Global Supply Chains Final

key features of a newsvendor problem

stocking before seeing random demand, one selling period

what is on order inventory

inventory that is ordered but not yet received

what is the level of safety inventory determined by

uncertainty of demand and supply and desired level of availability

why is safety stock carried

to satisfy demand that exceeds the amount forecast

what is average flow time

how long each item spends in inventory before sold to customers

what is the protection interval in a periodic model review

lead time + review interval

how is ordering cost normally provided in a periodic review model

per unit, not a fixed cost per order

when do you add on-order inventory costs in holding costs

when the on-order inventory is owned by the company

what is echelon inventory

inventory between a stage and the final customer

what does lower inventory at an upstream stage mean

higher supply uncertainty at a downstream stage

what is the objective of a risk pooling strategy

redesign the supply chain to either reduce or hedge the uncertainty so the firm can better position against uncertainty

what is a decentralized distribution system

one distribution center for each region

what is a pooled distribution system

one distribution center for all the regions

what does the coefficient of variation capture

the size of uncertainty relative to demand

how is the variability of demand in a pooled system

less variable

how does total safety inventory relate to the number of pooled locations

more pooled locations have less safety inventory

disadvantages of location

may increase response time and transportation costs

things to deal with disadvantages of pooling

information centralization, specialization, product substitution, component commonality, postponement

what is information centralization

online systems that allow customers or stores to locate stocks

what is specialization

low demand → stocked at centralized locations, high demand → stocked at decentralized locations

what is product substitution

the use of one product to satisfy demand for a different product

what is component commonality

selling products as components to be added

what is postponement

delaying product differentiation or customization until closer to the time the product is sold

what directly affects supply chain cost and customer value

distribution

what is supply chain surplus

the relationship between the cost in the supply chain and the customer value

examples of factors influencing customer value

response time, returnability, variety

trend between # facilities and cost

more facilities, hgiher cost

trend between # facilities and desired response time

lower response time, more facilities needed

which is normally higher: outbound or inbound transportation costs

outbound because inbound lot sizes are larger

how many facilities should a firm have at least

as many as it takes to minimize total logistics costs

characteristics of manufacturer storage with direct shipping

dropping shipping, low inventory cost, high transportation costs

characteristics of manufacturer storage with direct shipping and in-transit merge

similar to cross docking

characteristics of distributor storage with carrier delivery

closer to the customer, carrier takes care of delivery

characteristics of distributor storage with last mile delivery

very expensive, supplier takes care of delivery

characteristics of manufacturer or distributor storage with customer pickup

pickup sites for customers to receive order

characteristics of retail storage with customer pickup

fastest response time, most common, ex: grocery stores

aspects of network design

facility role and location, capacity allocation, market and supply allocation

some factors influencing network design decisions

political, competitive, freight and fuel costs

decision variables of network optimization models

binary variable on plant opening, quantity shipped from plants

objective function of network optimization models

minimize annual cost of meeting demand (fixed*decision + cost*quanitity)

constraints of network optimization models

demand: must be fulfilled (quantity=demand), capacity: can’t supply more than capacity (quantity<= capacity*decision)

what are duties applied on units based on

fixed cost + variable production cost + transportation cost

impact of globalization on supply chains

can simultaneously increase revenues and decrease costs

effects of offshoring

increases length and duration of information, product and cash flows

why does offshoring fail

focusing only on unit cost and not total cost, ignoring critical risk factors

major benefits of offshoring

low labor and fixed costs with possible tax benefits

what products is offshoring most appealing for

high labor content, large volume, low variety, low transportation costs

what do disruptions on supply impact

manufacturing, sourcing, transportation and inventory

parts of supply chain resilience

preparedness, mitigation, stabilization, recovery

risks of a deciated network

if anything happens to any plants, supply of the dedicated product will be disrupted

disadvantage to fully flexible networks

costly

when to use a chained network with one long chain

when dealing with demand fluctuations

when to use chained network with two short chains

when dealing with disruption risk

tailored strategy for increasing capacity

focus on low cost

tailored strategy for increasing responsivemness

favor cost over responsiveness for commodity products

tailored strategy for increasing inventory

decentralize inventory if predictable, lower value products

tailored strategy for increasing flexibility

favor cost over flexibility for predictable, high-volume products

tailored strategy for pooled or aggregate demand

increase aggregation as unpredictability grows

considerations of transportation cost

distance, weight, handling

how can third parties increase supply chain surplus

increasing customer value or decreasing cost

risk of using a third party for sourcing

leakage of data and information, negative reputational impact, loss of supply chain visibility

always focus on the total cost not…

the unit costs

strategic factors in sourcing

support for the business strategy, improve firm focus

onshoring definition

producing in the market the product is sold

near-shoring definition

producing at a lower-cost location near the market

offshoring definition

producing at a low-cost location far from the market

what is volume-based tailored sourcing

predictable part of volume is produced in an efficient facility and the uncertain part is produced in a responsive facility

what is product-based tailored sourcing

high-volume and predictable products are produced in an efficient facility, low-volume and uncertain products are produced in a responsive facility

risk sharing approaches

buyback/returns, revenue sharing, quantity flexibility

barriers to achieving sustainability

tragedy of the commons, upfront investment, customer unwillingness

sustainability through facilities

efficient technologies, green energy sources

sustainability in transportation

efficient vehicles, aggregate shipments, optimize networks

sustainability in sourcing

help suppliers be sustainable, weigh options

sustainability in information

standardize measurements

sustainability in closed-loop supply chains

design products with fewer resources and can be recycled and remanufactured