Supply Chain: Questions & Answers - Essay Example

Download file to see previous pages Answer: The subcontractors purchase the product or the raw material to develop the product in bulk quantities from the main production facilities of the product. Due to the large quantity, they are offered very low price per piece of product which allows them to offer the product for sale to companies at a price that includes their profit plus cost. This price is very low as compared to the cost borne by the company when developing the product in-house as its not the core product of the company and to develop it the company has to invest heavily to make that product of the required standard. 3- Discuss how you would set up a collaboration mechanism for the enterprises in a supply chain. Answer: Yang and Zhenghzou developed a collaborative mechanism using multi-agent for enterprises in a supply chain (98). They postulated that in a manufacturing enterprise, the “purchasing agent will negotiate with the supply agent for price, quality, delivery time and supplying quota” (Yang and Zhenghzou 2007). This way the suppliers and the enterprise can enjoy gains and profits. 4- Consider a supermarket deciding on the size of its replenishment order from Proctor & Gamble. What cost should it take into account when making this decision? Answer: The replenishment order is triggered to create an order for a vast availability of a product produced through economies of scale to replenish the manufacturer. In this regard, the initial minimum development cost should be taken into consideration to ensure that the manufacturer places the order for replenishment. 5- Discuss how various costs for the supermarket in question 1 change as it decreases the lot size ordered from Proctor & Gamble. Answer: The supermarket purchases the product from the wholesale market for a price. This price along with the further investment over the product in terms of its development, the maintenance and taxes are all covered in the price given to the manufacturer. In case the order size is reduced, the price offered will increase as all of these costs will increase simultaneously. 6- The manager at the supermarket on question 1 wants to decrease the lot size without increasing the cost he incurs. What actions can be taken to achieve this objective? Answer: In order to achieve this objective, the manager will have to reduce the quality of the product used to achieve the final product. The other possible action can be the use of economies of scale to develop the product at lowest possible cost. 7- What is the role of safety inventory in the supply chain? Answer: The safety inventory is the stock that is saved for the purpose of use in the uncertain happenings or unprecedented increase in the demand for the particular product. This safety inventory rescues the supply chain from falling apart in the uncertain times when the stock depletes and their is no source to supply it. 8- Explain how a reduction in lead time can help a supply chain reduce safety inventory without hurting product availability. Answer: When the lead time for making a product transport from one place to another is reduced significantly the product becomes available as soon as the stock reaches a minimum level of availability. Thus, the need for safety inventory is reduced without hurting a product’ ...Download file to see next pagesRead More