Solutions for Managing Operations Across the Supply Chain, 15th Edition by Morgan Swink.pdf

2. TobwhatbextentbisbDinsmore’sbhotelbabqualitybestablishment?

Thebbestbapproachbherebisbtoblistbthebvariousbproblemsbandbfrustrationsbencounteredbbybthebautho

rbbeginningbwithbthebarrival.bItbisbimportantbthatbthebstudentsbunderstandbthatbthesebarebexamplesb

ofbmomentsbofbtruthb–beventsbthatbaffectbhowbthebcustomerbperceivesbthebcompany:

• Thebdoormanbwillbnotbhelpbthebauthorbgobfrombhisbcarbtobtheblobby;binformsbthebauthorbt

hatbhebcouldbonlybleavebthebcarbforb10bminutesbbeforebitbwasbtowed.

• Authorbretrievesbluggagebwithoutbanybhelpbfrombthebdoormanb(exceptbforbhimblendingbt

hebauthorbanbumbrella).

• Nobonebseemsbtobgreatbthebauthorbwhenbhebgetsbtobthebdeskb(theybwerebtalkingbwithbeachbo

ther).

• Nobonebcanbfindbhisbreservationb(that’sbokaybbecausebtherebareblotsbofbextrabrooms).

• Takesbthreebringsbbeforebabbellhopbcomesbtobhelp

• Roombwasbnotbmadebup.

• Dinsmore’sbofficebisbcluttered.

• Onebofbthebelevatorsbwasbnotbworking.

• SecretarybrefersbtobDinsmorebasbElmerb(showsbunacceptablebinformality).

• Readbbookbwhilebauthorbwaits.

• Offersbcoffeebwithbthebwarningbthatbthebhotelbcoffeebwasbbad.

• Nobsympathybforbthebfactbthatbthebauthorbwasbwetbbecausebthebroombwasbnotbmadebup.

• Dinsmorebpoorlybdressed.
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LLC.

, • Magazine/newspaperbstandb–bpoor.

3. WhatbdobyoubthinkbofbDinsmore’sbhandlingbofbthebdisputebinvolvingbthebvacuumb

cleaners?

• Dinsmorebdidbeverythingbwrong:

• Hebjumpsbintobthebdiscussionbwithoutbhavingballbofbthebfacts.

• Heboverridesbthebauthoritybofbhisbheadbhousekeeper.

• Hisbsolutionbattemptsbthebsymptomb(theblackbofbvacuumbcleaners),bnotbthebrootbcauseb(
hallwaysbarebnotbclean).

4. WhatbwouldbyoubrecommendbtobDinsmorebaboutbthebmanagerbofbthebrestaurant?

• Keepbhim;bthebrestaurantbisbthebonlybpartbofbthebhotelbthatbisbdoingbabgreatbjob.

5. Ifbyoubwerebhiredbasbabconsultantbbybthebownersbofbthisbhotel,bwhatbwouldbyoubdo?

Why?

• Beforebmakingbanybrecommendations,bmakebsurebyoubreallybunderstandbwhybDinsmoreb
didbwhatbhebdid.bForbexample,bifbDinsmorebwasbtoldbtobreducebcosts,bthenbhisbactionsbma
kebsense.

• Listbthebobservationsbregardingbthebpoorbqualitybofbthebhotel.

• Recommendbthatbabnewbmanagerbbebbroughtbin.bEvenbifbDinsmorebisbnotbtobblame,bhebisbs
tillbresponsiblebforbwhatbisbgoingbonbinbthebhotel.bHebmustbbebfiredbtobsignalbtobeveryoneb
withinbthebhotelbthatbabsignificantbchangebisbnowbtakingbplace.

• Abtotalbplanbforbimprovingbqualitybatbthebhotelbmustbbebdevelopedbandbimplemented.

Chapterb07bMan
agingbInventories

SuggestedbAnswersbtobDiscussionbQuestions

1. Whybdobsomebexecutivesbbelievebthatbinventorybisb“bad”?bExplainbwhybthisbthinkingbisbincorrect.




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©bMcGrawbHillbLLC.bAllbrightsbreserved.bNobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGrawbHillb
LLC.

,Somebexecutivesbthinkbthatbinventorybisb“bad”bbecausebinventorybhasbabsignificantbfinancialbimpactbonb

anborganization.bFrombthebstandpointbofbfinancialbaccounting,binventorybrepresentsbbothbanbassetbon

thebbalancebsheetbasbwellbasbabcostbthatbimpactsbthebprofitabilitybofbanybfirm.bHowever,binventorybplaysb

manybsignificantbrolesbinbanborganizationbandbfailurebtobhavebinventorybinbstockbalsobresultsbinbcost,bsuch

asblostbsalesband,bpotentially,blostbcustomersbduebtobdissatisfaction.bOr,babproductionbplantbwhichbhasbn
b




obinventorybofbneededbcomponentsbmaybhavebtobshutbdown,bresultingbinbsignificantbexpense.


2. Explainbthebdifferentbtypesbofbcostsbrelatedbtobinventorybplanning.


Thebdifferentbtypesbofbcostsbrelatedbtobinventorybplanningbarebproductbcosts,bcarryingbcosts,borderband

setupbcosts,bandbstockoutbcosts.bProductbcostbisbthebamountbpaidbtobsuppliersbforbthebproductsbthatbar
b




ebpurchased.bCarryingbcostsbarebthebcostsbofbholdingbinventorybsuchbasbstoragebspace,binsurance,bcostsb

ofbobsolescencebandbloss,bcostsbofbmaterialbhandling,btrackingbandbmanagement.bOrderbcostbisbabcostba

ssociatedbwithbreplenishingbinventories.bSetupbcostbincludesbadministrationbexpenses,bexpensesbofbch

angingboverborbrearrangingbabworkbcenterbtobgetbitbreadybtobproducebanbitem.bStockoutbcostbis

incurredbwhenbabcompanybdoesbnotbhavebinventorybavailablebtobmeetbdemand.


3. Explainbthebtradeoffsbinvolvedbinbthebeconomicborderbquantity.bHowbdobthesebchangebwhe

nbquantitybdiscountsbarebconsidered?


Thebtradeoffsbinvolvedbinbthebeconomicborderbquantitybareborderingbcostsbandbinventorybcarryingbcosts.

Ifbabcompanybordersbmoreboftenbwithbfewerbproductsbperborder,btheybincurbmoreborderingbcostsband


fewerbcarryingbcosts.bIfbthebcompanybordersbfewerbitemsbbutbmorebproductsbperborder,btheybincurbmore

inventorybcarryingbcostsbandbfewerborderingbcosts.bThebproductbpricebisbnotbcriticalbinbthebbasicbmodel
b




.bWhenbquantitybdiscountsbarebconsidered,bproductbpricebmustbalsobbebconsideredbsincebdifferentbord

erbquantitiesbhavebdifferentbprices.


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©bMcGrawbHillbLLC.bAllbrightsbreserved.bNobreproductionborbdistributionbwithoutbthebpriorbwrittenbconsentbofbMcGrawbHillb
LLC.

, 4. Whybdoesbtotalbsystembinventorybincreasebasbabcompanybincreasesbitsbnumberbofbstockin

gblocations?


Thebvariationbinbdemandbthatbeachblocationbwillbfacebindividuallybisbgreaterbthanbthebvariationbin

demandbthatbisbfacedbbybservingbthebentirebcountrybfrombabsingleblocation.bThisboccursbbecausebfrombabsi

ngleblocation,bsomebofbthebvariationsbinbdemandbthatbexistbacrossbdifferentbmarketsbarebpartiallyboffsetbby

onebanother.bIncreasingbthebnumberbofblocationsbmeansbthatbthisboffsettingbdoesbnotboccur.bThus,
b




whilebthebtwoblocationsbwillbeachbcarrybsafetybstockbthatbisblessbthanbrequiredbbybabsingleblocation,bth

ebtotalbsafetybstockbcarriedbbybthebfirmbwillbhavebtobbebincreasedbtobprovidebthebsamebprotectionbagain

stbstockouts.


5. Earlybinbthebchapterbitbwasbstatedbthatbplanningbinventoryblevelsbisbbothbanbartbandbabscience.

Explainbinbyourbownbwordsbwhybthisbisbtrue.


Thisbisbtruebbecausebtherebarebmanybquantitativeborb“scientific”bplanningbmodelsbthatbhavebbeenbdevelop

edbtobaidbinbmakingbinventorybdecisions.bHowever,bconsiderablebjudgmentbstillbmustbbebexercised.bForbe

xample,bthebdecisionbconcerningbthebappropriateblevelbofbsafetybstockbrequires

judgmentbaboutbcustomerbreactionbtobstockouts,borbatbleastbsomebestimatesbofbthebcostbofbabstockout.bTh

esebdecisionsbarebnotbasblikelybtobbebmadebwithb“hard”bquantitativebinformation.


6. AbfirmbisbpresentlybusingbthebbasicbEOQbmodelbandbisbconsideringbswitchingbtobthebproductio

nborderbquantitybmodelb(i.e.,breceivingbgradualbdeliveriesboverbtime).bIfballbthebcostbandbdemandb

parametersbstaybthebsame,bwhatbchangesbshouldbthebfirmbexpect?


Thebfirmbshouldbexpectbdecreasedbinventorybcarryingbcosts.bSincebthebordersbwillbbebfilledbgradually,bitbw

illbsellbabportionbofbwhatbisbreceivedbinbstockbbeforebitbreceivesbthebnextbpartbofbtheborder.bTherefore,bitbwil

lbhavebtobstoreblessbinventorybandbincurblessbcarryingbcostbwhilebnotbincreasingbtheborderingbcosts.


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LLC.