Birla Institute of Technology & Science, Pilani Work-Integrated Learning Programmes Division Second Semester 2009-2010 Comprehensive Examination

(EC-2 Regular) Course No. Course Title Nature of Exam Weightage Duration Date of Exam Note:
1. 2. 3. 4.

: QMJ ZG621 : SUPPLY CHAIN MANAGEMENT : Open Book : 60% : 3 Hours : 04/04/2010 (AN)

No. of Pages =2 No. of Questions = 7

Please follow all the Instructions to Candidates given on the cover page of the answer book. All parts of a question should be answered consecutively. Each answer should start from a fresh page. Mobile phones and computers of any kind should not be used inside the examination hall. Use of any unfair means will result in severe disciplinary action.

Q.1 (a). Q.1 (b).

Q.1 (c).

In what way can improper incentives lead to a lack of coordination in a supply chain? What countermeasures can be used to offset this effect? Demand for hairdresser is much higher over the weekend, when people are not at work. What revenue management techniques can be used by such a business? What factors lead Wal-Mart to own its trucks although many retailers outsource all their transportation? [4 + 4 + 4 = 12] Compare the transportation costs for an e-business such as Amazon.com and a retailer such as Home Depot when selling home-improvement materials. The manager at the supermarket wants to decrease the lot size without increasing the costs he incurs. What actions can he take to achieve his objective? Consider two products with the same margin carried by a retail store. Any leftover units of one product are worthless. Leftover units of the other product can be sold to outlet stores. Which product should have a higher level of availability? Why? [4 + 4 + 4 = 12] Consumer electronics manufacturers generally give promotion during festival seasons in India. Mention the objectives of manufacturers for promotion. Draw the supply chain which involves a customer purchasing a can of soft drink at a retail store. Identify cycles in this supply chain and the location of the push/pull boundary. [4 + 4 = 8]

Q.2 (a). Q.2 (b).

Q.2 (c).

Q.3 (a).

Q.3 (b).

Q.4. The Dominicks supermarket chain sells Nut flakes, a popular cereal manufactured by the Tastee Cereal Company. Demand for Nut flakes is 2,000 boxes per week. Dominicks has a holding cost of 25 percent and incurs a fixed trucking cost of $400 for each replenishment order it places with Tastee. Given that Tastee normally charges $8 per box nut flakes, how much should Dominicks order in each replenishment lot? Tastee runs a trade promotion lowering the price of Nut flakes to $7 for a month. How much should Dominicks order given the short term price reduction? [8] QMJ ZG621 (EC-2 Regular) Second Semester 2009-2010 Page 1 of 2

QMJ ZG621 (EC-2 Regular)

Second Semester 2009-2010

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Q.5. Weekly demand for Motorola cell phones at Best Buy store is normally distributed with a mean of 3000 and a standard deviation of 2000. Motorola takes two weeks to supply a Best Buy order. Best Buy is targeting a CSL of 95 percent and monitors its inventory continuously. How much safety inventory of cell phones should Best Buy carry? What should their ROP be? [6] Q.6. A publisher sells books to Borders at $12 each. The marginal production cost for the publishers is $1 per book. Borders prices the book to its customers at $24 and expects the demand over the next two months to be normally distributed, with a mean of 20,000 and a standard deviation of 5,000. Borders place a single order with the publishers for delivery at the beginning of the two month periods. Currently, Borders discounts any unsold books at the end of two months down to $3, and any books that did not sell at full price is also sold at this price. (a). How many books should Borders order? (b). A plan under discussion is for the publisher to refund Borders $5 per book that does not sell during the two-month period. As before, Borders will discount them to $3. Under this plan, how many books will borders order? [6] Q.7. Royal Company consumes 100,000 components per year and purchases these components from its supplier at a price of $120 per component. Supplier ships each order within a day of receiving it. At assembly plant, Royal Company carries a safety inventory equal to 50 percent of average demand during delivery lead time. The plant manager at Royal Company has received three proposals given below for transportation. Mention the proposal plant manager should accept with proper justification. Assume holding cost as 20%. [8] Carrier XY Railway ABC Logistics GATI Range of quantity shipped 2000+ 1000+ 500+ Shipping cost $0.8/component $0.9/component $1/component Transit time 5 days 3 days 2 days

[F-1(0.90) =1.28; F-1(0.95) =1.65; F-1(0.571) =0.18; F-1(0.75) =0.6752; F (0.5) =0.691; F (1.5) =0.933; F-1 (0.997) =2.75; F-1 (0.99) =2.33]

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QMJ ZG621 (EC-2 Regular) Second Semester 2009-2010

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