w8 - Distribution Strategy

Question 1

What does the Cost, Insurance, and Freight (CIF) pricing scheme entail?

Answer 1

The seller bears the cost of maritime freight, cost of insurance, and other associated costs

Question 2

In the Delivered Duty Unpaid (DDU) pricing scheme, who is responsible for import duties?

Answer 2

The buyer

Question 3

What is the objective of distribution network planning?

Answer 3

Minimize the cost of distribution while maintaining required service levels, flexibility, delivery targets, and inventory requirements

Question 4

Fill in the blank: The _______ price includes manufacturing cost plus the manufacturer’s margins.

Answer 4

Ex-factory

Question 5

What are the three hierarchical steps of network planning?

Answer 5

• Network design
• Inventory positioning
• Resource allocation

Question 6

What does inventory positioning include?

Answer 6

• Identifying stocking points
• Selecting facilities that produce to stock
• Facilities that produce to order

Question 7

What must network planning consider regarding demand?

Answer 7

Demand and demand uncertainties at different points of sales

Question 8

True or False: The ex-factory price includes all transportation costs to the destination.

Answer 8

False

Question 9

What is the typical planning horizon for network design?

Answer 9

A few years

Question 10

What does resource allocation in network planning include?

Answer 10

• Determining production and packaging facility
• Plants sourcing strategies
• Capacity to meet seasonal demand

Question 11

What costs are included in warehouse costs?

Answer 11

• Fixed costs
• Storage costs
• Handling costs

Question 12

Fill in the blank: The _______ margin is the percentage added by the distributor after costs.

Answer 12

Distributor’s

Question 13

What is the purpose of matching supply and demand under uncertainty in network planning?

Answer 13

To utilize available resources efficiently

Question 14

What are the components of transportation costs in network planning?

Answer 14

• Transportation costs
• Transportation lead times

Question 15

What is a key factor in selecting suppliers during network planning?

Answer 15

Supplier locations

Question 16

Fill in the blank: The _______ includes all costs until the destination in the Delivered Duty Paid (DDP) scheme.

Answer 16

Seller

Question 17

What is a significant consideration for network planning related to suppliers?

Answer 17

Supply capacities and constraints

Question 18

What type of network design connects each source directly to each destination?

Answer 18

Point-to-point distribution network

Question 19

What is a hub-and-spoke design used for?

Answer 19

High frequency or high volume of transportation

Question 20

What is a centralized inventory system?

Answer 20

Manages bulk inventory at centralized hubs or warehouses

Question 21

What is an advantage of centralized inventory systems?

Answer 21

Reduces overall system-level inventory

Question 22

True or False: The hub-and-spoke design is effective when supply and demand are localized.

Answer 22

False

Question 23

What are the two types of inventory positioning?

Answer 23

Centralized and decentralized.

Question 24

What is a centralized inventory system?

Answer 24

It manages the bulk of the inventory at centralized hubs or warehouses, supplying retail stores on a need basis.

Question 25

What are the advantages of centralized inventory?

Answer 25

* Acts as a hub of distribution and manages purchasing * Coordinates information flow * Manages material flow with multiple links

Question 26

What are the disadvantages of centralized inventory?

Answer 26

Lacks responsiveness and agility.

Question 27

What is decentralized inventory positioning preferred for?

Answer 27

When variety is not a major concern and flexibility and responsiveness are important.

Question 28

What are the primary differences of international distribution from domestic distribution?

Answer 28

* Relatively higher distances * Risk of currency fluctuation * Additional steps required for border crossing * Tariffs and duties add to costs

Question 29

What are trade agreements in the context of international distribution?

Answer 29

Considerations for network designs that may affect packaging, labeling, and the number of agents involved.

Question 30

What is the definition of Network Design in supply chain management?

Answer 30

An important aspect that often involves complex and multiple interdependent factors.

Question 31

What is remanufacturing?

Answer 31

The process of collecting used products, classifying them, refurbishing, and selling them at a lower price than new products.

Question 32

What are the motivations for remanufacturing?

Answer 32

* Extend the usable life of products * Generate economic rents from remanufactured products * Reduce cost of raw materials and inputs

Question 33

What are the environmental and regulatory motivations for remanufacturing?

Answer 33

* Reducing landfills * Extend Producer Responsibility (EPR) regulations

Question 34

What is a challenge of remanufacturing related to product life cycles?

Answer 34

Tracing products throughout their life cycle.

Question 35

What is the impact of high variability in quality of returned cores?

Answer 35

It prohibits standardization of the manufacturing process.

Question 36

What are the advantages of using existing manufacturing facilities for remanufacturing?

Answer 36

No further major investment required.

Question 37

What is a disadvantage of investing in specialized manufacturing units for remanufacturing?

Answer 37

Requires major new investment.

Question 38

What is Green Supply Chain Management (GSCM)?

Answer 38

The process of incorporating environmental concerns into supply chain management.

Question 39

What are traditional motivations for green supply chains?

Answer 39

* Regulatory Compliance * Minimize Risk * Maintain Health * Protect the Environment

Question 40

What are emerging values for green supply chains?

Answer 40

* Reduce Cost * Boost Employee Satisfaction * Improve Productivity * Improve Brand Equity * Support Innovation * Enable Growth

Question 41

What is the total carbon footprint of a product?

Answer 41

The total amount of greenhouse gases emitted directly and indirectly during its life cycle.

Question 42

What is the definition of the carbon footprint of a product?

Answer 42

Total amount of greenhouse gases emitted by a product, factory, or supply chain.

Question 43

List the sources of carbon footprint in supply chains.

Answer 43

* Manufacturing processes * Transportation of products * Energy consumption * Usage * Disposal of products

Question 44

What are some initiatives to improve the environmental friendliness of supply chains?

Answer 44

* Choose environmentally friendly materials * Choose transportation modes that use cleaner energy * Transit in bulk as much as possible * Minimize packaging requirements * Reduce transit distances

Question 45

What are additional initiatives to improve environmental friendliness in supply chains?

Answer 45

* Consolidate logistics of multiple locations * Closer contact with customers * Build a robust reverse logistics network * Leasing of products with repurchase options * Use newer and more energy-efficient technologies * Collaborate with suppliers who focus on green operations

Question 46

True or False: Green supply chain management is becoming less important.

Answer 46

False

Question 47

What is vertical integration in supply chain management?

Answer 47

Supply chain integration achieved by financial ownership of assets through legal contractual agreements.

Question 48

Provide an example of forward vertical integration.

Answer 48

Zara owning and operating its own retail stores.

Question 49

What distinguishes virtual integration from vertical integration?

Answer 49

Virtual integration is achieved through long-term relationships and information sharing, not asset ownership.

Question 50

What is a key enabling factor of virtual integration for Dell?

Answer 50

The modular design of the products.

Question 51

List the advantages of vertical integration.

Answer 51

* Greater control over supply chain entities * Greater access to scarce resources * Reduces dependence on suppliers

Question 52

What are the disadvantages of vertical integration?

Answer 52

* Expensive to reverse * Greater financial risks * Demand fluctuations can be detrimental * Often reduces flexibility * Technology changes can make assets obsolete

Question 53

What are the advantages of virtual integration?

Answer 53

* Provides benefits of vertical integration without financial risks * Enables partners to work as an integrated entity * Minimizes inventory levels while providing high frontend variety

Question 54

What challenges are associated with virtual integration?

Answer 54

* Requires long-term commitment from all partners * Creation of a shared information technology infrastructure

Question 55

What makes IT integration difficult in vertical integration?

Answer 55

Variation in IT capabilities and infrastructure across partners.

Question 56

Fill in the blank: A key enabling factor of virtual integration is the _______.

Answer 56

[modular design of products]

Question 57

What is a significant challenge in redesigning products for virtual integration?

Answer 57

It takes time and investment.