ISyE 3104: Introduction to Supply Chain Modeling: Manufacturing and Warehousing
Instructor: Spyros Reveliotis
Spring 2002
Homework #1
Due Date: Wednesday, 1/23/02
Problem set:
1. Answer questions 1.1, 1.3, 1.8, 1.9, 1.10, 1.11 and 1.14 at the end of Chapter 1 in your textbook.
Solutions:
1.1 List the key resource types required by the firm to produce products.
 (page 1) Key resource types are:
 labor (i.e., employees)
 capital (i.e., machines, tools, utilities)
 materials
 managerial resources (information and established production and transactional
procedures)
1.3 What are the primary measures of a firm’s competitiveness? How do you think the relative importance
of these will vary from one industry to another? Give examples.
 (page 3) The primary measures of a firm’s competitiveness are (i) the product price, (ii) the
product differentiation in terms of features and quality, and (iii) the company responsiveness to its
customers in terms of service and product availability.
 In an industry where products are typically commodity-like, i.e., customers cannot experience
strong qualitative differences among the products of the various companies, operational costs as
reflected in the product price are the primary basis for the competition. However, product
differentiation (product features, quality) will play a grater role in the luxury or higher grade
products. In the case of capital equipment, delivery speed and responsive maintenance programs
can be the focus of competition. For companies competing in new product markets, product
availability might be an important factor.
 Some examples are as follows:
Price – gas, electricity, Wal-mart merchandise, etc.
Quality – luxury cars like Mercedes, Toyota, fashion industry, PC industry.
Speed – UPS, FedEx, Dell on-site service, etc.
Product availability – Software or games: Play Station, Nintendo, Digital devices, etc.
1.8 List the important characteristics of a business process.
 (page 12) The important characteristics of a business process are:
1. Processes require resources (materials, people, knowledge, equipment, energy, etc.).
2. The process should be derived from the objectives of the firm, otherwise it should be
eliminated.
3. Each process must have a product and a customer. Customer will determine what product
should be and the quality of the process is measured with customer satisfaction.
1.9 Visit a local fast food establishment. Observe the process of taking and filling a customer order.
Construct a flow diagram of the process for a customer ordering a burger, fries, and shake and paying with
a debit card.
 The flow diagram below is a typical example of the information and material/item flow in such an
environment (single-line arrow: information; double-line arrow: material/item):
Customer
Customer
Order
Take Order
Cashier
Cook
Approve and give
debit card
Give price
Take card
and receipt
Process payment
and send order
Retrieve
bag
Put food in bag
and deliver
Make burger,
fries and shakes
1.10 Educational institutions produce educated students ready for employment and life-long learning.
Consider the process of offering a course for academic credit as part of a degree program. Describe the
resources involved, tie this process to the objectives of the firm, and define the product and customer(s) of
this process.
 Resources: professors (labor), building and classroom equipment (capital), books and other
instructional material (capital), students (process materials), course policies and teaching method
(established procedures).
 Objectives: Academic excellence, maintaining a high recruitment rate, effective use of the school
resources
 Products: Highly-educated individuals.
 Customers: parents of students or students themselves and recruiting companies
1.11 Suppose you were considering purchasing a personal computer for use in your educational program.
List your key features: price, performance, and delivery requirements.
 An example can be:
o Price: <$1,000
o Performance: P4 1 GHz, 256 MB RAM, 20 GB Hard drive, 19 inch flat monitor.
o Delivery: insured and less than 3 days.
1.14 What problems can you see happening if the engineering department that finalizes product designs and
changes does not communicate well with production planning and purchasing personnel?
 In that case, the developed product designs and the introduced design changes might not be
realizable on the installed production processes, and the company suppliers might not be able to
meet the required specifications for the procured material. On the other hand, some other
technological options, not selected by the engineering department might be much better aligned
with the company's production and procurement infrastructure.