Information is potentially the biggest driver of performance in the supply chain as it
directly affects each of the other drivers.
Short-term production serves as a broad blueprint for operations and establishes the
parameters within which aggregate planning decisions are made.
Capacity allocation decisions have a significant impact on supply chain performance
because they tend to stay in place for several years.
Temporal aggregation decreases a firm’s responsiveness because of shipping delay but
also decreases transportation costs because of economies of scale that result from larger
shipments.
Cycle inventoryis the physical inventory in the supply chain due to either production or
purchases demanded by the customer.
Unused capacity from the past is extremely valuable.
To differentiate between the various market segments, the firm must either eliminate
barriers that identify product or service attributes the segments value differently.
As the replenishment lot size grows, the cycle inventory at the firm grows, thus
increasing the cost of holding inventory.
Intercompany scope is broader than intrafunctional scope.
High tariffs lead to more production locations within a supply chain network, with each
location having a lower allocated capacity.
An increase in forecast accuracy increases both the overstocked and understocked
quantity and decreases a firm’s profits.
Carrying excessive inventory can help counter demand volatility when new products
come on the market.
Postponement allows the supply chain to delay product differentiation, which results in
disaggregating most of the inventories in the supply chain.
The S&H Mercantile in Luther is the only game in town for a number of items, and
tries valiantly to use only the storage space needed to display items since there is no
stock room in the back of the store. One popular item, a 16-ounce can of dehydrated
water, takes up 20 square inches of shelf space. The shelf space available for this item
measures five feet by four feet. The store manager would like to order a quantity that
can fill the shelf space without stacking and without needing to store cans elsewhere in
the store. The amount ordered should all be on display once the S&H runs out and
ideally would arrive just as the last can is purchased.
Drought conditions spike demand during the summer to an annualized rate of 27,000
cans per year and the price rises to $12 per can with a holding cost of 20%. What is the
required order cost per lot?
A) 9.2 cents
B) 92 cents
C) $9.20
D) $92.00
The capacity management approach where a firm has production lines whose
production rate can easily be varied to match demand is
A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) designing product flexibility into the production processes.
________ forecasting methods assume that the demand forecast is highly correlated
with certain factors in the environment (the state of the economy, interest rates, etc.).
A) Qualitative
B) Time-series
C) Causal
D) Simulation
Customer order receiving is
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
allocates 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.
Which contract increases the margin for the dealer as sales cross certain levels?
A) Buyback or returns contract
B) Revenue-sharing contract
C) Quantity flexibility contract
D) Threshold contract
Which of the following is an advantage of distributor storage with last mile delivery?
A) It is more expensive to provide product availability than any other option except
retail stores.
B) Inventory cost is higher than distributor storage with package carrier delivery.
C) Response time is very quick ranging from same day to next day delivery.
D) Transportation cost is higher than any other distribution option.
The S&H Mercantile in Luther is the only game in town for a number of items, and
tries valiantly to use only the storage space needed to display items since there is no
stock room in the back of the store. One popular item, a 16-ounce can of dehydrated
water, takes up 20 square inches of shelf space. The shelf space available for this item
measures five feet by four feet. The store manager would like to order a quantity that
can fill the shelf space without stacking and without needing to store cans elsewhere in
the store. The amount ordered should all be on display once the S&H runs out and
ideally would arrive just as the last can is purchased.
Suppose the annual demand is 8,000 units and the cost per can is $3 with a holding cost
of 10%. What is the required order cost per lot?
A) 32 cents
B) $3.20
C) $32
D) $1.44
A negative NPV (net present value) for an option indicates that the option will
A) gain money for the supply chain.
B) lose money for the supply chain.
C) maximize profit for the supply chain.
D) minimize profit for the supply chain.
The sustainability damage from landfill additives comes in which form?
A) Potential energy lost
B) Materials lost
C) Terrible smell
D) Both A and B
Which factor favors promotion during peak-demand periods?
A) High margin
B) Low ability to steal market share
C) High ability to increase overall market
D) Low margin
Daily demand for cat litter at the Cat Caf© 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 Caf©; 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 caf© wishes to erase any hint of impropriety and wants to peg their service
level at 99%. How many days of safety inventory they should carry?
A) 4.77 days
B) 5.12 days
C) 5.33 days
D) 5.67 days
With a fixed cost of $100 per order, Nathan decided it was vital to get his money’s
worth. His monthly demand for energy drinks was 10,000 bottles and holding cost was
estimated at 20% of unit cost. The mail order company offered him a couple of
possibilities – he could pay $4.00 per bottle for orders of up to 10,000 bottles. After that
threshold, he would pay only $3.98 per bottle, and if he ordered 20,00 or more bottles
in an order, he would pay only $3.96 per bottle.
What is the best order quantity for Nathan to use?
A) 5,477
B) 5,505
C) 10,000
D) 5,491
The bullwhip effect causes
A) maximization of supply chain surplus.
B) improved accuracy of demand information within the supply chain.
C) different stages of the supply chain to have a very different estimate of what demand
looks like.
D) less need for aggregate planning.
There is a cost associated with postponement because the production cost using
postponement is typically
A) higher than the production cost without it.
B) lower than the production cost without it.
C) very stable.
D) equal to the production cost without it.
Which approach to capacity management would use production machinery that can be
changed easily from producing one product to another?
A) Time flexibility from workforce
B) Use of subcontracting
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes
Risks and opportunities have increased for supply chains due to
A) the decreasing value of the U.S. dollar.
B) increasing globalization.
C) the increasing population.
D) a decline in energy prices.
Discuss the importance of designing flexibility into the transportation network.
Discuss the information required for aggregate planning.
Explain the six distinct distribution network designs that may be used to move products
from factory to customer.
Explain the supply chain decision-making framework and the role of the four major
drivers.
Discuss the role of cycle inventory in the supply chain.
Discuss the role of sustainability supply chains.
Explain the impact of supplier lead time on safety inventory.
Explain why forecasting is important to revenue management.
Discuss the ideas that managers should consider to make better supply chain network
design decisions under uncertainty.