ISyE 3103B – Fall 2001
Supply Chain Modeling: Logistics
Prof. John Vande Vate
Practice Final Exam (December 5, 2001)
1. Answer TRUE or FALSE for each of the following questions. Provide a brief explanation
a) It is generally impractical to solve practical routing problems by using integer programming.
b) It is always more profitable for a buyer to negotiate “D-class” INCOTERMS with a supplier.
c) While doing 2-opt or 3-opt, it is worthwhile to accept worse solutions every once in a while.
d) The largest customer of ocean freight in terms of volume is petroleum products.
e) The minimum spanning tree heuristic has an upper bound on the length of the tour it produces, and hence it is better than all other heuristics like Nearest Insertion, Clark-Wright savings, etc.
f) Sport Obermeyer was using forecasts generated by members in the “Buying Committee”. Let’s assume they were generated “unscientifically”. Their forecasts would have greatly improved if they had uniformly used the triple exponential smoothing method (forecast with level, trend and seasonality) to forecast demand.
g) Only the product design and manufacturing process need to be changed in order to implement the idea of product postponement.
2. Consider a large US-based sports goods manufacturer who has a manufacturing plant in Jiangmen, China. The company wishes to ship goods to a big distributor in Toulouse, France. The distributor will ultimately sell to many wholesalers and retailers across Europe.
The transaction is for 3,000 items, which will be a single shipment. The manufacturing and packaging cost is $42.00 per item. There are two options the manufacturer can choose from – the first is to ship to Dover, England and then get the goods “inland” to Toulouse (assume there are no additional duties and tariffs for going from England to France). The second option is to ship to Bordeaux, France, and then take the goods inland to Toulouse.
Additional information :
Insurance : 1.5% based on FOB cost
Ocean freight : $24,700 per shipment (to Bordeaux) if the manufacturer is responsible
$23,400 per shipment (to Dover) if the manufacturer is responsible
$22,000 per shipment to Bordeaux if the distributor is responsible
France inland freight : $12,500 per shipment (from Bordeaux) if the manufacturer is responsible
$21,500 per shipment (from Dover) if the manufacturer is responsible
$9,300 per shipment if the distributor is responsible
Duty rate : 4% ad valorem CIF price in England, 9% in France
China inland freight : $0.11 per item if the manufacturer is responsible
$0.29 per item if the wholesaler is responsible
Calculate the total transaction cost to the wholesaler for each option.
3. The Gilbert Air-Conditioning Company is considering the purchase of a special shipment of portable air conditioners. Each unit will cost Gilbert $80, and it will be sold for $125. Gilbert does not want to carry surplus air conditioners over until the following year. Thus, all surplus air conditioners will be sold to a wholesaler for $50 per unit. Assume that the air conditioner demand follows a normal probability distribution with mean = 20 and standard deviation = 8.
What is the probability that Gilbert will sell all units it orders ?
- Discuss the issues involved in developing an appropriate routing technology for each of the following applications. Your answer should address topics of data availability and quality, what computational resources are available and appropriate, how valuable improvements in the solution are, issues specific to the setting that complicate the problem, etc. You may even wish to suggest appropriate routing techniques.
The SDI initiative has proposed a space based system for shooting down intercontinental ballistic missles in mid flight. The system is designed to face several targets simulateously, but because of the speed at with the missles travel, will only have a few seconds available to intercept them. It must choose a next target, aim and destroy it before moving on to the next target.