Solution Manual for Managing Supply Chain and Operations: An Integrative Approach, 2nd Edition

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Solution Manual for Managing Supply Chain and Operations: An Integrative Approach, 2nd Edition simplifies the toughest textbook questions, providing easy-to-follow solutions for every chapter.

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Managing Supply
Chain and Operations
An Integrative Approach
Second Edition
S. Thomas Foster
Scott Sampson
Cindy Wallin
Scott Webb
Solution Manual for
Managing Supply Chain and
Operations
Mahesh Srinivasan

Chapter 1 Solutions Manual
Integrative Learning Exercises
During this first exercise, students discuss how SC&O is relevant to their areas of study,
such as finance, marketing, or the like. The purpose of this exercise is to help the students
understand how SC&O is relevant to their careers. Let the students spend 5–10 minutes in
groups to discuss this and then open up class discussion.
Integrative Experiential Exercises
In this exercise, students go into a company and identify a couple of key processes. They
discuss process design and process control. They also find out how the companies are
improving processes. Usually, the assigned teams make about a 10-minute PowerPoint
presentations with their findings.
Discussion Questions
1. How is operations management different from supply chain management?
Supply chain management is cooperation between different firms to create value for
customers. Operations management is the administration of transformation
processes that create value for customers by meeting their needs or enabling them
to meet their own needs.
2. Why have organizations combined supply chain and operations management
into SC &O?
Combining the terms “supply chain” and “operations” emphasizes the linkages
between firms that tie the operations of those different firms together with the goal
of satisfying customers. The move to SC&O management from just operations
management externalizes the view of a productive firm in a way that is healthy for
the world, individual firms, and their global competitiveness.
3. Identify some of the strategic factors associated with the decision to bring
manufacturing back on-shore (e.g., nearshoring).
Nearshoring is the act of moving production from far away to a closer location. For
example, when Apple announced the production of Mac computers in the United
States instead of China, it was nearshoring. The strategic factors associated with the
decision to bring manufacturing back on-shore can be separated into two
categories: those related to the physical environment and those related to the task
environment. Important strategic aspects of the physical environment include
access to physical resources and suppliers, as well as sustainability initiatives and
costs. Strategic aspects of the task environment include economic structures, skills
of the employees, compensation structure, technologies, and government agencies.
Another concept similar to or related to nearshoring, is nearsourcing which occurs
when production of a product is moved from a supplier that is far away to one that

2 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations
is closer. For example, when one American firm moved its production from a
supplier in Malaysia to a supplier in Mexico, it was nearsourcing. Again, this decision
to nearsource is associated with similar strategic factors as discussed above.
4. What is meant by a process? Why do business students need to understand
processes?
Processes are the means by which all work is performed. Business students must
understand processes because all managers are responsible for the management of
processes.
5. What are the phases involved with process design? How can process design be
expedited?
The phases of process design are concept design, preliminary design,
implementation, and post-design review. This process is expedited through
concurrent engineering.
6. What is process improvement, and how is it related to customer needs?
Process improvement is a proactive effort to enhance process performance.
Specifically, it means to enhance the ability of the process to provide products or
services that are aligned more closely with customer needs.
7. What is meant by globalization? Why is this concept of importance to SC&O
managers?
Globalization is the establishment of production and marketing facilities in foreign
countries. This concept is important for SC&O managers given the global nature of
supply chains in most industries. SC&O managers must recognize that through
globalizing, processes are disrupted as there are significant changes to the physical
environment, the task environment, and the social environment in which they
operate.
8. Briefly list and define three mechanisms that firms use in globalizing their
operations.
Firms license their products overseas which gives them market penetration without
spending money to globalize. Firms enter into joint ventures and find partners to
help them navigate difficult foreign markets. Firms can also globalize which involves
investing in international operations.
9. What is meant by the statement “companies no longer compete against one
another; supply chains compete against supply chains”? Why is this statement
important to understand?

Chapter 1 Introduction to Supply Chain and Operations Management 3
This statement means that a supply chain must compete with supply chains of other
firms that follow their own supply paths. The supply chain that performs the most
efficiently wins the customer. This is important to understand because the each step
of the chain must be managed to deliver the most value to the customer. A firm’s
performance is no better than the weakest link in its supply chain.
10. How do value chain activities differ from support activities? What are a firm’s
core activities?
Value chain activities are the core activities that a firm performs. These core
activities are process steps that enhance products in a way that makes them more
valuable to customers because the products are better suited to meet customer
needs. The core activities are inbound logistics, production, and outbound logistics.
11. Identify the three primary flows found in a supply chain. Why is it important
for an SC&O manager to understand these flows?
The three primary flows of a supply chain are (1) product flows, (2) monetary flows,
and (3) information flows. These flows are important to understand because they
directly affect the ability of a supply chain to compete in providing value to end
customers.
12. In what fundamental way do information flows differ from monetary and
product flows in a supply chain?
Information flows are fundamentally different from monetary and product flows
because they are bidirectional, meaning that information flows move both upstream
and downstream in the normal conduct of supply chain commerce.
13. What makes service supply chains more complex to manage than product
supply chains?
Service supply chain management is often even more complex than manufacturing
management because the customers are also the suppliers. The fact that the
customer is also the supplier makes services supply chains especially bidirectional,
meaning that product resources flow from customers to producers and then back to
those same customers.
14. Briefly describe two basic feedback loops found in operations management.
The first feedback loop occurs when information is gathered about processes in
order to monitor and to improve their efficacy. We term this monitoring activity as
the control process. Control activities may take the form of process control, cost
control, labor control, inventory control, or quality control. The second feedback
loop is where information is gathered from customers, either by the firm or a third
party.

4 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations
15. Why are many colleges and universities seeing an increase in the number of
students who are interested in studying SC&O management?
The increase in the number of students interested in supply chain management is
due to recent upswings in job openings, comfortable salaries, and prospects for
advancement. Also a program of study in supply chain management provides
students with core skills that research shows are important for any career. These
include critical thinking, knowledge application and analysis, business ethics and
social responsibility, and data literacy which are much desired and sought after.
Case: Williamston Manufacturing
Answer
The decision to manufacture in low-wage countries is really a question of trade-offs and
access to manufacturing expertise. Although the low wages paid to workers help to reduce
manufacturing costs, other costs often offset those gains, and the total cost of ownership
must be considered. There is also increased risk of supply as the length of the supply chain
grows, and there are currently potential risks regarding the protection of intellectual
property.
Shipping is a primary offsetting cost to savings in wages. As the length of the supply
chain physically grows, and distance from the end consumer increase, so do shipping costs.
“Shipping costs have been rising, containers are expensive and staff have to be maintained
in both countries to manage the operation.”
Another cost trade-off concerns the potential level of automation in the
manufacturing process. The more a process can be automated, the less advantage is gained
in moving the production further from the end consumer. Often there is a larger cost
savings by maintaining local manufacturing and production and increasing the level of
automation in the manufacturing process.
Manufacturing overseas also affects a firm’s ability to react rapidly to changing
customer needs and preferences. “It is also difficult to react quickly if the market changes.”
One reason for the difficulty is that the physical length of the supply chain increases the
minimum amount of inventory needed to maintain customer service levels. In the case of
Peerless AV mentioned in the article: “Typically there would be 30 days or so of inventory
at each stage of the supply chain: the stock held by the suppliers to the Chinese factory, that
factory's inventory, the content of a shipping container on its way to America, and so on. A
design change could take at least six months to implement. Now the company can get a
prototype to a customer in a couple of weeks.”
Another factor affecting the decision to move manufacturing is access to the
required manufacturing expertise. Often manufacturing in China, for example, is not
cheaper, but manufacturing expertise is concentrated in some regions that simplifies the
supply chain and reduces complexity in procurement. This strategy targets an established
area of suppliers and producers who work in tandem to reduce manufacturing costs
through collaboration and physical proximity.

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Chapter 1 Introduction to Supply Chain and Operations Management 5
A further consideration in overseas manufacturing is the protection of intellectual
property. Although this situation is improving in China, there is still a risk of losing control
over sensitive information that could cost a company its strategic advantage in the world’s
markets. This has significantly affected many companies whose products have been reverse
engineered and sold throughout the world.
Finally, the decision of where to manufacture is also a question of supply chain
exposure to disruption from natural disasters and unstable political systems. Often there is
advantage to spreading out production across multiple locations to ensure alternate supply
sources when disruptions occur at a primary source. This ensures a firm’s ability to supply
their customers continuously.

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Chapter 2 Solutions Manual
Integrative Learning Exercise
This chapter focuses on strategy. As a result, this exercise is designed to get the students to
think about SC&O strategy. They are to go to the popular press to research a company and
find out about its strategic planning and mission. The exercise should be used to spark a
discussion on issues such as core competence, the voice of the customer and market, and
how SC&O managers have to make choices to allocate resources.
Integrative Experiential Exercise
This activity involves visiting a company to review its strategy process and content. The
students should report on whether the company uses a cost, differentiation, or focus
strategy. They should then discuss order winners and qualifiers. This will allow you to start
a discussion on winners, qualifiers, and strategy.
Discussion Questions
1. What is the purpose of strategy?
Strategy is a long-term plan that defines how the company will win customers,
create game winning capabilities, fit into the competitive environment, and develop
relationships. Strategy includes long-term planning that is performed at the highest
organizational levels to meets the organization’s long-term goals and objectives. The
purpose of strategy is to provide a roadmap for growth, provide a basis for aligning
operational subplans and create and sustain a competitive advantage for the
company.
2. What are the steps of strategic planning?
All planning starts with a forecast and requires an understanding of the economic
environment. Mission and vision also help to inform strategic decision making.
Management use the forecast, mission, and vision, coupled with customer research
and market analysis, to set strategic plans. A key decision in developing a strategic
plan is to decide whether a company will use a cost strategy to find ways to reduce
costs, use a focus strategy to service only select customers and provide these niche
customers with a narrow range of unique products or services, or use a
differentiation strategy that seeks to provide distinctive products or services that
competitors cannot compete with. From the strategic plan, operational subplans are
established in the areas of finance, operations, supply chain management,
information systems, human resources, and marketing.
3. Why is it important for strategic planning to consider the lifetime value of the
customer?
Switching costs and differentiation can enhance the likelihood of capturing the
lifetime value of a customer. SC&O strategists must address (1) the willingness of

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2 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations
consumers to switch to or from their product and (2) how differentiated consumers
perceive their product or service to be from the competitor’s products or services.
4. Why are customers important to the strategic planning process?
Strategists must understand key customers’ needs in order for a firm to survive and
prosper. Customers are the judge and jury in competitive advantage. No matter how
many of your shareholders, your competitors, or the media praise your company,
your customer decides your long-term success. Some companies also run the risk of
adopting a strategy that attracts the wrong types of customers and thus hurts their
existing loyal clientele.
5. Why should strategic planners not treat all customers the same?
SC&O managers understand that customers are not all equally valuable. Some
customers simply are not worth the cost or effort to serve. The 80/20 rule, also
called the Pareto’s Law, suggests that 20 percent of customers account for 80
percent of revenues. The key for strategy makers is to identify the very best
customers and to provide outstanding service to those top customers.
6. What is the difference between a company’s core competency and a skill that
the company is really good at doing?
Core competencies are those capabilities that tie most closely to their customer
values and that provide companies with a unique competitive advantage. Skills that
a company are really good at doing may be of no value to their customers or may not
represent a unique competitive advantage.
7. How does a firm know which capabilities they should create and foster?
Companies should focus on those capabilities that tie most closely to their customer
values and that provide companies with a unique competitive advantage.
8. What is the five forces model and why is it important to strategic planning?
This model helps companies understand how all competitors and supply chain
members influence their ability to compete. There are five considerations in this
model:
 Threat of new competitors
 Threat of substitutes
 Bargaining power of customers
 Bargaining power of suppliers
 Rivalry within the industry
9. How do relationships create sustained, competitive advantage for firms?
Relationships can be leveraged to reduce costs, appropriate value from a partner
with complementary core competencies, and create synergistic value.

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Chapter 2 Supply Chain and Operations Strategy 3
10. How are complementary relationships different from synergistic
relationships?
Complementary relationships occur when companies that clearly understand their
core competencies need another firm’s competencies in order to maintain world-
class service. Generally, these companies understand that they hold a competitive
advantage in one area but do not have expertise in another. A synergistic
relationship is a relationship between two companies that are committed to work
together in a way that the result is greater than the sum of the individual parts.
11. How does aligning strategic, functional, and operational plans help strategic
execution?
Strategies form the rationale for tactics and operations because they drive what
middle tier management must accomplish to win and keep customers. For example,
once a company determines that it is going to be a low price competitor, its tactics
are also going to focus on cost reduction and efficiency and its day-to-day
operations are going to focus on efficiency. Strategy sets the stage for tactics and
operations.
12. How do firms ensure that execution of strategic plans is effective?
When supply chain managers select the correct functional strategies to complement
their needs, strategies are supported, and execution becomes easier.
13. How does aligning strategic levels help make strategy execution more
effective?
Aligning strategic levels ensures that functional and operational plans work on a
tactical level to achieve the overall strategic goals of the firm.
14. What role do functional strategies have in strategy execution?
Functional strategies or operational subplans are one to two year goals that help the
firm “win a battle, but not necessarily win the war.” They are where “the rubber
meets the road” in terms of strategy implementation.
15. How can firms achieve SC&O sustainability?
Firms can achieve SC&O sustainability by implementing quality-based
environmental management systems, sometimes referred to as sustainability
management, engaging in life cycle costing, implementing supplier sustainability
scorecards, managing their reverse logistics processes, and finally by managing
their customer’s preferences regarding sustainability.

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4 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations
Case: Zara
Questions
1. What is Zara’s competitive advantage?
Zara’s competitive advantage is its ability to get new designs into its shops in five
weeks, compared to the six to nine months that is common in the industry.
2. How has Zara aligned its processes with its marketing requirements?
Zara has aligned its manufacturing to make small batches quickly and has
structured its distribution for rapid deliveries—by truck or air—to all of their
stores. It also produces much of its own product in its own production facilities, and
it imports the rest, often partly finished or undyed, allowing it to react quickly to
changes.
3. What problems do you see looming for Zara?
The major issue that Zara could face in the near future is the invasion of its space by
a competitor who can react equally fast to changing trends and market conditions.
Zara also faces competition from local competitors who offer similar clothing on a
smaller scale. This question provides an opportunity for students to apply the five
forces.
4. What opportunities has the company created through excellent SC&O
management?
Zara has created the opportunity to react quickly to changes in fashion, allowing
them to maintain their front position as a fashion leader. They have also been able
to reduce costs by avoiding overproduction of unsuccessful merchandise.

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Chapter 3 Solutions Manual
Integrative Learning Exercise
This exercise is designed to get students to go through the steps of designing or redesigning
a product. Instructors can have a competition to see who has the best new product.
Integrative Experiential Exercise
This exercise is designed to get the students into a firm to examine the design of their
processes. They should categorize and map these processes.
Discussion Questions
1. What is meant by design? How is it different from continuous design?
Design is a process of applying imagination to invent new products and services.
Innovative designs may come in differing ways. Continuous design involves
designing products that are enhancements to existing products.
2. Discuss some well designed products. What positive attributes do they
have from a design perspective?
Examples will vary. A good product design will first identify a need that will improve
the life of the customer and then design a product to fit that need. It makes use of
concepts such as failure modes and effects analysis and incorporates features for
product traceability. Some other positive attributes that a well-designed product
should have from a design perspective is designing the product for manufacture,
maintainability, and reliability. From the perspective of the firm, a good product
design will be one that strengthens the firm’s bottom-line, increases market share,
absorbs productive capacity, and is in tune with technological advances and changes
in materials. Many firms are also incorporating elements of sustainability and green
design concepts because customers care about them.
3. What questions must be answered when designing products?
What are the functions the customer wants? What are the capabilities of current
products? What are the limitations of the materials we have selected for the
product? Are there better materials available? How much will the product cost to
make? How do we price the product to make it successful in the marketplace?
4. Briefly define the product life cycle and identify the life phases the product
experiences.
The product life cycle is a graphical representation of the life phases a product
experiences. First, the product is launched. When it is new to the market, demand
for the product grows. As the product matures, demand levels out and eventually,
the product declines in demand.

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2 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations
5. What is meant by a complementary product? How can complementary
products affect a product line’s life?
Complementary products are goods that use similar technologies that can coexist in
a family of products. These products extend the life of a product line by offering new
features or improvements to prior versions of the product. The example of ATVs and
snowmobiles in the chapter is instructive as these products allow production
capacity to be used in a counter-seasonal fashion.
6. Identify five reasons why firms perform R & D.
a. Strengthen the bottom line. R&D provides a lifeblood of new products that
produce income.
b. Absorb productive capacity. R&D provides new products that allow us to use our
productive capacity.
c. Emerging customer needs. You may need to identify a solution to a problem that
makes customers’ lives better.
d. Increase market share. New product ideas are necessary to maintain or to
increase market share.
e. Regulatory mandates. There may be changes in the legal environment that make
new product development important. An example is when the federal
government increased the minimum mileage standards for automobiles.
f. Technological advances. There may be new technologies that arise that need to
be utilized. For example, when 4G technology supplanted 3G, the need for more
4G-compatible devises rose.
g. Changes in materials. New materials, like new technologies, change the way
products are designed and manufactured. For example, new carbon fibers are
replacing plastics in many products because they are lighter and stronger. R&D
helps companies use such changes to the companies’ advantage.
7. What is the major difference between basic research and applied research?
Basic research is theoretical exploration that is generally not profit motivated.
Applied research is practical exploration that often has a profit motive.
8. How is market pull R&D different from technological push R&D?
Market pull (continuous development) is taking existing products and enhancing
them to reinvigorate the product life cycle or to create new complementary
products. Thus market pull R&D ideas tend to be more incremental. Technological
push (discontinuous development) occurs when a new product is sent to market
without a clear idea of how it would be used by the customer. Tech push often
requires the read-fire-aim approach to be used. This is because if there is not an
existing market for a product, then the marketing approach for the new product will
have to be fine-tuned. This will then result in more focused continuous product
enhancements as the product is redesigned.

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Chapter 3 Product and Process Design and Mapping 3
9. What is meant by extended process? How does the extended process differ
from the traditional operations management view of a process?
The extended process is the chain of activities from raw materials to final customer.
The traditional operations management view of a process is a means of making
something that is of value to a customer. The extended process recognizes the
realities of supply chain management and the need for firms to collaborate to
provide customer value.
10. Under what circumstances would a process layout be preferred to a product
layout?
You will most likely use a process layout when your focus is on variety and product
flexibility more than cost or productivity.
11. How does batch production differ from a job shop?
Batch production facilities produce products in bunches. Because they allow
production in higher quantities, batches are lower cost and more productive than
job shops.
12. What is the purpose of process mapping?
Process mapping is used for understanding current processes and designing new
processes.
13. Briefly discuss the circumstances for which a fixed-position layout might be
employed.
There are two circumstances where some firms use fixed-position layouts. Boeing
uses fixed-position layout (or hangar built) in building aircraft because their
products are so large. It is easier to use a fixed position. Also, Volvo has used fixed
position in building cars. They can then claim that their cars are handmade from the
ground up.
14. Under what circumstances might you employ a Muther’s grid, rather than a
load-distance model in designing functional layouts?
While load-distance models are widely used in laying out job shops, their chief
limitation is that they focus on cost and distance only. Sometimes, there are
behavioral reasons for locating that must be considered. In these cases, you would
use a Muther’s grid.
15. What is the failure modes and effects analysis (FMEA) process? To what areas
can the process be applied?
Failure modes and effects analysis (FMEA) systematically considers each
component of a system, identifying, analyzing, and documenting the possible failure
modes within a system and the effects of each failure on the system. It is a method of
analysis beginning at the lowest level of detail to which the system is designed and

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4 Foster/Sampson/Wallin/Webb • Managing Supply Chain and Operations
works upward. The FMEA process results in a detailed description of how failures
influence system performance and personnel safety. FMEA answers the question,
"How do the systems or components fail?" There are five basic areas where FMEA
can be applied: (1) concept, (2) process, (3) design, (4) service, and (5) equipment.
Problems
Process Design
Break-Even Analysis
1. Using the equation 3.3: R * Q = Fc + Vc * Q
$25*Q = $2 million + $10*Q
Q = 2 million/(25 – 10) = 133,333.33 units until we break even on the investment.
2. Using the equation 3.3: R * Q = Fc + Vc * Q
a. $30*Q = $6,750,000 + 10*Q
Q = 6,750,000/(30 – 10) = 337,500 units
b. $30*Q = $5,000,000 + 14*Q
Q = 5,000,000/(30 – 14) = 312,500 units
c. (375,000 – 337,500) * (30 – 10) = $750,000
(375,000 – 312,500) * (30 – 14) = $1,000,000
Given 375,000 units are produced, Machine B will contribute the most profit.
3. Using the equation 3.3: R * Q = Fc + Vc * Q
$40*Q = $15 million + $8.75*Q
Q = 15 million/31.25 = 480,000 units until we break even on the investment.
Process Mapping
Line Balancing
4. Using the takt time formula (3-6) we calculate the following:
60 minutes/12 output per hour = 5 minute cycle time
Eligible Tasks Chosen Task
(LOT)
Workstation Task
Time (minutes)
Slack
Time (minutes)
A A 1 3 5 – 3 = 2
B B 2 4 5 – 4 = 1
C
D
C
D
3 2
2 5 – 2 – 2 = 1
E E 4 3 5 – 3 = 2
A
B
D
C
E

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Chapter 3 Product and Process Design and Mapping 5
5. Using the formulas and equations 3.6, 3.7, 3.8, and 3.9 we calculate the following:A
(90)
B
(25)
C
(60)
D
(75)
F
(35)
E
(15)
a. Takt Time = 60 seconds * 60 minutes/30 = 120 second cycle time
b. Sum of task times = 90 + 25 + 60 + 75 + 15 + 35 = 300
Minimum Number of Workstations = 300/120 = 2.5 ~ 3 workstations
c.
Eligible Tasks Chosen Task
(LOT)
Workstation Task
Time (seconds)
Slack
Time (seconds)
A
B
A
B
1 90
25 120 – 115 = 5
C D D 2 75 45
C
E
F
C
E
F
3 60
15
35
120 – (60 + 15 +
35) = 10
d. Efficiency = 300/(3 * 120) = 0.83 or in other words, 83 percent of the time work is
being performed.
e. Balance Delay = 60/(3 * 120) = 0.17 which means 17 percent of the time the
resources are not being utilized.
6. Using the formulas and equations 3.6, 3.7, 3.8, and 3.9 we calculate the following:A
(35)
B
(40)
C
(25)
D
(15)
G
(35)
E
(60)
F
(30)
H
(45)
I
(15)
a. Takt Time = 60 * 60/40 = 90 second cycle time
b. 300/90 = 3.33 ~ 4 workstations
c.
Eligible Tasks Chosen Task
(LOT)
Workstation Task
Time (seconds)
Slack
Time (seconds)
A
B C
A
B
1 35
40
15
C
D G
D
C
G
D
2 25
35
15
15
E
F
E
F
3 60
30
0
H
I
H
I
4 45
15
30
d. Efficiency = 300/(4 * 90) = 0.83 or in other words, 83 percent of the time work is
being performed.

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