Homework #2 - Part 1 (automatically graded)
If a company's' net income (i.e., profits before taxes) is $8.1 billion US Dollars and it has total assets of $135.0 Billion US Dollars, the Return on Assets (expressed as a percentage) is ______
6 General Feedback Correct Answer: 6% Calculation: 8.1 bn USD / 135.0 bn USD = 0.06 = 6%
The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is known as ______________________________
Bid bond General Feedback Correct Answer: Bid Bond
Reorder Point (Refer to Slides 29 through 31 in Chapter 04 -or- Pages 114 and 115 in the textbook) Calculate RBS Company's Reorder Point (ROP), including safety stock, for their top selling Pen Set using the following information: - Demand (D) is 750 Pen Sets per month (1 month = 30 days). - Supplier Lead Time (LT) is 50 days. - Safety Stock (SS) is 625 Pen Sets.
1,875 General Feedback Correct Answer: 1,875 Calculation = 750/30 x 50 + 625 = 1,875
In which sourcing category would the following items typically be classified? 1. Item A is high value, low risk, and there are multiple potential suppliers. 2. Item B is low value, high risk, and there are a small number of alternative suppliers. 3. Item C is high value, high risk, and there are few suppliers, but they are excellent. 4. Item D is low value, low risk, and there are lots of potential suppliers.
1. Leverage 2. Bottleneck 3. Strategic 4. Non-Critical General Feedback Correct Answers: Item A is high value, low risk, and there are multiple potential suppliers. = Leverage Item B is low value, high risk, and there are a small number of alternative suppliers. = Bottleneck Item C is high value, high risk, and there are few suppliers, but they are excellent. = Strategic Item D is low value, low risk, and there are lots of potential suppliers. = Non-Critical
Match the following descriptions with the appropriate inventory control tool. 1. A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. 2. The inventory control tool that does not require direct line of sight to read the tag on a product(s). 3. A type of inventory system that issues an order whenever a withdrawal is made from inventory.
1. Linear Barcode 2. Radio Frequency Identification 3. Base Stock Level System General Feedback Correct Answers: The inventory control tool that does not require direct line of sight to read the tag on a product(s). = Radio Frequency Identification A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. = Linear Barcode A type of inventory system that issues an order whenever a withdrawal is made from inventory. = Base Stock Level System
Match the following descriptions to the appropriate type of inventory stock 1. This type of inventory is in the transportation network and the distribution system, being held by wholesalers, distributors, retailers, and consumers. 2. This type of inventory is above and beyond what is actually needed to meet anticipated demand, and is maintained o protect against fluctuations in demand or supply 3. This type of inventory is generally used for a very specific purpose or future event, and for a defined period of time. 4. This type of inventory depletes gradually as customer orders are received, and is replenished cyclically when supply orders are received. 5. This type of inventory is needed to run the manufacturing operations and the business, but does not end up as part of the finished product.
1. Pipeline Inventory 2. Safety Stock 3. Strategic Stock 4. Cycle Stock 5. Maintenance, Repair, and Operating (MRO) supplies General Feedback Correct Answers: This type of inventory depletes gradually as customer orders are received, and is replenished cyclically when supply orders are received. = Cycle Stock This type of inventory is above and beyond what is actually needed to meet anticipated demand, and is maintained o protect against fluctuations in demand or supply. = Safety Stock This type of inventory is generally used for a very specific purpose or future event, and for a defined period of time. = Strategic Stock This type of inventory is in the transportation network and the distribution system, being held by wholesalers, distributors, retailers, and consumers. = Pipeline Inventory This type of inventory is needed to run the manufacturing operations and the business, but does not end up as part of the finished product. = Maintenance, Repair, and Operating (MRO) supplies
Match the following sourcing goals to the appropriate sourcing strategy 1. If your purchase volume is very small, you would choose? 2. If you want to create transportation economies, you would choose? 3. If you wanted to obtain the most information, you would choose? 4. If you want to develop strong supplier relationships, you would choose? 5. If you want to reduce the risk of a supply disruption, you would choose?
1. Single Supplier 2. Single Supplier 3. Multiple Suppliers 4. Single Supplier 5. Multiple Suppliers General Feedback Correct Answers: If you want to reduce the risk of a supply disruption, you would choose? = Multiple Suppliers If you want to create transportation economies, you would choose? = Single Supplier If you want to develop strong supplier relationships, you would choose? = Single Supplier If your purchase volume is very small, you would choose? = Single Supplier If you wanted to obtain the most information, you would choose? = Multiple Suppliers
Match the following descriptions with the appropriate sourcing concept. 1. An arrangement where a representative of the supplier is embedded in the buyer's purchasing group to forecast demand, monitor inventory, and place orders. 2. An arrangement where a specific quantity of an item is stored at the buyer's location. Once the inventory is used, the item is replaced by the supplier, with the full knowledge and approval of the buyer 3. Suppliers directly manage buyer inventories to reduce the buyer's inventory carrying costs and avoid stockouts for the buyer 4. A sourcing technique where pre-qualified suppliers enter a website and at pre-designated time and date, and try to underbid competitors to win the buyer's business
1. Supplier Co-Location 2. Co-Managed Inventory 3. Vendor Managed Inventory 4. Reverse Auction General Feedback Correct Answers: A sourcing technique where pre-qualified suppliers enter a website and at pre-designated time and date, and try to underbid competitors to win the buyer's business = Reverse Auction Suppliers directly manage buyer inventories to reduce the buyer's inventory carrying costs and avoid stockouts for the buyer = Vendor Managed Inventory An arrangement where a specific quantity of an item is stored at the buyer's location. Once the inventory is used, the item is replaced by the supplier, with the full knowledge and approval of the buyer = Co-Managed Inventory An arrangement where a representative of the supplier is embedded in the buyer's purchasing group to forecast demand, monitor inventory, and place orders. = Supplier Co-Location
Match each cost to its Total Cost of Ownership cost category 1. Payment for the purchased materials 2. Cost of warranty repairs 3. Cost for replacing defective finished goods 4. Cost to transport purchased materials 5. Cost for a site visit to qualify a new supplier 6. Cost for closing out the purchase order 7. Cost associated with investigating the need for a purchased material 8. Cost associated with the loss of customer goodwill 9. Cost associated with a late delivery 10. Cost to understand suppliers needs and operations
1. Transaction Cost 2. Post-Transaction Cost 3. Post-Transaction Cost 4. Transaction Cost 5. Pre-Transaction Cost 6. Transaction Cost 7. Pre-Transaction Cost 8. Post-Transaction Cost 9. Transaction Cost 10. Pre-Transaction Cost General Feedback Correct Answers: Cost of warranty repairs = Post-Transaction Cost Cost for a site visit to qualify a new supplier = Pre-Transaction Cost Cost to transport purchased materials = Transaction Cost Payment for the purchased materials = Transaction Cost Cost for closing out the purchase order = Transaction Cost Cost to understand suppliers needs and operations = Pre-Transaction Cost Cost for replacing defective finished goods = Post-Transaction Cost Cost associated with the loss of customer goodwill = Post-Transaction Cost Cost associated with investigating the need for a purchased material = Pre-Transaction Cost Cost associated with a late delivery = Transaction Cost
Economic Order Quantity (Refer to Slide 38 in Chapter 04 -or- Pages 117 through 120 in the textbook) Use the EOQ formula to solve Calculate RBS Company's Economic Order Quantity (EOQ) for their top selling Pen Set using the following information: - RBS Company expects to sell 1,265 Pen Sets per month for the next 12 months. - RBS Company purchases the Pen Sets from a supplier for $150 dollars each and incurs a cost of $50 dollars for each order that they place. - RBS Company estimates that their inventory carrying cost is 20% annually. Round to the nearest whole number
225 General Feedback Correct Answer: 225 Calculation: √2 x 50 x (12 x 1,265) = √100 x 15,180 = √1,518,000 = √50,600 = 224.944 ≈ 225 0.20 x 150 30 30 NOTE: A common mistake is not multiplying the monthly demand of 1,265 units times 12 months to get the annual demand of 15,180 units which is required for the EOQ formula.
