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The objective of every supply chain is to maximize the overall value generated.
Long-term contracts for both warehousing and transportation requirements will be more
effective if the demand and price of warehousing do not change in the future or if the
price of warehousing goes up.
A good supplier scoring and assessment process will primarily track performance along
the price dimension when evaluating a supplier.
Given that forecasts are always wrong to some degree, the aggregate plan needs to have
some flexibility built into it if it is to be useful.
The value chain emphasizes the close relationship between all the functional strategies
within a company.
The cost of wasted capacity is the margin that would have been generated if the
capacity had been used for production.
The aggregate planning problem is concerned with determining the production level,
inventory level, and capacity level (internal and outsourced) for each period that
maximizes the firm's profit over the planning horizon.
During network design, managers need a methodology that allows them to estimate the
certainty in their forecast of demand and price and then incorporate this certainty into
the decision-making process.
If quick response allows multiple orders in the season, profits increase and the
overstock quantity increases.
Cycle inventory is primarily held to take advantage of economies of scale and reduce
profit within the supply chain.
The curve that shows the lowest possible cost for a given level of responsiveness is
referred to as the
A) supply chain responsiveness curve.
B) supply chain efficiency curve.
C) cost-responsiveness efficient frontier.
D) responsiveness spectrum.
A highly effective tool for a company to use when it tries to maximize profits while
being subjected to a series of constraints is
A) aggregate programming.
B) distribution programming.
C) production programming.
D) linear programming.
The capacity management approach that uses a temporary workforce during the peak
season to increase capacity to match demand is
A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) the use of dual facilities-dedicated and flexible.
Most firms must decide what fraction of an asset to
A) sell in bulk and what fraction of the asset to discard.
B) save for the spot market and what fraction of the asset to discard.
C) save for emergencies and what fraction of the asset to rework.
D) sell in bulk and what fraction of the asset to save for the spot market.
The cost of loading/unloading orders, as well as other processing costs associated with
transportation, is considered
A) transportation cost.
B) inventory cost.
C) facility cost.
D) processing cost.
Forecasts are always wrong and therefore
A) should include both the expected value of the forecast and a measure of forecast
error.
B) should not include both the expected value of the forecast and a measure of forecast
error.
C) should only be used when there are no accurate estimates.
D) should be missing the expected value of the forecast and a measure of forecast error.
Customer arrival refers to
A) the point in time when the customer has access to choices and makes a decision
regarding a purchase.
B) the customer informing the retailer of what they want to purchase and the retailer
allocating product to the customer.
C) the process where product is prepared and sent to the customer.
D) the process where the customer receives the product and takes ownership.
Daily demand for cat litter at the Cat Cafe in Jones is 1500 ounces with a standard
deviation of 300 ounces. The proprietor orders the best cat litter money can buy online,
and the average shipping time is 5 days. Of course, if the order is placed at the end of
the week, then it may take a while longer to receive the shipment, so the standard
deviation of lead time is 2 days. The state health department keeps a close eye on the
condition of the Cat Cafe; a cat-loving inspector visits at least twice a week, ostensibly
to inspect, but mostly to pet his favorite Scottish Fold cat named Groundskeeper Willie.
Suppose the cafe wishes to erase any hint of impropriety and wants to peg their service
level at 99.5%. What is the level of safety inventory they should carry?
A) 7500 ounces
B) 3074 ounces
C) 19350 ounces
D) 7918 ounces
Bahouth Ltd. is planning for the next two years of production and debating whether to
construct a large cross-dock facility with 40 truck bays or a smaller one with 20 truck
bays. The cost to build the large facility is $2 million and the cost to build the small one
is $1.2 million. If they construct a large facility and demand is as high as they hope,
then operating costs are $450,000 annually. If they construct a large facility and demand
is low, then operating costs are $300,000. If they construct a small facility and demand
is low, the operating costs are $275,000 but if they experience high demand, the
operating cost of a small facility increases to $600,000. After having conducted some
market research, they feel that the likelihood of high demand is 0.7 and the likelihood
of small demand is 0.3.
If price and demand do vary over time in a global network,
A) flexible production capacity should not be used in the new environment.
B) flexible production capacity will be ineffective in the new environment.
C) flexible production capacity can be reconfigured to maximize profits in the new
environment.
D) flexible production capacity should never be used in an uncertain environment.
The taco stand in the atrium of the new College of Business building carried two items,
fish tacos and chicken tacos. The fish tacos sell for $15 and are made out of $5 of
ingredients and the chicken tacos sell for $10 and are made out of $4 of ingredients.
Some days the taco stand owner has only chicken at his disposal, so he makes nothing
but chicken tacos, and some days the opposite is true and he makes only fish tacos.
Thus, he is able to estimate demand for chicken tacos at 2500 per day with a standard
deviation of 600 and the demand for fish tacos at 2000 per day with a standard
deviation of 500. Any fish or chicken tacos that do not sell at the end of the day can be
sold for $1 each as bait. On days when both proteins are available, the taco stand
manager prefers to make a few of each kind. All tacos are made in his home kitchen and
then transported to campus. Due to time constraints and the capacity of his pickup truck
bed, he is limited to beginning each day with only 3000 tacos.
Suppose the taco stand manager could wake up a little earlier and borrow his buddy's
full size pickup to transport tacos to campus. If time and capacity were not an issue,
what would the expected profit be per day?
A) $29,443
B) $31,382
C) $35,000
D) $30,657
Which component of the supply chain decision-making framework would be
established first?
A) Customer strategy
B) Supply chain strategy
C) Supply chain structure
D) Competitive strategy
