MGMT Exam 2 Notes PDF

1,2, 7 Which of FedEx\'s Service Quality Indicators (SQIs) is the most critical for the company? - Wrong day late (explain why) Term for the process of managing geographically dispersed service-providing facilities? - Multisite management Work in process = Throughput\*Flow time Flow time=F...

1,2, 7 Which of FedEx\'s Service Quality Indicators (SQIs) is the most critical for the company? - Wrong day late (explain why) Term for the process of managing geographically dispersed service-providing facilities? - Multisite management Work in process = Throughput\*Flow time Flow time=Flow time in minutes/60 Throughput= Work in process/Flowtime Flowtime = Work in process/ Throughput Mock Quiz Modeling complex transportation configurations and conducting what-if analyses to evaluate alternative strategies are part of the optimization process of supply chains. What situation could NOT be examined through a what-if analysis? - Deletion of product lines - Price changes and discounts - Shipping cost minimization - Impact of demand variations on delivery routes School bus drivers have incorporated a procedure to confirm and report that their buses are empty at the end of their route. When their last route is completed, drivers must check all seats and then push and hold a button at the back of the bus to signal no student was left behind. If the driver neglects this step, the bus horn will honk repeatedly until the process is done. Which type of error is this service poka-yoke trying to prevent? - Treatment error - Tangible error - Customer errors in preparation - Task error Ferrari is a world-renowned, high-end car manufacturer. The company has a strong focus on customer experience targeted at having the most satisfied customers. Which of the following options is considered a peripheral service of its customer benefit package? - After-sales services - Yearbooks and publications - Fashion shows - Eyewear sales A rent-a-car company wants to increase the value ratio of its service by 15% by the end of the current year. What would be the most appropriate course of action for this company? - Increase both the perception of value and the rental costs by 15%. - Increase the perception of value by 5% percent while reducing the rental costs by 10%. - Increase the perception of value by 15% without changing the rental costs. - Reduce the rental costs by 15% while not changing the perception of value. What is the average value of a loyal customer (VLC) in a target market segment if the average purchase price is \$60 per visit, the frequency of repurchase is 5 times per year, the contribution margin is 10 percent, and the average customer defection rate is 25 percent? Round your answer to the nearest dollar. - \$96 - \$100 - \$112 - \$120 What is the average defection rate for grocery store shoppers in a local area of a large city if customers spend \$45 per visit, customers shop once a week, 52 weeks per year, the grocery store has a 6 percent gross margin, and the value of a loyal customer is estimated at \$3,100 per year? Round your answer to one decimal place. - 3.7 - 4.5 - 5.1 - 6.2 What is the term for the process of managing geographically dispersed service-providing facilities? - Offshoring - Geographical management - Outsourcing - Multisite management A hamburger factory produces 45,000 hamburgers per week. The cost of equipment is \$10,000 and will remain productive for four years. The labor cost per year is \$14,000. Assume that there are 52 weeks per year. a. What is the productivity measure of \"units of output per dollar of input\" averaged over the four-year period? Round your answer to one decimal place. Productivity: \_\_\_\_\_ hamburgers/dollar b. The company has the option of purchasing equipment for \$6,500, with an operating life of three years. It would increase labor costs to \$17,000 per year. Should it consider purchasing this equipment (using productivity arguments alone)? Round your answer for productivity to one decimal place. The supply chain of a company is essentially focused on supply, production, and distribution processes of a company. The value chain, however, is a much broader concept that encompasses supply chains. Which of the following processes is part of the value chain but not of the supply chain? The service-profit chain model outlines a clear path to higher company profitability among service companies. Which statement about this model is true? What concept is associated with a unique route through a service system? Quiz 1 70% 30?, 35 Mins Chapter 1 & 2 All material Operation Managers: ensure goods & services are created & delivered successfully to customers OM includes:\ The design of goods and services, and the\ processes that create them\ Day-to-day management of processes\ Continual improvement of goods, services,\ and processes\ OM depends on:\ Efficiency\ Cost of operations\ Quality of goods Internet of things (IOT) Industry 4.0\ Also called the 4th industrial revolution\ Prominent in manufacturing\ The information-intensive transformation\ of manufacturing in a connected\ environment of big data, people,\ processes, services, systems, and IoT-\ enabled industrial assets\ ***Service 4.0***\ Prominent in service\ The application of digitization to\ services that creates higher productivity,\ innovation, and value chain advantages in\ service industries. Good: physical product that a person sees, touches, or consumes. ***Durable good***: a product that doesn't wear out and lasts at least three years ***Non-durable good:*** a product that perishes and lasts for less than three years Service: primary or complementary activity that does not\ directly produce a physical product\ Driven by customers and providing value and satisfaction to customers\ who purchase and use them.\ Standardized or customized to individual wants and needs - Requires direct involvement with customer - Harder to predict than goods - Service management skill must be efficient - Facility in proximity to client - Not protected by patent ***Service Management***: integrates marketing, human resources, and operations functions to\ plan\ create\ deliver goods and services\ deal with associated service encounters\ A ***Service Encounter*** is an interaction between the customer and the service provider, and consist of one or more moments of truth\ ***Moments of truth*** are any experiences in which a customer comes into contact with any aspect of the delivery system and has an opportunity to form an impression ***Value*** is the perception of the benefits associated with a good, service, or bundle of goods and services in relation to what a buyer pays\ Goods or services are perceived favorably by customers if\ the ratio of perceived benefits to price to the customer is\ high\ Value = Perceived benefits/\ Price cost to the customer\ To ***increase value***, an organization must do one of the\ following:\ a) increase perceived benefits while holding price or cost\ constant\ b) increase perceived benefits while reducing price or cost\ c) decrease price or cost while holding perceived benefits\ constant ***Differentiate strategy***: achieve competitive advantage by value increases while keeping costs similar to competitor or lower A **Customer Benefit Package (CBP)** is a set of tangible and intangible features that a customer recognizes, pays for, uses, or experiences A ***CBP consists of*** a primary good or service coupled with peripheral goods and/or services, and sometimes variants\ Primary goods or services: the "core" offering that attracts customers\ and respond to their basic needs\ Peripheral goods or services: offerings that are not essential to the\ primary good or service but enhance it\ Variants are location- or firm-specific CBP attributes that depart from\ the standard CBP Primary good: Vehicle\ Peripheral goods:\ Free gourmet coffee & tea\ Free wash anytime\ Replacement parts\ Peripheral services:\ Financing and leasing\ Free credit reports\ High-speed internet\ Variant: Fishing pond ***Value Chains*** describe the flow of materials, finished goods, services, information, and financial transactions from suppliers through the facilities\ They contain the processes that create goods and services and deliver them\ A process is a sequence of activities intended to create a certain result, such\ as a physical good, a service, or information\ ***Supply Chains*** are a portion of the value chain; they focus primarily on the physical movement of goods and materials\ They support flows of information and financial transactions through the\ supply, production, and distribution processes ***Primary activities*** directly add value\ Transform inputs into outputs\ Focused on moving raw materials\ through production phases, to sales\ and marketing, and finally customer\ service:\ Supply Chain Management\ Operations\ Distribution\ Marketing and Sales\ After-Sales Service\ \ **Support *activit****ies* indirectly add\ value\ Necessary to sustain Primary\ activities:\ Research and Development (R&D)\ Information Systems\ Human Resources\ Accounting and Finance\ Firm infrastructure including processes,\ policies, and procedures ***Examples of sustainability*** 1. Environmental 2. Social 3. Economic ***Big Data***: massive amounts of business data from a wide variety of sources, much of which is available in real-time\ Helps retailers make optimum inventory\ decisions\ Helps supply chains to improve routing and\ delivery decisions\ Helps improve manufacturing, process flow,\ quality, and preventive maintenance\ Supports service businesses through targeted\ advertising, virtual banking, remote medical\ diagnosis by artificial intelligence, self-driving\ vehicles, etc. ***Business analytics*** is the process of transforming data into actions through analysis and insights in the context of decision-making and problem-solving. Used to create an advanatge - ***Current and Future Challenges in OM***\ Customers demand goods with new and improved features\ Technology continues to evolve at a rapid pace\ Today's workforce requires new skills, more diversity, and better management\ Firms must contend with globalization in a "borderless marketplace"\ Sustainability is a fourth major performance area in addition to the traditional cost, quality,\ and time\ Optimizing supply chains presents new challenges in terms of determining where to best\ source raw materials, components, and finished goods\ Exploiting Industry/Service 4.0 will lead to applications that are customized to customers [**Social sustainability**](javascript://) *is an organization's commitment to maintain healthy communities and a society that improves the quality of life*. Social sustainability is important because every organization must protect the health and well-being of all stakeholders and their respective communities, treat all stakeholders fairly, and provide them with essential services. [**Economic sustainability**](javascript://) *is an organization's commitment to address current business needs and economic vitality, and to have the agility and strategic management to prepare successfully for future business, markets, and operating environments*. Economic sustainability is important because staying in business for the long term, expanding markets, and providing jobs are vital to national economies. Quiz... ***Measuremen*t** = quantifying the performance of organizational\ units and goods and services, processes, people, and other\ business activities ***Measurement***\ provides a scorecard of performance\ helps identify performance gaps\ makes accomplishments visible to the workforce, stock\ market, and other stakeholders Top priority financial measures in for-profit orgs include:\ revenue\ return on investment\ operating profit\ pretax profit margin\ asset utilization\ growth\ revenue from new goods\ and services\ earning per share\ Non-profit organizations focus more on minimizing costs and\ maximizing value to their target markets, customers, and society\ Customer-satisfaction measurement systems provide\ customer ratings of specific goods and service features Financial Revenue and profit\ Return on assets\ Earning per share\ Labor and material costs\ Cost of quality\ Budget variance\ Customer and Market Customer satisfaction\ Customer retention\ Market Share\ Customer claims and complaints\ Type of warrant failure/upset\ Sales forecast accuracy\ Quality Customer ratings of goods and services\ Product recalls\ Defects/unit or error/opportunity\ Service representative courtesy\ Time Speed\ Reliability\ Flow processing or cycle time\ Percent of time meeting promised due date\ Flexibility Design flexibility\ Volume flexibility\ Number of engineering changes\ Assembly-line changeover time\ Innovation and Learning New product development rates\ Employee satisfaction\ Employee turnover\ Number of patent applications\ Number of improvement suggestions implemented\ Percent of workers trained on statistical process control\ Productivity and Operational Efficiency Labor productivity\ Equipment utilization\ Manufacturing yield\ Order fulfillment time\ Sustainability Environmental and regulatory compliance\ Product-related litigation\ Financial audits\ Toxic waste discharge rate\ Workplace safety violations\ Percent of employees with emergency preparedness\ training ***(Exam) Quality*** = degree to which the output of a process meets customer\ requirements\ Applies to both Goods and Services:\ Goods quality: physical performance and characteristics\ Service quality can have and external or internal focus:\ o External focus: consistently meeting/exceeding customer expectations\ o Internal focus: service-delivery system performance\ Every service encounter provides an opportunity for error\ Errors are sometimes called service upsets or service failures ***Service-quality measures*** are based on human perceptions of\ service\ Collected from customer surveys, focus groups, and interviews\ Customers use the following ***five key dimensions*** to assess\ service quality:\ Tangibles: facilities, uniforms, equipment, vehicles, and appearance\ Reliability: to perform the promised service dependably and accurately\ Responsiveness: willingness to help customers and provide prompt\ attention to service upsets\ Assurance: the ability to inspire trust and confidence in customers\ through knowledge and courtesy of the service\ Empathy: a caring attitude and individualized attention to customers ***Time*** relates to two types of performance measures:\ ** *Speed*** - usually measured in clock time\ ***Variability*** - measured by the variance around average performance or\ targets\ Some useful time measures:\ 1. Processing time: the time it takes to perform a task\ 2. Queue time: wait time; it is the time spent waiting\ 3. Variability: the variance around the average time; often leads to an\ unhappy customer experience\ Variability is usually measured by statistics such as the standard\ deviation or mean absolute deviation ***Flexibility*** is the ability to change easily\ Goods & Service design flexibility -- ability to develop customized goods or\ services to meet different customer needs\ Volume flexibility -- the ability to respond to changes in volume and demand\ Process flexibility -- the ability to manufacture different types of products in\ the same production facility simultaneously\ ***Agility*** is the ability to change quickly\ ***Resilience*** is the ability to anticipate, prepare for, and recover from\ disruptions ***Innovation***: the ability to create new and unique goods and services that delight\ customers and create a competitive advantage\ ***Learning***: creating, acquiring, and transferring knowledge\ ***Productivity***: compares the output of a process to the input to that process:\ Productivity = quantity of output/\ quantity of input\ ***Operational Efficiency***: the ability to provide goods and services to customers\ with minimum waste and maximum utilization of resources ***Triple Bottom Line*** is a measurement of\ sustainability related to:\ Environmental factors: energy\ consumption, recycling, resource\ conservation activities, air emissions,\ solid and hazardous waste rates, etc.\ Social factors: consumer and workplace\ safety, community relations, corporate\ ethics, governance, etc.\ Economic factors: auditing, regulatory\ compliance, sanctions, donations, etc. ***Analytics*** helps managers analyze data effectively and make better\ decisions:\ Visualizing data to examine\ performance trends\ Calculating basic statistical measures\ Comparing results with other business units,\ competitors, or best-in-class benchmarks\ Using correlation and regression analysis\ Operations Managers use statistics to gauge production and quality\ performance to determine process and design improvements\ ***Statistics*** includes collecting, organizing, analyzing, interpreting, and\ presenting data\ A statistic is a summary measure of data\ ***Descriptive statistics*** refers to methods of describing and summarizing data Statistical Analysis\ (Supplement A)\ Collecting, organizing, analyzing, interpreting, and\ presenting data\ Visualizing data using charts to examine performance\ trends; comparing results relative to other business units,\ competitors, or best-in-class benchmarks; understanding\ relationships among different measures.\ Decision Analysis\ (Supplement B)\ Identifying the best economic decision alternative\ with uncertain futures.\ Product selection, facility capacity expansion and location,\ inventory analysis, and technology and process analysis.\ Break-Even Analysis\ (Supplement C)\ Identifying the best economic choice between two\ options that vary with volume.\ Profitability analysis, outsourcing decisions, and technology\ choices.\ Optimization\ (Supplements D and E)\ Identifying the best decisions to maximize or\ minimize some objective while satisfying\ constraints and requirements.\ Product mix, process selection, production planning,\ scheduling, and transportation and supply chain\ management.\ Queueing Models\ (Supplement F)\ Understand behavior of waiting line systems with\ random arrivals of customers and service times\ using analytical models.\ Process design and analysis for manufacturing and service,\ resource utilization analysis, and bottleneck analysis.\ Simulation\ (Supplement G)\ Developing and analyzing a logical model of a\ system and conducting computer-based\ experiments to describe, explain, and predict\ system behavior.\ Process design for manufacturing and service, inventory\ systems, complex waiting line analysis, and resource\ planning. ***(Exam) Value of a Loyal Customer (VLC***) quantifies the total revenue or profit a\ customer generates over their life cycle:\ VLC can be computed as: 𝑽𝑳𝑪 = 𝑷 × 𝑪𝑴 × 𝑹𝑭 × 𝑩𝑳𝑪\ where:P = the revenue per unitCM = contribution margin to profit and overhead expressed as a fractionRF = repurchase frequency (number of purchases per year)\ BLC = buyers' lifecycle computed as 1/defection rate, expressed as a fraction\ Total market value gained or lost can be found multiplying VLC by the\ absolute number of customers gained or lost Good performance measures are actionable\ * **Actionable measures*** provide the basis for decisions at the organizational\ level at which they are applied:\ − value chain\ − organization\ − process\ − department\ − workstation\ − job\ − service\ encounters\ ***Performance measures*** should be meaningful to the user, timely, and\ reflect how the organization generates value for customers\ ***Performance measures*** should support, not conflict with, customer\ requirements Models of organizational performance are frameworks for\ designing, monitoring, and evaluating performance in\ operations management\ ***Two major models of organizational*** performance we will\ review are:\ the Baldrige Performance Excellence framework\ the Balanced Scorecard A ***Balanced Scorecard*** translates strategies into measures that uniquely\ communicate an organization's vision\ This example of the Balanced Scorecard consists of ***four performance\ perspectives:\ *** Financial - measures value provided\ to shareholders\ Customer - focuses on customer\ needs and satisfaction\ Innovation and Learning -\ emphasizes people and infrastructure\ Internal - focuses on the\ performance of key internal\ processes Reading [**customer-satisfaction measurement system**](javascript://) *provides a company with customer ratings of specific goods and service features and indicates the relationship between those ratings and the customer's likely future buying behavior.* Research has shown that customers use the following five key dimensions to assess service quality 1. *Tangibles*---Physical facilities, uniforms, equipment, vehicles, and appearance of employees (i.e., the physical evidence). 2. *Reliability*---Ability to perform the promised service dependably and accurately. 3. *Responsiveness*---Willingness to help customers and provide prompt recovery to service upsets. 4. *Assurance*---Knowledge and courtesy of the service providers and their ability to inspire trust and confidence in customers. 5. *Empathy*---Caring attitude and individualized attention provided to customers.. *Errors in service creation and delivery are sometimes called* [**service upsets**](javascript://) *or* **service failures**.  [**processing time**](javascript://), *the time it takes to perform some task.* For example, to make a pizza, a worker needs to roll out the dough, spread the sauce, and add the toppings, which might take three minutes. [**Queue time**](javascript://) *is a fancy word for* [**wait time**](javascript://), [**Goods and service design flexibility**](javascript://) *is the ability to develop a wide range of customized goods or services to meet different or changing customer needs.* [**Volume flexibility**](javascript://) *is the ability to respond to changes in the volume and type of demand.* **Process flexibility** *is the ability to manufacture different types of products in the same plant or production facility at the same time*  [**resilience**](javascript://) (which we address in [**Chapter 20**](javascript://)) *is the ability to anticipate, prepare for, and recover from disruptions, and to protect and enhance all aspects of operations when disruptions occur* [**Learning**](javascript://) *refers to creating, acquiring, and transferring knowledge, and modifying the behavior of employees in response to internal and external changes* *The quantitative modeling of cause-and-effect relationships between external and internal performance criteria is called* [**Interlinking**](javascript://).  [**Actionable measures**](javascript://) *provide the basis for decisions at the level at which they are applied*---the value chain, organization, process, department, workstation, job, and service encounter. They should be meaningful to the user, timely, and reflect how the organization generates value to customers.  Four models of organizational performance---the Baldrige Performance Excellence framework, the balanced scorecard, the value chain model, and the Service-Profit Chain Service-Profit Chain (SPC) was first proposed in a 1994 *Harvard Business Review* article and is most applicable to service environments. [Exhibit 2.9](javascript://) is one representation of the SPC, and many variations of this model have been proposed in academic and practitioner articles. model is based on a set of cause-and-effect linkages between internal and external measures, and in this fashion, defines the key performance measurements on which service-based firms should focus. Suppliers provide goods and services inputs to the value chain that are used in the creation and delivery of value chain outputs. Measuring supplier performance is critical to managing a value chain. In response to the limitations of traditional accounting measures, popularized the notion of the *balanced scorecard*, which was first developed at Analog Devices. Its purpose is "to translate strategy into measures that uniquely communicate your vision to the organization." Their version of the balanced scorecard, as shown in [Exhibit 2.7](javascript://), consists of four performance perspectives: Baldrige Performance Excellence program, formerly known as the Malcolm Baldrige National Quality Award Program, was created to help stimulate American organizations to improve quality, productivity, and overall competitiveness, and to encourage the development of high-performance management practices through innovation, learning, and sharing of best practices.  Ch. 6.1 & 6.2 A ***global supply*** chain is a network that connects: Sourcing of raw materials Component manufacturers Assembly plants Warehouses Distributors and Customers \...across the world Many of these decisions are ***strategic*** and support an organization's strategy, mission, and competitive priorities: Strategy Control Location Sustainability Technology Digital content Other decisions are t***actical*** and influence how supply chains are managed on a day-to-day basis: Sourcing Outsourcing Logistics and transportation Managing risk Measuring performance ***operational structure*** of a supply chain is the configuration of resources, such as: Suppliers Factories Warehouses Distributors Technical Support centers Engineering and Design Sales offices Communication links Examples of ***control decisions*** in supply chain design: Should we centralize or decentralize control of the supply chain? How do we secure supplier and customer payments along the supply chain? Who should have access to transaction data along the supply chain? Where can we locate facilities that provide efficiencies and improve customer value How do we champion economic, environmental, and social sustainability goals and practices in our global supply chains Intellectual Property (IP) is an important issue for multinational enterprises Licensing technology to firms in other countries can lead to risks Protecting and honoring patents from other countries is a constant topic in global trade negotiations Examples of technology decisions in supply chain design are: Do we share our technology and IP with suppliers and partners in other countries? If so, how do we protect it? Digital content in goods and services is becoming increasingly important Selecting suppliers ties-in closely with location\ A key decision is whether to use ***single or\ multiple sources***\ o A single supplier often provides economies of scale\ and the ability to form close partnerships\ o Multiple suppliers lowers the risk of a supply chain\ disruption\ Examples of sourcing decisions in supply chain\ design are:\ From whom do we purchase raw materials, parts,\ and sub-assemblies?\ How do we track returns and recalls? ***Transportation*** is more complex in global\ supply chains\ Often require multiple modes of transportation:\ by water, air, rail, and truck\ Transportation infrastructure may vary\ considerably in foreign countries\ ***Examples of logistics*** and transportation\ decisions in supply chain design are:\ How do we ensure that the shipment arrives at its\ correct destination?\ What documents are missing at Customs?\ Which transportation modes maximize service\ and minimize costs? Examples of other ***tactical decisions*** in supply chain design are:\ Outsourcing\ − What activities should be kept in-house or outsourced to contract\ manufacturers or third-party logistics providers?\ Managing risk\ − How do we address and mitigate supply chain risks and disruptions?\ Measuring performance\ − What performance metrics should we use?\ − How do we secure digital records and information flow? ***Blockchain i***s a distributed database network that holds records of digital data and events in a way that makes them tamper-resistant ***Supply chains*** can be designed to provide (1) high efficiency and\ low cost or (2) flexible and agile responses\ Efficient supply chains are designed for efficiency and low cost\ They minimize inventory and maximize efficiencies in the process flow\ Work best for goods and services with highly predictable demand, stable\ product lines with long life cycles that do not change frequently, and low\ contribution margins\ Responsive supply chains focus on flexibility and responsive service\ They can react quickly to changing market demand and requirements\ A focus on flexibility and response is best when demand is unpredictable ***Push*** system\ Produces goods in advance of customer demand using a sales forecast\ "Pushes" goods through supply chain to points of sale, where they are\ stored as finished-goods inventory\ Is effective for consistent sales patterns with few distribution\ centers and products\ *** A Pull*** system\ Produces only what is needed at upstream stages in the supply chain\ in response to customer demand signals from downstream stages\ A pull system is effective when there are many production facilities,\ points of distribution, and products Many supply chains are combinations of push and pull systems\ A ***push--pull bounda***ry is the point in the supply chain that separates\ the push system from the pull system Postponement is the process of delaying product customization until the product is closer to the customer at the end of the supply chain A firm must decide whether to\ Vertically integrate its supply chain or\ Outsource key business processes and functions\ ***Vertical Integration*** refers to the process of acquiring and\ consolidating elements of a value chain to achieve more control\ Backward integration refers to acquiring capabilities toward suppliers.\ Forward integration refers to acquiring capabilities toward distribution or\ customers\ **Outsourcin**g is the process of having suppliers provide goods and\ services that were previously provided internally ***Benefits and Risks*** of Vertical Integration\ Benefits:\ Lowering costs\ Improving quality\ Facilitating scheduling and planning\ Facilitating investments in\ specialized assets:\ o Co-located assets, unique equipment,\ human capital\ Securing critical supplies and\ distribution channels\ Risks:\ Increasing costs\ Reducing quality\ Reducing flexibility\ Increasing the\ potential for legal\ repercussions ***contract manufacturer is*** a firm that specializes in certain\ types of goods-producing activities, such as:\ Customized Design\ Manufacturing\ Assembly\ Packaging\ ***Advantages:***\ Access to advanced manufacturing technologies\ Faster product time-to-market\ Customization of goods in regional markets\ Lower total costs resulting from economies of scale 6.2 Reading Ch.6 Supply chains should support an organization's strategy, mission, and competitive priorities.  Second supply chain design decision is centralization versus decentralization. *The* [**operational structure**](javascript://) *of a supply chain is the configuration of resources, such as suppliers, factories, warehouses, distributors, technical support centers, engineering design and sales offices, and communication links*. we discuss risk management of the supply chain. These risks are both strategic and tactical and require every company to develop a risk mitigation strategy and plan. Almost every chapter contains concepts and methods for measuring performance at all levels of the organization. We focus on measuring supply chain performance in [Chapters 2](javascript://) and (javascript://). Executives have many trade-offs to consider when designing a supply chain. We see many examples of different supply chain design structures in a variety of industries Supply chains can be designed from two strategic-perspectives---providing high efficiency and low cost, or providing agile response. The location of the push--pull boundary can affect a supply chain's responsivity. Many firms try to push as much of the finished product as possible close to the customer to speed up response and reduce work-in-process inventory requirements. [**[Postponement]**](javascript://) *is the process of delaying product customization until the product is closer to the customer at the end of the supply chain*. An example is a manufacturer of refrigerators that have different door styles and colors. Although supply chains can have a profoundly positive effect on business performance, supply chain initiatives do not always work out as one would hope. *A* [**contract manufacturer**](javascript://) *is a firm that specializes in certain types of goods-producing activities, such as customized design, manufacturing, assembly, and packaging, and works under contract for end user*  [**[third-party logistics (3PL) providers]**](javascript://)---*businesses that provide integrated services that might include packaging, warehousing, inventory management, and transportation*.  Outsourcing decisions are often based on economics decision to offshore involves a variety of economic and noneconomic issues e principal goal of a supply chain is to provide customers with accurate and quick response to their orders at the lowest possible cost. Location is also critical in service  [**Multisite management**](javascript://) *is the process of managing geographically dispersed service-providing facilities* Economic criteria are not always the most important factors in such decisions. Sometimes location decisions are based upon strategic objectives such as preempting competitors from entering a geographical regio [**Supply chain optimization**](javascript://) *is the process of ensuring that a supply chain operates at the highest levels of efficiency and effectiveness* e [**transportation model**](javascript://)---*a linear optimization model that seeks to minimize the cost of shipping from sources such as factories to destinations such as warehouses or customer zones*.