Operations and Supply Chain Management The Core

448 OPERATIONS AND SUPPLY CHAIN MANAGEMENT
8. Why might managers resist buying a more expensive piece of equipment, known
to have a lower TCO, than a less expensive item?
LO13–4 9. Why is it desirable to increase a company’s inventory turnover ratio?
10. Research and compare the inventory turnover ratios of three large retailers:
Walmart, Target, and Nordstrom. Use the same financial Web site for all three,
and compare numbers from the same time frame. What do these ratios tell you?
Are you surprised by what you found?
OBJECTIVE QUESTIONS
LO13–1 1. What term refers to the development and management of supplier relationships
in order to acquire goods and services in a way that helps achieve the immediate
needs of a business?
2. Sometimes a company may need to purchase goods or services that are unique,
very complex, and/or extremely expensive. These would not be routine purchases,
but there may be a number of vendors that could supply what is needed. What
process would be used to transmit the company’s needs to the available vendors,
asking for a detailed response to the needs?
3. Sony Electronics produces a wide variety of electronic products for the consumer
marketplace, such as laptop computers, PlayStation game consoles, and tablet
computers. What type of products would these be considered in the Supply Chain
Uncertainty Framework?
4. One product that Staples sells a lot of is copy paper. According to the Supply
Chain Uncertainty Framework, what supply chain strategy is appropriate for this
product?
LO13–2 5. What is the term used for the act of moving some of a company’s internal
activities and decision-making processes to outside providers?
6. What is the term used for a company moving management of the complete cycle
of material flow to an outside provider?
7. Many bottled water manufacturers have recently worked with their suppliers to
switch over to bottles using much less plastic than before, reducing the amount of
plastic that needs to be transported, recycled, and/or disposed of. What sourcing
practice is this an example of?
8. What term is used to refer to those activities that are the key source of competitive
advantage?
LO13–3 9. What three main categories of costs are considered in figuring the total cost of
ownership?
10. Which category of lifetime product costs are sometimes overemphasized, leading
to a failure to fully recognize the total cost of ownership?
11. One of your Taiwanese suppliers has bid on a new line of molded plastic parts
that is currently being assembled at your plant. The supplier has bid $0.10 per
part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year
2; and 500,000 in year 3. Shipping and handling of parts from the supplier’s
factory is estimated at $0.01 per unit. Additional inventory handling charges
should amount to $0.005 per unit. Finally, administrative costs are estimated at
$20 per month.
Although your plant is able to continue producing the part, the plant would
need to invest in another molding machine, which would cost $10,000. Direct