OPMA 317 FINAL EXAM REVIEW QUESTIONS WITH
VERIFIED ANSWERS
Supply-chain debrief:
What caused people to act the way they did? and what did this lead to? (2) - Answers -
Lack of communication / cooperation , leading to the guessing of customer demand
which led to arbitrary ordering decisions and the result is the bullwhip effect
long lead time, could've been even longer if the supplier had no inventory
what is the "bullwhip" effect? - Answers - information (orders) going back through the
supply chain is distorted and then amplified
Supply-chain debrief:
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
Supply chain debrief:
what are the business implications of the supply chain structure? (5) (or the bullwhip) -
Answers - - stockouts at times (lost profit and potential goodwill)
- excess inventory at times (holding costs, risk of obsolescence)
- overtime costs (50-100% increase in labour costs)
- layoffs / rehiring costs (match staffing levels to fluctuating demands)
- expediting (rush transportations costs)
(debrief)
Incurring higher prices for the supplier throughout the supply chain will do what? -
Answers - Create a higher price for customers
(debrief)
How can we specifically improve the supply chain? (2) - Answers - 1. Communication &
Cooperation
a) actual consumer demand (IT, avoid lumping constant demand into lot sizes)
b) forecasting (share forecasts, production and distribution schedules, share decision
making too)
2. Shorten lead time
a) admin (ordering) lead time --> IT
b) physical manufacturing ---> just-in-time (very small batches batches = faster
production completion)
c) transportation lead time --> have suppliers geographically close by
,(debrief)
How can we encourage cooperation & communication? (2) - Answers - - incentives to
share information (ex. lower unit cost for actual data)
- Vendor Managed Inventory (VMI)
- lower admin cost for the retailer
- vendor sees actual demand
(debrief)
what are the benefits of on-shoring? (5) - Answers - - reduce logistics cost (improving
environmental performance)
- reduces length of lead times
- reduces the variability of lead times
- easier to identify local needs
- "local jobs"
(debrief)
What if you cannot change the supply chain? (ex the lead time) - Answers - if you
understand the structure, you can adapt and manage, even if you cannot change it ex.
you are inherently aware of the lead time, don't panic
- don't panic - recognize the delays
- systems thinking - before you do anything, analyze how it will impact your supply chain
(debrief)
how can we avoid these supply chain problems? (4) (game lessons) - Answers - 1)
change the supply chain structure if possible
- communication & cooperation
- shorter lead times (admin, manufacturing, distribution)
2) if you cannot change the supply chain structure: adapt! recognize the delays and
predict ordering impacts
3) choose "capable" suppliers (don't focus on cost)
- can they accommodate temporary demand changes (ex fast production, fast delivery)
- are they willing and able to collaborate
4) smooth your supply chain
- promotions (sales), discounts, create "waves of demand"
- "everyday low prices" is ideal for SCM (ex. everyday low with max cap)
what is a supply chain? - Answers - - a network of facilities that procure raw materials,
transform them into intermediate goods and then final products, and deliver products to
customers through a distribution system. it spans procurement, internal transformation,
and distribution.
why do people go globally with suppliers? - Answers - - reduced labour costs
, what are the triple bottom benefits of having a local supplier campus? (3) - Answers - 1)
economic
- lower freight (transportation, logistics) costs
- shorter lead time reduces supply chain uncertainty (inventory levels)
2) environmental
- shorter transportation = reduced carbon footprint
- less inventory = less space required (building, heating, lighting, etc)
3) social
- foreign supplier working conditions likely below U.S. standards
- providing local jobs
what is vertical integration? - Answers - - refers to the proportion of the supply chain that
the company owns
why would a company outsource? - Answers - - saving on fixed assets
- improve effectiveness by focusing on what they do best
- obtain expertise, skills, and technologies
- get access to new markets in new markets
- improve risk management
- flexible (more accommodating)
why would a company choose not to outsource? (or vertically integrate) (5) - Answers - -
"control"
- strategic process
- intellectual property
- "messy" coordination
- critical
how does Zara excel with its supply chain? - Answers - - it spends more $$$ on labour
in-house, because it doesn't outsource, and by having its supplier so close, they save
time and money. it shortens lead time, meaning they can be close and flexible. this "just
in time" approach would not exist if it were dependent on outside controls.
short lead time = small batches (flexible)
they have intense controls, so that is why they are able to replenish every 2 weeks
what is procurement (purchasing)? you got dis - Answers - - purchasing involves buying
services or materials we elect not to develop internally
(even modest reductions in purchasing costs (which are a substantial % of sales) can
lead to substantial pay offs)
selecting a vendor as a supply chain partner should be based on _______________? -
Answers - - many criteria (can be incorporated based on importance)
VERIFIED ANSWERS
Supply-chain debrief:
What caused people to act the way they did? and what did this lead to? (2) - Answers -
Lack of communication / cooperation , leading to the guessing of customer demand
which led to arbitrary ordering decisions and the result is the bullwhip effect
long lead time, could've been even longer if the supplier had no inventory
what is the "bullwhip" effect? - Answers - information (orders) going back through the
supply chain is distorted and then amplified
Supply-chain debrief:
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
Supply chain debrief:
what are the business implications of the supply chain structure? (5) (or the bullwhip) -
Answers - - stockouts at times (lost profit and potential goodwill)
- excess inventory at times (holding costs, risk of obsolescence)
- overtime costs (50-100% increase in labour costs)
- layoffs / rehiring costs (match staffing levels to fluctuating demands)
- expediting (rush transportations costs)
(debrief)
Incurring higher prices for the supplier throughout the supply chain will do what? -
Answers - Create a higher price for customers
(debrief)
How can we specifically improve the supply chain? (2) - Answers - 1. Communication &
Cooperation
a) actual consumer demand (IT, avoid lumping constant demand into lot sizes)
b) forecasting (share forecasts, production and distribution schedules, share decision
making too)
2. Shorten lead time
a) admin (ordering) lead time --> IT
b) physical manufacturing ---> just-in-time (very small batches batches = faster
production completion)
c) transportation lead time --> have suppliers geographically close by
,(debrief)
How can we encourage cooperation & communication? (2) - Answers - - incentives to
share information (ex. lower unit cost for actual data)
- Vendor Managed Inventory (VMI)
- lower admin cost for the retailer
- vendor sees actual demand
(debrief)
what are the benefits of on-shoring? (5) - Answers - - reduce logistics cost (improving
environmental performance)
- reduces length of lead times
- reduces the variability of lead times
- easier to identify local needs
- "local jobs"
(debrief)
What if you cannot change the supply chain? (ex the lead time) - Answers - if you
understand the structure, you can adapt and manage, even if you cannot change it ex.
you are inherently aware of the lead time, don't panic
- don't panic - recognize the delays
- systems thinking - before you do anything, analyze how it will impact your supply chain
(debrief)
how can we avoid these supply chain problems? (4) (game lessons) - Answers - 1)
change the supply chain structure if possible
- communication & cooperation
- shorter lead times (admin, manufacturing, distribution)
2) if you cannot change the supply chain structure: adapt! recognize the delays and
predict ordering impacts
3) choose "capable" suppliers (don't focus on cost)
- can they accommodate temporary demand changes (ex fast production, fast delivery)
- are they willing and able to collaborate
4) smooth your supply chain
- promotions (sales), discounts, create "waves of demand"
- "everyday low prices" is ideal for SCM (ex. everyday low with max cap)
what is a supply chain? - Answers - - a network of facilities that procure raw materials,
transform them into intermediate goods and then final products, and deliver products to
customers through a distribution system. it spans procurement, internal transformation,
and distribution.
why do people go globally with suppliers? - Answers - - reduced labour costs
, what are the triple bottom benefits of having a local supplier campus? (3) - Answers - 1)
economic
- lower freight (transportation, logistics) costs
- shorter lead time reduces supply chain uncertainty (inventory levels)
2) environmental
- shorter transportation = reduced carbon footprint
- less inventory = less space required (building, heating, lighting, etc)
3) social
- foreign supplier working conditions likely below U.S. standards
- providing local jobs
what is vertical integration? - Answers - - refers to the proportion of the supply chain that
the company owns
why would a company outsource? - Answers - - saving on fixed assets
- improve effectiveness by focusing on what they do best
- obtain expertise, skills, and technologies
- get access to new markets in new markets
- improve risk management
- flexible (more accommodating)
why would a company choose not to outsource? (or vertically integrate) (5) - Answers - -
"control"
- strategic process
- intellectual property
- "messy" coordination
- critical
how does Zara excel with its supply chain? - Answers - - it spends more $$$ on labour
in-house, because it doesn't outsource, and by having its supplier so close, they save
time and money. it shortens lead time, meaning they can be close and flexible. this "just
in time" approach would not exist if it were dependent on outside controls.
short lead time = small batches (flexible)
they have intense controls, so that is why they are able to replenish every 2 weeks
what is procurement (purchasing)? you got dis - Answers - - purchasing involves buying
services or materials we elect not to develop internally
(even modest reductions in purchasing costs (which are a substantial % of sales) can
lead to substantial pay offs)
selecting a vendor as a supply chain partner should be based on _______________? -
Answers - - many criteria (can be incorporated based on importance)
