Best Practices in supply chains

Supplies, Materials

B) Parts suppliers, metal shapers, tire makers, etc.

C) To make a profit and establish relationships with automakers and other customers

D) Shippers might want to make more profit while people using the shipper want to keep costs down

E) It can slow or shut down the movement of parts and supplies, like with a hurricane or volcano eruption

A) The service, paperwork, pens, mail service, etc.

B) Yes. Each firm is trying to provide a service for a profit . . . the loan, underwriters, etc.

C) The goods of service supply chains are more abstract whereas they are more physical and tangible with product supply chains

Shipping. It used to be just cars and trucks but now they use bigger trucks and planes

A vertical company would have a singular supply chain system. A horizontal one would probably have a supply chain system for each smaller company, or they would go outside the company.

Absolutely. They would tend to have their own system and it needs to be fluid and work well

6) Lack of metal for the cans, a bad peach crop, a breakdown or crash of a peach shipment, etc.

7) Having things close means lack of geographic distance from the main base. Having them distributed means less time to get to customers and less impact if one warehouse goes down and is unable to ship. Other warehouses can pick up the slack.

Chapter Two

Question One

A) They have an array of products, some with high margins and some with low margins. The customer base of SteelWorks has a wide array of desires and needs and thus this is seemingly creating the inventory issues.

B) They sell a wide array of products. Not based on the data provided, due to the separate and different nature of the two organizations in question

C) Entirely too much. They can do the 20% reduction if they do it the right way

D) Yes. There needs to be a tracking of the time and money spent by that division.

2) Perhaps the best way to is to reduce variability where it is possible. If not, there has to be adjustment to the variability that is or could happen or customers will have to back-order or cancel (which is already happening 30% of the time)

3) Inventory levels provide a response time for when customer service receives a request for a part. A balance has to be struck between having enough inventory on hand but not too much

4) Lead time would indicate how much time is needed to provide the order as requested and promised. Less lead time would mean higher variability and thus the need for higher inventory levels.

5) Managing the service level and expectations in a way that expands the time window promised and delivered would create more lead time and thus reduce the need for higher inventory

6) The first of those is safety stock . . . this is what the distributor needs to keep on hand when preparing for deviations from average demand during lead time. The latter is the expected level of inventory immediately after receiving the order, or the maximum level. The first one was the minimum.

7) The first is the expected level of inventory when receiving an order and the latter speaks to the safety talk. Both involve the average inventory level.

8)

Tires

Wheels

Hubcaps

Caps for car tire innertubes

Polish

Tires and wheels are highest because they need to be variable no matter what due to their importance and price point. The other items are mostly for show and thus are less important

9)

A) Overall, the cross-dock with zero time would be better since the goods would go straight from an income shipment to the stores. If they go to the lead time is added between the retail outlets and manufacturing facility, both stores would see longer waits

B) The retail outlets

10) Longer but less variable. Variability should always be reduced when possible

11) Long-term storage for stalled goods, etc.

12) It shows the minimum cost for the situation involved

13) It is very much a risk vs. reward situation. Payouts will be great when things go well but the valleys will be low as well

14) A) Going from several warehouses to one warehouse B) Using an annual forecast instead of a semi-annual one C) Staying away from products that are similar yet different

15) Assuming that two store shave similar level of service, service levels and pricing structures, they would be positively correlated. However, if one store does a sale and the other does not, there would probably be a negative correlation.

16) Projections at the onset would be based on things like focus groups and other realms of perceived demand. During the middle, it would be based on growing and prior sales. At the end, it would be based on an expected decline as the new product comes out

17)

A) It would generally be favorable . . . except when things are bad. If one rises, they all rise. If they fall, they all fall.

B) Table 2-12 (inbound/outbound) is the more attractive one

C) It could be useful given the guarantee and if the cost could be passed to the customer

Chapter Three

1) It has to be checked to make sure that the current setup is the right one. Requirements can change due to changes in cost, needed lead time, customer demands and so forth

2) Everyone would be involved on some level. Operations would be able to report things that go wrong or right, sales would have to manage expectations based on the network in place, marketing would have to do the same, etc.

3) Steps would include deciding where that warehouse would be, how service levels would be kept in check, how to meet consumer demand, how to transition from the five warehouses to the single one, etc. The major downside to a single warehouse is that all orders are on hold if something happens at that warehouse. An upside is that there is one warehouse and thus consistency in operations is easier to uphold

4) See below

a. The size of what is being transported, union/labor issues, shipping concerns

b. State regulations, whether drug is lifesaving/necessary

c. Centralized location probably needed due to volume that would be in play (cost per item, etc.)

d. Much the same as automobiles, laws at the federal/state/international level, etc.

e. Handling bulk of the same books or books, how they'd be sent to stores and such

f. Bulk means a centralized warehouse or network of warehouses would probably be warranted

g. All the base parts that would be involved, cost per shipment/part, etc.

5) Would expect to see more warehouses with chemical factories due to the costs. A pharmaceutical would probably have a single warehouse and ship all from there, due to the costs involved

6) It comes down to the fact that a truck would be empty after it completes its trip

7) Handling costs would include cost of equipment and labor Fixes costs would be things like utilities, land and so forth. Storage costs would be for storing inventory and so forth

8) When an optimization is exact, it will work at some point. When it comes an algorithm, the precision is less present.

9) Simulation is when a question or theory is tested in a way that is contrived and thus "simulated". It does not always replicate reality in a good way but it can teach lessons in some instances.

Chapter Four

1) Buyback should be used when the demand can drop sharply. A payback contract is good when the buyer wants to sell back any excess production. An option contract would be used when a reservation on a product is desired and is secured in the form of a small deposit

2) Since demand grows at a predictable clip, a fixed contract would be wiser

3) More rentals (which would happen due to the lower per copy price) would mean more revenue for the studio since they get a share of the rental price

4) Perhaps they felt that the scarcity kept up demand and margins. Either that or the movie studios were more focused on the margin of the original video. Perhaps they didn't realize that the high demand and revenue sharing would help them. It could also be that Blockbuster's volume was too low

5)

a. Because inventory levels would have to be different. Stocking shelve sand only making when ordered are two entirely different things

b. Make-to-stock could lead to wasted inventory space but the wait times are shorter

c. Make-to-order would lead to longer lead times . . . but inventory space being wasted would be reduced

6) See below

a. $35

b. $25

7) Make-to-stock would be the way to go if demand is not going to be clear

8) Their margins are surely going to be high if they are taking that risk. Otherwise, the risk would not be worth it

9) See Below

a. 2300 would be optimal production quantity due to the highest probability -- profit would be 30 * 2300

b. See below

i. See A

ii. Option of $10 up front and 10 on delivery

c. See Below

i. 2700 or 2500

ii. 5 up front, 15 on delivery

10) See below

a. Profit would rise

b. Profit would rise

c. Make to Stock