Section - 'A'

Q. 1 (A).

Supplier
Cycle View of a Supply Chain
 Each cycle occurs at the interface between two successive stages
 Customer order cycle (customer-retailer)
 Replenishment cycle (retailer-distributor)
 Manufacturing cycle (distributor-manufacturer)
 Procurement cycle (manufacturer-supplier)
 Figure 1.3
 Cycle view clearly defines processes involved and the owners of each process. Specifies the roles and
responsibilities of each member and the desired outcome of each process.
Q. 1 (B). The Planning Process

Prod
u
Capaction
Inven city
tory Mark
Proc et
ur
Suppement Cust ing
perfo lier demaomer
rman nd Finan
c
Mana ce Cashe
gem f low
Retu ent
inve r n o n Hum
Capi stment an
Manp resourc
t al Agg es
prod regate plann ower
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plan ion Engi
ne
Desi ering
compgn
letion

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Master production
schedule

Q. 1 (C).
 5-

Available information for design decision

 Location of supply sources and markets
 Location of potential facility sites
 Demand forecast by market
 Facility, labor, and material costs by site
 Transportation costs between each pair of sites
 Inventory costs by site and as a function of quantity
 Sale price of product in different regions
 Taxes and tariffs
 Desired response time and other service factors

Q. 1 (D). Modes of Transportation and their Performance Characteristics

• Air
• Package carriers
• Truck
• Rail
• Water
• Pipeline
• Intermodal
Role of IT in Transportation
• The complexity of transportation decisions demands use of IT systems
• IT software can assist in:
– Identification of optimal routes by minimizing costs subject to delivery constraints
– Optimal fleet utilization
– GPS applications

Q. 1 (E). Impact of E-Business on Responsiveness

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Enables a company to gain new revenues or to protect existing revenues.
 Direct Sales to Customers.
 24 Hour access from any location.
 Wider Product portfolio and Information Aggregation. Personalization/Customization.
 Faster time to Market.
 Flexible pricing, product portfolio, and promotions Price and Service discrimination
 Efficient funds Transfer Lower stock out levels.
 Convenience/automated processes

Section - 'B'
Q. 2. Modes of Transportation and their Performance Characteristics
• Air
• Package carriers
• Truck
• Rail
• Water
• Pipeline
• Intermodal
Air
•
Cost components
– Fixed infrastructure and equipment
– Labor and fuel
– Variable – passenger/cargo
• Key issues
– Location/number of hubs
– Fleet assignment
– Maintenance schedules
– Crew scheduling
– Prices and availability
Package Carriers
• Small packages up to about 150 pounds
• Expensive
• Rapid and reliable delivery
• Small and time-sensitive shipments
• Provide other value-added services
• Consolidation of shipments a key factor
Truck
• Significant fraction of the goods moved
• Truckload (TL)
– Low fixed cost
– Imbalance between flows
• Less than truckload (LTL)
– Small lots
– Hub and spoke system
– May take longer than TL
Rail
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 • Move commodities over large distances
• High fixed costs in equipment and facilities
• Scheduled to maximize utilization
• Transportation time can be long
– Trains ‘built’ not scheduled
Water
• Limited to certain geographic areas
• Ocean, inland waterway system, coastal waters
• Very large loads at very low cost
• Slowest
• Dominant in global trade
• Containers
Pipeline
• High fixed cost
• Primarily for crude petroleum, refined petroleum products, natural gas
• Best for large and stable flows
• Pricing structure encourages use for predicable component of demand
Intermodal
• Use of more than one mode of transportation to move a shipment
• Grown considerably with increased use of containers
• May be the only option for global trade
• More convenient for shippers – one entity
• Key issue – exchange of information to facilitate transfer between different modes
Design Options for Transportation
• Direct shipment network to single destination
• Direct shipping with milk runs
• All shipments via intermediate distribution centre with storage
• All shipments via intermediate transit point with cross docking
• Shipping via DC using milk runs
Direct Shipment Network to Single Destination

Direct Shipping with Milk Runs

All Shipments via Intermediate Distribution Center with Storage

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All Shipments via Intermediate Transit Point with Cross-Docking
• Suppliers send their shipments to an intermediate transit point
• They are cross-docked and sent to buyer locations without storing them

Shipping via DC Using Milk Runs

Q. 3.

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 Section - 'C'
Q. 4. Case Study
Bhavana Synthetics Limited is deciding on a location for the production of synthetics.After a study of critical
strategic issues, the choice has narrowed down to three possible places named site ‘X’, site ‘Y’ and site ‘Z’. For
its planned operating capacity, Bhavana estimates the costs at the different locations. The estimates on
various categories are shown in Table 4. The possible locations are also evaluated for important qualitative
factors such as community attitude and employee housing facilities. The weight assigned for community
attitude and employee housing facilities are 0.4 and 0.6 respectively. Suggest the desirable site for locating the
plant.
Table 4
Variables Site X Site Y Site Z
Total Initial Investment(Rs.) 2,00,000 2,00,000 2,00,000
Total Expected Sales(Rs.) 2,50,000 3,00,000 2,50,000
Distribution Expenses(Rs.) 40,000 40,000 75,000
Raw Material Expenses(Rs.) 70,000 80,000 90,000

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 Power and Water Supply Expenses(Rs.) 40,000 30,000 20,000
Wages and Salaries(Rs.) 20,000 25,000 20,000
Other Expenses(Rs.) 25,000 40,000 30,000
Community Attitude Indifferent Want Business Indifferent
Employee Housing Facilities Poor Excellent Good

SOLUTION:

Rate of return (RoR), % = (Total sales-Total expenses)× 100/Total investment

RoR for Site X = (2,50,000-1,95,000)× 100/2,00,000 = 27.5%

RoR for Site Y = (3,00,000-2,15,000)× 100/2,00,000 = 42.5%
RoR for Site Z= (2,50,000-2,35,000)× 100/2,00,000 =7.5%

Location Y can be selected because of higher rate of return.

Qualitative Factors:
By Taking Scale: 1 to 5 (1 = poor, 2 = Indifferent, 3 = want business, 4 = good, 5 = Excellent)
Factor Site 'X' Site 'Y' Site 'Z'
Community Attitude Indifferent (2) Want Business (3) Indifferent (2)
Employee Housing Poor (1) Excellent (5) Good (4)
Facilities
Total 3 8 6
Location Y can be selected because of high business favorable.

Q. 5. Case Study

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