WGU C720 COMPLETE OA PREP GUIDE | 2024 VERSION
Inputs - People, capital, material, money
Outputs - Services and goods
Sustainability - Defined broadly in operations and supply chain management as the ethical issues an organization faces to balance financial performance while maintai...
Sustainability - Defined broadly in operations and supply chain management as the
ethical issues an organization faces to balance financial performance while maintaining
social responsibility standards and a responsible environmental profile.
VIRAL - Acronym - A framework for competitive advantage.
Viral, Inimitable, Rare, Aptitude, Lifespan.
The advantage must provide Value to consumers; it should be Inimitable (not easily
imitated), Rare, and an organization must have the Aptitude (capability) and Lifespan
(sustainability) to earn appropriate returns on the advantage.
Productivity - A mathematical calculation; it is the ratio of the outputs achieved divided
by the inputs consumed to achieve those outputs.
6 Types of Inventory - o Raw Materials
o Work In Progress
o Finished Goods
o Replacement Parts Inventory
o Supplies
o Transportation
Raw Materials - These parts and materials are obtained from suppliers and are used in
the production process.
Work-in-process (WIP) - These are partly finished parts, components, sub-assemblies,
or modules.
Finished Goods - Items are ready to ship to the customer. No more work is required.
Replacement parts inventory - These are maintained to replace other parts in
machinery or equipment as those parts wear out
,Supplies - Parts or materials are used to support the production process but not usually
a component of the product. These items, such as lubricant and cutting tools, are
consumed in the production process.
Transportation (pipeline): - The portion of inventory that is in the process of being
shipped through the distribution system.
4 Types of Demand - o Peak
o Seasonal
o Unexpected
o Chase
Peak Demand - Demand which occurs in response to planned events such as
advertising, publicity or promotion. The release of a popular game franchise's latest
version often causes peak demand for a few days or weeks.
Seasonal Demand - Demand as shoppers adjust their purchase velocity in line with
holidays, especially Christmas. But Halloween, Thanksgiving and even St. Patrick's Day
also create seasonal demand for certain kinds of merchandise.
Unexpected Demand - Demand which occurs due to a usually-unexpected event. For
example, an underdog school may upset a favorite during the NCAA's basketball
tournament, causing a run on their merchandise.
Chase Demand - Demand that occurs when a company has to adjust production by
rates to match demand by varying the workforce and using overtime. Companies vary
the workforce by adding or reducing the number of employees on duty at any given
time. And they may choose to provide overtime by asking workers to stay on the job
beyond their normally scheduled time.
Safety Stock - A cushion of inventory to protect against unexpected demand. In this
way, they can continue to meet customer demand without delays.
Stock Out - Occurs when inventory is depleted.
Perpetual Inventory System - Continuously monitors inventory levels and is also called
a continuous review system. Requires human input (i.e. cashier) and the ordering of
more inventory is triggered by reorder point.
o Requires an exact inventory balance at all times
o Best for big businesses, retail stores, or banks
o High value and high volume
o Expensive to implement and maintain
Periodic Inventory System - Randomly monitors inventory levels and is also called the
fixed order interval system.
, o Requires a physical count periodically
o Used when a supplier will only deliver at specific time intervals
o Low value and volume
o Used for small businesses
o Inexpensive to implement and maintain
ABC analysis - Has been developed to determine which inventory items should receive
the highest level of control. By multiplying the dollar value of each item by its annual
usage, ba bdollar busage bvalue bcan bbe bobtained. bDollar busage bfollows bthe bPareto
bPrinciple bin bthat bfrequently, bonly b20% bof ball bthe bitems baccount bfor b80% bof bthe btotal
Economic bOrder bQuantity b(EOQ) b- b bFor binventory bthat bdoesn't brequire bproduction, bwhen
bdemand bis bconstant band bknown, bwhen bcost bper bunit bdoes bnot bdepend bon border
bquantity. b
Most bappropriate bfor bretail bstores bor bcompanies bthat border bfinished bgoods.
Economic bProduction bQuantity b(EPQ) b- b bFor binventory bthat bwill bbe bused bin bproduction,
bWhen bincremental bordering band bdepletion bof binventory bis ballowed, bAlso bcalled
bproduction border bquantity.
Most bappropriate bfor bmanufacturing band bproduction bcompanies
The bgoal bof bfirms busing bthe bEOQ b& bEPQ bmodel b- b bMinimize bthe btotal bannual bcosts bof
bordering band bholding binventory bby bvarying bthe border bquantity.
Quantity bdiscount bmodel b- b bA bdiscount boffered bin bprice bfor bordering babove ba bspecified
bamount
Transportation bdiscounts b- b bA bdiscount boffered bon bshipping bcost bfor bordering babove ba
bspecified bamount
Revenue bSharing b- b bWhen b2 bor bmore bcompanies bpartner band bdivides bthe bprofits
breceived bbased bon ban bagreement bbetween ball bparties binvolved.
Reserve bCapacity b- b bWhen ba bcompany bstores, bor bpays banother bcompany bto bstore,
bexcess binventory bto bbe bused bfor bunexpected bdemand
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