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Unformatted text preview: Chapter 11 - Supply Chain Management CHAPTER 11: SUPPLY CHAIN MANAGEMENT Answers to Discussion and Review Questions 1. Supply chain is a sequence of organizations, their facilities, functions and activities that are involved in producing and delivering a product or service. The chain begins with suppliers of raw materials and extends all the way to the final customer. 2. The factors that make it desirable to manage a supply chain include increasing: a. Need to improve operations b. Levels of outsourcing c. Transportation and distribution costs d. Competitive pressures e. Globalization f. Complexity of supply chains g. Importance of e-commerce The potential benefits of effective management of a supply chain include lower inventories, higher profits, improved customer loyalty, shorter manufacturing and production lead times, higher productivity and improved ability to respond to fluctuations in demand. 3. Elements of supply chain management consist of customers, forecasting, design, processing, inventory, purchasing, suppliers, location and logistics. 4. Strategic issues in supply chain management include determining the number, location and capacity of facilities, deciding whether to make or buy a product. Tactical issues in supply chain management involve policies and procedures related to procurement, processing, purchasing, logistics, inventory and quality. Operational issues in supply chain management are related to production planning and control which involves scheduling of workforce, machinery, production, deliveries and distribution of goods or services. 5. Bullwhip effect is the increase of inventories on a supply chain starting at the end of a supply chain with the final customer and working backwards towards the initial supplier (supplier of raw materials). The main reason for the occurrence of this phenomenon is the lumpiness and variability of demand at different stages of the supply chain. In order to protect themselves from the uncertainties resulting from lumpy and variable demand, suppliers carry larger amounts of inventory as safety stock. As the need for carrying inventory increases, the batch or order size also progressively increases on the supply chain from customers all the way back to initial suppliers. Setup time reduction methods and CONWIP (constant work-in-process) systems can alleviate the bullwhip effect because these methods generate smaller batch sizes, which result in smaller quantities of inventory. 6. The purchasing function is becoming more important in supply chain management because of the following factors: a. As a result of increased outsourcing, the cost of materials is higher than cost of labor for many end items....
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This note was uploaded on 02/29/2012 for the course BUSINESS 100 taught by Professor Allprofessor during the Spring '12 term at Virginia College.
- Spring '12