Supply Chain Management, 5e (Chopra/Meindl) Chapter 9 Sales and Operations Planning: Planning Supply and Demand in a Supply Chain
9.1 True/False Questions 1) Predictable variability is change in demand that cannot be forecasted. Answer FA!"# $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting +) Faced with %redictable variability of demand, a com%any-s goal is to res%ond in a manner that maimies %rofitability. %rofitability. Answer T&0# $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting ) The advantage of carrying enough manufacturing ca%acity to meet demand in any %eriod is very low inventory costs, because no inventory needs to be carried from %eriod to %eriod. Answer T&0# $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting 4) The disadvantage of carrying enough manufacturing ca%acity to meet demand in any %eriod is that much of the e%ensive ca%acity would go unused during most months when demand was lower. Answer T&0# $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting 5) The advantage of building u% inventory during the off season to 3ee% %roduction stable year round lies in the fact that a firm could get by with a smaller, more e%ensive factory. Answer FA!"# $iff + To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting
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;) The disadvantage of building u% inventory during the off season to 3ee% %roduction stable year round is the e%ensive ca%acity that would go unused during most months when demand was lower. Answer FA!"# $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting <) An a%%roach where a firm wor3s with their retail %artners in the su%%ly chain to offer a %rice %romotion during %eriods of low demand would shift some of the demand into a slow %eriod, thereby s%reading demand more evenly throughout the year and reducing the seasonal surge. Answer T&0# $iff + To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting =) >ith >ith su%%ly and demand management decisions being made inde%endently inde%enden tly,, it is easier to coordinate the su%%ly chain, thereby increasing %rofit. Answer FA!"# $iff + To%ic 9.1 &es%onding to Predictable 'ariability 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting 9) A firm can vary su%%ly su%% ly of %roduct by b y controlling %roduction ca%acity and inventory. Answer T&0# $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 18) A firm that uses fleible wor3 hours from the wor3force to manage ca%acity to better meet demand is using a seasonal wor3force. Answer FA!"# $iff + To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 11) "cheduling the wor3force so that the available ca%acity better matches demand is using time fleibility from the wor3force. Answer T&0# $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design
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1+) The use of a %art6time wor3force to increase the ca%acity fleibility by enabling the firm to have more %eo%le at wor3 during %ea3 %eriods is designing %roduct fleibility into the %roduction %rocesses. Answer FA!"# $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 1) A firm that uses a tem%orary wor3force during the %ea3 season to increase ca%acity to match demand is using a seasonal wor3force. Answer T&0# $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 14) The use of dual facilities to manage ca%acity may be hard to sustain if the labor mar3et is tight. Answer FA!"# $iff To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 15) A firm that %urchases %ea3 %roduction ca%ability from other com%anies so that internal %roduction remains level and can be done chea%ly is using subcontracting. Answer T&0# $iff 1 To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 1;) A firm that builds dedicated facilities to %roduce a relatively stable out%ut of %roducts over time in a very efficient manner and %urchases % ea3 %roduction ca%ability from other com%anies is using subcontracting. Answer FA!"# $iff To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 1<) A firm that has %roduction lines whose %roduction rate can easily be varied to match demand has designed %roduct fleibility into the %roduction %rocesses. Answer T&0# $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design
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1=) The use of a seasonal wor3force re@uires that the wor3force be multi6s3illed and easily ada%t to being moved from line to line. Answer T&0# $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 19) %erations usually ma3e the %romotion and %ricing decisions. Answer FA!"# $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +8) ?aimiing revenue is ty%ically the ob*ective when mar3eting and sales ma3e the %romotion and %ricing decisions. Answer T&0# $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +1) Pricing decisions based only on revenue considerations often result in an increase in o verall %rofitability. Answer FA!"# $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design ++) >hen %erforming aggregate %lanning, the goal of all firms in the su%%ly chain should be to maimie individual firm %rofits. Answer FA!"# $iff + To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design +) $etermining how %rofits will be allocated to different members of the su%%ly chain is a 3ey to successful collaboration. Answer T&0# $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design
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+4) n general, as the fraction of increased demand coming from forward buying grows, offering the %romotion during the %ea3 demand %eriod becomes more attractive. Answer FA!"# $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +5) ffering a %romotion during a %ea3 %eriod that has significant forward buying creates even more variable demand than before the %romotion. Answer T&0# $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +;) Average inventory decreases if a %romotion is run during the %ea3 %eriod and increases if the %romotion is run during the off6%ea3 %eriod. Answer FA!"# $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +<) Promoting during a %ea3 demand month may decrease overall %rofitability if a significant fraction of the demand increase results from a forward buy. Answer T&0# $iff To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design +=) As forward buying becomes a smaller fraction of the demand increase from a %romotion, it is less %rofitable to %romote during the %ea3 %eriod. Answer FA!"# $iff To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +9) As the %roduct margin declines, %romoting during the %ea3 demand %eriod becomes less %rofitable. Answer T&0# $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design
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8) >hen faced with seasonal demand, a firm should use a combination of %ricing to manage demand) and %roduction and inventory to manage su%%ly) to im%rove %rofitability. Answer T&0# $iff + To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 9.+ ?ulti%le (hoice Questions 1) Predictable variability is A) change in demand that can be forecasted. 2) change in demand that cannot be forecasted. () change in demand that has been %lanned. $) change in demand that has been scheduled. #) all of the above Answer A $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting +) >hich of the following is not a %roblem caused by %roducts e%eriencing %redictable variability of demandB A) :igh levels of stoc3outs during %ea3 demand 2) :igh levels of ecess inventory during %eriods of low demand () ncreased res%onsiveness of the su%%ly chain $) ncreased costs in the su%%ly chain #) $ecreased res%onsiveness of the su%%ly chain Answer ( $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting ) A firm can handle %redictable variability by managing A) su%%ly using ca%acity, inventory, trade %romotions, and bac3logs. 2) su%%ly using ca%acity, inventory, subcontracting, and bac3logs. () demand using short6term %rice discounts and trade %romotions. $) A and ( only #) 2 and ( only Answer # $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting
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4) "easonal demand can be met by A) maintaining enough manufacturing ca%acity to meet demand in any %eriod. 2) building u% inventory during the off season to meet demand during %ea3 seasons. () offering a %rice %romotion during %eriods of low demand to shift some of the demand into a slow %eriod. $) all of the above #) A and 2 only Answer $ $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting 5) The advantage of maintaining enough manufacturing ca%acity to meet demand in any %eriod is A) very low inventory costs because inventory needs to be carried from %eriod to %eriod. 2) very low inventory costs because no inventory needs to be carried from %eriod to %eriod. () very high inventory costs because no inventory needs to be carried from %eriod to %eriod. $) very high inventory costs because e%ensive ca%acity would go unused during most months when demand was lower. #) none of the above Answer 2 $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting ;) The disadvantage of maintaining enough manufacturing ca%acity to meet demand in any %eriod is A) much of the e%ensive ca%acity would go unused during most months when demand was lower. 2) the e%ensive ca%acity would be used consistently throughout the year. () most of the e%ensive ca%acity would still be used during most months when demand was lower. $) very low inventory costs because no inventory needs to be carried from %eriod to %eriod. #) Cone of the above are true. Answer A $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting
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<) The advantage of building u% inventory during the off season to meet demand during %ea3 seasons and 3ee% %roduction stable year round is A) very low inventory costs because no inventory needs to be carried from %eriod to %eriod. 2) much of the e%ensive ca%acity would go unused during most months when demand was lower. () in the fact that a firm could get by with a smaller, less e%ensive factory. $) in the fact that a firm could get by with a larger, more e%ensive factory. #) Cone of the above are true. Answer ( $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting =) The disadvantage of building u% inventory during the off season to meet demand during %ea3 seasons and 3ee% %roduction stable year round is A) very low inventory costs because no inventory needs to be carried from %eriod to %eriod. 2) very high inventory costs because inventory needs to be carried from %eriod to %eriod. () in the fact that a firm could get by with a smaller, less e%ensive factory. $) in the fact that a firm could get by with a larger, more e%ensive factory. #) Cone of the above are true. Answer 2 $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain AA("2 Analytic "3ills !earning utcome $escribe ma*or a%%roaches to forecasting 9) The advantage of offering a %rice %romotion during %eriods of low demand to shift some of the demand into a slow %eriod is A) a demand %attern that is less e%ensive to su%%ly. 2) very high inventory costs because inventory needs to be carried from %eriod to %eriod. () in the fact that a firm could get by with a smaller, more e%ensive factory. $) much of the e%ensive ca%acity would go unused during most months when demand was lower. #) all of the above Answer A $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting
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18) (om%anies ty%ically divide the tas3 of su%%ly and demand so that A) ?ar3eting manages demand and %erations manages su%%ly. 2) ?ar3eting manages su%%ly and %erations manages demand. () ?ar3eting manages demand and su%%ly. $) %erations manages demand and su%%ly. #) none of the above Answer A $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting 11) >ith su%%ly and demand management decisions being made inde%endently, A) it is increasingly difficult to coordinate the su%%ly chain, thereby increasing %rofit. 2) it is increasingly difficult to coordinate the su%%ly chain, thereby decreasing %rofit. () it is easier to coordinate the su%%ly chain, thereby decreasing %rofit. $) it is easier to coordinate the su%%ly chain, thereby increasing %rofit. #) none of the above Answer 2 $iff + To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain AA("2 &eflective Thin3ing "3ills !earning utcome $escribe ma*or a%%roaches to forecasting 1+) A firm can vary su%%ly of %roduct by controlling A) %roduction ca%acity and inventory. 2) %roduction ca%acity and %rice %romotions. () %rice %romotions and inventory. $) %roduction ca%acity and inventory %romotions. #) none of the above Answer A $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 1) >hich of the following is not an a%%roach that firms can use when managing ca%acity to meet %redictable demand variabilityB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) 0sing common com%onents across multi%le %roducts Answer # $iff 1 To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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14) The ca%acity management a%%roach that uses fleible wor3 hours from the wor3force to manage ca%acity to better meet demand is A) time fleibility from wor3force. 2) use of seasonal wor3force. () use of subcontracting. $) use of dual facilitiesDdedicated and fleible. #) designing %roduct fleibility into the %roduction %rocesses. Answer A $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 15) The ca%acity management a%%roach that uses a tem%orary wor3force during the %ea3 season to increase ca%acity to match demand is A) time fleibility from wor3force. 2) the use of seasonal wor3force. () the use of subcontracting. $) the use of dual facilitiesDdedicated and fleible. #) designing %roduct fleibility into the %roduction %rocesses. Answer 2 $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 1;) The ca%acity management a%%roach where a firm %urchases %ea3 %roduction from another firm so that internal %roduction remains level and can be done chea%ly is A) time fleibility from wor3force. 2) the use of seasonal wor3force. () the use of subcontracting. $) the use of dual facilitiesDdedicated and fleible. #) designing %roduct fleibility into the %roduction %rocesses. Answer ( $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design
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1<) The ca%acity management a%%roach where a firm builds facilities to %roduce a relatively stable out%ut of %roducts over time in a very efficient manner and facilities to %roduce a widely varying volume and variety of %roducts, but at a higher unit cost is A) time fleibility from wor3force. 2) the use of seasonal wor3force. () the use of subcontracting. $) the use of dual facilitiesDdedicated and fleible. #) designing %roduct fleibility into the %roduction %rocesses. Answer $ $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 1=) The ca%acity management a%%roach where a firm has %roduction lines whose %roduction rate can easily be varied to match demand is A) time fleibility from wor3force. 2) the use of seasonal wor3force. () the use of subcontracting. $) the use of dual facilitiesDdedicated and fleible. #) designing %roduct fleibility into the %roduction %rocesses. Answer # $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 19) >hich a%%roach to ca%acity management may be hard to sustain if the labor mar3et is tightB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer 2 $iff + To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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+8) >hich a%%roach to ca%acity management ma3es use of s%are %lant ca%acity that eists in the form of hours when the %lant is not o%erationalB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer A $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design +1) >hich a%%roach to ca%acity management ma3es use of overtime, which is varied to match the variation in demandB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer A $iff 1 To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design ++) >hich a%%roach to ca%acity management would schedule the wor3force so that the available ca%acity better matches demandB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer A $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design
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+) >hich a%%roach to ca%acity management would use a %art6time wor3force to increase ca%acity fleibility by enabling the firm to have more %eo%le at wor3 during %ea3 %eriodsB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer A $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design +4) The 3ey to which ca%acity management a%%roach would involve having both volume fluctuating demand from a manufacturer) and variety fleibility demand from several manufacturers) to be sustainableB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer ( $iff To%ic 9.+ ?anaging "u%%ly AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design +5) >hich a%%roach to ca%acity management would re@uire that the wor3force be multi6s3illed and easily ada%t to being moved from line to lineB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer # $iff + To%ic 9.+ ?anaging "u%%ly AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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+;) >hich a%%roach to ca%acity management would use %roduction machinery that can be changed easily from %roducing one %roduct to anotherB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer # $iff + To%ic 9.+ ?anaging "u%%ly AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design +<) >hich a%%roach to ca%acity management would only be effective if the overall demand across all the %roducts is relatively constantB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) $esigning %roduct fleibility into the %roduction %rocesses Answer # $iff To%ic 9.+ ?anaging "u%%ly AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design +=) >hich of the following is an a%%roach that firms can use when managing inventory to meet %redictable demand variabilityB A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDdedicated and fleible #) 0sing common com%onents across multi%le %roducts Answer # $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design
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+9) >hen most of the %roducts a firm %roduces hav e the same %ea3 demand season, in order to meet %redictable variability with inventory, it must A) use common com%onents across multi%le %roducts. 2) use a seasonal wor3force. () build inventory of high demand or %redictable demand %roducts. $) use subcontracting. #) use dual facilitiesDdedicated and fleible. Answer ( $iff + To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 8) "u%%ly chains can influence demand by using A) %roduction ca%acity and inventory. 2) %ricing and other %romotions. () %rice %romotions and inventory. $) %roduction ca%acity and inventory %romotions. #) %roduction ca%acity and other %romotions. Answer 2 $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design 1) The %ricing and %romotion decisions are often made by A) mar3eting and sales. 2) mar3eting and o%erations. () o%erations and sales. $) mar3eting, o%erations, and sales. #) mar3eting and o%erations without sales. Answer A $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design +) The %romotion and %ricing decisions made by mar3eting and sales ty%ically have the ob*ective of A) maimiing %rofitability. 2) minimiing %rofitability. () minimiing revenue. $) maimiing revenue. #) maimiing %rofitability across the su%%ly chain. Answer $ $iff To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design
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) Pricing decisions based only on revenue considerations often result in A) a decrease in overall %rofitability. 2) an increase in overall %rofitability. () a decrease in overall revenue. $) a decrease in su%%ly chain revenue. #) an increase in su%%ly chain %rofitability. Answer A $iff + To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 4) >hen %lanning, the goal of all firms in the su%%ly chain should be to maimie su%%ly chain %rofits because A) this leaves them less %rofit to divide among themselves. 2) this leaves them more %rofit to divide among themselves. () this outcome leaves them more %rofit to %ay ta on. $) this outcome will increase their charitable giving. #) none of the above Answer 2 $iff 1 To%ic 9. ?anaging $emand AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 5) ne 3ey to successful collaboration when the su%%ly chain is %erforming aggregate %lanning is A) determining how losses will be allocated to different members of the su%%ly cha in. 2) determining how %rofits will be allocated to different members of the su%%ly chain. () determining how labor will be allocated to different members of the su%%ly chain. $) determining how customers will be allocated to different members of the su%%ly chain. #) none of the above Answer 2 $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design ;) An increase in consum%tion of the %roduct either from new or eisting customers is A) mar3et growth. 2) stealing share. () forward selling. $) forward buying. #) none of the above Answer A $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design 961; (o%yright 7 +81 Pearson #ducation, nc. %ublishing as Prentice :all
<) (ustomers substituting the firm-s %roduct for a com%etitor-s %roduct is A) mar3et growth. 2) stealing share. () forward selling. $) forward buying. #) none of the above Answer 2 $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design =) (ustomers moving u% future %urchases to the %resent is A) mar3et growth. 2) stealing share. () forward selling. $) forward buying. #) none of the above Answer $ $iff 1 To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design 9) n general, as the fraction of increased demand coming from forward buying grows, offering the %romotion during the %ea3 demand %eriod becomes A) less attractive. 2) more attractive. () more %rofitable. $) less significant. #) none of the above Answer A $iff + To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 48) ffering a %romotion during a %ea3 %eriod that has significant forward buying A) creates a desirable demand %attern. 2) creates a demand %attern less costly to serve. () creates a demand %attern even more costly to serve. $) shifts demand from the %ea3 %eriod to the slow %eriod. #) shifts demand to a more desirable %eriod. Answer ( $iff To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design
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41) Average inventory A) increases if a %romotion is run during the %e a3 %eriod. 2) increases if a %romotion is run during the off6%ea3 %eriod. () decreases if a %romotion is run during the %ea3 %eriod. $) decreases if a %romotion is run during the off6%ea3 %eriod. #) both A and $ Answer 2 $iff + To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design 4+) Promoting during a %ea3 demand month may decrease overall %rofitability if A) a small fraction of the demand increase results from a forward buy. 2) any of the demand increase results from a forward buy. () a significant fraction of the demand increase results from a forward buy. $) none of the above #) all of the above Answer ( $iff To%ic 9. ?anaging $emand AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 4) As the %roduct margin declines, %romoting during the %ea3 demand %eriod becomes A) less %rofitable. 2) more %rofitable. () less of a ris3. $) more desirable. #) none of the above Answer A $iff To%ic 9. ?anaging $emand !earning utcome (om%are common a%%roaches to su%%ly chain design 44) EEEEEEEE variability is change in demand that can be forecasted. A) (a%acity 2) Predictable () nventory $) 2ac3log Answer 2 $iff 1 To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain !earning utcome $escribe ma*or a%%roaches to forecasting
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45) A firm can vary su%%ly of %roduct by controlling A) inventory. 2) %ricing. () demand. $) revenue. Answer A $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 4;) A firm can vary su%%ly of %roduct by controlling A) revenue. 2) %ricing. () demand. $) ca%acity. Answer $ $iff 1 To%ic 9.+ ?anaging "u%%ly !earning utcome (om%are common a%%roaches to su%%ly chain design 4<) n this a%%roach to managing ca%acity, a firm uses fleible wor3 hours by the wor3force to manage ca%acity to better meet demand. A) Time fleibility from wor3force 2) 0se of seasonal wor3force () 0se of subcontracting $) 0se of dual facilitiesDs%ecialied and fleible Answer A $iff + To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 4=) n this a%%roach to managing ca%acity, a firm uses a tem%orary wor3force during the %ea3 season to increase ca%acity to match demand. A) Time fleibility from wor3force 2) 0se of subcontracting () 0se of dual facilitiesDs%ecialied and fleible $) 0se of seasonal wor3force Answer $ $iff + To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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49) n this a%%roach to managing ca%acity, a firm subcontracts %ea3 %roduction so that internal %roduction remains level and can be done chea%ly. A) Time fleibility from wor3force 2) 0se of subcontracting () 0se of dual facilitiesDs%ecialied and fleible $) 0se of seasonal wor3force Answer 2 $iff + To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 58) n this a%%roach to managing ca%acity, a firm has fleible %roduction lines whose %roduction rate can easily be varied. A) Time fleibility from wor3force 2) 0se of subcontracting () $esigning %roduct fleibility into the %roduction %rocesses $) 0se of seasonal wor3force Answer ( $iff + To%ic 9.+ ?anaging "u%%ly AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 51) >hich of the following is not a 3ey factor influencing the timing of a %roduct %romotionB A) (ost of holding inventory 2) (ustomer %erce%tions () (ost of changing the level of ca%acity $) Product margins Answer 2 $iff To%ic 9. ?anaging $emand AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 5+) >hen a %romotion is offered during a %eriod, that %eriod-s demand tends to go u%. This increase in demand results from a combination of three factors. >hich of the following is not one of these three factorsB A) Forward buying 2) "tealing share () 2ac3ward buying $) ?ar3et growth Answer ( $iff To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 96+8 (o%yright 7 +81 Pearson #ducation, nc. %ublishing as Prentice :all
5) >hich factor favors %romotion during low6demand %eriodsB A) :igh forward buying 2) :igh ability to steal mar3et share () :igh ability to increase overall mar3et $) :igh margin Answer A $iff To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 54) >hich factor favors %romotion during low6demand %eriodsB A) :igh margin 2) :igh ability to steal mar3et share () :igh ability to increase overall mar3et $) !ow margin Answer $ $iff + To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 55) >hich factor favors %romotion during %ea36demand %eriodsB A) :igh margin 2) !ow ability to steal mar3et share () :igh ability to increase overall mar3et $) !ow margin Answer ( $iff To%ic 9. ?anaging $emand AA("2 Analytic "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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9. #ssay Questions 1) $iscuss how a firm can res%ond to %redictable variability of demand in the su%%ly chain. Answer Faced with %redictable variability, a com%any-s goal is to res%ond in a manner that maimies %rofitability. A firm must choose how to handle %redictable variability by utiliing techni@ues in two broad categories 1. ?anage su%%ly using ca%acity, inventory, subcontracting, and bac3logs +. ?anage demand using short6term %rice discounts and trade %romotions The use of these tools enables the su%%ly chain to greatly increase its %rofitability because it is able to match su%%ly and demand in a much more coordinated fashion. ne way to meet seasonal demand re@uires carrying enough manufacturing ca%acity to meet demand in any %eriod. The advantage of this a%%roach is very low inventory costs, because no inventory needs to be carried from %eriod to %eriod. The disadvantage, however, is that much of the e%ensive ca%acity would go unused during most months when demand was lower. Another a%%roach to meeting demand would be to build u% inventory during the off season to 3ee% %roduction stable year round. The advantage of this a%%roach lies in the fact that a firm could get by with a smaller, less e%ensive factory. :igh inventory carrying costs, however, ma3e this alternative e%ensive. A third a%%roach would be for a firm to wor3 with their retail %artners in the su%%ly chain to offer a %rice %romotion during %eriods of low demand. This %romotion shifts some of the demand into a slow %eriod, thereby s%reading demand more evenly throughout the year and reducing the seasonal surge. "uch a demand %attern is less e%ensive to su%%ly. A com%any needs to decide which alternative maimies their %rofitability. ften com%anies divide the tas3 of su%%ly and demand management between different functions. ?ar3eting ty%ically manages demand and %erations ty%ically manages su%%ly. At a higher level, su%%ly chains suffer from this %henomenon as well, with retailers inde%endently managing demand and manufacturers inde%endently managing su%%ly. >ith su%%ly and demand management decisions being made inde%endently, it is increasingly difficult to coordinate the su%%ly chain, thereby decreasing %rofit. Therefore, maimiing %rofitability de%ends on these decisions being made in a coordinated fashion and re@uires su%%ly chain %artners to wor3 together across enter%rises. $iff To%ic 9.1 &es%onding to Predictable 'ariability in the "u%%ly (hain AA("2 &eflective Thin3ing "3ills !earning utcome $escribe ma*or a%%roaches to forecasting
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+) $iscuss the a%%roaches that can be used to manage ca%acity to meet %redictable variability of demand. Answer >hen managing ca%acity to meet %redictable variability, firms use a combination of the following a%%roaches Time flexibility from workforce: n this a%%roach, a firm uses fleible wor3 hours from the wor3force to manage ca%acity to better meet demand. n many instances, %lants do not o%erate continually and are left idle during %ortions of the day or wee3. Therefore, s%are %lant ca%acity eists in the form of hours when the %lant is not o%erational. ?any %lants do not run three shifts, so the eisting wor3force could wor3 overtime during %ea3 %eriods to %roduce more to meet demand. f demand fluctuates by day of the wee3 or wee3 of the month and the wor3force is willing to be fleible, a firm may schedule the wor3force so that the available ca%acity better matches demand. n such settings, use of a %art6time wor3force may further increase the ca%acity fleibility by enabling the firm to have more %eo%le at wor3 during %ea3 %eriods. Use of seasonal workforce: n this a%%roach, a firm uses a tem%orary wor3force during the %ea3 season to increase ca%acity to match demand. This a%%roach may be hard to sustain if the labor mar3et is tight. Use of subcontracting: n this a%%roach, a firm subcontracts %ea3 %roduction so that internal %roduction remains level and can be done chea%ly. >ith the subcontractor handling the %ea3s, the com%any is able to build a relatively infleible but low6cost facility where the %roduction rates are 3e%t relatively constant other than variations that arise from the use of overtime). Pea3s are subcontracted out to facilities that are more fleible. A 3ey here is the availability of relatively fleible subcontractor ca%acity. The subcontractor can often %rovide fleibility at a lower cost by %ooling the fluctuations in demand across different manufacturers. Thus the fleible subcontractor ca%acity must have both volume fluctuating demand from a manufacturer) as well as variety fleibility demand from several manufacturers) to be sustainable. Use of dual facilities–dedicated and flexible: n this a%%roach, a firm builds both dedicated and fleible facilities. $edicated facilities %roduce a relatively stable out%ut of %roducts over time in a very efficient manner. Fleible facilities %roduce a widely varying volume and variety of %roducts but at a higher unit cost. #ach dedicated facility could %roduce at a relatively steady rate, with fluctuations being absorbed by the fleible facility. Designing product flexibility into the production processes: n this a%%roach, a firm has fleible %roduction lines whose %roduction rate can easily be varied. Production is then changed to match demand. The %roduction lines are designed such that changing the number of wor3ers on a line can vary the %roduction rate. As long as variation of demand across different %roduct lines is com%lementary, i.e., when one goes u%, the other tends to go down), the ca%acity on each line can be varied by moving the wor3force from one line to the other. f course, this re@uires that the wor3force be multi6s3illed and easily ada%t to being moved from line to line. Production fleibility can also be achieved if the %roduction machinery being used is fleible and can be changed easily from %roducing one %roduct to another. This a%%roach can only be effective if the overall demand across all the %roducts is relatively constant. " everal firms %roducing %roducts with seasonal demand try and e%loit this a%%roach by carrying a %ortfolio of %roducts that have %ea3 demand seasons distributed over the year. $iff + To%ic 9.+ ?anaging "u%%ly AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 96+ (o%yright 7 +81 Pearson #ducation, nc. %ublishing as Prentice :all
) $iscuss the a%%roaches a firm can use to manage inventory to meet %redictable variability of demand. Answer >hen managing inventory to meet %redictable variability, firms use a combination of the following a%%roaches Using common components across multiple products: n this a%%roach, a firm designs common com%onents used in multi%le %roducts, with each %roduct having %redictably variable demand that results in relatively constant overall demand. 0se of common com%onents across these %roducts will result in the demand for the com%onents being relatively constant. Build inventory of high demand or predictable demand products: >hen most of the %roducts a firm %roduces have the same %ea3 demand season, the %revious a%%roach is no longer feasible. A firm must then decide which inventory to build during the off season. The answer is to build %roducts during the off season that have more %redictable demand, because there is less to be learned about their demand by waiting. As more is 3nown about demand closer to the selling season, %roduction of more uncertain items should ta3e %lace. This strategy hel%s the su%%ly chain better synchronie su%%ly and demand. $iff + To%ic 9.+ ?anaging "u%%ly AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design 4) $iscuss the im%ortance of collaboration within a su%%ly ch ain when %erforming aggregate %lanning. Answer "u%%ly chains can influence demand by using %ricing and other forms of %romotion. ?ar3eting and sales often ma3e the %romotion and %ricing decisions, and they ty%ically ma3e them with the ob*ective of maimiing revenue. :owever, changing the demand %attern can change the cost the com%any incurs to meet that demand. Thus, %ricing decisions based only on revenue considerations often result in a decrease in overall %rofitability. The same is true when thin3ing of the su%%ly chain. The retailer sets the %rice and runs %romotions to generate demand. This is regularly done without ta3ing into account the im%act on the rest of the su%%ly chain. Therefore, the combination of %ricing and aggregate %lanning both demand and su%%ly management) can be used to maimie su%%ly chain %rofitability. >hen %erforming aggregate %lanning, the goal of all firms in the su%%ly chain should be to maimie su%%ly chain %rofits because this outcome leaves them more to divide with each other. For %rofit maimiation to ta3e %lace, com%anies need to devise a way to collaborate and, *ust as im%ortant, determine a way to s%lit the su%%ly ch ain %rofits. $etermining how these %rofits will be allocated to different members of the su%%ly chain is a 3ey to successful collaboration. $iff + To%ic 9. ?anaging $emand AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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5) $iscuss the im%act of %romotion on demand within a su%%ly chain. Answer (om%anies want to e%lore if and when to %otentially offer a %romotion. Four 3ey factors influence the timing of a trade %romotion m%act of the %romotion on demand Product margins (ost of holding inventory (ost of changing ca%acity (om%anies should identify whether each factor favors offering a %romotion during the high6 or low6demand %eriods. They start by considering the im%act of %romotion on demand. >hen a %romotion is offered during a %eriod, that %eriod-s demand will go u%. This increase in demand results from a combination of the following three factors 1. Market growth: An increase in consum%tion of the %roduct, either from new or eisting customers. +. tealing share: (ustomers substituting the firm-s %roduct for a com%etitor-s %roduct. . !orward buying: (ustomers move u% future %urchases to the %resent. The first two factors increase the overall demand, whereas the third sim%ly shifts future demand to the %resent. t is im%ortant to 3now the relative im%act from the three factors as a result of a %romotion before ma3ing the decision regarding the o%timal timing of the %romotion. n general, as the fraction of increased demand coming from forward buying grows, offering the %romotion during the %ea3 demand %eriod becomes less attractive. ffering a %romotion during a %ea3 %eriod that has significant forward buying creates even more variable demand than before the %romotion. Product that was once demanded in the slow %eriod is now demanded in the %ea3 %eriod, ma3ing this demand %attern even more costly to serve. Average inventory increases if a %romotion is run during the %ea3 %eriod and decreases if the %romotion is run during the off6%ea3 %eriod. Promoting during a %ea3 demand month may decrease overall %rofitability if a significant fraction of the demand increase results from a forward buy. As forward buying becomes a smaller fraction of the demand increase from a %romotion, it is more %rofitable to %romote during the %ea3 %eriod. As the %roduct margin declines, %romoting during the %ea3 demand %eriod becomes less %rofitable. ther factors such as holding cost and the cost of changing ca%acity also affect the o%timal timing of %romotions. >hen faced with seasonal demand, a firm should use a combination of %ricing to manage demand) and %roduction and inventory to manage su%%ly) to im%rove %rofitability. The %recise use of each lever varies with the situation. This ma3es it crucial that enter%rises in a su%%ly chain coordinate both their forecasting and %lanning efforts. nly then are %rofits maimied. $iff + To%ic 9. ?anaging $emand AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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;) $iscuss 3ey issues when managing %redictable variability of de mand within a su%%ly chain. Answer 1. "oordinate planning across enterprises in the supply chain# For a su%%ly chain to successfully manage %redictable variability, the entire chain must wor3 toward the one goal of maimiing %rofitability. #veryone in a su%%ly chain may agree with this in %rinci%le, but in reality, it is very difficult to get an entire su%%ly chain to agree on how to maimie %rofitability. >ithin a com%any, mar3eting often has incentives based on revenue, whereas o%erations has incentives based on cost. >ithin the su%%ly chain, different enter%rises are *udged by their own %rofitability, not necessarily by the overall su%%ly chain-s % rofitability. t is clear that without wor3ing to get com%anies to wor3 together, the su%%ly chain will return subo%timal %rofits. Therefore, firms in the su%%ly chain need to collaborate through the formation of *oint teams. ncentives of the members of the su%%ly chain must be aligned. :igh6level su%%ort within the organiation, including su%%ort from the chief eecutive officer, will also be needed because this coordination often re@uires grou%s to act counter to their traditional o%erating %rocedures. Although this collaboration is difficult, the %ayoffs are significant. +. Take predictable variability into account when making strategic decisions# Predictable variability has a tremendous im%act on the o%erations of a com%any. A firm must always ta3e this im%act into account when ma3ing strategic decisions. :owever, %redictable variability is not always ta3en into account when strategic %lans are made, such as what ty%e of %roducts to offer, whether or not to build new facilities, and what sort of %ricing structure a com%any should have. The level of %rofitability is greatly affected by %redictable variability and, therefore, the success or failure of strategic decisions can be determined by it. . $reempt% do not &ust react to% predictable variability# (om%anies often have a tendency to focus on how they can effectively react to %redictable variability. This role often falls on o%erations, which tries to manage su%%ly to best deal with %redictable variability. The management of su%%ly as well as demand %rovides the best res%onse to %redictable va riability. Actions li3e %ricing and %romotion that manage demand are %reem%tive and often in the domain of mar3eting. t is im%ortant for mar3eting and o%erations to coordinate their efforts and %lan for %redictable variability together well before the %ea3 demand is observed. This coordination allows a firm to %reem%t %redictable variability and come u % with a res%onse that maimies %rofits. $iff To%ic 9. ?anaging $emand AA("2 &eflective Thin3ing "3ills !earning utcome (om%are common a%%roaches to su%%ly chain design
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