Chapter 12
Determining Optimal Level of Product Availability
True/False 1. The level of product availability is also referred to as the customer service level.
Answer: True Difficulty: Easy
2. A supply chain can use a high level of product availability to improve its
responsiveness and attract customers. Answer: True
Difficulty: Moderate
3. A high level of product availability requires less inventory, which will keep costs
down for the supply chain. Answer: False
Difficulty: Moderate
4. A supply chain needs to achieve a balance between the level of availability and
the cost of inventory that maximizes supply chain revenues. Answer: False Difficulty: Hard
5. Whether the optimal level of availability is high or low depends on where a
particular company believes they can maximize profits. Answer: True
Difficulty: Moderate
6. The cost of overselling is denoted by Co and is the loss incurred by a firm for
each unsold unit at the end of the selling season. Answer: False Difficulty: Easy
7. The cost of understocking is denoted by Cu and is the margin lost by a firm for
each lost sale because there is no inventory on hand. Answer: True
Difficulty: Moderate
8. The cost of underselling is a key factor that influences the optimal level of
product availability. Answer: False
Difficulty: Moderate
9. The costs of overstocking and understocking have a direct impact on both the
optimal cycle service level and profitability. Answer: True
10.
Difficulty: Easy
As the ratio of the cost of overstocking to the cost of understocking gets smaller, the optimal level of product availability decreases. Answer: False Difficulty: Hard
With reduced demand uncertainty, a supply chain manager can better match supply and demand by reducing both overstocking and understocking. Answer: True
Difficulty: Moderate
An increase in forecast accuracy increases both the overstocked and understocked quantity and decreases a firm’s profits. Answer: False Difficulty: Easy
Supply chain managers are able to increase their forecast accuracy as lead times decrease, which allows them to better match supply with demand and increase supply chain profitability. Answer: True Difficulty: Easy
If quick response allows multiple orders in the season, profits increase and the overstock quantity increases. Answer: False Difficulty: Hard
Quick response results in the manufacturer making a lower profit in the short term if all else is unchanged. Answer: True Difficulty: Hard
There is a cost associated with postponement because the production cost using postponement is typically lower than the production cost without it. Answer: False Difficulty: Easy
Postponement is valuable for a firm that sells a large variety of products with demand that is independent and comparable in size. Answer: True
Difficulty: Moderate
Postponement may increase overall profits for a firm if a single product
contributes the majority of the demand because the increased manufacturing expense due to postponement outweighs the small benefit that aggregation provides in this case. Answer: False Difficulty: Hard
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Tailored postponement allows a firm to increase its profitability by only
postponing the uncertain part of the demand and producing the predictable part at a lower cost without postponement. Answer: True
Difficulty: Moderate
In tailored sourcing, firms use a combination of two supply sources, one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost. Answer: False
Difficulty: Moderate
Tailored sourcing may be volume-based or product-based depending on the source of uncertainty. Answer: True Difficulty: Easy
In volume-based tailored sourcing, the predictable part of a product’s demand is produced at a flexible facility, whereas the uncertain portion is produced at an efficient facility. Answer: False
Difficulty: Moderate
In product-based tailored sourcing, low-volume products with uncertain demand are obtained from a flexible source, while high-volume products with less demand uncertainty are obtained from an efficient source. Answer: True Difficulty: Easy
A contract may contain specifications regarding quantity, price, time, and quality. Answer: True Difficulty: Easy
Double marginalization refers to the fact that the total supply chain is divided between the manufacturer and the retailer. Answer: True
Difficulty: Moderate
Manufacturers can use buy-back contracts to increase their own profits as well as total supply chain profits. Answer: True
Difficulty: Moderate
Buybacks encourage retailers to increase the level of product availability. Answer: True Difficulty: Easy
Revenue sharing with a lower wholesale price allows retailers but not manufacturers to increase their profit. Answer: False
Difficulty: Moderate
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Revenue sharing encourages retailers to increase the level of product availability. Answer: True Difficulty: Easy
Manufacturers can use contracts with quantity flexibility to increase their own profits at the expense of total supply chain profits. Answer: False Difficulty: Easy
With vendor-managed inventory (VMI), the control of the replenishment decision moves to the manufacturer instead of the retailer. Answer: True Difficulty: Easy
VMI can allow a manufacturer to increase their profits as well as profits for the entire supply chain by increasing some of the effects of double marginalization. Answer: False Difficulty: Easy
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Multiple Choice 1. The level of product availability
a. is also referred to as the customer service level. b. is an important component of any supply chain’s responsiveness. c. increases revenues for the supply chain by increasing sales. d. All of the above are true. e. Only a and b are true. Answer: e
Difficulty: Hard
2. A supply chain can use a high level of product availability to
a. improve its responsiveness and attract customers.
b. reduce costs for the supply chain by reducing inventories. c. increase revenues for the supply chain by increasing sales. d. All of the above are true. e. Only a and c are true. Answer: e
Difficulty: Easy
3. A high level of product availability requires
a. large inventories and tends to raise costs for the supply chain. b. large inventories and tends to reduce costs for the supply chain. c. small inventories and tends to raise costs for the supply chain. d. small inventories and tends to reduce costs for the supply chain. e. none of the above
Answer: a
Difficulty: Easy
4.
A supply chain needs to achieve a balance between the level of availability and the cost of inventory that a. maximizes supply chain revenues. b. minimizes supply chain costs. c. maximizes supply chain profitability. d. maximizes supply chain availability. e. all of the above Answer: c
Difficulty: Moderate
Whether the optimal level of product availability is high or low depends on where a particular company believes they can a. minimize cost. b. maximize revenue. c. maximize profits. d. maximize product availability. e. all of the above Answer: c
Difficulty: Moderate
The key factors that influence the optimal level of product availability do not include a. the cost of overstocking the product. b. the cost of stocking the product. c. the cost of understocking the product. d. All of the above are key factors. e. None of the above are key factors. Answer: b
Difficulty: Moderate
The loss incurred by a firm for each unsold unit at the end of the selling season is a. the cost of overstocking the product. b. the cost of stocking the product.
c. the cost of understocking the product. d. the cost of overselling the product. e. the cost of underselling the product. Answer: a
Difficulty: Moderate
The margin lost by a firm for each lost sale because there is no inventory on hand is
a. the cost of overstocking the product. b. the cost of stocking the product.
c. the cost of understocking the product. d. the cost of overselling the product. e. the cost of underselling the product. Answer: c
Difficulty: Moderate
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供应链管理Homework：ChopraChapter 12_NEW
