Mgt 3325 - Home   Spring 2010   Email to Dr. Lyons     PatLyons Home
[ Calendar12:20 | 1:25 | Class Participation AI | App of OM | Table of Contents | Search ] 
[ Ch 1 | 2 | 3 | 4 | 5 | 6 | 6S | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | | HW1 | 2 | 3 | 4 | | Career1| 2 | 3 | 4 ]
[ SJU | TCB | CareerCenter | StudentInfo | CareerLinks | Internships ] [NYC Teaching Fellows] [ SJU Closing ] [H1N1SelfAssessment]

Ch 11 - Supply Chain Management

  1. Supply Chain's Strategic Importance (p434)
    1. Def - Supply Chain - the facilities and activities involved in producing and delivering a product (good or service) from suppliers (and their suppliers) to customers (and their customers).
      1. Objective - maximizing value to the ultimate customer.
      2. The profound improvement in supply chain mgt is due to:
        1. The rapid flow of information among suppliers and customers,
        2. *The use of mgt science computer models to optimize operations.
      3. Note: 20 years ago, average purchase order (PO) was manual, and cost $50. Today, average PO is electronic and costs $0.50.
    2. Supply Chain Facilities include - plants, warehouses, distribution centers, service centers, retail operations.
    3. Supply Chain Activities include:
      1. Purchasing
      2. Material and financial transfers (Chs 12 - Inventory Mgt, 14 - MRP)
      3. Scheduling (Chs 13 - Aggregate Planning, 15 Short-term Scheduling)
      4. Transportation - shipping & delivery (Ch 8 - Location, TransLP)
      5. Customer service (Module D - Waiting Lines)
  2. Purchasing (Supply Chain Economics, p436)
    1. Def - Purchasing - the acquisition of goods and services.
    2. Objectives of purchasing
      1. *Identify products that can best be obtained externally
        Make-or-Buy Decision - Table 11.4, page 437.
      2. *Evaluate, develop and determine the best price, supplier and delivery for those products.
    3. Def - Internet Purchasing (also called e-procurement) (p445) - purchasing that uses the Internet to communicate orders.  Part of Enterprise Resource Planning Systems (Ch 14)
      1. Note: Ford, General Motors, and DaimlerChrysler set up a super auction Internet site to buy $250 billion worth of parts each year. This cuts their cost by at least 10 percent, reducing the price of building a car by $1,000. Parts account for $10,000 of the cost of a $20,000 car. (Reference: "Believe All the Hype About B-2-B, It's the Real Thing", http://dailynews.yahoo.com, Tech Headlines, March 3, 2000)
  3. Purchasing Responsibilities (Vendor Selection, p447)
    1. *Vendor Evaluation
    2. Vendor Development - training vendor to ensure proper quality, delivery, engineering changes
    3. *Negotiation of Contracts - use learning curves (Module E below)
  4. Opportunities in an Integrated Supply Chain   (Techniques to enhance value, p442)
    1. *Vendor Managed Inventory - supplier delivers product directly to user department, not stockroom. Example - car seat supplier delivers seats directly to production line.
    2. *Postponement - withholds customization to the product as long as possible. Example - by moving the power supply out of the printer and into the power cord, HP can ship printer anywhere in the world.
    3. *Drop Shipping - supplier ships directly to end consumer. Example - When customer buys a Dell PC with HP printer, printer is drop shipped to customer. Dell never holds printer.
    4. *Standardization - when possible, replace several similar products with one standard product. Example, a company standardizes on Microsoft Word.
  5. Benchmarking Supply Chain Management
    1. Table 11.6 - Supply Chain Performance - p452
          Typical firms    Benchmark firms 
        Percent of late deliveries     33%             2%
        Percent of rejected material     1.5%     .0001%
        Number of shortages per year     400             4
  6. Learning Curves (Module E - page 782)
    1. Def - Learning Effect - each time the production quantity doubles, the unit production time is reduced by a constant rate.
    2. Example - A production process follows an 80% learning curve where first unit requires 100 hrs. Then:
      1. Second unit requires 100(.80) = 80 hrs
      2. Fourth unit requires 100(.80)2 = 64 hrs
      3. Eighth unit requires 100(.80)3 = 51 hrs
    3. *Learning Curve - let TN denote the time to produce the N-th unit, then:
          TN = T1 N b
              where   b = (log L) / (log 2) and
                         L = learning fraction.
    4. Verification of learning property (for your information only)
    5. For N equal to a power of 2 (2, 4, 8, 16, . . . ), TN can be easily computed without logs
      1. If  N = 2n , then  TN = T1 Ln
      2. Example E2 - tugboat - page 786
            T1 = 125,000 hours, L = 0.85. Find T4
             Since 4 = 22, T4 = T1 L2 = (125,000) (0.85)2 =
                      (125,000) (0.7225) = 90,312 hours
                                     Do assigned HW
                                                (This page was last edited on October 22, 2009 .)