SCH4801 ASSIGNMENT 2 2025 SEMESTER 1. SECTION A 2 1.1 Inventory-related decisions 2 1.2 Production strategies 5 Toyota supply chain 9 1.3b) Based on Toyota’s supply chain presented in 1.3a, distinguish between each role player by providing a relevant exa

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Table of Contents
SECTION A .............................................................................................................. 3

1.1 Inventory-related decisions ............................................................................. 3

1.2 Production strategies ...................................................................................... 6

Toyota supply chain ............................................................................................ 10

1.3b) Based on Toyota’s supply chain presented in 1.3a, distinguish between each role
player by providing a relevant example from the case study. (6) .............................. 11

SECTION B ............................................................................................................ 13

SECTION C ............................................................................................................ 14

3.1 Gilbeys Wineries and ABC Inventory Analysis for Independent Finished Goods .. 14

3.2 The Bullwhip Effect on Dairy Belle Cheese and Butter Supply Chain .................. 16

3.3 Methods for Determining Customer Needs for ET Clothing Distributors ............. 17

References ............................................................................................................ 20




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SECTION A

1.1 Inventory-related decisions

Procurement managers at Toyota are considering a future sourcing strategy of 40% from
local suppliers and 60% from global suppliers, which will significantly impact their
inventory decisions. To balance efficiency and responsiveness, evaluating three key
inventory categories relevant to Toyota and their potential trade-offs is crucial. Toyota's
current operations already involve sourcing raw materials and components, assembling
vehicles, and distributing finished products, implying the existence of these inventory
categories within their value chain.

Raw Materials and Components:

Raw materials and components are the inputs required for vehicle production, such as
brake pedals, catalytic converters, fuel tanks, shift lever knobs, and rear seat assembly
locks according to Ambe (2014). For Toyota, this category is vital as disruptions here
directly halt production.

o Efficiency Considerations: Sourcing 60% of components globally may
offer cost efficiencies through economies of scale and access to a wider
pool of competitive suppliers. However, managing inventory for a larger
proportion of globally sourced materials introduces challenges. To
maintain efficiency, Toyota would aim for lower inventory levels of these
raw materials to reduce holding costs and capital tied up. This is aligned
with Toyota's focus on eliminating waste and maintaining high efficiency
through 'The Toyota Production System' (TPS).

o Responsiveness Considerations: The 60% global sourcing strategy
introduces longer lead times and potentially higher uncertainties due to
greater distances and logistical complexities. To maintain responsiveness
to production demands, Toyota might need to increase buffer or safety
stock for these global components to mitigate risks of supply disruptions,
as experienced in 2019 due to a strike at a local supplier. While local


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