Online Resources

Online resources related to the book can be accessed at www.prenhall.com/chopra Instructors will need a userid and password to access solutions to exercises and cases. The userid and password can be obtained from your Prentice Hall rep. The various materials available online are: Instructors anual Instructors !olution anual "xcel files containin# solutions to exercises at the end of chapters PowerPoint files containin# overheads !ome sample syllabi from $orthwestern% ichi#an !tate &niversity% and

ichi#an

'

SAMPLE SYLLABUS
Sessio n ' ( , / 3 4 . 0 '1 '' Date !ep. (' !ep. (Oct. / Oct. '' Oct. 'Oct. (3 $ov. ' $ov. $ov. '3 $ov. (0 :ec. 4 Readings !even "leven )apan *hapters ' + , in C&M *hapter .% - in C&M *hapter 0% '1 in C&M Submission

*hapter '' in C&M *hapter '( in C&M *hapter ', in C&M erloni "lettrodomestici *hapter /% 3% 4 in C&M 5pplichem657 *hapters '4 in C&M i( Technolo#ies *hapter '. in C&M 8ord otor *ompany Pro2ect Presentations 8I$5; "<5

Distrigas Corporation Specialty Packaging Corporation, Part B Pro2ect Proposal ALKO Incorporated Sport Obermeyer Llenroc Plastics

Pro2ect 9eport

Other sample syllabi may be obtained under instructor resources from the prentice Hall eb site !prenhall!com"chopra

'.

#ourse $escription and Ob%ecti&es

(. ;o#istics and supply chain mana#ement is uni=ue and% to some de#ree% represents a paradox because it is concerned with one of the oldest and also the most newly discovered activities of business. !upply chain system activities > communication% inventory mana#ement% warehousin#% transportation% and facility location > have been performed since the start of commercial activity. It is difficult to visuali?e any product that could reach a customer without lo#istical support. @et it is only over the last few years that firms have started focusin# on lo#istics and supply chain mana#ement as a source of competitive advanta#e. There is a reali?ation that no company can do any better than its lo#istics system. This becomes even more important #iven that product life cycles are shrinkin# and competition is intense. ;o#istics and supply chain mana#ement today represents a #reat challen#e as well as a tremendous opportunity for most firms. 5nother term that has appeared in the business 2ar#on recently is demand c ain. 8rom our perspective we will use the phrases lo#istics mana#ement% supply chain mana#ement and demand chain mana#ement interchan#eably. In this course we will view the supply chain from the point of view of a #eneral mana#er. ;o#istics and supply chain mana#ement is all about mana#in# the hand>offs in a supply chain > hand>offs of either information or product. The desi#n of a lo#istics system is critically linked to the ob2ectives of the supply chain. Our #oal in this course is to understand how lo#istical decisions impact the performance of the firm as well as the entire supply chain. The key will be to understand the link between supply chain structures and lo#istical capabilities in a firm or supply chain.

'!

(radin)

There will be five case write>ups due durin# the =uarter. This will account for 31 A of the #rade. "ach case write up is due in #roups. Please keep #roup si?es to at most five. Please read the short note on case reports and try to structure case reports accordin#ly. (1 A of the #rade will be for an in class final exam and (3 A for a final pro2ect. 3A of the #rade will be for electronic class participation on the news#roup. :etails of the pro2ect will be #iven on the first day of class. 5s most of the work is in #roups% individual #rades will take into account a peer review from each #roup member of other members in the #roup. *t is e+tremely important and part of the honor code that each member of a )roup contributes to the case analysis by the )roup! *f any indi&idual has not contributed for a particular ee,- she"he should not append his"her name to the case report but submit a separate report on their o n! It will also be the #roupBs responsibility to ensure that this happens. Only one written report will be due per #roup. However% as I have stressed% each member must contribute to the analysis leadin# to the report. The final exam will consist of a series of short conceptual =uestions. The primary ob2ective is for you to review all concepts in class one last time. "ach #roup will be assi#ned a week on which they have to make a postin# on to the news#roup. The postin# must be a practical example where supply chain related concepts either apply or should have been applied.

.!

/e+t and Other Readin)s

ana#ement: !trate#y% Plannin#% and Operations by !. *hopra

The textbook is titled !upply *hain and P. eindl6*C 7.

5ll cases must be read before the class they are to be discussed in 6whether a submission is re=uired or not7. *hapters from this book have been assi#ned as back#round readin# with the material bein# covered. ;ectures will follow the book. The book is best read ri#ht after the lecture to reinforce the concepts discussed. The book also provides technical details that may not be discussed in class. Any !eedback on t e book "ill be m#c appreciated. Please send me feedback either by e>mail or directly. 5ll other readin#s can be read as time allows. They further elaborate on ideas that will be discussed in class but need not be read before class. !ome other text books on the sub2ect that may be of interest are as follows: '. (. ,. /. 3. !trate#ic ;o#istics ana#ement by :. . ;ambert and ).9. !tock. The ana#ement of Dusiness ;o#istics by ).) *oyle% ".). Dardi and *.). ;an#ley. ;o#istical ana#ement by :.). Dowersox% :.). *loss% O.E. Helferich. Dusiness ;o#istics ana#ement by 9onald H. Dallou Inventory ana#ement and Production Plannin# and !chedulin# by "dward 5. !ilver% :avid 8. Pyke% and 9ein Peterson

Other books that will be of interest to students takin# this course include '. (. ,. /. 3. 4. *lock !peed by *harles H. 8ine ass *ustomi?ation by D. )oseph Pine arkets of One by )ames H. Filmore and D. )oseph Pine Towards a Detter !upply *hain by *harles *. Poirier Time Dased *ompetition by )oseph :. Dlackburn *ompetin# 5#ainst Time by Feor#e !talk% )r. and Thomas H. Hout

$etailed #ourse Syllabus

8or each week the case to be covered and the readin#s are specified. The readin#s that are bold should be read before class. The others are accompanyin# readin#s and provide information related to the ideas discussed in class. @ou will find it useful to read them as we #o alon# but they can be read at your convenience.

Week 1
In this session we will discuss supply chain mana#ement and its importance to the success of a firm. Ge will discuss different ways to view a supply chain. Ge will also raise a variety of supply chain related =uestions that need to be answered by any firm. Ge will provide a framework within which supply chain drivers may be analy?ed and appropriate tradeoffs considered. Ge will define key performance measures for a supply chain and establish initial links to lo#istical drivers that a supply chain desi#ner or mana#er may control. Ge will consider the chan#in# environment and look at some of the key challen#es for lo#istics today. Ge will discuss the notion of $ailored Logistics and its importance in todayBs environment. This will be an important concept that we will refine in the context of different lo#istical drivers in the course of the =uarter. Ge start discussion on how a firm can mana#e inventories to ensure a fit between strate#ic supply chain ob2ectives and inventory mana#ement. Ge will illustrate the strate#ic framework for supply chain decisions in the context of the !even "leven )apan case. Please read the case before class. Readin)s '. %et Le&erage !rom Logistics% Harvard Dusiness 9eview% ay>)une '0-/ 6H-/,',7. (. $ailored Logistics' $ e (e)t Ad&antage% Harvard Dusiness 9eview% ay>)une '00, 6H0,,137. ,. $ e Po"er o! *irt#al Integration' An Inter&ie" "it Mic ael Dell % Harvard Dusiness 9eview% arch>5pril '00- 6H0-(1-7 /. Eello## case Se&en +le&en ,apan 3. *hapters '>, in C&M

-eek .
This session will start with a discussion of the :istri#as case to brin# up issues involved in desi#nin# a supply chain. Ge will then discuss demand plannin# in a supply chain illustratin# basic methodolo#ies for forecastin# and a##re#ate plannin#. #ase: Distrigas Corporation 6HD! 0>,.'>(-17. &se the followin# =uestions when preparin# your case report. I'J 5ssume that the utility pays a base commodity char#e% as su##ested in the case% plus a peak usa#e 6or KdemandK7 char#e based on a L/.4, per cf per month rate times the total demand durin# the maximum take day in the last '( months. !uppose the daily peak in :ecember '04. had been (/1 cf. Ghat would the Doston #as bill for '04- have beenM 5ssume that the total demand over '( months is ,1.. Dcf. Ghat is the avera#e cost per cfM Ghat savin#s would have resulted if the peak demand was e=ual to the avera#e demandM

I(J

In the spreadsheet :I!T:" .<;! you are #iven the daily demand at a utility for the months of :ecember% )anuary and 8ebruary. In each of the other months assume that the daily sendout does not exceed '(1 cf. 5ssume that the total demand over '( months is ,1.. Dcf. Gith cost data as #iven in I'J and the case 6assume that the utility wants :istri#as to store the ;$F until the be#innin# of the peak season and that the utility is located within .3 miles7% how much ;$F should the utility purchase from :istri#asM How should the utility use this ;$F 6which days7M Ghat is the annual cost of such a policyM In #eneral the utility will have to make decisions based on forecasts. How would you su##est the utility decide the purchase and use of ;$F from :istri#asM

I,J

Ghat do the utilities #ain from the existence of :istri#asM Ghat would be a suitable business strate#y for :istri#asM Dy this strate#y% what should :istri#as be able to do particularly well% i.e.% what capabilities must :istri#as buildM Ghat are the risks that :istri#as facesM Ghat are the advanta#es and disadvanta#es of alternative ;$F inventory possibilitiesM Ghich of the alternatives would you recommendM GhyM Please include a cost/benefit analysis. &se the discount factor and resale assumptions in "xhibit '1.

I/J

Readin)s 0! $istri)as #orporation (. %etting t e Most !rom Planning $ec nologies% /e&ie"% !pecial Flobal !upplement% Ginter (111 ,. *hapter .% - in C&M0

ohan !odhi% S#pply C ain Management

-eek 1
This session will start with a discussion of the !pecialty Packa#in# *orporation% Part D case 6at the end of *hapter - in C&M7. In this context we will continue discussion of demand plannin# and the use of supply as well as demand mana#ement strate#ies to match supply and demand in the supply chain. Ge will start discussion on the mana#ement of inventory in the supply chain to ensure fit with stated strate#ic #oals. Our focus will be to understand key inventory related levers that may be used to improve the performance of a supply chain. Ge will discuss the effect of volume discounts and short term discounts on order si?es and thus inventory and cycle times in the supply chain. 9ead *hapter . in C&M and play with the workbook in&e)0)ls associated with examples in the chapter. These examples will be discussed in class usin# the workbook. Ge will review the notion of poolin# and its impact on supply chain inventories. Ge will then try to characteri?e products by demand characteristics 6hi#hly uncertain to stable7 and see how appropriate purchasin# decisions can be made. Ge will start by discussin# products with uncertain demand and the factors that affect purchasin# decisions in this case. The discussion will be based on *hapter - of C&M. @ou are provided the workbook ne"sboy0)ls to help you simulate various orderin# policies. Play with the workbook before the lecture to #et a feel for the different issues involved in orderin# under uncertainty. Ge will also discuss certain aspects of Making S#pply Meet Demand in an 2ncertain -orld. #ase: Specialty Packaging Corporation, Part B 6at the end of chapter - in C&M3. Nuestions are included in the case itself.

Readin)s '. *hapters 0% '1 in C&M0

-eek 4
The first half of class will be a #uest speaker from G.G. Frain#er who will discuss the desi#n and operation of the Frain#er supply chain. Frain#er has customers that include small contractors% lar#e corporations and also customers over the web. Our #oal will be to understand how Frain#er has tried to structure its supply chain to meet these varied re=uirements. In the second half of class% we will continue discussin# the role of inventory in the supply chain. (uest Spea,er: Fary !cal?itti% G.G. Frain#er Readin)s '. Eello## note on Postponement. (. *hapter '' in C&M

-eek 5
Ge will start the session with the 5;EO case 6at the end of *hapter '' in C&M7 to discuss various factors that affect or#ani?ation of inventories within the distribution system. &sin# the lessons learnt from the 5;EO case% we will discuss the role that a firm like c aster *arr plays in the supply chain. This firm is a supplier of industrial items and speciali?es in supplyin# small emer#ency orders overni#ht. 5 key ob2ective will be to understand the role poolin# of stock plays in the face of independent demand and how this understandin# can be used strate#ically% as well as to improve operations. In this session we will then discuss the notion of 5ccurate 9esponse. The idea is particularly suited for seasonal and hi#h variability products but has more #eneral applicability. Ge will discuss a variety of accurate response strate#ies that improve the matchin# of supply and demand in such a settin#. In this context we will also discuss how supply contracts can aid in accurate response. #ase: ALKO Incorporated. :etailed =uestions are contained in the case description at the end of *hapter '' in C&M. Readin)s '. *hapter '( in C&M. 2. Ordering Multiple Products with Demand Uncertaint Under !apacit !onstraints

-eek 6
In this session we will illustrate the notion of 5ccurate 9esponse usin# the Sport Obermeyer case. This is most appropriate for product cate#ories with hi#hly uncertain demand. Ge will discuss the role that hi#h cost% low cycle time suppliers can play for a firm that may be competin# on low cost. This will relate back to the role of a small order emer#ency supplier in a supply chain. Ge will develop the notion of $ailored P#rc asing based on the uncertainty of product demand and discuss its application across different product cate#ories as well as for a sin#le product. This will be discussed in the context of #lobal sourcin#.

Ge will also discuss the role that contracts play in accurate response and actions that a supply chain can take to increase profits throu#h accurate response. Ge will discuss the role of transportation in the supply chain and raise various tradeoffs that need to be considered when desi#nin# and operatin# a transportation network. #ase: Sport Obermeyer 6HD!H 0>403>1((7. &se the followin# =uestions when preparin# your case report. I'J &sin# the sample data in "xhibit '1% make a recommendation for how many units of each style Gally Obermeyer should order durin# the initial phase of production. 5ssume that there is no minimum order si?e re=uirement% and that ObermeyerBs initial production commitment must be at least '1%111 units. 5ssume that an initial order of '1%111 units leaves sufficient capacity for the second order. &sin# the sample data in "xhibit '1% make a recommendation for how many units of each style Gally Obermeyer should order durin# the initial phase of production. 5ssume that all ten styles in the sample problem are made in Hon# Eon# 6a minimum commitment of 411 units per style ordered7% and that ObermeyerBs initial production commitment must be at least '1%111 units. I#nore price difference amon# styles in your initial analysis. *learly spell out the methodolo#y you have used to make your orderin# decisions in an exhibit. !pell out the lo#ic behind your methodolo#y. (ote t at I am not looking !or one optimal sol#tion0 My !oc#s "ill be on yo#r t inking abo#t o" s#c an iss#e can be approac ed0 *an you come up with a measure of risk associated with your orderin# policyM This measure of risk should be =uantifiable. 9epeat your methodolo#y now assumin# that all ten styles are made in *hina. Ghat differences 6if any7 resultM Ghat operational chan#es would you recommend to Gally to improve performanceM *learly list the expected benefits from each chan#e. Please try and be very specific in terms of the chan#es and benefits in response to this =uestion. How should Obermeyer mana#ement think 6both short term and lon# term7 about sourcin# in Hon# Eon# versus *hina. Ghat sourcin# policy would you recommendM

I(J

I,J I/J I3J

I4J

Ge will discuss the domestic transportation industry and consider the different modes available. Ge will motivate the link between transportation and inventory costs in the desi#n of transportation networks. Ge will also consider different problems that are relevant when makin# transportation decisions. Readin)s '. Making S#pply Meet Demand in an 2ncertain -orld % Harvard Dusiness 9eview% '00/ 6H0/,1(7. '! Sport Obermeyer .! Merloni Elettrodomestici SpA! /. *hapter ', in C&M. ay>)une

-eek 7
Ge will use the Llenroc Plastics case to discuss key factors that affect costs and customer service when makin# shippin# decisions. Ge will develop the notion of $ailored $ransportation and discuss its applications. Ge will develop a framework for facility location decisions that allows for a multi>plant% multi> warehouse network to supply a lar#e and diverse customer base. Our ob2ective will be to optimally structure the distribution network% takin# into account cost and customer service factors. The workbooks location0)ls and a#dit0)ls will be used in class discussion. Ge will use the 5pplichem case to illustrate these ideas. #ase: Llenroc Plastics' $ e Atlanta $ransportation System. The =uestions for the case report are contained in the case itself. @ou are provided with a simulation pro#ram 6tr#cks0e)e7 that allows you to simulate and evaluate different transportation decisions in terms of cost and customer service. Instructions for the simulation are contained in the case description and can also be obtained by usin# the help menu in the pro#ram. $ote that you will need to ensure that all files 6includin# tr#cks0e)e7 related with the ;lenroc case should be in the same directory. 8rom Gindows you can then r#n the tr#cks0e)e file. @ou will then be #uided by a set of menus. 5s a first step load the llenroc0trk file as prompted by the menu and then proceed. #ase: Applic em 8A3 6HD!H 0>4-3>13'7. &se the followin# =uestions when preparin# your case report. I'J I(J I,J *ompare the performance of 5pplichemOs six 9elease>ease plants. Please be specific about the measures of plant productivity selected by you and why they are important. Ghy are some plants KbetterK performers than othersM ;ist the factors that you feel affect performance. How should plant performance be comparedM @ou are provided a workbook 5PP;I*H".<;! to help you evaluate production and distribution decisions. All costs are in 01112s of US3. :ata contained is from "xhibits (% /% 3 of the case and is as follows: 4ariable cost per 011-111 lb!: *alculated from "xhibit ( usin# raw materials% direct labor% waste treatment and supplies as the components. The costs are #iven in '111Bs of L per '11%111 lb. 5i+ed cost: 9emainin# costs are treated as fixed costs and the fixed cost per plant is obtained by multiplyin# the remainin# costs by the volume produced in '0-(. The costs are in '111Bs of L. /ransportation costs: Obtained from "xhibit 3. The costs are #iven in '111Bs of L per '11%111 lb. *mport duties: Obtained from exhibit 3. The worksheet assumes that duties are char#ed based on the production cost in the source country. Thus the duties for entry into exico would differ if the source plant is 8rankfurt or Fary. $emand: The demands assumed by re#ion are exico *anada ;atin 5merica "urope ,.1 million pounds (.4 million pounds '4.1 million pounds (1.1 million pounds

5sia Pacific &.!.5

''.0 million pounds (4./ million pounds

E+chan)e rates: Obtained from "xhibit 4. Price *ndices: Obtained from "xhibit 4. 5ll input data is contained in the worksheet APPL*#HE. 5ll cost calculations are based on the costs #iven in '0-( &!L. The basic assumption is that the technolo#y at the plants has not chan#ed si#nificantly in the specified six years. To evaluate variable and fixed costs for a #iven year 6between '0.. and '0-(7 simply click on the button #alculate #osts in the worksheet APPL*#HE. 5 dialo# box will appear askin# you for the year for which cost calculations are to be made. "nter the year 6say '0-'7 and click O6. 5ll calculations are done automatically and the costs in '0-' &!L are obtained. The variable and fixed costs are calculated and appear on sheet0 alon# with the demand by re#ion. These can then be used as input to any optimi?ation model. The ad2ustments to cost are as follows: COS$ :;9.:;<< = COS$ :;9. > 8 +<C?A(%/$ :;9. P/IC+I(D+< :;<< 3> 8 3 +<C?A(%/$ :;<< P/IC+I(D+< :;9.

8or example the raw material cost in exico in '0-( was L.3.13 per hundred pounds of release ease. This translates to 3.13P04.3 Pesos in '0-( which is e=uivalent to .3.13P04.3P6'(/.//'0/.(7 '0-' Pesos. This is e=uivalent to .3.13P604.3/(4.(7P6'(/.//'0/.(7 Q '...1. '0-' &!L. 8or this calculation to be truly valid we are makin# the assumption that all raw materials are procured locally for production. How do you think )oe !padaro should structure his worldwide manufacturin# system. 5ssume that the past is a reasonable indicator of the future in terms of exchan#e rates and inflation. @ou must provide a detailed 2ustification for your answer. I/J Ghat impact do you think the abolition of all duties will have on your recommendationsM

Readin)s 0! Llenroc Plastics '! Applichem ,. Locating a#dit o!!ices !or $e)as. /. *hapters /% 3% 4 in C&M 3. The $ew :ynamics of Flobal anufacturin# !ite ;ocation 4. akin# the most of forei#n factories0

-eek 9
(uest Spea,er: Peter eindl% i( Technolo#ies. Peter will talk about the role of Internet exchan#es within the supply chain. In this context we will also discuss the notion of coordination in the supply chain and the role that exchan#es can potentially play. Ge will finish the discussion on location decisions within the supply chain and start the discussion on the role of information in the supply chain. 5lon# with the #uest speaker we will use the contents of the i( Technolo#ies case to discuss information system issues within the supply chain. Our #oal will be to identify the role of various information systems as well as some current considerations in the industry.

'1

Readin)s 0! i' /echnolo)ies (. *hapters '4 in C&M ,. Collaborati&e B#siness Comm#nities' $ e (e)t Ad&anatage% S#pply C ain Management re&ie". 40 +@?#bs' $ e (e" B.B Marketplaces

-eek ;
The #oal of this session will be to discuss the structure of various supply chains in the context of the various supply chain drivers discussed over the last - weeks. Ge will apply the ideas in the context of e>commerce to see what are the opportunities that the Internet provides from a supply chain perspective. Ge will also take the 8ord otor *ompany case to see if the :ell structure is appropriate for 8ord and look for reasons why it may or may not be so. Readin)s 1. "ord Motor !ompan (. - ic e@b#siness is rig t !or yo#r s#pply c ainA !. *hopra and ). Ran C ain Management /e&ie"% )uly/5u#ust (111. ,. *hapter '. in C&M /. Eello## note on $ ird party logistics

ie#hem% S#pply

-eek :B
The first half of the class will consist of three pro2ect presentations from class. In the second half of class we will continue discussion on the impact of e>commerce and provide a wrap up for the class.

''

Pro%ect (uidelines
This is a pro2ect that can be done individually or in #roups 6It would be best to use the same #roups that you are usin# for class assi#nments. However this is not a re=uirement7. There are three possible outcomes from a pro2ect report as follows: To analy?e an existin# lo#istics process and su##est any improvements that needs to be made. "xamples include a study of the distribution system and store deliveries at c:onalds% desi#n of a lo#istics system for a manufacturer of refri#eration e=uipment% and an analysis of intermodal movement for a railroad. To study lo#istics practices in industry from the point of describin# risks% benefits% best practices alon# with industry examples of each. To identify a business opportunity 6for example sellin# furniture on line7 involvin# a product and build a business plan with a focus on supply chain issues. The #oal is to identify the business opportunity and desi#n the ideal supply chain for it. The pro2ect should include implementation details. y expected outlines for the three types of pro2ects are discussed below:

#nal $e an e%isting logistics process and suggest impro&ement

The pro2ect report should not be a detailed description of everythin# you have done but a specific set of observations and recommendations. It should be#in with an executive summary no lon#er than (31 words. 5ll details are to be put in an appendix in the form of exhibits% tables etc. The #eneral #uidelines for the pro2ect are as follows: '. (. ,. /. "xecutive summary :efine the process and the context 6business unit7 in which it operates. Ghat is the strate#y / market of the business unitM Ghat does this imply in terms of the lo#istics process you are studyin#M Ghat must this process be able to do particularly well in terms of cost% time% =uality% and flexibilityM The headin#s mentioned here are broad. @ou are expected to identify specific dimensions alon# which the process is expected to do particularly well. :escribe the current process structure in terms of information% inventory% transportation% and location. :iscuss the process capabilities% #iven the current structure% in terms of the specific dimensions identified by you in /. :iscuss existin# problems and weaknesses in the current process. Ghat additional capabilities does the process need to developM How should the process be restructured to develop these capabilitiesM :iscuss why the chan#es su##ested by you will have the desired effect alon# the key dimensions identified by you. :iscuss how the su##ested chan#es should be implemented with a time line. "xplain any resistance you may face in implementin# the chan#es.

3. 4. .. -. 0.

Please note that these are #eneral #uidelines. I am not lookin# for a pro2ect report with nine points in the se=uence listed above. I have listed the points that I feel are important in most reports. Please feel free to add to or alter the above list as best fits your pro2ect.

'(

Stud logistics practices in industr

The ob2ective here is to study lo#istics practices in industry such as ">commerce and itOs impact on lo#istics and supply chain in an industry or company ":I !ystems includin# other supportin# systems that it makes possible% e.#. *5O 6computer assisted orderin# systems7 etc. *odin# and !cannin# Technolo#ies 6Dar codin#% !* % etc.7% 98 Third party lo#istics Garehouse mana#ement systems Garehouse desi#n and mana#ement

Please do not restrict yourself to the above list. It is meant simply as a startin# point. In each report I expect the followin#: '. 5 description of the lo#istical practice includin# its key elements and its role in the overall supply chain (. a2or benefits of the practice. ,. a2or risks/cost of the practice /. Eey issues in desi#nin# and implementin# the practice 3. Ghich companies is this practice ideally suited forM Ghich companies may it not be suitable forM 4. "xamples of companies that are successfully usin# the practice includin# best practices. .. "xamples of companies that have been unsuccessful in their implementation of the practice and possible reasons. Once a#ain% please do not feel bound by the above structure. It is simply meant to help you #et started. 'uild a business plan with a product (ocus The ob2ective of this report is to identify a business opportunity 6preferably on the web7 involvin# products where supply chain issues are si#nificant. This could be done for a particular company or an industry in #eneral. The business plan should detail the supply chain opportunity and how it will help the business position itself strate#ically. The report should also detail implementation issues.

',

A$$*/*O7AL REA$*7(S A7$ #ASES

The followin# cases and readin#s can be used to supplement the material in the book. This is a subset of the articles in the biblio#raphy of each chapter.

Buildin) a Strate)ic 5rame or, to Analy8e Supply #hains 9#hapters 0:.;

'. Fet ;evera#e from ;o#istics% 9oy :. !hapiro% ?ar&ard B#siness /e&ie"% ay>)une '0-/ 6H-/,',7. (. Tailored ;o#istics: The $ext 5dvanta#e% ).D. 8uller% ). OB*onner% and 9. 9awlinson% ?ar&ard B#siness /e&ie"% ay>)une '00, 6H0,,137. ,. The Power of Rirtual Inte#ration: 5n Interview with ichael :ell% ?ar&ard B#siness /e&ie"% arch>5pril '00-. 6H0-(1-7 /. 5li#nin# !upply *hain !trate#ies with product &ncertainties% by Hau ;. ;ee% Cali!ornia Management /e&ie"% !prin# (11(. 3. Eello## case Se&en +le&en ,apan. 4. :istri#as *orporation 6HD! *ase 0>,.'>(-17.

$esi)nin) the Supply #hain 7et or, 9#hapters <:=;

'. 5pplichem 657 6HD! *ase 0>4-3>13'7.

$emand and Supply Plannin) in a Supply #hain 9#hapters >:?;

'. Fettin# the ost 8rom Plannin# Technolo#ies% ohan !odhi% S#pply C ain Management /e&ie", Special %lobal S#pplement, Ginter (111.

Plannin) and Mana)in) *n&entories in a Supply #hain 9#hapters 01:0';

'. (. ,. /. 3. 4. ana#in# !upply *hain Inventories: Pitfalls and Opportunities% Hau ;. ;ee and *orey Dillin#ton% Sloan Management /e&ie"% !prin# '00(. ass *ustomi?ation at Hewlett Packard% "dward 8eit?in#er and Hau ;. ;ee% ?ar&ard B#siness /e&ie"% )an>8eb '00. 6H0.'1'7. Eello## note on Postponement. Eello## note on Ordering M#ltiple Prod#cts "it Demand 2ncertainty 2nder Capacity Constraints. !port Obermeyer% ;td. 6HD! *ase 0>403>1(( 7 akin# !upply eet :emand in an &ncertain Gorld% .;. 8isher% ).H. Hammond% G.9. Obermeyer% 5. 9aman% ?ar&ard B#siness /e&ie"% ay>)une '00/ 6H0/,1(7.

Mana)in) /ransportation in a Supply #hain 9#hapter 0.;

'. Eello## note on $ransportation $rends. (. erloni "lettrodomestici !p5: The Transit Point "xperiment 6HD! *ase 0>401>11,7 ,. *ase Llenroc Plastics' $ e Atlanta $ransportation System.

'/

Mana)in) #ross:5unctional $ri&ers in a Supply #hain 9#hapter 0< : 0>;

'. *hannel Partnerships !treamline :istribution% 9.:. Du??ell% F. Ortmeyer% Sloan Manangement /e&ie"% !prin# '003. (. The Dullwhip "ffect in !upply *hains% Hau ;. ;ee% R. Padmanabhan% !eun#2in Ghan#% Sloan Management /e&ie"% !prin# '00.. ,. Nuick 9esponse in the 5pparel Industry 6HD!H 0>401>1,-7. /. Eello## note on *endor Managed In&entories. 3. Eello## note on Ad&anced Planning and Sc ed#ling 8APS3 t e ne)t competiti&e ad&antageA 4. *ollaborative Dusiness *ommunities: The $ext 5dvanta#e% S#pply C ain Management /e&ie"% arch/5pril (111 .. ">Hubs: The $ew D(D arketplaces% !teven Eaplan and ohanbir !awhney% ?ar&ard B#siness /e&ie"% ay/)une (111 -. D(D e>*ommerce Opportunities% S#pply C ain Management /e&ie"% ay/)une (11' 0. i( Technolo#ies% Inc. 6HD! 0>400>1/(7 '1. Ghich e>Dusiness is 9i#ht for @our !upply *hainM !. *hopra and ). Ran ie#hem% S#pply C ain Management /e&ie"% )uly/5u#ust (111. ''. 8ord otor *ompany: !upply *hain !trate#y 6HD! 0>400>'0-7 '(. !upply *hain ana#ement at Gorld *o. ;td.6HD! 0>41'>1.(7 ',. Eello## note on $ ird Party Logistics.

'3

SAMPLE SYLLABUS 9Under)raduate Electi&e;

#ourse $escription: This course focuses on the development and application of decision models in supply chains with emphasis on demand forecastin#% a##re#ate plannin#% inventory mana#ement 6cycle and safety7% supply network desi#n% transportation% coordination and sourcin#. !preadsheet based tools and techni=ues will extensively be utili?ed in buildin# various decision models for effective decision makin# in supply chains. #ourse Materials: '. *hopra% !.% and eindl% P. S#pply C ain Management' Strategy, Planning, and Operation% /th "d.% Prentice Hall% $ew )ersey% (110. (. 5ssi#ned cases from *hopraBs book and readin#s 6readin#s will be provided durin# the course of the semester7. #ourse @ebsite: 5ll course materials can be accessed from the 5n#el website. *lass material will be uploaded on a weekly basis. #ourse ReAuirements and (radin) PolicyB "xams: @ou will have one exam focusin# on the concepts% models% and applications discussed from lectures and text. "xam will test your ability of understandin# of concepts% formulatin# problems% interpretin# solutions and derivin# mana#erial implications. "xam will be closed book and closed notes. I will not hold make>up exams unless a student has a very valid reason for missin# it. In my opinion% there are very few valid reasons for missin# an exam. *ase 5ssi#nments: *ases will focus on buildin# and analy?in# decision models for effective supply chain mana#ement. These case assi#nments will re=uire the use of word processin#% spreadsheet% and other optimi?ation software tools. 5ll assi#nments are due at the be#innin# of class. $o late submissions will be accepted. !tudents will work in #roups 6not more than , students in each #roup7 in solvin# these cases. @ou are responsible for formin# your own #roups. Pro2ect: Pro2ect #roups consistin# 6not more than , students7 will research on a topic of their choice relatin# to the area of applications of decision models in supply chain mana#ement. Pro2ect topic needs to #et approved from me before 5ebruary '.. The format of your final report should include a one>pa#e summary presentin# the ma2or findin#s and conclusions% body of the report% and a list of references used in the research. The typed report should be about ->'1 pa#es lon# and is due on April '>!

'4

*lass Participation: I encoura#e you to actively participate in the lectures. 8or example% if you are not clear about a concept bein# discussed in the class% please ask =uestions. I consider askin# =uestions as a very important form of class participation. 5lso% if you have an interestin# experience or insi#ht that either supports or contradicts the concept bein# discussed% please share it with the class. Fradin#: "xam *ases Pro2ect *lass Participation (3 A /3 A (1 A '1 A

Students ith $isabilitiesB If you are in need of special accommodations due to a disability% please see me as soon as possible. /entati&e OutlineB $ate '( )an '0 )an (4 )an ( 8eb 0 8eb '4 8eb (, 8eb ( ar Lecture /opic *ourse !etup% Introduction% Ob2ectives% C Fradin# Policies Introduction to Optimi?ation odels :emand 8orecastin# in !upply *hains Contd0 :emand 8orecastin# in !upply *hains Contd0 #aseB Specialty Pac,a)in) #orporation 9A; 5##re#ate Plannin# in !upply *hains 5##re#ate Plannin# in !upply *hains Contd0 #aseB Specialty Pac,a)in) #orporation 9B; SP# 9A; #ase $ue $ate Inventory ana#ement in !upply *hains: *ycle Inventory Inventory ana#ement in !upply *hains *ycle and !afety Inventory Contd0 SP# 9B; #ase $ue $ate Inventory ana#ement in !upply *hains: !afety Inventory SPR*7( BREA6 #aseB AL6O *ncorporated $etwork :esi#n in !upply *hains $etwork :esi#n in !upply *hains Contd0 AL6O #ase $ue $ate Transportation odels in a !upply *hain #aseB Sportstuff!com !ourcin# odels in !upply *hains ECAM *ourse wrap>up Sportstuff case $ue $ate #hapter

. . '1 '1 C '' ''

0 ar '4 ar (, ar ,1 ar 4 5pr ', 5pr (1 5pr (. 5pr

/ / ', C 9eadin#s '/ C 9eadin#s

'.

PAR/ O7EB BU*L$*7( A S/RA/E(*# 5RAME@OR6 /O A7ALYDE SUPPLY #HA*7S

Ob%ecti&e The #oal of the three chapters in this part is to provide a strate#ic framework that can be used to analy?e desi#n% plannin#% and operational decisions in a supply chain. The course starts with the framework established on the first day. The development of the framework is followed by a discussion on the strate#ic #oals and structure of .>"leven )apan to show how it is consistent with the established framework. The entire discussion takes about (.1 to (.3 hours in an D5 class. #hapter 0 introduces the definition of a supply chain and what it involves. In addition to the deter#ent example used in the textbook% the instructor can encoura#e students to identify supply chain processes involved in a variety of products% for example% consumer durable products such as a television% automobile% etc. Once the definition and sta#es of a supply chain are set% the next step is to discuss the ob2ective of a supply chain and the notion of supply chain surplus or supply chain profitability to show that a real supply chain improvement involves increasin# the total surplus in the supply chain as well as the profits of each party. 5t this sta#e% the importance of mana#in# supply chains effectively needs to be emphasi?ed in order to maximi?e the total surplus. The three decision phases% i.e.% supply chain strate#y or desi#n% supply chain plannin#% and supply chain operations can then be introduced and the importance of the decisions made in each of these phases can be linked to profitability. The instructor may also consider discussin# these phases briefly and linkin# them to various chapters and topics covered in the textbook. 8or example% supply chain strate#y or desi#n phase involves network confi#uration decisions 6plant and warehouse location% transportation decisions% etc.7. !upply plannin# involves effectively matchin# demand and supply throu#h a##re#ate plannin#% inventory mana#ement% etc. 8inally% supply chain operation focuses on a variety of operational decisions that include schedulin# of shipments% satisfyin# customer orders% and specific activities relatin# to operations at plants and warehouses. The two views of a supply chain% i.e.% the cycle view and the push/pull view can then be introduced. The main aspects that need to be covered in the cycle view primarily include the activities and responsibilities involved in each cycle and to some extent an introduction to what decision models are applicable in each of these cycles. 8or example% simple techni=ues such as economic order =uantity 6"ON7% etc.% can be mentioned as tools in replenishment order cycle% and similarly production plannin# and schedulin# models as a part of the manufacturin# cycle. "xamples can be provided to facilitate the understandin# of these cycles. In discussin# push/pull view of a supply chain% it would be useful for the instructor to provide examples of how companies should set their push/pull boundary. The :ell and paint industry examples in the text provide an excellent means to make this point. The relationship between the two process views and the three supply chain macro processes% i.e.% *9 % I!* % and !9 can be established. #hapter ' sets the strate#ic framework that establishes a link between customer needs and supply chain capabilities throu#h the implied demand and responsiveness spectrum. In discussin# uncertainty in supply chains% it is very important to establish the difference between demand uncertainty and implied demand uncertainty throu#h a variety of examples. 8or example% the case of a company supplyin# emer#ency orders of furniture versus a company supplyin# furniture with lon# lead times can be utili?ed. Once this difference is established% cost efficiency versus responsiveness #oals of a supply chain need to be discussed. The cost> responsiveness efficient frontier can then be introduced and it needs to be emphasi?ed that responsiveness comes only at a cost. !ome examples can be discussed at this sta#e. 8or instance%

'-

hi#h>speed transportation by packa#e carries such as 8ed"x and &P! increases responsiveness but results in hi#her costs. 5chievin# strate#ic fit throu#h the uncertainty/responsiveness map needs to be introduced and the ?one of strate#ic fit must be developed. It will help students understand this concept better if some example companies are identified alon# the ?one of fit. 8or example% in #eneral% companies in the hi#h technolo#y industry are located at the top ri#ht hand corner and companies that offer staple items are located at the bottom left hand corner. *ompanies that do not have a #ood strate#ic fit are located anywhere outside the ?one of fit dependin# on the strate#y that they have chosen. 8or example% the Nuaker Oats and !napple fiasco can be utili?ed to illustrate this case. The concept of expandin# the strate#ic scope across the entire supply chain% i.e.% throu#h all the sta#es% needs to be emphasi?ed by hi#hli#htin# the issues with locally optimi?in# a particular process at the cost of other sta#es and the #oals of the supply chain. The advanta#es of #lobally optimi?in# all the processes at different sta#es of the supply chain need to be discussed. The distributor example used in the textbook can be utili?ed for this purpose. #hapter . discusses the lo#istical and cross>functional drivers of supply chain performance namely inventory% transportation% facilities% information% sourcin#% and pricin#. The role of these drivers in achievin# the #oals set by a supply chain strate#y needs to be discussed. How the six drivers can effectively be utili?ed to improve both efficiency and responsiveness of a supply chain needs to be an important part of this discussion. The Gal> art example from the textbook can be utili?ed to illustrate how the different drivers are utili?ed to meet the efficiency and responsiveness #oals. !ome of the other examples that can be discussed are :ellBs direct model that minimi?es the inventory levels thereby improvin# efficiency of their supply chain% and simultaneously involvin# in effective transportation system and Internet based customer order processin# 6information driver7 to improve responsiveness. The next step in *hapter , involves the discussion of ma2or obstacles to achievin# strate#ic fit and the various countermeasures to these obstacles that will be discussed in the rest of the course. These obstacles include increasin# variety of products% decreasin# product lifecycles% increasin#ly demandin# customers% fra#mentation of supply chain ownership% #lobali?ation% and difficulty executin# new strate#ies. It needs to be emphasi?ed that all these obstacles in their own way make it difficult for companies to achieve a proper balance between responsiveness and efficiency. 8or example% :ell builds computers on a made to order basis% which results in a hi#h de#ree of product variety. Increased variety results in a hi#h de#ree of uncertainty that adversely impacts costs and responsiveness. The last step is to discuss the .>"leven )apan story in the context of this framework. Ge start off discussin# the .>"leven strate#y of micro>matchin# supply and demand by location and time of day re=uirin# a very responsive supply chain. Ge then hi#hli#ht how .>"leven has desi#ned facilities% transportation% inventory% and information strate#ies that are consistent with each other as well as the strate#ic #oal. The discussion is typically at a hi#h level so students #et a better feel for the framework. :etailed tradeoffs in various decisions will be discussed in the rest of the course. Additional Su))ested Readin)s The case used here is .>"leven )apan 6Eello## *ase available at the Prentice Hall Geb site7 The case should be treated as a readin# and the followin# =uestions discussed in class: '0

a. How would you characteri?e the business strate#y at .>"levenM Ghat level of responsiveness are they aimin# to achieveM b. Ghat risks does a retailer aimin# for this level of responsiveness faceM c. How has .>"leven structured its facilities% information% transportation% and information strate#ies to diminish its risks and develop a supply chain structure that is well suited for its business strate#yM Other readin#s that can be used to supplement the book are '. Fet ;evera#e from ;o#istics% 9oy :. !hapiro% ?ar&ard B#siness /e&ie"% ay>)une '0-/ 6H-/,',7. (. Tailored ;o#istics: The $ext 5dvanta#e% ).D. 8uller% ). OB*onner% and 9. 9awlinson% ?ar&ard B#siness /e&ie"% ay>)une '00, 6H0,,137. ,. The Power of Rirtual Inte#ration: 5n Interview with ichael :ell% ?ar&ard B#siness /e&ie"% arch>5pril '00-. 6H0-(1-7 /. Ghat is the 9i#ht !upply *hain for @our ProductM arshall ;. 8isher% ?ar&ard B#siness /e&ie"% arch>5pril '00.. 3. The !even principles of !upply *hain ana#ement% :.;. 5nderson% :. ). 8avre% and 8.8. Dritt S#pply C ain Management /e&ie"% !prin# '00.. #ase Assi)nment It is useful to assi#n students a case where they have to desi#n a supply chain. The case should brin# out the tradeoffs between the drivers of supply chain performance > facilities% information% inventory% and information. Fiven that it is early in the =uarter for detailed discussions% the case has to be one that does not re=uire detailed analysis based on skills the students have not seen. The two cases I have used in this context are: '. :istri#as *orporation 6HD! *ase 0>,.'>(-17 (. Halloran etals 6HD! *ase 0>4-,>14(7 The =uestions for :istri#as are in the sample syllabus. The =uestions assi#ned for Halloran etals are '. *ompare Halloran etals and 5llied in terms of the business strate#yM (. *ompare the supply chain desi#n of the two companies. :o you think their supply chain desi#ns are consistent with the strate#y each company hasM Doth cases allow the student to see how the drivers in the framework can be considered when desi#nin# a supply chain and how the decisions with re#ards to each driver are determined by the strate#y as well as decisions made for other drivers. !ome faculty may prefer to assi#n these cases at the end of the term when all ideas related to each driver have already been developed. 5t Eello##% we do enou#h on supply chain mana#ement in the core Operations class that students are e=uipped to handle these cases after the initial (.3 hour lecture developin# the framework and discussin# its application to .>"leven )apan.

(1

PAR/ /@OB $ES*(7*7( /HE SUPPLY #HA*7 7E/@OR6

Ob%ecti&e The #oal of the three chapters in this part is to discuss issues to be considered when desi#nin# a supply chain network. The discussion of this section can take anywhere from ,>- hours dependin# upon the time spent discussin# solution methodolo#ies and cases. #hapter < brin#s to the surface all issues that a firm must consider when desi#nin# their supply chain network. 8or faculty who do not want to emphasi?e on =uantitative models% *hapter / should be the basis of their discussion relatin# to network desi#n. The discussion needs to be#in with the importance of distribution in supply chains. !ome examples can be provided to hi#hli#ht that companies with inappropriate distribution networks can hurt their bottom lines. Gebvan can be used as an example in this context. It must be pointed out that several customer service oriented measures will be influenced by the desi#n of a distribution network% which includes response time% product variety% product availability% and so on. The next step involves the discussion on various factors that influence the desi#n of distribution networks. The main point that needs to be emphasi?ed here is that there can be multiple ways in which supply chain networks can be desi#ned% but the desi#n must be in ali#nment with the strate#ic position of the firm. 8or example% if cost efficiency is the most important priority then few facilities can be utili?ed% but if responsiveness is the priority then more facilities have to be considered. ;astly% it is important to understand how e>business has affected the desi#n of distribution networks in different industries. !pecific aspects such as the impact of e>business on customer service and cost can be emphasi?ed. "xamples that include :ell and 5ma?on can be discussed in this context. #hapter E focuses the discussion on network desi#n and first aims to build a strate#ic framework for facility decisions and then discuss methodolo#ies for network desi#n. !ome instructors may prefer to cover this material early in the term. I prefer to do it at the end because by this sta#e students have a much better understandin# of the costs involved in a supply chain and the tradeoffs to be considered. Ge discuss the factors influencin# network desi#n decisions% in particular how responsiveness and various lo#istics costs vary with an increase or decrease in the number of facilities. It also needs to be pointed out that network desi#n decisions are strate#ic in nature and are typically performed once in every '1 years or so when companies expand their facilities or build new facilities in order to meet an increase in customer demand or new product introductions. 5fter establishin# the strate#ic framework we then discuss various optimi?ation models for network desi#n. Ge discuss how optimi?ation models can be used to decide on the location and capacity in the desi#n phase. In the plannin# phase we then discuss how markets and suppliers should be allocated to locations. ore specifically% we discuss models that include: allocatin# demand to a set of existin# production facilities% where we identify the optimal number of units to be allocated to each plant in satisfyin# the customer demand by minimi?in# the production and transportation costsS capacitated plant location model% where we determine the optimal number of plants to be located and the number of units to be shipped from each plant to each demand point by minimi?in# costS capacitated plant location model with sin#le sourcin#% where a demand point needs to be sourced from a sin#le plant% but a plant can source multiple demand pointsS locatin# plants and warehouses simultaneously% which includes the entire supply chain network. The last model can be extended by incorporatin# supplier location into the decision makin# process.

('

#hapter = is focused on the desi#n of #lobal supply chain networks. The chapter starts with a detailed discussion of total cost in the off shorin# decision and the importance of risk when desi#nin# supply chain networks. This provides a #ood context for the followin# discussion on evaluatin# supply chain decisions under uncertainty. The Dio Pharma case at the end of *hapter 4 fits very well within this #lobal context. The chapter addresses the issue that since supply chain network desi#n decisions are in place for extended periods of time% it is important to account for demand and financial uncertainties 6prices and exchan#e rates7 over this period when desi#nin# a supply chain network. In this context% we discuss the discounted cash flow analysis that is utili?ed to evaluate supply chain desi#n decisions as a se=uence of cash flows over a specific time frame. The discounted cash flow analysis is utili?ed in combination with decision trees in evaluatin# network desi#n decisions under uncertainty. Ge want the student to understand that any capacity in a supply chain network is an option to produce. Thus% capacity should be evaluated takin# this fact into account. The 5pplichem case and the 5 tires example from *hapter 4 are used to drive home this point. I also have a discussion on how the #rowth in e>business is affectin# network desi#n with an increase in centrali?ed inventories with fewer facilities. The discussion takes about , hours at Eello##. I use the followin# case as the context in which to discuss network desi#n decisions 5pplichem 657 6HD! *ase 0>4-3>13'7 5n instructor may also want to use the examples in the chapter to drive home the same points. Eello## students are expected to have read the chapter and understood the examples to some extent before comin# to class. Ge then try to apply the learnin# to the 5pplichem situation. 5pplichem provides a #ood context for the discussion because it is a #lobal supply chain and there are fluctuations in exchan#e rates over time. The case can first be used to show students how network desi#n models can be applied to allocate demand to facilities in a #iven year. 5s exchan#e rates fluctuate% this allocation is no lon#er optimal. The students thus understand that a decision that is optimal at one period of time may not be optimal at all times. Thus% the presence of excess capacity and some flexibility in production can improve the performance of a supply chain. The network desi#n models can then be used to value capacity and flexibility as an option. Other readin#s that can be assi#ned to students include 5rnt?en% D. *.% Drown% F. F.% Harrision% T. P. and Trafton% ;. ;.% '003. Flobal supply chain mana#ement at :i#ital "=uipment *orporation% Inter!aces (3 6'7 40>0,. *ohen% . 5. and ;ee% H. ;.% '0-0. 9esource deployment analysis of #lobal manufacturin# and distribution networks% ,o#rnal o! Man#!act#ring and Operations Management ( 6(7 -'>'1/. akin# the most of forei#n factories% E. 8erdows% ?ar&ard B#siness /e&ie"% arch> 5pril '00. The new dynamics of #lobal manufacturin# site location% 5.:. ac*ormack% ;.). $ewman III% and :.D. 9osenfield% Sloan Management /e&ie"% !ummer '00/ $ote on facility location 6HD! 0>4-0>1307 8or the network desi#n section either the case ana#in# Frowth at !port!tuff at the end of *hapter 3 or the 5pplichem case are suitable to be assi#ned. If one of them is assi#ned% the other can be used as a context for discussin# network desi#n in class.

((

PAR/ /HREEB PLA77*7( $EMA7$ A7$ SUPPLY *7 A SUPPLY #HA*7

Ob%ecti&e The #oal of the three chapters in this part is to stress the importance of plannin# in a supply chain and provide basic tools that can be used when plannin# demand and supply. It is very important that the instructor hi#hli#ht the key role that demand plannin# as well as a##re#ate plannin# play in the success of any supply chain. It is important to hi#hli#ht that these activities involve multiple functions within a firm and should also involve multiple sta#es within a supply chain to be really effective. In particular% the link between marketin# and sales% operations% and distribution must be stressed. The time spent on this portion will depend on the instructorOs #oals. If the instructor wants to teach the detailed forecastin# as well as a##re#ate plannin# methodolo#ies usin# "xcel% teachin# these chapters can take anywhere from , to 4 hours of class time or even lon#er% dependin# upon the back#round of the class. 5t Eello##% most students takin# this class are well prepared in "xcel and are familiar with the forecastin# methods. 5s a result% the discussion focuses more on the implications of plannin# and the tradeoffs involved rather than the methodolo#ies. #hapter > discussions should provide focus on demand forecastin# by first pointin# out that forecastin# provides critical input to a variety of plannin# and execution decisions in supply chains. 8or example% lon#>ran#e forecastin# models assist mana#ement in plannin# for the capacity in the lon# run% which has important implications on facility plannin# and location decisions. !imilarly% short>ran#e forecastin# models can assist mana#ers in a##re#ate plannin# and schedulin# decisions. This substantiates the importance of forecastin# in business. The components of forecastin# and the different methods in forecastin# can then be introduced with emphasis on time series forecastin#% which is the focus of this chapter. 5lthou#h this chapter does not spend time on =ualitative forecastin# models% the instructor can briefly introduce techni=ues such as :elphi approach% expert opinions% etc. !imilarly% simple and multiple re#ression approaches can be introduced as possible methods for causal forecastin#. In the discussion on time series forecastin#% the difference between static and adaptive approaches needs to be addressed. The introduction of different types of demand patterns such as level% trend% seasonality% cycles% and random fluctuation will help students understand these models better. 8or example% in the discussion of seasonal forecastin#% demand for products such as winter clothin#% lawn movers% etc.% can be provided as possible examples. :ependin# on the time available% the instructor can explain all the models discussed in the chapter with illustrative applications in "<*";. In the discussion of movin# avera#es and exponential smoothin# it is important to address the issues relatin# to stability and responsiveness and how they are inversely related. The tradeoff between these two features of a forecastin# model needs to be emphasi?ed. 5 simple #raphical depiction of forecasts for varyin# levels of in exponential smoothin# can be utili?ed to explain the concepts of stability and responsiveness. It is important that the instructor focuses on measures of forecast error% which include both absolute and relative measures. The advanta#es of relative measures such as 5P"% which consider the absolute error as a percenta#e of actual demand% over absolute measures such as 5:% needs to be addressed. The instructor can also use the !O;R"9 option in "<*"; to solve for the optimal value of that minimi?es the forecast error. This can be performed by selectin# the 5: as the tar#et cell in !O;R"9. The "xcel files for the examples% exercises% as well as case will be available from the Prentice Hall Geb site.

(,

#hapter F discussion needs to be#in with the importance of a##re#ate plannin# decisions in supply chains. That is how a##re#ate plannin# can be used to match demand with supply by identifyin# optimal workforce levels% re#ular% overtime% and subcontract production levels% inventory levels% and stockouts/backorders. The chase and level a##re#ate plannin# strate#ies can be discussed next with relative advanta#es and disadvanta#es of the two. Defore the introduction of linear pro#rammin# models for a##re#ate plannin#% it is useful to discuss the limitations of spreadsheet based approaches for solvin# a##re#ate plannin# problems. 5 limitation of the spreadsheet models is that it is difficult to simultaneously consider all possible options in evaluatin# an optimal production plan% which the linear pro#rammin# models overcome. :ependin# on the back#round of students% it may be advanta#eous to do a brief introduction to linear pro#rammin# with a simple demonstrative example 6for example% product mix problem7 in "<*";% which can be followed with a linear pro#rammin# model for a##re#ate production plannin#. #hapter ? focuses on respondin# to predictable variability in a supply chain by mana#in# supply and demand. It needs to be pointed out that a##re#ate production plans are easy to develop and used in conditions where the demand is stable% but in cases where the demand varies from time period to time period with a predictable pattern a firm can utili?e strate#ies to mana#e supply and demand in developin# a cost efficient production plan. 8rom the supply side firms can involve in mana#in# capacity 6temporary workers% subcontractin#% dual facilities% etc7 and inventory. 8rom the demand side firms can involve in discountin# strate#ies. It is important that students walk away with the clear understandin# that pricin# decisions that affect demand and capacity and inventory decisions that affect supply must be made 2ointly. 5##re#ate plannin# provides a vehicle for doin# so% which can be demonstrated throu#h a linear pro#rammin# model. !tudents must also understand the various strate#ies that can be employed to improve the match between demand and supply when demand variations are predictable. 5ll "xcel workbooks used in examples% exercises% and cases will be available at the Prentice Hall Geb site. I also try to brin# out how the Internet offers the opportunity for collaborative plannin# within the supply chain. Additional Su))ested Readin)s Other su##ested readin#s include '. ana#erOs Fuide to 8orecastin#% :. . Feor#off and 9.F. urdick% ?ar&ard B#siness /e&ie"% )anuary>8ebruary '0-4. (. Fettin# the ost 8rom Plannin# Technolo#ies% ohan !odhi% S#pply C ain Management /e&ie", Special %lobal S#pplement, Ginter (111. !tudents will also find a copy of the 8orecastin# !oftware !urvey in the )une (11- issue of O9/ ! Today useful. This survey is updated on a re#ular basis by the ma#a?ine and students can stay current when searchin# for available software. #ase Assi)nment The cases used in this part are !pecialty Packa#in# *orporation 657 at the end of *hapter . and !pecialty Packa#in# *orporation 6D7 at the end of *hapter -. The cases are meant to allow students to apply the methodolo#ies learned in the two chapters. *ase 657 focuses on the use of various forecastin# methodolo#ies while case 6D7 focuses on a##re#ate plannin#. The intendo Fame Firl case at the end of *hapter 0 is also a useful exercise for students to see the importance of linkin# sales and supply chain production decisions when plannin# a promotion.

(/

PAR/ 5OURB PLA77*7( A7$ MA7A(*7( *74E7/OR*ES *7 A SUPPLY #HA*7

Ob%ecti&e This #oal of the three chapters in this part is to provide an understandin# of why inventory builds up in a supply chain and an identification of mana#erial levers that improve supply chain performance and profitability while lowerin# inventories. The material in these three chapters re=uires a minimum of .>'1 hours of class time 6includin# cases7 but can easily take much lon#er dependin# upon the time spent discussin# the technical details. The technical models and details presented in the chapters have been desi#ned with the #oal of allowin# students to be able to build models usin# "xcel to analy?e various inventory related =uestions in a supply chain. The models help illustrate how buyers or sellers react to various inventory situations leadin# to the buildup of cycle and safety inventory. Once a solid understandin# of why inventory builds up has been obtained% the focus then shifts to what mana#erial levers are available to reduce inventories. The belief is that students cannot fully understand how to reduce inventories without understandin# why inventories build up in the first place. #hapter 01 discussion needs to start with the role of cycle inventory in the supply chain. It must be pointed out that build up of cycle inventory in a supply chain is a result of fixed cost and pricin#. In discussin# the impact of fixed costs on cycle inventory the "ON model can be introduced. The inverse relationship between lot si?e and orderin# cost 6fixed cost7 can be explained in substantiatin# the reasons for build up of cycle inventory in a supply chain. The "ON model analysis can be discussed by usin# the Dest Duy example in the textbook or by usin# other examples such as a Tar#et store replenishin# a Texas Instruments calculator. It is important to address all the assumptions of the "ON model and it can be stated that some of the assumptions such as constant demand% constant lead>time% no =uantity discounts and backorders% will be relaxed later in this chapter and in the next chapter% i.e.% *hapter '' 6safety inventory7. The concept of a##re#atin# multiple products in a sin#le order for reducin# the lot>si?e and spreadin# the fixed costs across products can be discussed as an effective strate#y for cycle inventory reduction. *ost comparisons can be performed between orderin# and deliverin# lots independently for each product% 2oint orderin# and deliverin#% and 2oint orderin# and deliverin# of a subset of products. The discussion can then move to pricin#% which can also result in increased levels of cycle inventories in supply chains. The notion of =uantity discounts can be introduced by discussin# lot si?e based discounts 6all unit and mar#inal unit discounts7% volume based discounts% and short> term discounts 6trade promotions7. The relative advanta#es and disadvanta#es of each of these discountin# strate#ies need to be discussed with respect to impact on cycle inventory% supply chain coordination and costs. #hapter 00 be#ins with the role of safety inventory in a supply chain. The focus is then on the factors influencin# the build up of safety inventory in a supply chain% which include demand and supply uncertainty and desired level of product availability. The measurement of demand uncertainty is introduced next and its impact on safety stock in con2unction with product availability is discussed throu#h a variety examples. The impact of supply uncertainty on safety stock is then discussed followin# which the 2oint impact of both demand and supply uncertainty on safety stock is addressed. The main point that needs to be emphasi?ed here is that as demand

(3

and supply uncertainties increase the safety stock levels increase. Thus% mana#ement needs to identify strate#ies for decreasin# these uncertainties in a supply chain. The discussion then shifts to mana#erial levers that can help decrease safety inventories without decreasin# the level of product availability. In this context% the impact of a##re#ation on safety inventory across several re#ions is discussed. The main idea bein# that as the demand correlation between various re#ions decreases% inventory a##re#ation results in hi#her benefit levels% i.e.% lower levels of safety inventory without adversely affectin# the product availability. 5t a demand correlation level of 1 there is maximum benefit in movin# from a disa##re#ated option to an a##re#ated option% and at a demand correlation level of ' there is no difference between the two options. The instructor can use the 5;EO case to address these issues. The discussion then moves to issues associated with physically centrali?in# inventories and remedies that allow achievin# benefits of a##re#ation without physical centrali?ation. In this context% we discuss information centrali?ation% speciali?ation% product substitution% component commonality and postponement. #hapter 0' focuses on determinin# the optimal level of product availability and how the level of product availability influences the profits in a supply chain. The models discussed focus on linkin# the level of product availability to profits. This naturally leads to the mana#erial levers that may be used in a supply chain to increase profits. In this context we discuss improved forecastin#% =uick response% postponement% and tailored sourcin#. Ge also spend some time discussin# the role that supply chain contracts play and how they may be desi#ned to improve supply chain profits. Gith each chapter% I have a discussion on how e>business is affectin# cycle inventory% safety inventory% and the level of product availability. The key idea is that the #rowth in e>business offers an opportunity for inventories to be centrali?ed and variety to be postponed. It is useful to brin# in examples of industries that have achieved this as well as those that have not. Additional Su))ested Readin)s The three chapters here are fairly complete. Ge do use a follow up note on Postponement 6Eello## note that will be available from the Prentice Hall Geb site7 to supplement the discussion in *hapter ''. 5nother basic readin# that may be of interest to D5s is '. ana#in# !upply *hain Inventories: Pitfalls and Opportunities% H.;. ;ee and *. Dillin#ton% Sloan Management /e&ie"% !prin# '00(. This readin# is best assi#ned at the be#innin# of the discussion on inventories while the postponement readin# can follow the discussion on the topic. !tudents and instructors interested in more details on inventory models should refer to the book '. Inventory ana#ement and Production Plannin# and !chedulin# by ".5. !ilver% :. Pyke% and 9. Petersen% )ohn Giley C !ons% '00-. The book has a very #ood discussion on the technical details of a variety of inventory models. 5dditional readin#s to supplement the discussion in *hapter '( include '. akin# !upply eet :emand in an &ncertain Gorld% .;. 8isher% ).H. Hammond% G.9. Obermeyer% and 5. 9aman% ?ar&ard B#siness /e&ie"% ay>)une '00/ (. 9eturns Policies: akin# oney by akin# Food% R. Padmanabhan and I.P.;. Pn#% Sloan Management /e&ie"% 8all '003. #ase Assi)nments There are three cases that may be assi#ned for students to understand the value of the ideas that are learned in each chapter. They are '. :elivery !trate#y at oon*hem 6*ase at end of *hapter '17 (4

(. ana#in# Inventories at 5;EO Inc. 6*ase at end of *hapter ''7 ,. !port Obermeyer% ;td. 6HD! *ase 0>403>1((7 The oon*hem case shows students how cycle inventories can be reduced if deliveries to multiple customers are a##re#ated on the same truck lowerin# the fixed cots per customer delivery. !tudents can then see how customers of varyin# si?e should be treated differently in this a##re#atin#. The 5;EO case shows the impact of inventory a##re#ation on safety inventories. here students see that the benefit of a##re#atin# hi#h demand items can be very different from the benefit from a##re#atin# low demand items. Gith the increase in transportation cost on a##re#ation% it is better to decentrali?e the hi#h demand items while centrali?in# the low demand items. This desi#n also allows the company to be closer to its customers. The =uestions used for oon*hem and 5;EO are in the cases. The !port Obermeyer case shows how sourcin# strate#ies can be desi#ned to improve the matchin# of supply and demand. The case also discusses supply chain actions that improve profitability. The =uestions used are in the syllabus and a detailed teachin# note is available from HD! publications.

(.

PAR/ 5*4EB $ES*(7*7( A7$ PLA77*7( /RA7SPOR/A/*O7 7E/@OR6S

Ob%ecti&e #hapter 0. starts with a discussion of the various modes of transport% their cost structure% the key problems faced by carriers% and their role in transportation. !tudents should be able to appreciate the stren#ths and weaknesses of each mode of transport and what it is best used for. It is useful at this time to discuss with students the ma2or players in each industry as well as current trends. 5 #ood source for this information is Distrib#tion ma#a?ine that puts out an annual issue with all these details. The next step in class is to discuss various desi#ns of transportation networks from direct shippin# to cross dockin# and their relative stren#ths and weaknesses. 8inally a si#nificant amount of time is spent discussin# the tradeoffs involved in transportation network desi#n. The tradeoffs discussed include inventory and customer response time when selectin# appropriate modes as well as when decidin# on the de#ree of inventory a##re#ation. 8rom a tactical standpoint a discussion on vehicle routin# can also be held. It is important to brin# out the discussion on tailorin# to show that a #ood transportation network will often be tailored by products and customers. I also have a discussion on how the #rowth in e>business is affectin# transportation. I brin# out the fact that the #rowth in e>business is leadin# to an increase in small shipments and this fact tends to raise transportation costs and increase the need for opportunities for consolidation. The discussion takes about , hours at Eello## but will take lon#er if more time is spent on vehicle routin#. #ase Assi)nment 8or the transportation section I assi#n the erloni case and have a discussion of the Dombay :abbawallahs. The focus of the discussion is how the dabbawallahs can make the system work and how this system compares with systems like Eo?mo and &rbanfetch that failed in the &nited !tates. 5nother interestin# cases is ;lenroc Plastics: The 5tlanta Transportation !ystem The case was ori#inally developed by ). uckstadt and P. )ackson out of *ornell and allows students to understand the relationship between transportation and supply chain performance. The case can be used to have students practice tactical skills of vehicle routin#. The case is also useful in helpin# students understand how a transportation system can be structured to handle small and lar#e customers in different ways. I use the case to emphasi?e the notion of tailored transportation discussed in the chapter. !oftware is available from Peter )ackson at *ornell to help students work on the case.

(-

PAR/ S*CB MA7A(*7( #ROSS:5U7#/*O7AL $R*4ERS *7 A SUPPLY #HA*7

This module deals with four topics all related to mana#in# cross>functional drivers in a supply chain% i.e.% sourcin# 6chapter '/7% pricin# and revenue mana#ement 6chapter '37% information technolo#y in a supply chain 6chapter '47% and coordination in a supply chain 6chapter '.7. #hapter 0< discussion be#ins with the importance of sourcin# in supply chain mana#ement. It may be useful to point out the impact of sourcin# decisions on a variety of final product dimensions such as cost% =uality% delivery% desi#n% manufacturability% etc. One of the important issues that need to be addressed and discussed is whether to outsource an activity or perform it in> house. The next step involves the discussion of key sourcin# related practices% which include supplier evaluation and selection% contract mana#ement% desi#n collaboration% and procurement. In the area of supplier evaluation it is important to point out that multiple factors that are both strate#ic and operational in nature need to be considered in the evaluation process. Ghile traditional supplier evaluation models have primarily been price>based more recent approaches have allowed for the incorporation of multiple factors such as =uality% delivery% desi#n capabilities% cost reduction capabilities% flexibility% amon# others. Thus% the evaluation process has to be centered from a total cost of ownership standpoint by effectively considerin# a variety of supplier attributes and capabilities. It may be useful to delve into some of the more recent issues of the ,o#rnal o! S#pply C ain Management to discuss some of the recent trends in supplier evaluation and selection. 5nother important part of this chapter is the area of auctions and ne#otiations. The instructor can focus on supplier selection 6winner determination7 pertainin# to auctions. The different auction formats can be introduced and the concept of biddin# and identifyin# winners can be discussed. I focus a lot of my discussion around contractin# and the impact different contracts have on supply chain performance. I also spend some time discussin# how sourcin# can provide value for direct and indirect materials. 5 key aspect that needs to be addressed here is that the procurement process for direct materials must focus on improvin# coordination and visibility with the supplier. That is to coordinate the entire supply chain and effectively match supply and demand. This essentially involves providin# production plans% inventory levels% and capacity levels to the suppliers so that it improves their visibility and facilitates the plannin# and schedulin# of their production. The area of risk mana#ement in supply chains is #atherin# a lot of momentum with focus on supply chain disruptions due to natural disasters% terrorist attacks% etc. The discussion here can focus on different types of risks involved in sourcin# and what some of the strate#ies are to miti#ate these risks in order to make the supply chain effective. #hapter 0E discusses the role of pricin# and revenue mana#ement in maximi?in# profitability from supply chain assets. *onditions under which revenue mana#ement is applicable are discussed and in each case the basic tradeoffs are identified. Ge discuss revenue mana#ement for multiple customers% perishable assets% seasonal demand% and bulk and spot customers. In the case of revenue mana#ement for multiple customers the concept of differential pricin# is discussed by utili?in# the airline industry as an example. 8or perishable assets% the concept of the newsboy problem can be discussed and various tactics for effectively mana#in# perishable assets can be addressed. "xamples can include items such as fruits% clothin#% and airline seats. The concept of

(0

demand shiftin# can be discussed in the case of seasonal products to balance peak and off>peak demand patterns. In the case of revenue mana#ement for bulk and spot markets% the concept of usin# pure strate#ies to satisfy either bulk or spot customers can be discussed% and the mixed strate#y that decides the amount of asset to reserve for bulk and spot customers can be addressed. The time spent on this *hapter depends on what students have learned in their "conomics and arketin# courses. 8or students that are bein# exposed to revenue ana#ement for the first time% you can easily spend , hours on this chapter. 8or students that have prior exposure% the discussion can be completed in under an hour. #hapter 0=2s main point is that information technolo#y can play an important role in coordinatin# supply chain decisions. The application of information technolo#ies in mana#in# the macro processes of a supply chain is discussed next% which include *ustomer 9elationship ana#ement 6*9 7% Internal !upply *hain ana#ement 6I!* 7% and !upplier 9elationship ana#ement 6!9 7. The *9 processes include marketin#% sellin#% order mana#ement% channel mana#ement% and call/service center. !ome of the important technolo#y vendors that support *9 processes are !iebel !ystems 6best of breed7% !5P% Oracle% and Peoplesoft. 5lso% in this domain are other players such as <chan#e% which was recently ac=uired by 5mdocs that speciali?es in billin# C *9 . These technolo#ies primarily provide functionality that includes auto call distribution systems% help desk% voice reco#nition% and call center mana#ement in the area of customer service. In the area of marketin# automation they assist in marketin# campai#ns% direct marketin#% profilin#% database marketin#% and online marketin#. In the area of sales automation they provide tools for contact mana#ement% order mana#ement% sales force automation% and sales information systems. The I!* processes involve strate#ic plannin#% demand plannin#% supply plannin#% fulfillment% and field service. The two best of breed technolo#y vendors in the I!* space are i( Technolo#ies and anu#istics. However% "9P players such as !5P and some startups are makin# inroads into the dominance of these two companies. !9 processes mainly include sourcin#% ne#otiation% buyin#% and supply collaboration. 5riba and *ommerce One are important players in this domain% but companies such as *larus% !5P% i( Technolo#ies% and anu#istics have made si#nificant strides in this area as well. The !9 software provides companies with tools that support supply base optimi?ation/rationali?ation% supplier risk assessment/mana#ement% supply base benchmarkin#% supplier evaluation and selection% supplier performance monitorin#% contract mana#ement% content mana#ement% and e> auctions. It must be pointed out that the three macro processes 6*9 % I!* % and !9 7 can effectively be inte#rated with each other throu#h a fourth process called the Transaction ana#ement 8oundation 6T 87% which is supported by "9P players such as !5P% Oracle% Peoplesoft% and ): "dwards. #hapter 0> #ets students to understand how the lack of coordination can hurt the performance of a supply chain and the causes of lack of coordination. The bullwhip effect can be introduced as a phenomenon that occurs due to lack of coordination. The students can then understand mana#erial actions that may be implemented in a supply chain to achieve coordination and reduce the bullwhip effect.

,1

Ge start with the effects of lack of coordinated decisions on supply chain performance% i.e.% how lack of coordination increases manufacturin# cost% inventory cost% transportation cost% replenishment lead time% and decreases product availability and profitability. The next step involves the discussion on obstacles to coordination in a supply chain. !pecifically% these include incentive% information processin#% operational% pricin#% and behavioral obstacles. ana#erial levers to achievin# coordination can then be presented. !ome instructors may prefer to discuss the impact of the lack of coordination and its causes earlier in the course. 5t Eello##% students have seen this discussion in their core Operations class. 5s a result it is not repeated here. If students have not played the Deer Fame% they should #et a chance to do so. The #ame can be played manually with pennies thou#h there are several online versions also available. I prefer to discuss mana#erial actions to achieve coordination at this sta#e of the course because most of the discussion prior to this sta#e leads to mana#erial levers that improve coordination in the supply chain. This discussion can thus brin# to#ether everythin# the students have learned up to this sta#e. Additional Readin)s !ome of the readin# that can be used for supplier evaluation and selection decisions are: $arasimhan% 9.% Talluri% !.% and ende?% :.% (11'. !upplier evaluation and rationali?ation via data envelopment analysis: an empirical examination. ,o#rnal o! S#pply C ain Management% ,.6,7% (->,.. Darbaroso#lu% F.% and @a?#ac% T.% '00.. 5n application of the analytic hierarchy process to the supplier selection problem. Prod#ction and In&entory Management ,o#rnal % ,-6'7% '/>('. "llram% ;. .% '003. Total cost of ownership: an analysis approach for purchasin#. International ,o#rnal o! P ysical Distrib#tion and Logistics Management % (36-7% />(,. !arkis% ). and Talluri% !.% (11(. 5 model for strate#ic supplier selection. ,o#rnal o! S#pply C ain Management% ,-6'7% '->(-.

The students will find the followin# readin#s useful: Eello## note on Ad&anced Planning and Sc ed#ling 8APS3 t e ne)t competiti&e ad&antageA *ollaborative Dusiness *ommunities: The $ext 5dvanta#e% S#pply C ain Management /e&ie"% arch/5pril (111 ">Hubs: The $ew D(D arketplaces% !teven Eaplan and ohanbir !awhney% ?ar&ard B#siness /e&ie"% ay/)une (111 Ghich e>Dusiness is 9i#ht for @our !upply *hainM !. *hopra and ). Ran ie#hem% S#pply C ain Management /e&ie"% )uly/5u#ust (111. 5n excellent case that provides context for the discussion on coordination is Darilla% !p5 657 6HD! *ase 0>40/>1/47 It is particularly effective ri#ht after the students have played the beer #ame because they are able to see that there are several other factors that do not appear in the beer #ame that play a role in the lack of coordination. The points that come out of the Darilla discussion fit extremely well with the points discussed in *hapter '4. 5t Eello## students discuss Darilla in the basic operations course and thus the discussion is not repeated here. :ependin# upon the depth to which the discussion is to be carried% students can also be #iven Darilla 6D7% 6*7% and 6:7 as a follow up. ,'

8or the discussion on information technolo#y and the role of exchan#es in coordination% the followin# case forms #ood back#round readin# for students. i( Technolo#ies% Inc. 6HD! 0>400>1/(7 8or the discussion on e>business and the supply chain several contexts are provided in *hapter '-. 5 more detailed context in the area of book retailin# is provided by the followin# case: ;eadership Online: Darnes C $oble vs. 5ma?on.com 657 6HD! *ase 0>.0->14,7 5 context to discuss #eneral supply chain desi#n is also provided by the followin# cases: 8ord otor *ompany: !upply *hain !trate#y 6HD! 0>400>'0-7 !upply *hain ana#ement at Gorld *o. ;td.6HD! 0>41'>1.(7 #ase Assi)nment 5ny of the above cases may be assi#ned if the instructor desires. The Halloran etals case discussed in the be#innin# can also be used at the end to wrap up the discussion on supply chain desi#n. 5t Eello## I use the final pro2ects as an assi#nment so I do not assi#n any of these cases.

,(