Question 1

Explain how revenue management is beneficial.

Accepted Answer

Revenue management adjusts the pricing a

Question 2

The decision to use overbooking will

Accepted Answer

A) lead to upset customers and a high cost of providing them space. 
B) lead to unutilized assets and lost revenue. 
C) lead to reduced profits. 
D) depend upon optimization to be successful. 
A) lead to upset customers and a high cost of providing them space. 
B) lead to unutilized assets and lost revenue. 
C) lead to reduced profits. 
D) depend upon optimization to be successful.

Question 3

In most instances of differential pricing,demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

Accepted Answer

A) True 
 B)False

Question 4

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

Accepted Answer

A) True 
 B)False

Question 5

An order from a lower price buyer

Accepted Answer

A) should always be accepted rather than waiting for potential revenue from a higher price buyer. 
B) should only be accepted if the expected revenue from a higher price buyer is higher than the current revenue from the lower price buyer. 
C) should be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer. 
D) should not be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer. 
A) should always be accepted rather than waiting for potential revenue from a higher price buyer. 
B) should only be accepted if the expected revenue from a higher price buyer is higher than the current revenue from the lower price buyer. 
C) should be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer. 
D) should not be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer.

Question 6

Shifting demand from peak to off-peak periods is beneficial if the discount given

Accepted Answer

A) during the off-peak period is more than offset by the decrease in cost because of a larger peak. 
B) during the off-peak period is more than offset by the decrease in cost because of a smaller peak. 
C) during the peak period is more than offset by the decrease in cost because of a smaller peak. 
D) during the peak period is more than offset by the decrease in cost because of a larger peak. 
A) during the off-peak period is more than offset by the decrease in cost because of a larger peak. 
B) during the off-peak period is more than offset by the decrease in cost because of a smaller peak. 
C) during the peak period is more than offset by the decrease in cost because of a smaller peak. 
D) during the peak period is more than offset by the decrease in cost because of a larger peak.

Question 7

Scenario 16.4 - Santorini Donkeys
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the town of Fira.One cruise line that routinely docks at the port is considering a plan to maintain their own donkey herd,which will cost them $15,000 per thousand tourists.The number of tourists needing this service is normally distributed,with a mean of 10,000 and a standard deviation of 3,000.Usually,this is enough donkey capacity,but occasionally the cruise line rotates a bigger ship through this route and the excursion director must purchase donkey capacity on the spot market,where is costs $20 per tourist.
-Once a local donkey herder learns of the cruise line's plan,he lowers his donkey rental price to $17.50 per tourist.How many donkeys should be in the cruise line's herd?

Accepted Answer

A) 7,264 
B) 6,684 
C) 6,711 
D) 6,797 
A) 7,264 
B) 6,684 
C) 6,711 
D) 6,797

Question 8

Scenario 16.4 - Santorini Donkeys
Sturdy little donkeys are used to carry corpulent tourists up the Santorini caldera to the town of Fira.One cruise line that routinely docks at the port is considering a plan to maintain their own donkey herd,which will cost them $15,000 per thousand tourists.The number of tourists needing this service is normally distributed,with a mean of 10,000 and a standard deviation of 3,000.Usually,this is enough donkey capacity,but occasionally the cruise line rotates a bigger ship through this route and the excursion director must purchase donkey capacity on the spot market,where is costs $20 per tourist.
-Once a local donkey herder learns of the cruise line's plan,he raises his donkey rental price to $25 per tourist.How many donkeys should be in the cruise line's herd?

Accepted Answer

A) 9,311 
B) 8,971 
C) 9,240 
D) 8,707 
A) 9,311 
B) 8,971 
C) 9,240 
D) 8,707

Question 9

Scenario 16.7 - Commencement
Every year at commencement,the president hands out diploma covers to joyous students that cross the front of the auditorium to accept the cover and a hearty handshake.Commencement exercises have averaged 850 students with a standard deviation of 70 the last several years.The bookstore can provide a box of 144 diploma covers for $2,000 but is unwilling to break bulk.Any additional diploma covers must be purchased on the black market at $15 each.
-Use Scenario 16.7 to answer the following.If the university orders the optimal number of boxes of diploma covers from the bookstore,how many additional covers must they obtain from the black market?

Accepted Answer

A) 81 
B) 87 
C) 90 
D) 94 
A) 81 
B) 87 
C) 90 
D) 94

Question 10

The cost of a capacity shortage is

Accepted Answer

A) the reduction in margin that results from having to go to a backup source. 
B) the margin that would have been generated if the capacity had been used for production. 
C) the productivity increase generated when the capacity is used for production. 
D) the sales potential of excess capacity kept in reserve for emergency production. 
A) the reduction in margin that results from having to go to a backup source. 
B) the margin that would have been generated if the capacity had been used for production. 
C) the productivity increase generated when the capacity is used for production. 
D) the sales potential of excess capacity kept in reserve for emergency production.

Question 11

Salespeople must understand the revenue management tactic in place so they can align their sales pitch accordingly.

Accepted Answer

A) True 
 B)False

Question 12

Wasted capacity (or inventory)occurs when

Accepted Answer

A) there are excessive cancellations. 
B) there are few cancellations. 
C) an expensive backup needs to be arranged. 
D) all of these 
A) there are excessive cancellations. 
B) there are few cancellations. 
C) an expensive backup needs to be arranged. 
D) all of these

Question 13

In theory,the concept of differential pricing decreases total cost for a firm.

Accepted Answer

A) True 
 B)False

Question 14

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen.The sponsor is independently wealthy,so he donates his time and materials to the fundraising effort.Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season,which is four months.Eighteen sad years of experience have revealed that demand varies depending on the month of the season.Customer demand in the first month can be described as 400-p1,in the second month as 400-1.4p2,in the third month 400-1.8p3,and in the fourth month 400-2.2p4.The club sponsor has only 400 spare mason jars this year after a busy summer collecting specimens.
-Responding to customer complaints (primarily from period 1 purchasers)the student APICS chapter decides to use static pricing over the four month season.The club sponsor makes a deal with the local bootlegger to supply him with all the mason jars he will need for the barbecue season.What is the optimal price to charge for their barbecue sauce?

Accepted Answer

A) $122.50 
B) $125.00 
C) $127.50 
D) $130.00 
A) $122.50 
B) $125.00 
C) $127.50 
D) $130.00

Question 15

Scenario 16.2 - Card Table Vendor
The traditional fundraiser for the student chapter of APICS is pint mason jars filled with a tangy barbecue sauce that the club sponsor whips up in his kitchen.The sponsor is independently wealthy,so he donates his time and materials to the fundraising effort.Club officers set up a card table in the atrium of the business building and take turns staffing it for the duration of the barbecue season,which is four months.Eighteen sad years of experience have revealed that demand varies depending on the month of the season.Customer demand in the first month can be described as 400-p1,in the second month as 400-1.4p2,in the third month 400-1.8p3,and in the fourth month 400-2.2p4.The club sponsor has only 400 spare mason jars this year after a busy summer collecting specimens.
-What should the price be in period 3?

Accepted Answer

A) $185.13 
B) $181.27 
C) $177.43 
D) $173.61 
A) $185.13 
B) $181.27 
C) $177.43 
D) $173.61

Question 16

Describe the role of revenue management.

Accepted Answer

Pricing is an important lever to increas

Question 17

Effective differential pricing over time will generally increase the level of product availability for the consumer willing to pay full price,but will decrease total profits for the retailer.

Accepted Answer

A) True 
 B)False

Question 18

The tactic of overbooking or overselling the available asset is suitable where

Accepted Answer

A) there is a clear date beyond which the asset loses a lot of its value. 
B) there is no clear date beyond which the asset loses a lot of its value. 
C) customers are able to cancel orders and the value of the asset drops significantly after a deadline. 
D) customers are unable to cancel orders and the value of the asset drops significantly after a deadline. 
A) there is a clear date beyond which the asset loses a lot of its value. 
B) there is no clear date beyond which the asset loses a lot of its value. 
C) customers are able to cancel orders and the value of the asset drops significantly after a deadline. 
D) customers are unable to cancel orders and the value of the asset drops significantly after a deadline.

Question 19

Scenario 16.1 - The Stone Lion
The Stone Lion,a bed and breakfast located in a sleepy town,caters to two groups of customers,young couples interested in something marginally more exotic than a staycation,and corporate clients interested in doing some team-building at a location with no cellular service.Corporations know they can get rooms with minimal notice,but young couples on tight budgets tend to plan well in advance of their planned stay at the property.The corporate rate for rooms is $250 per person and the demand pattern is normal with a mean of 20 and a standard deviation of 10.The proprietor of the Stone Lion takes pity on the young couples and charges them only $150 for identical accommodations.
-What is the difference in the number of rooms that should be held by the Stone Lion if the standard deviation of corporate demand increases by five and if it decreases by five?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 20

Pricing may influence demand if customers are price sensitive.

Accepted Answer

A) True 
 B)False

Explain how revenue management is beneficial.

The decision to use overbooking will

In most instances of differential pricing,demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

An order from a lower price buyer

Shifting demand from peak to off-peak periods is beneficial if the discount given

The cost of a capacity shortage is

Salespeople must understand the revenue management tactic in place so they can align their sales pitch accordingly.

Wasted capacity (or inventory)occurs when

In theory,the concept of differential pricing decreases total cost for a firm.

Describe the role of revenue management.

Effective differential pricing over time will generally increase the level of product availability for the consumer willing to pay full price,but will decrease total profits for the retailer.

The tactic of overbooking or overselling the available asset is suitable where

Pricing may influence demand if customers are price sensitive.

Understanding the Supply Chain

Achieving Strategic Fit in a Supply Chain

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand

Coordination in a Supply Chain

Managing Economies of Scale in a Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Linking Product Availability to Profits

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Sustainability and the Supply Chain

Filters

Exam 16: Pricing and Revenue Management in a Supply Chain

Explain how revenue management is beneficial.

The decision to use overbooking will

In most instances of differential pricing,demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

An order from a lower price buyer

Shifting demand from peak to off-peak periods is beneficial if the discount given

The cost of a capacity shortage is

Salespeople must understand the revenue management tactic in place so they can align their sales pitch accordingly.

Wasted capacity (or inventory)occurs when

In theory,the concept of differential pricing decreases total cost for a firm.

Describe the role of revenue management.

Effective differential pricing over time will generally increase the level of product availability for the consumer willing to pay full price,but will decrease total profits for the retailer.

The tactic of overbooking or overselling the available asset is suitable where

Pricing may influence demand if customers are price sensitive.

Understanding the Supply Chain

Achieving Strategic Fit in a Supply Chain

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand

Coordination in a Supply Chain

Managing Economies of Scale in a Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Linking Product Availability to Profits

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Sustainability and the Supply Chain

Filters