2. True / False Questions - 3 Points each; 12 Points total Circle the best answer to the right and briefly explain your response in the space provided. In an industry with deterministic demand the role of safety stock is to reduce the adverse effects of demand variability and avoid stock-outs. If demand is deterministic (i.e. known in advance), there is no need for safety stock. ii. Compared to the traditional supply chain for jeans, the custom system for Levi’s Personal Pair holds less inventory, and hence reduces total operating costs. The Levi’s personal pair would hold less inventory, but the customization reduced the cost advantages from economies of scale and mass production system with production planning controlled by Levi’s. Increasing demand variability would prove to be costly for Levi’s custom system. iii. As Parrot (see Part A above) executed its successful launch of the Drone in 2012 and 2013, it is likely they used a physically efficient supply chain. False is the best answer because we assume it is an innovative product, hence is should have been managed via a responsive supply chain (Air shipment of batteries is evidence of a responsive SC.) iv. The sustainability efforts at Sofra could succeed if Sofra’s metrics for performance management made sustainability a cost issue, as well as a sustainability issue. The metrics for sustainability coincided with performance metrics used by Supply Management Group at Sofra. This caused lack of implementation of the sustainability plan. If Sofra communicated this as a cost issue, it would be highly regarded by Supply Management Group as it would directly impact the financial performance. 12
TOM Mid-Term #2 Spring, 2013 3. Short Answer / Explanations - 16 Points total i. (6 Points)Parrot Management has monitored the gradually increasing labor & transportation costs of sourcing its batteries in Asia. You have been asked to advise them on the reassessment of their outsourcing decision. Provide three assessment points that Parrot should consider when deciding whether to continue outsourcing battery manufacturing or to produce the batteries themselves in Paris. Please provide brief explanation of why.
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- Fall '14
- Supply Chain Management