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PART I: THEORY
3. In general, the further up the supply chain a company is (or the further they are from
the consumer),
a. the smaller the distortion of information they receive.
b. the information they receive is more accurate.
c. the greater the distortion of information they receive.
d. the information they receive is more useful.
e. none of the above
5. The warehousing methodology that uses a traditional warehouse to store all of one
type of product together is
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1. Analyze the following statements and determine if they are TRUE or FALSE.
1. In the Tag Line, in relation to the driver facilities, the company applies the concept F
of responsiveness.
2. In the company Exceso, from the case A Pain in the Supply Chain, one of the main F
problems was the lack of responsibility of the managers.
3. The Tag Line was an e-business focus on the sales of T-shirts. F
4. The lack of focus on customer needs was one of the main problems the company T
Exceso is facing.
5. We can infer that the company The Tag Line failed because its managers did not T
take into consideration the capabilities of the supply chain in a larger scale.
6. The company Excesso rewards its sales representatives based on Sell-Through F
7. In the Tag Line, in relation to the driver inventory, the company applies the concept T
of efficiency.
QUESTION ANSWER
What role does 1. Forecasting is the basis for all strategic and planning decisions in a
forecasting play in supply chain
the supply chain
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Why is it unlikely to 3. Forecasts are always wrong, hence, an estimate of error should be
have a forecast of provided with the forecast.
historical demand
without any forecast
error?
4. Accuracy depends on the data and method to produce results and
even with the most recent and up-to-date data unlikely that a 100%
accurate would occur.
Forecasts should 5. heating oil, electricity, natural gas, wrapping paper, school supplies,
take into account sporting goods (summer, winter, etc.), turkey, paneton
seasonality. Give 2
examples of
products with high
seasonality. 6. facial tissues, beverages (coffee, beer, iced tea, etc.), ice cream, pizza
delivery, and tax preparation services.
What is 10. Collaborative forecasting requires all supply chain partners to share
collaborative information regarding parameters that might affect demand, such as
forecasting? the timing and magnitude of promotions.
Question Answer
Were the reasons or competitive 1. Legal reforms in the EU such as the Waste
drivers that lead to Comet Electrical and Electronic Equipment Directive
needing to implement a more (WEEE) required firms like Comet to take back
complete reverse supply chain? and recover products after use to reduce waste
volumes
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What type of returns business 2. Open loop using a 3rd party for some of the
model is described in the case? recycling and transportation.
What were the aims of Comet’s 3. Reduce Comet’s carbon foot print
reverse supply chain operations?
Question Answer
What is strategic fit? 1. It is the consistency between customer priorities
and the competitive strategy and the supply
chain capabilities specified by the supply chain.
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7. Price is important
Name two problems that can arise 8. High inventories or poor quality,
when each stage of a supply chain
focuses solely on its own profits
when making decisions? 9. low customer service or increased returns
A store that provides a wide variety 10. Responsive as they need to provide highly
of quality fashion items to select innovative fashion products, excellent customer
customers who value luxury and service, and high service levels.
exclusive brands would have
which type of supply chain?
The American company WalMart is the largest retailer in the world. The company has thousand
stores around the world and in the United States it is everywhere. One of the main requirements
to set up a store in a specific location is that this has to be located nearby a Distribution Center.
Each Distribution Center replenishes a set of stores, applying the principle of centralization. To
distribute its products across the supply chain, WalMart applies the warehousing methodology
known as Cross-docking. The WalMart trucks go to manufacturers’ facilities to collect the
merchandise and return to the distribution center with the merchandise in bulk. At the
distribution center, items are reorganized rapidly using automation, and delivered to stores
through small trucks or vans, also owned by WalMart.
In stores, considering mass consumption products, WalMart stores small amounts of inventory
and uses frequent replenishment to provide availability to its customers. The company owns a
huge number of trucks that moves the products from manufacturers to distribution centers, and
from distribution centers to stores. WalMart has invested huge amounts of money to develop a
very standardized and effective transportation system to link all its operations. In relation to
pricing, the company applies an edlp (everyday low pricing) strategy, because mainly it works
with low-cost sources. Chinese suppliers are the main source when bringing products from
abroad. In order to monitor these operations effectively and in real time, WalMart uses the latest
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satellite system that supervises and controls what is happening in stores, distribution centers
and trucks all around the world.
Questions:
a. Draw the supply chain for WalMart, identifying clearly each of the stages. 10
marks
Production Costs
Starting inventory = 0 Production Cost = $100 per unit
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a) Analyse the situation using the Chase Strategy to produce the required demand (in
units) for the following six months. 10 marks
Cost: _________________
b) Analyse the situation using the Level Strategy to produce the required demand (in
units) for the following six months. 10
marks
Hiring or firing is allowed only at the beginning of period 1.
Cost: ________________
d) Using the data from the aggregate plan, explain the advantages of the most suitable
strategy 3marks
Chase is used when labour flexibility costs are low and there is sufficient labour
available. Here hiring costs and firing costs are less than $100 per person making labour
capacity change quite cheap. In the level strategy, the inventory costs are also low, but
exceed the labour capacity costs of chase.
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