Exam 12: Supply Chain Design

Scenario 12.1 You currently make a part on old equipment at a cost of $50,000 per year and a variable cost of $20 / unit. You have found an outside supplier who will make the part for $15 / unit if you will pay their annual fixed costs of $200,000 / year. The following table summarizes the details of this make versus buy decision. -Use Scenario 12.1 to answer the question. What are total costs to make a quantity of 40,000 units per year?

The average inventory at Hamilton Industries, comprising raw materials, work-in-process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.

Scenario 12.2 SAGE Inc. receives too many applications each year for the Global MBA program so they turn to their network of partners for assistance. Nothing in this world is free, of course, so their partners provide quotes that include a per student cost as well as a facilities cost that SAGE would pay regardless of the number of students they sent there. The costs in Rupees ( ) are elegantly summarized in the table below. -Use Scenario 12.2 to answer the question. What is the lowest variable cost that causes the Wisconsin option to never be the optimal location?

Efficient supply chains work best when contribution margins are high.

The purpose of supply chain design is to shape a firm's supply chain to meet the competitive priorities of its operations strategies.

A typical manufacturer spends:

The objective of a firm in a responsive supply chain is likely to be realized if it has a:

Responsive supply chains should be preferred when:

An efficient supply chain typically has:

Last year, RJT Enterprises had average inventories (raw materials, work-in-process, and finished goods) of $7.5 million. During this same year the cost of goods sold was $30 million. The company operates 50 weeks per year. a. What is their total inventory (measured as weeks of supply)? b. What is their inventory turnover?

While it is important to manufacturing firms, little can be done to improve supply chain strategy in most service organizations.

________ uses a firm's flexible processes to generate a wide variety of personalized services or products at reasonably low costs.

Responsive supply chains work best when frequent product introduction exists.

What is mass customization and what advantages does a producer benefit from if they can realize it?

The purpose of supply chain management is to synchronize a firm's processes with those of its suppliers and customers.

________ is the process of using members of the distribution channel as if they were assembly stations in the factory.

The VP of Finance studied the printing costs at the university and knew it was time for bold, decisive action. The annual fixed cost of printing at the school was $1,250,000 and the per-page cost was one cent. Fortunately, his brother-in-law happened to own a company that would lease the printers to the university for only $850,000 and charge three cents per page. At what point would the university be indifferent between owning their printers and leasing their printers?