SCM Final Exam CSU Exam Questions And Answers

• Define forecasting and the goals of forecasting. - ANS Forecasting provides an estimate of future demand. Its goal is to minimize forecasting error in order to match supply and demand • List the benefits of improved forecasts. - ANS Lower inventories, Reduced stock-outs, Smoother production plans, Reduced costs, Improved customer service • Qualitative Forecast - ANS Usually used when data is limited, unavailable, or irrelevant. Depends on skill & experience of forecaster and availability of information • Quantitative Forecast - ANS Time series forecasting uses historical data to predict future demand. Assumes the future is an extension of the past • Time Series Analysis components. Data should be plotted to detect: - ANS Trend Var.: Increasing or decreasing Cyclical Var.: Wavelike movements longer than a year Seasonal Var.: Show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, etc. Irregular Var.: Outliers Random Var.: Unexpected and unpredictable causes • Calculate a naive forecast - ANS Last period's actual demand is current period's forecast • Calculate a simple moving average forecast - ANS Add previous period actual demand and divide by the number of periods added • Calculate a weighted moving average forecast - ANS Multiply the actual demand by the weights given then add together for next period • Calculate an exponential moving average forecast - ANS Actual demand from previous period subtracted from forecasted demand of previous period. Multiplied by smoothing factor then forecast of previous period is added • Explain the limitations of smoothing models when there is trend in the sales data - ANS Smoothing models use 2 data points to produce forecasts that lag behind the actual trend of the data. It neglects ups and downs associated with random variation • Apply and interpret a linear trend forecasting model - ANS The trend can be estimated using simple linear regression to fit to a time series. Y = B0 + B1*t ; Y = forecast, B0= Intercept, B1= Slope, T=time • Apply and interpret an associative forecasting model - ANS At least one external variable(s) is identified relating to demand. Uses simple regression which means only one explanatory variable is used and is similar to the previous trend model, difference is variable is no longer a time but explanatory variable. Y = B0 + B1*X ; Y = forecast, B0= Intercept, B1= Slope, X=explanatory variable • Calculate the Mean Absolute Deviation (MAD) - ANS Absolute Value of the sum of all forecast error divided by number of periods • Calculate the Mean Squared Error (MSE) - ANS Squared value of the sum of all forecast error divided by number of periods • Calculate the Mean Absolute Percentage Error (MAPE) - ANS Abs. Value of forecast error divided by Actual Demand then all sums divided by number of periods • Calculate the Running Sum of Forecast Error (RFSE) - ANS Total sum of all forecast errors • Calculate the Tracking Signal (TS) - ANS Average total sum of all forecast errors divided by average Abs. Value of forecast error. TS determines if forecast is within acceptable control limits (Range is +4 or -4) if outside pre-set limits, bias exists and a forecast evaluation is required • Define Collaborative Planning, Forecasting and Replenishment (CPFR) and explain its benefits and process - ANS Nine-step process for supply chain integration that allows a supplier and customers to collaborate on forecasting by using the internet. Combines the intelligence of multiple trading partners in the planning & fulfillment of customer demand which leads to increased availability, decreased inventory, transportation and logistics costs • Explain the relationship of forecast accuracy to time horizon and level of detail - ANS Shorter time and a less detailed product would yield less forecast error • Discuss the underlying assumption of time series forecasting and what to do if that assumption is not upheld - ANS The past is not a good predictor of the future as demand can be variable. Works best when demand is expected to remain stable and we use qualitative data when assumption is not upheld • Understand how to identify a bottleneck in a process - ANS Where demand exceeds process capacity, characterized by long lines or lots of inventory before bottleneck / • Understand the connection between the bottleneck and a system's capacity - ANS A bottleneck constrains the system, meaning the system can only produce as fast as the bottleneck process • Define capacity - ANS The maximum average rate of output from an operations management system. Is a variable in the long term and a constraint in the short term • Know what factors can reduce capacity - ANS - Product mix - Worker skill level - Product changeovers - Preventative maintenance - Machine and tool breakdowns - Quality problems - Machine starvation and blockage • Know the various aspects of the Theory of Constraints - ANS 1. Identify the system bottlenecks 2. Exploit the bottlenecks 3. Subordinate all other decisions to step two 4. Elevate the bottlenecks long term 5. Don't fall back to old ways • How do statistical variability and dependent events impact a system's capacity - ANS Dependent events: Event that must take place before other ones can take place. Forms a chain of events where Event A must occur before Event B Statistical variability: statistical fluctuations in each event's ability to produce a result at a specified capacity • Dependent Variable - ANS Describes the internal demand for parts based on the demand of the final product in which the parts are used. Subassemblies, components, and raw materials are examples. • Independent Variable - ANS The demand for final products and has a demand pattern affected by trends, seasonal patterns and general market conditions • Explain the challenges of resource planning and its importance - ANS Challenge is achieving a rough balance between available capacity and required workload over time. Answers how much of each output we should produce, when it should be produced, and what resources are available, and which will be needed • Explain the hierarchical resource planning model -master production planning (MPS) and materials resource planning (MRP) - ANS 1st Calculate the Master Production Schedule for the product. When there are Planned Order Releases, they drop down and are multiplied by the planning factor to give the Gross Requirements for the Master Resource Planning of the component • Define Master Planning Schedule (MPS) - ANS Weekly build schedule for each product, plans our cumulative lead time and provides production quantity to meet demand from all sources • Define Master Resource Planning (MPR) - ANS Computer based material management system that calculates the exact quantities, dates needed and planned order releases for subassemblies and other materials needed to produce a final product. Needs independent demand info, parent-component relationships from BOM, and inventory status of final products and components to produce planned order releases