Trial exam questions + answers logistics and supply chain management 2

1. 1. ANSWERSTO END-OF-CHAPTER QUESTIONS CHAPTER 2:

THE SUPPLYCHAIN MANAGEMENTCONCEPT 1.
Discuss the differences between supply chain and supply chain management.
A supply chain refers to the activities associated with the flow and transformation of goods
from the raw material stage, through to the end user, as well as the associated information
flows. Supply chains are not a new concept in the sense that through the years organizations
have been dependent on suppliers and organizations have served customers. Although any
organization can be part of a supply chain, supply chain management requires over t
management efforts by the organizations in the supply chain. Moreover, supply chain
management cannot be successful unless the participating companies adopt an enterprise-
to-enterprise perspective.
2. Discuss the SCOR and GSCF models of supply chain management.
The SCOR model identifies five key processes—plan, source, make, deliver, and return —
associated with supply chain management. Each of the five processes indicates the
important role of logistics in supply chain management. There are eight relevant processes
in the GSCF model—customer relationship management, customer service management,
demand management, order fulfillment, manufacturing flow management, supplier
relationship management, product development management, and returns management.
Logistics also plays an important role in the supply chain processes in the GSCF model.
3. What are four key attributes of supply chain management?
The chapter discussed six key attributes of supply chain management:
- customer power;
- along-term orientation;
- leveraging technology;
- enhanced communication across organizations;
- inventory control;
- inter organizational coordination.
4. Why do modern supply chains need to be fast and agile?
decreased market share, reduced profitability, lower stock price, and/or dissatisfied
customers for supply chain participants.
5. What is the difference between relational and transactional exchanges?
Which is more relevant for supply chain management ?Why?
Relational exchanges tend to emphasize along-term orientation, while transactional
exchanges have a short-term orientation. Unlike transactional exchanges, relational
exchanges are characterized by attributes such as trust, commitment, and dependence,
among others. Supply chain management suggests that supply chains exist to improve the
long-term performance of the individual companies and the supply chain as a whole.
Relational exchanges also have along-term orientation. As a result, relational exchanges are
more relevant than transactional exchanges to supply chain management.
6. This chapter suggests that technology has been at the center of changes taking place that
affect the supply chain. Do you agree or dis agree ? Why? Although students can support
either side of the argument, the text does argue that technology has been at the center of
changes taking place that affect the supply chain. In particular, increases in computing
power and the Internet have been behind much of this change.
7. Discuss the impact of the Internet on supply chain management.
The Internet can facilitate supply chain effectiveness and efficiency by providing
opportunities to simultaneously(at the same time) improve customer service and reduce
logistics costs. The Internet allows one supply chain party to have virtually
instantaneous(prompt) visibility to the same data as do other supply chain participants. This
can ultimately result in lower inventories and improved profitability throughout the supply
chain.
8. Discuss some of the ways that inventory can be reduced in the supply chain
Ways to reduce inventory in the supply chain include, but are not limited to,
smaller, more frequent orders;
the use of premium transportation;
demand-pull (think of Dell Computers),as opposed to supply-push, replenishment;
the elimination or consolidation of slower-moving products.
9. Do you agree that supply chain collaboration can be classified as transactional,
tactical information sharing, or strategic in nature? Why? Students could argue that supply
chain collaboration is not transactional, tactical information sharing or strategic in nature, but
the text argues for this classification scheme.
0. How might regulatory and political conditions act as barriers to supply chain management?
With respect to regulatory conditions, a number of today’s supply chain arrangements were
illegal until the early1980s. At a minimum, companies should be aware of regulatory
considerations before pursuing supply chain arrangements.

Political conditions such as war and governmental stability can also act as barriers to supply
chain management. War, for example, could easily disrupt well- established supply chains.
Government policies that either discourage inter organizational coordination or discourage
doing business with certain countries which would have a negative impact on supply chain
efficiency.
11. Why is top management commitment necessary for successful supply chain
management? Top management has the ability to allocate(assign) the necessary resources
for supply chain endeavors (happenings) and top management has the power to structure, or
restructure, corporate incentive policies to focus on achieving organizational or inter
organizational (as oppose do functional) objectives.
12. Some companies are hesitant to use frequent shopper cards because the data provided
could violate the customer’s privacy. Do you agree or disagree? Why? Although either
answer is acceptable, the question of data usage versus customer privacy has generated
impassioned discussions by students. On the one hand, the frequent shopper cards can
provide a plethora of data about the shopping habits of particular consumers, potentially
allowing stores to achieve customized marketing for individual customers. At the same time,
frequent-shopper cards could violate customer privacy in the sense that certain customers
might be uncomfortable that stores have access to such detailed data about them,
particularly if the data includes frequent purchases of potentially“ embarrassing ”products
(e.g.,laxatives).
13. Discuss the best of breed and single integrator approaches. In a single integrator approach,
all relevant software applications(e.g., inventory management, transportation management,
warehouse management, etc.) are provided by a single vendor. One advantage of this approach
is that there should be coordination across the various applications. Alternatively, a best of breed
approach chooses the best application for a particular function and this approach often requires
additional software packages to coordinate the different applications.
14. Do you think corporate cultures are relevant for supply chain management ?Why or why not?
Again,either answer is adequate. However, the text indicates that incompatible corporate
cultures could present potential obstacles to effective and efficient supply chain management. In
addition , manifestations of corporate cultures, such as company rituals, company brochures,
and the like, can provide important clues about the ability of potential supply chain parties to
work together.
15. Why is supply chain integration so difficult in global supply chains? Integration challenges in
global supply chains include cultural, economic, technological, political, spatial, and logistical
differences. Global supply chains translate in to both longer, and more un predictable, lead times
for shipments, which increases the chances that customer demand might not be fulfilled due to a
potential out-of-stock situation.
16. Discuss the three primary methods that organizations can use to integrate their supply
chains.
One method is vertical integration, in which one organization owns multiple participants in the
supply chain. Sherwin-Williams,
For example, is a paint manufacturer and also owns retail paint stores. A second method
involves formal contracts among various participants, such as occurs with franchising. The third
method focuses on informal agreements among various organizations to pursue common goals
and objectives. This option provides a great deal of flexibility—which can have both positive and
negative aspects.
17. Discuss the factors that distinguish (differentiate) contemporary (modern ) third-party
logistics from earlier types of third-party logistics. For one, there tend to be formal
contracts(generally3–5years) betweenprovidersandusers. Contemporarythird-
partylogisticsalsotendstobe characterizedbya relational focus,anemphasis on mutual
benefits,andthe availabilityof customized(asopposedtostandardized) offerings.In
short,contemporarythird-partylogisticshasadecidedlylong-termoutlook,asopposedto“shopping
around”for the bestdeal at the presenttime.
18. What are some reasonsfor using third-party logisticsservices? Whatare some reasons that
third-party logisticsarrangementsaren’t always successful? The decisiontouse third-
partylogisticsservicescanbe drivenbystrategicconsiderationsinthe sense thatan
organizationbelievesthatone ormore aspectsof itssupplychainneedstobe
9. 4. transformed. Alternatively,the decisiontouse 3PLservicescouldbe more tactical innature;an
organizationmighthave aninefficientdistributionnetworkaswell asaninabilitytocontrol costs,
amongother reasons. Reasonsforunsuccessful3PLarrangementsincludeunreasonableand
unrealisticexpectationsandalackof flexibility.
19. Do you agree or disagree with the sentiment that fourth-party logistics companies(lead
logistics providers) merely add un necessary cost and few service improvements to supply
chains?
Why? Eitheranswerisacceptable.Because fourth-partylogisticsisarelativelynew concept,itmaybe
too earlyto have a goodideaas to the ultimate role(s) thatthese intermediarieswill playineffective
and efficientsupplychains.Theirusefulnesscouldbe limitedif theycontinue tobe bestsuitedtolarge
companieswithglobal supplychains.
20. Discuss the various types of supply chain software. Some software
packagesfocusonspecificfunctional areassuchasreverse logistics,transportation,
warehousing,orinventorymanagement.Othersoftware packagesfocusonspecificsupplychain
processessuchas suchas customerrelationshipmanagementorcollaborative planning,forecasting,
and replenishment.Still otherpackagesattempttosimultaneouslyoptimizesupplychainprocesses
across organizations.
10. 5. PART III EXAMINATION QUESTIONS CHAPTER 2:
THE SUPPLYCHAIN MANAGEMENT CONCEPT
Multiple Choice Questions
1. According to Professor Mentzer and colleagues, the supplychainconceptoriginatedinwhat
discipline? a. marketing b. operations c. logistics d. production (c; p. 33) 2. The
supplychainmanagementphilosophyemergedin whichdecade? a. 1960s b. 1970s c. 1980s d.
1990s (d;p. 33) 3. A ____________ encompassesall activitiesassociatedwiththe flow
andtransformationof goodsfrom the raw material stage,throughtothe enduser,as well asthe
associatedinformation flows. a. productionline b. supplychain c. marketingchannel d.
warehouse (b;p. 34) 4. Althoughnearlyanyorganizationcanbe part of a supplychain,
supplychainmanagement requires: a. the involvementof third-partylogisticscompanies b.
overt managementeffortsby the organizationsin a supply chain
11. 6. c. the participationof world-classorganizations d. at leastone organizationtobe a
multinational company (b;p. 35) 5. Two of the
mostprominentsupplychainmanagementframeworksare the Supply-Chain
OperationsReference (SCOR) modelandthe ____ model. a. Council of
 SupplyChainManagementProfessionals(CSCMP) b. SupplyChainEfficiency(SCE) c. Global
Supply ChainForum (GSCF) d. PennState University(PSU) (c; p. 35) 6. Whichof the
followingisnotone of the processesinthe SCORmodel? a. sell b. plan c. make d. return (a;
p.35) 7. The currentGlobal SupplyChainForum(GSCF) model identifies____________
keyprocesses associatedwithsupplychainmanagement. a. five b. six c. seven d. eight (d;p.
35) 8. Whichof the followingare notkeyattributesof supplychainmanagement? a.
inventorycontrol b. leveragingtechnology c. customerpower d. a long-termorientation
12. 7. e. all are key attributes (e;p. 36) 9. Contemporarysupplychainsshouldbe
fastand____________. a. lean b. agile c. interactive d. relevant (b;p. 37) 10.
Contemporarysupplychainsshouldbe agileand____________. a. fast b. lean c. interactive d.
relevant (a; p.37) 11. An organization’sabilitytorespondtochangesindemandwithrespectto
volume andvariety refersto____. a. responsiveness b. leanness c. agility d. relevancy (c; p.
37) 12. What is a perfectorder? a. simultaneousachievementofrelevantcustomer metrics b.
an order that arrivesontime c. an orderthat arrivesundamaged d. an order that iseasyfor the
receivertofill (a; p.38) 13. Which of the followingisnotassociatedwithrelational exchanges?
13. 8. a. independence b. trust c. commitment d. sharedbenefits (a; p.38) 14. Positive,long-
termrelationshipsbetweensupplychainparticipantsreferto: a. co-opetition b. tailoredlogistics c.
partnerships d. supplychainmanagement (c; p. 38) 15. Accordingto the text,____________
has beenat the centerof the changestakingplace that affectthe supplychain. a. logistics b.
warehousing c. technology d. customerpower (c; p. 38) 16. The twokeyfactors that have
sparkedmuchof the technological change affecting supplychains are ____________ and
____________. a. EDI; ERP b. Computingpower;ERP c. EDI; Internet d. Computingpower;
Internet (d;p. 38) 17. The bullwhipeffect: a. isan ineffective waytomotivate warehouse
employees b. appliestorodeosandhas nothingtodo withsupplychainmanagement
14. 9. c. referstothe “swaying”motionassociatedwithtriple trailers d. refersto variabilityin demand
ordersamong supplychain participants (d;p. 39) 18. The
variabilityindemandordersamongsupplychainparticipants: a. cannot be controlled b. refersto
the bullwhipeffect c. can be controlledwithelectronicorderplacement d. is more
pronouncedinrelational exchanges (b;p. 39) 19. Which of the followingisnotaway to reduce
inventorylevels? a. supply-pushreplenishment b. smaller,more frequentorders c. use of
premiumtransportation d. eliminationof slowermovingproducts (a; p.39) 20. Cooperative
supplychain relationshipsdevelopedtoenhance the overallbusinessperformance of
bothpartiesisa definitionof: a. third-partylogistics b. supplychain collaboration c. dovetailing d.
relationshipmarketing (b;p. 41) 21. Supplychaincollaborationcanbe
classifiedastransactional,strategic,or____ in nature. a. operational b. superorganizational c.
managerial d. tactical informationsharing (d;p. 41)
15. 10. 22. ____ collaborationsofferthe bestopportunityfor improvingsupplychainperformance. a.
Transactional b. Strategic c. Tactical informationsharing d. Operational (b;p. 41) 23. Which of
the followingisfalse? a. top managementcommitmentisessential if supplychainefforts are
tohave anychance of success b. some companiesare uncomfortable withthe conceptof
customerpowerinsupplychains c. seniormanagement commitmentto supply chain
managementoccurs in one of every two organizations d. some companies are
hesitanttoenterintolong-termrelationshipsbecausesuchrelationships mightbe
perceivedaslimitingacompany’soperational flexibility e. all are true statements (c; p. 42) 24.
Which of the followingisnotabarrierto supplychainmanagement? a. regulatoryandpolitical
considerations b. lack of top managementcommitment c. reluctance toshare,or
use,relevantdata d. incompatible corporate cultures e. all are barriers (e;pp.42–44) 25. Data
mining: a. isillegal inthe UnitedStates b. is synonymouswithmarginal analysis c. looks for
patterns and relationshipsinrelevantdata d. can onlybe done bygrocerystores (c; p. 43)
16. 11. 26. Lookingforpatternsand relationshipsinrelevantdata refersto: a. data warehousing b.
marginal analysis c. correlationanalysis d. data mining (d;p. 43) 27. In a(n) ____ approach,
all relevantsoftware applicationsare providedbyasingle vendor. a. single integrator b. captive
customer c. informationoutsourcing d. customercentric (a; p.43) 28. ____ refersto“howwe
 dothingsaroundhere”and reflectsanorganization'svision,values,and strategicplans. a.
Supplychainmanagement b. Organizational behavior c. A missionstatement d. Corporate
culture (d;p. 43) 29. Which of the followingisnotaroutine occurrence inglobal supplychains? a.
documentationerrors b. incomplete shipments c. packagingerrors d. failure
tofolloworderguidelines e. all of the above are routine occurrences (e;p. 44) 30.
Supplychainscan be integratedbyhavingvariouspartiesenterintoandcarry out long-term
mutuallybeneficial agreements.These agreementsare knownby several names.Whichof the
followingisnotone of these names?
17. 12. a. partnerships b. strategicalliances c. third-partyarrangements d. contract logistics e. all
of the above are correct (e;p. 44) 31. There are three
primarymethodsthatorganizationscanpursue whenattemptingtointegrate
theirsupplychains.Whichof the followingisnotone of them? a. vertical integration b. intensive
distribution c. formal contracts d. informal agreements (b;p. 45) 32. All of the followingare
factorsthatdistinguishcontemporarythird-partylogisticsfromearlier effortsexcept: a. there
tendstobe a formal contract incontemporary3PL b. contemporary3PL
focusesoncustomizedofferings c. contemporary 3PL has a transactional focus d.
contemporary3PL focusesonmutual benefits (c; p. 46) 33. Which of the
followingstatementsistrue? a. 3PL servicesare not usedoutside of WesternEurope
andNorthAmerica b. The decisiontouse third-partylogisticscanonlybe strategicinnature c.
Contemporary3PL begantoemerge inthe 1970s d. A common cause of 3PL failure is
unreasonable and unrealisticexpectations e. None of the above are true (d;pp. 46-47) 34.
What is a fourth-partylogisticsprovider?
18. 13. a. a third-partylogisticsproviderthathasbeeninexistence foratleast25 years b. a third-
partylogisticsproviderthathasachievedISO9000 certification c. a
logisticsintermediarythatspecializesinone logisticsactivity(e.g.,transportation, warehousing) d.
a general contractor that coordinatesthe activitiesof third-party logisticsproviders (d;p. 47) 35.
Which of the followingstatementsaboutsupplychainsoftware isfalse? a. many supplychain
software packages are developedforspecific,ratherthan general, applications b.
supplychainsoftware packagescanfocuson specificfunctionalactivitiessuchastransportation
and warehousing c. supplychainsoftware packagescanfocuson
specificsupplychainprocessessuchascustomer relationshipmanagement d.
supplychainsoftware packagescanattemptto simultaneouslyoptimize supplychainprocesses
across organizations e. all are true (a; p.48)
19. 14. True-False Questions 1. The supplychainconceptoriginatedinthe logisticsliterature.
(True;p.33) 2. Customersare not includedaspartof supplychains.(False;p.34) 3.
Supplychainmanagementrequiresovertmanagementefforts bythe organizationswithinthe
supplychain.(True;p.35) 4. Two of the more
prominentsupplychainmanagementframeworksare the Supply-Chain OperationsReference
(SCOR) andGlobal SupplyChainForum(GSCF) models.(True;p.35) 5. The SCORmodel
identifiesfourkeyprocessesassociatedwithsupplychainmanagement.(False; p. 35) 6. Because
customerneedsandwantschange relativelyquickly,supplychainsshouldbe fastand lean.
(False;p.37) 7. Withrespectto
supplychains,relevancyfocusesonanorganization’sabilitytorespondto
changesindemandwithrespecttovolume andvariety.(False;p.37) 8. A
perfectordersimultaneouslyachievesrelevantcustomermetrics.(True;p.38) 9.
Supplychainsshouldemployalong-termorientationwithvariousparticipants.(True;p.38) 10.
Relational exchangescannotbe successfulwithoutinformationsharingamongvarious
participants.(True;p.38) 11. Powerretailershave beenatthe centerof changestakingplace
thataffect the supplychain. (False;p.38) 12. The Internethasbeenreferredtoasthe
greatestforce of commodizationknowntoman,for bothgoods andservices.(True;p.39) 13.
Enhancedcommunicationsacrossorganizationsinasupplychainisonlydependenton the
technological capabilitiesof the organizations.(False;p.39) 14.
Variabilityindemandordersamongsupplychainparticipantsisknownasthe bubbleeffect.
 (False;p.39) 15. Inventorycontrol insupplychainmanagementisattemptingtomove
from“stopsandstarts” to continuousflow.(True;p.39) 16.
Supplychaindisruptions(e.g.,terroristattacks,natural disasters) have causedsomesupply
chainsto reassesstheiremphasisoninventoryreduction.(True;p.40) 17. As a general rule,
supplychaincollaborationiswidelyandsuccessfullyapplied.(False;p.41) 18. Tactical
informationsharingoffersthe bestopportunityforimprovingsupplychainperformance.
(False;p.41)
20. 15. 19. Regulatoryconsiderationspresentabiggerobstacle than political
considerationstosupplychain management.(False;p.42) 20. The overall global
climateforbusinesshasshiftedtowardallowingmore cooperationamong firms—
whichshouldhelpsupplychainmanagement.(True;p.42) 21. Top
managementissometimeshesitanttofullycommittosupplychainmanagement.(True;p. 42) 22.
Actual seniormanagementcommitmenttosupplychainmanagementoccursinone of everytwo
organizations.(False;p.42) 23. One cause of the bullwhipeffectisasymmetrical
informationamongsupplychainparticipants. (True;p. 43) 24. Data warehousingisatechnique
thatlooksforpatternsandrelationshipsinthe relevantdata. (False;p.43) 25.
Althoughcustomerloyaltyprograms(e.g.,frequentshoppercards) canprovide highlydetailed
data to companies,there are some whobelievethatthese programspotentiallyviolate
acustomer’s rightto privacy.(True;p. 43) 26. Today,computerhardware isa largerbarrierthan
computersoftware tointerorganizational collaboration.(False;p.43) 27. A best-of-
breedapproachchoosesthe bestsoftware applicationforaparticularfunction.(True; p. 43) 28.
Corporate culturesshouldnotbe consideredwhendesigningasupplychain.(False;p.43) 29.
Supplychainintegrationtendsto be more challenginginglobal,asopposedtodomestic,supply
chains.(True;p. 44) 30. An individual firmcanonlybe involvedinone supplychainata time.
(False;p.44) 31. Vertical integrationisone of the methodsthatorganizationscanpursue
whenattemptingto integrate theirsupplychains.(True;p.46) 32. Contemporarythird-
partylogisticshasexistedsince about1975. (False;p. 46) 33. Contemporarythird-
partylogisticstendstobe characterizedbystandardized,asopposedto customized, offerings.
(False;p.46) 34. Indicationsare thatthird-partylogisticswill
becomeincreasinglyimportantinpartsof the world such as EasternEurope and Asia.(True;p.
46) 35. Shipmentroutingandreverse logisticsare commonactivitiesdemandedby third-
partylogistics customers.(False;p.46) 36. The decisiontouse third-
partylogisticscompaniescanbe drivenbystrategicortactical considerations.(True;pp.46-47)
21. 16. 37. A fourth-partylogisticsprovidershouldbe viewedasa companywhose primarypurpose
isto insure thatthird-partylogisticsprovidersare workingtowardrelevantsupplychaingoals.
(True;p. 47) 38. The fourth-partylogisticsconceptappearstobe bestsuitedtosmall
companiesthatneed logistical assistanceinonlyone or twofunctional areas.(False;p.47) 39. As
a general rule,supplychainsoftwarepackageslooktocoordinate andintegrate functions,
processes,and/orsystemsacrossmultiple supplychainparticipants.(True;p.47) 40. The
supplychainsoftware markethasbeencharacterizedbyagreat deal of consolidationin
recentyears.(True;p. 48)
22. 17. PART IV CASE SOLUTIONS CASE 2-1 JOHNSONTOY COMPANY Question1: Fromthe
standpointof anindividualconcernedwithaccountingcontrols,discussand evaluate
JohnsonToyCompany’spresentpoliciesforhandlingreturneditems. The controlsare poor
fromthe standpointof accuracy of financial records,becausetheyprovide poor
informationtomanagement. Question2: Answerquestion1,butfrom the standpointof an
individual interestedinmarketing. Marketingpeople tendtofavorlessstringentcontrolsinthe
sense thattheyprovidemore flexibility whenbargainingwith retailers. Question3: Propose
apolicyforhandlingreturnsthatshouldbe adoptedbythe JohnsonToy Company.Be certainto
listcircumstancesunderwhichexceptionswouldbe allowed.Shoulditapply to the Jungle
Jimdolls? One student’sanswerisreproducedhere. I. HIGH VOLUME CUSTOMERS
(definedaspurchasing$75,000 of merchandise from Johnson’speryear) A.
Functionallydamagedgoodsmaybe returnedtoJohnson’splantatJohnson’sexpense withafull
 refund. B. High volume customerswill receiveastraight2% deductionoff of the wholesale
sellingprice to coverdefectives—whetherdefectivesare
classifiedascosmeticallydamagedorslow movingitems, exceptwhenunable tosell due
tospecial circumstances(seeSectionIII). II. LOW VOLUME CUSTOMERS A.
Functionallydamagedgoodsmaybe returnedtoJohnson’splantviaJohnson’ssalespersonwith a
full refund. B. Low volume customerswill
NOTreceiveanautomaticdeductionfordefectives.Instead,the damage or defectmustbe
defined: 1. Cosmeticallydamagedgoods(classifiedasfunctionableandsellable):a25%
discountgranted uponinspectionbyJohnson’ssalesperson. 2. Slowmovingitems:NORETURNS
3. Non-movingitems(forreasonsotherthanphysical damage):see special
circumstances,Section III) III. SPECIALCIRCUMSTANCESWhenproduct isnot resellable
forreasonsotherthanbeing functionallydamagedorjusta slowmoverinthe off season,suchas
whenthe productreceivesbad
23. 18. press(asin the case of Jungle JimandJoggerDolls),Johnsonwill allow returnof all
suchnon- resellable itemsunderthe followingconditions: A. Retailermustpayfor the
returnedmerchandise toreachJohnson’splant. B. Retailer’saccountwill be creditedforthe full
amountof saidpurchase. C. Creditisto be usedwithin30 days of receiptof returnedgoodsat
Johnson’splant;creditwill be voidafter30 days. No mentionwasmade asto
whetheritshouldapplytothe Jungle Jimdolls.The firmmighttryto enforce
itbutcustomersmightcomplainthatit shouldnotbe appliedretroactively. Question4:
Shouldthispolicy,if adopted,be printedanddistributedtoall of the retailerswho handle
JohnsonToyCompanyproducts?Whyor whynot? If it shouldnotbe distributedtothem,
whoshouldreceive copies? Yes,retailersshouldknowexactlywhatthe returnspolicywill be.One
elementof acustomerservice policyisto letcustomersknowinadvance whatthe policyis.
Question5: Assume thatitis decidedtoprepare astatementonreturnsto be distributedtoall
retailersandthatit shouldbe lessthana single double-spacedpage.Prepare suchastatement.
The answerprovidedforquestion3wouldsuffice hereaswell. Question6: Onthe basisof the
policyinyour answertoquestion3,developinstructionsforthe
JohnsonToyCompanydistributionandaccountingdepartmentswithrespecttotheirrolesand
proceduresinthe handlingof returns. One couldtake the informationasdevelopedin
answers3and5, anddraft a memoto be sentto boththe
distributionandaccountingdepartments,tellingthemof the new policies,andtheirrolesin
carryingthemout. The accountingdepartmentshouldbe toldtodevelopadditional
proceduresthat will protectagainstfraud.Inaddition,otherdepartmentsinthe
firmshouldreceivesome informationconcerningthe returns,because
theymaycontaininformationthatshouldinterest marketing,qualitycontrol
andproductionscheduling. Question7: Assume thatyouare Cheryl Guridi,the
firm’slogisticsmanager.Doyouthinkthatthe returnspolicyfavoredbythe
logisticsmanagerwoulddifferfromwhatwouldbe bestforthe firm? Why or whynot? Yes,the
returnspolicyfavoredbythe logisticsmanagerwill favoratightreturn policysothat her
departmentdoesnothave tobe responsible forkeepingtrackof returnedinventories,andfor
shippingdamagedgoods.The firmwouldprobablypreferalooserreturnpolicysothatit couldbe
usedas a bargainingtool to increase sales. Question8: Until the
policyyourecommendinyouranswertoquestion3 takeseffect,how would youhandle the
immediate problemof retailerswantingtoreturnunsoldJungle Jimthe Joggerdolls? There are
several approachestothisquestion.Some studentshave providedveryspecificpolicies.
Othershave saidthat because the policywasnotineffectwhenthe Jungle Jimdollswentout,it
24. 19. shouldnotapplyto theirsituation.Thislattergroupfavoredapolicyof
“almostanything”thatwould keepretailershappy.Theyargued—withsupportfromthe case
material—thatthere were anumber of valuedlong-
termrelationshipswithretailersthatshouldnotbe harmed.
25. 20. CASE 2-2 WYOMOGROCERYBUYERS’ COOPERATIVE Question1: Co-
opmemberspresentlypayforgoods“onthe basisof cost to the co-opplus23% to
coverwarehousingandtransportationfromthe warehousestothe members’retailstores.”Isthisa
fairway to coverwarehousingcosts?Canyouthinkof a betterway?If so,describe it.
Thissystemprobablyfavorsthe storesthathave smallerordersizesandhighertransportationcosts
to reach.“Better”may or may not be the issue;itisonlyif one thinksthat the ratesshouldbe cost-
oriented. Question2: Answerthe problemposedinquestion1withrespecttotransportationcosts.
The previousanswerisapplicablehere.If one wantedratesorientedtowardtransportationcosts,
theymightdevise amethodthattakesintoaccount tonnagescarriedanddistancestraveled.
Question3: Towardthe endof the case, Brightdescribedhow some
manufacturerspaybribestoget shelf space inretail stores.Shouldretailersacceptsuchbribes?
Whyor whynot? The bribesare paidintwoways.One is a giftof additional merchandisetobe
sold,whichmerely lessensthe store’scostof
goodspurchased.Thisissometimescalleda“stockingallowance.”The otherway iscash paidto
salariedemployees,whichtheywouldprobablypocket.The firstmethodis a
fairlycommonpractice;the secondmethodwouldbe viewedbymanyaswrong andthus shouldbe
discouraged. Question4: The case says,“Storeswere responsible forplacingorderswiththe co-
op,althoughaco- op representative wouldcall onaweeklybasis,andone of
her/hisfunctionswastohelpsome store operatorscomplete
theirorderforms.”Isthisafunctionthatthe co-opshouldbe performing?Why or whynot? It’sa
wayfor the co-opto helpsome of itsmembersandit alsohelpstokeepcertainstoresloyal to the
co-op. Unlessthe co-op’sboardadoptsa policyagainstthe practice,thenthere’snothingwrong
withit.The practice can be viewedasa formof customerservice.
Question5: The case mentionsthatsome of the largerstoresthat belongedtothe co-
opsometimes threatenedtoformtheirownco-op.Assume thatyouare hiredbysome of themto
studythe feasibilityof suchamove.Listthe varioustopicsthat youwouldinclude inyourstudy. One
couldlookat all the elementsinthe distributionsystemneededtoserve the largerco-ops:
warehousing,transportation,inventories,ordermanagement,etc.Thenone woulddetermine the
costs servingthe largerco-opsandcompare these coststo whatis
presentlyofferedbyWyomo.This isan area where quantitydiscountsare important:canthe new
co-opearnlarge enoughdiscounts on whatit buysto have some majorsavings?
Question6: Howwouldyouvote on Hardy’smotion?Why? A studentcanvote
eitherway,althoughfreezingthe numberof SKUsmayforce the larger members to leave the co-
op.
Question7: Woulditmake a difference whetheryourepresentedalarge orsmall store?Why?
Small stores would probably favor the resolution, unless they realized that expansion was
necessary for the survival of the co-op.If they lose their larger members, many costs per unit
may increase.
Question8: Are there otherstrategiesthatthe co-opmightpursue toovercome thisproblem?If
so, describe. Theycouldget additional productspace forsome productlines,orarrange to have
some large volume ordersdelivereddirectlytostores,bypassingthe warehouse.