Gang Aft Agley, a manufacturing company, faces the aggregate planning problem
shown in the table below. Cost of regular production is $5 per unit, the cost of
producing the same unit on overtime is $7.50, the cost of subcontracting is $9 per unit,
and the cost of carrying a unit in inventory from one month to the next is $2.
The labor contract at the plant prohibits both overtime and subcontracting output to
exceed 300 units in any five month window. The plant capacity is 600 units per month
produced using two shifts, regardless of the number of days in a month. By policy,
management wants to avoid stockouts.
Use the information from Scenario 8.1 to determine the number of decision variables in
this scenario.
A) 10
B) 15
C) 20
D) 24
The cost of various facilities in the shipper’s supply chain network is
A) transportation cost.
B) inventory cost.
C) facility cost.
D) processing cost.
A manufacturer of cat towers wishes to locate a super assembly facility to meet their cat
tower assembly needs for the next millennium. Currently, carpet, cylinders, yarn and
fasteners are purchased in bulk from suppliers in North Haverbrook, Ogden, and
Springfield in the quantities shown in the table. The super assembly facility would ship
to distribution centers located in Seattle, Lubbock, Nashville, and Philadelphia. The
locations of all of these cities on an x-y grid, transportation costs on a ton per mile
basis, and total tonnage are all contained in the table.
What is the distance between the Ogden and Seattle locations?
A) 450 miles
B) 350 miles
C) 630 miles
D) 1050 miles
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the
town of Fira. One cruise line that routinely docks at the port is considering a plan to
maintain their own donkey herd, which will cost them $15,000 per thousand tourists.
The number of tourists needing this service is normally distributed, with a mean of
Usually, this is enough donkey capacity, but occasionally the cruise line rotates a bigger
ship through this route and the excursion director must purchase donkey capacity on the
spot market, where is costs $20 per tourist.
Once a local donkey herder learns of the cruise line’s plan, he lowers his donkey rental
price to $17.50 per tourist. How many donkeys should be in the cruise line’s herd?
A) 7,264
B) 7,005
C) 6,711
D) 6,370
________ costs increase as the number of facilities in a supply chain increases.
A) Inventory
B) Transportation
C) Retail operation
D) Information
The major disadvantage of in-transit merge compared to drop-shipping is
A) transportation costs are high because the average outbound distance to the end
consumer is large and package carriers are used to shipping the product.
B) response times tend to be large because the order has to be transmitted from the
retailer to the manufacturer and shipping distances are on average longer from the
manufacturer’s centralized site.
C) order tracking becomes harder to implement because it requires complete integration
of information systems at both the retailer and the manufacturer.
D) the additional effort during the merge itself.
Ordering costs would include which of the following?
A) Cost from theft
B) Transportation cost
C) Security cost
D) Damage cost
Which statement about supply chains is best?
A) New product development is not a supply chain function.
B) If a supplier uses a shipping company to send product to a customer, the shipping
company is technically not a supply chain member.
C) Funds in a supply chain flow upstream only.
D) Flows in a supply chain may be managed by an intermediary.
A supply chain features a constant flow of
A) information, product and funds.
B) personnel, information, and policies.
C) processes, funds, and product.
D) product, processes, and support.
A shortage occurs in a replenishment cycle
A) only if the demand during the lead time exceeds the ROP.
B) only if the demand during the lead time is less than the ROP.
C) only if the demand during the lead time exceeds the average demand.
D) only if the demand during the lead time is less than the average demand.
Firms that focus on cost leadership tend to find the lowest-cost location might
A) locate far from their customers.
B) locate in a higher cost area to provide faster response.
C) have many facilities to take advantage of economies of scale.
D) increase inventory levels to reduce stockouts.
Aggregating across products, retailers, or suppliers in a single order allows for
A) an increase in lot size for individual products.
B) an increase in customer demand.
C) a reduction in holding cost per unit.
D) a reduction in lot size for individual products.
________ identifies the difference between the planned production/inventories and the
actual values.
A) Supplier reliability
B) Forecast error
C) Variance from plan
D) Supply quality
On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline
purchases in a logbook that he intended to support his rental expenses for the year. The
entries are in the table below:
What is the average sale price of the gasoline?
A) $2.61
B) $2.64
C) $2.67
D) $2.70
George takes an eclectic mix of spices to make his authentic jerk seasoning as a rub for
chicken, pork, and fish. The ingredients and packaging cost $1.50 and he sells the
packets by the case to Jerk Stores in the Caribbean for $2.50 per packet. Tourists to the
islands gladly pay $8.75 for these packets, eager to host their friends for an authentic
Caribbean meal and bore them with vacation photos upon their return. The demand for
the packets is normally distributed, with a mean of 2500 packets and a standard
deviation of 600.
If each Jerk Store location is acting independently, what is their expected profit if they
stock an optimal quantity?
A) $13,521
B) $13,840
C) $16,680
D) $16,789
The objective of the third phase of network design is to
A) maximize total profits, taking into account the expected margin and demand in each
market.
B) select a precise location and capacity allocation for each facility.
C) select a set of desirable sites within each region where facilities are to be located.
D) identify regions where facilities will be located, their potential roles, and their
approximate capacity.
A global supply chain with offshoring would tend to see which of these performance
dimensions decrease?
A) Working capital
B) Hidden costs
C) Supply chain visibility
D) Product returns
As the response time desired by the customer decreases, the required number of
facilities in the distribution network
A) decreases.
B) remains the same.
C) increases.
D) increases and then decreases.