Q&A Hero

Q: The bullwhip effect says that in any supply chain, the ordering patterns experience increasing variance as you move closer to the end customer.

Q: The finished goods of one firm may actually be the raw materials for another firm.

Q: A supply chain can be thought of as a river that flows from raw material suppliers to consumers.

Q: Supply chain integration is the effective coordination of supply chain processes through the seamless flow of information to suppliers, up and down the supply chain.

Q: Supply chain integration is the effective coordination of supply chain processes through the seamless flow of information to suppliers, but does not include customers, such as distributors and retailers.

Q: 14.1 Supply Chain Disruptions

Q: The point has been reached where a biotechnology research and development company must expand by building a new facility. The search has been narrowed to four locations, all of which are acceptable to management. The assessment of these sites is being made on the basis of the six subjective location factors that follow. Management has agreed to use a five-point scale (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor = 1) to quantify and compare their subjective opinions about the relative goodness of the sites. The weight reflects the importance of each factor in the decision. Calculate the weighted score for each alternative. Which location would you recommend? A) A B) B C) C D) D

Q: McKenna Restaurant wishes to open a new store. Based on the following subjective criteria, where 10 is excellent and 0 is poor, where should the new store be located? A) A B) B C) C D) D

Q: Widgets, Inc. wishes to locate two new manufacturing facilities. Based on the following subjective criteria, where should the new facilities be located? (Excellent = 5, Very good = 4, Good = 3, Fair = 2, Poor = A) B and D B) A and D C) C and D D) D and E

Q: Discuss the trade-offs with locating the inventory at the factory versus locating it closer to the customer at a warehouse, distribution center, wholesaler, or retailers.

Q: ________ involves locating the stock closer to customers at a warehouse, distribution center, or retailer.

Q: ________ is a reduction in inventory and safety stock because of the merging of variable demands from customers.

Q: Cornelius Controlfreak insisted that his manufacturing plant also be the sole location for all finished goods inventory. If any customer placed an order, they knew it would come from the only place on Earth that had a ready supply, Cornelius' plant warehouse. ________ was alive and well thanks to this approach.

Q: What does this diagram represent? A) forward placement B) inventory pooling C) a geographical information system D) interchangeable parts

Q: The auto supply stores in the metroplex use a common database to track inventory and actually have very little in each location. Instead, customer requests are typically met with the reply, "We have some in our depot and can get it here by truck after 5 pm." This is an example of: A) forward placement. B) centralized placement. C) backward placement. D) depot placement.

Q: Which location shift would qualify as forward placement? A) from the manufacturer to a distribution center B) from the retailer to the wholesaler C) from the wholesaler to the manufacturer D) from the retailer to the manufacturer

Q: Which one of the following statements on inventory placement of finished goods is best? A) Forward placement might help reduce transportation cost. B) Forward placement is consistent with a competitive priority that calls for customization. C) Inventory pooling should be avoided when demand in various regions fluctuates month to month. D) Backward placement is consistent with a competitive priority that calls for fast delivery times.

Q: Forward placement is a reduction in inventory and safety stock because of the merging of variable demands from customers.

Q: One disadvantage of centralized placement is increased shipping costs from the distribution center to the customer.

Q: What are the components and capabilities of a geographical information system?

Q: Which of the following is an example of an organization using the Geographical Information System (GIS) method for locating multiple facilities? A) A company that is searching for a location for its combination manufacturing plant and warehouse to better serve several geographical regions of the country. B) Load-distance scores and center of gravity data being used to locate a facility to provide better customer service for multiple customers. C) A company that is searching for a manufacturing plant location that provides enough space for the plant to double in size over the next five years. D) A hospital network that wants to locate several satellite medical facilities in outlying areas to better serve a major metropolitan area.

Q: Which of the following statements concerning the use of the Geographical Information System (GIS) method for locating multiple facilities is true? A) GIS helps with general facility locations, but is not able to identify specific locations because the transportation structure of roads and interstate highways can't be included in the GIS databases. B) Load-distance scores and center of gravity data can be merged with customer databases to arrive at trial locations for facilities. C) When locating two new facilities, the entire operating area is split into four subregions, two for each new facility, so the best two locations from the four subregions can be selected. D) One weakness of the GIS method is that it is slow and cumbersome, and significant time must be allowed in order to reach a reasonable multiple-facility location decision.

Q: Which of these is not a common functionality of a GIS? A) data storage B) communication C) map display D) modeling

Q: Which of these is not identified as a component of a geographical information system? A) hardware B) data C) software D) network

Q: Because Geographical Information System (GIS) tools are primarily quantitative in nature, a firm's managerial criteria, such as proximity to major metropolitan areas, are not able to be included in the GIS analysis.

Q: When using Geographical Information System (GIS) tools to solve multiple-facility location problems, an analyst may also use load-distance scores and center of gravity data to arrive at trial locations.

Q: Geographical Information System (GIS) tools are useful in solving single-facility location problems, but because of software limitations, cannot be used for determining multiple-facility locations.

Q: A geographic information system contains demographic information.

Q: As legend has it, Buddhist monks trained monkeys to deftly gather the youngest leaves from the tops of wild tea trees. The monkey-harvested leaves are unbroken and evenly sized to create the finest oolong tea in the world. There are five plantations that use monkeys for this task and four tea centers where the leaves must be shipped. The cost to send a kilogram of leaves from each plantation to each tea center is shown in the table. Note that supply equals demand in this scenario. What is the optimal shipping scheme such that the total transportation cost is minimized? Tea House 1 Tea House 2 Tea House 3 Tea House 4 Supply Monkey 1 $12 $13 $23 $15 400 Monkey 2 $6 $17 $11 $4 400 Monkey 3 $6 $14 $13 $19 300 Monkey 4 $8 $10 $6 $8 200 Monkey 5 $21 $22 $5 $21 200 Demand 500 350 250 400 1,500

Q: Five sources exist for the civet cat coffee favored by true coffee connoisseurs. The four processing centers for these coffee beans are scattered about the country, each with a different level of demand. The five sources all face different cost structures for transporting their beans, the prices in the table reflect a dollar cost per 50 pound bag of coffee beans. The total amounts supplied by each source and demanded by each destination are also shown in the table, and as luck would have it, the total supply equals the total demand. What is the optimal shipping scheme such that the total transportation cost is minimized? Destination 1 Destination 2 Destination 3 Destination 4 Supply Source 1 $5 $7 $2 $9 400 Source 2 $8 $6 $3 $4 400 Source 3 $11 $15 $18 $11 300 Source 4 $9 $6 $4 $3 200 Source 5 $7 $9 $11 $8 200 Demand 500 350 250 400 1,500

Q: The transportation method is customarily used to minimize transportation costs between sources of supply and sinks of demand. How could this model be used in other areas of operations management to maximize profit? Provide examples.

Q: What is a dummy plant or warehouse and when is it needed?

Q: A(n) ________ is a standard matrix that is used to solve location problems using the transportation method.

Q: Each cell in the interior of a transportation tableau not in the requirements row or capacity column is a(n) ________.

Q: Costs that are represented in each cell of a transportation tableau are based on ________.

Q: If the total supply does not equal the total number of units demanded, then the modeler should use a(n) ________ warehouse as part of the transportation method.

Q: The transportation method of production planning is a special case of: A) linear programming. B) integer programming. C) queuing theory. D) goal programming.

Q: The Nelson Company has four distribution centers (A, B, C, and D) that require shipments of 20, 30, 40, and 10 units per week, respectively. Its three plants (1, 2, and 3) have monthly capacities of 40, 30, and 30, respectively. Shipping costs (in $) follow. What can be said about a plant that ships 40 units from 1 to C, 30 units from 2 to B, 20 units from 3 to A, and 10 units from 3 to D? A) It is not feasible in terms of plant capacities. B) It is not feasible in terms of satisfying distribution center demands. C) It is feasible, and the weekly shipping cost is less than $1,600. D) It is feasible, and the weekly shipping cost is greater than $2,000.

Q: Which of the following invalidates any analysis using the transportation method? A) unequal supply and demand amounts B) more sources than destinations C) more destinations than sources D) A non-linear increase in shipping costs

Q: Which of the following is not a step in setting up a transportation tableau? A) Create a row for each plant being considered. B) Remove the lowest and highest cost intersections from consideration. C) Create a column for each warehouse being considered. D) Add a column and a row for plant capacities and total demands.

Q: Table 13.11 The Neale Company has four distribution centers (A, B, C, and D) that require monthly shipments of 30,000, 24,000, 36,000, and 24,000 gallons of diesel fuel per month, respectively. Three wholesalers (1, 2, and 3) are willing to supply up to 36,000, 48,000 and 30,000 gallons, respectively. Total costs (in $) for both shipping and price per gallon follow. A transportation method tableau is provided below. Use the information in Table 13.11. What can be said about a plan that ships 30,000 gallons from 1 to A; 6,000 gallons from 1 to C; 24,000 gallons from 2 to B; 24,000 gallons from 2 to D; and 30,000 gallons from 3 to C? A) It is not feasible in terms of wholesaler availabilities. B) It is not feasible in terms of satisfying distribution center demands. C) It is feasible, and the total monthly cost is less than or equal to $260,000. D) It is feasible, and the total monthly cost is greater than $260,000.

Q: Table 13.10 Sagebrush Company has four warehouses (A, B, C, and D) that require monthly shipments of 250, 200, 300, and 200 units per month, respectively. Its three plants (1, 2, and 3) have monthly capacities of 300, 400, and 450, respectively. Plant capacities, warehouse needs and shipping costs (in $) are shown in the following initial transportation method tableau. For example, the shipping cost from Plant 1 to Warehouse A is $17 per unit. A second table showing POM for Windows results from running this transportation problem is shown below the tableau. Use the information in Table 13.10. Which of the following statements is false? A) The plants have 200 more units of capacity than the warehouses need. B) All of the four warehouses' needs are satisfied by the solution shown. C) Total production by the three plants is 950 units. D) The total production from plant #3 is 450 units.

Q: A dummy plant is useful for problems where the sum of the plant capacities equals the sum of the demands.

Q: The transportation method provides optimal solutions for minimization of shipping costs in multiple facility location problems.

Q: Excel Products is planning a new warehouse to serve the Southeast. Locations A, B, and C are under consideration. Fixed and variable costs follow. Location Fixed Cost per Year Variable Cost per Unit A $2,500,000 $7 B 1,500,000 19 C 2,000,000 13 For what range of volume is each location the best?

Q: Table 13.8 An operations manager has narrowed down the search for a new plant for Tim! to three locations. Fixed and variable costs follow. Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 Use the information in Table 13.8 to address this question. For what range of output is each location superior?

Q: Excel Products is planning a new warehouse to serve the Southeast. Locations A, B, and C are under consideration. Fixed and variable costs follow. Location Fixed Cost per Year Variable Cost per Unit A $2,500,000 $19 B 1,500,000 7 C 2,000,000 9 Which of the following statements is best? A) Location A is the best one if volumes are quite high. B) Location B is best over all volume levels. C) The total cost of location A, if the volume is 250,000 units, is over $8,000,000. D) The break-even quantity between A and B is more than 85,000 units but fewer than 200,000 units.

Q: An operations manager has narrowed down the search for a new plant for McIntosh Enterprises to three locations. Fixed and variable costs follow: Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 Plot the total cost curves in the chart provided and identify the range over which each location would be best. Then use break-even analysis to calculate exactly the break-even quantity that defines each range. Which of the following statements is correct? A) Location C is the best one if volumes are quite low. B) Location A becomes the most expensive place to produce at volumes less than 10,000. C) The break-even quantity between A and B is less than or equal to 17,000 units. D) The break-even quantity between C and B is more than 30,000 units.

Q: An operations manager has narrowed down the search for a new King Kola plant to three locations. Fixed and variable costs follow. Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 Plot the total cost curves in the chart provided and identify the range over which each location would be best. Then use break-even analysis to calculate exactly the break-even quantity that defines each range. Which of the following statements is correct? A) By inspection, it is apparent that only one site will be the best place to produce, even at dramatically different output volumes. B) Location A becomes the most expensive place to produce at volumes in excess of 2,000. C) The break-even quantity between A and B is less than or equal to 5,000 units. D) The break-even quantity between C and B is more than 20,000 units.

Q: Use the information in Table 13.8 to determine the best statement. A) Location C is the best one if volumes are quite high. B) Location A becomes the most expensive place to produce at volumes in excess of 2,000. C) The break-even quantity between A and B is less than or equal to 5,000 units. D) The break-even quantity between C and B is more than 30,000 units.

Q: Which of the following statements about break-even analysis is incorrect? A) No start-up costs exist. B) Economies of scale cannot be achieved. C) Variable costs vary as output changes. D) Fixed costs vary as output changes.

Q: A quantitative method used to evaluate multiple locations based on total cost of production or service operations is called: A) break-even analysis. B) the transportation method. C) a preference matrix. D) the load-distance method.

Q: Break-even analysis can help a manager compare location alternatives on the basis of quantitative factors that can be expressed in terms of total cost.

Q: A decision maker using break-even analysis must assume that suppliers do not provide discounts for large orders.

Q: Table 13.2 A single facility is needed to meet the demands of four markets. The locations and demands of these four markets are shown below. Market Coordinates Demand A (8, 6) 10 B (4, 12) 15 C (3, 2) 10 D (9,6) 6 Using the data in Table 13.2, identify an optimal location for the new facility.

Q: Table 13.1 Four departments are located in adjacent bays in the same loading dock. The distance between adjacent bays is 30 feet, the distance between bays separated by another (Alpha and Charlie, Bravo and Delta) is 60 feet, and the distance between Alpha and Delta is 90 feet. Material flows (loads) between departments are shown in the Table below. To To To To From Alpha Bravo Charlie Delta Alpha 0 15 20 30 Bravo 5 0 12 8 Charlie 10 7 0 4 Delta 15 24 6 0 Use the data in Table 13.1. What is the load distance score for locations Alpha, Bravo, Charlie and Delta? Once your calculation is complete, how might the assignment of departments be improved?

Q: Table 13.7 Nuts-and-Bolts, Inc. wishes to find the best location for a plant that will satisfy customer demand in the following five areas. Location x coordinate y coordinate Volume A 3 1 35 B 5 0 90 C 8 7 15 D 2 3 20 E 5 4 55 Use the information in Table 13.7. If the plant is located at the coordinates (5, 5), what is the total load-distance score, assuming Euclidean (straight line) distance? A) less than or equal to 600 B) more than 600 but less than or equal to 700 C) more than 700 but less than or equal to 800 D) more than 800

Q: A grower and shipper of fresh gourmet herbs has determined the following demand forecast for the five metropolitan markets that the firm serves. Based on your calculations of the center of gravity, where should the new herb farm be located? A) x > 6, y > 8 B) x < 5, y > 5 C) x < 7, y > 6 D) x < 6, y >6

Q: A national drugstore chain prefers to operate one outlet in a town that has four major market segments. The number of potential customers in each segment, along with the location coordinates, are given below. Which would be the best location using the center of gravity method? A) x > 10, y < 5 B) x < 10, y > 5 C) x < 9, y < 6 D) x < 11, y > 8

Q: Bill Burns, district manager of the Pizza Palace, wishes to locate a new store in the metropolitan areas. Using the following information, what are the x and y coordinates for the center of gravity? Don't round your answer up or down before making your choice. Market Demand (pizzas/day) x coordinate y coordinate Grandview Heights 250 2 2 Upper Arlington 100 4 5 Bexley 150 7 3 Worthington 350 4 9 Medfield 500 4 3 A) x is less than or equal to 4; y is less or equal to than 4.5. B) x is greater than or equal to 5; y is greater than or equal to 3.5. C) x is less than or equal to 3.5; y is less than or equal to 4.5. D) x is less than or equal to 4; y is greater than or equal to 4.5.

Q: Kiddie Clothes wishes to locate its warehouse so that it would serve its four different stores, described as follows. Based on the center of gravity, what are the x and y coordinates of the proposed warehouse location? Store x y Trips / Day A 1 4 5 B 2 2 1 C 4 3 2 D 3 2 3 A) x is less than or equal to 3; y is less than or equal to 2. B) x is less than or equal to 3; y is less than or equal to 2.5. C) x is greater than or equal to 2.5; y is greater than or equal to 3. D) x is less than or equal to 2.5; y is greater than or equal to 2.9.

Q: The Burdell Company has four distribution centers located at the location coordinates given as follows. The monthly demand at each center is also given. DC Coordinates Demand A (100, 150) 50 B (250, 250) 30 C (150, 150) 15 D (200, 300) 100 Management wants to build a new plant that would be located at the center of gravity of the four distribution centers. Which of the following options best represents the coordinates of the new plant location? A) x coordinate is greater than 150 but less than 170; y coordinate is greater than 210 but less than 230. B) x coordinate is greater than 150 but less than 170; y coordinate is greater than 230 but less than 250. C) x coordinate is greater than 170 but less than 190; y coordinate is greater than 210 but less than 230. D) x coordinate is greater than 170 but less than 190; y coordinate is greater than 230 but less than 250.

Q: Table 13.6 Union Fork, Inc. has five distribution centers located at the location coordinates given as follows. The demand at each center is also given. DC Coordinates Demand A (2, 4) 10 B (6, 2) 15 C (4, 10) 25 D (13, 4) 30 E (10, 5) 20 Use the information in Table 13.6. What is the total load-distance score for the two plants if Plant 1 is located at the center of gravity serving A, B, and C, and Plant 2 is at the center of gravity serving D and E? (Assume Euclidean, or straight line, distance.) A) less than or equal to 240 B) more than 240 but less than or equal to 260 C) more than 260 but less than or equal to 280 D) more than 280

Q: Table 13.5 Paul's Pretzels manufactures and distributes gourmet pretzels for limited retail sales. Paul has determined the "demand points" and their relative locations as follows: Use the information in Table 13.5. If a facility were to be located at (15,15), what would be the load-distance score? (Assume rectilinear distance.) A) less than or equal to 5,000 B) more than 5,000 but less than or equal to 5,200 C) more than 5,200 but less than or equal to 5,400 D) more than 5,400

Q: Table 13.4 Royal Flush Plumbing Supplies has the following demand forecasts for the five markets that it serves: Market Coordinates Demand Forecast A (3, 1) 10 B (12, 9) 12 C (9, 14) 9 D (8, 8) 4 E (2,10) 15 Use the information in Table 13.4. If Royal Flush decides to locate a warehouse at market D, what is the total load-distance score? (Use rectilinear distance.) A) less than 400 B) between 401 and 450 C) between 451 and 500 D) more than 500

Q: A single facility is needed to meet the demand of four regions depicted as follows: Region Center Coordinates Demand A (2, 10) 20 B (7, 10) 5 C (2, 2) 10 D (7, 4) 10 If the plant is located at A, what is the total load-distance score, assuming Euclidean (straight line) distance? A) less than or equal to 100 B) more than 100 but less than or equal to 140 C) more than 140 but less than or equal to 180 D) more than 180

Q: Pinkerton Company has four distribution centers located at the location coordinates given. The monthly demand at each center is also given. DC Coordinates (Miles) Demand A (100, 150) 50 B (250, 250) 30 C (150, 150) 15 D (200, 300) 100 Assume that management is considering locating its new plant at distribution center A. What is the load-distance score, assuming rectilinear distance? A) less than 33,000 B) greater than 33,000 but less than 33,500 C) greater than 33,500 but less than 34,000 D) greater than 34,000

Q: Consider the location of four distribution centers, A, B, C, and D, with the following location coordinates and shipping requirements per week. Location Coordinates Tons A (0, 100) 2 B (200, 300) 1 C (500, 600) 3 D (100, 200) 4 Management is considering locating a new plant at the site of one of the four distribution centers. What is the load-distance score if the plant is located at distribution center A? (Use rectilinear distance.) A) less than or equal to 4,500 B) greater than 4,500 but less than or equal to 5,000 C) greater than 5,000 but less than or equal to 5,500 D) greater than 5,500

Q: Table 13.3 Durham Toy, Inc. has five distribution centers at the location coordinates given as follows. The monthly demand at each center is also given. DC Coordinates Demand A (10, 12) 40 B (25, 30) 25 C (8, 15) 30 D (11, 20) 10 E (25, 6) 20 Use the information in Table 13.3. If the plant is located at the center of gravity, what is the load-distance score, assuming rectilinear distance? A) less than or equal to 1,500 B) more than 1,500 but less than or equal to 1,600 C) more than 1,600 but less than or equal to 1,700 D) more than 1,700

Q: The center of gravity technique does not take into consideration the: A) total volume of product any given site receives. B) location of any given site. C) number of locations that must be served. D) balance of supply and demand.

Q: The load-distance model is used to minimize the total: A) number of loads. B) distance traveled. C) cost of doing business. D) profit of competitors.

Q: Which of these is most likely to be classified as a "load" when using the load-distance model? A) a process B) a supplier C) a shipment D) a customer

Q: A quantitative method used to evaluate single locations based primarily on proximity is: A) break-even analysis. B) the transportation method. C) a preference matrix. D) the load-distance method.

Q: When using the load-distance method to select a new location, the decision maker can represent the number of trips to be made, the number of customers needing a physical presence, or number of tons per week, among other measures, as loads.

Q: The center of gravity method considers a greater number of location factors than the break-even analysis.

Q: Consider any two factors that a service operation assigns the greatest weight when making a location decision. Using those two factors, identify one local service operation that likely used one of those factors as their top priority and a different service operation that likely used the other of your two factors as their dominant criterion. Briefly describe the business and justify your assignment of each factor as the overriding concern.

Q: What are the dominant factors that a manufacturing firm must consider when making a location decision?

Q: Which of the following statements about locating facilities in the service sector is best? A) The factors that apply to manufacturing firms often also apply to service facilities, but the impact of the location on sales and customer satisfaction is an important addition. B) Management should avoid locating facilities where competitors are already well established, as illustrated by new car showrooms. C) Creating a critical mass is a strategy that avoids locating near competing firms. D) "Site specific" factors are the main reason for locating warehousing and distribution operations near the customer.

Q: Which of the following location factors was not found to dominate location decisions for new U.S. manufacturing plants? A) proximity to the parent company's facilities B) quality of life C) proximity to competitors' facilities D) favorable labor climate

Q: Quality of life issues include: A) proximity to markets. B) prevailing wage rates. C) local and state taxes. D) recreational facilities.