Faculty of Engineering Mid Term Model Answer

Faculty Department Module Code Module Title Semester Time Allowed Total Mark No. of Pages Material provided Equipment permitted Regular calculator considered. Start each problem in a new page in your answer notebook. No books, paper or electronic devices are permitted to be brought into the examination room other than those specified above. Additional Instructions All Answers must be in English otherwise it will not be Engineering Industrial & System Engineering ISE 4334 Elective I Supply Chain Management Spring 2011 90 min 20 2 + cover page

Faculty of Engineering Mid Term Model Answer

Module Title Module Code Semester : Elective I Supply Chain Management : ISE 433x : Fall 2011

Answer the following questions: Question 1 (6 marks) 1.1 SC is a modern, integrative, systemic view of the management of the common production and operations management functions that goes beyond the boundaries of an organization to link several organizations and facilities. It has become needed due to the changes in the business environment today, SC offers more opportunities to improve operations in a global optimization direction, it copes with the increasing levels of outsourcing and world-wide cooperation, it inherently considers the increasing transportation costs, the competitive pressures, increasing globalization, and the increasing importance of e-business and information technology. Further, it allows significant enhancements to inventory management and planning activities. The main difference between SCM and classical production and operations management is the integrative perspective and the advanced utilization of information technology. (3 marks) 1.2 Main categories of operations in the supply chain (3 marks) a. Plan: planning and organizing the operations and activities in the other categories. The results are an action plan to satisfy the demand b. Source: processes that handle the sourcing of the required supply or resources from upstream SC partners c. Make: refers to the operations required to develop and build the products and services that the SC provides. d. Deliver: processes that handle the delivery of the requested products or services to its downstream customer

Page 1 of 2

Question 2 (8 marks) 2.1 Playing beer game demonstrates the need to share information with the suppliers and the customers that is to construct a supply chain system. With the lack of information, even with elaborating for forecasting and inventory management systems, it is difficult to avoid high inventories at some times and stock outs at other times. Guessing the behavior at the customer or the supplier cannot offer reliable basis for planning. It can be stated that SC offers framework for production and operations management that can significantly enhance the ability and the accuracy of the planning and cost management functions. Further, it facilitates sharing the risk and efforts in developing business plans and analysis in win-win relationships among the partners, which provides the basic justification for expecting mutual trust and confidence. It also utilizes the IT capabilities more efficiently and pushes toward more current and modernized enterprise system. (4 marks) 2.2 CPFR is an initiative to improve supply chain efficiency through, information exchange, development of a single forecast among partners, and collaborative exception management. CPFR can improve the availability of products and avoid stock-outs and discrepancy among the supply chain partners thus leading to more accurate business plans. VMI calls for the vendor to monitor the inventory levels of its product within a customers business. The vendor is responsible for watching usage rates and calculating EOQs. The vendor proactively ships products to the customer locations and invoices the customer for those shipments under terms defined in the contract Both systems can help mitigate the bullwhip effect. Yet CPFR offers a more comprehensive cooperation framework and may result in better control of the bullwhip effect. (4 marks) Question 3 (6 marks) 3.1 Information is the essence of integrating the SC partners. Sharing information is the basis for coordination and useful communications. Advances in IT supports the efforts for closer coordination and promotes the development of new work methods based on them, leading to more effective and efficient SCM (2 marks) 3.2 As the manufacturer, lacking up-to-date sales data from the retailer would prevent me from explaining accurately the demand data arriving from the distributor. Promotions made by the retails or unusual increase in demand there are received at my facility through the reaction of the distributor who works to ensure ability to use the opportunity perceived at the market by demanding more from me. Upon that I should make appropriate raw materials orders. If the demand goes down at the retailer, I would end up with unnecessary inventories. The delays in communication and in receiving the market analyses would worsen the situation. The logical way to avoid that is by coordination for real-time data sharing and joint-work to develop market analysis and manage sales exceptions. Accurate data is the key to avoid the bullwhip effect. (4 marks) Page 2 of 2