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| Section | Objectives |
|---|---|
| Demand Planning and Forecasting | - Supply Chain Issues for Short Life Cycle Products - Revenue Management - Issues and Trade-offs in Global Supply Chain Management - Integrated View of Procurement, Manufacturing and Operations Management - Spreadsheet Newsvendor Models - Demand Forecasting and Purchase Price Variance (PPV) Savings |
| Major Supply Chain Issues: Sourcing Materials and Services | - Inventory Management - Role of Logistics in Supply Chains - Major Challenges in Supply Chain Management Today - Developing Productive Supplier Relationships in a Competitive Market - Introduction to Global Supply Chain Management |
| Distribution and Operations Management | - Warehouse Management - Stock Management - Transport Management - Introduction to Distribution Network - Order Management |
| E-Supply Chain Management | - Modern Fulfilment Tools and Applications in Supply Chain - Differences Between Logistics and Supply Chain Management - Information Flows and Information Systems Integration - Warehouse Management System (WMS) - Big Data and IoT in Supply Chain |
| Principles of Supply Chain Management & Logistics | - Factors Affecting Supply Chain Management - Introduction to Supply Chain Management - Management Components of Supply Chain Management - Supply Chain Processes |
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NEW QUESTION # 64
Mickey the manager reviewed his company's customers' orders for the past year and compared the variability of those orders with the variability of the orders he placed with his suppliers. This comparison allowed him to estimate his own company's contribution to
Answer: A
Explanation:
The bullwhip effect is the progressive amplification of demand variability as order information moves upstream through a supply chain. A relatively stable pattern of final-customer demand can produce increasingly volatile retailer orders, distributor replenishment orders, manufacturer schedules, and supplier requirements.
Mickey is comparing the variability of two distinct signals: the orders received from his customers and the orders his organization subsequently places with suppliers. If the outgoing supplier orders are substantially more variable than the incoming customer orders, his company is amplifying the demand signal and therefore contributing to the bullwhip effect.
The comparison is valuable because bullwhip is fundamentally about changes in variability between successive stages. Causes include forecast updating, order batching, price promotions, shortage gaming, long replenishment lead times, and synchronized ordering. Managers can reduce amplification by sharing downstream demand information, shortening lead times, reducing batch sizes, stabilizing prices, and coordinating replenishment.
The analysis is not measuring market demand itself, because market demand is represented primarily by downstream consumption. Nor does it directly measure supply-chain surplus or merely forecast accuracy. It specifically evaluates whether the company's ordering practices magnify upstream variability.
Reference Topic: Demand Planning - Bullwhip Effect, Demand Variability, and Supply Chain Coordination.
NEW QUESTION # 65
One replenishment system that assigns replenishment responsibility to a single entity in a supply chain is
Answer: D
Explanation:
Vendor-managed inventory (VMI) assigns primary responsibility for replenishment to the vendor or manufacturer rather than leaving each downstream organization to place conventional replenishment orders independently. The supplier obtains access to relevant sales, inventory, and consumption information and determines when inventory should be replenished and in what quantity.
Centralizing the replenishment decision can improve supply-chain coordination because the organization making the decision can work from a broader set of demand and inventory information. Properly structured VMI reduces duplicated forecasting, improves inventory visibility, reduces stockouts, and can moderate order amplification. It also creates clearer accountability: one designated party controls the replenishment logic rather than multiple stages issuing potentially conflicting signals.
VMI should not be confused with inventory ownership. The supplier may control replenishment while the retailer owns the inventory, or ownership may remain with the supplier under a consignment arrangement.
The defining characteristic addressed by this question is responsibility for replenishment .
The other choices are not the recognized replenishment mechanism that formally assigns that responsibility to a vendor. Standard supply-chain management material explicitly identifies VMI as the system in which a single entity assumes replenishment responsibility.
Reference Topic: Inventory Management - Vendor-Managed Inventory and Replenishment Responsibility.
NEW QUESTION # 66
The World Trade Organization (WTO) is critical to the facility location decision process because of their impact on:
Answer: B
Explanation:
Tariffs can materially alter the economics of global supply-chain network design, making WTO-related trade rules relevant to facility-location decisions. A tariff increases the landed cost of moving goods across national boundaries and can therefore affect whether a company should export from an existing facility, manufacture closer to the target market, or restructure its sourcing network.
When tariffs are high, producing goods in one country and importing them into another may become less economically attractive. Firms may instead establish local manufacturing or assembly capacity to avoid or reduce tariff exposure. Conversely, lower trade barriers can make centralized global production and cross- border distribution more competitive.
Location decisions are long-term strategic commitments involving manufacturing cost, market access, transportation, duties, infrastructure, labor conditions, and regulatory stability. Managers must therefore understand international trade arrangements and tariff structures before committing capital to a region.
The associated global-location question bank specifically identifies tariffs as the WTO-related factor relevant to facility-location decisions.
Innovation and relationship marketing may influence corporate strategy, but they are not the direct WTO mechanism examined by this question.
Reference Topic: Supply Chain Strategy and Global Context - WTO, Tariffs, and Global Facility Location.
NEW QUESTION # 67
Ordering costs would include which of the following?
Answer: D
Explanation:
Ordering cost consists of costs associated with initiating and executing a replenishment order. Depending on the inventory model, these can include purchase-order administration, supplier communication, scheduling, shipment preparation, receiving activities, and fixed transportation expenses associated with each replenishment event. Among the listed alternatives, transportation cost is the appropriate ordering-cost component.
The key distinction is whether the cost is associated with placing or moving a replenishment order or with maintaining inventory after it has entered stock. Transportation often contains a fixed element that is incurred whenever an order or shipment is dispatched. This fixed component influences lot-size economics because ordering more frequently causes the supply chain to incur the transportation or replenishment charge more frequently.
Theft, security, and damage are primarily inventory-carrying or warehousing exposures. They arise because inventory is being stored, protected, and physically maintained rather than because an order is being initiated.
This distinction is fundamental to EOQ and cycle-inventory analysis. Ordering costs decrease as order quantities increase because fewer orders are required, while holding costs increase as average inventory rises.
The accepted treatment of this exact supply-chain formulation identifies transportation cost as the ordering- cost answer.
Reference Topic: Inventory and Warehousing - Fixed Ordering Cost and EOQ Cost Components.
NEW QUESTION # 68
Allocating existing supply based on past retailer sales rather than current retailer orders is known as
Answer: B
Explanation:
Turn-and-earn is an allocation mechanism in which a supplier allocates scarce capacity or product partly according to a retailer's historical sales performance rather than simply accepting the retailer's current requested quantity. A retailer effectively "earns" future allocation by successfully selling previous allocation.
The mechanism is particularly relevant when supply is constrained. If a manufacturer allocates scarce product solely according to current orders, retailers may intentionally inflate orders because they expect rationing.
Such shortage gaming creates artificial demand signals and intensifies the bullwhip effect. Allocating according to demonstrated historical sales reduces the benefit of submitting exaggerated orders because future allocation is linked to actual sell-through rather than unsupported requests.
Turn-and-earn must still be designed carefully because its incentives can affect retailer behavior. For example, retailers may aggressively increase sales in one period to improve future allocation. Nevertheless, the defining characteristic in this question is unequivocal: current allocation is based on past sales .
Operations-management research describes turn-and-earn as a capacity-allocation mechanism commonly used in industries such as automobiles, with current allocation determined using historical retailer sales.
Reference Topic: Demand Planning - Shortage Gaming, Allocation Rules, and Turn-and-Earn.
NEW QUESTION # 69
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