Paper 1 answer

03 November 2024 02:04

Q.1 Attempt any four:

(a) What is meant by Supply Chain Management? What are the objectives of Supply Chain
Management?

Supply Chain Management (SCM) involves the coordination of the production, shipment, and
delivery of goods from suppliers to end customers.

Objectives of SCM:

1. Reduce operational costs by streamlining processes.

2. Improve efficiency through optimal resource use.

3. Enhance customer satisfaction by ensuring timely delivery.

4. Increase flexibility to respond to market changes.

5. Optimize inventory levels to reduce holding costs.

(b) What is meant by Bullwhip Effect in Supply Chain? How can it be reduced?

Bullwhip Effect: It is the phenomenon where small demand fluctuations lead to larger demand
variances upstream in the supply chain.

Reduction Methods:

1. Improve demand forecasting accuracy.

2. Use real-time data sharing across the supply chain.

3. Reduce lead times by improving production processes.

4. Implement inventory optimization strategies.

5. Apply Just-in-Time (JIT) practices to manage inventory.

1. Meeting customer demand without delays.

2. Hedge against price changes and inflation.

3. Buffer against uncertainties in demand and supply.

4. Take advantage of bulk purchasing discounts.

5. Ensure production continuity without disruption.

(d) What are the objectives of Logistics Management? What are the factors affecting logistics
function?

Objectives of Logistics Management:

1. Efficiently transport and deliver goods to the right location.

2. Minimize costs of warehousing and transportation.

3. Enhance customer satisfaction through timely delivery.

4. Reduce lead time in supply chain processes.

5. Improve inventory management accuracy.

Factors affecting logistics:

1. Transportation costs.

2. Inventory levels and holding costs.

3. Technology used in tracking and managing logistics.

4. Market demand fluctuations.

5. Government regulations and compliance requirements.

1. Track inventory in real time.

2. Enhance visibility across the supply chain.

3. Reduce human errors in inventory management.

4. Improve asset management by tracking equipment and goods.

5. Support automated ordering and restocking processes.

Q.2 (a) What are the challenges in establishing a global supply chain? (10 marks)

1. Cultural Differences: Communication styles and business practices vary, which can complicate
negotiations.

2. Currency Exchange Rates: Exchange rate volatility affects costs and profits.

3. Diverse Regulations: Different countries have varying import/export laws, tax policies, and labor
standards.

4. Logistical Complexity: Long distances and various shipping methods increase lead times and costs.

5. Supplier Reliability: Political instability or natural disasters can disrupt supplier operations.

6. Quality Control: Ensuring consistent quality across different suppliers and locations is challenging.

7. Data Security: Protecting sensitive information in a globally connected network.

8. Sustainability: Increasing pressure to reduce carbon footprints and comply with environmental
regulations.

Q.2 (b) Discuss how to create a supplier scorecard in supplier performance evaluation. (10 marks)

1. Define KPIs (Key Performance Indicators): Identify metrics like cost, quality, delivery time, and
innovation.

2. Weight Assignment: Assign importance to each KPI based on company priorities.

4. Scoring System: Establish a scoring range (e.g., 1-10) for each KPI.

5. Overall Score Calculation: Multiply KPI scores by their weights to get an overall performance
score.

6. Regular Review: Periodically review and update scores to reflect performance changes.

7. Feedback and Improvement: Share results with suppliers and encourage continuous
improvement.

---

Q.3 (a) What is the difference between a P system and a Q system in inventory control? (10 marks)

P System (Periodic Review System):

Orders are placed at fixed intervals (e.g., monthly).

Brings inventory to a target level regardless of current stock.

Best for low-value items with steady demand.

Q System (Continuous Review System):

Inventory is monitored continuously; orders are placed when stock reaches a reorder point.

Minimizes stockouts and maintains tighter control.

Best for high-value, high-demand items requiring close monitoring.

(b) Find the optimum order quantity given that annual usage is 500 pieces, setup cost is Rs. 10, and
holding cost per unit is Rs. 120, cost per unit is Rs. 100. (10 marks)

Given Data:

Annual demand (D) = 500 pieces

Setup cost (S) = Rs. 10

Holding cost per unit (H) = 120% of unit cost = 120% of Rs. 100 = Rs. 120

EOQ Calculation (Economic Order Quantity):

---

Q.4 (a) Discuss the factors in packaging that lead to efficient logistics management. (10 marks)

1. Protection of Goods: Packaging should protect products from damage.

2. Efficient Handling: Design for easy handling and stacking.

3. Cost-Effectiveness: Choose materials that balance quality and cost.

4. Space Utilization: Compact packaging saves storage and shipping space.

5. Sustainability: Eco-friendly packaging meets regulatory and consumer demands.

6. Labeling and Information: Clear labels ensure correct handling.

7. Compatibility with Automation: Automated systems require standard packaging dimensions.

(b) What is the difference between a forward supply chain and a reverse supply chain? (10 marks)

Forward Supply Chain:

Flow from production to the end user.

Focus: Manufacturing, distribution, and sales.

Reverse Supply Chain:

Flow from end user back to origin.

Focus: Returns, recycling, and disposal.

---

Q.5 (a) What is a Transport Management System (TMS)? What are its different components? (10
marks)

TMS Definition: Software that optimizes the movement of goods, including planning, execution, and
monitoring of transportation.
Components:

1. Routing and Scheduling: Determines optimal routes.

2. Freight Management: Handles carrier selection and rate negotiation.

3. Order Tracking: Provides real-time tracking.

4. Load Optimization: Ensures efficient cargo space utilization.

5. Reporting and Analytics: Tracks performance metrics.

Q.5 (b)
A Warehouse Management System (WMS) is software designed to optimize warehouse operations,
from inventory control to order fulfillment, reducing costs and enhancing efficiency.

Key Processes in WMS:

1. Receiving: Records incoming goods, matches them with purchase orders, and updates inventory.

2. Putaway: Suggests optimal storage locations to maximize space and reduce retrieval time.

3. Inventory Management: Monitors stock levels in real-time to prevent overstocking and stockouts.

4. Picking: Optimizes picking routes for faster, more accurate order fulfillment.

5. Packing: Recommends safe, cost-effective packaging based on product size and type.

6. Shipping: Manages shipment, labeling, and transportation for timely deliveries.

7. Returns Processing: Handles returned goods for inspection, restocking, or disposal.

8. Reporting and Analytics: Provides insights for performance improvements and operational
efficiency.

In short, a WMS streamlines warehouse tasks, reduces errors, and improves service quality in supply
chain management.

---
Q.6 Answer the following:
Q.6 Answers:

a. Pros and Cons of Different Modes of Transportation

1. Road Transportation

Pros:

Flexible routing and scheduling.

Door-to-door service.

Lower initial costs.

Cons:

Traffic congestion can lead to delays.

Limited load capacity.

Vulnerable to weather conditions.

2. Rail Transportation

Pros:

Cost-effective for bulk and long-distance shipments.

Environmentally friendly.

High capacity and safety.

Cons:

Limited flexibility in routing.

Longer transit times compared to air.

Requires infrastructure for loading and unloading.

3. Air Transportation

Pros:

Fastest mode for long-distance shipping.

Ideal for high-value or time-sensitive goods.

Cons:

High costs.

Limited cargo capacity.

Weather-related disruptions can cause delays.

4. Sea Transportation

Pros:

Cost-effective for large volumes and long distances.

Can carry oversized and heavy cargo.

Environmentally friendly compared to air transport.

Cons:

Slow transit times.

Vulnerable to port congestion and customs delays.

Limited access to landlocked areas.

b. Difference Between Takt Time and Lead Time

Takt Time:

Takt time is the maximum allowable time to produce a product to meet customer demand. It is
calculated by dividing the available production time by the required output in a specific period (e.g.,
hours).

\text{Takt Time} = \frac{\text{Available Production Time}}{\text{Customer Demand}}

Lead Time:

Lead time refers to the total time taken from receiving a customer order to delivering the finished
product. It includes order processing, production, and shipping times. Lead time can vary
significantly based on various factors, including production processes and supply chain efficiency.
c. Calculate the Takt Time

Given:

Order quantity: 1,500 units

Manufacturing period: 24 hours

\text{Takt Time} = \frac{\text{Available Time}}{\text{Required Output}} = \frac{24 \text{ hours}

Takt Time: Approximately 0.96 minutes per unit.

d. Design Options for a Distribution Network

1. Direct Shipping: Products shipped directly from the manufacturer to the customer, minimizing
handling.

Sketch:

Manufacturer --> Customer

2. Distribution Center (DC): Products shipped to a central warehouse, where they are stored and
then distributed to customers.

Sketch:

Manufacturer --> Distribution Center --> Customer

3. Cross-Docking: Incoming goods are directly transferred to outgoing trucks with minimal storage
time.

Sketch:

Manufacturer --> Cross-Dock --> Customer

4. Hub-and-Spoke Model: A central hub collects goods from various suppliers and distributes them
to multiple locations.

Sketch:

Spoke
^
|
Supplier --> Hub --> Customer
|
Spoke
5. Regional Warehouses: Multiple warehouses located near customer bases to reduce shipping time
and costs.

Sketch:

Warehouse 1
^
|
Supplier --> Warehouse 2 --> Customer
|
Warehouse 3

e. What is Meant by Supply Chain Resilience

Supply Chain Resilience refers to the ability of a supply chain to anticipate, prepare for, respond to,
and recover from disruptive events, such as natural disasters, economic shifts, or pandemics. A
resilient supply chain is characterized by:

Flexibility: The capability to adapt operations and resources in response to changing conditions.

Visibility: Real-time tracking of inventory, orders, and logistics to quickly identify potential
disruptions.

Robustness: Strengthening supply chain components to withstand shocks and maintain operations.

Collaboration: Strong partnerships with suppliers and logistics providers to enable coordinated
responses to disruptions.

Risk Management: Proactive identification and mitigation of risks to minimize their impact on supply
chain performance.

In summary, supply chain resilience enhances the overall robustness and responsiveness of a supply
chain, ensuring continued service delivery despite unexpected challenges.