OPMA 317 - FINAL EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026

OPMA 317 - FINAL EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026 Purchase vs Product Order Flow - Answers Upstream vs. Downstream What happens to fluctuations and why? - Answers Fluctuations are amplified due to a time lag Beer Game: What caused people to act the way they did - Answers Lack of communication/cooperation and long lead times Bullwhip Effect - Answers Information going back through the supply chain is distorted and then amplified. Members of the supply chain overreact to changes in demand. How does a long lead time affect decision making? - Answers Panic - when inventory does not instantly arrive and solve your growing backlog, you panic and order even more Business Implications of Supply Chain - Answers Stockouts, excess inventory, overtime costs, layoffs/re-hiring costs, expediting Bullwhip Effect Measure - Answers Bullwhip effect is present if variance of orders/variance of demand is greater than 1 Stanley - Power Tools - Answers Accurately predicted jump in demand pre-Covid and kept their factories open in Mexico How to incentivize cooperation/communication? - Answers Provide incentives to share information. Use vendor managed inventory. Mattel - Answers Collected their own daily demand data in real time by visiting stores Collaborative Planning Forecasting & Replenishment example - Answers Canadian Tire has a 26-week planned order stream that is updated weekly How to shorten lead times - Answers Administrative lead = improve information technology Physical manufacturing lead = just in time production Transportation lead = have suppliers geographically close by (on-shoring) What to do if you cannot change the supply chain structure (ex. SMEs) - Answers Adapt and manage: The Aspirin Rule - once demand changes, don't panic, just correct once Beer Game Learning (3) - Answers Change the supply chain structure (communication & cooperation, shorter lead times). If you can't change the structure, adapt and wait. Choose capable suppliers/the best teammate. Keep a smooth supply chain - Answers Don't offer significant sales/discounts, if you have to, limit the quantity of items that can be bought at discounted prices. Don't do lumpsum orders, order evenly. What is a supply chain? - Answers A network of facilities that procure raw materials (purchasing) and distribute them. Managing inbound procurement and outbound logistics. Supply Chain Network - Answers Suppliers - Manufacturing - Distribution - Customers Why did supply chains extend globally? - Answers To reduce labour costs (now the lowest labour cost is in Ethiopia) Vertical Integration - Answers The proportion of the supply chain that the company owns (make vs. buy) Why would an organization not want to outsource? - Answers Control (strategic process, intellectual property, "messy" coordination). Example, Tesla manufactures their car batteries. Procurement/Purchasing - Answers Are a high % of sales. Involves buying materials not internally developed. Vendor Selection - Answers Based on criteria such as location, quality, sustainability, price, on-time delivery (among others) Vendor Development - Answers Some companies offer free consulting to their vendors to accomplish cost reductions, improved quality etc. Improving suppliers operations improve the entire supply chain. Types of purchasing: (3) - Answers 1. Centralized - HQ orders for everyone 2. Stockless - Supplied delivers material directly to the production area rather than to a stock room 3. Blanket Purchase Orders - Commits to an order amount for a year, then draws down this amount overtime (usually to receive unit discount) Benefits of Blanket Purchase Orders - Answers For retailer: Unit cost savings, lower holding costs (smaller deliveries), lower order costs (things already set up), less supply uncertainty. For manufacturer: Known demand = efficient planning Vendor Managed Inventory: Pros and Cons - Answers Retail Store: Less admin, less stock outs, BUT may result in layoffs Vendor: Knowledge of demand, less stock outs potentially, BUT requires staff, vehicles, and remote technology Supplier Consolidation - Answers Lesson: work closer with fewer suppliers Logistics utilities (3) - Answers Time utility - provides goods when wanted Place utility - provides goods where needed Form utility - goods are in correct form/packaging Green Delivery - Answers Encourage online shoppers to consider impact on environment of rush shipping All inclusive logistics costs (4): - Answers 1. Transportation 2. Inventory (holding) 3. Packaging 4. Damage Intermodal Shipments (same container on boats, trains and trucks) benefits (4): - Answers Convenient Extensive network Optimal cost Increased security Shipment Strategies - Consolidating - Answers Having a distribution center consolidate shipments to retail locations Cross-docking - Answers Remove the intermediate storage step by distributing goods immediately after they are recieved Benefits and requirements of cross-docking (example: Walmart) - Answers Reduces: Product handling, inventory, facility costs Requires: Tight scheduling, extensive IT Shipment Strategy: Drop Shipping - Answers Retailer can tell supplier to drop ship product directly to customer (eliminate retailer step) Logistics Management Strategies: Postponement - Answers Delay supply chain activities to improve flexibility and reduce inventory costs (shortage, holding, etc.) Postponement of Place Utility - Answers Avoid committing inventory down the supply chain as long as possible (hold at warehouse, then distribute to retail store as late as possible) Postponement of Form Utility - Answers Product doesn't take final customized form until later in the supply chain (ex. HP printers with different power boxes) Labeling Postponement - Answers Products completed without labels. This is applicable when a generic product is sold under multiple labels. Packaging Postponement - Answers Products stored without packaging to reduce storage space, and provide flexibility for different package sizes (eg. one battery per package vs 100) Third Party Logistics - Answers Outsourcing some logistics activities to a provider who specializes in the area. Level of logistics (1PL-4PL) - Answers 1PL = Conducts all logistics internally 2PL = Using a carrier to transport freight 3PL = Outsourcing some logistical activities 4PL = Completely outsourcing supply chain, doesn't own logistics assets (ex. Deloitte) Matching Supply Chain Design with Function - Answers Functional/low margin products (ex. toilet paper) focus on cost and efficiency. Innovative products (unpredictable demand ex. technology), focus on supply chain speed and flexibility) What is the most difficult link in the humanitarian supply chain? - Answers Distribution - Infrastructure is often significantly damaged. Coordination - want limited supply chains operating, not 200. The Red Cross has multiple warehouses that hold enough food and other resources for 450,000 people. What is this called? - Answers Pre-positioning resources Differences between commercial and humanitarian supply chains: - Answers 1. Cost not as critical 2. High inventory levels 3. Perishable items expire and need to be replaced 4. Many stakeholders 5. High visibility of performance 6. Job satisfaction Reverse supply chain (ex. Xerox printers, City of Calgary recycling) - Answers The series of activities required to retrieve a product from a customer and either dispose or reuse it (eg. use products/recycling or new products/returns) Product Design & Supply Chain Considerations (7) - Answers 1. Design for manufacturability 2. Shipping and handling considerations 3. Eco-design strategy 4. Modular design flexibility 5. Design to "Target Cost" 6. Compress the design process (concurrent engineering) 7. Formalize for Production (BOM & Routing) Design for Manufacturability - Answers Use less parts, use standard materials and parts of known quality, design to the process capability and set tolerances that won't strain the system, minimize number of distinct components Shipping and Handling - Answers Handling: during production, openings for lifting. Packing/Shipping: how much can you fit on a pallet Eco-Design Strategy - Answers Use low impact materials, consider ecological impact throughout whole process Modular Design Flexibility (security cameras) - Answers The creation of products (goods and services) from some combination of basic, pre-existing subsystems (or modules) (eg. GM had 26 seat frames, where Toyota has 2) Design to Target Cost - Answers Find established selling price (set by market), subtract margin, this = target cost. If target cost isn't feasible, don't make it. Compress the Design Process - Answers Team approach to design (marketing, engineering, accounting and operations work together), instead of linear one group at a time Formalize for Production - Answers When product design is complete, it is then formalized for production purposes. Bill of Materials (components required), and Routing (processing instructions). New Technologies: RFID - Answers Inexpensive "chip tag" attached to items in stores that enables live tracking. This improves inventory visibility/accuracy, and allows us to stock a wider variety of products. New Technologies: 3D Printing - 5 ways it will benefit: - Answers Uses additive manufacturing products to build 3D objects layer upon layer Can help to decentralize production, drive product customization, reduce complexity and improve time to market, improve resource efficiency, rationalize inventory and logistics. New Technologies: Blockchain (P2P networks). Block chain has high value of trust and automation. - Answers Provides all partners in a transaction with a secure, distributed ledger that has up to date info. Increases transparency, provides proof. Best to Worst Case Scenario of Poor Quality (5) - Answers High transformation costs (scrap/rework) High warranty costs (returns/repairs) Loss of sales (short term) Loss of reputation (long term) Lawsuits Quality Management Process Overview - Answers Alarm Bell - Investigate - Prevent Quality Costs - Answers Control Costs: Prevention (Failsafing, training). Appraisal costs (labour, equipment inspection). Failure Costs: Internal (rework, downtime/scrap), External (returns, warranty, lawsuits) Proactive approach to improving quality: - Answers Appraisal (ex. impaired driving checkstops) - quality goes up, costs go down. Prevention (anti-drinking campaign) - quality goes up, costs go down Failsafing (ex. Nuclear War, Self-Destructing Syringe, SafeSaw/Poka-Yoke) - Answers Creating a control condition where the customer or employee can only take the correct action while performing the process Prevention Strategies - Answers Checklists: effective and efficient, formalize lessons learned, share best practices, improvement is immediate and significant Six Sigma - Answers Reduce process variation to the point where only 3.4 defects per million are produced. Six Sigma Black Belt Certification is to lead process improvement project/teams. Six Sigma Methodologies - Answers DMAIC - Define, Measure, Analyze, Improve, Control PDCA Cycle (Continuous Improvement) - Answers Plan, Do, Check, Act