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A decrease in the response time customers desire increases the number of facilities
required in the network.
Price discriminationis the practice where a firm charges differential prices to maximize
profits.
Supply chain network design decisions include the location of manufacturing, storage,
or transportation-related facilities and the allocation of capacity and roles to each
facility.
When faced with uncertain conditions it is always best to sign long-term contracts
(because they are typically cheaper) and avoid all flexible capacity (because it is more
expensive).
Incentive obstacles refer to situations where incentives offered to different stages or
participants in a supply chain lead to actions that increase variability and reduce total
supply chain profits.
A firm that uses flexible work hours from the workforce to manage capacity to better
meet demand is using a seasonal workforce.
Marginal unit quantity discounts have also been referred to as multi-block tariffs.
The appropriate level of safety inventory is determined by the uncertainty of both
demand and supply and the desired level of cycle inventory.
The high utilization facility will have difficulty responding to demand fluctuations.
Collaborative forecasting based on sales to the end customer can help enterprises
further up the supply chain reduce forecast error.
Inventory and facility costs increase as the number of facilities in a supply chain
increase.
The procurement cycle occurs at the manufacturer/supplier interface.
The value of better information coordination will be linked to the amount of variability
introduced into the supply chain as a result of the bullwhip effect.
The supply chain profit is higher if each stage of the supply chain independently makes
its pricing decisions with the objective of maximizing its own profit.
Because demand and supply characteristics change, the supply chain strategy must
change over the product life cycle if a company is to continue achieving strategic fit.
The procurement cycle occurs at the
A) customer/retailer interface.
B) retailer/distributor interface.
C) distributor/manufacturer interface.
D) manufacturer/supplier interface.
The competent supply chain manager decided to aggregate all inventories and as
required, use fast mode of transportation for filling customer orders of his
A) high-value and high-demand product.
B) high-value and low-demand product.
C) low-value and high-demand product.
D) low-value and low-demand product.
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.
The cruise line's insurance policy limits the number of donkeys in their herd to 5,000.
What bulk price should the cruise line negotiate to make the 5,000 donkey herd size
optimal?
A) $18,586 per ten thousand
B) $18,362 per ten thousand
C) $18,134 per ten thousand
D) $17,978 per ten thousand
Suppose that a highway is governed by a use fee charged to motorists that is based on
congestion, operation and maintenance. The total traffic t is used to determine the cost
of 5t2. What is the average cost per motorist?
A) 2.5
B) 5
C) 5t
D) 2.5t
The trade-off that a supply chain manager must consider when planning safety
inventory is
A) increasing product availability versus increasing inventory holding costs.
B) decreasing product availability versus decreasing inventory holding costs.
C) increasing product availability versus raising the level of safety inventory.
D) decreasing product availability versus decreasing the level of safety inventory.
________ may reduce overall profits for a firm if a single product contributes the
majority of the demand.
A) Shortened forecasting window
B) Quick response
C) Postponement
D) Tailored sourcing
The multiplicative form of the systematic component of demand is shown as
A) level x trend x seasonal factor.
B) level + trend + seasonal factor.
C) (level + trend) x seasonal factor.
D) level x (trend + seasonal factor).
A shrewd supply chain manager would aggregate only safety inventory and use an
inexpensive mode of transportation for replenishing cycle inventory if she is dealing
with a
A) high-value product and high demand.
B) high-value product and low demand.
C) low-value product and high demand.
D) low-value product and low demand.
The process of evaluating the present value of any stream of future cash flows so that
management can compare two streams of cash flows in terms of their financial value is
A) annual cash flow(ACF) analysis.
B) discretionary cash flow(DCF) analysis.
C) discounted cash flow(DCF) analysis.
D) future cash flow(FCF) analysis.
Which approach to capacity management would require that the workforce be
multi-skilled and easily adapt to being moved from line to line?
A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes
Companies typically divide the task of supply and demand so that
A) Marketing manages demand and Operations manages supply.
B) Marketing manages supply and Operations manages demand.
C) Marketing manages demand and supply.
D) Operations manages demand and supply.
Short-term contracts for both warehousing and transportation requirements will be more
effective
A) if the demand and price of warehousing do not change in the future.
B) if the price of warehousing goes up in the future.
C) if either demand or the price of warehousing drops in the future.
D) only if demand drops in the future.
A firm that is not on the cost-responsiveness efficient frontier can improve
A) both responsiveness and cost performance.
B) only responsiveness.
C) only cost performance.
D) responsiveness, but not cost performance.
A firm can handle predictable variability by managing
A) supply using capacity, inventory, trade promotions, and backlogs.
B) supply using capacity, inventory, subcontracting, and backlogs.
C) demand using short-term price discounts and trade promotions.
D) B and C only
The ability to provide a high level of product availability to customers while carrying
very low levels of safety inventory in its supply chain has been a key to success at
which company?
A) Compaq
B) Hewlett-Packard
C) Dell
D) Packard-Bell
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.
Formulate the aggregate plan using linear programming.
Discuss key issues to be considered when implementing aggregate planning.
Pretzle Wagon is evaluating the possibility of offshoring part of his operation and
developing a spreadsheet to help assess the total cost of the decision. What elements
should be included in the evaluation?
Explain the relationship between product availability and supply chain profitability.
Describe the four phases in the framework for network design decisions.
A manufacturer of industrial sales has production capacity of 1,000 units per day.
Currently, the firm sells production capacity for $10 per unit. At this price, all
production capacity gets booked about one week in advance. A group of customers have
said that they would be willing to pay $15 per unit if capacity was available on the last
day. About ten days in advance, demand for the high-price segment is normally
distributed with a mean of 250 and a standard deviation of 100. How much production
capacity should the manufacturer reserve for the last day?
