Chapter3

SupplyChainDriversandObstaclesTrue/FalseThemajordriversofsupplychainperformancearefacilities,inventory,transportation,andinformation.Answer:TrueDifficulty:ModerateThemajordriversofsupplychainperformancearecustomers,facilities,inventory,transportation,andinformation.Answer:FalseDifficulty:ModerateThetwomajortypesoffacilitiesareproductionsitesandstoragesites.Answer:TrueDifficulty:ModerateThetwomajortypesoffacilitiesaredistributionsitesandstoragesites.Answer:FalseDifficulty:ModerateInventoryisanimportantsupplychaindriverbecausechanginginventorypoliciescandramaticallyalterthesupplychain 'sefficiencyandresponsiveness.Answer:TrueDifficulty:ModerateInformationispotentiallythebiggestdriverofperformanceinthesupplychainasitdirectlyaffectseachoftheotherdrivers.Answer:TrueDifficulty:EasyInformationispotentiallythebiggestdriverofperformanceinthesupplychaineventhoughithaslittleimpactoneachoftheotherdrivers.Answer:FalseDifficulty:EasyAfacilitywithlittleexcesscapacitywilllikelybemoreefficientperunitofproductitproducesthanonewithalotofunusedcapacity.Answer:TrueDifficulty:EasyAfacilitywithlittleexcesscapacitywilllikelybenomoreorlessefficientperunitofproductitproducesthanonewithalotofunusedcapacity.Answer:FalseDifficulty:EasyThehighutilizationfacilitywillhavedifficultyrespondingtodemandfluctuations.Answer:TrueDifficulty:EasyThehighutilizationfacilitywillhavenomoredifficultyrespondingtodemandfluctuationsthanonewithalotofunusedcapacity.Difficulty:ModerateDifficulty:ModerateDifficulty:EasyDifficulty:EasyAnswer:FalseDifficulty:EasyStockkeepingunit(SKU)storageisthewarehousingmethodologythatusesatraditionalwarehousetostoreallofonetypeofproducttogether.Answer:TrueDifficulty:ModerateWarehouseunitstorageisthewarehousingmethodologythatusesatraditionalwarehousetostoreallofonetypeofproducttogether.Answer:FalseDifficulty:ModerateThecomponentsofinventorydecisionsincludecycleinventory,safetyinventory,seasonalinventory,andsourcing.Answer:TrueDifficulty:EasyThecomponentsofinventorydecisionsincludecapacity,cycleinventory,safetyinventory,seasonalinventory,andsourcing.Answer:FalseDifficulty:EasyCycleinventoryisinventorythatisbuiltuptocounterpredictablevariabilityindemand.Answer:FalseSeasonalinventoryisinventorythatisbuiltuptocounterpredictablevariabilityindemand.Answer:TrueDifficulty:ModerateCompaniesusingseasonalinventorywillbuildupinventoryinperiodsoflowdemandandstoreitforperiodsofhighdemandwhentheywillnothavethecapacitytoproduceallthatisdemanded.Answer:TrueDifficulty:ModerateCompaniesusingseasonalinventorywillmaintainalevelinventoryincreaserateofproductionforperiodsofhighdemand.Answer:FalseDifficulty:EasyAcompany’sabilitytofindabalanceb etweenresponsivenessandefficiencythatbestmatchestheneedsofthecustomeritistargetingisthekeytoachievingstrategicfit.Answer:TrueDifficulty:ModerateManyobstacles,suchasgrowingproductvarietyandshorterlifecycles,havemadeitincreasinglydifficultforsupplychainstoachievestrategicfit.Answer:TrueMultipleChoiceWhichofthefollowingisnotamajordriverofsupplychainperformanceFacilitiesInventoryTransportationInformationAlloftheabovearemajordriversofsupplychainperformance.Answer:eDifficulty:EasyWhichofthefollowingisnotamajordriverofsupplychainperformanceCustomersFacilitiesInventoryTransportationInformationAnswer:aDifficulty:ModerateTheplacesinthesupplychainnetworkwhereproductisstored,assembled,orfabricatedareknownrmation.customers.Answer:aDifficulty:EasyAllrawmaterials,workinprocess,andfinishedgoodswithinasupplychainareknownrmation.customers.Answer:bDifficulty:EasyMovinginventoryfrompointtopointinthesupplyisknownrmation.customers.Answer:cDifficulty:EasyThedataandanalysisconcerningfacilities,inventory,transportation,andcustomersthroughoutthesupplychainisknownrmation.customers.Answer:dDifficulty:EasyThetwomajortypesoffacilitiesaredistributionsitesandstorageductionsitesanddistributionductionsitesandstoragesites.retailsitesanddistributionsites.distributionsitesandinventorysites.Answer:cDifficulty:ModerateWhichcomponentofthesupplychaindecision-makingframeworkwouldbeestablishedfirstCustomerstrategySupplychainstrategySupplychainstructureCompetitivestrategyReplenishmentstrategyAnswer:dDifficulty:ModerateWhichcomponentofthesupplychaindecision-makingframeworkwouldbeestablishedsecondCustomerstrategySupplychainstrategySupplychainstructureCompetitivestrategyReplenishmentstrategyAnswer:bDifficulty:ModerateWhichcomponentofthesupplychaindecision-makingframeworkwouldbeusedtoreachtheperformanceleveldictatedbythesupplychainstrategyCustomerstrategySupplychainstrategySupplychainstructureCompetitivestrategyReplenishmentstrategyAnswer:cDifficulty:EasyWhichofthefollowingisnotacomponentoffacilitiesdecisionsLocationCapacityOperationsmethodologyWarehousingmethodologyAlloftheabovearecomponentsoffacilitiesdecisions.Answer:eDifficulty:ModerateWhichofthefollowingisnotacomponentoffacilitiesdecisionsWarehousingmethodologyForecastingmethodologyOperationsmethodologyCapacityLocationAnswer:bDifficulty:ModerateWhichofthefollowingstatementsconcerningdecisionsregardinglocationoffacilitiesisfalseDecidingwhereacompanywilllocateitsfacilitiesconstitutesalargepartofthedesignofasupplychain.Abasictrade-offhereiswhethertocentralizetogaineconomiesofscaleordecentralizetobecomemoreresponsivebybeingclosertothecustomer.Companiesmustalsoconsiderahostofissuesrelatedtothevariouscharacteristicsofthelocalareainwhichthefacilitymaybesituated.Allofthesestatementsaretrue.Noneofthesestatementsaretrue.Answer:dDifficulty:ModerateWhichofthefollowingisnotanissuecompaniesneedtoconsiderinfacilitylocationdecisionsqualityofworkersproductdevelopmentproximitytocustomersandtherestofthenetworkcostoffacilitytaxeffectsAnswer:bDifficulty:ModerateWhichofthefollowingisnotanissuecompaniesneedtoconsiderinfacilitylocationdecisionsqualityofworkersavailabilityofinfrastructureproximitytocustomersandtherestofthenetworkcostoffacilityAlloftheaboveareissuescompaniesneedtoconsiderinfacilitylocationdecisions.Answer:eDifficulty:ModerateExcesscapacityallowsafacilitytobeveryflexibleandtorespondtowideswingsinthedemandsplacedonit.costsmoneyandthereforecandecreaseefficiency.requiresproximitytocustomersandtherestofthenetwork.bothaandballoftheaboveAnswer:dDifficulty:ModerateWhichofthefollowingisacharacteristicofafacilitywithexcesscapacitya.willlikelybemoreefficientperunitofproductitproducesa.thanonewithalotofunusedcapacitywouldbeveryflexibleandtorespondtowideswingsinthedemandsplacedonitwouldbeconsideredahighutilizationfacilitywillhavedifficultyrespondingtodemandfluctuationsnoneoftheaboveAnswer:aDifficulty:EasyAfacilitywithlittleexcesscapacitywilllikelybemoreefficientperunitofproductitproducesthanonewithalotofunusedcapacity.wouldbeconsideredahighutilizationfacility.willhavedifficultyrespondingtodemandfluctuations.Alloftheabovearetrue.Noneoftheabovearetrue.Answer:dDifficulty:ModerateWhichofthefollowingwouldbeacharacteristicofafacilitywithlittleexcesscapacityallowsafacilitytobeveryflexibleandtorespondtowideswingsinthedemandsplacedonitcostsmoneyandthereforecandecreaseefficiencyrequiresproximitytocustomersandtherestofthenetworkwilllikelybemoreefficientperunitofproductitproducesnoneoftheaboveAnswer:dDifficulty:Moderatee.noneoftheabovee.noneoftheabove20.Whichofthefollowingis20.WhichofthefollowingisnotawarehousingmethodologyWarehouseunitstorageStockkeepingunit(SKU)storageJoblotstorageCross-dockingAlloftheabovearewarehousingmethodologies.Answer:aDifficulty:ModerateThewarehousingmethodologythatusesatraditionalwarehousetostoreallofonetypeofproducttogetheriswarehouseunitstorage.stockkeepingunit(SKU)storage.joblotstorage.cross-docking.noneoftheaboveAnswer:bDifficulty:ModerateThewarehousingmethodologyinwhichallthedifferenttypesofproductsneededtoperformaparticularjoborsatisfyaparticulartypeofcustomerarestoredtogetheriswarehouseunitstorage.stockkeepingunit(SKU)storage.joblotstorage.cross-docking.exceptexceptexceptexceptAnswer:cDifficulty:ModerateThefollowingwarehousingmethodologyisoneinwhichgoodsarenotactuallywarehousedinafacility.Instead,trucksfromsuppliers,eachcarryingadifferenttypeofproduct,delivergoodstoafacility.Theretheinventoryisbrokenintosmallerlotsandquicklyloadedontostoreboundtrucksthatcarryavarietyofproducts,somefromeachofthesuppliertrucks.warehouseunitstoragestockkeepingunit(SKU)storagejoblotstoragecross-dockingnoneoftheaboveAnswer:dDifficulty:ModerateAllofthefollowingarecomponentsofinventorydecisionscycleinventory.safetyinventory.seasonalinventory.sourcing.Alloftheabovearecomponentsofinventorydecisions.Answer:eDifficulty:EasyAllofthefollowingarecomponentsofinventorydecisionscapacity.cycleinventory.safetyinventory.seasonalinventory.sourcing.Answer:aDifficulty:EasyTheaverageamountofinventoryusedtosatisfydemandbetweenreceiptofsuppliershipmentsisreferredtoascycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:aDifficulty:ModerateTheinventorythatisbuiltuptocounterpredictablevariabilityindemandiscalledcycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:cDifficulty:ModerateTheinventoryheldincasedemandexceedsexpectationinordertocounteruncertaintyiscalledcycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:bDifficulty:ModerateThesetofbusinessprocessesrequiredtopurchasegoodsandservicesisknownascycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:dDifficulty:EasyCycleinventorydecisionsinvolvehowmuchtoorderforreplenishment.howoftentoplaceorders.abasictrade-offbetweenthecostofholdinglargerlotsofinventoryandthecostoforderingproductfrequently.alloftheaboveaandbonlyAnswer:dDifficulty:ModerateCycleinventoryisusedbecausetheworldisperfectlypredictable.demandisuncertainandmayexceedexpectations.itinvolvesmakingatrade-offbetweenthecostsofhavingtoomuchinventoryandthecostsoflosingsalesduetonothavingenoughinventory.itfocusesonprocessesthatareexternaltothefirm.itfocusesonprocessesthatareinternaltothefirm.Answer:bDifficulty:ModerateSeasonalinventoryshouldbeusedwhenacompanycanrapidlychangetherateofitsproductionsystemataverylowcost.changingtherateofproductionisexpensive.,whenworkersmustbehiredorfired).adjustingtoaperiodoflowdemandwithoutincurringlargecosts.theworldisperfectlyductionrateisflexible.Answer:aDifficulty:HardSourcinginvolvesa.decidingthetasksthatwillbeoutsourcedandthosethatwillbeper-formedwithinthefirm.a.Difficulty:EasyDifficulty:Easydecidingwhethertosourcefromasinglesupplieroraportfolioofsuppliers.identifyingthesetofcriterionthatwillbeusedtoselectsuppliersandmeasuretheirperformance.selectingsuppliersandnegotiatingcontractswiththem.alloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingarekeycomponentsoftransportationdecisionswhendesigningandoperatingasupplychainModeoftransportationRouteandnetworkselectionIn-houseoroutsourcealloftheabovenoneoftheaboveAnswer:dDifficulty:ModerateWhichofthefollowingarekeycomponentsoftransportationdecisionswhendesigningandoperatingasupplychainSoftwareselectionModeoftransportationSourceselectionWarehouseselectionnoneoftheaboveAnswer:bWhichofthefollowingarekeycomponentsofinformationthatmustbeanalyzedtoincreaseefficiencyandimproveeffectivenessinasupplychainPushversuspullCoordinationandinformationsharingForecastingandaggregateplanningPricingandrevenuemanagementalloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingarekeycomponentsofinformationthatmustbeanalyzedtoincreaseefficiencyandimproveeffectivenessinasupplychainSoftwareselectionSourceselectionWarehouseselectionForecastingandaggregateplanningnoneoftheaboveAnswer:dDifficulty:ModerateWhenallthedifferentstagesofasupplychainworktowardtheobjectiveofmaximizingtotalsupplychainprofitability,ratherthaneachstagedevotingitselftoitsownprofitabilitywithoutconsideringtotalsupplychainprofit,itisknownassupplychaincoordination.forecasting.aggregateplanning.

d.revenuemanagement.d.revenuemanagement.e.pricing.Answer:aDifficulty:EasyTheartandscienceofmakingprojectionsaboutwhatfuturedemandandconditionswillbeissupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:bDifficulty:EasyTransformingforecastsintoplansofactivitytosatisfytheprojecteddemandisknownassupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:cDifficulty:EasyTheprocessbywhichafirmdecideshowmuchtochargecustomersforitsgoodsandservicesissupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:eDifficulty:EasyTheuseofdifferentialpricingovertimeorcustomersegmentstomaximizeprofitsfromalimitedsetofsupplychainassetsissupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:dDifficulty:ModerateWhichofthefollowingaretechnologiesthatshareandanalyzeinformationinthesupplychainElectronicDataInterchange(EDI)InternetEnterpriseResourcePlanning(ERP)SupplyChainManagement(SCM)softwarealloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingaretechnologiesthatshareandanalyzeinformationinthesupplychainInternetEnterpriseDataPlanning(EDP)ElectronicResourceInterchange(ERI)ChainManagement(CM)softwarenoneoftheaboveAnswer:aDifficulty:ModerateWhichofthefollowingareobstaclestoachievingstrategicfitIncreasingvarietyofproductsDecreasingproductlifecyclesIncreasinglydemandingcustomersFragmentationofsupplychain ownershipalloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingareobstaclestoachievingstrategicfitDifficultyexecutingnewstrategiesGlobalizationIncreasinglydemandingcustomersFragmentationofsupplychainownershipalloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingisnotanobstacletoachievingstrategicfitIncreasingvarietyofproductsDecreasingproductlifecyclesIncreasinglydemandingcustomersConsolidationofsupplychainownershipnoneoftheaboveAnswer:dDifficulty:ModerateEssay/ProblemsListanddefinethefourmajordriversofsupplychainperformance.AnswerFacilitiesaretheplacesinthesupplychainnetworkwhereproductisstored,assembled,orfabricated.Thetwomajortypesoffacilitiesareproductionsitesandstoragesites.Inventoryisallrawmaterials,workinprocess,andfinishedgoodswithinasupplychain.Inventoryisanimportantsupplychaindriverbecausechanginginventorypoliciescandramaticallyalterthesupplychain'sefficiencyandresponsiveness.Transportationentailsmovinginventoryfrompointtopointinthesupplychain.Transportationcantaketheformofmanycombinationsofmodesandroutes.Informationconsistsofdataandanalysisconcerningfacilities,inventory,transportation,andcustomersthroughoutthesupplychain.Informationispotentiallythebiggestdriverofperformanceinthesupplychainasitdirectlyaffectseachoftheotherdrivers.Difficulty: ModerateExplainthesupplychaindecision-makingframeworkandtheroleofthefourmajordrivers.Answer:Thegoalofasupplychainstrategyistostrikethebalancebetweenresponsivenessandefficiency,resultinginastrategicfitwiththecompetitivestrategy.Toreachthisgoal,acompanyusesthefoursupplychaindriversdiscussedearlier.Foreachoftheindividualdrivers,supplychainmanagersmustmakeatrade-offbetweenefficiencyandresponsiveness.Thecombinedimpactofthesefourdriversthendeterminestheresponsivenessandefficiencyoftheentiresupplychain.Mostcompaniesbeginwithacompetitivestrategyandthendecidewhattheirsupplychainstrategyoughttobe.Thesupplychainstrategydetermineshowthesupplychainshouldperformwithrespecttoefficiencyandresponsiveness.Thesupplychainmustthenusethesupplychaindriverstoreachtheperformancelevelthesupplychainstrategydictates.Difficulty: ModerateExplainthebasictrade-offbetweenresponsivenessandefficiencyforeachofthemajordriversofsupplychainperformance.Answer:Thefundamentaltrade-offwhenmakingfacilitiesdecisionsisbetweenthecostofthenumber,location,andtypeoffacilities(efficiency)andthelevelofresponsivenessthatthesefacilitiesprovidethecompany’scustomers.Thefundamentaltrade-offwhenmakinginventorydecisionsisbetweenresponsivenessandefficiency.Increasinginventorywillgenerallymakethesupplychainmoreresponsivetothecustomer.Thischoice,however,comesatacostastheaddedinventorydecreasesefficiency.Therefore,asupplychainmanagercanuseinventoryasoneofthedriversforreachingthelevelofresponsivenessandefficiencythecompetitivestrategytargets.Thefundamentaltrade-offfortransportationisbetweenthecostoftransportingagivenproduct(efficiency)andthespeedwithwhichthatproductistransported(responsiveness).Thetransportationchoiceinfluencesotherdriverssuchasinventoryandfacilities.Whensupplychainmanagersthinkaboutmakingtransportationdecisions,theyframethedecisionintermsofthistrade-off.Goodinformationsystemscanhelpafirmimprovebothitsresponsivenessandefficiency.Theinformationdriverisusedtoimprovetheperformanceofotherdriversandtheuseofinformationisbasedonthestrategicpositiontheotherdriverssupport.Accurateinformationcanhelpafirmimproveefficiencybydecreasinginventoryandtransportationcosts.Accurateinformationcanimproveresponsivenessbyhelpingasupplychainbettermatchsupplyanddemand.Difficulty: ModerateExplaintheroleofeachofthemajordriversofsupplychainperformance.Answer:Facilitiesarethewhereofthesupplychainifwethinkofinventoryaswhatisbeingpassedalongthesupplychainandtransportationashowitispassedalong.Theyarethelocationstoorfromwhichtheinventoryistransported.Withinafacility,inventoryiseitherprocessedortransformedintoanotherstate(manufacturing)oritisstoredbeforebeingshippedtothenextstage(warehousing).Inventoryexistsinthesupplychainbecauseofamismatchbetweensupplyanddemand.Animportantrolethatinventoryplaysinthesupplychainistoincreasetheamountofdemandthatcanbesatisfiedbyhavingproductreadyandavailablewhenthecustomerwantsit.Anothersignificantroleinventoryplaysistoreducecostbyexploitinganyeconomiesofscalethatmayexistduringbothproductionanddistribution.Inventoryisspreadthroughoutthesupplychainfromrawmaterialstoworkinprocesstofinishedgoodsthatsuppliers,manufacturers,distributors,andretailershold.Inventoryisamajorsourceofcostinasupplychainandithasahugeimpactonresponsiveness.Thelocationandquantityofinventorycanmovethesupplychainfromoneendoftheresponsivenessspectrumtotheother.Inventoryalsohasasignificantimpactonthematerialflowtimeinasupplychain.MaterialflowtimeisthetimethatelapsesbetweenthepointatwhichAnotherimportantareawhereinventoryhasasignificantimpactisthroughput.Inventoryandflowtimearesynonymousinasupplychain.Managersshoulduseactionsthatlowertheamountofinventoryneededwithoutincreasingcostorreducingresponsiveness,becausereducedflowtimecanbeasignificantadvantageinasupplychain.Transportationmovesproductbetweendifferentstagesinasupplychain.Liketheothersupplychaindrivers,transportationhasalargeimpactonbothresponsivenessandefficiency.Fastertransportation,whetherintheformofdifferentmodesoftransportationordifferentamountsbeingtransported,allowsasupplychaintobemoreresponsivebutreducesitsefficiency.Thetypeoftransportationacompanyusesalsoaffectstheinventoryandfacilitylocationsinthesupplychain.Informationcouldbeoverlookedasamajorsupplychaindriverbecauseitdoesnothaveaphysicalpresence.Information,however,deeplyaffectseverypartofthesupplychain.Itsimpactiseasytounderestimateasinformationaffectsasupplychaininmanydifferentways.Informationservesastheconnectionbetweenthesupplychain ’svariousstages,allowingthemtocoordinateandbringaboutmanyofthebenefitsofmaximizingtotalsupplychainprofitability.Informationisalsocrucialtothedailyoperationsofeachstageinasupplychain.Forinstance,aproductionschedulingsystemusesinformationondemandtocreateaschedulethatallowsafactorytoproducetherightproductsinanefficientmanner.Awarehousemanagementsystemusesinformationtocreatevisibilityofthewarehouse ’sinventory.Thecompanycanthenusethisinformationtodeterminewhetherneworderscanbefilled.Difficulty: HardExplaintheroleofeachofthemajordriversofsupplychainperformanceinthecompetitivestrategy.Answer:Facilitiesandtheircorrespondingcapacitiestoperformtheirfunctionsareakeydriverofsupplychainperformanceintermsofresponsivenessandefficiency.Forexample,companiescangaineconomiesofscalewhenaproductismanufacturedor