Examination Paper: Supply Chain Management
1
IIBM Institute of Business Management
IIBM Institute of Business Management
Examination Paper MM.100
Supply Chain Management
Section A: Objective Type (30 marks)
•This section consists of Multiple Choice
questions& Short Answer type questions.
•Answer all the questions.
•Part One questions carry 1 mark each &
Part Two questions carry 2 marks each.
Part One:
Multiple Choices:
1. When demand is steady, the cycle inventory for a given
lot size (Q) is given by:
a. Q/4
b. Q/8
c. Q/6
d. Q/2
2. There are two firms ‘x’ and ‘y’ located on a line of
distance demand(0-1) at ‘a’ and ‘b’
respectively, the customers are uniformly located on the
line, on keeping the fact of splitting of
market, the demand of firm ‘x’ will be given by:
a. (a+b)/2
b. a+(1-b-a)/2
c. (1+b-a)/2
d. a+(a-b)/2
3. Push process in supply chain analysis is also called:
a. Speculative process
b. Manufacturing process
c. Supplying process
d. Demand process
4. If the Throughput be ‘d’ and the flow time be ‘t’ then
the Inventory ‘I’ is given by:
a. I *d=t
b. I=t+d
c. d=I*t
d. I =d*t
5. Forecasting method is:
a. Time series
b. causal
c. Qualitative
d. All the above
Examination Paper: Supply Chain Management
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IIBM Institute of Business Management
6. Component of order cost include:
a. Handling cost
b. Occupancy cost
c. Receiving costs
d. Miscellaneous costs
7. How many distinct types of MRO inventory are there?
a. One
b. Four
c. Three
d. Two
8. Supply chain driver is:
a. Inventory
b. Return ability
c. Fulfillment
d. All of above
9. SRM stands for:
a. Strategic Relationship Management
b. Supply Return ability Management
c. Supplier Relationship Management
d. None of the above
10. Discount factor equals to, where k is the rate of
return.
a. 1/1+k
b. 2/1+k
c. 1/1-k
d. 1/2+k
Part Two:
1. Explain “zone of strategic fit”.
2. Explain “scope of strategic fit”.
3. What do you understand by “Stimulation Forecasting
Method”?
4. Write a note on “Obsolescence (or spoilage) cost”.
5. Define “Square Law” in safety inventory of supply chain
management.
6. What does the word “postponement” signifies in supply
chain?
7. What do you understand by the term “tailored sourcing”?
8. Explain the term “Outsourcing”.
9. Write a note on “threshold contracts” for increasing
agent efforts.
Examination Paper: Supply Chain Management
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IIBM Institute of Business Management
10. What is “dynamic pricing”?
END OF SECTION A
Section B: Caselets (40 marks)
•This section consists of Caselets.
•Answer all the questions.
•Each Caselet carries 20 marks.
•Detailed information should form the part
of your answer (Word limit 150 to 200 words).
Caselet 1
Orion is a global co. That sells copiers. Orion currently sells
10 variants of a copier, with all inventory
kept in finished-goods form. The primary component that
differentiates the copiers is the printing
subassembly. An idea being discussed is to introduce
commonality in the printing subassembly so
that final assembly can be postponed and inventories kept in
component form. Currently, each copier
costs $1,000 in terms of components. Introducing commonality
in the print subassembly will increase
component cost to$1.025.One of the 10 variants represents 80
percent of the total demand. Weekly
demand for this variant is normally distributed ,with a mean
of 1,000 and a standard deviation of
200.Each of the remaining nine variants has a weekly demand
of 28 with a standard deviation of
20.Orion aims to provide a 95per level of services
.Replacement lead time for components is four
weeks. Copier assembly can be implemented in a matter of
hours. Orion manages all inventories
using a continuous review policy and uses a holding cost of
20 percent.
Questions:
1. How much safety inventory of each variant must Orion keep
without component commonality?
What are the annual holding costs?
2. How much safety inventory must be kept in component form
if Orion uses common components
for all variants? What is the annual holding cost? What is
the increase in component cost using
commonality? Is commonality justified across all variants?
3. At what cost of commonality will complete commonality be
justified.
4. At what cost of commonality will commonality across the
low-volume variants be justified.
Caselet 2
An electronic manufacturer has outsourced production of its
latest MP3 player to a contract
manufacturer in Asia. Demand for the players has exceeded
all expectations whereas the contract
manufacturers sell three types of players- a 40-GB player, a
20-GB player, 6-GB player. For the
upcoming holiday season, the demand forecast for the 40-GB
player is normally distributed, with a
mean of 20,000and a standard deviation Dard deviation of
11,000, and the demand forecast for the 6-
GB player has a mean of 80,000 and a standard deviation of
16,000. The 40-GB player has a sale
Examination Paper: Supply Chain Management
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IIBM Institute of Business Management
price of $200, a production cost of $100, and a salvage
value of $80 .The 20-GB player has a price of
$150, a production cost of $70, and a salvage value of $50.
Questions:
1. How many units of each type of player should the
electronics manufacturer order if there are no
capacity constraints?
2. How many times of each type of player should the
electronics manufacturer order if the available
is 140,000? What is the expected profit?
END OF SECTION B
Section C: Applied Theory (30 marks)
•This section consists of Applied Theory
Questions.
•Answer all the questions.
•Each question carries 15 marks.
•Detailed information should form the part
of your answer (Word limit 200 to 250 words).
1. Consider two products with the same margin carried by a
retail store. Any leftover units of one
product are worthless. Leftover units of the other product
can be sold to outlet stores. Which
product should have a higher level of availability? Why?
2. McMaster-Carr sells maintenance, repair, and operations
equipment from five warehouses in the
United States. W.W. Grainger sells products from more than
350 retail locations, supported by
several warehouses. In both cases, customers place orders
using the Web or on the phone. Discuss
the pros and cons of the two strategies.
END OF SECTION C
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