Florida Institute of Technology

BUSINESS FTMT011B

QUIZ 4

1)A supply chain is not inherently stable. Demand variability increases as one move up the supply chain away from the retail customer, and small changes in customer demand can result in large variations in orders placed upstream. Eventually, the network can oscillate in very large swings as each organization in supply chain seeks to solve the problem from its own perspective. This phenomenon is known as

1. 1. 1. a consequence of the supply chain members’ irrational decision making.
      2. Efficient Customer Response (ECR)
      3. the bullwhip effect
      4. being out of step
      5. forward buying

1. 2. The major causes of the bullwhip effect identified by Hau Lee’s article are
      1. demand forecast updating and order batching
      2. demand forecast updating, price fluctuation, and order batching
      3. demand forecast updating, price fluctuation, order batching and forward buying
      4. demand forecast updating, price fluctuation, order batching rationing and shortage game.
      5. demand forecast updating, price fluctuation, order batching rationing and the supply chain members’ irrational decision making.

1. 3. According to Harold Sirkin, vice president of the Boston Consulting Group, as the economy changes, as competition becomes more global, it’s no longer company vs. company but
      1. CEO vs. CEO
      2. nation vs. nation.
      3. supply chain vs. supply chain.
      4. all of the above
      5. none of the above

1. 4. Using the economic order quantity model, which of the following is the total ordering cost of inventory given an annual demand of 36,000 units, a cost per order of $80 and a holding cost per unit per year of $4?

A. $849

B. $1,200

C. $1,889

D. $2,267

E. $2,400

1. 5. If the safety factory z=2.0, the standard deviation of weekly demand is 64, the lead time is 8 weeks and the review time is 1 week, how much safety stock is needed?

A. 1152

B. 384

C. 1024 Safety stock         z   L      R     2(64) 1 8       384

D. 128

E. None above

1. 6. Continue on question 5. If the manager decide to reduce safety stock by 100 units, what service level he will provides?

A.0.9121 B.0.9207

C.0.9292 Look at the normal table, service level=0.9306 D.0.9306

E.None above

1. 7. Assuming we use a continuous review inventory control system (Review time T=0) and safety stock 100 units, what is the re-­?order point given an average daily demand of 50 units, a lead time of 10 days?

A. 5501

B. 715

C. 600 Reorder point

D. 450

E. 475