Full Name: Phạm Thị Khánh Linh

ID:BABAWE13276

Assignment for Lecture 9: Supply chain management

I Multichoice:
1. Among which of the following industries are purchasing costs the LOWEST percentage of sales?
a. automobiles
b. petroleum
c. restaurants
d. lumber
e. chemicals

2. In the make-or-buy decision, which of the following is a reason for making an item?
a. management can focus on its primary business
b. lower production cost
c. inadequate capacity
d. reduce inventory costs
e. None of the above is a reason for making an item.

3. Outsourcing
a. transfers traditional internal activities to outside vendors
b. utilizes the efficiency which comes with specialization
c. lets the outsourcing firm focus on its critical success factors
d. None of the above are true of outsourcing.
e. All of the above are true of outsourcing.

4. Which one of the following is not a supply chain strategy?

a. negotiation with many suppliers
b. vertical integration
c. keiretsu
d. short-term relationships with few suppliers
e. virtual companies

5. Which of the following best describes vertical integration?

a. to produce goods or services previously purchased
b. to develop the ability to produce products which complement the original product
c. to sell products to a supplier or a distributor
d. to develop the ability to produce the specified good more efficiently than before
e. to build long-term partnerships with a few suppliers

6. A fried chicken fast-food chain that acquired feed mills and poultry farms has performed
a. horizontal integration
b. forward integration
c. job expansion
d. current transformation
e. backward integration

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7. E-procurement
a. works best in long-term contract situations, and is not suited for auctions
b. is the same thing as Internet purchasing
c. represents only the auction and bidding components of Internet purchasing
d. is illegal in all states except Nevada and New Jersey
e. All of the above are true of e-procurement.

8. The three classic types of negotiation strategies are

a. vendor evaluation, vendor development, and vendor selection
b. Theory X, Theory Y, and Theory Z
c. many suppliers, few suppliers, and keiretsu
d. cost-based price model, market-based price model, and competitive bidding
e. None of the above is correct.

9. A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to
distributors. This is an example of
a. horizontal integration
b. forward integration
c. backward integration
d. current transformation
e. keiretsu

10. Which of the following is not a concern of the supply chain?

a. warehousing and inventory levels
b. credit and cash transfers
c. suppliers
d. distributors and banks
e. maintenance scheduling

Answer : 1.C 2.B 3.E 4.D 5.A 6.E 7.B 8.D 9.B 10.E
II. Problems:
Problems in the textbook: (Chapter 11- Supply Chain Management)
P11.1, P11.2, P11.5, P11.6
*******

P11.1
a.
For profit to improve to $25,000 from current level of $10,000, increase in profit = $25000 -
$10000 = $15,000
Relevant supply chain strategy for profit to improve by $15,000 will be to reduce cost of material
by $15,000

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Current value of cost of material = $60,000
Therefore reduced value of cost of material = $60,000 - $15,000 = $45,000
Therefore ,
percentage improvement required in supply chain strategy = $15,000 improvement required/
$60,000 original cost of material x 100 = 25%

PERCENTAGE IMPROVEMENT REQUIRED IN SUPPLY CHAIN STRATEGY = 25%

COST OF MATERIAL WITH $25,000 PROFIT = $45,000

b.
Let the revised sales value = S
Since percentage of cost of material ( 60% ) and percentage of production cost ( 20% ) , totalling
80% remain unchanged, total cost of material and production will be = 0.6 S + 0.2.S = 0.8.S
when revised sales value = S
Fixed cost ( remains unchanged ) = $10,000
Profit = $25000
Since ,
Sales = Material cost + Production cost + Fixed cost + Profit
Therefore,
S = 0.6.S + 0.2.S + $10,000 + $25,000
Or, S = 0.8.S + 35000
Or, 0.2.S = 35000
S = 35000/0.2 = 175,000
Percentage improvement required in sales strategy =(Revised Sales value – Original sales value )
/ Original sales value x 100 = ( 175,000 – 100,000)/ 100,000 x 100 = 75 %

SALES FOR PROFIT TO IMPROVE TO $25,000 WILL BE $175,000

PERCENTAGE IMPROVEMENT REQUIRED IN SALES STRATEGY = 75%

P11.2
Information given in the table below the vendors K and D ratings overall rating needs to
calculate their scores based on their ratings and scores .It is given that the weight for product
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total is 40% and other three categories such as company , sale , and services and weighed 20%
each.
Company Excellent (4) Good (3) Fair (2) Poor (1)
Financial strenghth K D
Manufacturing range KD
Research Facilities K D
Geographical locations K D
Management K D
Labor relations K D
Trade relations KD

Services Excellent (4) Good (3) Fair (2) Poor (1)

Deliveries on time KD
Handling of problems KD
Technical assistance K D

Products Excellent (4) Good (3) Fair (2) Poor (1)

Quality KD
Price KD
Packaging KD

Sales Excellent (4) Good (3) Fair (2) Poor (1)

Product D K
knowledge
Sales call K D
Sale service K D
K refers to Corporation K and D refers to Corporation D.
a) Determine the rating scores for Corporation K with the given information :
The rating score calculation for Corporation K is shown below :
Company K
Product Particulars Weight Score Weight x Total
Score
Quality 0.4 4 1.6
Price 0.4 2 0.8
Packaging 0.4 2 0.8
Total 3.2
Sales Product knowledge 0.2 1 0.2
Sales call 0.2 2 0.4
Sales service 0.2 3 0.6
Total 1.2
Service Deliveries on time 0.2 3 0.6
Handling of problems 0.2 3 0.6
Technical Assistance 0.2 3 0.6
Total 1.8
Company Financial strenght 0.2 2 0.4
Manufacturing range 0.2 2 0.4
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 Research facilities 0.2 4 0.8
Geographical locations 0.2 3 0.6
Management 0.2 3 0.6
Labor relations 0.2 2 0.4
Trade relations 0.2 2 0.4
Total 3.6
9.8
Grand total of company K
It is given that the weight of the product is 40% , weight of the sales , service , and company is
20% .Thus , the weight is mentioned as 0.4 for product and 0.2 for sales , service , and
company .Score is from the given table . When the performance of the firm is excellent , the
score is 4 , 3 for good , 2 for fair , and 1 for poor performance.
Calculate the total score for the product :

Total score of the product =( Multiple of weight and score of quality + Multiple of weight and
score of price + Multiple of weight and score of packaging )= 1.6+0.8+0.8 = 3.2
Hence , the total score of the product is 3.2
- Calculate the total score for the service :
Total score of the service = ( Multiple of weight and score of deliveries on time + Multiple of weight
and score of handling of problems + Multiple of weight and score of technical assistance )=
0.6+0.6+0.6= 1.8

Hence , the total score of the service is 1.8

- Calculate the total score for the company :

Total score of the company = Multiple of weight and score of ( Financial strength + Manu facturing
range + Research facilities + Geographical locations + Management + Labor relations + Trade
relations )= 0.4+0.4+0.8+0.6+0.6+0.4+0.4 = 3.6

Hence , the total score for the company is 3.6

- Calculates the grand total of Corporation K :

Grand total of Corporation K = (Total score of product + Total score of sales + Total
score of company + Total score of service ) = 3.2+1.2+3.6+1.8=9.8
Hence , the grand total of Corporation K is 9.8
b) The rating score calculation for Corporation D is shown below :
Company D
Product Particulars Weight Score Weight x Total
Score
Quality 0.4 4 1.6
Price 0.4 2 0.8
Packaging 0.4 2 0.8
Total 3.2
Sales Product knowledge 0.2 1 0.4
Sales call 0.2 1 0.2
Sales service 0.2 2 0.4
Total 1
Service Deliveries on time 0.2 3 0.6
Handling of problems 0.2 3 0.6

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 Technical Assistance 0.2 2 0.4
Total 1.6
Company Financial strenght 0.2 1 0.2
Manufacturing range 0.2 2 0.4
Research facilities 0.2 2 0.4
Geographical locations 0.2 2 0.4
Management 0.2 2 0.4
Labor relations 0.2 1 0.2
Trade relations 0.2 2 0.4
Total 2.4
8.2
Grand total of company D
It is given that the weight of the product is 40% , weight of the sales , service , and company is 20% .Thus
, the weight is mentioned as 0.4 for product and 0.2 for sales , service , and company .Score is from the
given table . When the performance of the firm is excellent , the score is 4 , 3 for good , 2 for fair , and 1
for poor performance.

- Calculate the total score for the product :

Total score of the product =( Multiple of weight and score of quality + Multiple of weight and
score of price + Multiple of weight and score of packaging ) = 1.6+0.8+0.8 = 3.2

Hence , the total score of the product is 3.2

- Calculate the total score for the sales :
Total score of the sales = ( Multiple of weight and score of product knowledge + Multiple of
weight and score of sales call + Multiple of weight and score of sales service ) = 0.4+0.2+0.4 =1

Hence , the total score of the sale is 1

- Calculate the total score for the service :
Total score of the service = ( Multiple of weight and score of deliveries on time + Multiple of
weight and score of handling of problems + Multiple of weight and score of technical
assistance )= 0.6+0.6+0.4= 1.6

Hence , the total score of the service is 1.6

- Calculate the total score for the company :
Total score of the company = Multiple of weight and score of ( Financial strength + Manu
facturing range + Research facilities + Geographical locations + Management + Labor relations
+ Trade relations )= 0.2+0.4+0.4+0.4+0.4+0.2+0.4 = 2.4

Hence , the total score for the company is 2.4

- Calculates the grand total of Corporation D:
Grand total of Corporation K = (Total score of product + Total score of sales + Total score of
company + Total score of service ) = 3.2+1 +2.4+1.6 = 8.2

Hence , the grand total of Corporation D is 8.2

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P11.5
a) What is Baker’s inventory turnover?

Inventory turnover ratio= Cost of goods sold / average Inventory

= $21,500/ $1250
= 17.2
b) What is Baker's percent of assets commi²ed to inventory?
percent investment in inventory = (Average inventory / total assets)*100
= (1250/16600)* 100 = 7.53%
c) How does Baker's performance compare to the industry leaders
When compare with industry leaders the Inventory turnover is higher then leader but Baker's
performance is low because they are .47% lower than the industry leaders performance.
Thus:

Player Industry Leader Baker’s Comparison

Baker has a more efficient operation

since its Inventory turnover ratio is
Inventory turnover 13 17.2 higher than Industry leader

Lesser percent of asset is committed

to inventory for Baker and hence
which is desirable. Lesser is the
Percent asset percentage, company has more
committed to option to utilize its assets in a
inventory 8 7.53 productive manner

P11.6
a)
Arrow' s Weeks of supply = 52 / Inventory Turnover
Arrow's Inventory Turnover = Cost of sales / Inventory = 13500 / 1000 = 13.5
Therefore, Arrow's Weeks of Supply = 52 / 13.5 = 3.852
b)
Inventory to Asset ratio for Arrow = Inventory / Total Assets = 1000 / 8600 = 0.11628 = 11.628 %
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Therefore, 11.628 % of Arrow's assets are committed to Inventory
c)
Arrow's Inventory Turnover = Cost of sales / Inventory = 13500 / 1000 = 13.5
d)
Inventory to Asset ratio for Baker = 1250 / 16600 = 0.0753 = 7.53%
Baker's Inventory Turnover = 21500 / 1250 = 17.2
Baker's Weeks of supply = 52 / 17.2 = 3.023
Arrow's Inventory Turnover is less than that of Baker. This means Arrow is not doing better than Baker.
Higher Inventory Turnover means that the company is able to sell its goods in lesser time.
Arrow's Inventory to Asset ratio is higher than that of Baker. This means Arrow is not doing better than
Baker. Generally, if the Inventory to Asset ratio is lower, the inventory efficiency is higher.
Arrow's Weeks of supply is higher than that of Baker. Higher weeks of supply means that the company
requires more time to supply and sell its products.
Therefore, Arrow's supply chain performance is not better than Baker's supply chain performance, as
measured by the above inventory metrics.