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169。 Washington State University2023 1 Fundamental Exam Review Applications: Replenishment Segment The Theory of Constraints James R. Holt, ., PE Professor Engineering Technology Management 169。 Washington State University2023 2 TOCICO Segmented Fundamentals Exam Fundamentals Certificate Multiple Choice Exam (Identify, Exploit, Subordinate, Elevate, Go to Step 1) Fundamentals Certificate of TOC Philosophy Fundamentals Certificate of TOC Thinking Processes Fundamentals Certificate of TOC Applications Fundamentals Certificate of TOC Finance Measures ?Inherent Potential ?Inherent Simplicity ?Inherent WinWin ?Five Focusing Steps ?Three Questions ?Conflict Cloud ?Negative Branch ?Ambitious Target ?DBR ?T, I, OE ?PQ Type Problem ?Project Management ?Replenishment 169。 Washington State University2023 3 TOC Replenishment Distribution System ?Unlike a Factory, there is no single person managing ?Retail Systems include time delay between demand cycles ?Production occurs to forecast ?Delivery Systems focus on efficiencyTransfer in large batches (long time between shipments) ?Errors in forecast are magnified ten fold ?Too much of the wrong inventory, too little of the right ?Magnitude of Missed Sales is not Known 169。 Washington State University2023 4 Forecast Accuracy Now Future Accuracy of Forecast 100% Point where the world changes Effective Response Zone Death Response Zone 169。 Washington State University2023 5 Traditional Pushing Inventory to the Retail Store Manufacturing Warehouse Distribution Stores BEFORE 169。 Washington State University2023 6 Locate Inventory Where it Provides Best Protection AfterFast ProductionFast Delivery Aggregated Variability Manufacturing Warehouse Distribution Stores 169。 Washington State University2023 7 Supply Chain Processes ?Supply Chain is made up of many independent links (Businesses or Business Units) ?Individual links do not provide a pleted product ?There is significant interface problems ? Timing, Quality, Price, Value ?Links are in petition with each other / Leverage each other 169。 Washington State University2023 8 Typical Supply Chain Raw Materials Refine / Prepare Produce Transport Distribute Retail Customer 169。 Washington State University2023 9 Long and Short Duration Supply Chains Dairy Cows Creamery Deliver Retail Customer Farmer Cannery Wholesale Retail Customer 169。 Washington State University2023 10 Complex Combinations Brakes Tires Bumpers Upholstery Engine Transmission Manuf. Car Car Lot Car Lot Car Lot 169。 Washington State University2023 11 Dedicated Chains Mine Smelter Rolling Mill Product Steel Sales Independent Business Unit Independent Business Unit Independent Business Unit Single Firm Totally Owned Industry Sole Source Transfer Prices Fixed by Policy 169。 Washington State University2023 12 Competitive Chains Oil Well Refinery Chemical Plant Cloth Mill Dress Factory Customer Cloth Mill Cloth Mill Chemical Plant Chemical Plant Oil Well Refinery Dress Factory Customer Oil Well Refinery Dress Factory Customer Transfer Prices at Market Prices 169。 Washington State University2023 13 Supply Chain Issues ?In the future, petition will no longer be between petitors, it will be between petitive supply chains. ?Successful supply chains must respond quickly to the changing tastes of the final customer. ?The stumbling bock to FAST is the Information System ?Current Business to Business software offers near instant transfer of data ?But, is data what we need? 169。 Washington State University2023 14 TOC Supply Chain Measures ?TOC Supply Chain Model ? Example: Dairy Farmers Cooperative ? The farmers own the Coop ? Individuals own the cows ? Individuals sell milk to the Coop ? The Coop runs the Creamery ? The Coop sells the milk, cheese, ice cream to the customers ? The Coop keeps 5% profit ? The other profit goes to the farmers ? Everyone has some owne