Quality Assurance @ Theoretical Questions _____ Very Short Answer Questions Bees 1, [2021 Fall. No. T] Develop fiow chart of college admission process by using the: different symbol in operation. vs Flow chart of college admission process by using the different symbol in operation is shown in figure:- @ ‘Student aves entrance exam Yes marks > 2] 3 3 a : interview held be Fee subrision is E Scanned with CamScannerSealy Assume SUT 2 What are the costs of quality? Define, ‘za Cost of quality is a method for calculating the costs ¢; oe ensuring Aer pes eet quality siandards, 88 well as the sn oy producing goods that fail to meet quality standards. There are four penal of cost of quality. They are Appraisal Costs, Prevention Cost, Inteal Failure Costs, External Failure Costs. 3 [2021 Fal @. No. 4] Give the concept of fishbone analysis. ‘=. Afishbone diagram isa visual tool for identifying the causes of an issue. A fishbone diagram, which is commonly used for root cause analysis, combines brainstorming with a form of mind map template. {POA Fall No. 10] Whats OC curve? sz. The operating characteristic (OC) curve depicts the discriminatory power of an acceptance sampling plan. The OC curve plots the probabilities of accepting a lot versus the fraction defective. When the OC curve is plotted, ‘the sampling risks are obvious. [2020 Fall Q. No.7] Define fish bone analysis with suitable example. : vs The Fishbone diagram, also known as the Ishikawa diagram, is a modern quality management tool that explains the cause and effect relationship for any quality problem that has occurred or may occur. It provides a visual representation of all possible causes of a problem, allowing you to analyze and determine the root cause. ° Example: where the problem that needs our attention is wrong/delayed/damaged delivery. The possible reasons are many, like faulty packaging that led to damage during transit, the wrong product being released for delivery, or the address label on the product wasn't correct. 6 Enlist seven tools of TM. +s, Seven tools that are particularly helpful in the TQM effort are as follows: 1. Check sheets : Scatter Diagrams Cause-and-Effect Diagrams Pareto Charts Flowcharts Histograms Statistical Process Control (SPC) 1. Define Flowchart. ‘3 Flow charts are the diagram used to represent operational procedures to simplify the system, Flowchart shows the sequence of events in a process. 4, [2019 Fall. No. 10] What i type one error in process control. +s Inmaking decisions using control chart, a Type I error is committed when itis inferred that a process is out of control when it is actually in control. AAP Eye Scanned with CamScannerBEG Advance Saraswetis A Compete PU Solon to Operations Management 9, [2018 Fall Q. No. 3] How quality can improve profitability? Improved Quality through TOM To. [2017 Spring @. No. 4] Write about continuous improvement. +s. Continuous improvement based on a Japanese concept called Kaizen is ty philosophy of continuous seeking ways to improve operations. 14. [2016 Fall Q. No. 7| Define TQM. x= Total Quality Management (TQM) is defined as both a philosophy and ; set of guiding principles that represent the foundation of a continuousl; improving organization. 1. [2018 Spring Q. No. 12] What do you mean by TQM? Explain the five tools of TOM. z= Seven tools that are particularly helpful in the TQM effort are as follows: “AL Check sheets: A check sheet is any kind of a form that is designed for ate recording data. In many cases, the [Ostect{ {2]3 5, recording is done'so the patterns are |_A yy u e an easily seen while the data are being |-2+7 - am taken. Check sheets help analysts find the facts or patterns that may aid subsequent analysis. An example) might be a drawing that shows a tally of the areas where defects are ‘occurring or a check sheet showing the type of customer complaints. 2. Scatter Diagrams: Scatter diagrams show the relationship between two measurements. An 2 ‘example is. the positive relationship between Tength of a service call and the number of trips a repair person makes back to the truck for parts. Another example might be a plot of productivity and absenteeism. 3. Cause-and-Effect Diagrams: Ariother tool for identifying quality issues and inspection points is the cause-and-effect Cause : diagram, also known’ as an Ishikawa Matetials, Methods, diagram or a fish-bone chart. .The i operations manager starts with four categories: material, machinery /equipment, manpower, and methods. These four M s Manpower Mactinery are the “causes.” They provide a good checklist for initial analysis. Individual causes associated with each category are tied in as separate bones along that branch, often through a brainstorming process. Producti ‘Absenteeism Scanned with CamScannerg NR cay assume URI 4, Pareto Charts: Pareto charts are a method of organizing errors, problems, or défects to help focus -on problem solving efforts. z They are based on the work of Vilfredo ; Pareto, a 19th-century economist. Joseph M. Juran popularized Pareto’s work when AB CDE he suggested that 80% of a firm’s problems are a result of only 20% of the causes. Pareto analysis indicates which) problems. may yield the greatest payoff. 5, Flowcharts: Flowcharts graphically present a process or system using annotated boxes and interconnected lines. They are a simple but great tool for trying to make sense of a process or explain a process. 6 Histograms: Histograms show the range of values of a measurement and the frequency with which each value occurs. They show the most frequently occurring readings as well-as the variations in the measurements. Descriptive _ statistics, such as the average and, standard deviation, may be calculated to describe the distribution. However; the data should always be plotted so the shape of the distribution can be “seen.” A visual presentation of the distribution may also provide insight into the cause of the variation. 7. ‘Statistical Process Control (SPC): A process used to, monitor standards, make measurements, and take corrective action as a product or- service is being produced. @ Numerical Questions___ a 4. Upper Control Limit (UCL): X +207 2. Lower Control Limit (LCL): X zo Seo where, oF oA ' @ = Process standard deviation n° =Samplesiza * —___X.* = Average of sample means Scanned with CamScannerEE ea . UCL (R) = DAR 4, LCL(R)=DaR be 2178) 6. UCLc=c+2v0 1 LCLe=c-zv fication width 8. Process capi rato(e)= "Pecos wh __ Upper spe — Lower specification a 65 | X data, b._ What points, if any, out of control? ¢. Comment on your result. : a 1 }t004 | 1018 | 1924] 1003] 1014] 1005] 8066] 101.1 | 2 2 | 1923] 998 | 101.8] 996 | 100.2| 101.5] 695.2 | 115.87 | 937 3 | 1006 | 995 | 996 | 1005) 998 | 99.2 | 5902 | 9987 | 14 4 | 1003} 994 | 1005] 998 | 101.0] 99.8 | 6008 |. 100.13 | 16 5 | 1015 | 1010 | 104.0} 102.0| 1025 | 1050}. 616. | 10267 | 4 Total 3117.8 | 519.64 | 104.7 Scanned with CamScannereS Quel Assvnce PTL R.# N 5 * Mean Chart 2: = 103.422 + AgR = 103.922+ 0.483 * 20.34 = 113.74 - AgR = 103.922 - 0.483 *-20,34 = 94.09 UCL = 113.74 Sample mean X = CL= 103.922 {LCL = 94.09 Te eo ege es Whe 8 Since one of sample point lies outside control limit. The process is out of 004 x 20.34= 40.76 - x 20.34= 0 UCL =40.76 ‘Sample mean X X= CL= 20.4 CL=0 ese Bi hgBin he 8 Since point 2 is outside of CL, the process is out of control. [202% Fall 0. No. 13] The following data give the weight of an automobile part. Five being taken on a random sample basis. Scanned with CamScannerEGBE Aetac Saraswats & Compete PU Soliton to Operaons Management « ~My ‘a. Construct mean chart and range chart based on these samples. y b. What points, ifany, have gone out of contol? Calculation Table Sample Number | Sample observation | Total_[ Mean (X) | Rangee), 1 60 | 62] OO] | 28 60.75 2 2 61 | 69 | 59 | 60} 239 59.75 2 3 60 | 59 | 59 | 60} 238 59.5 1 4 60 | 60.| 61 |.59 240 60 2 5 et | 64 | 62.| 60 | 247 4 ‘Average Mean Chart Sample Number Mean =e=Central LCL e=UCL Since, all the mean value lies within fhe upper and lower contro! limit thus, the process is in under control, : Calculation of Range Dy = = 2282 Ds =0 UCLe =DixR LCL =D3*R Scanned with CamScanner—e=Range —e=Center —O-LCL —e=UCL Since, all the range value lies within the upper.and lower control limit, thus, the process is in under control. + : ¢ [020 Spring @. No. 2] ‘An electronic company produces light bulbs the following dafa on the number of lumens for 40-watt light bulbs were collected when process was in contol. 2. Calculate the control limit for a Range-chart and Mean-chart. b. Since these data were collect, some new employees were hired. A new sample obtained the following reading: 570,601,623,583. Is the process stilin control? Here, Given N =5 N-=4 Ar =0.729 7 Ds =0 : Dy =2282 Scanned with CamScannerxX Grand mean (X) = "fy = 2991/5 = 598.2 Range) =7y =112/5=224 Mean Chart CL —-=Grand mean = 598.8 UClx =X +AaxR = 598.2 + 0.729%22.4 =614.5296 UCLx =X -A2*R = 598.2 - 0.729%22.4 j me-Average —eCenler OmLCL —e=UCL Since sample points lies within the control limit, the process isin control. Rangechart 4 UCL =DR =2.282* 224 Scanned with CamScanner—e—Range —e=Center —e=LCL —e-UCL since sample pons lies wii the contro ii, the process i in contol: Range 8) | Mean Chart ich. = Grand mean = 597.54 UcLy = X + Aax R =597.54+ 0.729427,5 = 617.5875 1 Ucty =X -A2x R = 597.54 - 0.729275 = 577.4925 ove Figure. pete boi 1 gee me hverage —e= Center —e=LCL —e- UCL Scanned with CamScannerHHEGNE Aavance seraswat's A Complete PU Soliton lo Operations Management Since sample points lies within the control limit, the process is in contr. Range chart cL =R=275 UCL = DiR = 2.28227. LCL =D3R =0%27.5=0 y O—Range —O—Cenler —e=LCL —e=UCL Since sample points lies within the control mit, the prooess is in control. 4, [2020 Fall. No. 17] From the following data four being taken from each samples ol operation of materials from glue to dry of XYZ organizations. Prepare the mean an¢ range chart and make necessary comment about the process control of the) operations whether control or not. Scanned with CamScannerScanned with CamScanner—_—_-—_ Where 7” Ex 21141275 +8.75 + 14 + 7.75 = 54.25 ER =2+5+6+9+11=33 / x =5 = Ex _5425_ Xo aGp hg 71085 ER _33 R = 75766 Now, Mean chart using range UCL =X+ AsR = 1085 + 0.729 x 6.6 = 15.61 LCL =X~ AaR = 10.85 - 0.729 x 6.6 = 6.08 A UCL = 15.66 Ix 3 = CL= 10.85 s See 3 7 1 2 3 4 5 a Sample points lies within control limit. So, process is in’ control. Range chart CL =R=66 , UCL =D,R = 2.282 x 6.6 = 15.06 LCL =DsR =0*66=0 y A S B tc 15.06. f 3 : : : 5 i ee ‘i L__,-__+- ++» LP ge ds 26 LCL=0 Sample points lies within control limit, So, process is in control. 6. [2018 Spring @. No. 13] Construct mean and range charts for the following dat ny which samples of 4 being taken every hour. Comment on whether the production) seems to be: aaa sete sun rath es? ‘are the 1% oe Scanned with CamScanner+AR 7.86 + 0.729 ¥ 34.83 99.851 74.46 - 0.729 * 34.83 = 49.069 A fa ier 2 ar ee is LCL=479 ‘Sample mean fe aoe Bk Since sample points are within CL, the process is in control. CL = R=3483 - UCL =DR = 2.282 x 34.83 =79.482 LCL =DR =0%3483=0 Scanned with CamScannerpo CL = 79.48 cose ; ce cl= 34.83 1 2 3 4 5 6 LCcL=0 Since the sample points are within CL, the process is in control. 7 Shampoo Manufacturing Company wants that the contents of 2 bottle shou fneasure 100 +/-1 mis net. A statistical quality control operations is established ary the following data are obtained: From the table, for n= 6, Az = 0.483, Ds = 0, Ds= 2.004 : a. Construct neat and suitable control charts of mean and range for these given data. . What points, if any, out of control? “c. Comment on your result. ws Seé 2021 Fall Q.No. 13 & [2017 Spring Q. No. 15] Ten samples of 15 parts each were taken from an ongoing) process to establish a p-chart for control. The samples and the number of defectives in each are shown below: Tr Sample | __ No. of Defects = a. Develop a p-chart for 95% confidence level. b._Based on the plotted data, what comments can you make? « ‘Sum of No. of defects = Z value for 95% is 1.645 ; = Total number of defects s 15 Total number of observations = Tp x75 = 01 P 6, = /PXG=2) _. foea=oa : oe ae Scanned with CamScanner“aU ucL =p+Z3> aha +1615 « 0077 = 0.227 ick =p- 28> =01- 165 «007 = 0.027 =0 containing 2,000 rubber belts 425, 430, 216, 341, 225, 322, 280, 306, 337, 305, 356, 402, 216, 264, 126, 409, 193, 326, 280, 389, 451, 420 braw contol chart for fracton defective and comment onthe ta of conto ofthe Scanned with CamScannerWHEE ava sarasivatts A Complete PU Soliton to Operations Managemént 77) Let us assume that at 95% of variation ratio Z is 1.645 = _ Total number of defects ___7019. P . =Total number of observations ~ 22 x 2000" = /PXG-P) = PE oe = 0.00006. = 0.007 - UCL =p +Z8,=016+1.645 x 0.007 = 0.172 LCL =p - Z6, =0.16- 1.645 x 0.007 = 0.148 Now = _ 7019 C ogy = 319.05 UCL =C +BYC =319.05%3 x (319.05 =372.62 _ LCL = C -BYC =319.05-3 x-/319.05 = 265.45. =0.16 @ 7 Process is out of control. 40. [2016 Fall Q. No. 13] Construct the mean and range charts for the following data in which samples of 4 being taken every hour. Comment on your result whether the production seems to be under the control or not, assuming that the data are given Scanned with CamScannerStrategic importance, clea on lssiec im sabco: eH RRR eo supply chain performance, outsourcing, risks in outsourcing, ethical issues in outsourcing. U Theoretical Questions. 1. [2021 Fall Q.No. 1] What is bullwhip effect? The bullwhip effect is a distribution channel phenomena where expectations lead to supply -chain inefficiencies. The swing in inventory rises as you ) progress up the supply chain in response to fluctuations in consumer demand. The concept is known as the Forrester effect since it nbeny appeared ‘in es _ Forrester's Industrial Dynamics. [2021 Fall QNo. 2] Give any two importance Gi oso = ‘These are the two benefits of outsourcing *” i) Cost advantages ii) Increased efficiency [2019 Fall Q. No. 3] [2017 Fall Q. No. 6] Give the concept on bullwhip effect in supply chain management. The bullwhip effect is. a- distribution channel phenomena where expectations lead to supply chain inefficiencies. The swing in inventory tises as you progress up the supply chain in response to fluctuations in consumer demand. The concept is known as the Forrester effect since it initially appeared in Jay Forrester's Industrial Dynamics. . [2018 Spring @. No. 5] Write about different types of outsourcing. These are the different types of outsourcing ° Purchasing, © Logistics e ‘R&D © Operation of facilities * Management of services Scanned with CamScanner(HELE Avance Saraswats PU Solutions to Operations Management ‘would lower prices and lessen the chance of suppliers being cut off. 7), idea is not to form a long-term partnership. This technique pits o,| supplier against another, putting the onus on the suppliers to meet t,| buyer's demands. Suppliers are held accountable for maintaining ¢,, Tequisite technology, expertise, and forecasting abilities, as well 25 com quality and delivery competences, under this method. ‘Strategy 2: Few Suppliers, $$. This is a few-supplier strategy in which a buyer would be better o creating a long-term relationship with a few focused suppliers than tha: opting for short-term features like low cost. Using a small number ¢ suppliers can provide value by allowing suppliers to benefit fro=x ‘economies of scale and a learning curve that results in cheaper transactic: and production costs. Few suppliers, each with a significant financia commitment to the buyer, would be prepared to participate in a JT system as well as give technological skills and advances. Furthermer. such a commitment can produce both legal and informal contracts that c= help match the two organizations’ organizational cultures, there strengthening the relationship. 2 ‘Strategy 9: Vertical integration Vertical integration refers to the ability to create goods or services the have already been purchased, as well as the acquisition of a supplier « distributor. As indicated below, vertical integration can take the form ¢ forward or backward integration: Vertical Integration Examples of Vertical integration Raw material / (Suppliers) Silicon Finished Goods Computers waiches ; (Customers) oune Calculators Baked Goods Scanned with CamScannerSupp Chainer [LTT AE Strategy 4: Keiretsu Network _____ Many Japanese industries have discovered a balance between relying on a small number of suppliers and vertical integration. These companies are frequently financial backers of suppliers, either through ownership or loans, After then, the supplier joins a firm coalition known as "Keiretsu," Members of the keiretsu are guaranteed a long-term partnership and are so expected to work as partners with the manufacturer, offering technical expertise and consistent quality manufacturing. Strategy 5: Virtual Companies - — Vertical integration has a number of drawbacks. Vertical integration is made more difficult by the technology society's constant desire for increased specialization. A company that has its own department or division for everything, on the other hand, may be too bureaucratic to be world class: On the other side, rather than allowing vertical integration to lock an organization into businesses it may not understand or be able to manage, another option is to locate flexible suppliers. A traditional example of a virtual organization is the apparel or readymade garments industry, where clothing designers rarely make but rather license the production. After that, the manufacturer can rent the sewing machines and hire labor. As a result, the company has low overhead, is flexible, and can respond quickly to market-changes. . [2019 Fall G. No. 16] Explain the concept of Outsourcing, Describe the advantages ‘and disadvantages of outsourcing with appropriate examples. x= As organizations develop missions, goals, and: strategies, they identify their strengths —what they do as well as or better than their competitors — as their core competencies . By contrast, non-core activities, which can be a sizable portion of an organization's total business, are good candidates for outsourcing. Outsourcing is transferring activities that have traditionally been internal to external suppliers. When firms such as Apple find that their core competency is in creativity, innovation, and product design, they may want to outsource ‘manufacturing. art Scanned with CamScanner[EGON Advance Saraswats PU Solutions to Operations Management % Pad +=. By vertical integration , we mean developing the ability to produce goods, or services previously purchased or to actually buy a supplier or ay distributor. . ‘Types: Forward or Backward integration Backward integration suggests a firm purchase its suppliers, as in the case) of Apple deciding to manufacture its own semiconductors. Apple also) uses forward integration by establishing its own revolutionary retail) stores. In short, backward integration involves buying part of the supply: | chain that occurs prior to the company's manufacturing process, while forward integration involves buying part of the process that occursy after the company's manufacturing process. Examples of Vertical Integration Yertical integration s —_ Tree Raw material (suppliers) arab leat i _Backoard integra Chipmakers Pulpmaking fc transformation ‘Forward integration Fished goods (customers) |. [2018 Spring Q. No. 14] What do you mean by supply chain? Explain its components j in brief. ® Supply chain management describes the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer: Thus, a supply chain includes suppliers; manufacturers and/or service Providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer. eed + "Suppliers: Those Who provide raw materials and different resources +) Manufacturers: those Who convert raw material into final goods +, Distribution channel; those who transport finished goods to.customer like distributor, wholesalers and retailers + Customers: those who consume final goods a2 + Logistic management: transportation system, inventory activities-and warehouse Scanned with CamScannerSupply Chain Management [URS A F018 Fall Q. No. 14] What do you understand by supply chain management? Discuss about different types of supply chain strategies? ‘=. Supply chain management describes the coordination of all supply chain ‘activities, starting with raw materials and ending. with a satisfied customer. Six strategies: Many suppliers, Few suppliers, Vertical integration, Joint ventures, Keiretsu network, Virtual companies ‘Many Suppliers __ oe + With the many-suppliers strategy, a supplier responds to the demands and specifications of a “request for quotation,” with the order usually going to the low bidder. + This is a common strategy when products are commodities, + This strategy plays one supplier against another and places the burden cof meeting the buyer’s demands on the supplier. + Suppliers aggressively compete with one another. Few Suppliers__. eas i asec + A strategy of few suppliers implies that rather than looking for short- term attributes, such as low cost, a buyer is better off forming a long- term relationship with a few dedicated suppliers. Long-term suppliers are more likely to understand the broad objectives of the procuring firm and the end customer. Vertical integration __ + By vertical integration , we mean developing the ability to produce goods or services previously purchased ot to actually buy a supplier or a distributor. Forward or backward integration $$$ $ $$ $$$ + Backward integration suggests a firm purchase its suppliers, as in the case of Apple deciding to manufacture its own semiconductors. Apple also uses. forward integration by. establishing its own revolutionary retail stores. In short, backward integration involves buying part of the supply chain that occurs prior to the company's manufacturing process, while forward integration involves buying part of the process that occurs after the company's manufacturing process, Joint Ventures + Because vertical integration is so dangerous, firms may opt for some form of formal collaboration. + Firms may engage in collaboration to enhance their new product prowess or technological skills. But firms also engage in collaboration to secure supply or reduce costs. Scanned with CamScanner[HERE Avance Saraswat’s PU Solutions to Operations Management = * a + Many large Japanese manufacturers have found another stra part collaboration, part purchasing from few suppliers, and py vertical integration. + These manufacturers’ are often financial supporters of suppliy through ownership or loans. + The supplier becomes part of a company coalition known as a keiretsu Virtual Companies__ cen nh ie Ot ae + Virtual companies rely on a variety of good, stable suppl relationships to provide services on demand. + Suppliers may provide a variety of services that include doing thy payroll, hiring personnel, designing products, providing consulting services, manufacturing components, conducting tests, or distributiy products. : 2017, Spri 9. Explain the supply che Also explain three stages of vendor selection, + Supply chain management (SCM) is the management of the flow of good that includes the movement and storage of raw materials, work-in procs inventory, and finished goods from the point of origin to point o consumption. Vendors must be selected to purchase goods and service from them. Vendor selection considers numerous factors, such as strategy fit, vendor competence, delivery, and quality performance. Because a fit may have some competence in all areas and may have exception competence in only a few, selection can be challenging. Vendor selecti« includes these three stages: ec 4. Veridor evaluation: Veridor evaluation is the initial stage of vende selection, and it entails locating possible vendors and analyzing the likelihood of becoming good suppliers. This stage necessitates thy creation of evaluation criteria, The weighting criteria are determined, by the supply chain strategy in use. The following are the requirements: a. Production process capability (flexibility technical assistance) b. Distribution/ delivery capability ¢. Quality system and performarice d. Engineering/research/innovation skills e. Financial and managerial strength (stability and cost structure) et 2. Vendor development: Vendor developinent is the second stage of vendot selection, If the company wishes to work with a specific vendor, it J Scanned with CamScannermust integrate that vendor into its system. The firm ensures that the vendor understands the quality criteria, product specifi ations, timelines and delivery, payment mechanism for the purchase, and procurement procedures. , Vendor development can encompass anything from training to engineering and production assistance to data transfer protocols. 3, Negotiations: Negotiations about the important elements of the contractual relationship must take place regardless of the supply chain approach chosen. Quality, delivery, payment, and pricing. are frequently discussed during these conversations. The tactics adopted by supply chain professionals to create contractual relationships with suppliers are referred to as negotiation strategies. Negotiation inethods can be divided into three categories: a. Cost-Based Price Model b. Market-Based Price Model c. Competitive Binding. 7. [2017 Fall Q. No. 15| What do you mean by vendor selection? Explain its various stages. Vendors must be selected to purchase goods and service from them. Vendor Selection Includes three stages. Vendor Evaluation |» Vendor Development |_—> Vendor Evaluation ____ aah ides — The first stage of vendor selection is vendor evaluation which involves finding potentials vendors and determining the likelihood of their becoming good suppliers. se Evaluation criteria . Engineering/ research/ innovation skills . Production process capability Distribution/ delivery capability Quality systems and performance . Facilities and location . Financial and managerial strength _ Information system capability ). Integrity (environmental compliance / ethics Selection of competent suppliers is critical Vendor Development eg + The second stage of vendor selection is vendor development we enayreene + Should integrate particular supplier in to the system Scanned with CamScannerze a Sart PU Skin Operas Mnogeent sith st «The firms should make sure that vendor has ‘appretittion of qualiy requirement, product specification, schedules and delivery, th purchaser's payment system and procurement policies * Vendor development may include everything from training, t) engineering and production help, to procedures for informatio transformation. + Although the prices that consumers pay are often inflexible (printed) on the price tag, listed in the catalog, etc.), a significant number of final prices paid in business-to-business transactions are negotiated. Negotiation Strategies __ eee ; + Cost-Based Price Model: The cost-based price model requires that the supplier open its books to the purchaser. The contract price is theny based on time and materials or on a fixed cost with an escalationy clause to accommodate changes in the vendor's labor and materials, cost. 2 + Market-Based Price ‘Model: In the itlirket-based’ price model, price is based on a published, auction, or index price. Many commodities (agricultural products, paper, metal, etc.) are priced this way. +" Competitive Bidding: When suppliers are not willing to discuss costs or where near perfect markets do not exist, competitive bidding is often appropriate. Competitive bidding is the typical policy in many firms. for the majority of their purchases. 8. [2016 Spring Q. No. 43] Define the Bullwhip effect. What are the issues that need toy be considered while selecting suppliers for an effective supply chain management? 2= The bullwhip effect is a distribution channel phenomena in which» projections result in inefficiencies in the supply chain. As you travel} farther up the supply chain, it refers to'a'growing swing in inventory in» reaction to variations in consumer demand. The Forrester effect is named b after Jay Forrester's book Industrial Dynamics, which was published in 1961. The bullwhip effect gets its name from the way a whip's amplitude p increases as it travels down its length, The wave pattern becomes more : distorted the more away it is from the source impulses. Forecast accuracy reduces as you travel upstream in the supply chain, in a similar way. ‘Many consumer jtems, for example, have rather steady retail usage. As you get away from consumer purchasing behavior, though, this signal becomes more chaotic and unpredictable, The diagrains below depict typical order patterns encountered by each node in a supply chain, which includes a producer, distributor, wholesaler, and rétailer. Scanned with CamScanner: a ES Te = The demand in this situation is for birthday cake. The retailer's orders to the wholesaler are more variable than end-user sales; the wholesalers orders to the manufacturer are. even more unpredictable; and the manufacturer's orders to its suppliers are the most erratic. The bullwhip effect refers to the phenomena of variability magnification as we move from the customer to the producer in the supply chain. Issues need to be considered while selecting suppliers 4, Identifying a supplier: Gathering stakeholder viewpoints and defining the criteria for the selection process are crucial steps to consider before choosing a supplier. This list of stakeholders could include people from R&D, purchasing, marketing, quality assurance, and any other department in your company that has a hand in the supplier selection process. Value is an important factor to consider when choosing a supplier. The total cost of ownership, which considers the supplier's customer service, delivery obligations, reliability and responsiveness, and resource savings, should not be the sole factor. 2. Measuring Supply Performance: The development of an audit and assessment program is another -crucial phase in the supplier management process. Audits are conducted at various phases of the manufacturer/supplier relationship in best-in-class supplier programs. Before signing a contract, you should always undertake an audit to ensure that the supplier has no severe compliance or quality system flaws that could jeopardize your capacity to create high-quality products. Another reason to do the audit ahead of time is to gain a better understanding of the supplier's strengths and limitations before the partnership is formalized. Scanned with CamScannerIEG “Advance Saraswiat's PU Solutions 6 Operations Management Ty 3, Ensuring quality for consumers: Developing a supplier quality managemen, program can be a complex and upfront commitment, depending on the, amount of materials and ingredients required. You'll have peace of, mind knowing you're offering top quality to your customers if you op}, to create solid relationships with dependable suppliers. 2016 a. considered while selecting suppliers for an effective supply chain ma x The bullwhip effect is a distribution channel phenomenon in which: forecasts yield supply chain efficiencies. The bullwhip effect (also known: as the Forrester effect) is defined as the demand distortion that travels, upstream in the supply chain from the retailer through to the wholesaler, and manufacturer due to the variance of orders which may be larger than that of sales. The effect indicates a lack of synchronization among supply chain members Product Numbers \ \ Customer ———________, Manufacturer Evaluation criteria while selecting suppliers for an effective supply chainy management. . Engineering/ research/ innovation skills Production process capability Distribution/ delivery capability Quality systems and performance Facilities and location Financial and managerial strength Information system capability ._ Integrity (environmental compliance / ethics QoQ PNA OVE Scanned with CamScanner