SCM_Midterm1

SCM_Midterm1 - '1 .v [.1 Fall 2007 /© SCM 345 Midterm 1 1)...

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Unformatted text preview: '1 .v [.1 Fall 2007 /© SCM 345 Midterm 1 1) Company C wants to investigate if it would be more cost—efficient to ship their product by rail, rather than by their current modeefi otor carrier (truck). Analysis shows transportation costs by rail will be $3.50 per unit d motor transport is currently $4.5!) per unit. However, rail will take 2 days longer than truc , and will cost $.20/unit in inventory cost for each extra day.‘ T“!— 2 4 ’5 '9’ £1 W" a) With only the above information, should Comp C ,1 'p_b5Ltruck.oU_alll_Q points) C " , , 7é / 35 y m ,3; wider, or, t {X - “415/ .f'l‘W“ 05”“; ’ / r .a 7- /C. 4- h// I, ac €@;gflé>-’l/ b) It turns out that both the rail and truck supply chains c ' proved by storing some goods close to the final customer. If daily demand '3 300 units 1" day, optimal service benefits require storing 6 days of demand for rail vs.—3‘days for trucks, and inventory/ storage cost per unit ime, which mme cost advantage, and by how much per unit over a 250 day year? (25 points) a (300) 7/55??? we s 90 [#I‘/ c) Now forget about inventory cost. Suppose rail allows Company C to fulfill 95% of demand for the 250 day year, while with truck Company C can attain 97%. Given the demand in b), and assuming that each unit sold generates $2.50 in profit, how much will lostp_1‘0_fi_§ because of missed sales offset rail’s transportation cost advantage overayear‘? (20 points) I 7.212 7pdaf’5gem‘ ’fi‘hl a; 787% fly)": “jg-2&7? wfi’sfififfif f \ I: 7., f" @ Writ i New m /’?‘6“,«’5$‘ 3‘ 2) The book discusses the “responsive” business model on pages 11-12, and refers to this supply chain approach in other sections of the reading. ) Discuss in a paragraph Why the responsive business model depends 0n ke b ic iwmy chain manageflment, as outlined in the tejtt. ()ZOonints) f g / after, or fit ,afiiwfit Mpg, was? (it; , C , wif’mtgmsig ’- . ' ‘ l (a A: \ r if, i'r‘l "flux-3:3: C“ , 5). m (a; aw air ,xtt’Pi‘i-tE/vt Scfltfwmw’tf r35" %«: yrs/$1? flit-“W “f” 5- éaae‘e/miwaéiw . » W$f .- 0. 1 ~ ‘ J .- a ,. f fir"; f Cesare»! fr: C}: «’CIW’S'UE Sofa/«’19 Lily’fégwi tart: Qmpe,r r a? 4' ‘° (W ‘m, _ r I L, 1 ' .(a _; ‘ .zfiwvc we”. “fir-5 it; 33'“ Z 71 (witty-J? .3334,» . If 3' i u C? if"? -_ F3: ‘3‘?” Eh! I i If. A I. ’ H _ 7r [:3- I- r ’\ ‘ g .r a a M: w r ab“ €53," : r a»: Kara-<4“ Vic 429/1“??? 533"” {$99 - 1, f“? bfé'alfftujflx;w S‘ If} R \i f . a. tap w ' / C9 l?” 9’ Sta/Ce “"'—_—.'1—'=. - b) Explain in a paragraph the barriers to implementing a responsive business model. .. 6/ (Simply copying out of the book will result in little or no credit for this answer) (20 points) - g r m % _ F, is his 5- tats-tit}. -. 1%?” 75Mwéw 61 WE”; x-fi fig? ~_ u. ,_...rf 7 \ . 2.4: 3:5“ ’ V‘é*fl’jy’u{&'-w m M frec§as2¢ firmfi fi/fiafi Agave, .‘9 \ i 01 Harry right—t: w - ‘1 r r; ...v , i , fl H/r‘wC-i—wtéh ” f3” fag ' +53% Ck 52-9--:"f;=3§-Z>mé’/ (“x a 73 i I _ " y), * .- 5w .n. <’ 4 e" Jr's ‘ .3 I...‘ 51):", " .' :5 a . '.-’<’. I we“ -' ‘Y .4, ' fl 1' ., t ( Jot it)“ v. .2553} gm teas/6: '11:) size-«r» 1’ a r + ‘. ‘ , szrjf . I f” , .1 x v L- /f?fflxéagifiga_£ ‘1'?!" swag? ‘5‘ d finer-g ' J6 (MOD {(30136 {tibia—f (“or 5‘36 ,7 . ,- SS' arm 7%? S“ "I ' e c M" at?" flair flag. I j y / My} 4W’m; Q—l: your C hfféffi’” fiié’i‘elecf “Wt-C 4» -»~v .1— ‘ w 4;? {V flfi’i’fdf/f/ Wm ( Cup-PJ‘A’Or-f £28; ’QDfififi My, 1' n R Li‘r’itf 75:? r f" . 2"» - r M" :- e r“- ‘29 flat , J?“ is?” . VUD Watgv‘“ r jig yfi ' / i E “C’ng’f’rgi’5 SFCUY- W /W _.J 9602’” fl - ’J l a!" Q J) (Jr/49m? Pf 0/10, gym/goat: évc W’ fl/ay «mi 4/ fidzréggg 3) In his article, “What is the Right Supply Chain for Your Produc ,f’ Marshall Fisher suggests that innovative and functional products have different supply chain characteristics. a) Pick two characteristics and explain how they differ between functional and innovative products and Why that implies functional and innovative products should be served bydifierentsupply chains. (20 points) / MC M J— ' I“ r” l ’ , ,5’ , WW I M—wmv-MW:“‘fl‘m”mz:i a "é‘flfficffdfifi'f‘fi i=fiw - f “539%: fi'ryyzz‘ibflg‘rhc Sraayzdfi V ' r a w. 4,... ,. r. ‘ ~. . . _ f . WW ': " ' ' \ Cert-fies free” s4: 43?” flat/ee- em-«ar flat/écv‘flxdm {25sz L r . r. I: \ _. q - ‘ if ‘(wer-S't‘r'mim ‘r '4 .. H was, - . - 0r £03; ” I; 3“? (fink (“'qu 0 fi"”"'tt"‘-“2‘7’-‘F’f rgggfs'ledi’wte‘l" {gag-kc chiewi' s ’ i“ , . Hi. .- h. «9 * - SCIEP q/Z fififi/ ffljeg’f [‘1‘ 9V? y If j is}; trrgg-fll??z%fi¥3w (f 219239,?ct1‘55fl37g’ ) c a“ r - airy, 3 iv‘BrI—y Q‘SéO f7“ C‘t (- é/ibf’t) 0‘ “Jr‘bfifbe w W m} / 90W}: (35219:? ’«fifli’i’ffi‘f; C53,??9H’fle/ 94mm; #mzéamr’ Wwawr flaw Gr £923 3% arcs; gi/Letzfi my? @fip ~ “A: a WW_,____-m~_ _ ‘x - I ‘ . { “rs-H , -, 7’9 ’fit/f’ [emf/9 ASH/(Zr raffi“ Cit“ fits Cc; fairwaéeé ‘ service level, how much Tgach additional point ochSf‘om‘er service mean in terms of increased profit? (10 points) (jh‘lerAi?) 5 b) If a product has a 20% ntribution margin, costs $100 and already has a 95% c) Suppose you package boxes of blank business cards, and eac ‘box co ts you $5 after delivery to the customer. You decide to customize 10 boxes with ASU colors at an rt, Z additional cost of $2.50 per box. You sell the ASU customized boxes for $15, but end up only selling 4 boxes and throwing the rest away. What is your market mediation cost on _ S <§\ AL 1}: all wars the ASU customization project? (10 points) 7! 3(5 Child cm)!- 4. Suppose your sales data for the last 6 months is as follows: a) Fill in as much of the “mic Blank columns as'you can and explain why you may have to leave certain spaces blank. (20 points) (373:! ¢Z€§§ 745(figi/eflwm: 1.,‘11’é-“3r-40l/0 437*: j'éjéjg flare My 19mm (M Zw/Ie/cé/a J x r P” “P”? End? a?“ w “7%; G- b) You move to the market leader and are given a similar assignment, but with different data. Complete as much of the table as you can. (30 points) Efficcfiabeg‘ flame 390,59: / ,r(.../e;2- 4(183" /%47) 3 /%ré‘?+,3{m " “M0 : 7W3 : "/3719? [522/5 5. As you monitor your delivery process to customers, you find the following: Prepare Order at Factory to Ship - Ship and Deliver Order b. Which part of the process requires thmd What part of 3 mo st relevant to improving this part of recessf’lustify your answer (10 points) " 3 ode» ads. as r oar - .i' I ~ ? v Rafi, ‘ y h g ‘ i \ {we (all WM?! SHOE-Ila QWliAcle [lg M35 " Jlrv Vl') d’W/fqfir ‘ I X fir-.7"; , {a flywfi/fi/Zgw"? 537/ ’15-" " 7%‘rciii if??? “’5! -' . ‘ . ; film méoqflflm £15er SCM 345 Fall 2007 Midterm 1 — Study Guide 1. Trade-ofis in the supply chain (Quantitative) — Mode vs. service, speed vs.‘ inventory, service vs. inventory, etc. (25%) - One of the key trade-offs in logistics/SCM — Service/Inventory Logistics VALUE comes from service - getting customers what they want at the lowest cost. Hence the text stresses: ' Availability - Operational performance —— Consistency — Speed — Flexibility — Malfunctionfrecovery time ° Proper execution of availabilig: and operational performance is perceived by the customer as SERVICE RELIABILITY. Page 24-service dimensions - Like service, cost has several aspects: Inventory cost depends on number of units, value per unit, and carrying cost rate Transportation cost is a function of speed and shipment size Warehouse cost comes about based on amount stored, average storage time, and facilities and handling cost Packaging cost can vary with transportation Information cost depends on the technology available and customer requirements As the text notes, the imperative is to look at all costs together, or total cost. (Note also that standard accounting does not facilitate this approach). / / 2. Integrated supply chain perspective/organization of the supply chain (qualitative, 1-2 paragraph answer) - fimctional interaction and shifts, etc. (20%) page 8 Integrated supply chain management is talking about the “extended enterprise” The extended enterprise is about flows and is a process. You want to integrate your customers into your Operations. You want to share information with them and learn how to keep them satisfied. The focus of integrative management is to lower total process costs. Enterprise extension is based on 2 paradims; information sharing and process specialization. Pg 8 and 9. 0 Barriers to integration - Lack of clear definitions - So what E a supply chain? - Solutions - Understand interdependence vs. arms—length attitudes - Design and implement relationships with 0 Suppliers - Co-producers - Service providers 0 Channel partners 3. Fisher article and associated issues (Quantitative and/or qualitative) — innovative vs. functional products, responsive vs. efficient supply chains (20%) 4. Forecasting issues and methods (Quantitative) — Projecting based on history, trends, etc. (25%) FORECASTING: 62-73 5. Customer Service/customer utilities/gap analysis (Quantitative and/or qualitative) - See beginning of chapter 3 (10%) 0 Logistics is valued because it increases the utility of goods and services to customers. If goods have more utility to customers, they will either pay higher prices, purchase more often and with greater IOyalty, or both. - Logistics increases space utility by moving goods to where the custOmer needs them. - Logistics increases @353 utility by delivering goods when the customer needs them. - Logistics increases Quantity and assortment utility by delivering exactly what the customer wants in the quantifies the customer desires. Gap analysis - The concept that customers — Have expectations as to service and - Judge quality by comparing performance to expectation is now well-accepted. Your text has an extensive discussion on pp. 55- 58 of this “gap” model which shows that customers may be disappointed because of unrealistic expectations, poor service, or even the perception of a gap between expectation and service. Midterm 1 SCM 345 Spring, 2007 1) Your boss approaches you to help pl new product introduction. He/she is convinced the product ' mnovati/v , in the sense of the Fisher article, and he/ she believes the product W1 huge hit. In particular: Forecast sales for the first six months are: ——b ————‘.i _———— ————— a) What is the forecast for period 7 using the 3 period moving average procedure? (5 points) I :2 j éfiiLiigaaxnmva 2 the value shown? Take as your “initial” forecast th- 5pma recast for period 6. #55:??? (5:: i r- - ..' -r g3 Ff!" I!“ +Df ’4 7K [93 {M b) What is the forecast for periodqhsing the exponemgoghing procedure with (15 points) fifi57 J/meI‘T/fi'c’fia / [Va -/069 45> 2) The innovative product takes off, just as the boss expected. As it turns out, your company was relying on 5pma forecasting through period 6. The financial characteristics of the product are as follows: fi/ :1 35:31:? v SSA /5P? ‘130 per unit sold Contribution margi 35% _b__;_m,...mt-.;r;px- Price to the customer from your company,“,:,,..r-r‘”“"' .. ..—-—---m r ‘ “ __,_,....—--‘ .r / 3.x”! Is the “margin of error in the forecast” for period 6 consistent with an innovative .5" product? Why or why not? (Hint: See Exhibit on page 107 of the article) '(5 points) a 2:4 .\ fig??? \ “& v/ a x “a; .5, mafia”??? 493 r" Eu: iris“ . “an- . \ C; v- 1630’ (W; by @975" :(af/f’ 23B (303 Z w M‘s—:K‘fi‘nw‘s‘d‘u‘fl‘d-Jnvrr- m—rL-n‘ln Jill/f You forecast 150 or period fand you ship 100% of forecast, but are only able to scyfig. You authorize your customer to destroy the 10 excess units. What is your market mediation cost in period 8? (5 points) "‘53 a , /0 X / a; : 300 Mb? 55%: / VQ L4 [I 7.9- A - r J l '1’ J 6' mt .‘E/N (if) r“ 1;"; _, . El Fa} '- r»; //1 _ 2 x 5*” fie /’ was w-. fig /5 557’:- 3. The projected demand for a type of watch is shown below, by week. The manufacauer/assembler puts the band together with the assembled watch mechanism, after buying the two hands of the watch,(this is analog, not digitall). So the bill of materials looks like: Watch ' LT=2 ' Where LT is thelead time associated with each component or thefinal. product (Watch). Fill in the amount required-for-each of the components in the correct b0x on its table. 1) You have been asked to plan the last stage of producing 6 packs of Gatorade. The bill of material looks like: 6 Pack of Gamma r Baas/5‘47“ fih§“7c> Qfi‘éao #a’ as: m 6 Filled Bottles (If): ;’ m;r%\y Package Lead time for the finished item (6 Pack of Gatorade) is 3 days, the order size is always 70 6 packs, and the required safety stock is 40 6 packs. Lead time for filled bottles is 1 day. Order quantity for filled bottles is 420 bottles at a time. No safety stock Lead time for packages is 1 day and you can order in any quantity. Again, no safety stock. Fill in the following MRP plan (20 Points) Finished Item Day 1 = 6 Pack Safety Stock= SQ 40; LT=3; Order =70 Inventory on hand at perio end receipts ' release Bottles Day 1 LT=1; Order = 420 Inventory on hand at period end 2 20 10 0 7 50_ J receipts release LT=1; Order = An Inventory on hand at period end receipts release 1) The basic information for this problem is: Product (finished good) = Industrial Electric fans Cost to Nittany Fans (the distributor) = $400 Carrying cost rate (annual) for finished good in warehouse = 25% In—transit carrying cost = 15% Annual demand = 36,000 fans Order cycle time if shipped by rail = 4 days Order cycle time if shipped by truck = 2 days- Weight per fan, including packaging = 250 pounds Working days per year = 360 days The EconomngJd‘ef‘QuantityifEOQfifor this set of parameters is approximately 400 unit/sZ/How many times per year must Nittany Fans order? Howoftén does Nittany Fans place an order (i.e. every week, every 10 days, etc.) 10 points NITTANY MUST ORDER 36000l400 = 90 TILIES PER YEAR, OR EVERY 4 DAYS. b) If Nittany Fans chooses to keep 200 units of safety stock at all times, what is its average inventory in units? In dollars? Ignore ill-transit inventory for purposes of this question. 16 points AVERAGE INVENTORY IN UNITS IS 400/2 + 200 = 400 UNITS. AVERAGE INVENTORY IN $ IS 400*$400 = $160,000 Assume that Nittany Fans must finance its entire inventory with debt. How much must be borrowed, if in-transit inventory is ignored? «9 Where will this debtlborrowing show up in Nittany Fans’ financial reporting (be as specific as possible)? 16 points NITTANY MUST BORROW $160,000, AND THIS WILL SHOW UP AS DEBT IN LIABILITIES AREA OF THE LIABILITIES AND OWNER’S EQUITY COLUMN OF THE BALANCE SHEET (1) Nittany Fans’ management wants to know both how much expense is associated with this inventory, and where to find the details of this expense. You know the following: Finance is borrowing money at 7% annual interest, but insists that any acquired asset should have a 13% annual rate of return. 15 There is some obsolescence associated with the products Nittany Fans buys. In particular, customers who will pay $500 this year will only pay , _ . $480 next year at the same time. 5 Your insurance carrier charges 1% of product value for theft, shrinkage, and other insurance. 5 You believe that each Nittany Fan unit costs $10 to move into and out of the warehouse and each unit of inventory also takes up 3 square feet of space which costs $..333 per square foot per month. 10 Local government charges 5% of value per year in inventory tax. 3'" How wonld you answer management’s question, bearing in mind that they will want to look at specific lines of the relevant report or reports? [ For purposes of this question, the general sections of the operating statement are: Revnue (net); Cost of Goods Sold; Gross Profit; Expenses; Net Profit before taxes and—interest; Interest; Taxes Net profit The general sections of the balance sheet are: Assets, Liabilities, Owners Equity] OF THE 13% RATE OF MANDATED BY FINANCE, 7%, OR .07 *160,000I= $11,200 WILL SHOW' UP'IAS INTEREST VON OPERATTNG STATEMENT. 6%, OR $9600 'WILL NOT BE FOUND ON ANY STATEMENT AS IT IS AN OPPORTUNITY COST. THE $20 OBSOLESENCE COST PER UNIT WILL SHOW UP EITHER IN WRITEOFFS UNDER REVENUE OR IN DEPRECIATION EXPENSES (THIS IS ACTUALLY NOT QUITE RIGHT, BUT....) THE AMOUNT IS 20*400 = $8000 ANOTHER INTERPRETATION IS THAT THE WRITEDOWN ONLY APPLIES TO THE 200 UNITS OF SAFETY STOCK LEFT AT YEAR END, SO COST IS 20*200 = $4000. INSURANCE WILL COST $1600 PER YEAR AND WILL BE IN EXPENSES STORAGE = $10 PER UNIT FOR HANDLING AND $12 FOR SPACE, FOR A TOTAL OF $22*400 = $8800.THIS WILL BE IN EXPENSES. HOWEVER, THIS ASSUMES THAT YOU ONLY PAY INIOUT CHARGES ON AVERAGE INVENTORY. IN REALITY, YOU PAY FOR SPACE TO STORE AVERAGE INVENTORY = 400*12 =$4800 AND THEN YOU PAY INIOUT ON ALL THE UNITS GOING THROUGH (36000*10) = $360000. (YOU COULD ALSO ADD SAFETY STOCK HANDLING, IF YOU ARE CHARGED ON RECEIPT RATHER THAN 0N SHERIEI‘H‘}. STILL SE ‘33 n I SHRINKAGE AT.5% = $800 PER YEAR AND WILL BE IN EXPENSE. ...
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SCM_Midterm1 - '1 .v [.1 Fall 2007 /© SCM 345 Midterm 1 1)...

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