What are the four phases of External supply chain What are supplier service Steps to determine

the project process? components characteristics? deviations from the forecast

What are the factors that What are the five When is the capacity bill
What are performance
capital projects are components of supply procedure most
targets focused around?
evaluated on? chain? appropriate?

What are some of the

Quantitative factors of
typical financial methods What are some examples of Steps in the capacity bill
modification of existing
that are used to evaluate a order confirmation? procedure
structures
project?

Qualitative factors of
Order entry flow includes What are the final assembly
Average ROI formula modification of existing
what functions? schedule process steps?
structures

What are the four segments Accounting and finance

Levels of supply chain
in a supplier segmentation responsibilities in the order Modular planning bill
evolution
exercise? entry flow process

Elements of relationships
What are some risks of
between customer and
doing a project?
supplier
Logistics order entry flow
Common parts planning bill
responsibilities

Criteria for evaluating an

Factor for determining the Sales and marketing order
alliance relationship with a Super planning bill
IRR formula entry flow responsibilities
supplier:

What does the Statement of
work (SOW) define?
Work breakdown structure
(WBS) provides what?
Pert formula for task
completion time accumulating actual costs
What are the five stages
that a team goes through?
Before a project can be
closed out, what tasks must
be completed?
Total contribution Margin
Transportation inventories
Lot size inventory Contribution margin ratio
Why is it important to have
Production control
Benefits of horizontal senior management's
responsibilities during order
integration ongoing participation in the
entry flow
S&OP process?
Product and service Customer order flow: make
The S&OP process provides:
development stages to stock environment
What customer dates
Methods used when
should be recorded in all S&OP Process Steps
environments?
In a make to stock
environment there are two What are the six
3 main methods of dates associated with a considerations that should
allocating overhead customer-requested item, be addressed in the S&OP
date, and quantity, what are process?
they?
In the service and make to
order environments what
6 categories of
are the dates that may be
organizational S&OP grids
associated with a customer
measurements
requested item, quantity,
and date?
What are the three
characteristics for various Subprocesses in forecasting
formula
types of orders?
What are the order
Steps in demand planning
promising methods?

Break even point in
Fluctuation inventory
monetary units formula
Customer requested
Steps in the supply planning
delivery dates order
process:
promising method

Standard lead time

Required sales revenue Objectives of the
Anticipation Inventory approach to customer
formula preliminary S&OP meeting
promise dating

Uncommitted inventory and What are the procedures to

Hedge inventory Required sales units formula planned production method develop the production
of customer order dating plan?

What are the assumptions
of the EOQ model?
Uncommitted resources of
What are the 4 Rs of supply Resource planning process
all types method of
chain agility? flow:
customer order dating

What are the four steps of
the MRP planning process?
What are the four primary What are the four basics
Positions on the volume-
approaches to demand methods of resource
variety matrix
fulfillment? planning?

What are the business

What questions does
Shrinkage factor formula
business planning answer?
What are the three
environment factors that
categories of production
affect customer
planning costs?
commitment decisions?

Strategic customer service

Adjusted gross requirement External inputs to business Monthly production rate
measurements are based on
formula planning formula (MTS)
what categories?
 What are the three
categories of characteristics Internal inputs to business What are internally focused Monthly production rate
of the detailed planning and planning customer measurements? formula (MTO)
scheduling process?

What are the three main

What are some other
objectives of the Detailed
Output of business planning focused customer Ending inventory formula
Scheduling and Planning
measurements?
Process?

Ways in which business

What is the difference
planning is interrelated with
between bucketless and Level of service metrics Ending backlog formula
master planning of
bucketed planning systems?
resources

What are the three ways

waiting time can be What are the three major Variance percentage
Customer service ratio
reduced in service components of MPR? formula
operations?

Fill rate based on volume is

Inputs to demand Cumulative variance
Safety capacity calculated from one of what
management formula
three formulas?

Principle of postponement
Demand management Percent of complete orders
Surge capacity (aka order penetration
outputs shipped on time formula
point)

Percent of order line items What are some commonly

Sales and ops planning
Scheduling capacity shipped on schedule used form oils of
inputs
formula postponement?
 What are the four
Percent of total units categories that distribution
Sales and ops planning
Planned utilization shipped on schedule (not policy choices an
outputs
recommended) organization must make fall
into?

What are the 4 interrelated

Fill rate based on value is
choices that affect the
Planned efficiency Master Scheduling Inputs calculated using one of
structure of a company's
which two formulas?
distribution network?

What are the transportation

Percent of order value
Outputs of master choices that affect a
Productive capacity shipped on schedule
scheduling company's distribution
formula
network?

What are the 4 basic What are the two types of

Percent of unto dollar
Protective capacity business choices a company forecast approaches in a
volume formula
makes that influence MPR? distribution system?

What formula should be

used to calculate customer
What relationship is
fill rate in the make-to- What are some inventory
Idle capacity demand fulfillment based
order, assemble-to-order, replenishment methods?
on?
and engineer-to-order
environments?

Qualitative forecasting Percent of jobs shipped on Delivery performance

Excess capacity
methods schedule calculation

Percent of revenue shipped

Period 1 planned Backlog
formula
on schedule formula - for
Quantitative extrinsic Responsiveness
internal measurement
forecasting methods performance calculation
revenue shipped on
schedule

Planned backlog after
period 1 formula
At what value does the
tracking signal indicate that
Quantitative intrinsic
What is master scheduling? there is bias in the forecast
forecasting methods
that needs to be
eliminated?

What are the primary

storage area organization Key aspects of forecasting Why do master scheduling? Tracking signal formula
methods?

What are the four major

Targeted inventory level What does master What are the four types of
forecasting system design
formula scheduling do? distribution?
considerations?

What are the three

What are the two measurements for forecast What does master time-phased order point
components of quality? error at a single point in scheduling achieve? (TPOP)
time?

What are the three

How do you determine the
commonly used What does master 3 main ways of allocating
number of classes in a
measurements of forecast scheduling involve? overhead
histogram?
error over time?

What are the parts of a two

Basic 7 quality tools Tracking signal Costing methods
level MPS?

Running Sum of Forecast

Seven new tools of quality Inputs to master scheduling Mixed model scheduling
Errors (RSFE)
 What are the three steps in
what are the 5 What are the three phases
master production Two level MPS
organizational designs? of the sales cycle?
scheduling?

What are the outputs of Order wise finite scheduling

What are the attributes of a Ways that a promise date
master production vs order oriented
sound strategy? can be applied
scheduling? scheduling

Two categories of customer What are the outputs of the

Five forces model Planning Bill of Material
service metrics master scheduling process?

What tasks must the master

What are the 4 product life Two dimensions of scheduler perform in discrete available-to-
cycles? responsiveness addition to executing the promise
master scheduling process?

What are the performance What is the difference

Innovation market entry
measurements related to between deviations from Infinite Loading Technique
strategy
customer service? plan and changes to plan?

What are the three ways

Flexibility market entry What are the three phases Order oriented vs order
proposed changes can be
strategy of the sales cycle? wise scheduling
classified?

Standardized market entry What are the elements of What are the two types of
Finite loading
strategy the pre-transaction phase? master schedule hedges?
 What are some commonly
What are the elements of Constraints oriented finite
Blunder market strategy used measures of
the transaction phase? loading
efficiency?

What are the three major

5 Organizational design What are the pre-order Operations oriented finite
sub processes of Master
structures activities? loading
scheduling?

Interns supply chain What are the elements of PAB formula after the Network planning
components the post transaction phase? demand time fence techniques

Project evaluation and selection Project
Parts of the supply chain that organization
planning Project implementation Project
doesn't have control over
closeout
Cost/benefit analysis Time value of money
Plan Source Make Deliver Return
Present value of future payments Risk
Simple payback Average return on investment Transportation costs Utility costs Local labor
Net present value Internal rate of return skills and rates Taxes Facility costs
Closeness to suppliers Closeness to customers
Average operating income/investment Quality of life for workforce Legal issues
Community attitude
Level 1: functional and process improvement
Level 2: savings and excellence Level 3:
Core Growth Nuisance Profitable
strategic sourcing Level 4: collaboration Level 5:
advanced
Length of the project to complete Newness of Closeness Trust Sharing success Long term
the technology How accurate the costs and Multiple Points of communication Joint
savings are Operating costs Exchange risk learning Coordination Information Problem
Additional investment required solving Assets
Company profile Cost structure Management
capability Personnel capabilities Total quality
management philosophy Process and
technological capability Environmental
Investment in the project/net annual cash flow regulation compliance Financial
capability/stability Production scheduling and
control systems Information systems capability
Supplier sourcing strategies, policies, and
techniques Longer term relationship potential
Competence - are the suppliers representatives
capable of doing their jobs and are the
knowledgeable? Creditability - can the supplier
Step 1: determine if the deviation was
and it's representatives be believed? Courtesy -
significant Step 2: determine of the deviation
does the supplier treat the customer
was real Step 3: determine if the forecast is still
professionally and with consideration?
valid
Understanding - does the suppliers
representative understand the customers
needs, expectations, and interests?
In a environment where resources are not
Quality Cost/price Delivery Reliability Support aligned with product families and changes in
volume and product family mix are moderate
Step 1: develop capacity bills Step 2: determine
Inventory status Credit Pricing Shipping and
the capacity available Step 3: calculate the
handling costs Delivery schedule Open order
capacity required Step 4: accumulate the
status Status of backorder
required capacity Step 5: identify imbalances
Step 1: determine material required and
rooting of order Step 2: check material
availability Step 3: schedule the final assembly
Accounting/finance Logistics Sales and
order Step 4: update the final assembly orders
marketing Production control
Step 5: update the master production
schedules Step 6: release the final assembly
order
Credit check Value order Maintain customer Groups the components that are needed when
record Reports a specific feature or option is specified
Groups all of the common components for a
Consolidate shipments Communicate with
product or family of products into one bill of
carriers Shipping documentation
material
Ties the modular bills and common parts bills
Communicate with sales reps Sales
together to define an entire product or product
performance against forecast
family

Scope Benefits Expected results Measurements
Resources Risks
The essential framework of what needs to be
done and when for a project. The overall goal is
to clearly define the deliverables needed to
complete the project and to show the
ownership of each deliverable.
(O + 4ML + P)/6 O - most optimistic time ML-
most likely P - most pessimistic
Forming Storming Norming Performing
Reforming
Documentation Post-implementation audit
Individual Process Operational Financial Local
Final report Close-out meeting Closing
operations and gaining customer approval
Goods that exist because of the time needed to (Sales revenue - (total variable costs x variable
transport goods from one location to another
Also referred to as cycle stock, this inventory is
maintained because it was not procured in the Contribution Margin / Sales (Variable cost per
exact amount needed. Average is generally 1/2
what is procured at one time
Economies of scale Economies of scope
Increased market power Reduction in costs
Concept investigation Design preparation
Prototype phase Pilot phase Mfg ramp up
Continuous improvement Phase out
Process Job Project
Global
cost per unit))
unit/sales revenue per unit)
1) the process provides a direct link between
senior management and functional
management, and between functions at all
Product availability Master planning levels of the organization 2) broad trade off
decisions require senior management
perspective 3) senior management can force
difficult decisions to be made
Visibility into the future so potential
imbalances can be recognized before they
actually occur Balancing of product family
Order entry item validation process Order entry
volume which ensures that functional plans are
pricing process Priority for allocation of goods
consistent and mutually supportive
Packaging of goods for shipment
Appropriate level for senior management
involvement to set direction and make
necessary decisions
Step 1: run the sales forecast Step 2: demand
Customer order date Receipt date Order
planning Step 3: supply planning Step 4: pre-
processing date
S&OP meeting Step 5: executive S&OP
1) establishing the planning horizon far enough
into the future to include the business plans. It
should also be longer than the longest
cumulative lead time 2) establishing product
families convenient for the various functions of
Requested date - represents demand Shipment
the organization and dividing units of measure
date - represents fulfillment of that demand
to be used for each product family 3)
determining resource definitions, considering
only those that will constrain the production
plans. This might include critical raw materials,
critical skills, and funding. 4) deciding what to
forecast as input to the process in order to
Cross functional grids that combine demand,
Requested date Initial committed date Latest
supply, and inventory or backlog for a product
committed date Ship date
family. Should have one for MTS & MTO
1) all orders for services require a promise of
future delivery of the service 2) all orders in the
1) update data for the month just ended 2)
assemble-to-order, make-to-stock, and
execute any automated forecasting processes
engineer-to-order environments require a
3) generate data for forecasting by sales and
promise of future shipment or delivery 3) some
marketing 4) disseminate the data 5) capture
orders in the make-to-stock and distribution
and disseminate performance data
environments require a promise of future
shipment or delivery
Customer requested delivery dates Standard
1) develop management forecasts 2)
lead times Uncommitted inventory and
management review and approval 3) create the
planned production Uncommitted resources of
initial S&OP grids
all types

Inventory that is maintained to compensate for
Total fixed costs/contribution margin per unit
fluctuations in supply and demand
Represents the inventory maintained to
compensate for planned changes in supply and
demand or lead-time
Represents the goods maintained as a buffer
against some event that may or may not
happen
-the demand rate is constant, recurring, and
known -the carrying cost rate is independent of
the order qty -the lead time is constant and
known -orders arrive in a single batch
Step 1: initiate the MRP planning grid Step 2: Position 1: project, engineer to order Position
project the on-hand balance Step 3: plan
additional supply orders Step 4: replay all assemble to order Position 4: continuous, make
affected components
(100% - yield factor)/yield factor
(Unadjusted gross requirements)/(1-scrap
factor)
(Total fixed costs + target
income)/contribution margin ratio
(Fixed costs + target income) / margin per unit matched with either available units in inventory
Responsiveness Reliability Resilience
Relationships
2: batch, make to order Position 3: line,
to stock
Where, how many, how, and who in order to
move a firm towards attaining a strategic goal
Market needs, demographics, economics,
government actions, technology, and
competition
All customer requested delivery dates are
1) develop the preliminary supply plan 2)
accepted regardless of the work to be done.
perform resource planning 3) develop
This is a very risky approach as a next day
inventory or backlog plans 4) create updated
delivery for a two week lead time item would
S&OP grids
be accepted for example
1) make decisions regarding the balancing of
demand and supply 2) resolve issues and
A firm commits to delivery of product a certain
formulate a single set of recommendations 3)
time after receipt of the order This is sufficient
document the issues that could not be resolved
when lead times are consistent and sufficient
and alternate courses of action for each 4)
capacity exists
develop the agenda for the executive S&OP
meeting
1) develop the preliminary supply plan 2)
The "available-to-promise" method Order is
perform resource planning 3) develop
inventory or backlog plans 4) update the S&OP
or units in a planned production lot
grids
This is referred to as the "capable-to-promise"
1) determine resource availability by period 2)
method of order dating Most complex, uses a
determine resource requirements by period 3)
finite scheduling model of the production and
significant imbalances? If no then done 4) if
distribution system. Simulation and
significant imbalances, revise plan to resolve
optimization methods may be employed in this
differences and go back to step 2
method
1) production rates: appropriate when critical
resources are aligned with product families, not
adequate of resources aren't aligned 2)
capacity planning using overall factor (CPOF):
Customer requested delivery date Standard most appropriate for a stable environment 3)
lead times Available-to-promise Capable-to- bill of resources: most appropriate for when
promise resources are not aligned with families, but
planning periods and lead times are similar 4)
resource profiles method: most appropriate
when resources aren't aligned, lead time and
planning time vary
Rate of change in technology and markets
Inventory costs Rate change costs Capacity
Complexity of product configuration
change costs
Constraints in meeting demand
(Sum of demand over planning horizon +
Quality Support Level of service Lateness
(planned ending inventory-beginning
Responsiveness Requirements of the
inventory)/number of months in planning
marketplace Policies of the firm
horizon

Design Performance Operation
-ensure that all resources are available when
and where necessary -communicate any
restraints that will prevent the organization
from meeting the upper level plans -
communicate the detailed plans and any
revised plans to all functional areas
Bucketless systems use daily planning
increments, and bucketed use planning
increments greater than one day
Information technology can be used Employees
can be cross trained The service design can be
improved
A quantifiable capacity that is available over
and above productive capacity
Capacity available to meet sudden, unexpected
increases in demand
Uses safety stock and safety lead time to buffer demand management Production plan from
uncertainty in an MRP system
Principles, stakeholders, resources,
competencies, critical goals, and functional
plans
The business plan which is a direct input into
Master planning of resources
Strategic Objectives set financial targets
Financial objectives set MPR revenue forecasts
Key functional plans become inputs to the
master planning of resource process
Demand management, sales and operations
planning, and master scheduling
Business plan, including sales forecast,
fulfillment strategies, and updates on market
activity Demand history from past shipments
and customer inquiries Current customer
orders, current backlog, and any new bids or
proposals that could require resources in the
time period Market intelligence
Forecasts Current customer orders that have
contract releases or due dates
Business plans Product family forecasts from
the previous S&OP time period Inventory and
backlog levels
Customer retention - measuring the
percentage of customers who are still being
served Growth of customer base - calculating
the difference between the ending base and
(Sum of demand over planning horizon +
the actual number of new customers that were
(beginning backlog - planned ending
added to the base throughout the year
backlog)/number of months in planning
Performance to budget - how well are we
horizon
performing to plan? Headcount and
transaction by type Adherence to policies and
guidelines - could be how many shipped orders
followed the correct order processing policy
Average maximum time for orders - measures
Customer complaints Labeling and shipping
Beginning inventory + production - demand
errors Customer returns
Measure the firms ability to satisfy customers
requirements from inventory or planned
Beginning inventory + forecast - production
production Should be an element for the
balanced scorecard
Also called fill rate Can be calculated based on
(Actual production - planned production) /
monetary units, orders, line items, or physical
planned production
units Typically stated as a percentage
Percent of complete orders shipped on
schedule - doesn't account for value or
importance and is affected by the number of
items per order it is a strong indicator of (Cumulative actual production - cumulative
customer satisfaction Percent of order line planned production) / cumulative planned
items shipped on schedule - indicated the production
degree of individual item availability Percent of
total units shipped on schedule - ignores value
of importance and is not recommended
This strategy involves delaying the
commitment of finished goods by deferring the
(Number of orders shipped on schedule during final assembly, packaging, or labeling as long
the period/number of orders scheduled to be as possible. The objective of this tactic is to
shipped during the period)x100 minimize the risk of carrying inventory in the
distribution system by delaying product
differentiation to the latest practical moment.
(Number of items shipped on schedule during Commitment Delay of title transfer Final
the period/number of items scheduled to be assembly, blending, or finishing Labeling Bulk
shipped during the period)x100 breaking

Is a measure of how intensely a resource is
being used to produce a good or service
The ratio of standard load versus actual old,
averaged over all operations performed at a
work center
The maximum out the output capabilities of a
resource or the market demand for that output Resolutions to any conflicts identified in sales
for a given period of time
Is quantifiable capacity that can be made
available at a non constraint work center to
protect against fluctuation of the constraint
work center
Capacity that is normally not used in a system
of linked resources. From theory of constraints
perspective, idle capacity consists of protective
and excess capacity
The output capability at a non constraint
resource that exceeds the productive and
protective capacity required
Starting planned backlog + planned input -
planned output
Sales plan Inventory plan and/or the backlog
plan Production plan Product release plan, if
applicable Resource plan Financial or other
functional plans
Production plan from S&OP Conflicts identified
in S&OP Master production schedule from the
previous master planning time period Final
assembly schedules from the previous planning
time period New customer orders received
since the previous master planning time period
Inventory and planning data
Master production schedule Final assembly
schedule Rough cut capacity load profiles
and operations planning Identified changes
needed to sales and operations planning
Approach to demand fulfillment Manufacturing (Value of units shipped on schedule during the
process Facility layout Method of workflow period/value of units scheduled to be shipped
control
The relationship between lead time required by
the customer and the cumulative lead time for
the product
Sales force estimate, Delphi method, panel
consensus, expert opinion, and market research
Regression analysis, lifecycle analysis, and
econometric models
(Number of units shipped on schedule during
the period/number of units scheduled to be
shipped during the period)x100
Percent of order value shipped on schedule
Percent of unto dollar volume
(Value of orders shipped on schedule during
the period/value of orders scheduled to ship
during the period)x100
during the period)x100
Jobs instead of customer orders Committed
date to determine what was scheduled to be
shipped Committed date to indicate when
service was to be provided
(Number of jobs shipped on schedule/number
of jobs scheduled to be shipped)x100
(Revenue from jobs shipped/revenue from jobs
scheduled to be shipped)x100
1) structure of the distribution network 2)
infrastructure of the distribution system 3)
transportation of goods 4) distribution
inventory management
1) number of stocking levels 2) number and
placement of stocking locations 3) functions
performed at each location 4) ownership and
operation of each location
Modes of transport to be employed Routing of
shipments Selection of carrier Ownership of
transportation equipment
Aggregation: demand starts at local stocking
points and is then aggregated upward
Disaggregation: allocation on forecast starts
with the total system demand and is then
allocated downward to the next level
Visual review Two-bin Min-max Periodic review
Order point Distribution requirements planning
1/3 line item fill rate + 1/3 order fill rate + 1/3
revenue fill rate
1/2 percentage of calls completed + value for
number of rings to answer + value for most
rings before answer

Previous period planned backlog + planned
input - planned output
Fixed location Random location Zone location
forecast must be generated in time to meet the
Business
T = D(LT + R) + SS T - targeted inventory level
D - demand rate LT - lead time R - review
period SS - safety stock
Quality of conformance - the absence of
defects Quality of design - how well does it
meet customer expectations
The square root of the number of data points,
rounded to the nearest whole number
Cause and effect diagram Check sheet
Flowchart Histogram Pareto chart Process map dispersion of the error. =sum of forecast errors needed for the final assembly schedule Level
Scatter plot
Activity network diagram Affinity diagram
Interrelationship diagram Matrix diagram
Prioritization matrix Process decision program
chart Tree diagram
The process of creating a plan that will: Drive
Moving average, weighted moving average, production Execute the production plan
Greater than 3
exponential smoothing Provide product to satisfy demand Provide
information for order promising
Cost effectiveness: the costs of managing the
forecasting process must be proportional to
the magnitude of the business decisions being
made Horizon: the forecast must support the
lead times of the business decision 1: failure to plan means planning to fail 2: the
Aggregation: the forecast must be at the quality of our master scheduling process will RSFE/MAD
appropriate level of precision Timelines: the determine the success of the entire operation
deadlines of the business decisions Accuracy:
acceptable forecast error limits must be
established and achieved Accountability: when
forecast
performance
decision: is unacceptable,
the forecasting process must
be designed to support one or more business
decisions System performance: the forecasting
process must contain appropriate
measurements to evaluate performance It links strategic planning with operational
Discerning distribution: Selective distribution
Methods: a variety of quantitative and planning. Also links forecast and customer
Intensive distribution Exclusive distribution
qualitative techniques exist in industry. The order information
choice of an appropriate technique is usually
dependent upon business decision that is
being addressed and the availability of data
Data: data can be either internal or external.
Internal sources include demand history and
MRP-like time planning for independent
demand items where gross requirements come
Forecast error (actual - forecast) Absolute
from a forecast not from BOM explosion; can
forecast error: | actual-forecast | Absolute If done well it creates a good master schedule,
be used to plan distribution center inventories
percent error: (absolute forecast error) / actual that will generate effective use of all resources
as well as service parts since MRP logic can
demand
plan items with dependent, independent, or
both demand
Achieving the production plan goals
Standard deviation Mean absolute deviation Disaggregating the production plan
(MAD): sum or absolute forecast errors / n time Developing production schedules to meet
periods Mean absolute forecast error (MAPE): market needs Ensuring that the schedule is
(100/n) x (sum (absolute forecast error/ actual feasible Ensuring that the planning horizon is
demand)) covered The plan must cover the planning
horizon
Level one MPS: will create the availability of the
Compares the running forecast error with the components, assemblies, and options that are
/ MAD two MPS: to fine tune what we have made and
to produce the end products
provides a measure of forecast bias. RSFE Production plan rules on: inventory, customer
indicates the tendency of a forecast to be service, resource utilization Current MPS
consistently higher or lower than actual Forecasts, customer orders, inventory levels,
demand. and resource constraints

Simple Functions Divisional Conglomerate
Hybrid or Matrix
Create the MPS Calculate information for
1) pre-transaction 2) transaction 3) post-
order-promising Create the final assembly
transaction
schedule

A statement of the planned output for each

Customer requested date Product family
It must be sustainable The assumptions have time period Stability within the fixed time fence
guidelines Uncommitted inventory and
been identified and are realistic The risks have A benchmark against which performance can
planned production Uncommitted resources of
been recognized and are realistic be measured A statement of future inventory
all types
or backlog

An artificial grouping of items or events in bill-

Rivalry among existing competitors Threat of
new entrants Threat of substitute products
metrics focused on effectiveness and efficiency
Bargaining power of suppliers Bargaining
power of buyers
Introduction Growth Maturity Decline
External customer focused metrics Internal
Master production schedule Rough cut
capacity plan
of operations
Analyzing the feasibility of the preliminary
master schedules against all resources
Resolving imbalances between current
requirements and current performance levels
Speed: how quickly we respond to the initial
Analyzing deviations from plan and developing
request Correctness: was the request fulfilled
recovery plans Receiving change requests and
correctly the first time?
understanding the impact of the proposed
changes on the organization Developing and
negotiating solutions that optimize the
business results for the organization
of-material format used to facilitate master
scheduling and material planning. It may
include the historical average of demand
expressed as a percentage of total demand for
all options within a feature or for a specific end
item within a product family and is used as the
quantity per in the planning bill of material.
Synonym: planning bill. See: hedge, option
overplanning, production forecast, pseudo bill
of material.
A calculation based on the available-to-
promise figure in the master schedule. For the
first period, the ATP is the sum of the
beginning inventory plus the MPS quantity
minus backlog for all periods until the item is
master scheduled again. For all other periods, if
a quantity has been scheduled for that time
period then the ATP is this quantity minus all
customer commitments for this and other
periods until another quantity is scheduled in
the MPS. For those periods where the quantity
scheduled is zero, the ATP is zero (even if

An organization enters the market with a new
product or process and exits when the product
starts to develop stable growth
Backlog level Level of quality Delivery Infinite is better when meeting due dates is
Deviations happened in the past Changes are
performance Stockout percentage Customer more important than high utilization of the
requested for the future
support production facility

Order oriented: objective is to achieve a high

An org enters the market when there are still
opportunities for competition. At this point the Pre-transaction phase Transaction phase Post-
product still has to mature, it exits when
volume starts to decline
Supply or demand classification Timing:
immediate or long-term Significance: major
transaction phase
importance or insignificant
level of delivery reliability. Meeting need dates
for production or procurement orders is more
important than utilization Order wise: loads
orders individually on an order by order basis.
Most appropriate when there is limited
capacity and schedule flexibility. Also usually
used when there are a few high value orders
being processed

Customer Service Policy- defines firms

objectives of customer service, provides
guidance for service activities and should be
Volume hedge: protects against fluctuations in
communicated to the customer. Should at least
demand Mix hedge: utilize planning bill
An org enters just before a product is ready to include a service mission statement, detailed Considers capacity Objectives: keep resources
structures, is used to hedge demand
explode into a high volume level. It exits when service standards and a list of quantifiable highly utilized and minimize delays in meeting
fluctuation at the product feature or option
volume is starting to decline. performance measurements. Communication committed dates
level. Percentage of components adds to more
of Service Policy- service policy must be
than 100%
communicated to everyone in the organization
as well as the customer. Organization
Structure- must develop and organization
capable of executing the mission statement.
 Product availability Order inquiries - ability of
the firm to respond quickly and accurately to
customer inquiries. Components of the order
Follows the theory of constraints method.
cycle - from the moment the order is placed
Good for limited schedule flexibility and
An org enters when market volume is at its until receipt of the final product Expedited Cost per transaction Time per activity Asset
relatively level demand Objective is to
peak and tried to steal market share, and exits shipment - two types: expediting through utilization Turnaround time Output per unit of
maximize the output of the system by
when volume starts to decline order processing and expediting when a resource
maximizing the output of the constraint. (Drum
customer backorder occurs. Inventory transfers
buffer rope scheduling)
- refers to the transfer of inventory between
stocking points in the supply chain System
integrity - inaccuracies in the order cycle are
costly both to the firm and the customer Order

Validating part numbers for accuracy

Reviewing the agreed-upon pricing and terms
Evaluating the accuracy of options or system
Simple Functional Divisional Conglomerate
configurations Performing credit checks and Perform rough cut capacity planning Formulate
Hybrid
address verifications Evaluating the ability to
ship on or before the date requested by the
customer
A form of vertical loading, also referred to as
Develop the master production schedule
operations sequencing. Objective: minimize the
delays of individual operations which will also
the final assembly schedule
minimize the delay of the system as a whole

Installation, warranty, alterations, repairs,

service parts - these are value added to the
customer Product tracking - tracing by lot or
Aspects of the supply chain over which the
serial number Customer claims, complaints,
organization has direct control
and returns - these should be clearly explained
in the customer service policy Product
replacement
Critical path method: based on infinite loading
Prior period PAB + MPS receipts - greater of
PERT: also based on infinite loading Critical
forecast or orders
chain: constraint oriented finite loading