Small Tutorial
Exercise 1 International Business Administration (2021-2022)
Global Supply Chain Management
1. Should the members of a supply chain maximize individual profits in order to raise
the overall supply chain surplus?
The supply chain surplus consists of the consumer value minus the supply chain costs. The
consumer value is of a certain height which won’t go up. Thus the costs should be lowered
to raise the surplus. If the individual profits are maximized by minimizing their individual
costs, then they raise the overall supply chain surplus. However, if they maximize their
profits by increasing their turnover by increasing their price, then they won’t raise the
overall surplus. Can even have a detrimental effect, because costs can go up
suboptimization is not a good idea.
2. What are some strategic planning and operational decisions that must be made by
H&M, a Swedish apparel retailer?
Strategic planning: Inventory policies/subcontracting
Operational decisions: Set delivery schedules/Allocate orders to inventory or production
3. Consider the supply chain involved when a customer purchases a book at a bookstore.
Identify cycles in this supply chain and the location of the push/pull boundary.
Procurement cycle Manufacturing cycle Replenishment cycle Customer order cycle
Location boundary: In between the replenishment and customer order cycle.
4. Consider the supply chain involved when a customer orders a book from Amazon.
Identify the push/pull boundary and two processes each in the push and pull phases.
Location boundary: In between the replenishment and customer order cycle.
Processes push: inventory is replenished, production of products
Processes pull: supplying customer orders
5. In what way do supply chain flows affect the success or failure of a firm like
Amazon? List two supply chain decisions that have a significant impact on supply
chain profitability.
- Whether something will be outsourced or performed in-house.
- The location and capacities of warehouse facilities.
6. How would you characterize the competitive strategy of the Swedish furniture retailer
IKEA? What are the key customer needs that IKEA aims to satisfy?
Exercise 1 International Business Administration (2021-2022)
Global Supply Chain Management
1. Should the members of a supply chain maximize individual profits in order to raise
the overall supply chain surplus?
The supply chain surplus consists of the consumer value minus the supply chain costs. The
consumer value is of a certain height which won’t go up. Thus the costs should be lowered
to raise the surplus. If the individual profits are maximized by minimizing their individual
costs, then they raise the overall supply chain surplus. However, if they maximize their
profits by increasing their turnover by increasing their price, then they won’t raise the
overall surplus. Can even have a detrimental effect, because costs can go up
suboptimization is not a good idea.
2. What are some strategic planning and operational decisions that must be made by
H&M, a Swedish apparel retailer?
Strategic planning: Inventory policies/subcontracting
Operational decisions: Set delivery schedules/Allocate orders to inventory or production
3. Consider the supply chain involved when a customer purchases a book at a bookstore.
Identify cycles in this supply chain and the location of the push/pull boundary.
Procurement cycle Manufacturing cycle Replenishment cycle Customer order cycle
Location boundary: In between the replenishment and customer order cycle.
4. Consider the supply chain involved when a customer orders a book from Amazon.
Identify the push/pull boundary and two processes each in the push and pull phases.
Location boundary: In between the replenishment and customer order cycle.
Processes push: inventory is replenished, production of products
Processes pull: supplying customer orders
5. In what way do supply chain flows affect the success or failure of a firm like
Amazon? List two supply chain decisions that have a significant impact on supply
chain profitability.
- Whether something will be outsourced or performed in-house.
- The location and capacities of warehouse facilities.
6. How would you characterize the competitive strategy of the Swedish furniture retailer
IKEA? What are the key customer needs that IKEA aims to satisfy?
