Identification code

STOCKHOLM UNIVERSITY

School of Business

Exam / Cover Page

Course Title

SCM Supply Chain Management

Number of Credits

7.5

Date January 17, 2018

Time 17:00-19:00

Permitted English Dictionary

Aids Calculator

Examiner Fredrik Eng Larsson

Write Your Identification code on each answer sheet

Your name and social security number should only be marked on the cover sheet

Examiner’s instructions

(response space, number of questions, maximum score, pass score, miscellaneous)

1. The exam is in three parts. The first part consists of multiple-choice questions with one correct alternative.
The questions are answered by circling one of the alternatives. Each question is worth 6 points, for a total of
30 points. Part II consists of two questions, each with two parts, for a total of 32 points. Part III is one larger
question in several parts for a total of 38 points. Calculations can be submitted for part credit on the back of
the page or on the last page. A standard Normal table is provided at the very back of the exam.
3. The maximum score for the exam is 100 points.
4. The exam will count 50% towards your final grade.
5. To pass the course, you need at least 50 points as your final course grade (continuous assessment + final
exam).
GOOD LUCK!
 Identification code

Part 1 (30 points). Circle one answer.

1. Which of the following statements about the cycle view of supply chains is correct?

a. The cycles become slower as one moves further from the end customer
b. The manufacturing cycle is equivalent to the “push” view of supply chains
c. All supply chains have four cycles
d. Transportation lot sizes normally decrease as one moves further from the end
customer

2. Which of the following statements describe an Efficient supply chain according to the
definition in the textbook?

a. Primary goal: respond quickly to demand

b. Pricing strategy: Higher margins because price is not a prime customer driver
c. Inventory strategy: Minimize inventory to lower cost
d. Lead-time strategy: Reduce aggressively, even if costs are significant

3. In 2015, Toyota had a WSO (Weeks of Sales Outstanding) of 15.07 while General Motors had
a WSO of 2.94. Which of the following statements is correct?

a. Toyota, on average, has better payment terms (more days of credit) with their
suppliers
b. Toyota must have a shorter cash to cash cycle
c. General Motors, on average, gets paid faster by its customers
d. General Motors, on average, has less inventory

4. According to the textbook framework, which of the following is not a driver of supply chain
performance?

a. Facilities
b. Inventory
c. Organization
d. Information

5. Which of the following statements about demand forecasting is correct?

a. Times series forecasts are always more accurate than other forecasting methods
b. Causal models should not be combined with time series models in demand
forecasting
c. For new products, it may be difficult to use time series to forecast demand
d. Subjective demand forecasting methods always produce a forecast with higher MAPE
than other methods
 Identification code

Part 2 (32 points)

6. A firm is using periodic review for an item. Orders are placed every Sunday, 52 times per
year, so that the inventory position reaches an order-up-to level (OUL) as soon as the order is
placed. Orders arrive five days later. The item is purchased at $100 per item, and the holding
rate is 10% of the purchase price per year. The daily demand approximately follows a Normal
Distribution with mean 100 and standard deviation 10.
a. What safety inventory is necessary to reach a target cycle service level (CSL) of 95%
for the item? ______________________(10 points)
b. The firm considers changing from a target CSL of 95% to a target fill rate (FR) of 95%.
Which of the following statements is correct? Circle one (6 points)
i. The safety inventory and the cycle inventory will remain the same
ii. The safety inventory and the cycle inventory will decrease
iii. The safety inventory will decrease and the cycle inventory will increase
iv. The safety inventory will decrease and the cycle inventory will remain the
same

7. A manager wants to find the economic order quantity (EOQ) for an item with a daily demand
of 10 units. The ordering cost is estimated to be 350 SEK per order, and the item is purchased
at 79 SEK per item. The annual holding rate is 25% of the purchase price. The lead time is 7
days. Assume 365 days per year.
a. What is the EOQ?______________________________(10 points)
b. Suppose the Ordering Cost is given by a cost per order (So) plus a cost per unit (Su).
Let demand per year be denoted D and holding cost per item per year H. Which of
the following express the new EOQ? Circle one (6 points)
i. EOQ=SQRT(2SoD/H)
ii. EOQ=SQRT(2SoD/(HSu))
iii. EOQ=SQRT((Su+So)D/H)
iv. EOQ=SQRT(2SoD/(H+Su))
 Identification code

Part 3 (38 points)

8. An American manufacturer of rubber seals operates 15 production plants in contiguous U.S.

All plants have their own raw material storage. The manufacturer wants to consolidate the
raw material storage for two of production plants, which are located close to one another.
The plants produce different final products but use the same raw material input; essentially,
the plants are identical. Each plant restock the raw material using a continuous review policy
with target CSL=99%. Daily demand at each plant follows a Normal distribution with mean
5,000 and standard deviation 500. The lead time from the supplier is three (3) days, and the
ordering cost is $3,000 per order. The annual holding cost for the raw material is $3. After
production, the seals are transported to one of five distribution centers, where they are
stored in anticipation of customer orders. The seals are sold to large manufacturers in the
process industries and to distributors of manufacturing items. Price and availability is why
they choose the manufacturer – lead times are usually in weeks. Assume 365 days per year.
a. According to the textbook – what is the push/pull view of a supply chain? Would you
describe the rubber seal supply chain above as “pull” or “push” (or both)? Answer in
no more than three bullet points and a figure. (6 points)
b. Without consolidation, how much safety inventory should the manufacturer keep, in
total, for the two plants in order to meet the target CSL?______________________
(10 points)
c. How much safety inventory should the manufacturer keep, in total, if the raw
material storage of the two plants is consolidated into one common
storage?______________________(10 points)
d. What are the potential problems of consolidating raw material storage? Answer in
three bullet points. (4 points)
e. In conjunction with the potential consolidation of raw material storage, the
manufacturer wants to rethink its current push/pull-position. What do you suggest?
Should the supply chain become more of a “push” supply chain or more of a “pull”
supply chain? How will consolidation of raw material affect such a move? Answer
with a recommendation and motivate your answer in (no more than) three bullet
points. (8 points)
 Identification code

Standard Normal distribution table

The table provides the cumulative probability P(Z<z) for the standardized Normal distribution, Z~N(0,1)

z 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

0 0.5 0.503989 0.507978 0.511966 0.515953 0.519939 0.523922 0.527903 0.531881 0.535856
0.1 0.539828 0.543795 0.547758 0.551717 0.55567 0.559618 0.563559 0.567495 0.571424 0.575345
0.2 0.57926 0.583166 0.587064 0.590954 0.594835 0.598706 0.602568 0.60642 0.610261 0.614092
0.3 0.617911 0.62172 0.625516 0.6293 0.633072 0.636831 0.640576 0.644309 0.648027 0.651732
0.4 0.655422 0.659097 0.662757 0.666402 0.670031 0.673645 0.677242 0.680822 0.684386 0.687933
0.5 0.691462 0.694974 0.698468 0.701944 0.705401 0.70884 0.71226 0.715661 0.719043 0.722405
0.6 0.725747 0.729069 0.732371 0.735653 0.738914 0.742154 0.745373 0.748571 0.751748 0.754903
0.7 0.758036 0.761148 0.764238 0.767305 0.77035 0.773373 0.776373 0.77935 0.782305 0.785236
0.8 0.788145 0.79103 0.793892 0.796731 0.799546 0.802337 0.805105 0.80785 0.81057 0.813267
0.9 0.81594 0.818589 0.821214 0.823814 0.826391 0.828944 0.831472 0.833977 0.836457 0.838913
1 0.841345 0.843752 0.846136 0.848495 0.85083 0.853141 0.855428 0.85769 0.859929 0.862143
1.1 0.864334 0.8665 0.868643 0.870762 0.872857 0.874928 0.876976 0.879 0.881 0.882977
1.2 0.88493 0.886861 0.888768 0.890651 0.892512 0.89435 0.896165 0.897958 0.899727 0.901475
1.3 0.9032 0.904902 0.906582 0.908241 0.909877 0.911492 0.913085 0.914657 0.916207 0.917736
1.4 0.919243 0.92073 0.922196 0.923641 0.925066 0.926471 0.927855 0.929219 0.930563 0.931888
1.5 0.933193 0.934478 0.935745 0.936992 0.93822 0.939429 0.94062 0.941792 0.942947 0.944083
1.6 0.945201 0.946301 0.947384 0.948449 0.949497 0.950529 0.951543 0.95254 0.953521 0.954486
1.7 0.955435 0.956367 0.957284 0.958185 0.95907 0.959941 0.960796 0.961636 0.962462 0.963273
1.8 0.96407 0.964852 0.96562 0.966375 0.967116 0.967843 0.968557 0.969258 0.969946 0.970621
1.9 0.971283 0.971933 0.972571 0.973197 0.97381 0.974412 0.975002 0.975581 0.976148 0.976705
2 0.97725 0.977784 0.978308 0.978822 0.979325 0.979818 0.980301 0.980774 0.981237 0.981691
2.1 0.982136 0.982571 0.982997 0.983414 0.983823 0.984222 0.984614 0.984997 0.985371 0.985738
2.2 0.986097 0.986447 0.986791 0.987126 0.987455 0.987776 0.988089 0.988396 0.988696 0.988989
2.3 0.989276 0.989556 0.98983 0.990097 0.990358 0.990613 0.990863 0.991106 0.991344 0.991576
2.4 0.991802 0.992024 0.99224 0.992451 0.992656 0.992857 0.993053 0.993244 0.993431 0.993613
2.5 0.99379 0.993963 0.994132 0.994297 0.994457 0.994614 0.994766 0.994915 0.99506 0.995201
2.6 0.995339 0.995473 0.995604 0.995731 0.995855 0.995975 0.996093 0.996207 0.996319 0.996427
2.7 0.996533 0.996636 0.996736 0.996833 0.996928 0.99702 0.99711 0.997197 0.997282 0.997365
2.8 0.997445 0.997523 0.997599 0.997673 0.997744 0.997814 0.997882 0.997948 0.998012 0.998074
2.9 0.998134 0.998193 0.99825 0.998305 0.998359 0.998411 0.998462 0.998511 0.998559 0.998605
3 0.99865 0.998694 0.998736 0.998777 0.998817 0.998856 0.998893 0.99893 0.998965 0.998999
 Identification code

Standardized Unit Loss function, G(z)

z G(z) z G(z) z G(z) z G(z) z G(z)

0 0.398942 0.5 0.197797 1 0.083315 1.5 0.029307 2 0.008491
0.01 0.393962 0.51 0.194729 1.01 0.081741 1.51 0.028645 2.01 0.008266
0.02 0.389022 0.52 0.191696 1.02 0.08019 1.52 0.027996 2.02 0.008046
0.03 0.384122 0.53 0.188698 1.03 0.078664 1.53 0.02736 2.03 0.007832
0.04 0.379261 0.54 0.185735 1.04 0.07716 1.54 0.026736 2.04 0.007623
0.05 0.374441 0.55 0.182806 1.05 0.07568 1.55 0.026124 2.05 0.007418
0.06 0.36966 0.56 0.179912 1.06 0.074223 1.56 0.025525 2.06 0.007219
0.07 0.364919 0.57 0.177051 1.07 0.072789 1.57 0.024937 2.07 0.007024
0.08 0.360218 0.58 0.174225 1.08 0.071377 1.58 0.02436 2.08 0.006835
0.09 0.355557 0.59 0.171432 1.09 0.069987 1.59 0.023796 2.09 0.006649
0.1 0.350935 0.6 0.168673 1.1 0.06862 1.6 0.023242 2.1 0.006468
0.11 0.346353 0.61 0.165947 1.11 0.067274 1.61 0.022699 2.11 0.006292
0.12 0.341811 0.62 0.163254 1.12 0.065949 1.62 0.022168 2.12 0.00612
0.13 0.337309 0.63 0.160594 1.13 0.064646 1.63 0.021647 2.13 0.005952
0.14 0.332846 0.64 0.157967 1.14 0.063365 1.64 0.021137 2.14 0.005788
0.15 0.328422 0.65 0.155372 1.15 0.062104 1.65 0.020637 2.15 0.005628
0.16 0.324038 0.66 0.15281 1.16 0.060863 1.66 0.020147 2.16 0.005472
0.17 0.319693 0.67 0.15028 1.17 0.059643 1.67 0.019668 2.17 0.00532
0.18 0.315388 0.68 0.147781 1.18 0.058443 1.68 0.019198 2.18 0.005172
0.19 0.311122 0.69 0.145315 1.19 0.057263 1.69 0.018738 2.19 0.005028
0.2 0.306895 0.7 0.142879 1.2 0.056102 1.7 0.018288 2.2 0.004887
0.21 0.302707 0.71 0.140475 1.21 0.054961 1.71 0.017847 2.21 0.00475
0.22 0.298558 0.72 0.138102 1.22 0.05384 1.72 0.017415 2.22 0.004616
0.23 0.294448 0.73 0.13576 1.23 0.052737 1.73 0.016992 2.23 0.004486
0.24 0.290377 0.74 0.133448 1.24 0.051653 1.74 0.016579 2.24 0.004358
0.25 0.286345 0.75 0.131167 1.25 0.050587 1.75 0.016174 2.25 0.004235
0.26 0.282351 0.76 0.128916 1.26 0.049539 1.76 0.015777 2.26 0.004114
0.27 0.278396 0.77 0.126694 1.27 0.04851 1.77 0.01539 2.27 0.003996
0.28 0.274479 0.78 0.124503 1.28 0.047499 1.78 0.01501 2.28 0.003882
0.29 0.270601 0.79 0.12234 1.29 0.046505 1.79 0.014639 2.29 0.00377
0.3 0.266761 0.8 0.120207 1.3 0.045528 1.8 0.014276 2.3 0.003662
0.31 0.262959 0.81 0.118103 1.31 0.044568 1.81 0.01392 2.31 0.003556
0.32 0.259196 0.82 0.116028 1.32 0.043626 1.82 0.013573 2.32 0.003453
0.33 0.25547 0.83 0.113981 1.33 0.0427 1.83 0.013233 2.33 0.003352
0.34 0.251782 0.84 0.111962 1.34 0.041791 1.84 0.0129 2.34 0.003255
0.35 0.248131 0.85 0.109972 1.35 0.040898 1.85 0.012575 2.35 0.003159
0.36 0.244518 0.86 0.108009 1.36 0.04002 1.86 0.012257 2.36 0.003067
0.37 0.240943 0.87 0.106074 1.37 0.039159 1.87 0.011946 2.37 0.002977
0.38 0.237404 0.88 0.104166 1.38 0.038314 1.88 0.011642 2.38 0.002889
0.39 0.233903 0.89 0.102285 1.39 0.037483 1.89 0.011345 2.39 0.002804
0.4 0.230439 0.9 0.100431 1.4 0.036668 1.9 0.011054 2.4 0.00272
0.41 0.227011 0.91 0.098604 1.41 0.035868 1.91 0.01077 2.41 0.00264
0.42 0.223621 0.92 0.096803 1.42 0.035083 1.92 0.010493 2.42 0.002561
0.43 0.220267 0.93 0.095028 1.43 0.034312 1.93 0.010222 2.43 0.002484
0.44 0.216949 0.94 0.093279 1.44 0.033555 1.94 0.009957 2.44 0.00241
0.45 0.213667 0.95 0.091556 1.45 0.032813 1.95 0.009698 2.45 0.002337
0.46 0.210422 0.96 0.089858 1.46 0.032085 1.96 0.009445 2.46 0.002267
0.47 0.207212 0.97 0.088185 1.47 0.03137 1.97 0.009198 2.47 0.002199
0.48 0.204038 0.98 0.086537 1.48 0.030669 1.98 0.008957 2.48 0.002132
0.49 0.2009 0.99 0.084914 1.49 0.029981 1.99 0.008721 2.49 0.002067