The EOQ model determines the optimal order size that minimizes total inventory holding costs and ordering costs.
). Calculate the required Safety Stock and the final Reorder Point (ROP).
According to Marshall Fisher’s framework, high-end, customizable smartphones are classified as due to their short life cycles, high profit margins, high customization options, and volatile demand. Designing an efficient supply chain for this product would result in stockouts or massive obsolescence costs. Therefore, a responsive supply chain is appropriate. The company should use strategies like postponement (keeping components modular and assembling only when a customized order arrives) to manage risks. Analytical and Quantitative Sample Questions Question 3: Economic Order Quantity (EOQ)
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“A child’s lemonade stand has daily demand uniformly distributed between 10 and 30 cups. Lemons cost $0.50 each (1 lemon per cup). Sugar costs $0.02 per cup. Cups cost $0.05 each. Selling price: $2.00 per cup. Unsold lemonade must be discarded at end of day. However, the child’s mother offers a ‘distress option’: any unsold lemons can be returned at $0.25 each, but only if the child purchases a ‘salvage membership’ for $2.00 per week.
This shifts the decoupling point further down the supply chain. By aggregating demand at the generic product level, the manufacturer benefits from risk pooling. This drastically reduces safety stock requirements, eliminates excess inventory of unpopular models, and raises service levels across all European regions. Essential SCM Formulas Cheat Sheet
Midterm exams heavily feature quantitative problems. You must memorize core inventory and forecasting formulas and understand how to apply them. Inventory Management & Economic Order Quantity (EOQ) The EOQ model determines the optimal order size
Exam Question: Which level of SCM focuses on these high-stakes, long-term plans? (Answer: ).
A clothing retailer is facing high inventory costs and frequent stockouts of popular items. Customers are complaining, and sales are dropping.
"Explain the concept of Cross-Docking and the logistics scenarios where it is most beneficial." The company should use strategies like postponement (keeping
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Conceptual questions assess your understanding of high-level supply chain strategy. Expect multiple-choice, short-answer, or essay questions focusing on how a supply chain aligns with corporate goals. Strategic Fit and Alignment