Baker percent of assets committed to inventory

Reference no: EM13786976

1. Baker Mfg. Inc. (see Table 11.9) wishes to compare its inventory turnover to those of industry leaders, who have turnover of about 13 times per year and 8% of their assets invested in inventory.

a) What is Baker's inventory turnover?

b) What is Baker's percent of assets committed to inventory?

c) How does Baker's performance compare to the industry leaders?

2. Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a "unique-event" risk of 5%, and the probability of a "super-event" that would disable both at the same time is estimated to be 1.5%. Option 2 uses two suppliers located in different countries. Each has a "unique-event" risk of 13%, and the probability of a "super-event" that would disable both at the same time is estimated to be 0.2%.

a) What is the probability that both suppliers will be disrupted using option 1?

b) What is the probability that both suppliers will be disrupted using option 2?

c) Which option would provide the lowest risk of a total shutdown?

3. Consider a three-firm supply chain consisting of a retailer, manufacturer, and supplier. The retailer's demand over an 8-week period was 100 units each of the first 2 weeks, 200 units each of the second 2 weeks, 300 units each of the third 2 weeks, and 400 units each of the fourth 2 weeks. The following table presents the orders placed by each firm in the supply chain. Notice, as is often the case in supply chains due to economies of scale, that total units are the same in each case, but firms further up the supply chain (away from the retailer) place larger, less frequent, orders.

a) What is the bullwhip measure for the retailer?

b) What is the bullwhip measure for the manufacturer?

c) What is the bullwhip measure for the supplier?

d) What conclusions can you draw regarding the impact that economies of scale may have on the bullwhip effect?

4. Monczka Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Handfield has daily shipments of a power-steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard shipment is $250,000. Monczka-Trent has two options: (1) its standard 2-day shipment or (2) a subcontractor who will team drive overnight with an effective delivery of one day. The extra driver costs $175. Handfield's holding cost is 35% annually for this kind of inventory.

a) Which option is more economical?

b) What production issues are not included in the data presented?

Reference no: EM13786976

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