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A typical supply chain manager has to make the decisions listed below. Categorize each decision as strategic, tactical, or operational and briefly justify your choice.

a. Number of warehouses needed and where to locate them

b. Assignment of customer orders to inventory or production

c. Choosing vendors to supply critical raw materials

d. Selecting a transportation provider for shipments to customers

e. Given the factory capacity, determining the quarterly production schedule

f. Choosing to produce a part internally or to outsource that part

g. Setting inventory policies at a retail location

h. Choice of transportation mode for shipping

i. Reordering materials to build inventory

j. Allocating inventory to customer backorders

k. Creating the distribution plan to move finished goods inventory from warehouses to retail locations

 
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Discuss the similarities and differences between Lp metric and AHP for ranking suppliers.

2 (Adapted from Srinivasan 2010) Consider a supply chain network with three potential sites for warehouses and eight retailer regions. The fixed costs of locating warehouses at the three sites are given below:

Site 1: $100,000

Site 2: $80,000

Site 3: $110,000

The capacities of the three sites are 100,000, 80,000 and 125,000, respectively. The retailer demands are 20,000 for the first four retailers and 25,000 for the remaining.

The unit transportation costs ($) are given in Table 5.38.

a. Formulate a mixed integer linear program to determine the optimal location and distribution plan that will minimize the total cost. You must define your variables clearly, write out the constraints, explaining briefly the significance of each, and write the objective function. Assume that the retailers can receive supply from multiple sites. Solve using any optimization software. Write down the optimal solution.

b. Reformulate the optimization problem as a linear integer program, assuming dedicated warehouses, that is, each retailer has to be supplied by exactly one warehouse. Solve the integer programming model. What is the new optimal solution?

c. Compare the two optimal solutions and comment on their distribution plans.

 
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State whether each of the following statements is true or false, or whether the answer ultimately depends on some other factors (which you should identify).

a. Speed of delivery is an efficiency measure for the transportation driver.

b. Large inventory is a warning sign for poor supply chain efficiency.

c. Location of plants and DCs are tactical decisions.

d. Selection of suppliers is an operational decision.

e. Increasing product variety improves supply chain responsiveness.

f. Increasing inventory turns increases working capital.

g. Increasing days of inventory increases ROA.

h. To decrease supply chain cost, inventory turns should be increased.

i. The Japanese earthquake and tsunami of 2011 were a hazard risk

to the supply chain.

j. Failure of IT systems is considered an operational risk to the supply chain.

k. Operational risks have a more significant impact on supply chain performance than hazard risks.

l. Hazard risks are uncontrollable rare events that disrupt supply chain performance.

m. Functional products are best matched with responsive supply chains.

 
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Consider the following design proposals and financial performance measures for Mighty Manufacturing given in Table 5.39. Both sets of numbers are for 2017 with all possible markets open and plants open in both Denver and Covington. Scenario A has DCs in Denver, Chicago, Pittsburgh, and Atlanta. Scenario B has DCs in Denver,

Consider the following design proposals and financial performance measures for Mighty Manufacturing...

Los Angeles, Portland, Dallas, Chicago, Boston, Pittsburgh, and Atlanta.

a. Which scenario offers better customer service? Why?

b. Which scenario would you suspect has higher transportation costs? Why?

c. Under which scenario is Mighty Manufacturing in a better position if forecasts for new markets are too high? Why?

d. Under which scenario is Mighty Manufacturing in a better position if forecasts for new markets are too low? Why?

 
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