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1. Explain that supply chain can be one of decisions affect from company strategy?

Low-Cost Response Differentiation

Strategy Strategy Strategy

Supplier’s Supply Respond quickly Share market

goal demand at to changing research; jointly
lowest possible requirements and develop products and
cost (e.g., demand to options (e.g.,
Emerson minimize Benetton)
Electric, Taco stockouts (e.g.,
Bell) Dell Computers)

Primary Select Select primarily Select primarily for

selection primarily for for capacity, product
criteria cost speed, and development skills

Process Maintain high Invest in Modular processes

charact- average excess that lend themselves
eristics utilization capacity and to mass
flexible customization

Inventory Minimize Develop Minimize inventory

charact- inventory responsive in the chain to avoid
eristics throughout the system with obsolescence
chain to hold buffer stocks
down cost positioned to
ensure supply
2. Explain the reasons for whether we make or buy ourselves?

Reasons for Buying

1. Frees management to deal with its core competence
2. Lower acquisition cost
3. Preserve supplier commitment
4. Obtain technical or management ability
5. Inadequate capacity
6. Reduce inventory costs
7. Ensure alternative sources
8. Inadequate managerial or technical resources
9. Reciprocity
10. Item is protected by a patent or trade secret

Reasons for Making

1. Maintain core competence

2. Lower production cost
3. Unsuitable suppliers
4. Assure adequate supply (quantity or delivery)
5. Utilize surplus labor or facilities
6. Obtain desired quality
7. Remove supplier collusion
8. Obtain unique item that would entail a prohibitive
commitment for a supplier
9. Protect personnel from a layoff
10.Protect proprietary design or quality
11.Increase or maintain size of company

3. Describe the various strategies in the supply chain!

- Many suppliers
 Commonly used for commodity products
 Purchasing is typically based on price
 Suppliers compete with one another
 Supplier is responsible for technology, expertise, forecasting, cost, quality, and
- Few suppliers
 Buyer forms longer term relationships with fewer suppliers
 Create value through economies of scale and learning curve improvements
 Suppliers more willing to participate in JIT programs and contribute design
and technological expertise
 Cost of changing suppliers is huge
- Vertical intergration
 Developing the ability to produce goods or service previously purchased
 Integration may be forward, towards the customer, or backward, towards
 Can improve cost, quality, and inventory but requires capital, managerial
skills, and demand
 Risk in industries with rapid technological change
- Keiretsu networks
 A middle ground between few suppliers and vertical integration
 Supplier becomes part of the company coalition
 Often provide financial support for suppliers through ownership or loans
 Members expect long-term relationships and provide technical expertise and
stable deliveries
 May extend through several levels of the supply chain
- Virtual companies
 Rely on a variety of supplier relationships to provide services on demand
 Fluid organizational boundaries that allow the creation of unique enterprises to
meet changing market demands
 Exceptionally lean performance, low capital investment, flexibility, and speed

4. What is the issues in an integrated supply chain?

 Local optimization
 Incentives (sales incentives, quantity discounts, quotas, and promotions)
 Large lots
5. Specify at least 5 opportunities in an integrated supply chain
 Accurate “pull” data
 Lot size reduction
 Single stage control of replenishment
 Vendor managed inventory
 Blanket orders

6. Explain the types of vendor selection?

 Vendor evaluation
a. Critical decision
b. Find potential vendors
c. Determine the likelihood of them becoming good suppliers
 Vendor Development
a. Training
b. Engineering and production help
c. Establish policies and procedures
7. Specify about distribution systems!
- Tracking
- Railroads
- Airfreight
- Waterways
- Pipelines
8. How to decision cost of shipping alternatives?
 Product in transit is a form of inventory and has a carrying cost
 Faster shipping is generally more expensive than slower shipping
 We can evaluate the two costs to better understand the trade-off
9. What is the types of e-procurement?
 Auctions
 RFQs
 Real-time inventory tracking
10. What and where is we can find internet trading exchanges?
 Health care products –
 Retail goods –
 Defense and aerospace products –
 Food, beverage, consumer products –
 Steel and metal products –
 Hotels –

1. Explain the functions of inventory?

 To decouple or separate various parts of the production process
 To decouple the firm from fluctuations in demand and provide a stock of
goods that will provide a selection for customers
 To take advantage of quantity discounts
 To hedge against inflation
2. Specify about the types of inventory!
 Raw material
 Work-in-process
 Maintenance/repair/operating (MRO)
 Finished goods
3. How to Dividesinventory into three classes based on annual dollar volume
 Class A - high annual dollar volume
 Class B - medium annual dollar volume
 Class C - low annual dollar volume
4. What is the Other criteria than annual dollar volume may be used
 Anticipated engineering changes
 Delivery problems
 Quality problems
 High unit cost
5. What is the different between independent and dependent demand?
 Independent demand - the demand for item is independent of the demand for
any other item in inventory
 Dependent demand - the demand for item is dependent upon the demand for
some other item in the inventory
6. When we used production order quantity model?
 Used when inventory builds up over a period of time after an order is placed
 Used when units are produced and sold simultaneously
7. Specify the record of accuracy in inventory management!
 Accurate records are a critical ingredient in production and inventory systems
 Allows organization to focus on what is needed
 Necessary to make precise decisions about ordering, scheduling, and shipping
 Incoming and outgoing record keeping must be accurate
 Stockrooms should be secure
8. What is the definition of holding costs?
Holding costs - the costs of holding or “carrying” inventory over time,Cost of
outdated goods, storage-related costs such as insurance, additional employees and
interest payments
9. What is the definition of ordering costs?
Ordering costs - the costs of placing an order and receiving goods,Form fees,
order processing, purchases, administrative support
10. What is the definition of setup costs?
Setup costs - cost to prepare a machine or process for manufacturing an order

1. How to minimize cost over the planning period by adjusting

 Production rates
 Labor levels
 Inventory levels
 Overtime work
 Subcontracting rates
 Other controllable variables
2. How we can determine aggregate planning strategies?
 Use inventories to absorb changes in demand
 Accommodate changes by varying workforce size
 Use part-timers, overtime, or idle time to absorb changes
 Use subcontractors and maintain a stable workforce
 Change prices or other factors to influence demand
3. In the aggregate planning, how we can make the capacity options to be a good
 Changing inventory levels
 Varying workforce size by hiring or layoff
 Varying production rate through overtime or middle time
 Subcontracting
 Using part-time workers
4. How to mix strategy options to develop a plan?
 Chase strategy
 Level strategy
 Some combination of capacity options, a mixed strategy, might be the best
5. What is the function of graphical method?
 Determine the demand for each period
 Determine the capacity for regular time, overtime, and subcontracting each
 Find labor costs, hiring and layoff costs, and inventory holding costs
 Consider company policy on workers and stock levels
 Develop alternative plans and examine their total costs
6. Specify the important points of transportation example?
 Carrying costs are $2/tire/month. If goods are made in one period and held
over to the next, holding costs are incurred
 Supply must equal demand, so a dummy column called “unused capacity”
is added
 Because back ordering is not viable in this example, cells that might be
used to satisfy earlier demand are not available
 Quantities in each column designate the levels of inventory needed to meet
demand requirements
 In general, production should be allocated to the lowest cost cell available
without exceeding unused capacity in the row or demand in the column
7. Specify the five service scenarios?
 Restaurants
 Hospitals
 National Chains of Small Service Firms
 Miscellaneous Services
 Airline industry
8. How to make yield management work?
 Multiple pricing structures must be feasible and appear logical to the
 Forecasts of the use and duration of use
 Changes in demand
9. How to allocating resources to customers at prices that will maximize yield?
 Service or product can be sold in advance of consumption
 Demand fluctuates
 Capacity is relatively fixed
 Demand can be segmented
 Variable costs are low and fixed costs are high
10. In aggregate planning, we can make some models of management coefficients.
What are the models?
 Builds a model based on manager’s experience and performance
 A regression model is constructed to define the relationships between
decision variables
 Objective is to remove inconsistencies in decision making
 Linear Decision Rule
 Simulation


NIM : 156601100