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Answers to Questions
10-1. McDonalds: The company is supplied by food distributors and restaurant product suppliers (for plates,
napkins, etc.). Production is located in retail sites that are usually small and are near large easily accessible
customer markets. Their inventory levels are typically small because food cannot be stored in large
quantities. Their primary mode of transportation is trucking.
Toyota: Toyota suppliers include raw materials and auto parts. They receive some items on-demand for JIT
production and some is stored in warehouses. Production is in large plants with heavy-machinery in close
proximity to good transportation sources. Toyota plants are located all over the world as are their distribution
systems. Transportation is by all modes of transportation.
10-2. The strategic goals are low cost and customer service. Purchasing from suppliers must be on time or the
entire supply chain is delayed, creating late deliveries to customers. Erratic and poor quality supply can also
increase costs. If facilities are not located properly it can delay product or service flow through the supply
chain, and increase costs for longer deliveries. Production inefficiency and poor quality can cause delays in
product or service flow and it also creates the need for more inventory which increases cost. Inefficient
transportation can also result in higher inventories to offset delays and raise costs, and, causes delayed
delivery to customers.
10-3. Answer depends on the businesses selected.
10-4. Answer depends on the example the student selects. One example is a grocery chain that uses POS terminals
to send information sales to distribution center who, in turn, sends mixed loads to the store by truck weekly.
10-5. The answer depends on the company the student selects.
10-6. Answer depends on the e-marketplace selected.
10-7. Answer depends on the ERP provider selected.
10-8. The answer depends on the article the student selects.
10-9. The answer depends on the article the student selects.
10-10. Toyota is one automobile company that has begun a limited BTO program. The student should go tan
automobile company website to see what they are doing with BTO options. There are traditionally many
more options with automobiles than with a product like a computer, which means more suppliers to work
with. Customers must be reconditioned to make selections from a smaller list of options—like colors, seat
type and fabric, sound system, trim, tires, etc. Also the component parts for a computer can generally be
stored in one location however, component parts for autos tend to be more geographically dispersed.
10-11. Companies like L.L. Bean and Sears had long experience with telephone catalog sales and thus had already
developed the basic supply chain to service a catalog-phone operation, which online sales mirrored.
Amazon.com had virtually no supply chain structure for warehousing, transport and distribution when it
started—thus it had to begin supply chain development from scratch.
10-12. RFID allows items to be scanned and identified without direct sight lines which enables items to be checked
much more rapidly. Since bills-of-lading must not be much more detailed than previously (listing virtually
all items in a shipment) this can be accomplished much more quickly and thoroughly with RFID technology
and the information can be transported via satellite. This allows for much quicker security approvals, thus
allowing ships and planes to load and unload more quickly.
10-13. Figure 10.6 shows some of the advantages that RFID technology would provide for a retailer like Wal-Mart.
The primary obstacle to the use of RFID is (currently) cost.
10-14. It provides a set of performance evaluators and an apparatus for comparing supply chains, which enables
generic supply chain evaluation. These performance evaluators apply to supply chains of different sizes and
cut across supply chains from different industries, which could allow them to be used to establish standards
that can be used as a certification tool.
10-15. Universities have traditional suppliers for MRO goods like supplies, telephone and computer services,
furniture, maintenance equipment and products, food and beverages, etc. They also have non-traditional
suppliers like high schools that provide students. The producers are the teachers and other academic and
support services that educate the student and provide for daily student life and well-being. Distributors
include placement services and companies and organizations students are hired by. Inventory exists for MRO
goods and services. Students are also a form of inventory as are classrooms, dorm rooms, parking spaces,
etc. Students as inventory incur a carrying cost. The longer a student remains in school the greater the cost to
the institution or state. Not only is there a direct cost for maintaining a student, but a student who stays too
long also takes up a spot for other incoming students, thus creating shortages of facilities like dorm rooms
and classrooms, which in-turn require expenditures for capital expansion.
10-20. Sustainability to a large extent is about conserving resources, which coincides with the quality management
focus of eliminating waste. In the human resources area, quality management focuses on employee
satisfaction which also coincides with sustainability goals. To a certain extent, sustainability also supports
the quality goal of customer satisfaction since customers these days seem to desire sustainable products.
10-21. Service companies can achieve sustainability by reducing waste and conserving resources, like reducing
paper usage, conserving on heat and electricity in workplace facilities, and telecommuting. However, some
service companies, like UPS and Wal-Mart, can also reduce greenhouse gas emissions like carbon dioxide
by using more energy-efficient vehicles. Manufacturing firms can reduce their carbon footprint, as well as
eliminate waste and conserve energy and other sustainable resources.
10-24. In a digital supply chain, products move and are distributed electronically so there are no physical products,
modes of transport, inventory or facilities; i.e., the things that make up a physical supply chain. However,
there are still suppliers of digital content, the movement of products, distributors, stores and end-use
customers. The supply chain tends to be embedded in the Internet.
Solutions to Problems
470
10-1. Inventory turns = = 14.2
17.5 + 9.3 + 6.4
33.2
Days of supply = = 25.94 days
1.28
3, 700, 000
Inventory turns = = 10.17
363,800
363,800
Days of supply = = 35.88
( 3, 700, 000 ) / ( 365)
10-3. Aggregate value of inventory: Raw materials = 817,500
WIP = 67,800
Finished goods = 64,000
949,300
17,500, 000
Inventory turns = = 18.4
949,300
949,300
Weeks of supply = = 2.7 weeks
(17,500, 000 ) / (50 )
10-4. Average aggregate value of inventory: Raw materials = 281,090
WIP = 3,435,000
Finished goods = 3,087,000
6,803,090
18,500, 000
Inventory turns = = 2.72
6,803, 090
6,803, 090
Days of supply = = 134.22
(18,500, 000 ) / ( 365 )
10-5. (a)
Year
1 2 3 4
Inventory turns 8.0 8.3 11.1 12.0
Days of supply 45.7 44.1 32.8 30.5
(b) The company’s supply chain performance has marginally improved. However, the number of turns still
seems excessive for a computer firm.
(c) For a BTO company the average work-in-process and finished goods inventory seems excessive; the
company should work to reduce these levels, possibly by working with its suppliers.
10-6.
Supplier 1 Supplier 2
Inventory turns 22.6 9.25
Weeks of supply 2.3 5.6
Supplier 1 has the better supply chain performance. Other factors that might influence Delph could be
quality and delivery speed.
219
10-7. c= = 7.3
30
All the sample observations are within the control limits suggesting that the invoice errors are in control.
255
10-8. c= = 12.75
20
All the sample observations are within the control limits suggesting that the delivery process is in control.
10-9.
421 421
p= = = .0421
( 20 )( 500 ) 10, 000
p (1 − p )
UCL = p + Z
n
.0421(1 − .0421)
= .0421 + 3.00
500
p (1 − p )
LCL = p − Z
n
.0421(1 − .0421)
= .0421 − 3
500
Samples 3 and 11 are above the upper control limit indicating the process may be out of control.
10-10.
Sample x R
1 2.00 2.3
2 2.08 2.6
3 2.92 2.7
4 1.78 1.9
5 2.70 3.2
6 3.50 5.0
7 2.84 2.2
8 3.26 4.6
9 2.50 1.3
10 4.14 3.5
11 2.12 3.0
12 4.38 4.0
13 2.84 3.3
14 2.70 1.1
15 3.56 5.6
16 2.96 3.1
17 3.34 6.1
18 4.16 2.4
19 3.70 2.5
20 2.72 2.9
60.20 63.3
R=
R = 63.3 = 3.17
k 20
x=
x = 60.20 = 3.01
20 20
R-chart
D3 = 0, D4 = 2.11, for n = 5
UCL = D4 R = 2.11( 3.17 ) = 6.69
LCL = 0 R = 0 ( 3.17 ) = 0
There are no R values outside the control limits, which would suggest the process is in control.
x -chart
A2 = 0.58
There are no x values outside the control limits, which suggests the process is in control.
LCL = D3 R = 0 ( 3.25 ) = 0
The process appears out of control for sample 10, however, this could be an aberration since there are no
other apparent nonrandom patterns or out-of-control points. Thus, this point should probably be “thrown out”
and a new control chart developed with the remaining eleven samples.
CASE PROBLEM SOLUTION: Somerset Furniture Company’s Global Supply Chain
This case is based on a real furniture company the authors are familiar with. The company essentially reinvented
itself from a furniture manufacturer to a supply chain management and distribution company. In doing so it
outsourced its primary area of expertise, i.e., manufacturing, thereby losing direct control of the thing it knew most
about, and adopted the role of supply chain manager, something it had little prior expertise with. The company
suffered a number of inadequacies that left it ill prepared to assume its new role. The case as presented addresses
many of the problems faced by companies that are confronted by a global supply chain, and provides students with a
general platform for discussing supply chain problems and their remedy.
• The company identified a set of characteristics of their global supply chain that seem to be endemic to many
companies, as follows:
• Primary among its deficiencies was its lack of expertise in the information technology area and an insufficient
computing system. Much of the variability in the company’s supply chain was attributable to information
technology problems. After the company made new hires to acquire IT expertise, and upgraded their
computing technology, they were able to successfully address many of their problems in logistics and order
processing and fulfillment, including the reduction of system variability.
• The company adopted better, more innovative forecasting methods, which improved their scheduling.
• They contracted with an international trade logistics (ITL) company to improve their overseas logistics, which
combined with their improved information technology capabilities, allowed them to directly monitor and
control overseas product movement. This reduced scheduling variability.
• In the quality area they worked with their Chinese suppliers to improve quality management including training
local plant managers in the use of quality control techniques. More quality auditors were hired to make more
frequent visits to the plants, and quality was monitored more closely at various key points in the
manufacturing process. In the case of the humidity problem the production of some lines was moved to other
plants in China.
• Suppliers were selected based on the following criteria: quality, capacity, delivery and service.
• Many furniture products were redesigned with the objective of creating full container loads. It was discovered
that removing even a few inches from the dimensions of a piece of furniture would allow additional pieces to
be loaded into a container.
• The company decided to keep its own spare parts inventory in the U.S., ordering spare parts from their Chinese
suppliers when the product line is initially produced. This required a more accurate forecast of spare parts
demand. However, improved product quality eventually reduced the need for spare parts.
• To improve service the company determined required inventory levels based on customer demand with an
objective of on-time delivery while at the same time seeking ways to reduce inventory levels. The reduction in
system variability simultaneously worked to reduce inventory requirements and improve customer service.
• The company implemented a warehouse management system (WMS) to improve its local distribution service to
customers.
• The company is also exploring moving some production to other countries to limit its vulnerability to
anticipated restrictions on furniture imports from China. Also, the SARS epidemic has caused the company to
reconsider sourcing its products from only one country.
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— Ne t’inquiète pas de ça, commanda-t-il, et fais comme je fais. »
Et il nous montre comment il faut placer ses doigts sur la table,
sans que les mains se touchent et, sans appuyer. Bon ! On attend un
petit moment : rien ne se passe. Muller observe :
— Je vous dis que la table est trop lourde. Et puis, c’est des
blagues.
Et je le vois qui essaie de pousser, pour rire. Mais la table était
trop lourde, en effet, et Tassart l’attrape comme du poisson pourri :
— Si tu essaies de pousser, je te fais faire la marche à pied, cette
nuit, à côté de ton chameau, ton barda sur la tête. C’est sérieux !
Et alors, subitement, nous nous sentîmes très émus, sans savoir
de quoi. Nous attendions… La table craqua.
— Avez-vous entendu ? interrogea Tassart à voix basse.
Nous avions entendu, et nous fîmes « oui » de la tête.
Muller serrait les lèvres, peut-être pour ne pas claquer des
dents : ce qu’avait dit le père d’Ardigeant l’impressionnait. Moi, pour
me donner une contenance, je posai une question :
— Mon adjudant, si des fois la table veut causer, à qui voulez-
vous causer ?
Tassart ricana :
— A qui, à qui ?…
Il n’y avait pas songé. Il dit tout à coup :
— Eh bien, nom de Dieu, au Diable ! Puisque le père prétend que
c’est son patelin, ici… Un coup pour oui, deux coups pour non ! »
Juste à cet instant, la table leva un de ses pieds, lentement, et le
baissa, lentement. Plus lentement, je l’aurais juré, que si ce pied
était retombé tout seul. Nous étions un peu saisis, vous comprenez.
Tassart seul eut un mouvement de fierté satisfaite : l’expérience
réussissait ! Mais il avait aussi un petit tremblement dans la voix en
demandant :
— C’est toi ?… Celui que nous avons appelé ?
— Au lieu de répondre, au lieu de frapper encore un coup, voilà
que cette table, ce monument de table, cet immeuble par
destination, se met à danser, à danser ! Parfois elle glissait, ses
quatre pieds à terre, comme pour une valse ; parfois elle en levait
un, ou deux, peut-être trois, je ne sais plus. Elle avait l’air de faire
des grâces, de faire de l’esprit, de suivre un air qu’on n’entendait
pas. Elle pressa la mesure, et ça changea : des nègres, des nègres
qui dansent, avec leurs sorciers, leurs danses de démons. Elle
cavalcadait, cavalcadait ! Et avec un bruit ! C’était comme des sabots
cornés qui frappaient le sol de la terrasse. Les sabots d’un être
malin, perfide. Nous nous essoufflions à la suivre, et nous étions
obligés de la suivre : nos doigts étaient comme collés sur elle. Une
idée qu’on se faisait, ou la vérité ? N’importe : nous étions
convaincus qu’on ne pouvait pas les décoller.
A la fin, pourtant, elle resta tranquille un moment, comme pour
reprendre haleine elle-même, et Tassart lui cria courageusement —
oui, hein ? c’est bien courageusement qu’il faut dire ! — mais avec
une voix toute changée :
— Si c’est toi, parle, au lieu de faire des bêtises !
Ce fut comme s’il avait touché un cheval de sang avec un fer
rouge. La table se cabra ! Je ne trouve pas d’autre mot. Elle se
dressa sur deux de ses pieds, les pieds du côté où se trouvaient
Tassart et Muller, et marcha, par bonds furieux, de mon côté, le côté
où j’étais tout seul ! Une bête féroce ! On aurait dit qu’elle avait des
mâchoires. Et ce qu’il y a d’incompréhensible, ce qu’il y a de stupide
et de mystérieux, c’est que je tenais toujours mes doigts posés sur
elle, les bras en l’air, maintenant, sans pouvoir les détacher.
Elle avançait, elle avançait toujours, et me poussait vers le bord
de la terrasse, vers le vide. Tassart hurla :
— Retire-toi donc, retire-toi, imbécile ! Tu vas tomber !
Et j’essayais de crier :
— Mais retenez-la, arrêtez-la, vous autres ! Vous voyez bien
qu’elle veut me f… en bas !
Je sentais déjà un de mes talons ferrés grincer sur l’extrême
rebord de la terrasse. De mes doigts toujours si absurdement liés à
la table, j’essayais de la rejeter vers Tassart et Muller. Autant lutter
contre une locomotive ! Les deux autres, Coldru et Malterre,
suivaient le mouvement sans pouvoir l’empêcher. Nous poussions
des cris qui devaient s’entendre à dix kilomètres. Les goumiers
arabes qui s’étaient couchés dans la cour intérieure du bordj ou
dehors, sur le sable, s’étaient réveillés, levés. Ils dressaient les bras,
ils n’y comprenaient rien. Ils croyaient que les blancs se battaient
entre eux, voilà tout.
Du reste, ils n’auraient pas eu le temps de monter : encore une
seconde, et ils n’auraient plus qu’à ramasser mes morceaux, en bas.
Je tournai la tête, pour voir… On veut toujours voir, malgré
l’épouvante, à cause de l’épouvante.
Je vis les grandes dunes pareilles à des ice-bergs sous le clair
de lune, et, entre deux de ces dunes, le père d’Ardigeant qui se
pressait. Je ne sais pas ce qu’il fit : un signe de croix, une
conjuration ? Il était trop loin, je n’ai pas pu distinguer… Mais la table
retomba sur ses quatre pieds, si fort qu’elle en resta toute
tremblante, avec un air, on aurait dit déçu, irrité. Et, en même temps,
mes mains purent se détacher.
Tassart murmura tout haletant :
— Eh bien, par exemple !…
Moi, je m’essuyais le front. J’étais tout pâle ; je tombai sur une
chaise, le cœur démoli.
Le père d’Ardigeant regarda, constata sans doute que tout était
rentré dans l’ordre, et ne daigna même pas monter. Il s’occupa, avec
son boy, de démonter sa tente et de la plier : on devait repartir à trois
heures du matin, en pleine nuit, pour finir l’étape, avant que le soleil
fût trop chaud.