MEE2035 Logistics and Supply Chain Management

Digital Assignment I

Instructions: Answer 2 questions each from questions 1-7, 8-16, 17-22 and 23-25

Part A

1. Define supply chain management.

2. Define the term value chain?
3. State the mission of logistics management.
4. What are the challenging issues that confront the business organizations today?
5. Competitive advantage for this new era will be comprised of achieving excellence in
two areas. State them.
6. What is meant by competitive advantage?
7. What do you understand by logistics management?

8. What is the role of safety inventory in the supply chain?

9. What is the impact of supply uncertainty on safety inventory?
10. Echelon inventory is not the same as local inventory. Justify this in a multiechelon
supply chain.
11. State the important measures of product availability.
12. What is meant by trade promotion?
13. Write briefly about component commonality.
14. State the methods by which a supply chain extracts the benefits of aggregation.
15. How the measures fill rate and cycle service level are related? Which is more
relevant?
16. What is short-term discounting?

Part B

17. Describe the two types of ordering policies and the impact that each of them has on
safety inventory.
18. Many issues are challenging and confront the business organizations today in view of
changing environment. What are the issues and substantiate them with valid points.
19. Develop an example to illustrate a trade-off between cost and service.
20. Explain in detail on how effective logistics and supply chain management can provide
a major source of competitive advantage.
21. Briefly discuss on the concept of value chain and how it can be related to supply
chain.
22. Discuss in detail on how logistics help gain competitive advantage.
 23. A company has introduced a new music device and it is sold through a retailer. The
retailer has estimated that demand for the device will depend on the final retail price p
according to the demand curve Demand D = 20,00,000 – 2,000p
The production cost for the device is $100 per unit.
a. What wholesale price should the company charge for the device? At this
wholesale price, what retail price should the retailer set? What are the profits for
the both of them at equilibrium?
b. If the company decides to discount the wholesale price by $40, how much of a
discount should the retailer offer to customers if it wants to maximize its own
profits? What fraction of the discount offered by the company does the retailer
pass along to the customer?
24. A company prices a device it manufactures at $550 per unit. The retailer sells the
device at $775. Annual demand at this retail price turns out to be 4,50,000 units. The
retailer incurs ordering, receiving, and transportation costs of $10,000 for each lot of
the device ordered. The holding cost used by the retailer is 20 percent.
a. What is the optimal lot size that the retailer should order?
b. The company has discounted the retailer by $40 for the short term. The retailer
has decided not to change the retail price but may change the lot size ordered with
the company. How should the retailer adjust its lot size given this discount? How
much does the lot size increase because of the discount?
25. A pharmacy replenishes one of its best-selling drugs using a continuous review
policy. Daily demand for the drug is normally distributed, with a mean of 300 and a
standard deviation of 100. The wholesaler can process a replenishment request in 2
days. The current replenishment policy is to order 1,500 units when there are 750
units on hand.
a. What is the cycle service level that the pharmacy achieves with its policy?
b. What is the fill rate it achieves with its policy?
c. What change in fill rate would it achieve if it increased its reorder point from 750
to 800?
d. If the pharmacy wants to adjust its reorder point from 750 to achieve a fill rate of
99.9 percent, what reorder point should it use?

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