Enterprise operations and business intelligence
Enterprise operations and business intelligence scm-7380
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This 9 page Study Guide was uploaded by Anil Reddy on Friday October 16, 2015. The Study Guide belongs to scm-7380 at a university taught by micheal J murray in Fall. Since its upload, it has received 461 views.
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Date Created: 10/16/15
1 Why is Daniel so concerned about his inventory position Why does he need to have inventory at all Explain in at most 5 sentences Explanation Daniel was concerned about his inventory because a The rising inventory levels of the knitted shirts combined with the potential cost of obsolescence b Considerable impact of inventory on the company39s nancial statement He needs to have inventory a In order to achieve quick deliveries than its competitors by stocking excess fabric on its shelves b Because of the seasonal nature of the business they wanted to ensure they have enough stock to ful ll the demand in peak season c In order to compete with low cost distributors from countries like China and Bangladesh by keeping stock outs as lean as possible 2 Why is inventory control so important to Athletic Knit AK Explain in at most 5 sentences Explanation a In order to be able to compete in a global economy b In order to fulfill the demand by having excess inventory c In order to achieve quick deliveries than its competitors by replenishing them in the event of stock outs d In order to substantially write down the costs that company incur with having excess inventory 3 What is stopping Daniel from building everything as it is ordered by the customer Explanation At AK the inventory policy may separate the company from the other competitors such as manufacturers based in China and Bangladesh But in reality the leadtimes are varying from four day to four weeks for the customized product requirements from the customers These high lead times is almost equal to the low cost manufactures in the market and that at a premium price The constraints related to higher lead times for AK is due to the machine capacities available utilization of man and machine power lead times associated with raw materials procurement highly uctuating demand during the year space constraints maximum inventory levels which considers the setup fixed and holding costs So in order to achieve the quick deliveries for stock products than the low cost competitors AK doesn t build everything ordered by the customer 4 Perform a capacity analysis for AK by lling in the following table using the data provided in the case CU Capacity Utilization OT Over Time Assume that the total number of working days in a year is 243 days Therefore 1 week of production is assumed to be equal to 24352 467 days of production on average For each day available for production two hours of overtime may be used Explanation Season Week Sale Deman No of Capaci CU No of Capaci CU s s d Workin ty working ty with with 9 days days OT OT with Over time July 15Aug 4 10 85168 187 8602 99 23373 10751 7921 14 58 Aug 15Nov 11 44 37473 51 23460 154 6375 29325 127 1 92 73 Nov 15 4 10 85168 19 8740 997 2375 10925 779 Dec14 4 Dec 15 33 36 30660 154 70840 432 1925 88550 346 Juy14 48 8 5 What are your observations from the table that you constructed in part 4 Is there slack production capacity When Explanation From the above table one can observe that the capacity utilization for the period Aug 15 Nov 1 is higher than any other remaining periods both in the overtime period and without the overtime There is slack production capacity during this period as the demand is higher than the actually capacity a 3747392 23460 1401392 units of slack units for the demand to be met when overtime is not considered b 3747392 29325 814892 units of slack units for demand to be met when considering overtime 6 How much inventory does AK have in a year Explanation Since the average production per day is 460 units and in a year there are 243 working days so the total production rate in a year is equal to 460 243 111780 units and the demand for a year being 85168 unitsso the amount of units that Will be held in the inventory will be Production rate Annual Demand 1 1 17 80 85168 26612 units So AK will have an annual inventory of 26612 units 7 What are the reasons for AK s high inventory levels Explanation a To minimize stock outs due to uncertainty in demand from the retailers especially during the peak season b To meet the backorders quicker than its competitors c In order to keep up the good service level among its customers d In order to be able to compete With the other low cost manufacturers 8 Based on the data provided in Exhibit 4 perform an ABC analysis Clearly explain your approach 5rn EIamand 515 1515 555 5515 155 5555 1515 1555 555 4551 5515 1555 155 4555 5555151555 545 5555 1555 555 5415 4551 1554 545 5555 4555 1455 555 5555 5415 1411 455 5551 5 5555 1414 555 5155 5555 1415 445 5545 5551 1455 515 5554 5155 1551 115 5515 5545 1555 555 5555 5554 555 415 555 5515 155 555 5551 5555 1H1 555 1555 EE 1555 555 1555 5551 T515 555 1555 1555 455 1555 5455 T5151 455 1554 555 1455 515 1411 555 1414 515 1415 555 1455 555 1551 145 555 1555 145 515 H55 155 555 155 155 145 1H1 455 555 1555 455 555 145 455 555 145 415 555 155 5551 T5151 555 155 555 455 545 455 455 455 EM 415 If we observe the demand column the demand for item 300 is 1595 which has created a margin for A category and B category We have performed ABC analysis based on demand per item Categories have been made based on sudden drop of Demand for Item value 9 If AK must build inventory how do they determine the ideal production batch lot size Would the answer differ for peak and offseason Suppose that you will use the EOQ model to answer these questions by following the steps below A Compute the cost per jersey set up cost and the holding cost Explanation Given that 25 m 1kg and 15m of cloth is required for l jersey That implies 15m of cloth is 06kg Clothing cost for 1 jersey 0695 57 Dye cost for 1 jersey 3 06 18 Work cost for 1 jersey 1850 3 Workers 8 Hours460 0965 Total cost for producing 1 jersey 57 18 0965 8465 Setup cost per 1 jersey 31850 555 Holding cost per 1 jersey 018465 0847 B Based on your ABC analysis compute the EOQ for each class EOQ for A l 259994555847 280397 2804 units EOQ for B 220445555847 163686 1637 units EOQ for C 24729555847 78723 787 units c Based on your ABC analysis compute the EOQ for each class for peak season and offseason separately 1 EOQ for peak season Aug 15 to Nov 1 23747392555847 22161 2216 units 2 EOQ for off season July Aug amp Nov Dec 2170336555847 149401 1494 units D What do you observe from your results for parts b and c On comparing the results we can observe that the economic order quantity for peak season is more than the off season and that the EOQ for class A items are more than the other items which shows that the items sold in class A category is matching the peak season 10 How do AK s inventory levels change if the results of the EOQ model are implemented It has been considered that the production starts in November 1 every year which is the end of the peak season According to the assumption we have 4 time periods based on yearly demand Period Demand of total November 1 December 31 13 11074 units January 1 June 30 30 25556 units July 1 August 15 13 11074 units August 16 October 31 44 37482 units After Calculations EOQ 57763 unitscaucating this for a period of 1 year the frequency of orders is 16 Months Number of E0 anua 1 Februa March ril Ma une ul Au ust Se tember October November December I INNI Ii Ii Ii Ii INNi I The Inventory levels at the end of each period is November1 December 31 6254 January 1 June 30 20653 July August 15 478 Total Inventory for peak season 625420653478 27384 August 16 October 31 14377De cit The de cit inventory in the off season is covered by inventory in the peak season 11 What is the alternative to building inventory and how much this option cost AK Explanation We can use lot to lot procedure to find the most optimal solution Quarterl Quarter 2 Quarter 3 Quarter 4 Demands per quarter 8517 37474 8517 30660 On Hand Inventory 677 13543 376 34087 Net Requirement 12866 Planned order receipt 12866 Planned Order Release 12866 Assuming the lead time to be one quarter we order the required 12866 jerseys in the first quarter INDE7390 Spring 2014 Article Reading Report Article 7 EBusiness and SuDDlV Chain Integration 1 One approach to Intemetbased supply chain integration is the information hub Describe and discuss the information hub mentioned in the article One approach to Internetbased supply chain integration is the information hub that instantly processes and forwards all relevant information to all appropriate parties The information hub is a node in the data network where multiple organizations interact in pursuit of supply chain integration It has the capabilities of data storage information processing and pushpull publishing The overall network forms a hubandspoke system with the participants39 internal information systems ie ERP or other enterprise systems being the spokes The Internet is an efficient electronic link between different entities and has proven to be an ideal platform for information sharing The power of the Internet stems from open standards permitting easy universal yet secure access to a wide audience at a low cost 2 Describe and discuss the Collaborative Planning Forecasting and Replenishment CPFR initiative mentioned in the article In CPFR both the buyer and the seller make use of the Internet to share forecasts detect major variances exchange ideas and collaborate to reconcile differences so that eventually both have a common forecast and replenishment plan Currently the Voluntary Industry Commerce Standards Committee is working on formalizing the process models and technology framework for CPFR It encourages companies to utilize the Internet with electronic bulletin boards to pursue the collaborative efforts Both consumer and businesstobusiness companies can achieve the benefits of Internetdriven collaboration Snack giant Nabisco successfully conducted a promising CPFR pilot with grocery chain Wegmans Due to smart promotions Wegmans had seen an 11 growth of snack nut sales versus a 9 decline at other retailers By strategically sharing demand data and collaborating closely on promotions and replenishment Nabisco saw its Planters sales jumped 40 dramatically increasing its market share at Wegmans Moreover Nabisco s warehouse fill rate increased from 93 to 97 while inventory dropped by 18 Several other pilots are now under way at Schnuck Markets Kmart Circuit City PampG Kimberly Clark Sara Lee and WalMart In the businesstobusiness world Adaptec a fabless semiconductor company and Cisco Systems the leading networking equipment vendor are undertaking similar initiatives 3 Describe New Business Models that was discussed in the article Once companies begin to realize the promise of ebusiness enabled supply chain integration they often discover entirely new ways of pursuing business objectives developing strategies and business models that were neither apparent nor possible prior to the Internet These new business models and opportunities are as limitless as the imagination The following examples show the range of possibilities The Internet facilitates information search so that multiple resources in a supply chain that once acted independently can now be tapped simultaneously to satisfy special needs Examples include inventory stockpiles untapped capacity or even unmet demand all of which can be pooled to create a secondary market of virtual resources Such secondary markets can create high value for participants by minimizing imbalances between supply and demand and reducing exposure to inventory obsolescence Intemetbased secondary markets can thus benefit in most cases every member of the supply chain One example of a virtual resource is World Chemical Exchange an electronic marketplace operated by ChemConnect providing a global market for chemical and plastic manufacturers and buyers More than 2500 members representing 80 percent of the world s top 25 chemical companies now can conduct roundtheclock trading of chemicals and plastics of all types Converge operates a market exchange for the secondary market of electronics components Since the high tech industry has very short product life cycles excess inventory of components and parts can result in huge obsolescence costs while suppliers and manufacturers are not always able to produce more of their products that are close to the end of the product life cycle Converge minimizes such exposure by providing an open virtual marketplace for buyers and sellers
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