INSE 6300/4/UU-Quality Assurance in Supply Chain Management (Winter 2007) Mid-Term Exam

Transcription

1 INSE 6300/4/UU-Quality Assurance in Supply Chain Management (Winter 2007) Mid-Term Exam Professor: J. Bentahar Date: Thursday, March 15, 2007 Duration: 120 minutes NAME: ID: INSTRUCTIONS: Answer all questions on these sheets in the space provided, and if you run out of space please use the back of the page. The use of calculators is permitted. This exam is 13 pages long, including the cover page and the appendices A, B, C, and D. Check that your copy is complete. This exam is out of 100 points. This is a closed book examination. 1

2 Part I. Multiple Choices and True or False (10Pt.) 1- What is the difference between static and adaptive forecasting? a- Static forecasting is based on time series while adaptive forecasting is based on deseasonalized demand. b- Static forecasting supposes that the estimates of the systematic component do not vary as new demand is observed, while adaptive forecasting updates the systematic component after each demand observation. c- Static forecasting is based on time series, while adaptive forecasting is based on time series and normal distribution. 2- De seasonalized demand is used only for static forecasting, but not for adaptive forecasting. a- True b- False 3- The three flows of a supply chain are: a- Information, Products, and Funds b- Products, Inventories, and Funds c- Uncertainty, Inventories, and Network design 4- Moving average is a method used to compute safety inventory a- True b- False 2

3 5- A difference between cycle inventory and seasonal inventory is that seasonal inventory is based on the predictable variability in demand, while cycle inventory represents the average amount of inventory. a- True b- False Part II. Discussion Questions (25Pt.) 1- Consider a firm such as Dell, with very few production facilities. List the pros and cons of this approach. 3

4 2- Why is it important to consider uncertainty when evaluating supply chain design decisions? 3- What types of distribution networks are typically best suited for commodity items? 4

5 4- List and briefly discuss some key quality issues of supply chain. 5- Give arguments to support the statement that Wal-Mart has achieved very good strategic fit between its competitive and supply chain strategies. 5

6 Part III. Exercises (65Pt.) Exercise 1 (20Pt.) KodiFrotti is a manufacturer of refrigerators. It has 4 plants in US, Japan, Italy, and India. The important markets are North America, Europe, North Africa, and Asia. The locations, capacity, demand, production costs, and transportation costs from each plant to each market are as follows: N. America Europe N. Africa Asia Capacity / year * 10 3 Production Cost(Million) U.S $395 Japan $360 Italy $572 India $140 Demand / Year *

7 1- Write the linear program to decide about how much should each plant produce and which market should each plant supply if no plant can run below 65 percent of capacity. 7

8 2- Write the linear program to decide about the same problem if there are no limits on production. 3- Theoretically speaking, and without doing any calculation, what do you think about the total cost we can obtain with the linear program of question 1 compared to the cost we can get with the linear program of question 2? 8

9 Exercise 2 (18Pt.) UniPart, a manufacturer of auto parts, is considering two different marketplaces to purchase its MRO supplies. Both market places provide very similar service levels and lead times. However, their fee structures are quite different: 1- The first marketplace Parts4u sells all its products with a 5% commission tacked on top of the price of the product. 2- The second marketplace AutoParts charges a subscription fee of $10 million that should be paid up front a two-year period and a commission of 1% on each transaction s product price. Unipart spends about $ 150 million on MRO supplies each year. Next year, probably, high utilization will keep MRO spending at $150 million. However, there is a 25% chance that spending will drop by 10%. In the second year, there is a 50% chance that the spending level will stay where it was in the first year and a 50% chance that it will drop by another 10%. The discount rate is 20%. 1- What is the technique to use in order to decide about the marketplace should UniPart buy its parts from? 2- What are the different spending scenarios? Indicate the different spending values and the associated probabilities. 9

10 3- Calculate the total cost of option Parts4u for the scenario where the spending has been kept at the same level for two successive years? 4- Calculate the total cost of option AutoParts for the same scenario? 10

11 Exercise 3 (07Pt.) 1- What is the intuition behind the discount factor? 1 Discount factor = 1 + k C0, C1,..., CT 2- Let be is a stream of cash flows. Explain how we can obtain: T t 1 = 0 + t= 1 1+ k NPV C C t 11

12 Exercise 4 (20Pt.) 1- Explain the relationship between safety inventory and demand forecasting. 2- What is the meaning of lead time when considering safety inventory? 3- Explain the relationship between safety inventory (ss), the reorder point (ROP), and the average demand D per period, during the period L. (Please explain, not just give the formula) 4- Explain the meaning of Cycle Service Level (CSL) in safety inventory? 12

13 5- In the simple Exponential Smoothing, we know that after observing demand D t+1, we can revise the estimate of the level as follows: L t+1 = αd t+1 + (1-α)L t a- How we can select α if we would like to be more responsive to recent observations? (Explain) b- What happens if α has a lower value? (Explain) 13