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31 Cards in this Set

  • Front
  • Back
A process maybe "out of control" when?
-a point is outside the limits
-series of points lands on one side of the overall avg.
-series of points show strong trend
Probability that four consecutive points plotted below mid point of control chart?
50% chance up or 50% chance below probability = (0.50)^4 =6.25%
for five consecutive = (.50)^5= 3.125%
want to balance shortage and overage?
expected over stocking cost = expected under stocking cost
Pus * Cus = Pos * Cos
How much to order?
Q = mean
Q> mean
Q< mean
-cost of under stock is very high
-overstocking cost is very high (diamonds/expensive goods)
It depends
-Q>mean large order quant.
-Q<mean low stock small order
-over the course of the project the critical path changes
-best to manage project by various paths
-focus solely on critical path
-allocate resources to keep balance
-focus solely on critical path
Measure the cost of shortage of cups at Starbucks which measures customer service best?
cycle fill rate = probability of running out before next order
= (1-Pus) * 100%
used when concerned with shortage
Measure cost of shortage of tea @ starbucks which is best measures customer service?
unit fill rate =expected % demand missed
-used when managers are concerned with extremity of shortage likelihood of shortage
(want TV but not avaliable)
replenishment lead time
(D x L)
potential time to run out b/w ordering and receiving new order
- 50% chance of running out if set at D x L
In a continuous review inv. system if the ROP is set = avg. demand during lead time what is the corresponding service level?
50% just based on avg. NOT accounting for variability
right in the middle of the bell curve
For the same amount of safety stock which inv. system results in a better service level?
continuous order as often as you want emergency order inv. level availiable
Which of the following is NOT a characteristic of periodic review inv. system?
incorporate price discount
A sequence of activities in a project
The longest time sequence of activities in a project
critical path
used when two activities have the same starting and finishing points
dummy activity
the difference in time length of any path and the critical path
path slack
statistical distribution used to describe variability of an activity time
beta distribution
statistical distribution used to describe path variability
normal distribution
shortening an activity by allocating additional resources
The Four types of Variability Pooling
1.) Location (centralization)
2.) Product (universal design)
3.) Lead time (consolidated distribution postponement delayed differentation)
4.) capacity (chaining worksharing)
Location Pooling
centralizing the storage of inventory used to buffer demand of mult. retail locations
drawback: moves inventory further away from customer
why works? reduces demand uncertainty allowing to reduce inventory increase service expand product line
Product Pooling
most effective when coefficient of variation on universal is lower than coefficient variation of individual products
-may lack a key function, more expensive to produce eliminate brand names
Lead time pooling: when does delay differentiation make sense?
product variety is created late in process
product variety can be added quickly and cheaply
components are inexpensive relative to genetic components
ex: only stock base color paint make all white then add color
allows production shifts to high selling products to avoid lost sales
-most effective to create long chains and when capacity = expected demand
-least valuable when capacity is very high or very low
risk pooling strategies most effective when..
total demand uncertainty is lower than individual uncertainty
disruptions "shocks" can be worsened when...
centralized inventory pooling
should store more inventory ________ to pool the _________ demand uncertainty
and when there is a disaster more inventory held _______
High volume should be stored
More variability demand
More expensive products
-closer to customer
-farther upstream to enhance pooling
-farther upstream to reduce # in inventory
Innovative Product vs Functional Product
-high margin short life cycle high demand variability "responsive"
ex: high end ski coat
-low margin long life cycle low uncertainty in demand "efficient"
ex: toilet paper
What is Bullwhip effect
Causes of Bullwhip effect
demand variability increases as you move up the supply chain from customers towards supply
-order batching, forecasting, pricing, shortage
Reorder Point is
- equal to safety stock plus lead time
- equal to expected demand during lead time plus safety stock
- equal to the economic order quantity plus safety stock
- equal to expected demand during the lead time
ROP = expected demand during lead time plus safety stock
EOQ economic order quantity
square root: (2 * D S) / H