Principles Of Operations Management 9th Edition By Heizer Render – Test Bank

CHAPTER 11

Supply-Chain Management Anlytics
DISCUSSION QUESTIONS
1. A unique event disrupts only one supplier (e.g., it went
broke). A super event disrupts all suppliers simultaneously (e.g.,
a natural catastrophe).
2. As the probability of a super event increases, the unique
event risk decreases in importance. This can be seen by observing
equation (S11.1). When S increases, (1–S) decreases, so U
n
is
multiplied by a smaller number (i.e., the unique event risk’s relative impact on the probability if all n suppliers being disrupted
simultaneously decreases). Conceptually, if there is a greater
chance that all suppliers will be disrupted simultaneously by a
super event, it becomes relatively less important to be concerned
about all suppliers being disrupted simultaneously by their own
unique events (as all will be more likely to be simultaneously
knocked out by a catastrophe anyway).
3. As the probability of a super event decreases, the likelihood
of needing multiple suppliers increases. This can be seen by
observing equation (S11.1). When S decreases, (1–S) increases,
so U
n
is multiplied by a larger number (i.e., the unique event
risk’s relative impact on the probability of all n suppliers being
disrupted simultaneously increases). Conceptually, if there is a
smaller chance that all suppliers will be disrupted simultaneously by a super event, it becomes relatively more important to
be concerned about all suppliers being disrupted simultaneously
by their own unique events. In this situation, the benefits of
supplier diversification are highest because as each supplier is
added to the mix, the probability of all failing at the same time
decreases significantly.
4. As members of the supply chain try to “cover” their perceived demands, they tend to order more than they should. When
perceived demands begin to fall, the reverse occurs, and orders
become smaller than they should. This phenomenon occurs at
each stage of the supply chain, generating unrealistic estimates of
demand at each stage. Such fluctuations in order sizes create
unstable production schedules, resulting in expensive capacity
change adjustments, such as overtime, subcontracting, extra
inventory, back orders, hiring and firing of workers, equipment
additions, equipment underutilization, longer lead times, and
obsolescence of over-produced items.
5. There are four primary causes of the bullwhip effect: (1)
demand forecast updating (cumulative uncertainty), which can be
remedied by sharing demand information throughout the supply
chain; (2) order batching, which can be remedied through channel
coordination of lot sizing; (3) price fluctuations (promotions and
discounting), which can be remedied via price stabilization practices;
and (4) shortage gaming, which can be remedied by allocating orders
based on past demand.
6. The bullwhip measure provides some insight as to how
members of the supply chain are responding with orders to their
suppliers, based on demand (sales). If the measure for a member
is greater than 1, that member is experiencing variance amplification and is contributing to the bullwhip effect. Once the culprits
have been identified, corrective action can focus on those supplychain members.
7. A multitude of potential factors could be deemed important for supplier selection. The proper set would be dependent
upon the buyer’s customer needs and its competitive priorities.
Certainly, characteristics such as product cost, product quality,
delivery speed and reliability, customer service, and financial
performance would be good candidates. Other specific criteria,
such as those identified in Example S11.3, might apply for any
given situation.
8. The use of a factor-weighting approach can help firms systematically identify the features that are important to them and evaluate
potential suppliers in an objective manner. A certain degree of subjectivity remains in the process, however, with regard to the criteria
chosen, the weights applied to those criteria, and the supplier scores
that are applied to each criterion. Also, sometimes there may be
political/regulatory and economic/legal issues to consider, or perhaps
issues such as maintaining a strong relationship with the parent company of a supplier may take priority.
9. Slow shipping methods tie up products and the related
investment. Thus, pipeline holding costs increase. In addition,
coordinating shipments to maintain a schedule may become more
challenging, as well as getting the product to market quickly and
keeping customers happy. For example, for some high-tech products that have components sourced throughout the world, the
technology is moving on while the product is being shipped. Students may find it interesting to note that some computer chips take
two dozen airplane rides prior to final sale.
END-OF-SUPPLEMENT PROBLEMS
S11.1 Relevant factors could include frequency rates of natural
disasters, geologic or meteorologic predictions of natural disasters, current state of political or military turmoil, global economic
predictions, crime and vandalism rates, frequency rates of fires, or
past frequency of delivery failures of suppliers.