OPMA 317 Final Exam UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
During the SCM Exercise Graph Commonalities - CORRECT ANSWER Fluctuations,
amplification, and a time lag between the retailer to the factory
Beer Game Average - CORRECT ANSWER Everyone averaged around the same even
though some came from different backgrounds yet the players control the game, you can't
blame customer demand
What caused people to act the way they did during the beer game? - CORRECT
ANSWER 1) Lack of communication/cooperation
- guessing of the customer demand-->arbitrary ordering
RESULT: BULLWHIP EFFECT
2) Long lead time: results in panic when inventory does not instantly arrive and solve your
growing backlog, you panic and order even more
Bullwhip effect - CORRECT ANSWER information (orders) going back through the
supply chain is distorted and them amplified
What are the business implications of the supply chain structure? - CORRECT
ANSWER Stockouts at times -> loss of profit and potential lost goodwill
Excess inventory at times-> holding costs, risk of obsolence
Overtime costs-> increase in labour cost
Layoff/Rehiring costs->match staffing levels to fluctuating demand
Expediting-> rush transportation costs
How does the supply chain structure affect consumers? - CORRECT ANSWER Leads
to high costs throughout the supply chain, leading to a higher end price for the consumer
How to improve the supply chain? - CORRECT ANSWER 1) Communication and
Cooperation
,Determine actual consumer demand through technology
Forecasting (promotions, shutdowns, etc, share forecasts, schedules, and decision making)
(ex. Canadian Tire reduced lead time from 46 days to 15!)
2) Shorten Lead times (allows a faster response) - How?
Administration (ordering) lead time - Information Tech
Physical Manufacturing Lead time (just in time production systems)
Transportation lead time (have suppliers geographically close by)
How to encourage communication and cooperation? - CORRECT
ANSWER Incentives to share information (lower unit cost for actual data)
Vendor Managed Inventory
- lower admin costs for the retailer
- vendor sees actual consumer demand
What is on-shoring? - CORRECT ANSWER Ikea's furniture provider opened up shop
in the US which most people thought they were crazy to do so. But the thing is it was very
costly for IKEA to transport the furniture. Having a plant in the US would reduce lead times,
sourcing costs, currency exposure, transportation concerns
What is next-shoring? - CORRECT ANSWER local production near demand "next to"
Reduces logistics costs
- improves environmental performance
Reduces length of lead times
Reduces variability of lead times
Easier to identify local needs
Consumer perception: "jobs in home country"
--> It is a growing focus on countering traditional offshoring by locating facilities closer to a
company's home base
What if you cannot change the supply chain structure? - CORRECT ANSWER Try to
understand the structure and adapt to it and manage
, Ex: "the aspirin rule" - 10 min after taking two aspirin, you likely still have a headache- why
don't you take 2 more right then? YOU ARE AWARE OF THE LEAD TIME AND DONT
PANIC
Adapting to the supply chain structure - CORRECT ANSWER Don't panic and
recognize delays
Systems thinking - before you do anything, analyze how it will impact your supply chain
How to avoid supply chain problems? - CORRECT ANSWER Change the supply
chain structure (if possible)
- Communication and cooperation
- Shorter lead times (admin, manufacturing, distribution)
If you can't change the supply chain structure
- Adapt and recognize delays and predict ordering impacts
Choose "capable" suppliers (don't focus on cost)
- Can they accommodate temporary demand changes
- Are they willing and able to collaborate (share info)
Smooth your supply chain - CORRECT ANSWER Promotions (sales), discounts etc.
create "waves" of demand
P&G example
Everyday lower prices is ideal approach for SCM (sale price but within maximum quantity
ex. limit 4)
Titantic Supply Chain Problems - CORRECT ANSWER While it was being
constructed they had to use poor quality rivets as other ships were being constructed at the
time and the usual rivet supplier could not supply for them. The quality did not match the
competitive standard.
QUESTIONS AND CORRECT ANSWERS
During the SCM Exercise Graph Commonalities - CORRECT ANSWER Fluctuations,
amplification, and a time lag between the retailer to the factory
Beer Game Average - CORRECT ANSWER Everyone averaged around the same even
though some came from different backgrounds yet the players control the game, you can't
blame customer demand
What caused people to act the way they did during the beer game? - CORRECT
ANSWER 1) Lack of communication/cooperation
- guessing of the customer demand-->arbitrary ordering
RESULT: BULLWHIP EFFECT
2) Long lead time: results in panic when inventory does not instantly arrive and solve your
growing backlog, you panic and order even more
Bullwhip effect - CORRECT ANSWER information (orders) going back through the
supply chain is distorted and them amplified
What are the business implications of the supply chain structure? - CORRECT
ANSWER Stockouts at times -> loss of profit and potential lost goodwill
Excess inventory at times-> holding costs, risk of obsolence
Overtime costs-> increase in labour cost
Layoff/Rehiring costs->match staffing levels to fluctuating demand
Expediting-> rush transportation costs
How does the supply chain structure affect consumers? - CORRECT ANSWER Leads
to high costs throughout the supply chain, leading to a higher end price for the consumer
How to improve the supply chain? - CORRECT ANSWER 1) Communication and
Cooperation
,Determine actual consumer demand through technology
Forecasting (promotions, shutdowns, etc, share forecasts, schedules, and decision making)
(ex. Canadian Tire reduced lead time from 46 days to 15!)
2) Shorten Lead times (allows a faster response) - How?
Administration (ordering) lead time - Information Tech
Physical Manufacturing Lead time (just in time production systems)
Transportation lead time (have suppliers geographically close by)
How to encourage communication and cooperation? - CORRECT
ANSWER Incentives to share information (lower unit cost for actual data)
Vendor Managed Inventory
- lower admin costs for the retailer
- vendor sees actual consumer demand
What is on-shoring? - CORRECT ANSWER Ikea's furniture provider opened up shop
in the US which most people thought they were crazy to do so. But the thing is it was very
costly for IKEA to transport the furniture. Having a plant in the US would reduce lead times,
sourcing costs, currency exposure, transportation concerns
What is next-shoring? - CORRECT ANSWER local production near demand "next to"
Reduces logistics costs
- improves environmental performance
Reduces length of lead times
Reduces variability of lead times
Easier to identify local needs
Consumer perception: "jobs in home country"
--> It is a growing focus on countering traditional offshoring by locating facilities closer to a
company's home base
What if you cannot change the supply chain structure? - CORRECT ANSWER Try to
understand the structure and adapt to it and manage
, Ex: "the aspirin rule" - 10 min after taking two aspirin, you likely still have a headache- why
don't you take 2 more right then? YOU ARE AWARE OF THE LEAD TIME AND DONT
PANIC
Adapting to the supply chain structure - CORRECT ANSWER Don't panic and
recognize delays
Systems thinking - before you do anything, analyze how it will impact your supply chain
How to avoid supply chain problems? - CORRECT ANSWER Change the supply
chain structure (if possible)
- Communication and cooperation
- Shorter lead times (admin, manufacturing, distribution)
If you can't change the supply chain structure
- Adapt and recognize delays and predict ordering impacts
Choose "capable" suppliers (don't focus on cost)
- Can they accommodate temporary demand changes
- Are they willing and able to collaborate (share info)
Smooth your supply chain - CORRECT ANSWER Promotions (sales), discounts etc.
create "waves" of demand
P&G example
Everyday lower prices is ideal approach for SCM (sale price but within maximum quantity
ex. limit 4)
Titantic Supply Chain Problems - CORRECT ANSWER While it was being
constructed they had to use poor quality rivets as other ships were being constructed at the
time and the usual rivet supplier could not supply for them. The quality did not match the
competitive standard.
