Assignment Questions and Answers

Ques1:

What is Supply Chain Management?

Ans1: Supply Chain Management is the management of interconnected activities that provides materials and services and ultimately transforming them to the final product to be sold or transferred to the consumers.

Ques2:

What are the objectives of supply chain management?

Ans2: One of the main objectives of supply chain management is to build a chain of suppliers that focuses on capitalizing on the worth of the ultimate costumer. The objectives also include enhancing customer service, expanding sales revenue, reducing inventory cost, improving on-time delivery of product, reducing order to delivery cycle time, reducing lead time, reducing transportation cost, reducing warehouse cost, reducing / rationalize supplier base and expanding width and depth of distribution of the product.

Ques3:

What is the objective of logistic management?

Ans3: The objective of supply chain management is efficient and effective operations through the incorporation of all material acquisition, movement and storage activities.

Ques4: Explain how supply chain management, purchasing and logistics management differ. Ans4: Supply Chain Management is the management of interconnected activities that provides materials and service, transforming them to the final product to be sold while

logistics management is the part of the supply chain management that deals with the planning, implementations, and controlling the flow and storage of goods, services, and acquisition of materials. Purchasing is the part of the supply management that involves the exchanging of any goods or services with money which may be done online or in the physical.

Ques5: What is vertical integration? Give examples of forward and backward integration. Ans5: Vertical Integration is the ability to produce goods or service previously purchased.

Ques6: What are the three basic approaches to negotiations? Explain the difference among the three basic approaches to negotiations. Ans6: The three basic approaches to negotiations are cost-based price, model market-based price model and competitive bidding. Cost-based price model is where the supplier opens books to the intended purchaser while market-based price model is where the price is modeled based on published, auction, or indexed price. Competitive bidding is used for infrequent purchases but may make establishing long-term relationships difficult.

Ques7: What are the following; e-procurement, internet purchasing? Ans7: E-procurement is the process of using the internet to facilitate purchasing which involves electronic ordering and funds transfer.

Ques8: Discuss the implications of a make-or-buy decision in manufacturing. What is the gain? What is the disadvantage, if any for the organization? Ans8: The implication of make-or-buy is to make a strategic choice between producing an item internally or buy it from an outside supplier.

Ques9: Name four (4) transportation methods used in the supply chain. Compare any two (2) of these methods. Ans9: Four transportation methods used in the supply chain are trucking, waterways, airfreight and pipelines. The pipeline distribution method of transportation is where goods and services such as oil, gas and other chemical product are transported through pipelines while waterways distribution is the use of ships to transport bulky, low value cargo goods.

Supply Chain Management Questions

11.11 Baker Mfg Inc. wishes to compare its inventory turnover to those of industry leaders, who have turnover of about 13 times per year and 8% of their assets invested in inventory. Baker Mfg. Inc. Net Revenue Cost of scales Inventory $27,500 $21,500 $1,250

Total assets A) What is Bakers inventory turnover?

$16,600

Inventory Turnover = Cost of goods sold Inventory investment $21,500 = $17.20 $1,250 B) What is Bakers percent of assets committed to inventory? Percent inventory = Total inventory investment Total assets) x 100 $1,250 = 7.53% $16,600x100 C) How does Bakers performance compare to the industry leader? The industry performance is 0.47% more than Bakers which means that Bakers performance is very low when compared to the industrys performance.

11.12 Arrow Distributing Crop likes to track inventory by using weeks of supply as well as by inventory turnover.

Arrow Distributing Crop. Net Revenue Cost of scales Inventory Total assets

$16,500 $13,500 $1,000 $8,600

A)

What are its weeks of supply? Cost of scale 52 $13,500 = $259.6 52 Weeks supply = (Inventory investment Average weekly cost of goods sold) $1,000 = 3.9 or 4 weeks $259.6

11.14 Mattresses Wholesalers, Inc. is constantly trying to reduce inventory its supply chain. Last year, cost of goods sold was $7.5million and inventory was $1.5 million. This year, cost of goods sold is 8.6 million and inventory investment is $1.6 million. A) What was the weeks supply last year? Cost of goods sold 52 $7.5 = $ 0.1442 or 144230.8 52

Weeks supply = (Inventory investment Average weekly cost of goods sold) 1.5 =10.4 (11weeks) 0.1442

B)

What was the weeks supply this year? Cost of goods sold 52 $8.6 = $0.165 ($0.17)

52 Weeks supply = (Inventory investment Average weekly cost of goods sold) $1.6 = 9.7 (10 weeks) 0.165 C) Is Mattress Wholesalers making progress in its inventory- reduction effort? The progress of the Mattress Wholesalers in the inventory reduction was good due to the fact that last year was 11 weeks as opposed to this year which is 10 week (a 1 week reduction).