SCH4801
Assignment 2
(COMPLETE
ANSWERS) 2025
- DUE 30 June
2025
No plagiarism
[Pick the date]
[Type the company name]
, Course
Supply Chain Management (SCH4801)
Book
Supply Chain Management
This document contains workings, explanations and solutions to the
SCH4801 Assignment 2 (QUALITY ANSWERS) 2025
QUESTION 1 QUESTIONS 31 MARKS Section A (question 1) consists of short
essay-type questions. Please note that the questions are based on the case
study – Toyota South Africa's Supply Chain Challenges: A Case Study in
Disruption and Resilience. Please use the underlined words for each of your
report's three (3) questions as sub-headings. Also, number your answers, for
example, 1.1, 1.2, up to 1.3. Also, remember to link your answer to Toyota
South Africa's Supply Chain Challenges: A Case Study in Disruption and
Resilience. Very important: When referring to Toyota, please note that you
cannot just provide the sentences from the case study. Your answers should
not contain replication from the case study but rather demonstrate your own
insight, analysing the information and explaining its relevance to the
discussion. This applies to all the questions. Also, all answers should be
based on the prescribed book's content and no other sources. 1.1 Inventory-
related decisions: Procurement managers at Toyota might, in future, only
source 40% from local suppliers and 60% from global suppliers, which might
impact their inventory decisions. To balance efficiency and responsiveness,
evaluate any three key inventory categories relevant to Toyota with possible
trade-offs for each. [9]
Question 1.1 using the prescribed style, based on the Toyota South Africa Supply Chain case
study, while applying insights from prescribed supply chain theory and avoiding direct copying
from the case:
1.1 Inventory-related decisions
In light of Toyota South Africa’s shift toward sourcing 40% of components locally and 60%
globally, inventory-related decisions become critical in balancing efficiency (cost, space, flow)
and responsiveness (flexibility, speed, risk mitigation). The three key inventory categories
relevant to Toyota are cycle inventory, safety inventory, and pipeline inventory.
1.1.1 Cycle Inventory
, Cycle inventory refers to the average amount of stock held to meet regular demand between
replenishment cycles. For Toyota, maintaining optimal cycle inventory ensures stable production
without overstocking. However, with increased reliance on global suppliers (60%), the
replenishment lead time becomes longer and more variable. The trade-off here involves holding
more inventory to avoid production delays (lower efficiency, higher holding cost) versus
ordering in smaller batches to reduce storage costs (but increasing the risk of stockouts and setup
costs). Toyota must re-evaluate its Economic Order Quantity (EOQ) models to strike a balance
between cost savings and operational continuity.
1.1.2 Safety Inventory
Safety inventory cushions against uncertainty in supply and demand. Toyota’s experience with
severe disruptions (e.g., floods and port delays) has highlighted the importance of this buffer.
Increased global sourcing means higher risk of transport delays, political instability, and
currency fluctuations. While high safety stock levels increase responsiveness and reduce the risk
of line stoppages, they also raise inventory carrying costs and reduce overall efficiency. Toyota
must therefore assess which components are most vulnerable and critical, and selectively apply
higher safety stock policies to them, rather than across all inventory.
1.1.3 Pipeline Inventory
Pipeline inventory includes items that are in transit between suppliers and Toyota’s production
facilities. With global sourcing dominating at 60%, pipeline inventory levels are expected to rise.
Longer transit times from overseas suppliers increase the volume of goods "on the water," tying
up working capital and increasing exposure to risk (e.g., customs delays or port congestion). The
trade-off is between lean inventory flow and the responsiveness needed to handle unpredictable
delays. Toyota may consider strategies like nearshoring certain suppliers or using air freight for
high-value or time-sensitive components to reduce pipeline inventory lead times.
In summary, Toyota must make careful inventory decisions by understanding the impact of its
local-versus-global sourcing model on cycle, safety, and pipeline inventory. This will involve
developing risk-informed policies that consider both cost efficiency and the ability to respond
rapidly to disruptions.
Toyota South Africa's proposed shift to sourcing 40% from local suppliers and 60% from global
suppliers will significantly influence its inventory-related decisions. This change necessitates a
careful balancing act between supply chain efficiency (cost reduction) and responsiveness
(ability to meet demand quickly and adapt to disruptions). Below are three key inventory
categories relevant to Toyota and their possible trade-offs:
1.1 Raw Materials and Components Inventory This category includes all the basic inputs and
sub-assemblies required for vehicle production, such as steel, plastics, electronic components
Assignment 2
(COMPLETE
ANSWERS) 2025
- DUE 30 June
2025
No plagiarism
[Pick the date]
[Type the company name]
, Course
Supply Chain Management (SCH4801)
Book
Supply Chain Management
This document contains workings, explanations and solutions to the
SCH4801 Assignment 2 (QUALITY ANSWERS) 2025
QUESTION 1 QUESTIONS 31 MARKS Section A (question 1) consists of short
essay-type questions. Please note that the questions are based on the case
study – Toyota South Africa's Supply Chain Challenges: A Case Study in
Disruption and Resilience. Please use the underlined words for each of your
report's three (3) questions as sub-headings. Also, number your answers, for
example, 1.1, 1.2, up to 1.3. Also, remember to link your answer to Toyota
South Africa's Supply Chain Challenges: A Case Study in Disruption and
Resilience. Very important: When referring to Toyota, please note that you
cannot just provide the sentences from the case study. Your answers should
not contain replication from the case study but rather demonstrate your own
insight, analysing the information and explaining its relevance to the
discussion. This applies to all the questions. Also, all answers should be
based on the prescribed book's content and no other sources. 1.1 Inventory-
related decisions: Procurement managers at Toyota might, in future, only
source 40% from local suppliers and 60% from global suppliers, which might
impact their inventory decisions. To balance efficiency and responsiveness,
evaluate any three key inventory categories relevant to Toyota with possible
trade-offs for each. [9]
Question 1.1 using the prescribed style, based on the Toyota South Africa Supply Chain case
study, while applying insights from prescribed supply chain theory and avoiding direct copying
from the case:
1.1 Inventory-related decisions
In light of Toyota South Africa’s shift toward sourcing 40% of components locally and 60%
globally, inventory-related decisions become critical in balancing efficiency (cost, space, flow)
and responsiveness (flexibility, speed, risk mitigation). The three key inventory categories
relevant to Toyota are cycle inventory, safety inventory, and pipeline inventory.
1.1.1 Cycle Inventory
, Cycle inventory refers to the average amount of stock held to meet regular demand between
replenishment cycles. For Toyota, maintaining optimal cycle inventory ensures stable production
without overstocking. However, with increased reliance on global suppliers (60%), the
replenishment lead time becomes longer and more variable. The trade-off here involves holding
more inventory to avoid production delays (lower efficiency, higher holding cost) versus
ordering in smaller batches to reduce storage costs (but increasing the risk of stockouts and setup
costs). Toyota must re-evaluate its Economic Order Quantity (EOQ) models to strike a balance
between cost savings and operational continuity.
1.1.2 Safety Inventory
Safety inventory cushions against uncertainty in supply and demand. Toyota’s experience with
severe disruptions (e.g., floods and port delays) has highlighted the importance of this buffer.
Increased global sourcing means higher risk of transport delays, political instability, and
currency fluctuations. While high safety stock levels increase responsiveness and reduce the risk
of line stoppages, they also raise inventory carrying costs and reduce overall efficiency. Toyota
must therefore assess which components are most vulnerable and critical, and selectively apply
higher safety stock policies to them, rather than across all inventory.
1.1.3 Pipeline Inventory
Pipeline inventory includes items that are in transit between suppliers and Toyota’s production
facilities. With global sourcing dominating at 60%, pipeline inventory levels are expected to rise.
Longer transit times from overseas suppliers increase the volume of goods "on the water," tying
up working capital and increasing exposure to risk (e.g., customs delays or port congestion). The
trade-off is between lean inventory flow and the responsiveness needed to handle unpredictable
delays. Toyota may consider strategies like nearshoring certain suppliers or using air freight for
high-value or time-sensitive components to reduce pipeline inventory lead times.
In summary, Toyota must make careful inventory decisions by understanding the impact of its
local-versus-global sourcing model on cycle, safety, and pipeline inventory. This will involve
developing risk-informed policies that consider both cost efficiency and the ability to respond
rapidly to disruptions.
Toyota South Africa's proposed shift to sourcing 40% from local suppliers and 60% from global
suppliers will significantly influence its inventory-related decisions. This change necessitates a
careful balancing act between supply chain efficiency (cost reduction) and responsiveness
(ability to meet demand quickly and adapt to disruptions). Below are three key inventory
categories relevant to Toyota and their possible trade-offs:
1.1 Raw Materials and Components Inventory This category includes all the basic inputs and
sub-assemblies required for vehicle production, such as steel, plastics, electronic components
