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SUPPLY CHAIN SCIENCEBook Summary
2022
,Table of contents
Chapter 0. Strategic Foundations 3
Chapter 1. Capacity 4
1.2 Measuring Capacity 4
1.3 Limits on Capacity 5
1.4 Impact of Utilization 5
Chapter 2. Variability 6
2.2 Little’s Law 6
2.3 Measuring Variability 7
2.4 Influence of variability 8
Chapter 3. Batching 10
3.2 Simultaneous batching 10
3.3 Sequential batching (one at a time) 11
3.4 Multi product batching 12
LECTURE 2: (VARIABILITY) & BATCHING 13
CHAPTER 4. FLOWS 14
4.2 Characterizing flows: 14
4.3 Best-case performances 14
4.4 Worst-case performance 15
4.5 Practical worst-case performance 16
4.6 Internal benchmarking 17
4.7 Variability propagation 17
4.8 Improving performance of process flows 18
CHAPTER 5. BUFFERING 19
5.2 Buffering fundamentals 19
5.3 Role of strategy 19
5.4 Buffer Flexibility 19
5.5 Buffer location 20
5.6 The science of lean production 21
CHAPTER 6. PUSH AND PULL 22
6.2 What is pull 22
,6.4 The magic of pull 23
6.5 Comparison of push and pull 23
6.6 Pull implementation 25
CHAPTER 7. INVENTORY 26
7.2 Classification 26
7.3 Cycle stock 27
7.4 Safety stock 29
7.5 Periodic review System 30
7.6 Continuous Review System 31
7.7 Multi-item systems 33
CHAPTER 8. RISK 34
8.1 Introduction 34
8.2 Pooling 35
8.2.1 Probability basics 35
8.2.2 Applications of pooling 35
8.3 Contingency Planning 37
8.4 Crisis management 38
, Chapter 0. Strategic Foundations
The link between a strategy and operations lies in an organization's value proposition. Firms that offer products
or services to customers compete on the basis of some combination of:
• Cost
• Speed
• Quality
• Service
• variety
Consumers and competing firms attach different weights to these metrics, so they make trade-offs based on
their business strategies. See the figure below for strategic trade-offs and efficient frontiers.
The blue lines depicts the efficient frontiers = the most efficient (cost) system for a given performance level.
• Not being on the efficient frontier = not competitive = room for competition to enter.
Thinking of supply chain design in terms of these kinds of trade-offs presents two levels of decision making:
1. Strategic problem: determine where on the efficient frontier to locate
2. Operational problem: design a system that achieves performance on the efficient frontier
Benchmarking: how firms seek efficiency, however:
• The system can only partially ensure that systems achieves its strategic goals
• It cannot provide a way to move efficiency beyond historical levels, because its nature is imitative.
By describing how a system works, a supply chain science offers the potential to’:
• identify areas of greatest leverage
• determine which policies are likely to be effective in a given system
• enable practices/insights for one type of environment to be generalized to another environment
• make quantitative trade-offs between the costs and benefits of a particular action
• synthesize the various perspectives of a manufacturing or service system, including those of logistics,
product design, HR, accounting and management strategy.
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