![1) [10] Consider Amazon.com. a) [5] In which product categories does the online channel such as Amazon.com offer the smallest](https://media.cheggcdn.com/study/365/365124aa-031a-4a80-ac55-c6e0ec0a71e9/image.png)
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1) [10] Consider Amazon.com. a) [5] In which product categories does the online channel such as Amazon.com offer the smallest advantage (or a potential cost disadvantage) compared with a retail store chain? Why? b) [5] Amazon.com acquired Whole Foods, Inc. (an upper-tier, urban, specialty-foods oriented supermarket chain in the US, similar to MacroCenter in Turkey) in 2017. How do you think this acquisition would synergize with Amazon.com's operations and capabilities? Think in the dimensions of cost/efficiency and responsiveness/value- creation. 2) [10] Consider an IKEA location and the supply chain functions it performs. a) [5] How do the location and size of its locations affect the supply chain performance of IKEA? What factors should IKEA consider when deciding where and how big its warehouses should be? b) (5) How does increasing number of its locations affect various costs and value created in the IKEA supply chain? 3) [14+] Consider modular product design coupled with postponement approach in a supply chain. a) [5] Briefly discuss the relationship of this practice to the push-pull boundary of supply chain processes. b) [9+] Briefly discuss at least 3 distinct advantages of this practice to the supply chain performance/management BONUS: 2 points for each advantage successfully discussed beyond the minimum 3. 4) [36] A clothing franchise currently has 25 retail stores in Istanbul. Weekly demand for bootcut jeans at each store is normally distributed with a mean of 100 and a standard deviation of 8. Weekly demand for wool coats at each store is normally distributed with a mean of 15 and a standard deviation of 10. Each pair of jeans costs the company $20 and each wool coat costs $100. The holding cost rate for jeans is 25%, whereas that for the wool coats is 40%. The management is considering starting to sell some of the merchandise through the online channel; they have to decide which products to carry at the retail stores and which products to carry at the central warehouse to be sold only via the online channel. For both products: the average supply lead-time is 5 weeks, with a standard deviation of 1 week, normally distributed; the targeted cycle service level is 97.5% (z=1.96); and the fixed cost of orders from the supplier is $150 per order. While the company manages all store inventories using a continuous review policy, the central warehouse uses a periodic review policy with T = 6 weeks. Furthermore, in case of online sales, it costs the company $1 per item on average to ship from the central warehouse to the customers. a) [16] Answer for each product (jeans and coats) if the company sells them in retail stores. 1) What is the optimal order quantity to replenish inventory at each retail store? ii) What is the safety stock used at each retail store? iii) What is the total annual inventory holding and ordering costs? b) [20] Answer for each product (ieans and coats) if the company moves them to the central warehouse for online channel. 1) What is the optimal order up-to level at the central warehouse? ii) What is the safety stock used at the central warehouse? iii) What is the total annual inventory holding and ordering costs? iv) Considering the additional transportation cost to deliver the items to the customers from the central warehouse, comment whether it makes sense to move the product to central warehouse for online channel. 5) [30] Blue Computers, a major server manufacturer in the US, currently has a manufacturing plant in Kentucky with a capacity of 1.5 million units a year. The firm divides the United States into five markets: northeast, southeast, midwest, south, and west. The firm has been experiencing growth in demand and wants to build a plant with a capacity of 1.5 million units per year to accommodate the growth. Potential sites being considered are in Pennsylvania and California. Annual fixed costs of existing and potential plants, production and transportation costs per unit (including material and labor costs), and estimated regional annual demand (for next year and after) are shown below. Kentucky Pennsylvania California Demand/year in thousands Variable Production and Transportation Cost ($/Unit) Northeast Southeast Midwest South West 185 180 175 175 200 180 180 185 185 215 220 220 195 195 175 Annual Fixed Cost (Million $) 150 200 150 700 400 400 300 600 a) [24] Assume Blue Computers sets an objective of minimizing total fixed and variable costs. Develop an LP model to solve their problem, complete with decision variables, an objective function and constraints. b) [6] Consider the following information: Each server sells for $1,000. Federal taxes are 20%, and all regional taxes are 7% in each state. Pennsylvania has offered to reduce regional taxes from 7% to 2%. If Blue Computers sets an objective of maximizing after-tax profits, express the objective function of the LP model to solve their problem. Hint: Calculate tax over (Revenue minus Cost). 0 0 0 0 6) [30] Consider three firms in the diamond retailing industry: Zales, Tiffany, and Blue Nile. Zales sells merchandise primarily through stores but recently added an online channel; Tiffany also uses an online channel but most of its diamond and other high-end products are sold through stores; and Blue Nile's supply chain structure is geared toward a pure centralized e-business. Tiffany brand is very strong and well established; it is associated with glamour, trust, and customer service. Zales does not have the product variety and availability that Blue Nile provides, nor does it have the brand name advantage of Tiffany. Blue Nile operates primarily from one warehouse; Zales and Tiffany operate many stores, often in high-priced locations, From the following calculate relevant financial performance metrics to highlight and demonstrate the differences in these firms' supply chain structures and approach. Zales Tiffany Blue Nile INCOME STATEMENT Revenues 1,888,016 3,794,249 400,035 Cost of sales 903,602 1,630,965 324,977 Gross margin 984,414 2,163,284 75,058 Selling general and administrative 916,274 1,466,067 62,771 Depreciation and amortization 33,770 Other operating income 748 0 Operating earnings (loss) 35,118 697,217 12,287 Interest expense 23,182 59,069 Other income 0 5,428 679 Earnings (loss) before income taxes 11,936 643,576 12.966 Income tax expense 1,924 227,419 4,574 Net earnings (loss) 10,012 416,157 8,392 ASSETS Cash and cash equivalents 17,060 504,838 87017 Accounts Receivable 52,620 173,998 3,485 Inventories 767,540 2,234,334 33,270 Other current assets 238,419 2,155 Total current assets 837,220 3,151,589 125,927 Property and equipment, net 108,875 818,838 7,876 Deferred tax asset 107,110 306,385 7,786 Other assets 134,050 354,038 4,312 Total assets 1,187,255 4,630,850 145,901 LIABILITIES Short-Term Loans 0 194,034 60 Accounts payable and accrued liabilities 220,558 295,424 128,648 Deferred revenue 82,110 66,647 246 Deferred tax liability 107,016 30,487 Total current liabilities 409,684 586,592 128,954 Long-term debt 410,050 765,238 625 Deferred revenue-long-term 109,135 96,724 2.188 Other liabilities 73,057 570978 25 Total Liabilities 1,001,926 2,019,532 131,792 Shareholder's Equity 185,329 2,611,318 14,109 0 0 5) [30] Blue Computers, a major server manufacturer in the US, currently has a manufacturing plant in Kentucky with a capacity of 1.5 million units a year. The firm divides the United States into five markets: northeast, southeast, midwest, south, and west. The firm has been experiencing growth in demand and wants to build a plant with a capacity of 1.5 million units per year to accommodate the growth. Potential sites being considered are in Pennsylvania and California. Annual fixed costs of existing and potential plants, production and transportation costs per unit (including material and labor costs), and estimated regional annual demand (for next year and after) are shown below. Kentucky Pennsylvania California Demand/year in thousands Variable Production and Transportation Cost ($/Unit) Northeast Southeast Midwest South West 185 180 175 175 200 180 180 185 185 215 220 220 195 195 175 Annual Fixed Cost (Million $) 150 200 150 700 400 400 300 600 a) [24] Assume Blue Computers sets an objective of minimizing total fixed and variable costs. Develop an LP model to solve their problem, complete with decision variables, an objective function and constraints. b) [6] Consider the following information: Each server sells for $1,000. Federal taxes are 20%, and all regional taxes are 7% in each state. Pennsylvania has offered to reduce regional taxes from 7% to 2%. If Blue Computers sets an objective of maximizing after-tax profits, express the objective function of the LP model to solve their problem. Hint: Calculate tax over (Revenue minus Cost).