1    Question 1

Briefly discuss each part.

a) A primary objective of supply chain management is to maximise the value created for the end customer. What does this “value” refer to? [5 marks]

b) Operational excellence and innovation excellence are two key goals in supply chain strategy. Briefly explain what they mean. [5 marks]

c ) Sustainable supply chain management focuses on improving the performance of organisations towards three goals . What are these goals? Briefly explain each. [5 marks]

d) ZARA is a fashion company aiming to constantly introduce cutting-edge designs to keep up   with the ever changing consumer taste. KMART, on the other hand, offers products essential to consumers everyday life. Based on Fisher's framework , which supply chain type would you recommend for these companies and why? [6 marks]

Question 2 [14 marks]

A motorcycle manufacturer has two options to prepare wheel rotors of its

motorcycles . Option A is to produce the rotors inhouse, and option B is to procure

them from an external supplier. With option A, the manufacturer incurs $180 setup

cost anytime it starts the production, and producing each rotor costs $30, and only   300 rotors can be produced every week. With option B, the manufacturer pays $50  fixed application cost anytime it places an order from the supplier, and the purchase price is $50 per rotor. Operations & Supply Chain department will decide, based on  the EOQ model, which option is better. The following information is also available:

Demand for the motorcycle is constant and 3,025 rotors need to be prepared

annually. Prepared rotors , manufactured or procured, can be stored in inventory, and carrying one rotor for one year costs 2% of its unit cost. Assume 52 weeks in a year. (Note: Round down quantities to integer numbers .)

a) What are the optimal production quantity and total cost with Option A? [6 marks]

b) What are the optimal order quantity and total cost with Option B? [6 marks]

c ) Which option will be recommended? Why? [2 marks]

Question 3 [20 marks]

AlphaStar is a jet ski manufacturer in limited scales . Demand for the jet ski is

variable due to weather seasonality. The table below shows the demand over the next 10 months . Assume no shortage is allowed.

AlphaStar uses a modern navigation equipment in its jet skis and it cannot be

produced inhouse and has to be procured from an external expert supplier. To

procure from this supplier, AlphaStar pays a fixed cost of $750 anytime it places an   order. Purchase cost is $100 per unit. Procured units that are not used in the current month can be stored inhouse for future use in following months . AlphaStar estimates that the inventory carrying cost is equivalent to 2.5% of the product cost per month.

a) The current inventory policy that AlphaStar implements is Lot-for-Lot so that they    can save the storage cost. What are the ordering cost and inventory carrying cost for the next 10 months under this policy? (Use the table below to give your answer.)  [4    marks]

b) A supply chain consultant suggested AlphaStar to use Part-Period Balancing

(PPB) inventory management policy instead. What would be the ordering cost and inventory carrying cost for the next 10 months under this policy? (Use the tables    below for calculations and showing your answer.) [12 marks]

Use as many rows as you need.

c ) Comparing the ordering cost and inventory carrying cost in part (a) and part (b), which one is closer to the outcome of the EOQ model? Why? [4 marks]

Question 4 [7 marks]

Assume the following for average value of inventory in a manufacturing company last year:

The cost of goods sold by this company last year (assume 360 sales days in a year) was $182,530,000.

a) What was the inventory turnover for this company last year? [3 marks]

b) How many days of supply on average the company was holding? [4 marks]

Question 5 [10 marks]

Assume a casting plant that has five separate workstations . Operating cost for each workstation is $200/day. Operating manager of the plant can freely assign a given     casting job to any of the workstations . However, the workstations differ in their

processing times . The table below shows how many days it will take for each

workstation to finish five casting tasks that the manager has recently received.

What is the optimal allocation of the tasks to the workstations? What is the total

operating cost under the optimal allocation? (Use the tables below for calculations and showing your answers .)

Use as many of he  a  les as you nee  .

Question 6 [16 marks]

Jack and Joe run a carwash for heavy vehicles . Every washing job consists of two steps: clean-up (cleaning inside of the vehicle and pre-cleaning its outside); and

pressure washing. Clean-up should always proceed pressure washing, that is ,

first Jack does the clean-up and then Joe does the pressure washing. They have    received six vehicles to wash. The vehicles are different in size, height, cleanness , etc . The table below shows how many hours each vehicle will need for each step.

a) Using the Johnson’s rule, optimally schedule the jobs . [5 marks]

b) Compute the minimum makespan time? (Use the format below for calculations .) [5 marks]

c ) Assume each vehicle has a due time for its washing to be completed by. The table below shows the due time. Furthermore, Joe and Jack decide to work together. That  is , they both perform both steps of a job. Hence, the two steps are combined into a     whole washing task as the table below shows .

Using the DDATE rule, optimally schedule the jobs . (Use the table below.)  [6 marks]

Question 7 [12 marks]

A football (soccer) ball producer currently faces demand for 10,000 balls/year and is currently capable of producing this many in one year. Each ball sells for $30 and

costs $12 to produce. The producer anticipates that there is a 50-50 chance that

demand will increase to 15,000 or decrease to 8,000 next year. The producer is

considering upgrading its production line for next year so it can keep up with the

possible increased demand. The upgrade requires a fixed $70,000 investment now. Depending on how well the upgrade will be laid out, the unit production cost may

remain the same or change after the upgrade. The producer anticipants that with 60% probability, the unit production cost will remain the same, and with 40%

probability it will decrease to $10/ball.

Use the discounted cash flow method with decision tree analysis to suggest whether the producer should implement the upgrade or not. Assume 0.1 discount factor for a