CHAPTER-11s : Discussion Questions
1. What is the difference between “unique-event” risk and “super-event” risk?
In unique-event, only one supplier is affected like when the supplier went bankrupt while in a super-event, all suppliers are affected like if there is a natural catastrophe.
2. If the probability of a “super-event” increases, does the “unique-event” risk increase or decrease in importance? Why?
The unique-event risk decrease in importance because the probability that all suppliers are going to be affected is very likely so it no longer matters whether are affected by own unique events.
3. If the probability of a “super-event” decreases, what happens to the likelihood of needing multiple suppliers?
The likelihood of needing more supplier increases because the probability of a super event decreases which means the focus is on what will be the effect on each supplier by their own unique events. In situations like this, there will more suppliers to choose from and the likelihood that all of them will fail altogether is very low.
4. Describe some ramifications of the bullwhip effect.
Bullwhip Effect creates unstable production and results in expensive capacity change adjustments in the following:
- Overtime
- Subcontracting
- Extra inventory
- Back orders
- Hiring and firing of workers
- Equipment additions
- Equipment underutilization
- Longer lead times
- Obsolescence of over-produced items
5. Describe causes of the bullwhip effect and their associated remedies
- Demand forecast error – share demand information throughout the supply chain
- Order batching – channel coordination: determine lot sizes as though the supply chain was one company
- Price fluctuations – price stabilization
- Shortage gaming – allocate orders based on past demand
6. Describe how the bullwhip measure can be used to analyze supply chains.
Bullwhip measure is equal to variance of orders over variance of demand and this variance can affect smoothness of the supply chain process.
7. Describe some potentially useful categories to include in a factor-weighting analysis for supplier selection.
- Engineering/Innovation skills
- Production process capability
- Distribution capability
- Quality performance
- Facilities/location
- Financial strength
- Information systems
- Integrity
8. Describe some potential pitfalls in relying solely on the results of a factor-weighting analysis for supplier selection.
As factor-weighting evaluation uses scores for objectivity, certain degree of subjectivity still remains in the process. Factors assigned an importance weight and each potential supplier is scored accordingly (e.g. Very good = 8).
9. Describe some disadvantages of using a slow shipping method.
There could be delivery and payment delay. Also, the money can be invested longer since the product is in transit in a long period of time.
10. Besides warehouse layout decisions, what are some other applications where ranking items according to “bang/buck” might make sense?
It could be used in warehouse storage, hospital layouts and other infrastructure layouts.