Week 4

Question 1

Why is it important to manage the supply network?

Answer 1

Managing the supply network improves competitiveness, identifies key links, and helps focus on long-term strategic issues

Question 2

How much can the grocery industry save by using effective logistics strategies?

Answer 2

$30 billion, which is 10% of operating costs

Question 3

How long does a typical box of cereal spend getting from factory to supermarket?

Answer 3

104 days

Question 4

How long does a new car typically take to travel from the factory to the dealership?

Answer 4

15 days

Question 5

What are the key players in a jeans supply network?

Answer 5

Raw material suppliers (cotton, steel for zippers), fabric manufacturers, garment manufacturers, distributors, and retailers.

Question 6

What are the main benefits of analyzing the whole supply chain?

Answer 6

Understanding competitiveness, identifying key links, and focusing on long-term improvements

Question 7

Why is Levi’s more successful than Diesel?

Answer 7

They may have a stronger supply network, better production strategies, or superior distribution centers

Question 8

What are the three strategic design decisions for a supply network?

Answer 8

1) How should the network be configured?

2) Where should each part of the network be located?

3) What physical capacity should each part have?

Question 9

What are key factors in choosing business partners and suppliers?

Answer 9

Fewer key business partners, close proximity to end customers, strong relationships with competitors, and outsourcing considerations

Question 10

How did Dell revolutionize its supply network?

Answer 10

1 computer maker

By cutting out the middleman and using direct selling methods, making them the

Question 11

What is outsourcing in supply networks?

Answer 11

Hiring external companies to perform specific operations or processes

Question 12

What factors determine whether an activity should be outsourced?

Answer 12

Is the activity strategically important?

Does the company have specialized knowledge?

Is the company’s operational performance superior?

Can performance be significantly improved by outsourcing?

Question 13

What are the advantages of keeping activities in-house (make it)?

Answer 13

Better quality control, easier synchronization of schedules, and internal prioritization

Question 14

What are the advantages of outsourcing (buy it)?

Answer 14

Cost reduction, access to supplier expertise, and increased flexibility

Question 15

What are potential risks of outsourcing?

Answer 15

Communication barriers, quality concerns, transportation delays, and dependency on external suppliers

Question 16

What are the key location decision factors?

Answer 16

Investment size, customer demand changes, supply chain changes

Question 17

What are the supply-side factors affecting location decisions?

Answer 17

Labor costs, land costs, energy costs, transportation costs, community factors

Question 18

What are the demand-side factors affecting location decisions?

Answer 18

Labor skills, site suitability, company image, customer convenience

Question 19

What macroeconomic factors influence location decisions?

Answer 19

Political constraints, new market opportunities, technology developments, currency fluctuations

Question 20

What microeconomic factors influence location decisions?

Answer 20

Infrastructure, supplier proximity, staff availability, government policies, business climate

Question 21

What are common location decision methods?

Answer 21

Qualitative Methods: SWOT analysis, Factor Rating Method.

Quantitative Methods: Optimization, heuristics, simulations

Hybrid Methods: Combination of qualitative and quantitative.

Question 22

How does SWOT analysis help in location decisions?

Answer 22

It evaluates strengths, weaknesses, opportunities, and threats of a location to determine suitability

Question 23

What are the steps of the Factor Rating Method for location decisions?

Answer 23

Identify key location factors.

Assign total score points.

Allocate min/max points to each factor.

Score each location factor.

Calculate average scores.

Repeat for all factors.

Sum up location scores.

Choose the highest-scoring location

Question 24

What are the steps of the Factor-Rating Method?

Answer 24

1) Develop a list of relevant location factors.

✅ 2) Assign a weight to each factor.

✅ 3) Develop a scale for each factor.

✅ 4) Score each location for each factor.

✅ 5) Multiply scores by weights for each factor for each location.

✅ 6) Calculate sums for scores for each location.

✅ 7) Recommend the location with the highest point score.

Question 25

ow does the Weighted Factor-Rating Method differ from the regular Factor-Rating Method?

Answer 25

The weighted method assigns different levels of importance to each factor, making it more precise in decision-making.

Question 26

What is the key assumption of the Weighted Factor-Rating Method?

Answer 26

That some factors are more critical than others and should carry more weight in the decision process.

Question 27

What kind of scales can be used for the Weighted Factor-Rating Method?

Answer 27

Scales can range from 1 to 100, 1 to 10, or even 0 (if a location does not meet a criterion at all).

Question 28

What is the Centre of Gravity Method used for?

Answer 28

To determine the optimal location that minimizes transportation costs by considering the weighted coordinates of suppliers and customers.

Question 29

What assumptions does the Centre of Gravity Method make?

Answer 29

The company knows important existing locations and their coordinates. The company knows how much product needs to be shipped to and from each location.

Question 30

Why is the Centre of Gravity Method beneficial?

Answer 30

It minimizes transport costs and optimizes distribution efficiency

Question 31

What does the Hybrid Model combine in location analysis?

Answer 31

It integrates qualitative, quantitative, and critical factors to provide a more comprehensive location decision

Question 32

What are critical factors in the Hybrid Model?

Answer 32

Factors that determine whether a location is immediately eliminated or considered further (e.g., availability of water for a beverage factory).

Question 33

What are the advantages of qualitative location methods?

Answer 33

Simple and easy to use. Can incorporate expert judgment and experience. Useful when numerical data is limited.

Question 34

What are the disadvantages of qualitative location methods?

Answer 34

Subjective and prone to bias. Lacks mathematical precision. Hard to compare multiple locations objectively.

Question 35

What are the advantages of quantitative location methods?

Answer 35

Objective and data-driven. Can handle complex calculations. Provides precise recommendations.

Question 36

What are the disadvantages of quantitative location methods?

Answer 36

Requires accurate numerical data. Can be computationally intensive. May overlook qualitative factors like culture or politics.

Question 37

What are the advantages of the Hybrid Model?

Answer 37

Combines both qualitative and quantitative approaches. Accounts for both subjective and objective factors. Considers critical factors to eliminate unsuitable locations early.

Question 38

What are the disadvantages of the Hybrid Model?

Answer 38

More complex than individual methods. Requires extensive data collection. Needs careful weighting of factors for accuracy.

Question 39

What are the advantages of quantitative location models?

Answer 39

Objective and data-driven – reduces bias in decision-making. Mathematically precise – allows for accurate location comparisons. Handles large amounts of data efficiently. Helps minimize costs and optimize performance. Can be used for complex decision-making scenarios. Provides a structured, repeatable process. Useful for large-scale logistics and supply chain decisions. Integrates well with software and optimization tools. Enables forecasting and scenario planning. Can be automated for real-time decision-making.

Question 40

What are the disadvantages of quantitative location models?

Answer 40

Requires extensive data collection – accurate input data is critical. Computationally intensive – may require specialized software. May not account for qualitative factors like culture, politics, or brand reputation. Assumptions may not always reflect real-world conditions. Data inaccuracies can lead to incorrect results. Not always flexible for dynamic market conditions. Difficult to use for small businesses with limited resources. Can be costly to implement and maintain. Some models lack adaptability to sudden business changes. May require expert interpretation to make the right decision.

Question 41

What are the advantages of hybrid location models?

Answer 41

Combines both qualitative and quantitative approaches. Balances subjective and objective decision factors. Accounts for both financial and non-financial elements. Eliminates unsuitable locations early using critical factors. More adaptable to real-world complexities. Provides a comprehensive decision-making framework. Useful for industries with both logistical and customer-service priorities. Helps identify risks that purely quantitative models might miss. Allows for expert judgment alongside data-driven insights. Can improve decision accuracy by considering multiple perspectives.

Question 42

What are the disadvantages of hybrid location models?

Answer 42

More complex than individual models. Requires more data collection and analysis. Needs careful weighting of factors for accuracy. May take longer to implement compared to simple models. Finding the right balance between qualitative and quantitative factors can be difficult. Heavily reliant on the quality of expert judgment. Potential for subjectivity in assigning weights to different factors. Can be expensive due to multiple analysis layers. May require specialized software for implementation. Not always suitable for time-sensitive decision-making.