Chapter 10 Supply Chain Design

Question 1

Average aggregate inventory value

Answer 1

The total average value of all items held in inventory for a firm

Question 2

Weeks of supply

Answer 2

An inventory measure obtained by dividing the average aggregate inventory value by sales per week at cost

Question 3

Inventory turnover

Answer 3

An inventory measure obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year

Question 4

Centralized placement

Answer 4

Keeping all the inventory of a product at a single location such as a firm’s manufacturing plant or a warehouse and shipping directly to each of its customers

Question 5

Inventory pooling

Answer 5

A reduction in inventory and safety stock because of the merging of variable demands from customers

Question 6

Forward placement

Answer 6

Locating stock closer to customers at a warehouse, DC, wholesaler, or retailer

Question 7

Channel assembly

Answer 7

The process of using members of the distribution channel as if they were assembly stations in the factory

Question 8

Outsourcing

Answer 8

Paying suppliers and distributors to perform processes and provide needed services and materials

Question 9

Make or buy decision

Answer 9

A managerial choice between whether to outsource a process or do it in house

Question 10

Backward integration

Answer 10

A firm’s movement upstream toward the sources of raw materials, parts, and services through acquisitions

Question 11

Forward integration

Answer 11

Acquiring more channels of distribution, such as distribution centers (warehouses) and retail stores, or even business customers

Question 12

Offshoring

Answer 12

A supply chain strategy of moving processes to another country

Question 13

Supply chain design

Answer 13

Designing a firm’s supply chain to meet the competitive priorities of the firm’s operations strategy