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Study Guide for MAN 3504_2

Study Guide for MAN 3504_2 - Study Guide for MAN 3504...

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Study Guide for MAN 3504: Production / Operations & Logistics Management The following summarizes the major topics and learning objectives covered in class thus far. You should find the answers or appropriate methods to address each of these on the PowerPoint slides (very often the case), and/or in your lecture notes, and/or in the practice homework. Independent Demand Inventory Management 1. Define inventory: Materials stored for future consumption 2. Define (in general) why inventory is stored and indicate why effective management of inventory is important (i.e., its impact on the economy, the assets of various types of firms, and the total logistics costs. Economy- allows producing and buying more than you need right now Firm’s Assets- largest assets for most wholesalers and retailers (20-50% of total assets) manufacturers (10-20%) Logistics- starts at manufacturer, then wholesaler, then retailer. Inventory gets more value as it goes down the chain. (7.7% of GDP) 4. Identify and define the five major types of inventory and identify whether each of the five has independent or dependent demand. 1). Finished Goods (anything ready to sell) Independent 2). Raw Materials (materials) Dependent 3). Work in Process (goods not ready for sale) Dependent 4). Semi-Finished Assemblies or Sub-Assemblies (almost finished but needs next stage of assembly) Dependent Think ”Assembly line” 5). Maintenance, Repair, and Operating Supplies (used in the process of running business.) Independent 6. Identify the environments (e.g., retail, manufacturing) in which each type of inventory is found 1). Finished Goods- Manufacturing, Retail, Wholesalers 2). Raw Materials- Manufacturing 3). Work in Process- Manufacturing 4). Semi-Finished assemblies- Manufacturing 5), Maintenance, Repair, and Operating Supplies- Manufacturing, Retail, Wholesalers, **Manufacturing is in all of these 7. Identify which type of inventory appears in virtually any type of business environment Maintenance, Repair, and Operating Supplies 8. Identify all the specific reasons why inventory is carried Identify all the specific reasons why inventory is carried Economies of scale: • Allows producing & buying more than you need right now
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• Avoids cost of processing an order for every item demanded (cycle stock) • Allows us to take quantity discounts when purchasing (anticipationor speculative stock) • Allows producing in bulk to minimize expensive setups in mfg. Balances supply and demand: • Allows buildup of stock in anticipation of seasonal demand and/or to stabilize employment levels over time (anticipationor seasonal stock) • Allows flexibility in production & distribution rates (decoupling stock) • Buffer between all the links in the supply chain: supplier-mfr-retailer-consumer • Enables specialization by manufacturing plants: focused factories Protection from uncertainties: • Protects against higher than expected demand, or longer than expected delivery time (safety stock) • Protect against possible future strike or shortage (anticipationor speculative stock)
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