a normal curve as the number of samples  increases Don't forget about the age old question of How do you name a compound?

o  o X-bar bar = μ We also discuss several other topics like Is smoking marijuana in a city park in fort collins a deviant act?

o σ x-bar = σ /(root (n))

*** on the  

formula  

sheet!

*** on the  

formula  

sheet!

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∙ P-chart- a quality control chart that is used to control attributes

*** on the  

formula  

sheet!

o

∙ Run test- a test used to examine the points in a control chart to see if nonrandom  variation is present

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o

o

∙ Cp- a ratio for determining whether a process meets design specifications; a ratio  

of the specification to the process variation o

*** on the  formula  sheet!

∙ Cpk- a proportion of variation (3 σ ) between the center of the process and the  nearest specification limit

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o

formula  sheet!

∙ Acceptance sampling- a method of measuring random samples of lots or  batches of products against predetermined standards  

o

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∙ Operating characteristic (OC) curve- a graph that describes how well an  acceptance plan discriminates between good and bad lots  

o

∙ Producer’s risk- the mistake of having a producer’s good lot rejected through  sampling

∙ Consumer’s risk- the mistake of a customer’s acceptance of a bad lot overlooked through sampling

∙ Acceptable quality level (AQL)- the quality level of a lot considered good ∙ Lot tolerance percentage defective (LTPD)- the quality level of a lot  considered bad

∙ Type I error- statistically, the probability of rejecting a good lot ∙ Type II error- statistically, the probability of accepting a bad lot  ∙ Average outgoing quality (AOQ)- the percentage defective in an average lot of  goods inspected through acceptance sampling

o

o

Chapter 6s Practice Problems:

∙ If the mean of a particular sample is within control limits and the range of that  sample is not within control limits:

o The process is not producing within the established control limits ∙ The central limit theorem:

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o Allows managers to use the normal distribution as the basis for building  some control charts

∙ The type of chart used to control the central tendency of variables with continuous  dimensions is:

o X-bar chart

∙ If parts in a sample are measured and the mean of the sample measurement is  outside the control limits:

o The process is out of control, and the cause should be established ∙ Control charts for attributes are:

o Both p-charts and c-charts

∙ The ability of a process to meet design specifications is called:

o Process capability

∙ The _______ risk is the probability that a lot will be rejected despite the quality level exceeding or meeting the ______:

o Producer’s; AQL

∙ The R chart is used:

o To indicate gains or losses in uniformity

∙ Which type of control chart should be used when it is possible to have more than  one mistake per item?

o C-chart

∙ One type of control chart for attributes is a:

o P-chart

∙ If a sample of parts is measured and the mean of the sample measurements is  outside the control limits:

o The process is out of control and the cause can be established

∙ The object of a statistical process control (SPC) system is to:

o Provide a signal when assignable variations are present

∙ In acceptance sampling, the producer’s risk is the risk of having a: o Good lot rejected

∙ Twenty samples of size 5 are taken from a stable process. The average means of  the sample means is 42.5, and the average range of the samples is 1.5. What is  the UCL for the X-bar chart?

o 43.37

∙ Twenty samples of size 5 are taken from a stable process. The average means of  the sample means is 42.5, and the average range of the samples is 1.5. What is  the UCL for the R-chart?

o 3.17

∙ Twenty samples of size 100 are taken. The total number of defective items is 75.  What is the UCL of the 3-sigma (z=3) p-chart?

o 0.094

∙ A customer service hotline has received an average of 7 complaints a day for the  last 25 days. What type of control chart should be used to monitor this hotline? o C-chart

∙ For the last 30 days, the number of mistakes on the daily report has averaged 4.5.  What would the UCL be if a 3-sigma c-chart was constructed?

o 10.86

∙ A bottling company runs a filling process that should fill bottles with 12 plus or  minus 0.04 ounces. A capability study reveals that the process mean is 12 ounces

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and the standard deviation is 0.01 ounces. What is the capability of the bottling  process?

o 1.33

∙ A manufacturing engineer is designing a process that must be able to produce a  shaft with a diameter of 2.5 cm plus or minus 0.01 cm. If the process capability  must be 1.5, what is the maximum process standard deviation?

o 0.00222

∙ Which is the best statement regarding an operating characteristic curve? o As the AQL decreases, the producer’s risk also decreases

∙ A box of 1000 parts is subjected to an acceptance sampling plan that examines  only 50 parts. The actual fraction defective in the box is 0.02 and the sampling  plan has a 0.53 probability of accepting a box of this quality. What is the average  outgoing quality for this scenario?

o 0.01

∙ When the process average is under control, the process dispersion is also under  control.

o FALSE

∙ The central limit theorem states that regardless of the distribution of all parts (or  services), the distribution of x-bars will tend to follow a normal curve as the  number of samples increases.

o TRUE

∙ Control charts for variables classify items as defective or not defective. o FALSE

∙ One popular measure of process capability is Cpk.

o TRUE

∙ When the process fraction defective is low, the p-chart may have a negative lower  control limit.

o FALSE

∙ If the producer’s risk increases, then the consumer’s risk decreases. o TRUE

∙ If a process is in control, then all of the output produced is acceptable for use. o FALSE

∙ Which type of control chart should be used when it is possible to have more than  one mistake per item?

o C-chart

∙ Which of the following statements is NOT true about the process capability ratio? o A capable process has a process capability ratio less than one

∙ Which is the best statement regarding an operating characteristic curve? o As the AQL decreases, the producer’s risk also decreases

Chapter 11: Supply Chain Management 

∙ Supply chain management- the coordination of all supply chain activities  involved in enhancing customer value

o The objective of supply chain management is to coordinate activities within  the supply chain to maximize the supply chain’s competitive advantage and  benefits to the ultimate consumer

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∙ Make or buy decision- a choice between producing a component or service in  house or purchasing it from an outside source

∙ Outsourcing- transferring a firm’s activities that have traditionally been internal  to external suppliers

∙ Six supply chain strategies for goods and services to be obtained from outside  sources:  

o Negotiating with many suppliers and playing one supplier against another o Developing long term partnering relationships with a few suppliers o Vertical integration

o Joint ventures

o Developing keiretsu networks

o Developing virtual companies that use suppliers on an as needed basis ∙ Vertical integration- developing the ability to produce goods or services  previously purchased or actually buying a supplier or a distributor  ∙

∙ Keiretsu- a Japanese term that describes suppliers who become part of a  company coalition

∙ Virtual companies- companies that rely on a variety of supplier relationships to  provide services on demand; also known as hollow corporations or network  companies

∙ Cross sourcing- using one supplier for a component and a second supplier for  another component, where each supplier acts as a backup for the other

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∙ Three issues complicate the development of an efficient, integrated supply chain: o Local optimization

o Incentives

o Large lots

∙ Bullwhip effect- the increasing fluctuation in orders that often occurs as orders  move through the supply chain

∙ Pull data- accurate sales data that initiate transactions to “pull” product through  the supply chain

∙ Single stage control of replenishment- fixing responsibility for monitoring and  managing inventory for the retailer

∙ Vendor managed inventory (VMI)- a system in which a supplier maintains  material for the buyer, often delivering directly to the buyer’s using department ∙ Collaborative planning, forecasting, and replenishment (CPFR)- a system in which members of a supply chain share information in a joint effort to reduce  supply chain costs

∙ Blanket order- a long term purchase commitment to a supplier for items that are  to be delivered against short term releases to ship

∙ Postponement- delaying any modifications or customization to a product as long  as possible in the production process

∙ Drop shipping- shopping directly from the supplier to the end consumer rather  than from the seller, saving both time and reshipping costs

∙ Four stages of the supplier selection:

o Supplier evaluation- finding potential vendors and determining the  likelihood of their becoming good suppliers

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o Supplier development- may include everything from training, to  engineering and production help, to procedures for information transfer o Negotiations- approaches taken by supply chain personnel to set prices  The cost based price model

 The market based price model

 Competitive bidding

o Contracting- a design to share risks, share benefits, and create incentives  so as to optimize the whole supply chain

∙ E procurement- purchasing facilitated through the internet

∙ Logistics management- an approach that seeks efficiency of operations through  the integration of all material acquisition, movement, and storage activities  ∙ Six major means of distribution:

o Trucking

o Railroads

o Airfreight

o Waterways

o Pipelines

o Multimodal

∙ Channel assembly- postpones final assembly of a product so the distribution  channel can assemble it

∙ Reverse logistics- the process of sending returned products back up the supply  chain for value recovery or disposal  

∙ Closed loop supply chain- a supply chain designed to optimize both forward and reverse flows  

∙ Inventory turnover- cost of goods sold divided by average inventory o = cost of goods sold / inventory investment

o weeks and supply = inventory investment / (annual cost of goods sold / 52  weeks)

∙ Supply Chain Operations Reference (SCOR) model- a set of processes,  metrics, and best practices developed by the Supply Chain Council

o Plan

o Source

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o Make

o Deliver

o Return

Chapter 11 Practice Questions:

∙ The objective of supply chain management is to _____________________. o Build a chain of suppliers that focuses on maximizing value to the ultimate  customer

∙ The term vertical integration means to:

o Produce goods or services previously purchased

∙ The bullwhip effect can be aggravated by:

o All of the above (local optimization, sales incentives, quantity discounts, and  promotions)

∙ Supplier selection requires:

o Negotiations, supplier evaluation, supplier development, and contracts ∙ A major issue in logistics is:  

o Cost of shipping alternatives

∙ Inventory turnover equals:

o Cost of goods sold / inventory investment

∙ If a process is in control, then all of the output produced is acceptable for use. o FALSE

∙ Which of the following statements is NOT one of the differentiation strategy  decisions?

o Use buffer stocks to ensure speedy supply

∙ Which sourcing strategy is particularly common when the products being sourced  are commodities?

o Many suppliers

∙ Which of the following mitigation tactics could reduce economic risk? o Purchasing contracts that address price fluctuations

∙ Which of the following is NOT one of the risk mitigation tactics for the supply chain  risk category of suppliers failing to deliver?

o Require overnight delivery

∙ What are the four stages of supplier selection?

o Supplier evaluation, supplier development, negotiations, and contracting ∙ Once revenue and total logistics costs are considered together, the optimal  number of facilities in a distribution network may decrease compared to the  optimal number of facilities based on total logistics costs only.

o FALSE

∙ Distribution management focuses on which of the following?

o The outbound flow of products

∙ Which of the following statements does NOT accurately explain what occurs when  the number of facilities in a distribution network increases?

o Response time first decreases, the increases

∙ Benchmark firms have driven down costs of supply chain performance. o TRUE

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Linear Programming and Optimization 

∙ Objective- the quantity to be maximized or minimized

∙ Constraints- limitations or requirements that must be satisfied

∙ Decision variables- quantities under the control of the decision maker ∙ Constrained optimization problem- a mathematical model in which one is  trying to maximize or minimize some quantity, while satisfying a set of constraints ∙ Formulation- a formal, algebraic statement of a constrained optimization problem ∙ Text based formulation:

o Decision variables

o Objective function

o Constraints

∙ Linear program (LP)- a constrained optimization problem in which all the  functions involving decision variables are linear

∙ Feasible solution- a specific combination of values of the decision variables such  that all of the constraints are satisfied

∙ Infeasible solution- a specific combination of values of the decision variables  such that at least one of the constraints is violated

∙ Optimal solution- the feasible solution with the largest (for a maximization  problem) or smallest (for a minimization) objective value

∙ Simplex method- a mathematical algorithm developed by George Dantzig that,  when implemented in software, can solve LP’s very quickly

∙ Guidelines to set an LP in a spreadsheet:

o Develop a correct, flexible, and documented model

o Divide the worksheet into three sections

 Decisions variables

 Objective function

 Constraints

o Use the algebraic formulation and the natural structure of the problem to  guide the structure of the spreadsheet

o Use one cell for each decision variable

o Store the coefficients of the objective function in separate cells, and use  another cell to store a formula that calculates the value of the objective  function (by referring to the decision variable cells and the coefficient cells)

∙ Target cell- in Solver, the cell to be maximized or minimized; this cell corresponds to the objective function

∙ Changing cells- in Solver, the cells that can be changed during the optimization  process; these cells correspond to the decision variables

∙ Constraints- in Solver, the limitations and requirements that must be met  ∙ Binding constraints- constraints that are satisfied exactly at the optimal solution ∙ Nonbinding constraints- constraints that are satisfied at the optimal solution,  but as strict inequalities

∙ Slack- the difference between the left hand side and the right hand side of a  constraint

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∙ Shadow price- the amount by which the optimal objective value will change if the right hand side of a constraint is increased by one unit, assuming all other  coefficients of the problem remain the same

∙ Marginal value- another name for shadow price

∙ Infeasible problem- a LP in which it is impossible for all the constraints to be  satisfied simultaneously  

∙ Unbounded problem- a LP in which the objective value can increase (for a  maximization problem) or decrease (for a minimization problem) without bound

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