1. What is a supply chain?

the sequence of organizations-their facilities, functions, and activities organizations-their

facilities, that are involved in producing and delivering a product or service.
The sequence begins functions, and activities-that with basic suppliers of raw materials and
extends all the way to the final customer.
Facilities involved in producing and ties include warehouses, factories, processing centers,
distribution centers, retail outlets, delivering a product or service. and offices.
Functions and activities include forecasting, purchasing, inventory management, information
management, quality assurance, scheduling, production, distribution, delivery, and customer
service
There are two kinds of movement in these systems: the physical movement of material, generally
in the direction of the end of the chain (although not all material starts at the beginning of the
chain), and exchange of information, which moves in both directions along the chain.

2. What is the need to manage a supply chain, and what are some potential benefits of doing
so?
1) Need to improve operations
2) ^ levels of outsourcing (buying goods/services)
3) ^ Transp. Costs
4) Competitive pressures
5) ^ Globalization
6) ^ e-commerce importance
7) Complexity of supply chain
8) Need to manage Invent.

What are the elements of supply chain management?

Customers Determining what products and/or services customers. Forecasting Predicting the
quantity and timing of customer demand. Design Incorporating customers, wants,
manufacturability and time to market. Processing Controlling quality, scheduling work.
Inventory Meeting demand requirements while managing the cost of holding inventory.
Purchasing Evaluating potential suppliers, supporting the needs of operations. Suppliers:
 Monitoring supplier quality, on-time delivery, and flexibility; maintaining supplier relations.
location Determining the location of facilities. logistics Deciding how to best move materials.
Shipping
4. What are the strategic, tactical, and operations issues in supply chain management?
Strategic Issues. Strategic decisions generally have long-term impact on a supply chain. The key
strategic issue is the design of the supply chain. This involves determining the number, location,
and capacity of facilities. It may also involve such issues as make or buy.
Tactical Issues. Tactical issues involve policies related to such areas as inventory, procurement,
processing, logistics, and quality. Guided by strategy, they in turn provide guidance for
operations decisions.
Operating Issues. The important operational issues in supply chain management relate to
production planning and control and to scheduling of deliveries of goods and services. It can also
depend on make-or-buy decisions, some of which are made at this level. Operating issues
primarily relate to an organization's in-house activities.

5. What is the bullwhip effect, and why does it occur? How can it be overcome?
Bullwhip Inventories are progressively larger moving backward through a supply chain, due to
periodically ordering batches of an item from supplier and replenishing inventories at various
points along supply chain.
CONWHIP (constant work in progress) systems can alleviate bullwhip effect as they use smaller
lot sizes to influence efficiency and economical ordering

6. Explain the increasing importance of purchasing.

Used to evaluate potential supplier and support needs of the operations

7. What is meant by the term inventory velocity and why is this important? What is information
velocity, and why is it important?
Inventory velocity: Rate at which inventory goes through the supply chain
Information velocity: the rate at which information is communicated through a supply chain

8. Explain strategic partnering.

Two or more business organizations that have complementary products or services join so that
each may realize a strategic benefit
9. What impact has e-commerce had on supply chain management?
Use of electronic technology to facilitate business transaction

11. What are some of the trade-offs that might be factors in designing a supply chain?
1) Lot size-inventory trade-off: Producing or ordering large lot sizes yields benefits in terms of
quantity discounts and lower annual setup costs, but it increases the amount of safety stock
carried by suppliers and, hence, the carrying cost. (Bullwhip)

2) Inventory-transportation cost trade-off. Suppliers prefer to ship full truckloads instead of

partial loads in order to spread shipping costs over as many units as possible. This leads to higher
holding costs for customers. Solutions include combining orders to realize full truckloads,
downsizing truck capacity, and shipping late in the process along with cross-docking (avoids
ware house storage by having goods arriving at a warehouse from a supplier where they are
unloaded from supplier’s truck and loaded onto outbound trucks to retailers)

3)Lead time-transportation cost trade-off. Suppliers usually prefer to ship in full loads, as
mentioned previously. But waiting for sufficient orders and/or production to achieve a full load
increases lead time, therefore need improved forecasting to improve timing of production and
ordering of supplies

4) 4. Product variety-inventory trade-off. Higher product variety generally means smaller lot
sizes, which results in higher setup costs, as well as higher transportation and inventory
management costs. One possible means of reducing some costs is delayed differentiation, which
means producing standard components and subassemblies, and subassemblies, then waiting until
late in the process to add differentiating features. For example, an automobile producer may
produce and ship cars without radios, allowing customers to select from a range of radios which
can be installed by the dealer, thereby eliminating that variety from features. much of the supply
chain

5) 5. Cost-customer service trade-off. Producing and shipping in large lots reduces costs, but it
increases lead times, as previously noted. One approach to reducing lead time is to ship directly
from a warehouse to the customer, bypassing a retail outlet. Reducing one or more steps in a
supply chain by cutting out one or more intermediaries is referred to as disintermediation
Reducing disintermediation.
traffic management Overseeing the shipment of incoming and outgoing goods.

Electronic data interchange (EDI) is the direct, computer-to-computer transmission of

interorganizational transactions, including purchase orders, shipping notices, debit or credit
memos, and more. Why: ^ Productivity, facilitation of JIT (just in time) systems (require
frequent deliveries of small shipments)

EDI Approaches:
Dubbed quick response, the approach is based on scanning bar codes and transmitting that
information to vendors. The purpose is to create adjust-in-time replenishment system that is
keyed to customer buying patterns.
Retailers use Universal Product Code (UPC) scanning or point-of-sale (POS) scanning at the
registers which use price-look-up (PLU) to track customer buying.
Efficient consumer response (ECR) is a variation of quick response used by the supermarket
industry to provide supermarkets, distributors, and suppliers with key data on buying patterns so
that they can make better decisions on replenishment.
Distribution requirements planning (DRP) is a system for inventory management and distribution
planning. It is especially useful in multichannel warehousing systems (factory inventory
management and regional warehouses)
Long lead times impair the ability of a supply chain to quickly respond to changing conditions
(demand)
time between the initiation and completion of a production process.

Chapter 2
1. From time to time, various groups clamor for import restrictions or tariffs on foreign-produced
goods, particularly automobiles. How might these be helpful? Harmful?

2. List the key ways that organizations compete.

Price is the amount a customer must pay for the product or service. If all other factors are equal,
customers will choose the product or service that has the lowest price. Organizations that
compete on price may settle for lower profit margins, but most focus on lowering costs of goods
or services.
2. Quality refers to materials and workmanship as well as design. Usually, it relates to a buyer's
perceptions of how well the product or service will serve its intended purpose.
3. Product or service differentiation refers to any special features (e.g., design, cost, quality, ease
of use, convenient location, warranty) that cause a product or service to be perceived by the
buyer as more suitable than a competitor's product or service.
4. Flexibility is the ability to respond to changes. The better a company or department is at
responding to changes, the greater its competitive advantage over another company that is not as
responsive. The changes might relate to increases or decreases in volume demanded, or to
changes in the design of goods or services.
5. Time refers to a number of different aspects of an organization's operations. One is how
quickly a product or service is delivered to a customer. This can be facilitated by faster
movement of information backward through the supply chain
6. Service might involve after-sale activities that are perceived by customers as value-added,
such as delivery, setup, warranty work, technical support, or extra attention while work is in
progress, such as courtesy, keeping the customer informed, and attention to little details.
7. Managers and workers are the people at the heart and soul of an organization, and if they are
competent and motivated, they can provide a distinct competitive edge by their skills and the
ideas they create.
3. Explain the importance of identifying and differentiating order qualifiers and order winners.

6. Contrast the terms strategies and tactics.

Strategy: Plan for achieving organizational goals
Tactics: Methods and actions taken to accomplish strategies
7. Contrast organization strategy and operations strategy.
Operations strategy is narrower in scope, dealing primarily with the operations aspect of the
organization. Operations strategy relates to products, processes, methods, operating resources,
quality, costs, lead times, and scheduling.
Organizational strategy is a creation, implementation, and evaluation of decisions within an
organization that enables it to achieve its long-term and short- term objectives.

8. Explain the term time-based strategies and give three examples.

Time-based strategies focus on reducing the time required to accomplish various activities (e.g.,
develop new products or services and market them, respond to a change in customer demand, or
deliver a product or perform a service). By doing so, organizations seek to improve service to the
customer and to gain a competitive advantage over rivals who take more time.
9. What is productivity and why is it important? Who is primarily responsible for productivity in
an organization?
Productivity is an index that measures output (goods and services) relative to the input (labor,
materials, energy, and other resources) used to produce them, productivity = output/input =
#stuff produced installed/$labor machine capital overhead energy (could be added together)
Total measure= all goods and services produced/ all inputs used to produce them
Manager of organization is responsible
10. List some factors that can affect productivity and some ways that productivity can be
improved.
1) Tech 3) Quality differences 4) Use of internet 5) New workers, shortages of information,
supplies, workers, layoffs
Improve by: setting goals, making critical decisions in operations, measure improvements,
communication at all levels
mission statement A statement of purpose that serves as a guide for strategy and decision
making.
Logistics refers to the movement of materials and information within a facility and to incoming
and outgoing shipments of goods and materials.

Chapter 3 Forecasting
Accounting. New product/process cost estimates, profit projections, cash management. Finance.
Equipment/equipment replacement needs, timing and amount of funding borrowing needs.
Human resources. Hiring activities, including recruitment, interviewing, training, layoff
planning, including outplacement, counseling. Marketing. Pricing and promotion, e-business
strategies, global competition strategies. MIS. New/revised information systems; Internet
services. Operations. Schedules, work assignments and workloads, inventory planning, make or-
buy decisions, outsourcing. Product/service design. Revision of current features, design of new
products or services
2. What are some of the consequences of poor forecasts? Explain.
Forecasts must be accurate, timely, simple to understand and use
4. Briefly describe the Delphi technique. What are its main benefits and weaknesses?
Delphi method Managers and staff complete a series of questionnaires, each developed from the
previous one, to achieve a consensus forecast
Cheap doesn’t use analytical techniques. Rather, judgments of experts or others who possess
sufficient knowledge to make predictions are used

16. How is forecasting in the context of a supply chain different from forecasting for just a single
organization? List possible supply chain benefits and discuss potential difficulties in doing
supply chain forecasting.
Naïve Forecasts= traces actual data, does not smooth data, has lag one period
Averaging= expanding historical data
Forecast Process: Purpose – time horizon – selection – gather/analyze – prepare – monitor
judgmental forecasts use subjective inputs such as opinions from consumer surveys, sales staff,
managers, executives, and experts.
associative model Forecasting technique that uses explanatory variables to predict future
demand.
moving average Technique= averages a number of recent actual values, updated as new values
available
Pure service (What is being transformed): Haircut

What are models and why are they important?

A model is an abstraction of reality, a simplified representation of something. Models can be
mathematical, schematic, or statistical. Models ignore the unimportant details so that attention
can be concentrated on the most important aspects, thus increasing the opportunity to
understand a problem and its solution. Models allow experiments that could be very costly to do
in real life.

Tactical planning and control activities involve making decisions about all of the following EXCEPT:
A. location of facilities.

Which of the following is not a factor that has increased the need for business organizations to actively
manage their supply chains?

The complexity of management information systems

Which of the following is not a benefit of "quick response" for retailers?
B. Reduced transportation costs
Holding safety stock inventory in one central location rather than in multiple locations is called:

risk pooling

Which of the following is not a factor that affects productivity?

Analysis of competitors.

Characteristics that customers perceive as minimum standards of acceptability are called:

B. order qualifiers.

Which of the following are steps for formulating an operations strategy?

I. Link the organizational goals to the operations strategy.

II. Define the mission and values of the organization.
III. Conduct an audit to determine the strengths/weaknesses of the current operations strategy.
IV. Assess the degree of focus at each plant.

C. I, III, and IV only

Which would not generally be considered a feature common to all forecasts?

Historical data is available on which to base the forecast.

Tactical planning and control activities involve making decisions about all of the following

Scheduling, material requirements planning, project management, inventory management.

All of the following is a characteristic of service operations?

Intangible output. High customer contact. High labour content. Low uniformity of output.

All of the following is a factor that has increased the need for business organizations to actively manage
their supply chains?

Increasing reliance on e-commerce for purchasing and logistics services, globalization, competition
driving efforts to lower costs, the need to manage orders and inventories throughout supply chains

All of the following is a benefit of "quick response" for retailers?

Reduced dependency on forecasts Reduced inventory holding costs Better match between supply and
demand

All of the following is a factor that affects productivity?

Use of computers in an office, Design of the workspace, Use of Internet and e-mail, Standardizing work
process.

All are generally considered a feature common to all forecasts?

 An assumption of a stable underlying causal system

 Actual results will differ somewhat from predicted values.
 Forecasts for groups of items tend to be more accurate than forecasts for individual items.
 Accuracy decreases as the time horizon increases.
Decisions making
Capacity factors

Facilities

Floor space, layout

Products or services

Limited menu in a restaurant

Human

Training, skills and experience

Planning and Operational

No of shifts per day, inventory, quality control

External

Pollution standards, paper work

Stable time series data : Ft  At 1
Seasonal variation s : Ft  At n
Data with tren d : Ft  At 1   At 1  At 2 
Cost is the unit production of a good or performance of a service to the organization. Organizations
that compete based on cost (i.e., price from a customer’s perspective) emphasize
lowering their operating costs.
Quality from an organization’s perspective means determining customers’ quality requirements,
translating these into specifications for goods or services, and consistently producing
goods or performing services to these specifications.
Flexibility refers to being able to produce a variety of goods or performing a variety of
services in the same facility. This also includes customization, which is modifying goods
or services to meet the requirements of individual customers. It may also refer to being able
to easily increase or decrease the production quantity of goods or performance quantity of
services (quantity flexibility). Flexibility is usually achieved by having general-purpose
equipment, excess capacity, and multiskilled workers, resulting in easy changeover between
production of goods and performance of services.
Delivery flexibility and speed refers to being able to consistently meet promised due dates by producing
goods or performing services on time or quickly. Delivery is achieved by using faster and more reliable
resources/processes.