Designing Global Supply Chain Networks

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Questions Bank

Understanding the Supply Chain
Supply Chain Performance: Achieving Strategic Fit and Scope
Supply Chain Drivers and Metrics
Designing Distribution Networks and Applications to e-Business
Network Design in the Supply Chain
Designing Global Supply Chain Networks
Demand Forecasting in a Supply Chain
Aggregate Planning in a Supply Chain
Sales and Operations Planning: Planning Supply and Demand in a Supply Chain
Coordination in a Supply Chain
Managing Economies of Scale in the Supply Chain: Cycle Inventory
Managing Uncertainty in a Supply Chain: Safety Inventory
Determining the Optimal Level of Product Availability
Transportation in a Supply Chain
Sourcing Decisions in a Supply Chain
Pricing and Revenue Management in a Supply Chain
Sustainability and the Supply Chain

All Questions

Question 1

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Decisions made during the supply chain design phase regarding significant investments in the supply chain, such as the number and size of plants to build, the number of trucks to purchase or lease, and whether to build or lease warehouse space, cannot be altered in the short term.

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Question 2

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The degree of demand and price uncertainty has a significant influence on the appropriate portfolio of long- and short-term warehousing space that a firm should carry.

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Question 3

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If price and demand vary over time in a global network, flexible production capacity can be reconfigured to maximize profits in the new environment.

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Question 4

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A firm may choose to build a flexible global supply chain even in the presence of little demand or supply uncertainty if certainty exists in exchange rates or prices.

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Question 5

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Offshoring typically lowers labor, working capital and fixed costs but increases risk and freight costs.

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Question 6

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Appropriate flexibility is an effective approach for a global supply chain to deal with a variety of risks and uncertainties. Extra flexibility is always worth the cost.

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Question 7

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The present value of a stream of cash flows is what that stream is worth in today's dollars.

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Question 8

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The rate of return k is also referred to as the present value of capital.

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Question 9

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A negative NPV for an option indicates that the option will lose money for the supply chain.

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Question 10

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Discounted cash flow (DCF) analysis evaluates the present value of any stream of future cash flows and allows management to compare two streams of cash flows in terms of their financial value.

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Question 11

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When faced with uncertain conditions it is always best to sign long-term contracts (because they are typically cheaper) and avoid all flexible capacity (because it is more expensive).

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Question 12

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The value of flexibility increases with an increase in uncertainty.

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Question 13

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In reality, demand and prices are highly uncertain and are likely to fluctuate during the life of any supply chain decision.

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Question 14

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Long-term contracts for both warehousing and transportation requirements will be more effective if the demand and price of warehousing do not change in the future or if the price of warehousing goes up.

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Question 15

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During network design, managers need a methodology that allows them to estimate the certainty in their forecast of demand and price and then incorporate this certainty into the decision-making process.

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Question 16

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In a complex decision tree, there are thousands of possible paths that may result from the first period to the last.

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Question 17

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Simulation methods are very good at evaluating a decision where the path itself is decision dependent.

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Question 18

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The main advantage of simulation models is that they can provide low-cost evaluations of complex situations.

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Question 19

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Strategic planning and financial planning should be combined during supply chain network design.

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Question 20

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Financial analysis should be used as an input to decision making, not as the decision-making process.

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