Designing and Managing the Supply Chain, Chapter 1 Questions

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PROC 5850

Week 1 Homework: Ch1 Question 1,2,6

1. Consider the supply chain for a domestic automobile.
a. What are the components of the supply chain for an automobile?

The components of the supply chain for an automobile are as follows:

First you have the supplying industries. These include components such as steel and other metals, rubber, electronics, plastic, glass, and textiles. These raw components are fabricated into car bodies, mechanical and electrical subcomponents as well as engines and transmissions. These subassemblies are assembled during final assembly and then distributed to dealership for the consumer market.

b. What are the different firms involved in the supply chain?

The following are a selection of firms involved in the supply chain: Suppliers, Manufactures, Transportation companies, Warehouses and distributions centers, sub-contractors, dealerships, and customers.

c. What are the objectives of these firms?

The simple objective of these firms is to maximize market share and make a profit. Every challenge to operate the supply chain supports these two primary goals.

d. Provide examples of conflicting objectives in this supply chain?

The supplying industries would like the automobile manufacture to commit themselves to purchasing large quantities with stable volumes with flexible (long-lead) dates. On the manufacture’s side, they need to be flexible to their customers’ need and the change in demands. So what we have is a direct conflict of interest between the suppliers’ and manufactures’ desire for flexibility. The ability to optimally match supply and demand is just as much an art and it is a science. Other conflicts arise with transportation of smaller batches versus larger batches of supplies. Usually the smaller and faster a batch of supply is required, the cost of transportation increase; another conflicting objective.

e. What are the risks that rare or unexpected events pose to this supply chain?

An unexpected risk such as a natural disaster can bring the supply chain to a stand still. However, such events can almost never be managed. There are some challenges such as matching supply and demand risks, lead times, forecasts, transportation times and costs, which can be “managed” or operational risk management used to minimize risks. 2. Consider a consumer mortgage offered by a bank.

f. What are the components of the supply chain for a mortgage?

There are several components of the supply chain for a consumer mortgage offered by a bank.

First, there are marketing companies that solicit to prospective customers. Secondly, the bank needs to be able to evaluate potential customers by using credit-reporting companies. Thirdly, usually a third party bank that extends the mortgage loans. Lastly, the bank requires mortgage brokers that distribute the loans.

g. Is there more than one firm involved in the supply chain? What are the objectives of the firm or firms?

Marketing companies try to increase the responses from prospective homebuyers to maximize their returns. The banks try to find customers that are a relatively low risk, on-time payments, and low average maturity date; i.e., maximize profits. The mortgage broker is all about maximizing his commission of the sell of the property.

h. What are the similarities between product and service supply chains, what are the differences?

Both product and service supply chains provide a need. The difference is the type of service, instead of the physical product… faster, better, cheaper all apply.

Some of the differences between the two types of supply chains are as follows: * With the product supply chain there is both the flow of physical and informational products. However, in the service supply chain, the product is mostly information. * Unlike the service supply chain, inventory and transportation of goods are a major costs of...
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