Learning Outcome 2

Question 1

Explain the difference between direct supplies and indirect supplies.

Answer 1

• Direct - directly related to the manufacture of the finished product. - Raw materials or components
• Indirect - not incorporated into the finished product. - tools or stationery

Question 2

Identify some causes of obsolescent and redundant stock.

Answer 2

• Obsolescent - Technological change, Cultural change, Legislation
• Redundant - Poor forecasting, weak customer relationships, poor stock control/overstock, change in internal policy, too much variety.

Question 3

Provide a brief summary of the following costs:
Preliminary costs
Placement costs
Post-placement costs

Answer 3

• Prelim - costs associated with actions before raising PO
• Placement - cost of raising the PO
• Post - Costs after the PO is raised.

Question 4

Explain the concept of ‘vendor-owned’ stock.

Answer 4

inventory owned by the buying organisation but managed by the supplier.
Reduces risk of redundancy or obsolescence

Question 5

What does the acronym BOM stand for in the MRP process? And, what is the purpose of a BOM?

Answer 5

• bill of materials
• A recipe for the production of a product

Question 6

Lean thinking is aimed at driving value and eliminating waste in a production line and in service industry flows. Waste in a production system takes a number of forms. The pioneer of these approaches is Taiichi Ohno. Ohno identified seven key types of waste. What are they?

Answer 6

• Transportation - unnecessary movement of machinery/parts etc.
• Inventory - holding too much stock, increased storage costs
• Movement - movement of people
• Waiting - machinery/people that are idle
• Over-production - producing more than needed
• Over-processing - unnecessary processes of production
• Defects - faults that need correcting
• Skills - under-utilised talent