Global Supply Chain Decision Making
53 Questions
1 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary reason to consider Total Landed Cost when making global sourcing decisions?

  • To evaluate all costs from production to delivery (correct)
  • To maximize profits
  • To minimize transportation costs
  • To reduce labor costs

    • Which of the following is an example of a Risk Mitigation Strategy?

  • Dedicated manufacturing plants
  • Long-term contracts with suppliers
  • Fixed production schedules
  • Flexible capacity and inventory buffers (correct)

    • What is a key consideration when evaluating global supply chain design decisions under uncertainty?

  • Only labor costs
  • Only transportation costs
  • All costs from production to delivery (correct)
  • Only commodity prices

    • What is the primary benefit of using decision trees in global supply chain design decisions?

    <p>To consider all possible outcomes and associated risks</p> Signup and view all the answers

    What is an example of a best practice in global supply chain design decision-making?

    <p>Conducting sensitivity analysis</p> Signup and view all the answers

    What is the primary benefit of integrating strategic and financial planning in global supply chain design?

    <p>To evaluate supply chain options under uncertainty</p> Signup and view all the answers

    What is a key uncertainty to consider in global supply chain design?

    <p>Demand, price, and economic uncertainties</p> Signup and view all the answers

    What is the primary goal of using multiple evaluation metrics in global supply chain design?

    <p>To evaluate decisions using various metrics</p> Signup and view all the answers

    What is the primary goal of offshoring production to low-cost countries?

    <p>To reduce production costs</p> Signup and view all the answers

    What is included in the calculation of total landed cost?

    <p>Production costs, transportation costs, inventory costs, and risk-related costs</p> Signup and view all the answers

    What is a risk factor that can impact the cost-effectiveness of offshoring?

    <p>Fluctuations in exchange rates</p> Signup and view all the answers

    What is the benefit of global supply chains in terms of cost reduction?

    <p>Through economies of scale and the consolidation of production in low-cost countries</p> Signup and view all the answers

    What is an example of a company that has successfully penetrated emerging markets?

    <p>Procter &amp; Gamble (P&amp;G)</p> Signup and view all the answers

    What is a challenge associated with global supply chains?

    <p>Increased risk of supply chain disruptions and demand fluctuations</p> Signup and view all the answers

    What is an example of a risk-related cost in total landed cost calculation?

    <p>Cost of natural disaster insurance</p> Signup and view all the answers

    What is the primary benefit of evaluating total landed cost in offshoring decisions?

    <p>To evaluate the total cost of offshoring including all relevant costs</p> Signup and view all the answers

    What is a primary concern in global supply chains that can be mitigated by implementing multiple suppliers?

    <p>Supply disruptions</p> Signup and view all the answers

    Which risk mitigation strategy adjusts production levels to match demand fluctuations?

    <p>Flexible capacity</p> Signup and view all the answers

    What is the purpose of discounted cash flow analysis in evaluating global supply chain design decisions?

    <p>To evaluate the financial viability of different supply chain options</p> Signup and view all the answers

    What is the term for the rate of return used to discount future cash flows to their present value?

    <p>Discount rate</p> Signup and view all the answers

    Which component of a decision tree represents possible outcomes and their probabilities?

    <p>Branches</p> Signup and view all the answers

    What is the primary benefit of using multiple suppliers in a global supply chain?

    <p>Reducing the risk of supply disruptions</p> Signup and view all the answers

    What is the purpose of evaluating global supply chain design decisions using decision trees?

    <p>To evaluate decisions under uncertainty</p> Signup and view all the answers

    What is the term for the present value of future cash flows minus the initial investment?

    <p>Net present value</p> Signup and view all the answers

    In a global supply chain, what is a potential disadvantage of using inventory buffers as a risk mitigation strategy?

    <p>It increases the risk of obsolescence.</p> Signup and view all the answers

    What is the primary purpose of using decision trees in evaluating global supply chain design decisions?

    <p>To identify potential risks and their probabilities</p> Signup and view all the answers

    What is a key benefit of using multiple suppliers in a global supply chain?

    <p>It reduces the risk of supply disruptions</p> Signup and view all the answers

    In a global supply chain, which of the following is an example of a supply chain risk?

    <p>Volatility in demand</p> Signup and view all the answers

    What is the primary purpose of Discounted Cash Flow (DCF) analysis in evaluating global supply chain design decisions?

    <p>To evaluate the present value of future cash flows</p> Signup and view all the answers

    Which component of a decision tree represents decision points or uncertain events?

    <p>Nodes</p> Signup and view all the answers

    What is a key consideration when evaluating global supply chain design decisions under uncertainty?

    <p>Considering multiple scenarios and their probabilities</p> Signup and view all the answers

    What is the purpose of evaluating global supply chain design decisions using decision trees?

    <p>To evaluate supply chain design decisions under uncertainty</p> Signup and view all the answers

    What is a key benefit of using hedging as a risk mitigation strategy in global supply chains?

    <p>It reduces the risk of exchange rate fluctuations</p> Signup and view all the answers

    What is the primary objective of evaluating total landed cost in offshoring decisions?

    <p>To identify potential risks and uncertainties</p> Signup and view all the answers

    Which of the following is a key factor to consider when evaluating supplier selection in global supply chain design?

    <p>Supplier price</p> Signup and view all the answers

    What is a primary benefit of using discounted cash flow analysis in evaluating global supply chain design decisions?

    <p>To quantify the present value of future cash flows</p> Signup and view all the answers

    Which of the following is an example of a risk management strategy in global supply chain design?

    <p>Implementing multiple suppliers</p> Signup and view all the answers

    What is the primary goal of using decision trees in global supply chain design decisions?

    <p>To visualize complex decision-making processes</p> Signup and view all the answers

    What is a primary benefit of integrating strategic and financial planning in global supply chain design?

    <p>To improve decision-making under uncertainty</p> Signup and view all the answers

    Which of the following is a challenge associated with global supply chains?

    <p>Supply chain disruptions</p> Signup and view all the answers

    What is a primary concern in global supply chains that can be mitigated by implementing multiple suppliers?

    <p>Supply chain disruptions</p> Signup and view all the answers

    What is the primary benefit of evaluating total landed cost in offshoring decisions?

    <p>To identify potential risks and uncertainties</p> Signup and view all the answers

    Which of the following is an example of a best practice in global supply chain design decision-making?

    <p>Implementing multiple suppliers</p> Signup and view all the answers

    What is the primary objective of evaluating total landed cost in global supply chain design decisions?

    <p>To identify the optimal sourcing strategy</p> Signup and view all the answers

    Which of the following risk management strategies is most effective in addressing demand uncertainties?

    <p>Flexible capacity</p> Signup and view all the answers

    What is the primary benefit of using discounted cash flow analysis in evaluating global supply chain design decisions?

    <p>To estimate the present value of future cash flows</p> Signup and view all the answers

    What is the primary characteristic of a well-designed supply chain network?

    <p>Flexibility to respond to changing demand patterns</p> Signup and view all the answers

    Which of the following is a key consideration when evaluating supplier selection?

    <p>Supplier's financial stability</p> Signup and view all the answers

    What is the primary benefit of using multiple evaluation metrics in global supply chain design decisions?

    <p>To ensure that all stakeholders' interests are considered</p> Signup and view all the answers

    What is the primary goal of sensitivity analysis in global supply chain design decisions?

    <p>To assess how changes in input assumptions affect outcomes</p> Signup and view all the answers

    What is the primary benefit of integrating strategic and financial planning in global supply chain design?

    <p>To evaluate supply chain design options under uncertainty</p> Signup and view all the answers

    What is the primary challenge associated with using decision trees in global supply chain design decisions?

    <p>Defining the decision tree's structure and variables</p> Signup and view all the answers

    What is the primary benefit of using a combination of risk management strategies in global supply chain design?

    <p>To increase the effectiveness of individual risk management strategies</p> Signup and view all the answers

    Study Notes

    Decision Trees and Global Supply Chain Design

    • Decision trees help managers make optimal decisions by considering all possible outcomes and their associated risks.
    • Payoffs refer to the expected value of each decision path.

    Evaluating Global Supply Chain Design Decisions

    • Offshoring can reduce labor and production costs, but increases risks related to transportation, lead times, and geopolitical factors.
    • Key considerations include:
      • Total Landed Cost: all costs from production to delivery.
      • Risk Mitigation: strategies like flexible capacity and inventory buffers can offset some risks.
      • Economic Volatility: exchange rates and commodity prices can significantly impact the cost-effectiveness of offshoring.

    Making Global Supply Chain Design Decisions Under Uncertainty

    • Practical considerations include:
      • Integrated Planning: combining strategic and financial planning.
      • Multiple Metrics: using various metrics such as profits, customer service levels, and response times.
      • Sensitivity Analysis: assessing how changes in input assumptions affect outcomes.

    Risk Management in Global Supply Chains

    • Global supply chains face more risks compared to localized supply chains, including:
      • Supply disruptions.
      • Demand fluctuations.
      • Price volatility.
      • Exchange rate fluctuations.
    • Risk Mitigation Strategies:
      • Multiple Suppliers.
      • Flexible Capacity.
      • Inventory Buffers.
      • Hedging: financial strategies to manage currency and fuel price fluctuations.

    Discounted Cash Flows

    • Evaluating global supply chain design decisions requires considering future cash flows and their present value.
    • Discounted cash flow (DCF) analysis helps compare the financial viability of different supply chain options.
    • Key Concepts:
      • Net Present Value (NPV): the present value of future cash flows minus the initial investment.
      • Discount Rate: the rate of return used to discount future cash flows to their present value.

    Global Supply Chain Networks

    • Globalization offers companies the opportunity to increase revenues and decrease costs, but also introduces significant risks and uncertainties.
    • Global supply chains benefit from cost reductions through economies of scale and the consolidation of production in low-cost countries.
    • However, these advantages come with risks, such as supply chain disruptions and demand fluctuations.

    The Offshoring Decision

    • Offshoring involves moving production to low-cost countries to reduce costs.
    • Key factors to consider include:
      • Supplier Price.
      • Transportation Costs.
      • Inventory Costs.
      • Risk Factors: natural disasters, geopolitical risks, and economic volatility.

    Risk Management in Global Supply Chains

    • Global supply chains face more risks, including supply disruptions, demand fluctuations, price volatility, and exchange rate fluctuations.
    • Effective risk management involves identifying these risks and implementing mitigation strategies.
    • Risk mitigation strategies include:
      • Multiple suppliers to reduce the risk of supply disruption
      • Flexible capacity to adjust production levels to match demand fluctuations
      • Inventory buffers to mitigate delays but increase the risk of obsolescence
      • Hedging to manage currency and fuel price fluctuations

    Discounted Cash Flows

    • Evaluating global supply chain design decisions requires considering future cash flows and their present value.
    • Discounted cash flow (DCF) analysis helps compare the financial viability of different supply chain options.
    • Key concepts:
      • Net Present Value (NPV): The present value of future cash flows minus the initial investment
      • Discount Rate: The rate of return used to discount future cash flows to their present value

    Evaluating Network Design Decisions Using Decision Trees

    • Decision trees are used to evaluate supply chain design decisions under uncertainty by mapping out possible scenarios and their associated probabilities.
    • Decision tree components:
      • Nodes: Represent decision points or uncertain events
      • Branches: Represent possible outcomes and their probabilities

    The Impact of Globalization on Supply Chain Networks

    • Globalization offers companies the opportunity to increase revenues and decrease costs.
    • However, it also introduces significant risks and uncertainties, such as fluctuations in exchange rates, volatile fuel prices, and geopolitical uncertainties.
    • Examples:
      • Procter & Gamble (P&G) reported substantial sales growth from developing markets with comparable profit margins to developed markets
      • Samsung: 86% of Samsung's sales were outside Korea, highlighting its effective penetration into emerging markets like China and India

    The Offshoring Decision: Total Cost

    • Offshoring involves moving production to low-cost countries to reduce costs.
    • Key factors to consider:
      • Supplier Price: Direct and indirect labor, materials, overhead, local taxes, and regulatory compliance costs
      • Transportation Costs: Include freight costs and the impact of distance on logistics
      • Inventory Costs: Higher due to longer lead times and increased safety stock requirements
      • Risk Factors: Natural disasters, geopolitical risks, and economic volatility can impact cost-effectiveness

    To Onshore or Offshore: Evaluation of Global Supply Chain Design Decisions Under Uncertainty

    • Evaluating the decision to onshore or offshore involves considering both costs and risks.
    • Considerations:
      • Total Landed Cost: Includes all costs from production to delivery
      • Risk Mitigation: Strategies like flexible capacity and inventory buffers can offset some risks
      • Economic Volatility: Exchange rates and commodity prices can significantly impact the cost-effectiveness of offshoring

    Making Global Supply Chain Design Decisions Under Uncertainty in Practice

    • Practical considerations for global supply chain design include:
      • Integrated Planning: Combine strategic and financial planning to evaluate supply chain options under uncertainty
      • Multiple Metrics: Use various metrics such as profits, customer service levels, and response times to evaluate decisions
      • Sensitivity Analysis: Assess how changes in input assumptions affect outcomes to identify key variables

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Detailed Summary of Chapter 6: Designing Global Supply Chain Networks PDF

    Description

    This quiz evaluates the decision to onshore or offshore in global supply chain design, considering both costs and risks, including labor and production costs, transportation, lead times, and geopolitical factors.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser