Attempt all the problems.
problem1) What are the four elements of the order cycle? Why is it important to understand and measure the length and variability of each?
problem2) Companies could have three levels of involvement with respect to customer service. What are these, and what is the significance of each?
problem3) What do you mean by “Collaborative” relationships, and how are they relevant to supply chain issues?
problem4) Describe the applications of RFID in retail supply chain.
Toyota has decided to set up regional warehouses where some variants of the Scion would be customized and shipped to dealers on demands. Customizing and shipping on demand would raise production and transportation cost per car by $ 100. Each car costs $20,000 and Toyota has holding cost of 20%. Cars at dealer are owned by Toyota for first 90 days. Therefore for all practical purposes, Toyota owns all inventory, whether at the dealers or at the regional warehouse. Consider a region with five large dealers and 30 small dealers. Toyota has portioned the variants into two groups – popular variants and uncommon variants. Weekly demands for the two type of variants in the two types of dealers is given in the table.
Popular variants Uncommon variants
Mean Standard deviation Mean Standard deviation
Large dealer 50 15 8 5
Small dealer 10 5 2 2
The objective is to provide a 95% cycle service level using continuous review policy. Replenishment lead times for both dealers and regional warehouses are 4 weeks. Customizing and shipping from a regional warehouse to a dealer could be done in a day, and this time could be ignored. Suppose demand to be independent across all dealers.
problem1) How much safety inventory of the popular variant is required at a large or small dealer?
problem2) What is the safety inventory needed if inventory for the popular variant (for both large and small dealers) is centralized at regional warehouse by Toyota?
problem3) What is the safety inventory necessary if inventory for the popular variant at small dealer is centralized at the regional warehouse but that from large dealers is decentralized?
problem4) How should Toyota structure inventories given in regional warehouses?