IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines
not only have distinct areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-specific
knowledge. In this essay, we will explore the nature of exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
Solution Manual For
Principles of Supply Chain Management:A Balanced Approach 5 th Edition
by Joel Wisner Keah Choon Tan G. Leong
Chapter 1-14
Answers to Questions/Problems
Chapter One
Discussion Questions
1. Define the term supply chain management in your own words, and list its most
important activities.
Ans.: The Supply-Chain Council’s definition of supply chain management is
“[m]anaging supply and demand, sourcing raw materials and parts, manufacturing and
assembly, warehousing and inventory tracking, order entry and order management,
distribution across all channels, and delivery to the customer.
These are also the most important activities, however integration of key supply chain
processes might also be included in there.
2. Can a small business like a local sandwich or bicycle shop benefit from practicing
supply chain management? What would they most likely concentrate on?
Ans.: Yes, any organization can implement at least some of the important concepts. A
good place to start is the rationalization or reduction of the supply base. Small businesses
might also want to concentrate on customers as a starting point.
3. Describe and draw a supply chain for a bicycle repair shop and list the important supply
chain members.
Ans.: This will vary from student to student, but should include for instance parts
suppliers, bicycle suppliers and other suppliers (ie, helmet suppliers) and services (ie,
repair services) as 1st-tier suppliers and bicycle owners as 1st-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain.
Ans.: Yes. Every repair item the firm stocks has potentially a different supply chain
associated with it.
5. What roles do “collaboration” and “trust” play in the practice of supply chain
management?
Ans.: This is essential for process integration. Sharing information and determining
joint strategies is part of the integration/collaboration process, and to do this, trust must be
present between the customer/focal firm/supplier.
, 6. Why don’t firms just become more vertically integrated (eg. buy out suppliers and
customers), instead of trying to manage their supply chains?
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only have distinct
areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-specific knowledge. In this essay, we will explore the nature of
exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
Ans.: This could cause a loss of focus and keep managers/employees from doing their
core competencies, resulting in loss of performance.
7. What types of organizations would benefit the most from practicing supply chain
management? What sorts of improvements could be expected?
Ans.: Firms with many suppliers, many complex products, large inventories and many
customers (in other words, firms with many supply chains). Gains would be lower
purchasing costs, lower carrying costs, better product quality, and better customer service.
8. What are the benefits of supply chain management?
Ans.: Reduction of the bullwhip effect, better buyer/supplier relationships, better
quality, lower costs, better customer service, higher demand, more profits.
9. Can nonprofit, educational, or government organizations benefit from supply chain
management? How?
Ans.: Yes. All services and organizations can benefit in terms of at least better
customer service, better inventory management, and cheaper purchase prices.
10. What does the term, “third-tier supplier” mean? What about “third-tier customer”?
What about the “focal firm”? Provide examples.
Ans.: First-tier suppliers are the focal firm’s direct suppliers. 2 nd-tier suppliers are the
focal firm’s suppliers’ direct suppliers. 3rd-tier suppliers are the focal firm’s suppliers’
suppliers’ suppliers. Company A sells wood to Company B. Company B sells furniture to
Company C. Company C sells the furniture to Wal-Mart. Company A is Wal-Mart’s 3 rd-
tier supplier. Similarly, the focal firm’s customers’ customers’ customers are their 3 rd-tier
customers. The focal firm just refers to the firm in question, or in the topic of discussion.
11. What is the bullwhip effect and what causes it? How would you try to reduce the
bullwhip effect?
Ans.: The magnification of safety stock and erratic buying behavior as customers along
the supply chain forecast demand and add safety stock to their forecasts and production
schedules causes the bullwhip effect. As we move further back up the supply chain then,
more and more of the output is in the form of safety stocks. Reducing the need to forecast
(by agreeing on a future purchase quantity or using CPFR) is one way to reduce the
bullwhip effect.
12. When did the idea and term, supply chain management, first begin to be thought about
and discussed? Which two operations management practices became the origin of
, supply chain management?
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only
have distinct areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-specific knowledge. In this essay,
we will explore the nature of exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
Ans.: The general idea of supply chain management had been discussed for many years
prior to the chain of events shown in Figure 1.1. Back in 1915, Arch W. Shaw of the
Harvard Business School wrote the textbook, Some Problems in Market Distribution,
considered by many to be the first on the topic of what we now refer to as supply chain
management. The text included discussions of how best to purchase raw materials,
transport products, locate facilities, and analyze productivity and waste. According to C.
John Langley, Jr., professor of supply chain management at the Georgia Institute of
Technology, “The idea that companies ought to work together and coordinate activities has
always been around, but ask people today what one of the biggest problems with supply
chains are today, and they say companies don’t work very well together.”
The 1980s were the breakout years for supply chain management. One of the first
widely recorded uses of the term supply chain management came about in a paper
published in 1982. Intense global competition beginning in the 1980s (and continuing
today) provided an incentive for U.S. manufacturers to offer lower-cost, higher-quality
products along with higher levels of customer service. Manufacturers utilized just-in-time
(JIT) and total quality management (TQM) strategies to improve quality, manufacturing
efficiency, and delivery times. In a JIT manufacturing environment with little inventory to
cushion scheduling and/or production problems, firms began to realize the potential
benefits and importance of strategic and cooperative supplier-buyer-customer relationships.
The concept of these partnerships or alliances emerged as manufacturers experimented
with JIT and TQM. These were the origins of SCM.
13. Do you think supply chain management is simply the latest trend in management
thinking and will die out in a few years? Why or why not?
Ans.: This answer will vary because it was not specifically discussed, however,
considering that the ideas of SCM have been around for many, many years makes one think
that the practice is here to stay.
14. How has technology impacted supply chain management?
Ans.: SCM software and e-commerce has aided supply chain integration and aided in the
evolution and adoption of supply chain management. Sharing information with supply
chain partners through the internet has enabled firms to integrate stocking, logistics,
materials acquisition, shipping, and other functions to create a more proactive and effective
style of business management and customer responsiveness
15. What are the four foundation elements of supply chain management? Describe some
activities within each element.
Ans.: The four elements are supply (supply base reduction, supplier alliances, SRM, global
sourcing, ethical and sustainable sourcing), operations (demand management, CPFR,
inventory management, MRP, ERP, lean systems, Six Sigma quality), logistics (logistics
, management, CRM, network design, RFID, global supply chains, sustainability, service
response logistics), and integration (barriers to integration, risk and security management,
performance measurement, green supply chains).
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These
disciplines not only have distinct areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-
specific knowledge. In this essay, we will explore the nature of exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
16. Is the use of a large number of suppliers a good idea? Why?
Ans.: This somewhat depends. Certainly SCM suggests fewer suppliers and longer-
term relationships, however there can always be exceptions to this rule. Purchasing a
widely available common product like soap or tissue paper might be better done with a
large number of suppliers competing for this business. But this works against ever creating
trusting and lasting supply chain partnerships. In most cases though, use of a few key
suppliers for an item is considered a good idea, since it means larger supply quantities,
leading to lower prices and better service.
17. Do you think the proper way to choose a supplier is to always find the one that will
give you the lowest price? When might this not be a good idea?
Ans.: Absolutely not. Low price is sometimes fine, if quality or service is not an issue,
as in buying some MRO items. But when quality and service matter, price should only be
one of the purchase criteria.
18. What is supplier management? What are some of the activities of supplier
management?
Ans.: Simply put, this means encouraging or helping the firm’s suppliers to perform in
some desired fashion, and there are a number of ways to do this. This involves assessing
suppliers’ current capabilities and then deciding if and how they need to improve them.
Thus, one of the key activities in supplier management is supplier evaluation, or
determining the current capabilities of suppliers.
19. What is the difference between supply chain management and logistics?
Ans.: Logistics involves only the transportation and distribution functions. SCM
includes logistics as well as production, supply management, and integration of processes.
20. What is demand management and why is this an important part of supply chain
management?
Ans.: Demand management is when management tries to match demand to available
capacity, either by improving production scheduling, curtailing demand, using a back-order
system, or increasing capacity. In a recent survey of supply chain managers, stockouts were
considered the most pressing issue in the use of demand management activities, followed
closely by excess inventories and long lead times.
21. What is the difference between and MRP system and an ERP system?
not only have distinct areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-specific
knowledge. In this essay, we will explore the nature of exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
Solution Manual For
Principles of Supply Chain Management:A Balanced Approach 5 th Edition
by Joel Wisner Keah Choon Tan G. Leong
Chapter 1-14
Answers to Questions/Problems
Chapter One
Discussion Questions
1. Define the term supply chain management in your own words, and list its most
important activities.
Ans.: The Supply-Chain Council’s definition of supply chain management is
“[m]anaging supply and demand, sourcing raw materials and parts, manufacturing and
assembly, warehousing and inventory tracking, order entry and order management,
distribution across all channels, and delivery to the customer.
These are also the most important activities, however integration of key supply chain
processes might also be included in there.
2. Can a small business like a local sandwich or bicycle shop benefit from practicing
supply chain management? What would they most likely concentrate on?
Ans.: Yes, any organization can implement at least some of the important concepts. A
good place to start is the rationalization or reduction of the supply base. Small businesses
might also want to concentrate on customers as a starting point.
3. Describe and draw a supply chain for a bicycle repair shop and list the important supply
chain members.
Ans.: This will vary from student to student, but should include for instance parts
suppliers, bicycle suppliers and other suppliers (ie, helmet suppliers) and services (ie,
repair services) as 1st-tier suppliers and bicycle owners as 1st-tier customers.
4. Can a bicycle repair shop have more than one supply chain? Explain.
Ans.: Yes. Every repair item the firm stocks has potentially a different supply chain
associated with it.
5. What roles do “collaboration” and “trust” play in the practice of supply chain
management?
Ans.: This is essential for process integration. Sharing information and determining
joint strategies is part of the integration/collaboration process, and to do this, trust must be
present between the customer/focal firm/supplier.
, 6. Why don’t firms just become more vertically integrated (eg. buy out suppliers and
customers), instead of trying to manage their supply chains?
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only have distinct
areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-specific knowledge. In this essay, we will explore the nature of
exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
Ans.: This could cause a loss of focus and keep managers/employees from doing their
core competencies, resulting in loss of performance.
7. What types of organizations would benefit the most from practicing supply chain
management? What sorts of improvements could be expected?
Ans.: Firms with many suppliers, many complex products, large inventories and many
customers (in other words, firms with many supply chains). Gains would be lower
purchasing costs, lower carrying costs, better product quality, and better customer service.
8. What are the benefits of supply chain management?
Ans.: Reduction of the bullwhip effect, better buyer/supplier relationships, better
quality, lower costs, better customer service, higher demand, more profits.
9. Can nonprofit, educational, or government organizations benefit from supply chain
management? How?
Ans.: Yes. All services and organizations can benefit in terms of at least better
customer service, better inventory management, and cheaper purchase prices.
10. What does the term, “third-tier supplier” mean? What about “third-tier customer”?
What about the “focal firm”? Provide examples.
Ans.: First-tier suppliers are the focal firm’s direct suppliers. 2 nd-tier suppliers are the
focal firm’s suppliers’ direct suppliers. 3rd-tier suppliers are the focal firm’s suppliers’
suppliers’ suppliers. Company A sells wood to Company B. Company B sells furniture to
Company C. Company C sells the furniture to Wal-Mart. Company A is Wal-Mart’s 3 rd-
tier supplier. Similarly, the focal firm’s customers’ customers’ customers are their 3 rd-tier
customers. The focal firm just refers to the firm in question, or in the topic of discussion.
11. What is the bullwhip effect and what causes it? How would you try to reduce the
bullwhip effect?
Ans.: The magnification of safety stock and erratic buying behavior as customers along
the supply chain forecast demand and add safety stock to their forecasts and production
schedules causes the bullwhip effect. As we move further back up the supply chain then,
more and more of the output is in the form of safety stocks. Reducing the need to forecast
(by agreeing on a future purchase quantity or using CPFR) is one way to reduce the
bullwhip effect.
12. When did the idea and term, supply chain management, first begin to be thought about
and discussed? Which two operations management practices became the origin of
, supply chain management?
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These disciplines not only
have distinct areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-specific knowledge. In this essay,
we will explore the nature of exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
Ans.: The general idea of supply chain management had been discussed for many years
prior to the chain of events shown in Figure 1.1. Back in 1915, Arch W. Shaw of the
Harvard Business School wrote the textbook, Some Problems in Market Distribution,
considered by many to be the first on the topic of what we now refer to as supply chain
management. The text included discussions of how best to purchase raw materials,
transport products, locate facilities, and analyze productivity and waste. According to C.
John Langley, Jr., professor of supply chain management at the Georgia Institute of
Technology, “The idea that companies ought to work together and coordinate activities has
always been around, but ask people today what one of the biggest problems with supply
chains are today, and they say companies don’t work very well together.”
The 1980s were the breakout years for supply chain management. One of the first
widely recorded uses of the term supply chain management came about in a paper
published in 1982. Intense global competition beginning in the 1980s (and continuing
today) provided an incentive for U.S. manufacturers to offer lower-cost, higher-quality
products along with higher levels of customer service. Manufacturers utilized just-in-time
(JIT) and total quality management (TQM) strategies to improve quality, manufacturing
efficiency, and delivery times. In a JIT manufacturing environment with little inventory to
cushion scheduling and/or production problems, firms began to realize the potential
benefits and importance of strategic and cooperative supplier-buyer-customer relationships.
The concept of these partnerships or alliances emerged as manufacturers experimented
with JIT and TQM. These were the origins of SCM.
13. Do you think supply chain management is simply the latest trend in management
thinking and will die out in a few years? Why or why not?
Ans.: This answer will vary because it was not specifically discussed, however,
considering that the ideas of SCM have been around for many, many years makes one think
that the practice is here to stay.
14. How has technology impacted supply chain management?
Ans.: SCM software and e-commerce has aided supply chain integration and aided in the
evolution and adoption of supply chain management. Sharing information with supply
chain partners through the internet has enabled firms to integrate stocking, logistics,
materials acquisition, shipping, and other functions to create a more proactive and effective
style of business management and customer responsiveness
15. What are the four foundation elements of supply chain management? Describe some
activities within each element.
Ans.: The four elements are supply (supply base reduction, supplier alliances, SRM, global
sourcing, ethical and sustainable sourcing), operations (demand management, CPFR,
inventory management, MRP, ERP, lean systems, Six Sigma quality), logistics (logistics
, management, CRM, network design, RFID, global supply chains, sustainability, service
response logistics), and integration (barriers to integration, risk and security management,
performance measurement, green supply chains).
IntroductionExams serve as a fundamental tool in evaluating a student's understanding of a subject, particularly in fields as diverse as business, law, and mathematics. These
disciplines not only have distinct areas of focus but also require unique approaches to assessment, with each exam testing different cognitive abilities, analytical skills, and subject-
specific knowledge. In this essay, we will explore the nature of exams in business, law, and mathematics, their format, and how they evaluate students’ comprehension and
16. Is the use of a large number of suppliers a good idea? Why?
Ans.: This somewhat depends. Certainly SCM suggests fewer suppliers and longer-
term relationships, however there can always be exceptions to this rule. Purchasing a
widely available common product like soap or tissue paper might be better done with a
large number of suppliers competing for this business. But this works against ever creating
trusting and lasting supply chain partnerships. In most cases though, use of a few key
suppliers for an item is considered a good idea, since it means larger supply quantities,
leading to lower prices and better service.
17. Do you think the proper way to choose a supplier is to always find the one that will
give you the lowest price? When might this not be a good idea?
Ans.: Absolutely not. Low price is sometimes fine, if quality or service is not an issue,
as in buying some MRO items. But when quality and service matter, price should only be
one of the purchase criteria.
18. What is supplier management? What are some of the activities of supplier
management?
Ans.: Simply put, this means encouraging or helping the firm’s suppliers to perform in
some desired fashion, and there are a number of ways to do this. This involves assessing
suppliers’ current capabilities and then deciding if and how they need to improve them.
Thus, one of the key activities in supplier management is supplier evaluation, or
determining the current capabilities of suppliers.
19. What is the difference between supply chain management and logistics?
Ans.: Logistics involves only the transportation and distribution functions. SCM
includes logistics as well as production, supply management, and integration of processes.
20. What is demand management and why is this an important part of supply chain
management?
Ans.: Demand management is when management tries to match demand to available
capacity, either by improving production scheduling, curtailing demand, using a back-order
system, or increasing capacity. In a recent survey of supply chain managers, stockouts were
considered the most pressing issue in the use of demand management activities, followed
closely by excess inventories and long lead times.
21. What is the difference between and MRP system and an ERP system?
