OPMA 317 - Final Exam || All Answered Correctly.
Purchase vs Product Order Flow correct answers Upstream vs. Downstream
What happens to fluctuations and why? correct answers Fluctuations are amplified due to a time
lag
Beer Game: What caused people to act the way they did correct answers Lack of
communication/cooperation and long lead times
Bullwhip Effect correct 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? correct answers Panic - when inventory does
not instantly arrive and solve your growing backlog, you panic and order even more
Business Implications of Supply Chain correct answers Stockouts, excess inventory, overtime
costs, layoffs/re-hiring costs, expediting
Bullwhip Effect Measure correct answers Bullwhip effect is present if variance of
orders/variance of demand is greater than 1
Stanley - Power Tools correct answers Accurately predicted jump in demand pre-Covid and kept
their factories open in Mexico
How to incentivize cooperation/communication? correct answers Provide incentives to share
information. Use vendor managed inventory.
Mattel correct answers Collected their own daily demand data in real time by visiting stores
Collaborative Planning Forecasting & Replenishment example correct answers Canadian Tire
has a 26-week planned order stream that is updated weekly
How to shorten lead times correct 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) correct answers Adapt
and manage: The Aspirin Rule - once demand changes, don't panic, just correct once
Beer Game Learning (3) correct 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 correct 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? correct answers A network of facilities that procure raw materials
(purchasing) and distribute them. Managing inbound procurement and outbound logistics.
Supply Chain Network correct answers Suppliers -> Manufacturing -> Distribution -> Customers
Why did supply chains extend globally? correct answers To reduce labour costs (now the lowest
labour cost is in Ethiopia)
Vertical Integration correct answers The proportion of the supply chain that the company owns
(make vs. buy)
Why would an organization not want to outsource? correct answers Control (strategic process,
intellectual property, "messy" coordination). Example, Tesla manufactures their car batteries.
Procurement/Purchasing correct answers Are a high % of sales. Involves buying materials not
internally developed.
Vendor Selection correct answers Based on criteria such as location, quality, sustainability, price,
on-time delivery (among others)
Vendor Development correct 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) correct 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 correct 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 correct 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 correct answers Lesson: work closer with fewer suppliers
Purchase vs Product Order Flow correct answers Upstream vs. Downstream
What happens to fluctuations and why? correct answers Fluctuations are amplified due to a time
lag
Beer Game: What caused people to act the way they did correct answers Lack of
communication/cooperation and long lead times
Bullwhip Effect correct 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? correct answers Panic - when inventory does
not instantly arrive and solve your growing backlog, you panic and order even more
Business Implications of Supply Chain correct answers Stockouts, excess inventory, overtime
costs, layoffs/re-hiring costs, expediting
Bullwhip Effect Measure correct answers Bullwhip effect is present if variance of
orders/variance of demand is greater than 1
Stanley - Power Tools correct answers Accurately predicted jump in demand pre-Covid and kept
their factories open in Mexico
How to incentivize cooperation/communication? correct answers Provide incentives to share
information. Use vendor managed inventory.
Mattel correct answers Collected their own daily demand data in real time by visiting stores
Collaborative Planning Forecasting & Replenishment example correct answers Canadian Tire
has a 26-week planned order stream that is updated weekly
How to shorten lead times correct 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) correct answers Adapt
and manage: The Aspirin Rule - once demand changes, don't panic, just correct once
Beer Game Learning (3) correct 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 correct 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? correct answers A network of facilities that procure raw materials
(purchasing) and distribute them. Managing inbound procurement and outbound logistics.
Supply Chain Network correct answers Suppliers -> Manufacturing -> Distribution -> Customers
Why did supply chains extend globally? correct answers To reduce labour costs (now the lowest
labour cost is in Ethiopia)
Vertical Integration correct answers The proportion of the supply chain that the company owns
(make vs. buy)
Why would an organization not want to outsource? correct answers Control (strategic process,
intellectual property, "messy" coordination). Example, Tesla manufactures their car batteries.
Procurement/Purchasing correct answers Are a high % of sales. Involves buying materials not
internally developed.
Vendor Selection correct answers Based on criteria such as location, quality, sustainability, price,
on-time delivery (among others)
Vendor Development correct 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) correct 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 correct 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 correct 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 correct answers Lesson: work closer with fewer suppliers
