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It is more common for a manufacturer to not own the distribution network.
A reliable supplier has low variability of lead time, whereas an unreliable supplier has
high variability.
Too low a level of overbooking will lead to unutilized assets and lost revenue.
Buyback contracts counter double marginalization by lowering the cost of overstocking
for the retailer.
A company faces the aggregate planning problem shown in the table below. Cost of
regular production is $8 per unit, the cost of producing the same unit on overtime is
$15, the cost of subcontracting is $12 per unit, and the cost of carrying a unit in
inventory from one month to the next is $6.
The labor contract at the plant prohibits both overtime and subcontracting output to
exceed 400 units in any five month window. The plant capacity is 20 units per day
produced using two shifts and the plant runs seven days a week. By policy,
management wants to avoid stockouts.
What is the optimal total cost of the aggregate plan developed to address Scenario 8.2?
A) $27,200
B) $20,960
C) $31,400
D) $26,600
The decision to use overbooking will
A) lead to upset customers and a high cost of providing them space.
B) lead to unutilized assets and lost revenue.
C) lead to reduced profits.
D) depend upon optimization to be successful.
The Stone Lion, a bed and breakfast located in a sleepy town, caters to two groups of
customers, young couples interested in something marginally more exotic than a
staycation, and corporate clients interested in doing some team-building at a location
with no cellular service. Corporations know they can get rooms with minimal notice,
but young couples on tight budgets tend to plan well in advance of their planned stay at
the property. The corporate rate for rooms is $250 per person and the demand pattern is
normal with a mean of 20 and a standard deviation of 10. The proprietor of the Stone
Lion takes pity on the young couples and charges them only $150 for identical
accommodations.
If the price young couples are willing to pay increases by 50%, how many rooms
should be reserved for corporate clients?
A) 17
B) 7
C) 4
D) 10
Distribution is a key driver of the overall profitability of a firm because
A) the addition of distributors only adds cost to the supply chain.
B) it directly impacts both the supply chain cost and the customer experience.
C) it slows down the responsiveness of the supply chain.
D) it cannot be developed as a part of supply chain strategy.
________ worked with their equipment supplier, Siemens VAI, to create a new
production process that cut costs and emissions by using local iron ore that was of
lower quality but cheaper.
A) Walmart
B) Coca-Cola
C) Posco
D) Starbucks
The procurement process for indirect materials should focus on
A) improving coordination and visibility with the supplier.
B) decreasing the transaction cost for each order.
C) consolidation of orders to take advantage of economies of scale and quantity
discounts.
D) minimizing communication with the supplier.
Offering a promotion during a peak period that has significant forward buying
A) creates a desirable demand pattern.
B) creates a demand pattern less costly to serve.
C) creates a demand pattern even more costly to serve.
D) shifts demand from the peak period to the slow period.
A facility built because of tax incentives, local content requirement, tariff barriers, or
high logistics cost to supply the region from elsewhere with the objective to supply the
market where it is located is
A) an offshore facility.
B) a source facility.
C) a server facility.
D) a contributor facility.
The first step in achieving strategic fit between competitive and supply chain strategies
is to
A) understand the supply chain and map it on the responsiveness spectrum.
B) understand customers and supply chain uncertainty.
C) match supply chain responsiveness with the implied uncertainty of demand.
D) ensure that all functional strategies within the supply chain support the supply
chain's level of responsiveness.
For individuals and firms to focus on sustainability, it is crucial that they
A) reject the model of maximization of shareholder wealth as the firm objective.
B) adhere to ISO 14000 standards.
C) internalize the monetary value of the social/environmental cost of their actions.
D) include language in the corporate mission, vision, and values statements about
sustainability.
The local hominy man is anticipating a bumper crop this year, so he arranges with a
chain of grocery stores to stock up on his hominy as part of a Homina Homina Hominy
campaign to lure customers in to the stores during September for cans of the divinely
salty, yet nutritious vegetable. This approach is an example of
A) DC replenishment collaboration.
B) store replenishment collaboration.
C) retail event collaboration.
D) assortment planning collaboration.
If the technology is flexible
A) it becomes more difficult to consolidate manufacturing in a few large facilities.
B) it becomes more difficult to distribute manufacturing in many local facilities.
C) it becomes easier to consolidate manufacturing in a few large facilities.
D) it becomes easier to consolidate manufacturing in many local facilities.
Which approach to capacity management would only be effective if the overall demand
across all the products is relatively constant?
A) Use of seasonal workforce
B) Use of subcontracting
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes
When all the different stages of a supply chain work toward the objective of
maximizing total supply chain profitability, rather than each stage devoting itself to its
own profitability without considering total supply chain profit, it is known as
A) supply chain coordination.
B) forecasting.
C) aggregate planning.
D) revenue management.
Cycle inventory is used because
A) the world is perfectly predictable.
B) demand is uncertain and may exceed expectations.
C) it involves making a trade-off between the costs of having too much inventory and
the costs of losing sales due to not having enough inventory.
D) it focuses on processes that are external to the firm.
