Logistics Reading Quiz 1
According to Fisher (1997): An innovative product has a contribution margin of 40% and average stockout rate of 25%. What is the lost contribution to profit from stock out:
40%X25%= 10%
Lecture-based question: In order to assess the effect of product life cycles on the appropriate supply chain strategy, we need to understand how the demand for a product and the importance of economies of scale change over the life cycle of the product. A typical product life cycle has several stages. Consider a new car design. Initially, the car is introduced with a single choice for engine size, and in a limited number of colors because the car manufacturer is not certain whether the car will be accepted in the market. In other words, in this early stage of the product life cycle, demand is highly variable, and economies of scale are not important. This implies that:
A pull strategy is appropriate, and a responsive supply chain is required.
According to Lee (2004): Efficient supply chains find it difficult to cope with following situations:
A sudden rise in demand of a particular merchandise. Launching a new product. Situations in which the structure of market changes.
According to Fisher (1997): The success of National Bicycles of Japan is a good example to demonstrate following:
Achievement of responsive supply chain through avoiding uncertainties. Using produce-to-order system to match supply and demand. By increasing the available choices to customers, it was able to make customers wait two weeks rather than immediately match demand and supply.
According to Lee (2004): Identify the characteristics of the supply chain which will be achieved by following measures; I. Provide data on changes in supply and demand to partners continuously so they can respond quickly. II. Develop collaborative relationships with suppliers and customers so that companies work together to design or redesign processes, components, and products as well as to prepare backup plans. III. Keeping a small inventory of inexpensive non-bulky components.
Agility
According to Lee: By developing collaborative relationships with suppliers and customers, employing postponement, building a dependable logistics system, laying down tasks and responsibilities, and equitably sharing risk and gains, a company will foster:
Agility and Alignment
According to Lee (2004): Alignment in the context of supply chain refers to :
Alignment of all stake holders in the supply chain through equitable sharing of risks, costs, and gains of improvement initiatives.
According to Porter: Structural attractiveness of industries is not determined by:
Bargaining power of manufacturers.
Based on the Fisher article: What is the first step in devising an effective supply chain strategy?
Considering the nature of demand for the product.
Based on the Fisher article: Which supply chain strategy is suitable for a company producing toothpaste?
Considering the product as a functional product and trying to have an efficient supply chain.
According to Lee (2004): Adaptability in the supply chain is needed to cater to following situations arising out of:
Economic progress, political and social changes, demographic trends, and technological advances
According to Fisher (1997), deciding to have efficient or responsive supply chain priority is important. Point out the combinations that should be avoided from the four combinations below:
Efficient supply chain for innovative products, and a responsive supply chain for functional products.
According to Fisher (1997): The distinction between functional and innovative products is always very clear.
False. Fisher believed the distinction between functional and innovative products may not be crystal clear, and the product can be offered in a basic functional product or in an innovative form.
Lecture-based question: Which of the following is NOT a benefit of e-business?
Higher level of trust between supply chain members
According to Porter: What are the two fundamental factors that determine profitability?
Industry structure and sustainable competitive advantage.
According to Porter: Which statement is not true?
Internet technologies tend to reduce fixed cost and tilt cost structure toward variable cost, increasing pressure for price competition.
Lecture-based question: By moving the push-pull boundary earlier in the supply chain, lead times and variability in the system are decreased and service levels are improved due to increased ability to match supply and demand. This is because:
Inventory levels are decreased in the pull portion of the supply chain
According to O'Bryne (2011): Which of the following statements is FALSE: i. It is paramount that you first understand the dynamics of your supplier base so that you can design your service offering to meet their needs at a sensible cost. ii. The scope and variability of supply chain activities means that anybody who is in business to make a profit needs to understand the "cost to serve" for the different types of customers and the different types of products and services your company provides to them. iii. One of the most important requirements for an efficient and cost effective distribution network is to minimize product handling. iv. Your customers' requirements should shape your supply chain strategy and structure.
It is paramount that you first understand the dynamics of your supplier base so that you can design your service offering to meet their needs at a sensible cost.
According to Lee (2004): Seven-Eleven Japan ( SEJ ) is known for:
Its supply chain built on agility, adaptability, and alignment. When Seven-Eleven Japan spots business opportunities, it works with suppliers to develop products and shares revenues with them.
According to O'Bryne (2011): After set of targets for improvement, you then choose the corresponding key performance indicators (KPIs) that let you measure your performance compared to your targets. Which one is correct, if you have good supply chain KPIs?
KPIs are used to focus on and drive performance improvement.
According to O'Bryne (2011): What really matters to your business is your supply chain "end game" objectives. That's what you need to manage, regularly and consistently, so that you can set realistic targets for improvement. For the purpose of the right measurement of your own performance; after setting your own objectives and targets, what do you need to define?
Key performance indicators (KPIs)
According to Porter, best practice competition leads to ....
NOT SUPERIOR QUALITY THAT BEST MATCHES CUSTOMERS' DESIRES
According to Lee (2004), how can adaptability be built into a supply chain? I. By spotting trends by tracking the economic changes in vast geographical locations II. By identifying the needs of immediate customers while the needs of ultimate customers are taken care of by their suppliers III. By developing new suppliers that compliment the existing ones IV. By ensuring that product design teams are aware of supply chain implications of their design.
NOT ii, iii, AND iv
In support of companies such as H & M, Mango, and Zara companies using the agile supply chains, Hau L. Lee (2004) quotes which features: I. Their supply chains are very efficient and cheap. II. They use agile design process like ordering of fabrics as soon as designers spot possible trend. III. They have highly efficient distribution centers. IV. State-of-the-art sorting and material handling systems are used to avoid bottlenecks in distribution. V. They employ experts who constantly alter company systems to suit the current situation.
NOT iii, iv AND v
Based on Fisher (1997): Which of the following statement(s) about cause(s) of poor Supply Chain Management is (are) CORRECT:
Overreliance on price promotions. Excess of some product in one Industry and shortage of other products due to inability to predict demand. Resorting to markdowns to clear inventory while customers leaving the store Empty handed not finding the item they wanted in the store.
Lecture-based question: Furniture is a highly customized product, but its handling and distribution are complex due to its bulkiness. Therefore, the production phase is a __________ system based on realized demand while transportation/distribution of furniture is implemented based on _______ system with fixed delivery schedules in order to achieve economies of scale.
Pull Push
Lecture-based question: _________ processes are initiated by a customer order and _______ processes are initiated and performed in anticipation of customer orders.
Pull, Push
According to O'Bryne (2011): _______________ is a process that shares information and brings people together in a structured, single plan that is defined across the functional departments. People often confuse this process with complex, expensive _______________, but the process comes first, not the system.
Sales and Operations Planning / Software Tools
According to O'Bryne (2011): Both parties can benefit from a healthy and proactive partnership. Which of the following is NOT a reason behind outsourcing?
The service being outsourced is core to the business and management want to focus on and excel in it.
Based on the Fisher article: Which of the following answers is NOT a characteristic of functional products?
They have short life cycle.
According to Porter: Which statement refers to a suitable strategy for dot-com companies?
To seek avenues where an internet-only model can offer real advantages.
Lecture-based question: A pull-based supply chain reacts to real customer orders rather than to forecasts. Thus, lead times and variability in the system are reduced by matching supply and demand. This leads to improved customer service and decreased inventory holding costs.
True
Lecture-based question: When demand uncertainty is low, a push-based supply chain allows the firm to reduce costs by making use of economies of scale in production and distribution without increasing inventory holding costs.
True
According to Fisher (1997): In the case of innovative products, which statements are CORRECT:
Uncertain market reaction increases the risk of shortages or excess demand. Short product life cycle increases the risk of obsolescence. Cost of excess supply is very high. Market mediation cost is high due to a, b, and c above.