BUSOBA 3230 Exam 2 | Questions and Answers

BUSOBA 3230 Exam 2 | Questions and Answers In a recent post, it was indicated that Tesla currently has the capacity to build 90k Model S/X and 400k Model 3/Y in Fremont, California, with an additional 150k capacity for Model 3s in Shanghai. Which of the following are true? (Select all that are correct) These are input measures They indicate the number of cars needed to break-even These are productivity measures These are output measures They indicate the maximum number of cars that can be produced per year They indicate the maximum utilization rate Consider two generic strategies for expanding capacity: (1) small, frequent increases (2) larger, infrequent increases Match industry examples with typical capacity expansion strategies and their associated risks. i. Apple ii. Charmin Apple- larger, infrequent increases Charmin- small, frequent increases Typically speaking, how are capital intensity, fixed costs, and economies of scale related? Higher capital intensity = greater fixed costs = greater opportunities of economies of scale Match the industry example with the typical demand uncertainty and capacity cushions. restaurant automotive industry restaurant - high demand uncertainty, high capacity cushion automotive - lower demand uncertainty, lower capacity cushion Southwest airlines has set utilization at 60% in response to COVID-19 pandemic. If an airplane has 100 seats, how many seats will be sold? 60 When lead time, L = 0 and demand is constant, the reorder point (ROP or R) = _______units. 0 When is Q (order quantity) optimal? annual holding cost = annual ordering cost When lead time 0 & constant and demand is constant, reorder point (ROP or R) = R=dL When lead-time 0 and demand is NOT constant, reorder point (ROP or R) = R=dL + SS Finding the overall capacity level of capital-intensive resources to best support the firm's long-term strategy. Strategic capacity planning The output that a system is capable of achieving over a period of time. Capacity Measure of how close the firm's current output rate is to its best operating level (percent). Capacity Utilization Rate Idea that as the plant gets larger and volume increases, the average cost per unit drops. At some point, the plant gets too large and cost per unit increases. Economies of Scale When multiple products can be produced at lower cost in combination than they can be separately. Economies of Scope All the money that the system has invested in purchasing things it intends to sell (Goldratt's definition) Inventory The demands for these items are unrelated to each other, or to activities that can be predicted with certainty. Independent demand The need for an item is a direct result of the need for some other item, usually an item of which it is a part. Also, when the demand for the item can be predicted with accuracy due to a schedule or specific activity. Dependent Demand An inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specified level of inventory. Fixed-order quantity model (Q-model) The amount on hand plus on-order minus backordered quantities. In the case where inventory has been allocated for special purposes, the inventory position is reduced by these allocated amounts. Inventory Position This order size minimizes total annual cost. Optimal order quantity (Qopt) An order is placed when inventory drops to this level. Reorder Point (R) The amount of inventory carried in addition to the expected demand. Safety Stock A measure of the expected number of times inventory is replaced over a year. Inventory Turn Divides inventory into dollar volume categories that map into strategies appropriate for the category. ABC inventory classification The development and management of supplier relationships to acquire goods and services in a way that aids in achieving the needs of a business. Strategic sourcing A process suitable for procuring products that are strategically important to the firm. Sourcing When a customer allows the supplier to manage the inventory policy of an item or group of items. Vendor-managed inventory A program for automatically supplying groups of items to a customer on a regular basis. Continuous replenishment Staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations. Functional products Products such as fashionable clothes and personal computers that typically have a life cycle of just a few months. Innovative products Moving some of a firm's internal activities and decision responsibility to outside providers. Outsourcing Practice where a single entity controls the entire process of a product, from the raw materials to distribution Vertical Integration A measure of supply chain efficiency. inventory turnover The annual cost for a company to produce the goods or services provided to customers. Cost of Goods sold The average total value of all items held in inventory for the firm, valued at cost Average aggregate inventory value Preferred measure of supply chain efficiency that is mathematically the inverse of inventory turnover times 52. Weeks of supply Which of the following are true about the importance of supply chain management? (Select all that apply) Supply chain management directly impacts cost, quality, and availability of raw materials Good supply chain management eliminates forecast errors Supply chain management directly impacts inventory turnover and return on assets Good supply chain management can eliminate global supply chain risk Match the following products with their product type and most applicable supply chain strategy: Trendy Clothes A loaf of bread Trendy Clothes: Innovative product and responsive supply chain A loaf of bread: Functional Product and Efficient Supply Chain Made-to-Stock (MTS) strategies typically use continuous flow, line, or large batch processes in order to... focus on cost efficiency and speed of delivery.. focus on customization and variety. the focus is on minimizing time between orders. focus is on responsiveness and development speed.. In supply chains, inventory held "upstream" can result in lower aggregate average inventory values because transformational "value adding" processes have not yet been performed. On the other hand, it is sometimes moved "downstream" closer to the customer (forward placement) in order to: Reduce inventory costs Reduce risk of bullwhip effect Increase return on assets Improve speed of customer delivery Why was it so challenging for the supply of toilet paper to keep up with sudden increases in demand during the pandemic? Additional links in the supply chain increased the risk of a "bullwhip" effect Manufacturers had very little idle capacity (low capacity cushions) It is costly to change from commercial to consumer production All of these Supply chains are networks of independent entities, each acting on their own best interests. Getting everyone "synchronized" is a challenge. For example, a retailer increasing their order quantities in anticipation of a price increase can send signals upstream creating a "bullwhip" effect across the supply chain. What does this mean? (Pick the best answer) Inventory levels are increased uniformly throughout the supply chain. Firms are motivated to make independent decisions to pursue their own objectives. Variability is magnified as we move downstream in a supply chain. Variability is magnified as we move upstream in a supply chain. Supply chain management has evolved from being primarily concerned with purchasing decisions to a more strategic role in many firms. What evidence best supports this view? The involvement of more complex processes and decisions that are of strategic importance to the firm. Vendor-managed inventory practices The use of EOQ inventory systems The short-term / higher turnover nature of supply contracts. Zara is an example of a company using supply chain management for strategic positioning in the market. Examples of this include which of the following? (Pick all that are correct)