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SCM 470 - Process Fundamentals and Inventory Management Review

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SCM 470 - Process Fundamentals and Inventory Management Review According to Lecture, what is Supply Chain Management (SCM) / Operations Management (OM)? ️The process of transforming Raw Materials into Finished Goods while minimizing wasted resources (i.e, People, Cost of Materials, Energy...

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  • October 16, 2024
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SCM 470 - Process Fundamentals and Inventory Management
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According to Lecture, what is Supply Chain Management (SCM) / Operations Management (OM)?
✔️The process of transforming Raw Materials into Finished Goods while minimizing wasted resources
(i.e, People, Cost of Materials, Energy)



What are the main components of Operations Management? ✔️- Strategy

- Process Flow (Capacity, Utilization, Bottleneck)

- Forecasting

- Quality



What is Purchasing? ✔️To acquire Goods and Services for the Use or Resale of an Organization while
Minimizing the Waste of Resources (i.e, People, Cost of Materials, Energy)



What is Logistics? ✔️The process of Moving and Storing Inventory (Raw Materials, WIP, and Finished
Goods) while Minimizing the Waste of Resources (i.e, People, Cost of Materials, Energy)



Describe the Meaning behind the components of a Process Flow Diagram:

- Triangle

- Rectangle

- Diamond

- Arrow ✔️- Triangle: Inventory



- Rectangle: Operating Step



- Diamond: Decision Point



- Arrow: Flow / Movement

,True or False: If Task 1 has an Output Rate of 80 Units per Minute and Task 2 has an Output Rate of 75
Units per Minute, Task 1 is the Bottleneck ✔️False

- Task 2 is the Bottleneck



True or False: If Task 1 has an Output Rate of 80 Units per Minute and Task 2 has an Output Rate of 75
Units per Minute, adding Capacity to Task 1 will increase the Output capabilities of the entire Process
✔️False

- Given that Task 2 is the Bottleneck, adding Capacity to Task 1 would not affect the Output capabilities
of the process at all



- We would need to add Capacity to Task 2 in order to increase the Output capabilities of the Process



Example: Assume that Task 1 has an Output Rate of 80 Units per Minute and Task 2 has an Output Rate
of 75 Units per Minute. Given this information, How many FGs will be produced in 8 hours? ✔️36,000
Units



How does Decoupling Inventory accumulate in a Process? ✔️If a Preceding Task operates Faster Than
(i.e., has an Output Rate Larger than) its Subsequent Task, there will be Decoupling Inventory



- EX: If Task 1 is Faster than Task 2 (i.e., Task 2 is Slower than Task 1), there will be Decoupling Inventory



- EX: Task 1 (80 Units/Min) and Task 2 (75 Units/Min). Between these Tasks, there will be 5 units of
Decoupling Inventory generated each minute.



Example: Assume that Task 1 has an Output Rate of 80 Units per Minute and Task 2 has an Output Rate
of 75 Units per Minute. Given this information, How much WIP will be produced in 8 hours? ✔️2,400
Units



1) 80 Units/Min - 75 Units/Min = 5 Units of Decoupling Inventory per Minute



2) 5 Units x 480 Minutes (8 hours) = 2,400 Units

, True or False: When converting units, you must always begin with the Lowest/Smallest Unit in the
Process ✔️True

- You must always work with the same units in a conversion problem



- EX: If the Lowest/Smallest Unit in the process is expressed in Seconds, convert other Task Times into
seconds and proceed with the problem



What is Output Rate? ✔️The number of units that can be produced within a specific amount of time

- Units per (Period of Time)



How is the Output Rate of a Process Calculated? ✔️1) For each Task and Resource in the Process, we
determine the Cycle Time



2) The Cycle Time of the entire process is determined by the Cycle Time of the Bottleneck Task or
Resource



3) The Output Rate of a Process is calculated as the inverse of its Cycle Time (OR = 1/CT)



What is Cycle Time? ✔️The amount of time needed to produce a single unit



- That is, it is the average time between successive completion of units



- EX: Minutes per Unit



True or False: The Cycle Time of the overall process determines the Capacity of the Process ✔️True

- Cycle Time limits the volume of the product that the process is able to produce and determines the
maximum revenue that a process can generate

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