The University of Scranton

Arthur J. Kania School of Management

OM 540: Supply Chain Management

Special Fall 2013 Term (2A)

Final Exam

Due by 11:55 pm Central Time, Sunday, October 20

Name:

Question 1

Give two examples each of a functional product and an innovative product.
Functional products are staples that people buy in a wide range of retail outlets. Mostly, they do not change much over time; stable predictable demand, long life cycles, and have low profit margins.
Fashionable clothes and personal computers are examples of innovative products. Innovative products have short life cycles, high profit margins, and volatile demand.

Characterize functional/innovative products by choosing the appropriate adjective from the last column.

Product Characteristic Functional Product Innovative Product Choose From Lifecycle length
Long Short Long/Short
Contribution margin
Low High High/Low
Product variety
Little Lot Lot/Little
Forecast errors
Small Large Large/Small Stockout rates
High Low High/Low Forced end-of-season markdowns
Rare Frequent Frequent/Rare Order lead time
Long Short Long/Short
It is claimed that a supply chain has two functions: a physical function, and a market mediation function. Explain what these terms mean. Physical functions are based on production, transportation, and inventory storage. Market mediation arises when supplies do not match with demand.

Supply chains are generally of two types: physically efficient supply chains, and market responsive supply chains. What type of supply chain would be suitable for a functional product? Why?

Physically efficient process- meets demand efficiently at the lowest possible cost through high utilization of productive capacity, minimum inventory investment, cost efficient lead time reductions, and by choosing suppliers based on low…