TEST 2

1. Due to prohibitive logistics costs, a wholesaler orders replenishments of a particular brand of products only once every month. The replenishment lead time is 10 days, so the retailer orders the pieces on the 20th of every month, so the order arrives on the first of the next month. During the month, the retailer makes a profit of Rs 100 on every piece that he sells while he would make a loss of Rs X on every piece that he cannot sell during the month and can only sell during the following month. The estimated demand for a month is 5000 pieces (mean) with a standard deviation of 1000 (assume a normal distytribution). . Because of the uncertainty, the wholesaler has decided to order only 4500 pieces. For what value of X would this be an optimal decision.

2. A particular warehouse follows the (Q, r) policy. The iaverage number of demands per month is 100. The warehouse orders a quantity Q=200 each time and is required to have a minimum fill rate of 95 percent. What can you then say about the average number of stockouts during a replenishment cycle? during a period of one month? What will be a good value to choose for the reorder point r? For this reorder point, what should be the order quantity so that the fill rate is at least 99 percent?

3. With respect to the IBM-Europe case study, provide reasons
for the following observations

(a) BTO achieves the same level of service
with significantly less inventory than both BTP and LC strategies

(b) Forecasting and supply planning
do not lose inportance whichever among BTO, BTP, and LC strahtegies is
ultimately used

(c) 3 transshipment points was
better than either 2 or 4 transshipment points.

(d) 3 transhipment points
without LC plant was better than 3 transshipments with LC plant

4. Explain how you will use Digital's GSCM model to:

(a) find the least cost supply chain

(b) find the fastest cycle time for
the supply chain

(c) find optimal number and location
of manufacturing plants

(d) find what level of vertical integration
is best for the supply chain