311_Session25 - Session25:SupplyChain PreviousLectures...

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Operations Management Session 25:  Supply Chain  Coordination and Beer Game
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 Session 25 Operations Management 2 Previous Lectures Inventory Systems Inventory Turns Quantity Discount  
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 Session 25 Operations Management 3 Today’s Lecture How information and incentives impact the  performance? Supply Chain Coordination Vertical Integration Beer Game
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 Session 25 Operations Management 4 Manufacturers Wholesale  Distributors Suppliers Customers  Information Flow Goods  Flow Retailers A Simplified Supply Chain Revenue Flow
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 Session 25 Operations Management 5 Supply Chain Management  (SCM) Supply Chain Management (SCM)  concerns the  coordination and optimization of all supply,  manufacturing, distribution and logistics activities  from raw materials to finished goods to the  customer. SCM  strives to use the supply chain as a mutually  beneficial competitive tool.
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 Session 25 Operations Management 6 Multiple Perspectives Raw Materials Suppliers  Component Manufacturer Systems Integrator Assembler Integrated Manufacturer Logistics Provider Distributor Customer
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 Session 25 Operations Management 7 SCM Goals Maximize profits of all supply chain partners How to do it? Get the right product, in the right quantity, to the  right customer at the right time with minimum cost,  proper documentation and financial reconciliation Difficulty: Each partner has its own goal
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 Session 25 Operations Management 8 Channel Coordination What are the objectives? What is channel coordination? Why are channels not coordinated? How can we coordinate channels?
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 Session 25 Operations Management 9 Channel Coordination:   Solutions Type of channel coordination solutions Buy back Revenue Sharing Vendor Managed Inventory (VMI) Consignment Options
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 Session 25 Operations Management 10 Channel Coordination:  What is the problem? Example:  A single publisher sells a book to a retailer.     Demand for the book is: 1000 units with probability 0.2 2000 units with probability 0.3 3000 units with probability 0.25 4000 units with probability 0.25 Production cost (c) = 9 Revenue (p) = 39 Good-will (g) = 0 Holding cost (h) = 1 Whole sale price (w) = 19 Salvage value is assumed to be 0.
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 Session 25 Operations Management 11 Channel Coordination:  Suppose you own both bookstore and the  publisher: What is the optimal number of books to be printed by the  publisher and offered by the retailing department?
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