DOC PREVIEW
GT ISYE 6230 - Supply Chain Management

This preview shows page 1 out of 2 pages.

Save
View full document
View full document
Premium Document
Do you want full access? Go Premium and unlock all 2 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 2 pages.
Access to all documents
Download any document
Ad free experience

Unformatted text preview:

ISyE 6230 – Economic Decision Analysis II – Spring 2008HW 3: Supply Chain Management Due date: Thurs Mar 13 (no extensions)Grading: up to 10 points per problem for completing each problem; the remaining 50 points will come from grading one randomly selected problem for correctness. In all of the following questions, you are required to show your work and demonstrate clearly the logic of your method. Your final answer should be clearly marked. Please write Last Name, First Name on the assignment you turn in.1) Find an industry article on supply chain coordination and/or contracting and analyze the situation (avoid Blockbuster's revenue sharing). In particular, discuss the structure of the contract and whether or not the supply chain would yield different product flows and prices from a centralized channel, comment on the distribution of risk, and the distribution of power and profit. Be sure to give the full reference of the article. Be prepared to discuss article in class on the date the homework is due.2) A local coffee shop owner is considering introducing a sandwich stall in his store to attract the professionals in the neighborhood during lunch time. The owner of the store realizes that it would be best if he offers Subway sandwich in his shop due to its popularity. Suppose the demand for Subway sandwichin that particular neighborhood is P= (15-q/400). The cost to the coffee shop of selling sandwich is $2 per unit. The cost to the Subway Inc of supplying it’s franchise material is $1.50 per unit. a) What is the optimal price and quantity if Subway Inc owned the local coffee shop?b) What is the profit from selling the sandwich at the coffee shop if Subway Inc owned the coffee Shop?c) What would we expect to be the wholesale price(w), the quantity demanded (q), and price (p) to be if the coffee shop was not owned by Subway Inc.?d) What are the profits for each company under this wholesale price contract? Find the changein overall profit from the decentralized to the centralized solution.e) Suppose, Subway Inc decides to launch advertising campaign and therefore decides to charge a fixed fee F and the wholesale price of w per unit to the local shop. What should bethe value of w so that this contract coordinates the supply chain? For what values of F is this contract acceptable for both the retailer and the supplier?f) Now, suppose that Subway Inch charges a fixed fee of $7000 and supplies the franchise materials at $1.50 to the coffee shop. The coffee shop agrees to share 25% of it’s revenue from selling sandwich to Subway Inc. Calculate the profit of the retailer and the supplier under this contract. Is this contract desirable to the retailer? Explain why or why not? Does this contract coordinate the supply chain?3) You are in charge of placing an order for swimsuits for your retail store located at Lenox mall. You have compiled data on past sales and you estimate that the demand will follow a uniform distribution witha range of 100 to 400. You have found a reliable swimsuit manufacturer in Malaysia who is willing to supply the latest trend swimsuits. It costs you $55 per swimsuit plus $5 to ship each swimsuit to Atlanta. It costs the manufacturer $15 to produce each swimsuit. You can sell the swimsuits at your store for $150.If any swimsuits are left over at the end of summer you can sell it to a discount store in Miami for $25 because no store in Atlanta is willing to buy it from you. However, you have to pay the shipping cost of $1.50 per unit to ship it to Miami for disposal. (a) Determine the optimal order quantity and profit for each manufacturer and you under decentralized model without any coordination. What would be the expected overstock level under this arrangement? 1(b) Determine the optimal order quantity and total profit of the supply chain under centralized supply chain.(c) If manufacturer offers you a buyback price of $30 per left over swimsuit, and you accept, will this newagreement coordinate the supply chain? What is the profit for each party (you and manufacturer)? (Assume the salvage value is zero under this case and you have to pay the shipping cost to send it back)(d) Still using the buyback contract, suppose that you only can stock up to 300 swimsuits. Determine the profit for each party. Is the buyback contract a good idea for the supplier in this case?4) Suppose a supplier sells a good at w per unit. Demand for this good is distributed with cdf F(x)and pdf f(x). Supplier’s unit cost isSc, andSRccc . Unit selling price is p. Suppose the supplier decides to refund the retailer Rcw  for units unsold up to min},{ qI where I is the remaining inventory and]1,0[.a. What is the Centralized supply chain solution to this arrangement?b. What is the expected number of units sold by the retailer?c. What is the expected number of units for which the retailer gets compensation for?d. Find an expression for retailer’s profit function and specify the condition that it needs to satisfyso that the order quantity *qis optimal for the retailer. e. How can we be assured that the retailer will choose the optimal order quantity given that part d) is satisfied?e. What happens to retailer’s profit as  goes up?5) Automotive manufacturers use promotions such as customer rebates to increase sales and market share. In practice, rebates may have an additional effect on the market demand since they are often advertised by the manufacturers and/or retailers. This may increase awareness and hence, increase market potential. For example, in auto industry both the dealers and the carmakers use newspapers and broadcasting as a means for advertising. We can model this situation with market potential ,)1( aaR .0 However, it is costly to advertise these promotions and it is essential that the manufacturer finds the correct balance between the cost of promoting and the revenue from the additional sales. We can model the cost as a convex and increasing function of  with an appropriate cost factor, e, and i.e.,2e. The manufacturer's problem is to find the optimal values for R and  to maximize profits. Suppose that the inverse demand curve is given by QQP 55000)( and the cost to the manufacturer is $10,000. a. Setup the retailer's profit function and determine the optimal *Q. (Hint, consider carefullythe results from the model when rebate does not increase demand directly.)b. Setup the manufacturer's profit function where the


View Full Document

GT ISYE 6230 - Supply Chain Management

Documents in this Course
Recap

Recap

22 pages

Recap

Recap

11 pages

Load more
Download Supply Chain Management
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Supply Chain Management and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Supply Chain Management 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?