A company that sells 60 units of product in a given year and has an average quantity on hand of 10 units. There are 360 selling days and 261 production days in the year. The company has on hand how many days of product inventory?
Answer : C
To determine the days of product inventory on hand, use the formula: DaysofInventory=AverageInventoryDailyUsageDaysofInventory=DailyUsageAverageInventory
Given:
Average quantity on hand = 10 units
Annual sales = 60 units
Selling days in a year = 360 days
First, calculate the daily usage: DailyUsage=60units360days=0.1667units/dayDailyUsage=360days60units=0.1667units/day
Then, calculate the days of inventory: DaysofInventory=10units0.1667units/day60daysDaysofInventory=0.1667units/day10units60days
However, considering production days (261 days) is not relevant as the selling days (360 days) have already been used in the calculation.
Hence, the correct days of inventory based on daily usage calculation is approximately 60 days. To be more precise, using the given options: DaysofInventory=10units(60units/360days)=60daysDaysofInventory=(60units/360days)10units=60days
Vollmann, T.E., Berry, W.L., Whybark, D.C., & Jacobs, F.R. (2005). Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill.
Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation. Pearson.
Which of the following actions is most likely to improve the cash-to-cash cycle time?
Answer : B
Improving the cash-to-cash cycle time involves reducing the time taken to convert resources into cash flows. Implementing vendor-managed inventory (VMI) with key suppliers can significantly improve this cycle by reducing inventory holding costs and improving inventory turnover. In a VMI setup, suppliers manage the inventory levels of their products at the customer's location, ensuring optimal inventory levels and reducing stockouts and excess inventory. This arrangement improves cash flow as it reduces the amount of capital tied up in inventory. Finding suppliers with lower TCO, implementing VMI with customers, or targeting promotions, while beneficial, do not have as direct an impact on the cash-to-cash cycle time as VMI with suppliers.
Pfohl, H.-C. (2010). Logistics Management: An International Journal. Springer.
Watson, M., & Gallego, G. (2013). Revenue Management and Pricing Analytics. Springer.
A company's decision to charge different prices for the same service sold in different market segments is most likely based on which of the following metrics?
Answer : B
Context: Charging different prices for the same service in different market segments involves understanding the value derived from different customer groups.
Options Breakdown:
A . Internal rate of return (IRR): This is a financial metric for investment profitability, not directly related to pricing strategies.
B . Lifetime customer value (LCV): This metric evaluates the total revenue a business can expect from a customer over the duration of their relationship, making it crucial for segment-based pricing strategies.
C . Net present value (NPV): This measures the profitability of an investment, not specifically used for pricing decisions.
D . Return on investment (ROI): This measures the gain from an investment relative to its cost, not directly related to customer-based pricing strategies.
Correct Answer Justification: LCV provides insight into how much value different customer segments bring to the company over time, allowing businesses to tailor pricing strategies to maximize profitability from each segment.
Marketing and pricing strategy literature
Studies on customer value and segmentation
Qualitative extrinsic data are used with which of the following forecasting techniques?
Answer : C
Qualitative extrinsic data are data that are obtained from external sources and are not based on numerical measurements, but rather on opinions, judgments, or perceptions. Qualitative extrinsic data are used with qualitative forecasting techniques, such as the Delphi method. The Delphi method is a technique that involves a panel of experts who provide their opinions on a topic through a series of questionnaires. The results of each questionnaire are summarized and fed back to the panel, allowing them to revise their opinions based on the feedback. The process is repeated until a consensus is reached or the opinions stabilize . The Delphi method is useful for forecasting long-term trends, new product demand, technological changes, or social and economic issues.
Which of the following responses to risk best describes the evolving concept of flexibility in supply chain risk management?
Answer : B
Flexibility in supply chain risk management involves the capacity to respond promptly and effectively to disruptions or changes in the supply chain while maintaining customer service levels. This includes being able to switch suppliers, adjust production schedules, and manage inventory dynamically to meet customer demands despite unforeseen events.
Adjusting capacities in a manufacturing environment (A) is a part of flexibility but not as comprehensive as the ability to maintain service levels.
Producing high volume SKUs in multiple locations (C) and producing complex configurations of a product within the standard lead time (D) are aspects of flexibility but do not capture the broader definition related to risk management and customer service.
Tang, C. S. (2006). Robust strategies for mitigating supply chain disruptions. International Journal of Logistics Research and Applications.
Sheffi, Y. (2005). The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage. MIT Press.
A company wants to implement a system for managing environmental compliance with legislative and regulatory requirements. Which of the following sustainability tools is most appropriate?
Answer : A
ISO 14000 Series: This set of standards provides practical tools for companies and organizations looking to manage their environmental responsibilities.
ISO 14001: Specifies requirements for an environmental management system (EMS) to help organizations improve their environmental performance through more efficient use of resources and reduction of waste.
Purpose: These standards are designed to help organizations comply with environmental legislation and regulatory requirements.
Explanation of Choice:
Option B (GRI): Focuses on sustainability reporting, not specifically on compliance management.
Option C (ISO 26000): Provides guidance on social responsibility, not specifically environmental compliance.
Option D (UN Global Compact): Focuses on broader sustainability principles, not specific compliance management.
International Organization for Standardization (ISO). (2015). ISO 14001: Environmental Management Systems - Requirements with Guidance for Use. ISO.
Epstein, M. J., & Buhovac, A. R. (2014). Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts. Berrett-Koehler Publishers.
The primary reason for a firm to pursue strategic supply chain activities is to:
Answer : A
Context: Strategic supply chain activities are pursued to achieve long-term business objectives.
Options Breakdown:
A . Gain competitive advantage: Strategic activities enhance a firm's market position through improved efficiency, customer service, and innovation.
B . Reduce total cost of ownership (TCO): While important, this is often a tactical goal rather than the primary strategic driver.
C . Decrease inventory: Inventory reduction is a tactical benefit but not the main strategic reason.
D . Increase product life cycles: Extending product life cycles can be a goal, but it is not the primary strategic driver.
Correct Answer Justification: The primary reason for engaging in strategic supply chain activities is to gain a competitive advantage by enhancing overall performance and customer satisfaction.
Strategic supply chain management literature
Industry analyses on the benefits of strategic supply chain initiatives