Most strategies that an aggregate planner actually uses are in combination, and are
referred to as hybrid strategies.
The use of software to determine transportation routes has been the most common IT
application in transportation.
Tailored sourcing may be volume-based or product-based depending on the source of
uncertainty.
With periodic review, inventory status is checked at regular intervals and an order is
placed to raise the inventory level to a specified threshold.
Effective differential pricing over time will generally increase the level of product
availability for the consumer willing to pay full price, but will decrease total profits for
the retailer.
Any asset that loses value over time is perishable.
If facilities have lower fixed costs, many local facilities are preferred because this helps
lower transportation costs.
Pricing schedules with all unit quantity discounts encourage retailers to increase the
size of their lots, which reduces the average inventory and flow time in a supply chain.
Manufacturer-driven substitution increases overall profitability for the manufacturer by
allowing some aggregation of demand, which reduces the inventory requirements for
the same level of availability.
Revenue management is the use of marketing to increase the profit generated from a
limited supply of supply chain assets.
Marlo Stanfield’s operation also uses large quantities of prepaid cell phones, on average
1500 per week with a standard deviation of 145. The lead time for their own brand of
prepaid cell phones is three weeks and they have a lot size of 350 phones. To ensure
they never run out, they keep a safety stock of 500 phones with Proposition Joe.
What safety stock should be held to put the fill rate at 0.99?
A) 251 phones
B) 145 phones
C) 0 phones
D) 100 phones
Historical demand for Peeps is as displayed in the table.
The measure of forecast error where the absolute amount of error of each forecast is
averaged is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) mean absolute percentage error (MAPE).
D) bias.
A high level of product availability requires ________, which raises supply chain costs.
A) large inventories
B) increased revenues
C) reduced costs
D) understocking the product
An aggregate planner requires information on constraints. Which of the following is
one of the typical constraints for an aggregate planner?
A) Inventory holding cost
B) Labor/machine hours required per unit
C) Stockout or backlog cost
D) Limits on overtime
What information does a master production schedule provide that an aggregate plan
does not?
A) Expense information for the planning period
B) Revenue information for the planning period
C) Specific product family production information
D) A specific machine schedule for each order
Which of the following is a characteristic of a facility with excess capacity?
A) Will likely be more efficient per unit of product it produces than one with a lot of
unused capacity
B) Would be very flexible and respond to wide swings in the demands placed on it
C) Would be considered a high utilization facility
D) Will have difficulty responding to demand fluctuations
The basic trade-off to be considered by the supplier with production capacity is between
A) committing to an order from a high-price buyer or waiting for a lower price buyer to
arrive later on.
B) committing to an order from a lower price buyer or waiting for a high-price buyer to
arrive later on.
C) allowing the market to be controlled by price or capacity.
D) having marketing or operations establish the constraints within which orders are
accepted.
The NPV (net present value) of a cash stream that is equal to $100 per period for 5
periods with a rate of return of 12% per period would be
A) $360.48.
B) $382.98.
C) $403.73.
D) $416.51.
This company has not hit its targets for the use of renewable energy because these
sources have higher costs compared to other sources of energy. In general, the public
has not been willing to pay for the added costs.
A) Walmart
B) IKEA
C) IBM
D) 3M
Firms focusing on cost leadership tend to
A) locate facilities close to the market they serve.
B) locate facilities very far from the market they serve.
C) find the lowest cost location for their manufacturing facilities.
D) select a high-cost location to be able to react quickly.
Retailing in the United States is largely
A) push/pull.
B) profitable.
C) consolidated.
D) centralized.
Discuss the two keys to the success or failure of a company.
Briefly describe the three primary risk mitigation strategies based on the idea of
flexibility that supply chain managers can use.
What are the challenges to greater sustainability posed by the tragedy of the commons?
A manufacturer of lawn care equipment has introduced a new product. The anticipated
demand is normally distributed with a mean of ¼ = 100 and a standard deviation of =
50. Each unit costs $75 to manufacture and the introductory price is to be $125 to
achieve this level of sales. Any unsold units at the end of the season are unlikely to be
very valuable and will be disposed of in a fire sale for $25 each. It costs $10 to hold a
unit in inventory for the entire season. What is the cost of overstocking? What is the
cost of understocking? What is the optimal cycle service level? How many units should
be manufactured for sale?
Describe the basic characteristics of forecasts that managers should be aware.
Develop a forecast for this data using simple exponential smoothing with an alpha of
0.66. Then calculate MAD, MSE and the tracking signal.
Explain the two situations in which managers use network design models.