Exam 15: Sourcing Decisions in a Supply Chain

A contract that allows the buyer to modify the order (within limits agreed to by the supplier)as demand visibility increases closer to the point of sale is a

Single sourcing for a product is used to

The procurement process for indirect materials should focus on decreasing the transaction cost for each order.

When designing a sourcing strategy,it is important for a firm to

Figure 15-1 -Use Figure 15-1 to answer the question.Most suppliers have a similar price for

A contract that is used to induce performance improvement from a supplier along dimensions,such as lead time,where the benefit of improvement accrues primarily to the buyer,whereas the effort for improvement comes primarily from the supplier is a

Supplier performance must be rated on many different factors because

A production material that lies on the high end of both the value/cost scale and the criticality scale is categorized as a strategic item.

Sales efforts and orders peak near the end of any month,quarter,or other evaluation period.This is commonly referred to as

Using the output from supplier scoring and assessment to identify the appropriate supplier(s)is

Sourcing processes include the selection of suppliers,design of supplier contracts,product design collaboration,procurement of material,and evaluation of supplier performance.

Scenario 15.2 - The Hilltop Gregory and his followers scavenge the countryside for anything of value and with minimal investment,make it ready to provide for any customer visiting their compound.Their average investment in a product is $3,and one popular product,body armor,is in high demand.Residents of The Kingdom and Alexandria in particular,are eager to procure The Hilltop's body armor for $65 and sell it to anyone left in the world at an average price of $650.The demand for the body armor is normally distributed,with a mean of 250 units and a standard deviation of 50. -If The Kingdom and Alexandria are acting independently,how many units should they order?

Scenario 15.1 - The Jerk Store George takes an eclectic mix of spices to make his authentic jerk seasoning as a rub for chicken,pork,and fish.The ingredients and packaging cost $1.50 and he sells the packets by the case to Jerk Stores in the Caribbean for $2.50 per packet.Tourists to the islands gladly pay $8.75 for these packets,eager to host their friends for an authentic Caribbean meal and bore them with vacation photos upon their return.The demand for the packets is normally distributed,with a mean of 2500 packets and a standard deviation of 600. -If each Jerk Store location is acting independently,what is their expected overstock quantity if they order the optimal quantity?

Scenario 15.2 - The Hilltop Gregory and his followers scavenge the countryside for anything of value and with minimal investment,make it ready to provide for any customer visiting their compound.Their average investment in a product is $3,and one popular product,body armor,is in high demand.Residents of The Kingdom and Alexandria in particular,are eager to procure The Hilltop's body armor for $65 and sell it to anyone left in the world at an average price of $650.The demand for the body armor is normally distributed,with a mean of 250 units and a standard deviation of 50. -If Gregory and a single retailer - say Alexandria - act as a vertically integrated supply chain,what is their expected overstock quantity if Alexandria orders optimally?

A third party can increase the supply chain surplus if it has a lower collection cost than the firm.This is called

To improve overall profits,the supplier must design a contract that requires the buyer to share in some of the supplier's demand uncertainty.

Post-ownership costs are not factored in when computing the total cost of ownership.

A third party increases the supply chain surplus if it aggregates the sourcing for many small players and facilitates economies of scale in ordering,inbound transportation and production.This is called

Scenario 15.2 - The Hilltop Gregory and his followers scavenge the countryside for anything of value and with minimal investment,make it ready to provide for any customer visiting their compound.Their average investment in a product is $3,and one popular product,body armor,is in high demand.Residents of The Kingdom and Alexandria in particular,are eager to procure The Hilltop's body armor for $65 and sell it to anyone left in the world at an average price of $650.The demand for the body armor is normally distributed,with a mean of 250 units and a standard deviation of 50. -If The Kingdom and Alexandria are acting independently,what is their expected profit if they order the optimal quantity?

Which of the following is a traditional logistics driver of sourcing?