Supply Chain Management Chapters 1 and 2

Study Notes

Chapter 1: Supply Chain Objectives and Views

Every supply chain aims to maximize consumer surplus, the difference between what a customer is willing to pay and what they actually pay.
A push/pull view categorizes supply chain activities based on whether they are initiated by demand (pull) or by forecast (push).
The objective of a supply chain is to create a supply chain surplus: the difference between the value customers receive and the expenses incurred in generating that value.
A cycle view focuses on the sequential interactions within a supply chain; each entity performs roles with specific inputs and outputs, creating a cyclical chain.
Customer order arrival is the occurrence of a customer initiating an order request.
Customer order entry is the process of recording customer orders into the system.

Chapter 2: Demand Uncertainty and Strategic Fit

Implied demand uncertainty is the degree to which the actual demand differs from the expected demand.
Supply chain efficiency is optimizing operational processes to lower costs, and speed up time to market.
The cost-responsiveness efficient frontier illustrates the trade-offs between cost and responsiveness in supply chain design.
Scope of strategic fit defines the boundaries within which a supply chain fits its company's overall strategy.

Chapter 3: Facility Management and Inventory

Two main facility types are production sites for manufacturing and distribution centers.
Facilities with limited excess capacity restrict output and can hinder responsiveness to changing demands.
High facility utilization, while cost-effective, can lead to production bottlenecks due to limited availability.
Cycle inventory is the stock held to satisfy expected demand between production cycles.
Safety inventory is stock kept to protect against demand fluctuations.
Forecasting, aggregate planning, and the supply lead time are critical processes directly affecting inventory and production.

Chapter 4: Distribution Network Design and Response Time

A distribution network with local storage offers quicker response times to customer orders, which is advantageous in fast-moving markets.
A well-structured omni-channel supply chain encompasses various channels (e.g., online, physical stores) to meet consumer needs effectively.
Response time is the speed at which a customer's order is fulfilled.
Inbound transportation costs are the expenses of bringing goods into the supply chain.
There's an inverse correlation between the number of facilities and inventory cost--more facilities usually result in lower inventory.
Desired response time and the number of facilities required are positively correlated. More sites are required to speed up fulfillment time.

Chapter 5: Transportation Costs and Facility Number

There's an inverse correlation between transportation costs and the number of facilities. Fewer facilities might increase transportation costs.

Chapter 6: Flexibility in Supply Chain

Mix flexibility refers to the capability of the supply chain to switch rapidly between different product configurations.

Chapter 7: Forecasting Methods

Causal forecasting methods use relationships between variables to predict future demand.
Qualitative forecasting methods rely on expert opinions and subjective judgments.
Time-series forecasting methods use historical data to predict future demand.
Static forecasting methods do not adapt to changes in demand over time.
Adaptive forecasting methods use adjusting techniques based on recent data to better predict current and future needs.

Chapter 8: Aggregate Planning Strategies

Aggregate planning involves the strategic plan of production quantities and inventory levels to satisfy future demand.
Production rate is the quantity produced in a specific time frame.
Inventory on hand is the amount of products currently held in stock.
Chase strategy adjusts production to match demand fluctuations, while level strategy keeps production relatively constant.

Exam Section 2: Short Answer Questions

Return on Assets (ROA) is calculated by dividing net income by total assets to determine the efficiency.
Cycle inventory is the stock held between production cycles to meet expected demand, and safety inventory is stock maintained to protect against demand fluctuations.
More facilities typically reduce transportation costs; there's an inverse correlation.
Consumer surplus is the difference between what a customer is willing to pay and the actual price, and examples include discounts on items.
Customer order arrival is when a customer initiates an order, and customer order entry is recording the order.

Exam Section 3: Walmart Supply Chain Case Analysis

Case Analysis Questions: The provided questions are case analysis questions for students to use for their exam. To answer them properly, students should analyze the Walmart case provided and answer appropriately, with specific examples.

Description

This quiz covers the fundamental concepts of supply chain objectives and the views that influence supply chain management. It also delves into demand uncertainty and the importance of aligning strategies with market demands. Test your knowledge on key terms such as consumer surplus and push/pull strategies.