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SCM303 Chapter 2 Slides
Course: SCM 303, Fall 2011School: Michigan State University
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2: Operations Chapter and Supply Chain Strategy Michigan State University, 2011 - 1 Michigan State University, 2011 Levels of Strategic Planning Environment Corporate Culture Strategic Questions Corporate Strategy Business Strategies SBU What business(es) should we be in? How do we compete? SBU SBU Operations Strategy How do we best support the SBU strategy? Structure Infrastructure Finance,...
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2:
Operations Chapter and Supply Chain Strategy
Michigan State University, 2011
- 1 Michigan State University, 2011
Levels of Strategic Planning
Environment
Corporate Culture
Strategic Questions
Corporate Strategy
Business Strategies
SBU
What business(es)
should we be in?
How do we
compete?
SBU
SBU
Operations Strategy
How do we best
support the SBU
strategy?
Structure
Infrastructure
Finance, Marketing, etc. Strategies
-2-
Michigan State University, 2011
Figure 2-1
Corporate Strategic Planning
Corporate Strategy: overall mission and
target businesses
Long time horizon
Overall values, direction and goals
Acquisitions and divestitures
Performance metrics
Risk management
-3-
Michigan State University, 2011
Business Unit Strategic Planning
Strategic Business Unit (SBU): semi-independent
organization for different products or markets
Appropriate competitive priorities
Constrained by corporate strategy
More detailed
-4-
Identification of customer or market segments
Shorter time horizon
Michigan State University, 2011
Functional Strategic Planning
Functional strategy: determines how functions
support business unit strategies
Most detailed
Most constrained
Determines specific focus
Key metrics
Identification of capabilities
-5-
Management of critical resources
Coordination of activities
Michigan State University, 2011
Developing an Operations Strategy
Critical Customer: critical to
firms success and receives firms
focus
Value Proposition: tangible and
intangibles that customers expect
from a firm
Capabilities: what a firm
does well, defines
types of problems a firm can
proficiently address
-6-
Michigan State University, 2011
Value
Proposition
Critical
Customer
Capabilities
Critical Customers
Assessing Customers wants and needs:
Order Winners: why customers choose your firm
Order Qualifiers: minimum standards to be met
Order Losers: why customers avoid your firm
Example: Dell Computers
Order Winner: Flexibility (Customization - A million combinations!)
Order Qualifier: Affordable price, reasonable quality and
reasonable delivery
Order Losers?
http://www.youtube.com/watch?v=7Yd705_UrZE
-7-
Michigan State University, 2011
Value Proposition
Value Proposition: firms offerings that are valued by
customers and different from competitors
1.
Features that customers value and will pay for
2.
A difficult to imitate source of differentiation
3.
Satisfies financial and strategic firm objectives
4.
-8-
Deliverable using the firms capabilities and supply
chain
Michigan State University, 2011
Supply Chain Product Related Competitive
Priorities
How customers problem is solved
-9-
Quality: fitness for consumption in terms of
meeting customer needs & desires
Timeliness: delivery and availability when
customer wants
Cost: expenses incurred in acquiring or using
the product
Michigan State University, 2011
Product Priorities: Quality
How can you judge whether a product is a quality product?
Performance
Features
Reliability
Conformance
Durability
Support
Aesthetics
Perceived Quality
- 10 -
Michigan State University, 2011
Which Product Has Better Quality?
Watches
Automobiles
- 11 -
Rolex?
Timex?
Mercedes?
Hyundai?
Michigan State University, 2011
Product Priorities: Timeliness
Timeliness This describes the degree to which
a product is delivered where the customer
needs it exactly when the customer needs not
before it, or after the customer needs it.
Lead Time: Time between beginning and end of
a set of activities:
- 12 -
Time to market
Customer is concerned with Order to Delivery Lead
Time: the time from when the customer places an
order until customer receives it.
Concern is related to both absolute speed and
reliability
Michigan State University, 2011
Product Priorities: Cost
- 13 -
Total Cost the sum of all costs incurred by the
customer during the consumption experience.
This includes all costs associated with the
product, beginning with its acquisition and
including its use, maintenance and disposal.
Michigan State University, 2011
Product Priorities: Costs
Purchase Price
Operating
Acquisition
Salvage / resale
Repair
Disposal
Maintenance
But remember, monetary costs are not the only costs
Involved.
- 14 -
Michigan State University, 2011
Process Related Competitive Priorities
How the firms supply chain operations
run over time
- 15 -
Innovation: radical and incremental changes in products
and processes
Flexibility: ability to respond efficiently to changes in
products, processes and competitive environment
Sustainability: operations that are profitable and
nondamaging to society or the environment
Risk Management: anticipating and dealing with
unexpected events
Michigan State University, 2011
215
Process Related Competitive Priorities
How the firms supply chain operations
run over time
- 16 -
Innovation: radical and incremental changes in products
and processes: Example - Apple
Michigan State University, 2011
Process Related Competitive Priorities
How the firms supply chain operations
run over time
- 17 -
Flexibility: ability to respond efficiently to changes in
products, processes and competitive environment
Zara provides a good example
Michigan State University, 2011
Zaras Approach
400 Local Cooperatives
Zara
Zara
Zara
1 Factory/Distribution Center
- 18 -
Michigan State University, 2011
Stores
Process Related Competitive Priorities
How the firms supply chain operations
run over time
Sustainability: operations that are profitable and nondamaging to society or the environment
Becoming a critical concern in supply chain management
Transportation
Warehouses
- 19 -
Production processes
Packaging
Michigan State University, 2011
Sustainability?-Green Jeans
- 20 -
Michigan State University, 2011
Wall Street Journal: July 22, 2010
Green Jeans? One pair =
CO2 Emissions
- 21 -
Cotton Production 1.7 kg
Fabric Production 6.6 kg
Cut/sew/finish
3.0 kg
Transportation
3.1 kg
Consumer wash/dry 18.6 kg
Water
Michigan State University, 2011
3,480 liters over life
Process Related Competitive Priorities
How the firms supply chain operations
run over time
Risk Management: anticipating and dealing with
unexpected events
Numerous sources of risk
Disruptions Port closures
Product integrity Contaminated food
- 22 -
Disasters The Japan Tsunami
These are just a few examples
Michigan State University, 2011
Capabilities
- 23 -
Capabilities: unique and superior abilities based
upon the firms routines, skills and processes
Core capabilities: enable firm to meet customer
expectations and are difficult for competitors to
imitate.
Fit: alignment with capabilities, value proposition
and critical customer Which one(s) of the
competitive priorities can the firm actually
provide?
Michigan State University, 2011
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Michigan State University - SCM - 303
SCM 303: Introduction toSupply Chain Management Michigan State UniversityTodays Agenda Discussion of Syllabus, course administration, andground rules Gain an understanding of what is meant by Supply Chain Supply Chain Management-2- Michigan Stat
Michigan State University - MKT - 327
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Michigan State University - MKT - 327
McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 10, YOU SHOULD BE ABLE TO:LO1Recognize the various terms thatpertain to products and services.LO2Identify the ways
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MKT327Ch.11:ManagingSuccessfulProducts,Services,andBrands05:14*Figure111/1B:Howstagesoftheproductlifecyclerelatetoafirmsmarketingobjectivesandmarketingmixactions(dontmemorize,butknowthegeneralideas marketingobjective,competition,marketingmix)Introdu
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MKT327:Ch.14RetailingandWholesaling*OnlythingreallygettingintoisRETAILINGI.TheValueofRetailingRetailingsellingtoendusersConsumerUtilitiesOfferedbyRetailingPlaceFormPossessionTimeTheGlobalEconomicImpactofRetailingII.ClassifyingRetailOutletsFormo
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 18, YOU SHOULD BE ABLE TO:LO1LO2Describe what interactive marketingis and how it creates customer value,customer r
Michigan State University - MKT - 327
McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 16, YOU SHOULD BE ABLE TO:LO1Explain the differences betweenproduct advertising and institutionaladvertising and th
Michigan State University - MKT - 327
McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 17, YOU SHOULD BE ABLE TO:LO1Discuss the nature and scope ofpersonal selling and salesmanagement in marketing.LO2
Michigan State University - MKT - 327
CHAPTER 12 NOTESPricing Price= know definition and difference between cost Barter- known as something other than money- used to be known as the land of thecheap tradersbut last 20-30 years US has moved away from bartering.o US is not comfortable with
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 15, YOU SHOULD BE ABLE TO:LO1Discuss integrated marketingcommunication and thecommunication process.LO2Describe t
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 14, YOU SHOULD BE ABLE TO:LO1Identify retailers in terms of theutilities they provide.LO2Explain the alternative w
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 13, YOU SHOULD BE ABLE TO:LO1LO2Explain what is meant by a marketingchannel of distribution and whyintermediaries
Michigan State University - MKT - 327
CHAPTER 18Interactive & multichannel Marketing(This chapter is shorter in terms of questions on the exam)Promotional Chapters:Personal SellingAdvertisingPromotional*.com boom 1995-1999.com bust 2000 (2nd half of 2000)Didnt bust, kept going up bu
Michigan State University - MKT - 327
CHAPTER 17 NOTESPersonal Selling:Ideally best form of selling because of the one on onenessEx.) Door to door salesman (difficult today though)At its core its most persuasive in marketing* Sales people: Link firm and its customers Are the firm in cos
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 12, YOU SHOULD BE ABLE TO:LO1Describe the nature and importance ofpricing and the approaches used toselect an appro
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 2, YOU SHOULD BE ABLE TO:LO1Describe two kinds of organizationsand the three levels of strategy inthem.LO2Describ
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McGraw-Hill/IrwinCopyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.LEARNING OBJECTIVES (LO)AFTER READING CHAPTER 1, YOU SHOULD BE ABLE TO:LO1Define marketing and identify thediverse factors influencing marketingactivities.LO2E
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SOLUTIONS TO MIDTERM TEST # 1 ACTSC 431/831, FALL20111. (a) Prcfw_Y L > 60 = 1 Prcfw_Y L 60 = 1 Prcfw_50 + 0.8(X 50) 60 = 0.375.(b) Prcfw_Y P 40 = Prcfw_Y L 40|X > 20 = Prcfw_X 40|X > 20 = 0.25.(c) E (Y L ) =5020x1dx100+8050 (50+ 0.8(x 50)
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SOLUTIONS TO MIDTERM TEST # 2 ACTSC 431/831, FALL2011k=11. It follows from E (N ) =kpk =k=1bk (a + k )pk1 that E (N ) =2. The loss elimination ratio in the current year is LERX (20) =a+b.1aE (X 20)E (X )= 0.51775.3. (a) Let Ij = 1 if Xj > 3
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Answers to Practice Questions 1 ACTSC 431/831, FALL 20111. (a)FY (y ) = Prcfw_Y y |N = 0 Prcfw_N = 0 + Prcfw_Y y |1 N 5 Prcfw_1 N 5+ Prcfw_Y y |N > 5 Prcfw_N > 50,y < 0,y/100y/2001 0.5 e 0.2 e, y 0.=(b) The probability is Prcfw_Y > 500 = 1 FY
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Practice Questions 1 ACTSC 431/831, FALL 20111. Let Y be the total loss in an insurance portfolio and N be the number of claims in theportfolio. If N = 0, then Y = 0. If 1 N 5, then Y has an exponential distributionwith mean 100. If N > 5, then Y has a
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Answers to Practice Questions 2 ACTSC 431/831, FALL 20111. Let X1 = 1/ X and X2 = eX .(a) We have E (X1 ) =1f (x)dx0xX= and E (X2 ) = E (eX ) = MX (1) = 16/9.Thus, E (Y ) = 0.2E (X1 ) + 0.8E (X2 ) = 1.7767.(b) The probability is Prcfw_Y > E (Y )
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Practice Questions 2 ACTSC 431/831, FALL 20111. Suppose that loss Y has a two-point mixture distribution with the following cdf:FY (y ) = 0.2F1 (y ) + 0.8F2 (y ) for all y,where F1 (y ) and F2 (y ) are the distribution functions of 1X and eX , respecti
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Answers to Practice Questions 3 ACTSC 431/831, FALL 20111. (a) Prcfw_X < 1 = 0.75.(b) The distribution of X is neither DFR nor IFR.(c) X 4 has a heavier tail than X .2. (a) We have a = 600. Then, V ar(X ) = 35.42.(b) We havexFX (x) =fX (t)dt =0,
Waterloo - ACTSC - 431
Practice Questions 3 ACTSC 431/831, FALL 20111. The conditional hazard rate function of loss X , given = , is h(x|) = x3 . The distributionof is a gamma distribution G(2, 4).(a) Calculate the probability that the loss is less than one.(b) Justify if t
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ANSWERS TO PRACTICE QUESTIONS 4 ACTSC 431/831, FALL 20111. Use the pgf of X to prove that X is innitely divisible.2. (a) Let v = Prcfw_Xj 50. Use PN P (z ) = PN L (1 + v (z 1) to prove that N P isinnitely divisible.i. V ar(N P ) = 2108.05.(b)ii. Cov
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Practice Questions 4 ACTSC 431/831, FALL 20111. Prove that if X has a mixed Poisson distribution and the mixing distribution is innitelydivisible, then X is innitely divisible.2. Let N L be the number of losses. The size of the j th loss is Xj . Assume
Waterloo - ACTSC - 431
Practice Questions 5 ACTSC 431/831, FALL 20111. The aggregate losses for an insurer is S , which has the following pdffS (x) =2500/x5 , x 5;0,otherwise.The premium charged by the insurer is equal to (1+)E [S ], which is called the expectedvalue pri
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ANSWERS TO PRACTICES QUESTIONS 5 ACTSC 431/831, FALL 20111. We have625, x 5,x4250020x 5 dx = ,x35502 2500xdx (E (S )2 = .5x95FS (x) = Prcfw_S x = 1 E (S ) =V ar(S ) =Thus, Pr cfw_S (1 + )E [S ] = Pr S E [S ] + V ar(S ) = 0.95 gives =
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ANSWERS TO PRACTICE QUESTIONS 6 ACTSC 431/831, FALL 20111. (a) The probability isPrcfw_N 3 = 1, N 5 = 2 = Prcfw_N 3 = 1 Prcfw_N 2 = 1 = 0.02747.12121212(b) The probability is Prcfw_N 1 = 0|N 1 = 3 =1252(c) The probability is2Prcfw_N1 =0 Prcf
Waterloo - ACTSC - 431
Practice Questions 6 ACTSC 331, FALL 20111. The surplus process of an insurer is Ut = u + 1.2 t Nt Xi , t 0, where u 0 is thei=1initial surplus; the claim number process cfw_Nt , t 0 is a Poisson process with rate1; and the claim sizes cfw_X1 , X2 , .
Waterloo - ACTSC - 431
Project ACTSC 831, FALL 2011Project deadline: 4:00 pm, Friday, December 9. Please submit a hard copy of your projectto M3 4012 or email a PDF le of your project to jcai@uwaterloo.ca by the deadline.Project requirement: Projects must be typed using LaTe
Waterloo - ACTSC - 431
Review Notes for Loss Models 1 ACTSC 431/831, Fall 2011Part 1 Random Variables and Distributional Quantities The distribution function (df ) or cumulative distribution function (cdf ) andsurvival function (sf ) of a random variable (rv) X are dened by
Waterloo - ACTSC - 431
Review Notes for Loss Models 1 - ACTSC 431/831, FALL 2011Part 2 Severity Models1. Severity models are distributions that are used to model the distribution of theamount of a claim/loss.2. The distribution function F (y ) of a random variable Y is call
Waterloo - ACTSC - 431
Review Notes for Loss Models 1 - ACTSC 431/831, FALL 2011Part 3 Frequency Models1. Frequency models are used to model the number of events or claims/losses.2. A counting random variable N is a nonnegative integer-valued random variablewith pf pk = Pcf
Waterloo - ACTSC - 431
Review Notes for Loss Models 1 - ACTSC 431/831, FALL 2011Part 4 Frequency and Severity with Coverage ModicationsLet X be the ground-up loss for an insurance policy or an insurer and assume that X is acontinuous r.v. with cdf F (x), sf S (x), and pdf f
Waterloo - ACTSC - 431
Review Notes for Loss Models 1 - ACTSC 431/831, FALL 2011Part 5 Aggregate Loss ModelsRoughly speaking, an aggregate loss model is used to describe the total loss of an insurance portfolio in a xed time period.1. Individual Risk Model: There are n polic
Waterloo - ACTSC - 431
Review Notes for Loss Models 1 - ACTSC 431/831, FALL 2011Part 6 The Classical Continuous Time Ruin ModelIn this part, times are measured in years, unless stated otherwise.1. Poisson Process: Let Nt be the number of claims up to time t or the number of
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ACTSC 431/831 LOSS MODELS 1, FALL 2011Instructor: Jun Cai, M3 4012, 519-888-4567 ext. 36990, jcai@uwaterloo.caInstructors Oce Hours: Monday, 14:0016:00.Lectures: 11:3012:20 on Monday, Wednesday, and Friday in MC 2066.Course Webpage: UWACE. Course info
Waterloo - ACTSC - 432
Parameter estimationActSCi 432/8321 / 31Distributions SummaryX is Binomial with parameters n (positive integer) andp (0, 1)p .f . f (x ) =nxp (1 p )nx for x = 0, 1, 2, 3, .nxE (X ) = np ,Var (X ) = np (1 p )X is Bernoulli with parameters p (0,
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Credibility IActSCi 432/8321 / 16Distributions SummaryX is Binomial with parameters n (positive integer) andp (0, 1)p .f . f (x ) =nxp (1 p )nx for x = 0, 1, 2, 3, .nxE (X ) = np ,Var (X ) = np (1 p )X is Bernoulli with parameters p (0, 1) X i
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Credibility IIActSCi 432/8321 / 22Greatest Accuracy Credibility Theory (GACT)Bayesian approach developed by H. BhlmannuSuppose we have a risk r.v. X that depends on a xed butunknown parameter . (Here can be a vector in general)For example, represe
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Credibility IIIActSCi 432/8321 / 20Linear Exponential Family - A quick reviewDenition (LEF)X LEF if the density is given byf (x ; ) =p (x )e r ()xq ()r () is called the canonical parameter.It turns out that the LEF class contains well-known dist
Waterloo - ACTSC - 432
Parameter estimation suuplement noteActSCi 432/8321/7Review: Unbiased estimationConsider an iid random sample X = (X1 , ., Xn ) from a modelspecied by its pdf (or pmf) f (x |)Here parameter is a vector or scalar to be estimated from XAn estimator n
Waterloo - ACTSC - 432
1!!"#"$%!#&'()*&+%!)*"%!,*&(*$!!-&%.!/0)1!'"*"%-!!This Rate Manual has been approved by theSuperintendent of Insurance of the State of New Yorkand is effective September 1, 1993.FOURTH REPRINT: May 1, 2007Fourth Revision: March 3, 2010This r
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ActSc 432/832: Loss Models II (Fall 2011)1Course outlineInstructor: Joseph H.T. Kim (M3 3126, ext. 35539, jhtkim@uwaterloo.ca) Best to email me since I do notcheck my voice mail often.Lecture: 2:30-3:20 MWF (MC 4059)Teaching Assistants and oce hours
Waterloo - ACTSC - 432
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Waterloo - ACTSC - 432
Name:ID:1. The random variable has pdf . It is known that =1000. You are given the following fiveobservations: 43 145 233 396 775 (sample mean = 318.4).Determine the method-of-moments estimate of .A.B.C.D.E.<44<4.24.2<4.44.4<4.6>4.62. Suppo
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Name:ID:1. A random variable X is assumed to satisfy X|( = ) ~ Pareto (, = 1200), and thus= , x > 0 and the prior distribution for is Exponential with mean 5, i.e. , >0. Determine theposterior distribution of given X = 155 (i.e. say which type of dist
Waterloo - ACTSC - 432
Waterloo - ACTSC - 463
1. Use the following data to answer the questions below. Assume this company does not reserve for salvage or subrogation recoveries.Claim # Acc. Year Rep. Year1200520052200520063200620064200720075200720076200720087200820088200620
Waterloo - ACTSC - 463
1. Use the transactional data to create the cumulative data:Paid Triangle20052006200720081250070072050024700900900362300105048230012120020015755002417005001000365002004850012170090022951000242400140019003628001
Waterloo - ACTSC - 463
1. Use the transactional data (as of December 31, 2008) to develop cumulative accident year paidand incurred loss triangles.Claim #1112233455566777891010Acc Date12-Jan-0512-Jan-0512-Jan-0510-Mar-0510-Mar-0501-Nov-0501-Nov-05
Waterloo - ACTSC - 463
1. SolutionNote that there is a lot of extaneous information.Since we are interested in the value of 2006 at 24 months we need to look at data from 2008 which iscurrently at 24 months of development.Calculate the average case outstanding for 2008 at 2
Waterloo - ACTSC - 463
1. You are given the following information:AY20052006200720082009Incurred Paid Claims Paid ClaimsClaims @@@ Open Claim Open Claim12/31/2009 12/31/2009 12/31/2007 Counts @ Counts @(000's)(000's)(000's) 12/31/2009 12/31/2007117,160100,75864