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424 viewsApics SMR PG
Apics Smr Pg
Uploaded by
midaa2000Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
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/ 60
Strategic Management of Resources
2
[a _. Class Problem 1.1: Industry Attractiveness and Competitive Strength
Visual 1-25
Introduce the matrix on the opposing page, which shows four quadrants related to the degree
of industry attractiveness versus strength among competitors. Have participants fill in each
quadrant with the appropriate strategic action a company should consider taking
it's in that
quadrant. The choice of actions is listed at the bottom of the participant workbook page.
°
LE") solution:
+ Protect current position
+ Invest cautiously
+ Look for opportunities
Invest aggressively
Make long-term
in other industries improvements
Competitive
‘Strength
Relative
to Rivals ;
+ Find a buyer + Invest cautiously
+ Horizontal integration |+ Value chain efficiency
+ Look for opportunities} + Horizontal or vertical
in other industries integration
Low
High
ae Industry Attractiveness ics
Instructor Guide Version 2.0 1-34 © 2010 APICS pee -®ics
2
[ Class Problem 1.2: Competitive Strength Assessment Case Study (cont.)
«|
J solution:
fz} Visual 1-41
1. The product is most likely a commodity product in the maturity stage. The KSFs for product
innovation and technology skills are given a low weighting. A low quality ranking does not
seem to be a problem for the strongest competitor (Rival A). Customer service is given more
weight as a KSF than manufacturing capability.
2. Rival A. It
rated first in three important KSFs: cost position, financial resources, and
manufacturing capability. It is the second-highest rated in customer service. Its vulnerability
is quality.
3. Rival B has a lower cost position than SMR Co., but it is better than SMR in the second most
important KSF, customer service. It is ranked first in quality, though SMR is not far behind,
Itis also ranked higher than SMR in manufacturing capability, financial resources, dealer
network, and product innovation,
SMR can put pressure on Rival B by increasing its relatively low customer service rating.
Note that the two companies that have the highest customer service ratings also have the
highest overall scores. Strengthening manufacturing capability might also strengthen SMR’s
overall score if it also raises SMR’s cost position rating.
4, SMR Co. is stronger than Rival C in four important KSF categories: cost position, customer
service, financial resources, and quality. Rival C might not be able to respond to SMR Co.
because of limited financial resources to improve quality and manufacturing capability.
Rival A might respond to SMR’s attempt to increase market share. It has deep financial
resources with which to engage in price competition with SMR.
Instructor Guide Version 2.0 154 ©2010 APICS suse Mangement Resouces -®ics
Vocabulary Check Solution
*
Visual 1-55
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‘Instructor Guide Version 2.0 1-66 7 ©2010 APICS Strategic Management of Resources Fics
Performance Check
Remind the class that the main purpose of the performance check is to provide feedback.
‘The questions are all multiple choice and are of the same type as on the APICS SMR
examination.
If you will be assigning grades, ask the class to write their answers on a separate answer
sheet.
Give the class the answers, and let them mark their own papers. This is a good opportunity to
reinforce material from this session. Discussion of answers is encouraged.
When the discussion is completed, collect the papers. If you are assigning grades, you can
record from the papers.
Answers:
1, d—When buyer demand grows slowly or is flat, sellers must compete harder to
increase revenues. When strong and weak rivals exist, strong competitors tend to
exploit their advantages and weak ones have to move quickly to compete. Answer is
not correct because it is harder to entice a customer to switch when they are loyal.
Answer IIT is not correct because buyers are not likely to change suppliers.
c—Rivalry among sellers is generally the most intense.
a—Environmental scanning looks at external factors that represent either threats to
the organization or opportunities for it. Identifying effective supply chains and
understanding competitors and markets are not objectives of environmental scanning.
4, b—Answers a, c, and d are all determinants of industry attractiveness. Answer b can
have a tangential impact, if any at all.
Instructor Guide Version 2.0 1-68 (©2010 APICS orstape Mangere Ress Fics
Answers (cont.):
5. a—Answers b, c, and d all play a role in understanding what primary and support
activity costs are involved in determining the price of a product, the cost of those
activities, and how the resulting product price compares with rivals’ prices.
6. d—All of the ways listed above are ethical unless the information is obtained under
false pretenses.
d—Answers a, b, and c are not correct, as they are classic barriers to entry.
b—“Differentiated” and “low-cost” are opposites from a strategy point of view and
are not combined in a strategy. All of the others are generic competitive strategies
Instructor Guide Version 2.0 1-70 ‘©2010 APICS es AP ics
Answers (cont.
9. d—Greens differentiates itself from the competition through product selecti
customer service, appealing to a narrow market niche. Answer c, although a
differentiation strategy is broader and less focused. Answers a and b focus on low-
cost strategies, which is not Greens’ emphasis.
10. b—To create and maintain fiercely loyal customers, Greens must strive to open gaps
in quality and service or performance features between itself and its rivals, which
creates stronger differentiation.
Instructor Guide Version 2.0 172 ©2010 APICS eee ee fics
]
Class Problem 2.1: Multicountry vs. Global Strategy
Visual 2-20
Have the class work in groups of two or more and ask each group to address one of the four
scenarios. Each group should recommend a global, multicountry, or hybrid strategy for its
assigned scenario and give reasons and assumptions for its strategy recommendation. Have
each group present its recommendation and reasoning to the class.
@ Note: The solutions below are examples of the kind of thinking we want to encourage. You
can facilitate as needed by suggesting issues the class should address. Class members!
recommendations will depend on the assumptions they make, which might vary considerably
from the sample solutions. As long as the assumptions are reasonable, there will also be
reasonable variations in the solutions recommended.
eI *
Loe te) Visual 2-22
Review the answers given on the visuals above. A solution table is available for easier
viewing in the Appendix of this guide.
Instructor Guide Version 2.0 224 (©2010 APICS Strategic Management of Resources
Appendix
Solution to Class Problem 2.1
A®ics
Personal
computers
Global
+ Global importance of brand name
+ Regional assembly operations: assemble to
order or make to stock
+ Scale economies, low-cost locations,
proximity to market
+ Manufacturing excellence/mass
customization capability
Soups
Multicountry or
Hybrid
| Significant differences exist in local market
preferences, brand still important.
+ In small markets consider outsourcing to.
third party, or supply through regional
operations in low-cost locations.
+ Consider licensing in mid-size markets with
tight control of branding.
+ Consider full operations (joint ventures) in
large markets.
Washing
machines
Global
+ Importance of global brand; strong
competition from other brands
+ Regional assembly operations: high-volume
make to stock, scale economies, and low
cost locations
+ Proximity to market more important than for
PCs due to product size
Laundry
Detergent
Global
+ Low profit margins, but brand is still
important.
+ Strong competition exists from other brands.
+ Regional operations fit the required low-cost
model: scale economies, production
efficiency, low-cost location, proximity to
markets.
Instructor Guide Version 2.0
2-50 (©2010 APICS sratagc Haagen Res Fics
@)
J Class Problem 2.2: Inside-Out Linkages
Have participants work in pairs to consider each value~chain activity and determine an
impact on society for each. They will fill in the table in their workbook. As an example, the
impact of operations on society could include waste emissions, water usage, and worker
safety.
SE ==] | *
Le) Visual 2-31
‘¢ Human resource management—health care benefits, safe working conditions,
compensation, and training. Consider the examples of Marriott and Microsoft, which both
turned the need for local employees into training programs and job opportunities through
direct training (Marriott) and grants to community colleges to train Microsoft-certified
engineers (value chain support)
+ Procurement—supply chain practices and utilization of natural resources. Consider the
example Whole Foods, a U.S. based grocery chain whose business model is based on
animal- and socially-friendly business practices, especially purchasing standards.
‘+ Marketing and sales—advertising policies and privacy. Consider the example of
restrictions on some areas of advertising (such as tobacco products to children in the
US).
Instructor Guide Version 2.0 234 © 2010 APICS Strategic Management of Resources
Wrap-Up and Homework
‘earings =
Visual 2-36
tae pcre) =
Visual 2-37,
Review the objectives with the class.
Vocabulary Check
fie} Visual 2-38
Solution:
‘os Coat aan
Visual 2-39
Ld 5. 9.5
2b 6. 10.h
3.8 ij
4a 8k
Instructor Guide Version 2.0 2-42 (©2010 APICS Strategic Management of Resources Apics
Performance Check
Remind the class that the main purpose of the performance check is to provide feedback.
‘The questions are all multiple choice and are of the same type as on the APICS Strategic
Management of Resources examination.
If you will be assigning grades, ask the class to write their answers on a separate answer
sheet.
Give the class the answers, and let them mark their own papers. This is a good opportunity to
reinforce material from this session. Discussion of the answers is encouraged.
When the discussion is completed, collect the papers. If you are assigning grades, you can
record from the papers.
Answer
1. c—A profit sanctuary is a market that generates surplus revenues and it is not
considered a strategic market entry option. All of the others are considered market
entry options.
2. b—Price competition is a primary characteristic of the maturing phase. Traditionally,
companies prune product lines and distribution channels (d) in this phase, but ramp
up promotions (c) of higher margin products to compete with rivals for market share.
Some differentiation takes place (a) but more along the lines of innovation to replace
aging products than to appeal to a new customer segment.
3, a—Answers b, c, and d are incorrect because profit margins for some products can be
induced to grow through innovation and promotions
4, d—Create product awareness is not a timely strategic option since creating product
awareness is an essential activity during the emerging phase, whereas building the
brand (b) is the more important marketing activity during the rapid growth phase.
Determining if additional market segments can be accommodated by differentiation
(a) and if the sales of current products can be increased by introducing new models
(c) are also timely strategic options during the rapid growth phase.
Instructor Guide Version 2.0 244 ‘©2010 APICS ee eee A®ics
Answers (cont.)
5. b—Neither licensing nor franchising would be an advantageous solution in a market
in which existing companies have weak competence and capability. A joint venture
‘would be a more appropriate type of arrangement. Economies of scale, labor cost
savings, and adequacy of the supply base (answers a, c, and d) are some, but not all,
of the major issues that need to be considered.
6. ¢—Country managers have more autonomy in a multicountry strategy and less ina
global strategy. Answers a, b, and d are all advantages of a global strategy.
7. a—By concentrating production in few locations, high cumulative production
volumes are reached faster, which then allows workers to achieve high competence
and productivity levels faster. Answers b, c, and d are all distracters.
Instructor Guide Version 2.0 2-46 ©2010 APICS Strategic Management of Resources A®ics
Answers (cont.)
8. ¢—Although Toyota’s activities may be good citizenship and mitigate harm from
value-chain activities, the primary methods of strategic CSR which they employ
(rather than responsive CSR) are III and IV.
9, b—There is no obvious single direction for the linkage between Toyota and society,
as they are very interdependent. Toyota’s response to environmental concerns and
limited sources of fossil fuel tend to influence their sustainability efforts from the
outside (society) in, while the types of automobiles they make and resources they use
influence society from the inside out.
10. a—Implementing a monitoring and auditing plan should begin immediately in order
to determine the root cause of the failures and the corrective actions required to get
the plan back on track.
Instructor Guide Version 2.0 248 (©2010 APICS Strategic Management of Resources
zl
\) Class Problem 3.1: Layout Characteristics
Pin ay chars
#e| Visual 3-26
Have participants work in groups of two or more to develop a profile of the four basic
process layouts. They should refer to the characteristics shown in the table on the participant
‘workbook page and qualify the characteristics as high, medium or low. They will fill in the
table in their workbooks. Discuss the results and explain that the answers below are meant to
highlight the differences between the layout types and are not absolute.
*
4e} Visual 3-27
reyeta os
Eres farce otc asic’
Unitcost High Medium | Medium Low
[Workin process High High Medium Low
Productimbx lexibiity High igh Medium tow
Variety of tasks forworkers High High Medium Low
Piantutlization Low Medium High High
[Ease ofplantworkersupervision | Low Low High High
[Costofplantand equipment Low Low Medium High
Ease of scheduling Low Low Medium High
Throughput Low Low High High
[Workerinvolvement High High High Low
Complexity offiow Low High Medium Low
Needforspecialized equipment | Low Low ‘Medium High
Instructor Guide Version 2.0 338 ©2010 APICS Se Afics
fi)
Class Problem 3.2: Performance Measurement (cont.)
ie
“Solution:
*
—— fie} Visual 3-38
*
Visual 3-39
Some participants are likely to say that you cannot select just two performance measures and
that you need a balanced scorecard. That is a valid point, but this exercise is to identify the
two most critical (not exclusive of others) in terms of competitive strategy relating to market
objectives.
1. What are Scipa’s likely competitive strategies?
Scipa’s products are in a slow-growing industry in the maturity phase of the market life
cycle. Revenue growth in this market is slow, price competition is intense, and
‘outcompeting rivals for market share is a key to growth. In this market, organizations are
likely to adopt these strategies:
+ low-cost provider
+ product innovation
2. What are the two most significant performance measures that relate to Scipa’s
competitive strategies, and why?
+ Low-cost provider strategy: Efficiency —since it affects costs in a number of operations
such as manufacturing, distribution and supply management.
+ Product innovation strategy: Two possible answers:
+ Time needed to develop new products. Why? The goal is to find new ways to
stimulate sales to existing customers and draw new customers from rivals.
+ Specification quality. Why? Success in the marketplace—for the product to succeed
with customers in terms of features and performance.
Instructor Guide Version 2.0 358 ‘©2010 APICS svat anogenen ot Resaces /Pics
Vocabulary Check Solution
*
Visual 3-46
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‘Instructor Guide Version 2.0 364 ‘©2010 APICS oraape Mangement Ress -®ics
Performance Check
Remind the class that the main purpose of the performance check is to provide feedback.
The questions are all multiple choice and are of the same type as on the APICS Strategic
Management of Resources examination.
If you will be assigning grades, ask the class to write their answers on a separate answer
sheet.
Give the class the answers, and let them mark their own papers. This is a good opportunity to
reinforce material from this session. Discussion of the answers is encouraged.
When the discussion is completed, collect the papers. If you are assigning grades, you can
record from the papers.
Answers:
1. e—Answers a, b, and d are characteristics of a hierarchical structure.
2. a—Answers b, c, and d are three of the five generic performance objectives along
with dependability and cost. These are different from and play a supporting role in
competitive strategies, such as low-cost provider. The others are focused low-cost
provider, best-cost provider, broad differentiation, and focused differentiation.
3. d—Job commitment is a desired outcome of answers a, b, and c and not an approach
to improving morale and motivation.
4, b—Market share performance is not one of the four major performance measurement
categories of the balanced scorecard. In addition to the three that are, the fourth is
learning and growth performance.
Instructor Guide Version 2.0 366 ©2010 APICS stat eragameat et Resces -eics
Answers (cont.)
5. €—Cost of the product design process is of much less importance than the other
answers in a rapidly growing market where rivals are competing for early competitive
advantage and market share. Answers a, b, and d are of more relevance at this phase
of the market life cycle.
6. d—Dedicated equipment for very high volume production is a characteristic of
product layout and leads to lower unit costs and less work in process, and also
requires less worker involvement.
7. a—Answers b, c, and d are critical factors. Volume /variety is pethaps the most
important because, for example, very high volumes usually require higher levels of
automation, and decisions about scale reflect performance objectives choices with
respect to flexibility and cost, as in whether to have large-scale centralized operations
or small-scale decentralized operations. Worker skills might have some effect on the
choice but is not as important as the other factors.
8. b—Answers a, c, and d are influenced by the product volume and variety factor.
Instructor Guide Version 2.0 368 ©2010 APICS ee ics
Answers (cont.):
9. a—A fixed position layout is used to produce a wide variety of unique products in
Jow volumes. All of the other answers are true statements.
10, d—Answers a, b, and c are true and show the interdependency among performance
objectives. Conformance quality and specification quality are different dimensions of
quality and technically can be decoupled. A zero defect product may conform to
physical and performance specifications but not be successful in the marketplace.
Instructor Guide Version 2.0 3-70 ©2010 APICS Strategic Management of Resources -Pics
"
(is Class Problem 4.1: Performance Objective Choices (cont).
"Solution:
Quality x
Speed x
Dependability x
Flexibility x
Cost x
1. Explain your choice of key performance objectives for a low-cost provider strategy.
+ cost (efficient operations)
+ speed (high throughput rates to reduce inventory and working capital costs)
2. Explain your choice of key performance objectives for a differentiation strategy.
+ quality (specification quality ensures product/service success in the market)
+ flexibility (rate of new product introduction; ability to change volume and variety of
production)
+ dependability (of product design process and quality of product/service delivery)
Instructor Guide Version 2.0 442 ‘©2010 APICS stage Manopmentt Ressrces -Bics
: Process & Layout Choices
fe} Visual 4-14
Have participants work in the same groups as follows:
+ Review the description of performance objectives shown in 4-12.
+ For each of the five process/layout choices, identify the performance objectives that rank
very high in relative importance.
+ Fill in the worksheets in their participant workbooks and then present the reasons for their
choices for a general discussion led by the instructor.
*
Visual 4-15
Project/jobbing/batch— Products are made to customer specifications with the tacit
understanding that production will not start until the order is processed. Customers expect the
process to show dependability rather than speed in its ability to meet promised delivery dates.
Customers also expect flexibility in accommodating a high level of product variety, as these
are often unique products. Cost is always important, but in this case, when products are made
to specifications in low volumes, it is not always critical.
Mass/continuous—These are high-volume/low-variety processes with flow layouts. Cost and
speed are the dominant performance objectives driving these processes.
Quality is important in all cases but not as important as the other performance objectives in
choosing a process or layout. In some instances, however, it can influence the choice of
manufacturing process and layout. Low-throughput/high-value items that require highly
skilled labor, for example, might lead to the choice of a jobbing/cell process and layout.
Note: See Slack and Lewis, Operations Strategy, 2003, pages 36-43, for more information on
performance objectives.
Instructor Guide Version 2.0 a6 ©2010 APICS cesta Mangement ot Ress -ics
Process/Layout Choices and Competitive Strategy
|" class Problem 4.3: Process/Layout Choices and Competitive Strategy
Visual 4-18
Have participants work in the same groups to review the table on the participant workbook
page, which shows the relationship between the choice of process/layout and low-cost and
differentiation strategies, and then answer the two questions below the table.
(s Solution:
*
Visual 4-19
+ Low cost and speed are key performance characteristics of mass and continuous
processes that are high volume/low variety.
+ These processes accommodate make-to-stock commodity-type products made in high
volumes with low variety. Unit costs of production are low as a result.
+ The repetitive and continuous flow nature and layout of these processes means speed in
terms of high throughput.
+ The make-to-stock strategy used in mass and continuous processes also results in speed
of order fulfillment.
Psi assoumnen) = [iw]
eee *
f| Visual 4-20
+ Equipment and workers are flexible, capable of performing multiple jobs, and not
dedicated to repetitive work as in high-production-volume environments.
* Worker skills are higher, consistent with the make-to-order nature of products.
Instructor Guide Version 2.0 420 ©2010 APICS ovsteg arapnentt Resa -eics
Materials Planning and Scheduling
2
U } Class Problem 4.4: Materials Planning and Scheduling
——M] Visual 4-21
Have participants work in the same groups. Using the table on the participant workbook
page,
+ indicate which materials planning and scheduling systems best support low-cost provider
and differentiation strategies
¢ explain the reasoning behind their conclusions in a discussion led by the instructor.
Visual 4-22
Istue ”Suategy Strategy ee ce
‘Materials planning
air POAC Ste WAP Snr
raquremert planning (MRP) suppocs ferentiation
Shop order x | wihplsnning andeontoltechniquesforarighvasely
‘fproductsconsistngofmany pars, onanéorderby-
erderoasi
Rate-basedtPSMRPauppotsiow-coatsvateny and
provides foreven flowin a pull producton system ia
Rate-based | x Figh-volumetow-varety envrcnment. LeanlT
Inventory pratoesredveeinventny costs,
‘Scheduling basedon
Infinite x. | Infinite loading supports order-basedogic ofits
loading capac, which supports the ctferentatonstaegy,
a Finte loading is more applicable ina igh-volumeiow-
a x varety envronmenewih stabledemandand therfore
acing spportstneiourcostetateny
Instructor Guide Version 2.0 422
©2010 APICS suite aragenrttRemces Fics
Capacity and Organizational Structure Issues
&|
i __| Class Problem 4.5: Capacity and Organizational Structure Issues
Visual 4-23
Have participants work in the same groups as follows:
Assess the relationship between the following capacity and organizational structure issues
and low-cost provider and differentiation strategies:
* lag versus lead capacity strategy
+ level versus chase production strategy
+ centralized versus decentralized organizational structure
+ Fill in the table on the participant workbook page and participate in an instructor-led
discussion of the results.
*
Visual 4-24
a eee
po slbepehgciehi
Logvs. ed copecty saeyy
ts ‘ Resaacenandocaecthonr Sniarearone
oflow-costprovesses mass, contnucus.
‘Ads capacty mantcpalion of demand Compeanaan
Lead X _|latterentationrequires detvery speed andfiexbilty
Levelve. chase strategy
Low-coa srategy requreslong producionrursat
Level x [constant volume.
Chase x [Chase skategyeaures ably adustvaumesqucoy
tomas gentand
Organizational structure
Cenvatzed | x management cnatertviniow poate cet
econvazee X__[itferetaton equres productvaretyandfexbity
Ienerentinthe configuration ofdecervalzedoperatons.
Instructor Guide Version 2.0 424 ‘©2010 APICS ene aragenertt Resouces Fics
Performance Measurements
2
[8] Class Problem 4.6: Performance Measurement
retrace |
—Me| Visual 4-25
Have participants work in the same groups as follows:
+ Review the list of performance measures on the participant workbook page.
‘+ Fill in the type of measure and indicate whether it is internal or external.
(5 ote
*
Visual 4-26
Pasensocamnem) (iB)
*
Visual 4-27
A table of the solution for Class Problem 4.6 appears in the Appendix.
oO Note: The reference for this problem is Slack and Lewis, Operations Strategy, 2003, Chap. 2.
Instructor Guide Version 2.0 426 ‘©2010 APICS Strategic Management of Resources
Appendix
Solution to Class Problem 4.6
-Pics
Performance Measure
iS
B
g
m
% orders delivered late
Cycle time
Average batch size
Time needed to develop new products/services | -
No. of defects per unit
Schedule adherence
Efficiency
Frequency of delivery
Scrap level
Utilization of resources
Time to change schedules
Mean deviation from promised arrival
Order lead time
Mean time between failures
Labor productivity
Customer query time
Time to increase activity rate
Cost per operation hour
Customer satisfaction score
Average lateness of orders
Actual vs. theoretical throughput time
Warranty claims
Variance against budget
Machine changeover time
Level of customer complaints
Range of products and services
Added value
alnlo}nlololalojole|nja|olojalo/njojolajajoloja|njalo
—|m|m|—|—|m|—|m|m|—|—|m|—|—Jm}m)—|—|—|m}—|—|}—|-|-|-—|m
Instructor Guide Version 2.0 466
©2010 APICS Strategic Management of Resources - f =
(i)
Class Problem 4.
jurger King Performance Objectives (cont.)
fie! Visual 4-29
1. BK competes mainly on differentiation. President Paul Clayton touts the flame-broiled taste
as an important part of product differentiation and business success.
2. Quality is the most important, as itis the key differentiator (the order-winning factor). The
other four (order qualifiers) are very important, as BK has to be as good as its rivals to be
competitive.
3. _BK’s main rivals offer a wide range of products to suit different types of customers (age,
ethnicity, gender, budget, food preferences, etc.). Flexibility in preparing different products
for different customers and in introducing new products/services is critical to success.
*
Visual 4-30
4, President Paul Clayton points to the important link between quality of product and
conformance in restaurant processes (reliability and consistency of food preparation and
service). The latter supports the former. Actually, it is important to recognize the
interrelationship among the performance objectives. For example, speed can reduce costs,
and customers expect the same product/service quality, speed, and flexibility (variety of
meals) from day to day and from store to store (dependability).
5. Aside from quality, which is a differentiating order-winner, all other performance objectives
include minimum order-qualifying levels of performance that BK must meet in order to be
considered by customers.
@ Note: Refer to Slack and Lewis, Operations Strategy, 2003, chap. 2, for a discussion of
order-winning and -qualifying factors.
Instructor Guide Version 2.0 430 ©2010 APICS ee -Pics
fey
| Class Problem 4.8: Ratio Analysis
— Me| Visual 4-43
Ask the class to calculate the current ratio and rate of return on net sales for 2014 and
2013. They should refer to the 2014 and 2013 income statement and balance sheet for
‘Smart Touch Learning (see Visuals 4-37 and 4-38) and the ratio formulas shown in the
Key Financial Ratios table on the previous participant workbook page.
Solution:
aoe *
Ae! \/isual 4-44
4. Current ratio
oe ors) =£uTentassets___ $2609
went ratio (2014) = ‘$340
3560
rrentrato 2013). = 24
Ccurentrtio (2013) Se
2. Rate of return on net sales
Relumonnet sales $909 og
(2014) $3,189 eee
Retumonnet sales $105 oe
(2013) 314g ~ 72 = 72%
Q Ask what the trends in current ratio and return on net sales can tell you about Smart Touch.
Answer:
If the current ratio is representative of past and indicative of future performance, Smart
Touch has adequate liquidity (assets convertible into cash to pay current liabilities—debt or
other obligations due within a year). If the rate of return on net sales represents an upward
trend and long-term growth, Smart Touch is a going concern with good long-term
profitability prospects. The ratios as calculated indicate that Smart Touch would be a
financially reliable supplier or customer. Ratios are valuable in intercompany comparisons.
Instructor Guide Version 2.0 44 (©2010 APICS Strategic Management of Resources
Wrap-Up and Homework
ans
Vocabulary Check
Visual 4-56
Visual 4-57
Review the objectives with the class.
Visual 4-58
Solution:
Vea cnec Son
Visual 4-59
Li 5.3 9.4
Le of 10.4
3g le
4b 8h
Instructor Guide Version 2.0 458 Performance Check
Remind the class that the main purpose of the performance check is to provide feedback.
‘The questions are all multiple choice and are of the same type as on the APICS Strategic
Management of Resources examination.
If you will be assigning grades, ask the class to write their answers on a separate answer
sheet.
Give the class the answers, and let them mark their own papers. This is a good opportunity to
reinforce material from this session. Discussion of the answers is encouraged.
When the discussion is completed, collect the papers. If you are assigning grades, you can
record from the papers.
Answer
1. c— Schedule adherence supports dependability, not speed.
2. e—Jobbing requires a functional layout, though in some instances it can utilize a cell
layout. Answers a, b, and d require product layouts and in the case of mass, a cell
layout may also apply
3. b— Answers a, c, and d relate to speed, cost, and quality respectively.
4, b— Answers a, c, and d relate to cost, dependability, and quality!
Instructor Guide Version 2.0 4-60 ‘©2010 APICS Ce Fics
Answers (cont.)
5. d—Volume flexibility is the ability to change quickly the production level of a
product. Answer a relates to being able to customize (for example, bundle) existing
products/services to meet the special needs of customers. Answer b relates to being
able to adjust the mix of existing products within a given lead time. Answer c might
seem to be the correct answer, but it relates more to being able to replan to meet a
new delivery date rather than to change volumes quickly.
6, a—Some purchasers will tolerate lapses in order winning and qualifying factors in
order to preserve a long-term relationship.
7, d—When creating a statement of cash flow, the organization analyzes the cash flows
from operating, investing, and financing activities. Answers a and b are incorrect,
because the residual value of the equipment only produces cash when the equipment
is sold, and answer c is incorrect because it omits cash flows from operating and
investing activities.
8, a—Answers b and c are incorrect because they treat fixed manufacturing overhead as
operating expense or period cost. Answer d is incorrect because target costing is the
process of designing a product to meet a specific cost objective.
Instructor Guide Version 2.0 462 ‘©2010 APICS ousage NaapeenotResaces -eics
Answers: (cont.)
9. e—Accounts receivable turnover, answer a, and inventory turns, answer d, are ratios
that assist in measuring ability to collect receivables and sell inventory respectively.
Answer b is a ratio that helps to measure the ability to pay long-term debt.
10. d—The accounting rate of return does not incorporate the time value of money.
‘Answers a, and b directly account for the time value of money, and answer c
indirectly incorporates the time value of money when it is used to compare net
present value calculations of different investment opportunities.
Instructor Guide Version 2.0 484 ‘©2010 APICS Strategic Management of Resources -Pics
'] Class Problem 5.1: Support for Supply Chain Management Objectives
Have participants work in pairs or small groups to answer the questions in their participant
workbooks.
[Paxton Guerre oee on gy]
toemen
Visual 5-10
s
LS! solution:
*
Visual 5-11
1. Quality of product and service design, especially when speed to market and product
innovation are important strategy goals. Quality of production and purchasing processes to
‘ensure quality raw materials and products and adherence to schedules.
2. Time required for goods and services to move through the supply chain. Throughput/cycle
time, or the time it takes to move a product from order to delivery.
3. Dependable on-time and in-full delivery prevents over and early ordering, which increases
inventory costs. Dependable throughput speeds the supply chain and reduces waste.
#2) Visual 5-12
4, Flexibility or agility enables an organization to respond quickly to changes in market.
conditions and customer requirements.
5. Reduction in direct material and labor costs. Reduction in holding and transaction costs
(the latter through supplier and customer partnerships).
Instructor Guide Version 2.0 eA ©2010 APICS Strategic Management of Resources Féics
: Lead and Lag Strategies
Visual 5-21
Have participants work in small groups and assign them either the lead or lag strategy to
analyze. They should refer to the characteristics shown in the table on the participant
workbook page and use an “X” to indicate whether the lead or lag strategy is advantageous
for a particular characteristic. They may add others as they see fit.
Have them answer the questions in their participant workbooks and present reasons for their
selections. Discuss the results. Explain that the answers below are meant to highlight the
differences between the two strategies and are not absolute.
solution:
Me} Visual 5-22
Cimemes Eero wien
Low risk of temporary capacity insufficiency x
High plantutiization % x
Cushion against orecasterror x
Capital spending x
Low risk of permanentovercapacity x
Lowunitcost of production x
Customer satisfaction x
Revenue maximization potential x
Flexibilty to meet unexpecteddemand x
‘Smoothing| x
Instructor Guide Version 2.0 5-20 ‘©2010 APICS Strategic Management of Resources Fics
a)
Class Problem 5.
: Transactions vs. Partnerships
Have participants work in pairs or small groups to complete Class Problem 5.3. They will
suggest an appropriate form of supplier relationship (arm’s length transaction, long-term
contract, partnership, or other) for the scenarios given in their participant workbooks and
state the reason for their choice. Ask volunteers to share their responses and discuss as a
class.
Visual 5-29
Solution:
*
Visual 5-30
1. Long-term partnership: safeguard supplies as there is a high supply risk: few sellers, other
large buyers, large percent of customer Y’s total product cost.
2. Arm’s-length transaction: supplier competition is high and supply risk is low; focus on
cost reduction and force competition among suppliers.
ovens eosin ea]
Visual 5-31
3 Long-term contract: bottleneck item with few sellers; high supply risk; safeguard supply
possibly at a slight price premium,
4. Arm’s length transaction: non-critical items and low supply risk, but streamline
purchasing process to keep transaction costs low.
Instructor Guide Version 2.0 5-28 ‘©2010 APICS Strategic Management of Resources / “PICS
Vocabulary Check Solution
*
Visual 5-47
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IN; IN) |L} [GI LT} EF
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[vlelRit Lhiinitlelclelaltiiloln| — [+]
Instructor Guide Version 2.0 “6-46 © 2010 APICS Strategic Management of Resources fr ics
Performance Check
Remind the class that the main purpose of the performance check is to provide feedback.
‘The questions are all multiple choice and are of the same type as on the APICS Strategic
Management of Resources (SMR) examination,
If you will be assigning grades, ask the class to write their answers on a separate answer
sheet,
Give the class the answers, and let them mark their own papers. This is a good opportunity to
reinforce material from this session. Discussion of the answers is encouraged.
When the discussion is completed, collect the papers. If you are assigning grades, you can
record from the papers,
Answers:
1, d—Disintermediation involves bypassing a downstream operation, which is usually
owned by a third party, Answers a, b, and c all involve assuming ownership of
operations.
2. b—An organization’s supply network or chain includes internal operations and
usually includes operations that are included in the supply networks of other
organizations.
3. b—Improving the forecast is not as effective as having real time information,
Forward integration and disintermediation will provide better visibility to
downstream demand but are not everyday solutions to the bullwhip effect.
4. c—As capacity will lead demand, utilization will be lower and production costs per
will be higher than in a lag strategy. The risk of permanent overcapacity is high,
so it is not an advantage.
5. a—Answer bis true, but it is not an advantage. Answers ¢ and d are advantages of
large-scale operations and facilities.
Instructor Guide Version 2.0 5-48 ‘©2010 APICS Strategic Management of Resources / KPICS
Answers (cont.)
6. b—The objective of arm’s-length transactions is generally to obtain the most
favorable price, which encourages competition. Answer a is true of partnerships.
Answer c is the opposite of the high cumulative transaction costs of arm's length
transactions.
7, d—Alll of the others are valid considerations or alternatives relating to the
outsourcing decision,
8. b—Answer ais true of arm’s-length transactions. Answer ¢ is a situation that calls for
a long-term contract, but not necessarily a partnership arrangement. Answer dis a
possibility but not a general rule, and is not as true as answer b.
9. a—All of the others are objectives of supplier reduction.
10. e—Marketing and financial strategies play an important role in vertical integration.
decisions. Answer d is therefore untrue. There is no evidence that answer a is true,
and answer b is untrue because vertical integration requires a much higher risk of
capital.
Instructor Guide Version 2.0 5-50 ‘©2010 APICS Strategic Management of Resources
{2
\ Class Problem 6.1: Variable and Attribute Measures
A®ics
Have participants work in groups of two to four. Assign half the teams to use a car as the
model for the problem and half to use an airline flight. Ask participants to brainstorm ideas
for variable and attribute measures for each of the six quality characteristics given in the
chart in their participant workbooks, and to record one variable and attribute measure for
each characteristic.
fe! Visual 6-23
Ask for volunteers to share their results with the class for each model. Compare their answers
to the possible answers given in Visual 6-24.
Me} Visual 6-24
a Bn
os fo cod Cis
Functionality | Accsleraton and | Wasthe de | Numberofjourmeys | Vas he food
braking salisfacioy? | thatsatelyarived. | acceptabie?
performance
‘Appearance | Numberot | Iscolorto ‘Numberofseats | Is crewdressed
iemishes | specticaion? | cleanedsatstactorly | we?
Reliability | Averagetime | Istheretabiy | Proporionthet | Weve here any
betweentauts | satisfactory?” | arivedontime | complaints?
Durabiity | Uieotthecar |istheusetulife | Numberofimes airine updating
spredicied? | sericeimovatons | services
laggeabenind | satefactoniy?
‘competion
Recovery | Timefromfaut | Issericeabiity | Proportonofsewice | Docustomersfee!
discoveyto | acceplable? | faluresresoNed | staffdealwellwith
repair complaints?
Contact Levelofhelp | Didcustomers | Thelevelto which | Didcustomers
providedbystat | teelwellsewed? | customersfeelwell | feelstatfwere
sened help?
Instructor Guide Version 2.0 624 ‘©2010 APICS Strategic Management of Resources APics
2
(ei Class Problem 6.2: Number and Size of Sites
Visual 6-45
Have participants work in small groups as follows:
+ For each decision factor listed in Visual 6-45 and the table on the participant workbook
page, determine whether it conveys an advantage in a market area served by a few large
sites or many small sites.
Fill in the worksheets in their participant workbooks.
‘Then turn to the following page, answer the questions, and be prepared to present the
reasons for their choices in a short discussion led by the instructor.
| Solution:
*
#} Visual 6-46
eons ns
erectus aie
eee eae)
Economies of scale x
Transportation costs x
Customer service x
Sales volume x
Instructor Guide Version 2.0 6-46 (©2010 APICS Strategic Management of Resources /Pics
)
[ai Class Problem 6.2: Number and Size of Sites (cont.)
= Visual 6-47
Ask the participants to answer the questions on the participant workbook page.
*
Visual 6-48
1. Explain the relationship of the number and size of manufacturing sites to transportation costs.
‘Transportation costs are higher when a single large manufacturing site supplies distributed
stocking points and customer sites.
2. What effect will adding retai
tes in a regional market have on customer service, and why?
Customer service should improve as customers will not have to travel as far to reach a store.
Pebeneaiauimin =f
A! Visual 6-49
3. Explain the relationship of the number of retail sites to sales volume in a regional market.
More retail sites increases proximity to customers, which is important in customer-contact
retail as it leads to increased sales volume.
4, What different performance objectives do a few large sites and many small sites relate to?
+ Large sites that enjoy economies of scale relate to the performance objective of cost.
+ Many small sites relate to the performance objective of flexibility (proximity
accommodates customer time constraints).
Instructor Guide Version 2.0 6-48 (©2010 APICS satu ManapnecttRemras Fics
a)
_ Class Problem 6.3: Adding a New Retail Site
fe} Visual 6-50
Ask the class to review the visual above and answer the questions in the visual.
Note: Refer to the full-text-sized version of the answers to Problem 6.3 in the Appendix at
the end of this session in making sure that participants can interpret the numbers in Visual 6-
50.
Peomeseawinen = [a]
| Visual 6-53
Instructor Guide Version 2.0 6-50
(©2010 APICS Strategic Management of Resources Fics
Appendix
Solution to Class Problem 6.3
1, What are the components of the total gross margin calculation?
+ Total sales revenue and cost of goods sold (or cost of sales).
What was the change in total net margin when the fourth store was opened?
+ No change. It remained at $5 million ($28 million - $23 million).
3. Was adding a fourth store a good business decision? Give reasons for and against?
+ The net margin of $5 million (total gross margin — total store operating cost) did not
change after the fourth store was built, One could argue that although $5 million ($26
million — $21 million) was invested in a new store, additional revenues for all stores
merely broke even with additional operating expenses, and that the investment was
therefore not good.
+ On the other hand, if the new store is in an area of rapid growth, it may become quite
profitable in time. Also adding a new store might have other competitive advantages,
such as discouraging rivals from entering the market.
Instructor Guide Version 2.0 6-74 ‘©2010 APICS Strategic Management of Resources
Wrap-Up and Homework
Visual 6-62
Visual 6-63
Review the objectives with the class.
Vocabulary Check
Visual 6-64
*
Visual 6-65
Lj 5.h 9.5
2e 6k 10.g
3.b 2d Wd
4c 8a 12.
Instructor Guide Version 2.0 6-66 ‘©2010 APICS Ssrategic Management of Resources Feics
Performance Check
Remind the class that the main purpose of the performance check is to provide feedback
‘The questions are all multiple choice and are of the same type as on the APICS Strategic
Management of Resources exai n.
If you will be assigning grades, ask the class to write their answers on a separate answer
sheet.
Give the class the answers, and let them mark their own papers. This is a good opportunity to
reinforce material from this session. Discussion of the answers is encouraged,
‘When the discussion is completed, collect the papers. If you are assigning grades, you can
record from the papers.
Answers:
1. d—Only answer d is true.
2. e—Rewards in the form of bonuses are tied directly to executing the strategic
objective of quality products.
3. a—TQM emphasizes using money to prevent errors rather than assess or correct them
after they occur.
4, e—Answer c is an incorrect rejection. Answers a and d do not have sampling errors.
Answer b is a type II error with incorrect acceptance.
Instructor Guide Version 2.0 6-68 (©2010 APICS Strategic Management of Resources Fics
Answers (cont.):
5. b—The percentage expressing satisfaction has varied widely and has not remained
steady over time.
6. c—Answers a would apply if demand were regular, and b supports high volume, not
high variety. Answer d is not a plant layout, but is a resource that assists in
determining the applicability of a cellular layout.
7. d—Answers a, b, and c all support automation, high scalability and tight coupling.
8. b—Quality function deployment is a product or service design tool while the other
answers are indeed factors that affect location decisions.
Instructor Guide Version 2.0 6-70 ©2010 APICS Strategic Management of Resources / ‘PICS
Answers (cont.):
9. a—Answer b relies on general purpose equipment. Answers c and d might require
some specialized equipment, but none of them reach the production volumes to
justify high levels of investment in highly automated and costly equipment used in
some assembly line or continuous flow (product) layouts.
10. b—Answers a, ¢, and d are all market-related location decisions. Answer b is usually
a supply-related factor aimed at improving product and /or process design.
Instructor Guide Version 2.0 6-72 ‘©2010 APICS ‘Sati Management of Resouces ____ Fics
(2
__J Class Problem 7.1: Failure Examples
Visual 7-24
Have participants give examples of failures that an Internet service provider might face in
each of the four quadrants in the table in their participant workbook. Ask for volunteers to
give examples. Review possible solutions on Visual 7-25.
) solution:
*
Visual 7-25
More likely failures with high impact—Servers go down due to hackers, and customers
lose service.
+ Less likely failures with high impact—Servers go down due to a catastrophic event, such
as an earthquake.
* More likely failures with low impact— Service slows due to high Internet traffic.
+ Less likely failures with low impact—Service slows due to temporary local energy drops
to conserve energy.
Instructor Guide Version 2.0 7-24 ©2010 APICS Strategic Management of Resources ABics
(va.
Class Problem 7.2: FMEA
Me! Visual 7-32
Have participants calculate RPN values for the case given in their participant workbooks.
(They should multiply the values across the rows in the table.)
Ask them to determine, based on the RPN values, which potential failure should be ranked
first for corrective action.
Me) Visual 7-33
Goods not secured: RPN = 60
Goods incorrectly secured: RPN = 160
Goods incorrectly loaded: RPN = 196
Since “goods incorrectly loaded” has the highest RPN score, it should be the first potential
failure to be reviewed for prevention and mitigation.
Instructor Guide Version 2.0 734 ©2010 APICS cwatepe Magento esas -Pics
Preventing Failures
=e! Visual 7-34
Explain the importance of preventing failures before they occur. Review the approaches for
preventing failures given on Visual 7-34; then have the class work on Problem 7.3 to
reinforce these new concepts.
|
") Class Problem 7.3 Preventing Failures
Visual 7-35
Have the class review the failures on the left in their participant workbooks and draw lines to
‘match them to the failure prevention approaches on the right. Discuss other examples from
the participants’ own experiences.
