-&) The goal of trade promotions is to ) influence retailers to act in a way that helps the retailer achieve its obDectives. 5) influence retailers to act in a way that helps the manufacturer achieve its obDectives. C) influence retailers to act in a way that will maximi*e supply chain profit. %) influence retailers to act in a way minimi*e supply chain cost. nswer! 5 %iff! Topic! 11. #hort8Term %iscounting! Trade ;romotions C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance --) 0hich of the following is not a 6ey goal Bfrom the manufacturers perspective) of a trade promotionG ) (nduce retailers to use price discounts displays or advertising to spur sales. 5) #hift inventory from the manufacturer to the retailer and the customer. C) #hift inventory from the retailer to the customer. %) %efend a brand against competition. nswer! C %iff! & Topic! 11. #hort8Term %iscounting! Trade ;romotions C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance -) 0hich of the following is a possible response that a retailer could ma6e to a trade promotionG ) ;ass through some or all of the promotion to customers to spur sales. 5) ;ass through very little of the promotion to customers but purchase in greater +uantity during the promotion period to exploit the temporary reduction in price. C) #hift inventory from the retailer to the customer. %) and 5 only nswer! % %iff! Topic! 11. #hort8Term %iscounting! Trade ;romotions C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance -) 0hen the retailer decides to pass through some or all of the promotion to customers to spur sales the result is ) a lowering of the price of the product for the end customer. 5) increased purchases and thus increased sales for the entire supply chain. C) an increase in the amount of inventory held at the retailer. %) and 5 only nswer! % %iff! Topic! 11. #hort8Term %iscounting! Trade ;romotions C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance 1181 Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
=) verage verage flow time resulting from cycle inventory 2 Cycle (nventory/%emand 2 Q/2D. nswer! T',$ %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply supply chain performance >) Cycle inventory is primarily held to ta6e advantage ad vantage of economies of scale and reduce profit within the supply chain. nswer! F"#$ %iff! 1 Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply supply chain performance ?) (ncreasing the lot si*e or cycle inventory often decreases the cost incurred by different stages of a supply chain. nswer! T',$ %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply supply chain performance 1:) Cycle inventory exists in a supply chain because different stages exploit economies of scale to lower total cost. nswer! T',$ %iff! 1 Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply supply chain performance 11) The costs considered in lot si*ing decisions include material cost fixed ordering cost and manufacturing cost. nswer! F"#$ %iff! & Topic! 11.& $stimating $stimating Cycle (nventory@'elated Costs in ;ractice "earning utcome! %iscuss options for measuring supply supply chain performance 1&) The total annual cost is the sum of annual material cost annual order cost and annual holding cost and is given as TC = CD A (D/ Q) Q)S A ( Q/&) Q/&)hC. nswer! T',$ %iff! & Topic! 11.& $stimating $stimating Cycle (nventory@'elated Costs in ;ractice C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply supply chain performance
118& Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
1-) The optimal lot si*e is referred to as the economic order quantity B$Q). (t is denoted by Q 4 and is given by the e+uation! Q4 2 & DS/hC . nswer! T',$ %iff! & Topic! 11.- $conomies of #cale to $xploit Fixed Costs C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance 1) Total ordering and holding costs are unstable around the economic order +uantity. nswer! F"#$ %iff! & Topic! 11.- $conomies of #cale to $xploit Fixed Costs "earning utcome! %iscuss options for measuring supply chain performance 1) firm is often better served by ordering a convenient lot si*e close to the economic order +uantity rather than the precise $Q. nswer! T',$ %iff! & Topic! 11.- $conomies of #cale to $xploit Fixed Costs C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance 17) (f demand increases by a factor of k, the optimal lot si*e decreases by a factor of k . nswer! F"#$ %iff! Topic! 11.- $conomies of #cale to $xploit Fixed Costs C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance 1=) To reduce the optimal lot si*e by a factor of k the fixed order cost S must be reduced by a factor of k . nswer! F"#$ %iff! & Topic! 11.- $conomies of #cale to $xploit Fixed Costs C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance 1>) ggregating across products retailers or suppliers in a single order allows for a reduction in lot si*e for individual products because fixed ordering and transportation costs are now spread across multiple products retailers or suppliers. nswer! T',$ %iff! & Topic! 11.- $conomies of #cale to $xploit Fixed Costs "earning utcome! %iscuss options for measuring supply chain performance
118Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
1?) 6ey to reducing cycle inventory is the reduction of lot si*e. nswer! T',$ %iff! 1 Topic! 11.- $conomies of #cale to $xploit Fixed Costs "earning utcome! %iscuss options for measuring supply chain performance &:) 6ey to reducing lot si*e without increasing costs is to reduce the holding cost associated with each lot. nswer! F"#$ %iff! & Topic! 11.- $conomies of #cale to $xploit Fixed Costs C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance &1) 'eduction of fixed cost may be achieved by aggregating lots across multiple products customers or suppliers. nswer! T',$ %iff! 1 Topic! 11.- $conomies of #cale to $xploit Fixed Costs "earning utcome! %iscuss options for measuring supply chain performance &&) discount is volume8based if the pricing schedule offers discounts based on the +uantity ordered in a single lot. nswer! F"#$ %iff! Topic! 11. $conomies of #cale to $xploit Quantity %iscounts C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance &-) discount is volume8based if the discount is based on the total +uantity purchased over a given period regardless of the number of lots purchased over that period. nswer! T',$ %iff! 1 Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance &) ;ricing schedules with all unit +uantity discounts encourage retailers to increase the si*e of their lots which reduces the average inventory and flow time in a supply chain. nswer! F"#$ %iff! & Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance
118 Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
&) arginal unit +uantity discounts have also been referred to as multi8bloc6 tariffs. nswer! T',$ %iff! & Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance &7) Quantity discounts lead to a minor buildup of cycle inventory in the supply chain. nswer! F"#$ %iff! & Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance &=) For commodity products where price is set by the mar6et manufacturers can use lot si*e based +uantity discounts to achieve coordination in the supply chain and decrease supply chain cost. nswer! T',$ %iff! & Topic! 11. $conomies of #cale to $xploit Quantity %iscounts C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance &>) The supply chain profit is higher if each stage of the supply chain independently ma6es its pricing decisions with the obDective of maximi*ing its own profit. nswer! F"#$ %iff! & Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance &?) For products where the firm has mar6et power two8part tariffs can be used to achieve coordination in the supply chain and maximi*e supply chain profits. nswer! T',$ %iff! & Topic! 11. $conomies of #cale to $xploit Quantity %iscounts C#5! %ynamics of the Elobal $conomy "earning utcome! %iscuss options for measuring supply chain performance -:) %iscounts related to price discrimination will be lot si*e based. nswer! F"#$ %iff! Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance
118 Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
-1) ;rice discrimination is the practice where a firm charges differential prices to maximi*e profits. nswer! T',$ %iff! 1 Topic! 11. $conomies of #cale to $xploit Quantity %iscounts "earning utcome! %iscuss options for measuring supply chain performance -&) The goal of trade promotions is to influence retailers to act in a way that helps the retailer achieve its obDectives. nswer! F"#$ %iff! 1 Topic! 11. #hort8Term %iscounting! Trade ;romotions "earning utcome! %iscuss options for measuring supply chain performance --) lthough a forward buy is often the retailers appropriate response and increases their own profits it usually increases demand variability with a resulting increase in inventory and flow times within the supply chain. nswer! T',$ %iff! & Topic! 11. #hort8Term %iscounting! Trade ;romotions "earning utcome! %iscuss options for measuring supply chain performance -) Trade promotions lead to a significant increase in lot si*e and cycle inventory because of forward buying by the retailer. nswer! T',$ %iff! & Topic! 11. #hort8Term %iscounting! Trade ;romotions C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance -) The fixed ordering cost includes all costs that do not vary with the si*e of the order but are incurred each time an order is placed. nswer! T',$ %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance -7) o!ding cost is the cost of carrying one unit in inventory for a specified period of time usually one year. nswer! T',$ %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply chain performance
1187 Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
-=) The fixed ordering cost is the cost of carrying one unit in inventory for a specified period of time usually one year. nswer! T',$ %iff! 1 Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply chain performance 11.& ultiple Choice Questions 1) Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to ) exploit economies of scale and raise cost. 5) exploit economies of scale and lower cost. C) exploit customers and lower cost. %) exploit customers and raise cost. $) none of the above nswer! 5 %iff! 1 Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply chain performance &) The +uantity of inventory that a stage of the supply chain either produces or purchases at a given time is ) an order. 5) a Dob. C) a shipment. %) a lot or batch. $) none of the above nswer! % %iff! 1 Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply chain performance -) The average inventory in the supply chain due to either production or purchases in lot si*es that are larger than those demanded by the customer is ) annual inventory. 5) distribution inventory. C) cycle inventory. %) physical inventory. $) 5 and C only nswer! C %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply chain performance
118= Copyright 9 &:1- ;earson $ducation (nc. publishing as ;rentice
) graphical plot depicting the level of inventory over time is ) an inventory graph. 5) a distribution inventory. C) an inventory drawing. %) an inventory profile. $) an inventory picture. nswer! % %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain "earning utcome! %iscuss options for measuring supply chain performance ) 0hen demand is steady cycle inventory and lot si*e are related as ) Cycle (nventory 2 "ot #i*e 3 &. 5) Cycle (nventory 2 Q4&. C) Cycle (nventory 2 Q/&. %) Cycle (nventory 2 "ot #i*e 2 Q. $) none of the above nswer! C %iff! & Topic! 11.1 The 'ole of Cycle (nventory in a #upply Chain C#5! nalytic #6ills "earning utcome! %iscuss options for measuring supply chain performance 7) verage flow time resulting from cycle inventory is e+ual to ) Cycle (nventory/%emand 2
