Question 1

Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages.

Accepted Answer

This statement is true. Supply chain coordination involves the alignment of different stages of the supply chain towards a common goal while considering the impact of each stage on other stages. Each stage of the supply chain must work together to achieve efficient supply chain operations.

Question 2

Supply chain coordination improves if all stages of the chain take actions that are aligned and together increase total supply chain surplus.

Accepted Answer

Supply chain coordination involves various stages of the chain working together to increase overall supply chain surplus. This involves each stage taking coordinated actions that are aligned to achieve this goal. Therefore, the statement is true.

Question 3

A reduction of lot sizes increases the amount of fluctuation that can accumulate between any pair of stages of a supply chain,thus increasing the bullwhip effect.

Accepted Answer

A reduction of lot sizes actually helps in reducing the bullwhip effect because it allows for more frequent ordering in smaller quantities, which can lead to a better match between supply and demand, thus reducing fluctuations.

Question 4

Pricing obstacles refer to situations in which the pricing policies for a product lead to an increase in variability of orders placed.

Accepted Answer

Pricing obstacles can create uncertainty and inconsistencies in customer demand, leading to fluctuations in order quantities. This can happen when a product is priced too high, making it unaffordable for certain customers, or when pricing is too complex or confusing, causing customers to hesitate or delay their purchasing decisions. These obstacles can ultimately affect a company's revenue and profitability.

Question 5

The bullwhip effect moves a supply chain away from the efficient frontier by increasing cost and decreasing responsiveness.

Accepted Answer

The bullwhip effect is a phenomenon in supply chain management where fluctuations in customer demand increase as they move up the supply chain from retailers to manufacturers. This leads to higher inventory costs and lower responsiveness to customer demand, thereby moving the supply chain away from the efficient frontier. Therefore, the statement is true.

Question 6

Behavioral obstacles are often related to the way the supply chain is structured and reduce the bullwhip effect.

Accepted Answer

Behavioral obstacles are related to human factors such as miscommunication or misinterpretation of demand, which can actually increase the bullwhip effect by causing overreaction to demand signals.

Question 7

When a single stage controls replenishment decisions for the entire chain,the problem of multiple forecasts is magnified and coordination within the supply chain follows.

Accepted Answer

When a single stage controls replenishment decisions for the entire chain, it actually reduces the problem of multiple forecasts because all decisions are based on a single forecast rather than multiple, potentially conflicting ones from each stage. Coordination within the supply chain is simplified, not necessarily magnified, due to centralized decision-making.

Question 8

Managers can encourage the bullwhip effect by devising pricing strategies that encourage retailers to order in smaller lots and reduce forward buying.

Accepted Answer

Managers should aim to reduce the bullwhip effect by implementing pricing strategies that encourage retailers to order in larger quantities and reduce the frequency of orders. This will lead to more stable demand and reduce fluctuations in orders up the supply chain. Encouraging smaller lots and forward buying can exacerbate the bullwhip effect.

Question 9

Measuring performance based on sell-through is often justified on the grounds that the manufacturer's sales force does not control sell-in.

Accepted Answer

The answer of Measuring performance based on sell-through is often...

Question 10

Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits.

Accepted Answer

Incentive obstacles are indeed situations where incentives offered to different stages or participants in a supply chain can create misalignments and lead to actions that increase variability and reduce total supply chain profits. This happens when each participant in the supply chain acts in their individual best interest, rather than in the best interest of the whole supply chain.

Question 11

With an uncoordinated supply chain each stage tries to maximize its own profits,resulting in actions that often diminish total supply chain profits.

Accepted Answer

This statement is true. When each stage of the supply chain tries to maximize their own profits without coordinating with the other stages, they may take actions that benefit them individually but reduce the overall profitability of the supply chain. For example, a manufacturer may try to negotiate lower prices from their suppliers, but if this results in the supplier cutting corners or using cheaper materials, it could lead to lower quality products or delays in delivery, which would ultimately hurt the manufacturer's profits. It is better for all stages of the supply chain to work together and coordinate their actions to maximize overall profitability.

Question 12

Improperly structured sales force incentives are a significant obstacle to coordination in the supply chain.

Accepted Answer

Improper incentives for the sales force can lead to a myopic focus on short-term goals such as individual sales targets, which can negatively affect the overall performance of the supply chain. Properly structured incentives, on the other hand, can align the goals of the sales force with those of the larger supply chain network, leading to better coordination and overall performance.

Question 13

Tying allocation to past sales removes any incentive a retailer may have to inflate orders,as a result dampening the bullwhip effect.

Accepted Answer

Tying allocation to past sales creates a more accurate forecast, reducing the likelihood of over-ordering or under-ordering, thus reducing the bullwhip effect. It also removes the incentive for a retailer to inflate orders to receive more allocation in the future.

Question 14

Trade promotions and other short-term discounts offered by a manufacturer result in large orders during the promotion period followed by very small orders after that.

Accepted Answer

This is a common phenomenon observed in the market when manufacturers offer trade promotions and short-term discounts. Customers tend to place large orders during the promotion period, taking advantage of the lower prices, but they may not have a long-term need for the product. Therefore, the orders usually decrease after the promotion period ends, resulting in a spike in demand followed by a drop-off.

Question 15

Lot size based quantity discounts reduce the bullwhip effect within the supply chain.

Accepted Answer

Lot size based quantity discounts can actually increase the bullwhip effect because they encourage buyers to order in larger quantities than needed to avail of the discounts, leading to increased variability in order sizes upstream in the supply chain.

Question 16

The bullwhip effect reduces the profitability of a supply chain by making it simpler to provide a given level of product availability.

Accepted Answer

The bullwhip effect increases the total cost of a supply chain and reduces the efficiency and profitability of the system. It causes inventory holding costs to go up due to increased safety stocks, as well as reduced responsiveness to customer demand. Thus, providing a given level of product availability becomes more difficult and expensive.

Question 17

The bullwhip effect enables different stages of the supply chain to have a consistent estimate of what demand looks like.

Accepted Answer

The bullwhip effect refers to the phenomenon of demand distortion increasing as you move up the supply chain, resulting in each stage having a different estimate of demand. Therefore, it does not enable different stages of the supply chain to have a consistent estimate of demand.

Question 18

A lack of coordination occurs either because different stages of the supply chain have objectives that conflict or because information moving between stages gets delayed and distorted.

Accepted Answer

A lack of coordination can indeed happen due to conflicting objectives among different stages of the supply chain or due to delayed and distorted information flow between stages.

Question 19

Sharing of POS data helps reduce the bullwhip effect because it allows each stage of the supply chain to use orders from the previous stage to forecast future demand.

Accepted Answer

Sharing POS (Point of Sale) data directly with all stages of the supply chain allows for real-time demand visibility, reducing the need for each stage to rely solely on orders from the previous stage for demand forecasting, thus helping to mitigate the bullwhip effect.

Question 20

The lack of information sharing between the retailer and manufacturer leads to a large fluctuation in manufacturer orders.

Accepted Answer

If the retailer and manufacturer do not communicate effectively and share accurate information, the manufacturer may not have a clear idea of the demand for their products, leading to fluctuations in order quantities.

Quiz 10: Coordination in a Supply Chain