CII Institute of Logistics
Post Graduate Diploma in Supply Chain Management
Semester IV – Assignment II
Supply Chain And Logistics Strategies
Answer all questions with explanation in not more than 20 words
1) “An industry’s competitive advantage cannot be built or sustained solely by market
orientation” – Porter.
True/False
2) “WTO agreements ensure to provide enormous opportunities in areas of comparative
advantage”.
True/False
3) The formal structure of the organization shapes the way in which supply chain decisions
are made. The culture, the informal structure and style of the company have no part to
play.
True/False
4) Distinctive competence means relative superiority in skills & resources.
True/False
5) Support activities of value chain are manufacturing, marketing, sales and service.
True/False
6) Experience curve suggests that increasing a company’s product-volume and market share
will bring cost advantages over the competition.
True/False
7) Global logistics capabilities must include only international transportation.
True/False
8) A multi division structure constitutes functional, product and matrix structure and such a
structure will always be ideal for global operations.
True/False
9) At the highest level, performance of a distribution network should be evaluated along
two dimensions:
(i) Customer needs that are met
(ii) Cost of meeting customer needs
True/False
10) Supply chain decision phases may be categorized as design, planning or operational
depending on the time over which the decisions made in a given phase apply.
True/False
Section B
Answer any three questions. Answers should indicate conceptual clarity.
1) With the help of a line diagram, indicate enterprise connectivity for a typical project life
cycle starting with feasibility study and ending with procurement and contracts using
LANs and WANs across a company in India. Assume suitably links have been established
between the company in India and engineering set-up in Norway- (as an example) for
transfer of drawings and 3-D Models. From the above draft the project life cycle – value
chain.
2) a) Briefly discuss the three objectives for developing and implementing performance
measurement system.
b) Why is it critical that logistics reporting systems reflect dynamic rather than static
performance?
3) a) The manager at the supermarket would like to decrease the lot size without increasing
the costs he incurs. What actions can he take to achieve this objective?
b) When are quantity discounts justified in a supply chain?
4) a) What differences in the retail environment may justify the fact that the fast moving
consumer goods supply chain in India has far more distributors than in the Unites States?
b) What type of networks is best suited to highly differentiated products?
Section C
Read the case study, analyse it and proceed to answer the questions given below:
Mintendo Game Girl
It is late June, and Sandra, head of operations at Mintendo, and Bill, head of sales of We ‘R’ Toys,
are about to get together to discuss production and marketing plans for the next six months.
Mintendo is the manufacturer of the popular Game Girl handheld electronic game that is sold
exclusively through We ‘R’ Toys retail stores. The second half of the year is critical to Game Girl’s
success because a majority of their sales occur during the holiday shopping period.
Sandra is worried about the impact that the upcoming holiday surge in demand will have on her
production line. Costs to subcontract assembly of the Game Girls are expected to increase and
she has been trying to keep costs down given that her bonus depends on the level of production
costs.
Bill is worried about competing toy stores gaining share during the Christmas buying season. He
has seen many companies lose their share by failing to keep prices in line with the performance
of their products. He would like to maximize the Game Girl market share.
Both Sandra and Bill’s teams produce a joint forecast of demand over the next six months, as
shown in Table below:
We ‘R’ Toys sells Game Girls for Rs. 50 a piece.
At the end of June, the company has an
inventory of 50,000 Game Girls. Capacity of the production facility is set purely by the number of
workers assembling the Game Girls. At the end of June, the company has a work force of 300
employees each of whom work eight hours of non-overtime at Rs. 15/hour for twenty days each
month. Work rules require that no employee work more than forty hours of over-time a month.
The various costs are shown in Table 2.
Table 1
Demand for Game Girls
Month
July
August
September
October
November
December
Demand Forecast
1,00,000
1,10,000
1,30,000
1,80,000
2,50,000
3,00,000
Table 2
Costs for Mintendo/We ‘R’ Toys
Item
Material cost
Inventory Holding cost
Marginal cost of a stock-out
Hiring and training costs
Layoff cost
Labor hours required
Regular time cost
Cost
21 / unit
4 / unit / month
10 / unit / month
3000 / worker
5000 / worker
.25 / unit
15.00 / hour
Over time cost
Cost of Subcontracting
22.50 / hour
18 / unit
Sandra, concerned about controlling costs during the periods of surging demand over the
holidays proposes to Bill that the price be lowered by Rs. 5 for the month of September. This
would likely increase September’s demand by 50 percent due to new customers attracted to
Game Girl. Additionally, 30 percent of each of the following two months of demand would occur
in September as forward buys. She strongly believes that this leveling of demand will help the
company.
Bill counters with the idea of offering the same promotion in November, during the heart of the
buying season. In this case, the promotion increases November’s demand by 50 percent due to
new customers attracted to Game Girl. Additionally, 30 percent of December’s demand would
occur in November as forward buying. Bill wants to increase revenue and sees no better way to
do this than to offer a promotion during the peak season.
Questions:
1) Which option delivers the maximum profit for the supply chain: Sandra’s plan, Bill’s plan,
or no promotion plan at all?
2) How does the answer change if a discount of Rs. 10 must be given to reach the same
level of impact that the Rs. 5 discount received?
3) Suppose Sandra’s fears about increasing out-sourcing costs come to fruition and the cost
rises to Rs. 22/unit for subcontracting. Does this change the decision when the discount
is Rs. 5?
Note: Your answer should reveal your analytical ability and conceptual clarity.
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