SHORT ANSWER FINAL EXAM SYUDY GUIDE
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Questions and Answers

Explain a scenario where using trucks for transportation would be more advantageous than using air transport, considering both cost and speed.

For regional deliveries where the time sensitivity is not critical, trucking is more advantageous due to its cost-effectiveness compared to the higher expense of air transport.

Describe a situation in which a company might prefer water transportation despite its slower speed compared to other methods.

A company transporting large quantities of raw materials over long distances would prefer water transportation due to its cost-effectiveness and large cargo capacity, despite the longer transit times.

How can weather and traffic delays impact a supply chain that heavily relies on trucks for its distribution? Suggest a mitigation strategy.

Weather and traffic delays can lead to late deliveries, increased costs, and potential customer dissatisfaction. A mitigation strategy could involve using real-time traffic data to optimize routes or diversifying transportation methods.

Explain how a company's brand reputation (an intangible asset) can directly influence its supply chain operations.

<p>A good brand reputation can increase customer demand, requiring a more responsive and efficient supply chain to ensure product availability and on-time delivery. Conversely, a poor reputation may lead to decreased demand and excess inventory.</p> Signup and view all the answers

Describe how data systems, such as ERP, function as intangible assets within a supply chain and provide an example of their impact.

<p>Data systems facilitate inventory management, order tracking, and demand forecasting. Their impact can be seen in reduced stockouts, optimized inventory levels, and improved delivery accuracy, enhancing overall supply chain efficiency.</p> Signup and view all the answers

Explain how forward buying can benefit a company facing potential supply chain disruptions.

<p>Forward buying allows companies to secure inventory at current prices, mitigating risks associated with future price increases or shortages due to disruptions. This ensures business continuity and potentially lower costs.</p> Signup and view all the answers

Describe a situation, different from the airline example, where a company might ethically practice price discrimination. What conditions must be met?

<p>A movie theater offering discounted prices for matinee showings is price discrimination. This is acceptable since it targets price-sensitive customers during off-peak times, increases overall revenue, and does not harm other groups.</p> Signup and view all the answers

A product has an average weekly demand of 50 units with a standard deviation of 10 units. Calculate the coefficient of variation (CV) and interpret what this CV suggests about the demand for this product.

<p>CV = (10/50) * 100 = 20%. A CV of 20% indicates moderate variability in demand. The demand is relatively consistent but not perfectly stable.</p> Signup and view all the answers

Compare and contrast air and truck transportation in terms of cost, speed, and accessibility. Provide a scenario where truck transportation is clearly preferable, despite air's speed advantage.

<p>Air is faster but more expensive and has limited accessibility, while trucks are cheaper and highly accessible. Truck transport is better for shipping goods short distances where speed is not critical.</p> Signup and view all the answers

A retailer anticipates a major promotional event in three months for a specific product. How would they use forward buying, and what are the risks associated with this strategy?

<p>The retailer would purchase a large quantity of the product now to ensure sufficient stock for the promotion. Risks include potential storage costs, product obsolescence, and forecasting errors leading to excess inventory.</p> Signup and view all the answers

A software company offers its product at a lower price to students than to professionals. Is this price discrimination? Explain why or why not, considering the potential justifications.

<p>Yes, this is price discrimination. The justification is that students have lower willingness and ability to pay. This allows the company to capture a larger market share.</p> Signup and view all the answers

Product A has a mean demand of 1000 units and a standard deviation of 50 units. Product B has a mean demand of 100 units and a standard deviation of 10 units. Calculate the CV for each and determine which product has more relative variability in demand.

<p>Product A: CV = (50/1000) * 100 = 5%. Product B: CV = (10/100) * 100 = 10%. Product B has more relative variability in demand due to its higher CV.</p> Signup and view all the answers

A company needs to transport temperature-sensitive pharmaceuticals overseas. Considering both advantages and disadvantages, which transportation mode, air or truck is more suitable?

<p>Air transport is more suitable despite higher costs. Its speed minimizes the risk of temperature fluctuations affecting the pharmaceuticals, outweighing cost considerations due to the product's sensitivity.</p> Signup and view all the answers

Flashcards

Trucking Cost-Effectiveness

Trucking is often more economical for deliveries within a specific region compared to air or water transport.

Trucking Delay Factors

A downside of trucking is the potential for delays due to weather conditions or heavy traffic congestion.

Water Transport Efficiency

Water transport is the most economical method for shipping large quantities of goods, such as raw materials.

Shipping Cargo Capacity

Ships have the capability to transport significantly larger amounts of cargo compared to planes or trucks.

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Intangible Assets

Non-physical resources, like brand image or data systems, are essential to operating a supply chain.

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Forward Buying

Purchasing large quantities in advance due to expected price increases or discounts.

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Price Discrimination

Charging different prices for the same product based on customer characteristics or market segments.

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Coefficient of Variation (CV)

Measures relative variability; ratio of standard deviation to the mean.

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Air Transportation Advantages

Fastest transport mode; ideal for time-sensitive or global deliveries.

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Air Transportation Disadvantages

Expensive; has weight and size restrictions for cargo.

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Truck Transportation Advantages

Highly adaptable for door-to-door service.

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Price Discrimination

The strategy of charging different prices for the same offerings.

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Coefficient of Variation Risk Indicator

Variability relative to the average. A larger CV means more risk.

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Study Notes

  • Study notes on supply chain management concepts.

Forward Buying

  • Purchasing a large quantity of a product in advance.
  • Usually done to prepare for anticipated price increases or to take advantage of promotional discounts.
  • A retail chain may use forward buying when expecting the price of things like canned goods to increase.
  • Purchasing early allows them to lock in lower prices to save money.

Price Discrimination

  • Charging different prices for the same product based on customer characteristics, market segments, or other factors.
  • Factors include time, location, or demand.
  • Airlines use it to offer different ticket prices based on when the ticket is purchased, the class of service, and customer loyalty.
  • Booking a flight in advance could be cheaper than booking last minute.

Coefficient of Variation (CV)

  • A statistical measure representing the ratio of the standard deviation to the mean of a dataset.
  • Used to assess the relative variability of data.
  • Formula: CV = (Standard Deviation / Mean) * 100
  • Example: With an average demand of 100 units and a standard deviation of 20 units, the coefficient of variation would be 20%.
  • CV = (20 / 100) * 100 = 20%
  • A higher CV indicates more variability or risk.
  • A lower CV indicates a more consistent demand.

Comparison of Transportation Modes

Air Transportation

  • Advantages:
    • Speed: Fastest mode, suitable for time-sensitive goods.
    • Global Reach: Able to access remote and international locations quickly.
  • Disadvantages:
    • Cost: Generally more expensive due to fuel and maintenance.
    • Weight and Size Limitations: Restrictions apply, limiting the types of goods.
  • FedEx uses it to deliver time-sensitive packages globally.

Truck Transportation

  • Advantages:
    • Flexibility: Can reach almost any location with door-to-door service.
    • Cost-effective for Short Distances: Cheaper than air or water for regional deliveries.
  • Disadvantages:
    • Speed: Slower than air, especially over long distances.
    • Weather and Traffic Delays: Susceptible to delays from weather or road congestion.
  • UPS uses it for domestic deliveries to individual customers.

Water Transportation

  • Advantages:
    • Cost-Effective for Bulk Shipments: Most efficient for large quantities of goods.
    • Large Cargo Capacity: Ships can carry much more than planes or trucks.
  • Disadvantages:
    • Speed: Much slower than air or trucks.
    • Limited Reach: Needs ports and is limited by waterways.
  • Maersk Line uses large container ships for transporting bulk goods across oceans.

Forms of Supply Chain Assets

Physical Assets

  • Tangible assets for production, storage, and transportation.
  • Examples: Warehouses, trucks, etc.
  • A warehouse is where products are stored before retail distribution.
  • Another example: A fleet of trucks used to transport goods.

Intangible Assets

  • Non-physical assets essential for the operation of a supply chain.
  • Examples: Brand reputation, data systems, etc.
  • A company's brand reliability influences customer loyalty and demand.
  • Data systems such as ERP help with inventory management, order tracking, and forecasting.

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Description

Study notes on supply chain management concepts such as forward buying, price discrimination, and the coefficient of variation. Forward buying involves purchasing large quantities in advance, while price discrimination involves charging different prices. The coefficient of variation measures relative data variability.

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