Supply Chain Analytics

Week 5, 2020

1. Consider a three installation supply chain with following set up and holding costs.

Installation Setup Cost Holding Cost

1 Rs 10 Rs 11 per unit
2 Rs 50 Rs17 per unit
3 Rs 25 Rs 19 per unit

What will be echelon holding cost per unit at installation 1, 2 and 3?

(a) Rs4, Rs4, Rs19

(b) Rs11, Rs15, Rs19
(c) Rs11, Rs6, Rs2
(d) Rs4, Rs4, Rs4

2. Consider a three installation supply chain with following set up and holding costs.

Installation Setup Cost Holding Cost Order Quantity

1 Rs 10 Rs 11 per unit Q1
2 Rs 50 Rs15 per unit Q2
3 Rs 25 Rs 19 per unit Q3

Which of the following is correct with respect to above table?

(a) Q1 =Q2 = Q3
(b) Q1 > Q2 > Q3
(c) Q1 = Q2 > Q3
(d) Q1> Q2= Q3

3. Consider a two installation supply chain with following set up and holding costs.

Installation Setup Cost Holding Cost Order Quantity

1 Rs 200 Rs 40 per unit Q1
2 Rs 50 Rs10 per unit Q2

Which of the following is correct with respect to above table?

(a) Q1 = Q2
(b) Q1 > Q2
(c) Q1 < Q2
(d) Cannot be determined.

4. Which of the following is correct?

(a) Inventory management in supply chain is done to optimize individual installations.
(b) Inventory management in a supply chain is done on the basis of type of installations.
(c) Inventory management in a supply chain is done simultaneously for all the installations.
(d) None of the above

5. Which of the following is incorrect?

(a) With increase in number of facilities, response time to reach to customer continuously
decreases.
(b) With increase in number of facilities, response time to reach to customer first decreases
then starts increasing.
(c) Facility cost decreases as the number of facilities is reduced.
(d) Mostly direct distribution is suitable for services.

6. Which of the following is not an influencing factor for decisions related to network design in
case of a supply chain?
a) Political
b) Infrastructure
c) Technological
d) Customer

7. Which of the following is correct?

(a) With increase in number of facilities, transportation cost in a supply chain continuously
decreases.
(b) With increase in number of facilities, transportation cost in a supply chain continuously
increases.
(c) With increase in number of facilities, transportation cost in a supply chain first decreases to
a point and then starts increasing.
(d) With increase in number of facilities, transportation cost in a supply chain first decreases to
a point and then remains constant.

8. Which of the following is affecting supply chain strategy?

a) Regional demand
b) Production methods
c) Internal Constraints
d) Competitive environment
9. Which of the following factor/factors affecting the choice of distribution network?
a) Nature of product with respect to perishability
b) Unit price of product
c) Push Vs pull processes
d) All of the above
10. The defensive role of facility in supply chain strategy tries:
a) To reach maximum possible customers
b) To reach minimum possible customers
c) To apply new distribution network
d) None of the above
1. C 2. C 3.D 4.C 5.B 6.D 7.C 8.C 9.D 10.A
Solution

1. Consider a three installation supply chain with following set up and holding costs.

Installation Setup Cost Holding Cost

1 Rs 10 Rs 11 per unit
2 Rs 50 Rs17 per unit
3 Rs 25 Rs 19 per unit

What will be echelon holding cost per unit at installation 1, 2 and 3?

Installation Setup Cost Holding Cost Echelon Echelon

holding cost holding cost
(e)
1 Rs 10 Rs 11 per unit E1 = h1 11
2 Rs 50 Rs17 per unit E2 = h2-h1 6
3 Rs 25 Rs 19 per unit E3 = h3-h2 2

Therefore answer is C

2. Consider a three installation supply chain with following set up and holding costs.

Installation Setup Cost Holding Cost Order Quantity

1 Rs 10 Rs 11 per unit Q1
2 Rs 50 Rs15 per unit Q2
3 Rs 25 Rs 19 per unit Q3

To find relation between Q1, Q2 and Q3, we should find ratio of K/e
K1/e1 = 10/11=0.9
K2/e2 = 50/6= 8.33
K3/e3 = 25/4=6.25

Therefore, k1/e1 < k2/e2 and k2/e2 > k3/e3

For multiechelon modelling purpose, installation 1 and 2 will be merged, therefore Q1 = Q2 and,
installation 2 and 3 also will not be merged Q2 > Q3.
Therefore final relation will be Q1 = Q2 > Q3

3. Consider a two installation supply chain with following set up and holding costs.

Installation Setup Cost Holding Cost Order Quantity

1 Rs 200 Rs 40 per unit Q1
2 Rs 50 Rs10 per unit Q2

To find relation between Q1 and Q2, we should find ratio of K/e.

Here K1/e1 = 200/40 = 5 and K2/ e2 = 50/-30
Therefore, Cannot be determined.