CII Institute of Logistics

Post Graduate Diploma in

Supply Chain Management
Semester IV Assignment II
Supply Chain And Logistics Strategies

Answer all questions with explanation in not more than 20 words

1) An industrys competitive advantage cannot be built or sustained solely by

market orientation Porter.
True/False
2) WTO agreements ensure to provide enormous opportunities in areas of
comparative advantage.
True/False
3) The formal structure of the organization shapes the way in which supply chain
decisions are made.

The culture, the informal structure and style of the

company have no part to play.

True/False

4) Distinctive competence means relative superiority in skills & resources.

True/False
5) Support activities of value chain are manufacturing, marketing, sales and
service.
True/False
6) Experience curve suggests that increasing a companys product-volume and
market share will bring cost advantages over the competition.
True/False
7) Global logistics capabilities must include only international transportation.
True/False
8) A multi division structure constitutes functional, product and matrix structure
and such a structure will always be ideal for global operations.
True/False
9) At the highest level, performance of a distribution network should be
evaluated along two dimensions:
(i) Customer needs that are met
(ii) Cost of meeting customer needs
True/False
10) Supply chain decision phases may be categorized as design, planning or
operational depending on the time over which the decisions made in a given
phase apply.
True/False

Section B
Answer any three questions. Answers should indicate conceptual clarity.
1) With the help of a line diagram, indicate enterprise connectivity for a typical
project life cycle starting with feasibility study and ending with procurement
and contracts using LANs and WANs across a company in India.

Assume

suitably links have been established between the company in India and
engineering set-up in Norway- (as an example) for transfer of drawings and 3D Models. From the above draft the project life cycle value chain.
2) a) Briefly discuss the three objectives for developing and implementing
performance measurement system.
b)

Why is it critical that logistics reporting systems reflect dynamic rather

than static performance?

3) a) The manager at the supermarket would like to decrease the lot size without
increasing the costs he incurs.

What actions can he take to achieve this

objective?
b) When are quantity discounts justified in a supply chain?
4) a) What differences in the retail environment may justify the fact that the fast
moving consumer goods supply chain in India has far more distributors than in
the Unites States?
b) What type of networks is best suited to highly differentiated products?

Section C
Read the case study, analyse it and proceed to answer the questions given
below:
Mintendo Game Girl
It is late June, and Sandra, head of operations at Mintendo, and Bill, head of sales of
We R Toys, are about to get together to discuss production and marketing plans for
the next six months.

Mintendo is the manufacturer of the popular Game Girl

handheld electronic game that is sold exclusively through We R Toys retail stores.

The second half of the year is critical to Game Girls success because a majority of
their sales occur during the holiday shopping period.
Sandra is worried about the impact that the upcoming holiday surge in demand will
have on her production line. Costs to subcontract assembly of the Game Girls are
expected to increase and she has been trying to keep costs down given that her
bonus depends on the level of production costs.
Bill is worried about competing toy stores gaining share during the Christmas buying
season. He has seen many companies lose their share by failing to keep prices in
line with the performance of their products. He would like to maximize the Game Girl
market share.
Both Sandra and Bills teams produce a joint forecast of demand over the next six
months, as shown in Table below:
We R Toys sells Game Girls for Rs. 50 a piece. At the end of June, the company has
an inventory of 50,000 Game Girls. Capacity of the production facility is set purely by
the number of workers assembling the Game Girls. At the end of June, the company
has a work force of 300 employees each of whom work eight hours of non-overtime
at Rs. 15/hour for twenty days each month. Work rules require that no employee
work more than forty hours of over-time a month. The various costs are shown in
Table 2.
Table 1
Demand for Game Girls
Month
July
August
September
October
November
December

Demand Forecast
1,00,000
1,10,000
1,30,000
1,80,000
2,50,000
3,00,000

Table 2
Costs for Mintendo/We R Toys
Item
Material cost
Inventory Holding cost

Cost
21 / unit
4 / unit / month

Marginal cost of a stock-out

Hiring and training costs
Layoff cost
Labor hours required
Regular time cost
Over time cost
Cost of Subcontracting

10 / unit / month
3000 / worker
5000 / worker
.25 / unit
15.00 / hour
22.50 / hour
18 / unit

Sandra, concerned about controlling costs during the periods of surging demand over
the holidays proposes to Bill that the price be lowered by Rs. 5 for the month of
September. This would likely increase Septembers demand by 50 percent due to
new customers attracted to Game Girl.

Additionally, 30 percent of each of the

following two months of demand would occur in September as forward buys. She
strongly believes that this leveling of demand will help the company.
Bill counters with the idea of offering the same promotion in November, during the
heart of the buying season.

In this case, the promotion increases Novembers

demand by 50 percent due to new customers attracted to Game Girl. Additionally, 30

percent of Decembers demand would occur in November as forward buying.

Bill

wants to increase revenue and sees no better way to do this than to offer a
promotion during the peak season.
Questions:
1) Which option delivers the maximum profit for the supply chain: Sandras plan,
Bills plan, or no promotion plan at all?
2) How does the answer change if a discount of Rs. 10 must be given to reach
the same level of impact that the Rs. 5 discount received?
3) Suppose Sandras fears about increasing out-sourcing costs come to fruition
and the cost rises to Rs. 22/unit for subcontracting.

Does this change the

decision when the discount is Rs. 5?

Note: Your answer should reveal your analytical ability and conceptual clarity.

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