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当代物流学习题3

当代物流学习题3
当代物流学习题3

PART II

ANSWERS TO END-OF-CHAPTER QUESTIONS

CHAPTER 2: THE SUPPLY-CHAIN CONCEPT

1.Discuss the differences between supply chain and supply-chain management.

A supply chain refers to the activities associated with the flow and transformation

of goods from the raw material stage, through to the end user, as well as the

associated information flows. Supply chains are not a new concept in the sense

that organizations have been dependent on suppliers and organizations have

served customers. Although any organization can be part of a supply chain,

supply-chain management requires overt management efforts by the organizations in the supply chain. Moreover, supply-chain management cannot be successful

unless the participating companies adopt an enterprise-to-enterprise perspective.

https://www.wendangku.net/doc/ca17658298.html,ing the SCOR model as a reference, explain the role of logistics in supply-chain

management.

The SCOR model identifies five key processes—plan, source, make, deliver, and return—associated with supply-chain management. It can be argued that logistics is involved in at least four of the five processes. For example, ―source‖ focuses on processes that procure goods and services; recall from Chapter 1 that procurement is part of the logistics ―umbrella‖ at many firms. With respect to making, the

concept of postponement has resulted in value-added activities being performed

closer to the ultimate customer. Moreover, the SCOR definition of delivery

specifically mentions the key logistics components of order management,

transportation management, and distribution management. Finally, Chapter 1

pointed out that returned products often present a different set of logistical

challenges when compared to forward distribution.

3.Do you believe that competition in the twenty-first century will involve supply chain

versus supply chain? Why or why not?

Students can support either perspective. For example, there have been suggestions that Wal-Mart has continued to pull away from competitors—particularly

Kmart—because of Wal-Mart’s superior supply chain. Kmart’s supply chain, in

contrast, is viewed as much less effective and efficient than Wal-Mart’s.

Alternatively, although supply chain versus supply chain sounds good, such

competition may not always be practical because of overlapping suppliers and the lack of a central control point.

4.What are four key attributes of supply-chain management?

The chapter discussed six key attributes of supply-chain management: customer

power; a long-term orientation; leveraging technology; enhanced communication

across organizations; inventory control; inter-activity, interfunctional, and

interorganizational coordination.

5.Why do contemporary supply chains need to be fast and agile?

First, ―fast‖ encompasses a time/speed component, while ―agile‖ focuses on an

organization’s ability to respond to changes in demand with respect to volume and variety. Fast and agile are important attributes of contemporary supply chains in

part because customer needs and wants can change relatively quickly. Failure to

be fast and agile can result in decreased market share, reduced profitability, lower stock price, and/or dissatisfied customers or supply-chain participants.

6.What is the difference between relational and transactional exchanges? Which is

more relevant for supply-chain management? Why?

Relational exchanges tend to emphasize a long-term orientation, while

transactional exchanges have a short-term orientation. Unlike transactional

exchanges, relational exchanges are characterized by attributes such as trust,

commitment, and dependence, among others. Supply-chain management suggests that supply chains exist to improve the long-term performance of the individual

companies and the supply chain as a whole. Relational exchanges also have a

long-term orientation; as a result, relational exchanges are more relevant than

transactional exchanges to supply-chain management.

7.This chapter suggests that technology has been at the center of changes taking place

that affect the supply chain. Do you agree or disagree? Why?

Although students can support either side of the argument, the text does argue that technology has been at the center of changes taking place that affect the supply

chain. In particular, increases in computing power and the Internet have been

behind much of this change.

8.Discuss the impact of the Internet on supply-chain management.

The Internet can facilitate supply chain effectiveness and efficiency by providing opportunities to simultaneously improve customer service and reduce logistics

costs. The Internet allows one supply-chain party to have virtually instantaneous

visibility to the same data as do other supply-chain participants. This can

ultimately result in lower inventories and improved profitability throughout the

supply chain.

9.Discuss some of the ways that inventory can be reduced in the supply chain.

Ways to reduce inventory in the supply chain include, but are not limited to,

smaller, more frequent orders; the use of premium transportation; demand-pull

(think of Dell Computers), as opposed to supply-push, replenishment; the

elimination or consolidation of slower-moving products.

10.What are supply-chain councils, and how do they operate?

Supply-chain councils are made up of supply-chain participants, including

representative (or the most important) customers. These councils meet

periodically to evaluate supply chain performance and to offer suggestions for

potential improvements, such as cost reduction and the elimination of non-value

added processes and activities.

11.What is meant by co-opetition? How is it relevant to supply-chain management?

Co-opetition refers to the idea that although companies can be competitors in

some situations, they can work together in other situations. In terms of its

relevance to supply-chain management, the text offers the example of Covisint, an on-line trading exchange that handles purchasing for production and non-

production materials in the automobile industry. Equity partners in Covisint

include General Motors and Ford, and Covisint was established largely to remove waste from the automotive supply chain.

12.How might regulatory and political conditions act as barriers to supply-chain

management?

With respect to regulatory conditions, a number of today’s supply chain

arrangements were illegal until the early 1980s. At a minimum, companies should be aware of regulatory considerations before pursuing supply chain arrangements.

Political conditions such as war and governmental stability can also act as barriers to supply-chain management. War, for example, could easily disrupt well-

established supply chains.

13.Some companies are hesitant to use frequent shopper cards because the data provided

could violate the customer’s privacy. Do you agree or disagree? Why?

Although either answer is acceptable, the question of data usage versus customer privacy has generated impassioned discussions by students. On the one hand, the frequent shopper cards can provide a plethora of data about the shopping habits of particular consumers, potentially allowing stores to achieve customized marketing for individual customers. At the same time, frequent shopper cards could violate

customer privacy in the sense that certain customers might be uncomfortable that stores have access to such detailed data about them, particularly if the data

includes frequent purchases of p otentially ―embarrassing‖ products (e.g.,

laxatives).

14.Why are compatible information systems important for effective and efficient supply-

chain management?

One reason compatible information systems are important for effective and

efficient supply-chain management involves the growing emphasis on ERP

systems. ERP installations, in and of themselves, are complex and time

consuming; in many cases, the ERP systems have to be integrated with other

specialized software—and this ―integration‖ can have disastrou s consequences. 15.Do you think corporate cultures are relevant for supply-chain management? Why or

why not?

Again, either answer is adequate; however, the text indicates that incompatible

corporate cultures could present potential obstacles to effective and efficient

supply-chain management. In addition, manifestations of corporate cultures, such as company rituals, company brochures, and the like, can provide important clues about the ability of potential supply-chain parties to work together.

16.Discuss the three primary methods that organizations can use to integrate their supply

chains.

One method is vertical integration, in which one organization owns multiple

participants in the supply chain. Sherwin-Williams, for example, is a paint

manufacturer and also owns retail paint stores. A second method involves formal contracts among various participants, such as occurs with franchising. The third

method focuses on informal agreements among various organizations to pursue

common goals and objectives. This option provides a great deal of flexibility—

which can have both positive and negative aspects.

17.Discuss the factors that distinguish contemporary third-party logistics from earlier

types of third-party logistics.

For one, there tend to be formal contracts (generally 3–5 years) between providers and users. Contemporary third-party logistics also tends to be characterized by a

relational focus, an emphasis on mutual benefits, and the availability of

customized (as opposed to standardized) offerings. In short, contemporary third-

party logistics has a decidedly long-term outlook, as opposed to ―shopping

around‖ for the best deal at the present time.

https://www.wendangku.net/doc/ca17658298.html, some of the supplemental services that are currently offered by third-party

logistics companies. How can these supplemental services facilitate supply-chain management?

Some supplemental services that are offered by third-party logistics companies

include, but are not limited to, final product assembly, product installation, and

product repair—activities that go beyond traditional offerings. These

supplemental services can facilitate supply-chain integration in the sense that

there is less emphasis on functional issues and more emphasis on cross-functional processes.

19.Do you agree or disagree with the sentiment that fourth-party logistics companies

(lead logistics providers) merely add unnecessary cost and few service improvements to supply chains? Why?

Either answer is acceptable. Because fourth-party logistics is still in its infancy, it may be too early to have a good idea as to the ultimate role(s) that these

intermediaries will play in effective and efficient supply chains. Their usefulness could be limited if they continue to be best suited to large companies with global supply chains.

20.Discuss the various types of supply-chain software.

Some software packages focus on specific functional areas such as transportation, warehousing, or inventory management. Other software packages focus on

specific supply-chain processes such as such as customer relationship

management or collaborative planning, forecasting, and replenishment. Still other packages attempt to simultaneously optimize supply-chain processes across

organizations.

PART III

EXAMINATION QUESTIONS

CHAPTER 2: THE SUPPLY-CHAIN CONCEPT

Multiple Choice Questions

1.According to Professor Mentzer and colleagues, the supply-chain concept originated

in what discipline?

a.marketing

b.operations

c.logistics

d.production

(c; p. 36)

2. A ____________ encompasses all activities associated with the flow and

transformation of goods from the raw material stage, through to the end user, as well as the associated information flows.

a.production line

b.supply chain

c.marketing channel

d.warehouse

(b; p. 36)

3.Which of the following is not one of the processes in the SCOR model?

a.sell

b.plan

c.make

d.return

(a; p. 38)

4.The current SCOR model identifies ____________ key processes associated with

supply-chain management.

a.three

b.four

c.five

d.six

(c; p. 38)

5.The text suggests that logistics has an important role in all SCOR processes except:

a.make

b.source

c.deliver

d.plan

(d; p. 38)

6.It has been suggested that company-versus-company competition might be

superseded in the twenty-first century by:

a.region-to-region

b.country-to-country

c.industry-to-industry

d.supply chain-to-supply chain

(d; p. 39)

7.Which of the following are not key attributes of supply-chain management?

a.inventory control

b.leveraging technology

c.customer power

d. a long-term orientation

e.all are key attributes

(e; p. 39)

8.Contemporary supply chains should be fast and ____________.

a.lean

b.agile

c.interactive

d.relevant

(b; p. 40)

9.An organization’s ability to respond to changes in demand with respect to volume and

variety refers to ____.

a.responsiveness

b.leanness

c.agility

d.relevancy

(c; p. 40)

10.Which of the following is not associated with relational exchanges?

a.independence

b.trust

https://www.wendangku.net/doc/ca17658298.html,mitment

d.shared benefits

(a; p. 40)

11.According to the text, ____________ has been at the center of the changes taking

place that affect the supply chain.

a.logistics

b.warehousing

c.technology

d.customer power

(c; p. 41)

12.What has been referred to as the greatest force of commodization known to man, for

both goods and services?

a.McDonald’s

b.The Internet

c.Wal-Mart

d.Logistics

(b; p. 41)

13.The two key factors that have sparked much of the technological change affecting

supply chains are ____________ and ____________.

a.EDI, ERP

https://www.wendangku.net/doc/ca17658298.html,puting power, ERP

c.EDI, Internet

https://www.wendangku.net/doc/ca17658298.html,puting power, Internet

(d; p. 41)

14.The bullwhip effect:

a.is an ineffective way to motivate warehouse employees

b.applies to rodeos and has nothing to do with supply-chain management

c.refers to the ―swaying‖ motion associated with triple trailers

d.refers to variability in demand orders among supply-chain participants

(d; p. 42)

15.Which of the following is not a way to reduce inventory levels?

a.supply-push replenishment

b.smaller, more frequent orders

https://www.wendangku.net/doc/ca17658298.html,e of premium transportation

d.elimination of slower moving products

(a; p. 42)

16.A supply-chain council:

a.ensures that unfair trade practices don’t happen in supply chains

b.is comprised of all relevant CEOs

c.meets periodically to evaluate supply-chain performance

d.is a lobbying group concerned with promoting favorable supply-chain

legislation

(c; p. 43)

17.Covisint, an on-line trading exchange, is an example of co-opetition in the

____________ industry.

a.fast-food

b.office supply

c.sporting goods

d.automotive

(d; p. 44)

18.Which of the following is not a method of supply chain coordination?

a.co-opetition

b.dovetailing

c.placing personnel from one supply-chain participant into the facility of

another participant

d.supply-chain councils

e.all are methods

(b; pp. 43–44)

19.Which of the following represents a method of supply chain coordination?

a.dovetailing

b.co-opetition

c.benchmarking

d.nesting

(b; p. 44)

20.Which of the following is not a barrier to supply-chain management?

a.regulatory and political considerations

https://www.wendangku.net/doc/ca17658298.html,ck of top management commitment

c.reluctance to share, or use, relevant data

d.incompatible corporate cultures

e.all are barriers

(e; pp. 44–46)

21.Data mining:

a.is illegal in the United States

b.is synonymous with marginal analysis

c.looks for patterns and relationships in relevant data

d.can only be done by grocery stores

(c; p. 45)

22.Looking for patterns and relationships in relevant data refers to:

a.data warehousing

b.marginal analysis

c.correlation analysis

d.data mining

(d; p. 45)

23.Which of the following is false?

a.ERP systems tend to be relatively strong when it comes to logistics and supply

chain requirements.

b.Installing ERP systems can take several years to complete.

c.ERP systems offer tremendous potential for increasing organizational

effectiveness and efficiency.

d.Installing ERP systems can be expensiv

e.

e.All of the above are true.

(a; pp. 45–46)

24.Supply chains can be integrated by having various parties enter into and carry out

long-term mutually beneficial agreements. These agreements are known by several names. Which of the following is not one of these names?

a.partnerships

b.strategic alliances

c.third-party arrangements

d.contract logistics

e.all of the above are correct

(e; p. 46)

25.There are three primary methods that organizations can pursue when attempting to

integrate their supply chains. Which of the following is not one of them?

a.vertical integration

b.intensive distribution

c.formal contracts

https://www.wendangku.net/doc/ca17658298.html,rmal agreements

(b; p. 47)

26.All of the following are factors that distinguish contemporary third-party logistics

from earlier efforts except:

a.there tends to be a formal contract in contemporary 3PL

b.contemporary 3PL focuses on customized offerings

c.contemporary 3PL has a transactional focus

d.contemporary 3PL focuses on mutual benefits

(c; p. 48)

27.What is a fourth-party logistics provider?

a. a third-party logistics provider that has been in existence for at least 25 years

b. a third-party logistics provider that has achieved ISO 9000 certification

c. a logistics intermediary that specializes in one logistics activity (e.g.,

transportation, warehousing)

d. a general contractor that coordinates the activities of third-party logistics

providers

(d; p. 49)

28.Which of the following statements about supply-chain software is false?

a.many supply-chain software packages are developed for specific, rather than

general, applications

b.supply-chain software packages can focus on specific functional activities

such as transportation and warehousing

c.supply-chain software packages can focus on specific supply-chain processes

such as customer relationship management

d.supply-chain software packages can attempt to simultaneously optimize

supply-chain processes across organizations

e.all are true

(a; pp. 49–50)

29.The supply-chain management philosophy emerged in which decade?

a.1960s

b.1970s

c.1980s

d.1990s

(d; p. 36)

30.Although nearly any organization can be part of a supply chain, supply-chain

management requires:

a.the involvement of third-party logistics companies

b.overt management efforts by the organizations in a supply chain

c.the participation of world-class organizations

d.at least one organization to be a multinational company

(b; p. 37)

31.A distinguishing feature of the JIT II concept is that:

a.supplier and customer facilities are located in the same industrial park

b.only expedited transportation is used

https://www.wendangku.net/doc/ca17658298.html,panies must have ISO 9000 certification to participate

d.suppliers have on-site offices at a particular customer

(d; p. 39)

32.What company developed the supplier integration program known as JIT II?

a.Procter & Gamble

b.Gap

c.Bose

d.McDonald’s

(c; p. 39)

33.Contemporary supply chains should be agile and ____________.

a.fast

b.lean

c.interactive

d.relevant

(a; p. 40)

34.Which of the following is false?

a.supply chains should employ a long-term orientation

b.supply-chain management cannot be successful without information sharing

c.partnerships must involve formal, contractual agreements

d. a long-term orientation tends to be predicated on relational exchanges

(c; pp. 40–41)

35.The variability in demand orders among supply-chain participants:

a.cannot be controlled

b.refers to the bullwhip effect

c.can be controlled with electronic order placement

d.is more pronounced in relational exchanges

(b; p. 42)

True-False Questions

1.The supply-chain concept originated in the logistics literature. (True, p. 36)

2.Customers are not included as part of supply chains. (False, pp. 36–37)

3.Supply-chain management requires overt management efforts by the organizations

within the supply chain. (True, p.37)

4.The SCOR model identifies four key processes associated with supply-chain

management. (False, p. 38)

5.JIT II is a supplier integration program that allows different suppliers to interact with

each other on a regular basis. (True, p. 39)

6.Logistics has involvement in at least four of the key processes identified in the SCOR

model. (True, p. 38)

7.Because customer needs and wants change relatively quickly, supply chains should be

fast and lean. (False, p. 40)

8.With respect to supply chains, relevancy focuses on an organization’s ability to

respond to changes in demand with respect to volume and variety. (False, p. 40)

9.Supply chains should employ a long-term orientation with various participants. (True,

p. 40)

10.Formal partnerships are more likely than informal ones to result in improved long-

term supply-chain performance. (True, p. 41)

11.Power retailers have been at the center of changes taking place that affect the supply

chain. (False, p. 41)

12.The Internet has been referred to as the greatest force of commodization known to

man, for both goods and services. (True, p. 41)

13.Enhanced communications across organizations in a supply chain is only dependent

on the technological capabilities of the organizations. (False, p. 42)

14.Variability in demand orders among supply-chain participants is known as the bubble

effect. (False, p. 42)

15.Inventory control in supply-chain management is attempting to move from ―stops and

st arts‖ to continuous flow. (True, p. 42)

16.Supply chain disruptions (e.g., delayed shipments) that occurred in the wake of the

terrorist attacks in September 2001 have caused some supply chains to reassess their emphasis on inventory reduction. (True, p. 42)

17.Supply-chain councils refer to lobbying groups concerned with promoting favorable

supply-chain legislation. (False, p. 43)

18.Co-opetition is a concept that suggests that companies can be competitors in some

situations while working together in other situations. (True, p. 44)

19.Covisint is an on-line trading exchange that represents an example of co-opetition in

the grocery industry. (False, p. 44)

20.Regulatory considerations present a bigger obstacle than political considerations to

supply-chain management. (False, p. 44)

21.The overall global climate for business has shifted toward allowing more cooperation

among firms—which should help supply-chain management. (True, p. 44)

22.Top management is sometimes hesitant to fully commit to supply-chain management.

(True, p. 45)

23.Data warehousing is a technique that looks for patterns and relationships in the

relevant data. (False, p. 45)

24.Although customer loyalty programs (e.g., frequent shopper cards) can provide highly

detailed data to companies, there are some who believe that these programs potentially violate a customer’s right to privacy. (True, p. 45)

25.Most ERP systems tend to be relatively weak when it comes to logistics and supply

chain requirements. (True, p. 45)

26.Corporate cultures should be an irrelevant consideration when designing a supply

chain. (False, p. 46)

27.An individual firm can only be involved in one supply chain at a time. (False, p. 46)

28.The most common examples of vertical integration today are some lines of paint and

automotive tires. (True, p. 47)

29.Intensive distribution is one of the methods that organizations can pursue when

attempting to integrate their supply chains. (False, p. 47)

30. Informal agreements offer supply-chain participants more flexibility than other

methods of supply-chain integration. (True, p. 47)

31.Contemporary third-party logistics has existed since about 1975. (False, p. 48)

32.Contemporary third-party logistics tends to be characterized by standardized, as

opposed to customized, offerings. (False, p. 48)

33.A fourth-party logistics provider should be viewed as a general contractor whose

primary purpose is to insure that third-party logistics providers are working toward relevant supply-chain goals. (True, p. 49)

34.The fourth-party logistics concept appears to be best suited to small companies that

need logistical assistance in only one or two functional areas. (False, p. 49)

35.As a general rule, supply-chain software packages look to coordinate and integrate

functions, processes, and/or systems across multiple supply-chain participants. (True, p. 50)

PART IV

CASE SOLUTIONS

CASE 2-1 JOHNSON TOY COMPANY

Question 1: From the standpoint of an individual concerned with accounting controls, discuss and evaluate Johnson Toy Company’s present policies for handling returned items.

The controls are poor from the standpoint of accuracy of financial records,

because they provide poor information to management.

Question 2: Answer question 1, but from the standpoint of an individual interested in marketing.

Marketing people tend to favor less stringent controls in the sense that they

provide more flexibility when bargaining with retailers.

Question 3: Propose a policy for handling returns that should be adopted by the Johnson Toy Company. Be certain to list circumstances under which exceptions would be allowed. Should it apply to the Jungle Jim dolls?

One student’s answer is reproduced here.

I.HIGH VOLUME CUSTOMERS (defined as purchasing $75,000 of

merchandise from Johnson’s per year)

A.Functionally damaged goods may be returned to Johnson’s pla nt at

Johnson’s expense with a full refund.

B.High volume customers will received a straight 2% deduction off of

the wholesale selling price to cover defectives—whether defectives are

classified as cosmetically damaged or slow moving items, except when

unable to sell due to special circumstances (see Section III).

II.LOW VOLUME CUSTOMERS

A.Functionally damaged goods may be returned to Johnson’s plant via

Johnson’s salesperson with a full refund.

B.Low volume customers will NOT receive an automatic deduction for

defectives. Instead, the damage or defect must be defined:

1.Cosmetically damaged goods (classified as functionable and

sellable): a 25% discount granted upon inspection by

Johnson’s salesperson.

2.Slow moving items: NO RETURNS

3.Non-moving items (for reasons other than physical damage):

see special circumstances, Section III)

III.SPECIAL CIRCUMSTANCES When product is not resellable for reasons other than being functionally damaged or just a slow mover in the off

season, such as when the product receives bad press (as in the case of

Jungle Jim and Jogger Dolls), Johnson will allow return of all such non-

resellable items under the following conditions:

A.Retailer must pay for the returned merchandise to reach Johnson’s

plant.

B.Retailer’s account will be credited for the full amount of said purchase.

C.Credit is to be used within 30 days of receipt of returned goods at

Johnson’s plant; credit will be void after 30 days.

No mention was made as to whether it should apply to the Jungle Jim dolls. The firm might try to enforce it but customers might complain that it should not be applied retroactively.

Question 4: Should this policy, if adopted, be printed and distributed to all of the retailers who handle Johnson Toy Company products? Why or why not? If it should not be distributed to them, who should receive copies?

Yes, retailers should know exactly what the returns policy will be. One element of

a customer service policy is to let customers know in advance what the policy is.

Question 5: Assume that it is decided to prepare a statement on returns to be distributed to all retailers and that it should be less than a single double-spaced page. Prepare such a statement.

The answer provided for question 3 would suffice here as well.

Question 6: On the basis of the policy in your answer to question 3, develop instructions for the Johnson Toy Company distribution and accounting departments with respect to their roles and procedures in the handling of returns.

One could take the information as developed in answers 3 and 5, and draft a

memo to be sent to both the distribution and accounting departments, telling them of the new policies, and their roles in carrying them out. The accounting

department should be told to develop additional procedures that will protect

against fraud. In addition, other departments in the firm should receive some

information concerning the returns, because they may contain information that

should interest marketing, quality control and production scheduling.

Question 7: Assume that you are Cheryl Gu ridi, the firm’s logistics manager. Do you think that the returns policy favored by the logistics manager would differ from what would be best for the firm? Why or why not?

Yes, the returns policy favored by the logistics manager will favor a tight return

policy so that her department does not have to be responsible for keeping track of returned inventories, and for shipping damaged goods. The firm would probably prefer a looser return policy so that it could be used as a bargaining tool to

increase sales.

Question 8: Until the policy you recommend in your answer to question 3 takes effect, how would you handle the immediate problem of retailers wanting to return unsold Jungle Jim the Jogger dolls?

There are several approaches to this question. Some students have provided very specific policies. Others have said that because the policy was not in effect when the Jungle Jim dolls went out, it should not apply to their situation. This latter

group favored a policy of ―almost anything‖ that would keep retaile rs happy.

They argued—with support from the case material—that there were a number of valued long-term relationships with retailers that should not be harmed.

CASE 2-2 WYOMO GROCERY BUYERS’ COOPERATIVE

Question 1: Co-op members presently pay for goods ―o n the basis of cost to the co-op plus 23% to cover warehousing and transportation from the warehouses to the members’ retail stores.‖ Is this a fair way to cover warehousing costs? Can you think of a better way? If so, describe it.

This system probably favors the stores that have smaller order sizes and higher

transportation costs to reach. ―Better‖ may or may not be the issue; it is only if

one thinks that the rates should be cost-oriented.

Question 2: Answer the problem posed in question 1 with respect to transportation costs.

The previous answer is applicable here. If one wanted rates oriented toward

transportation costs, they might devise a method that takes into account tonnages

carried and distances traveled.

Question 3: Toward the end of the case, Bright describes how some manufacturers pay bribes in order to get shelf space in retail stores. Should retailers accept such bribes? Why or why not?

The bribes are paid in two ways. One is a gift of additional merchandise to be sold, which merely lessen s the store’s cost of goods purchased. This is sometimes

called a ―stocking allowance.‖ The other way is cash paid to salaried employees,

which they would probably pocket. The first method is a fairly common practice;

the second method would be viewed by many as wrong and thus should be

discouraged.

Question 4:The case says, ―Stores were responsible for placing orders with the co-op, although a co-op representative would call on a weekly basis, and one of her/his functions was to help some store operators complete their order forms.‖ Is this a function that the co-op should be performing? Why or why not?

It’s a way for the co-op to help some of its members and it also helps to keep

certain stores loyal to the co-op. Unless the co-op’s board adopts a polic y against

the practice, then there’s nothing wrong with it. The practice can be viewed as a

form of customer service.

Question 5: The case mentions that some of the larger stores that belonged to the co-op sometimes threatened to form their own co-op. Assume that you are hired by some of them to study the feasibility of such a move. List the various topics that you would include in your study.

One could look at all the elements in the distribution system needed to serve the

larger co-ops: warehousing, transportation, inventories, order management, etc.

Then one would determine the costs serving the larger co-ops and compare these

costs to what is presently offered by Wyomo. This is an area where quantity

discounts are important: can the new co-op earn large enough discounts on what it buys to have some major savings?

Question 6:How would you vote on Hardy’s motion? Why?

A student can vote either way, although freezing the number of SKUs may force

the larger members to leave the co-op.

Question 7: Would it make a difference whether you represented a large or small store? Why?

Small stores would probably favor the resolution, unless they realized that

expansion was necessary for the survival of the co-op. If they lose their larger

members, many costs per unit may increase.

Question 8: Are there other strategies that the co-op might pursue to overcome this problem? If so, describe.

They could get additional product space for some product lines, or arrange to have some large volume orders delivered directly to stores, bypassing the warehouse.

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