Sourcing Decisions in a Supply Chain
1. After reviewing the last three lines of Table 15-3 in your text, as the buy-back price for each disc increases from $0 to $6 while the wholesale price is held constant at $7, what happens to profits for the music store (the retailer) and the supplier (the manufacturer)? What about overall supply chain profitability? What is the lesson to be learned from this exercise?
The information presented in Table 15-3 assumes that there are no costs associated with returning the “buy-back” products to the supplier. As the transportation costs to return the goods being bought back increases, what happens to the profitability of the supply chain?
Chapter 16 – Pricing and Revenue Management in a Supply Chain
2. Right click and download the Pricing to Multiple Segments dataPreview the documentView in a new window to your hard drive. What happens to prices and profitability when the sensitivity for customers that are willing to wait (i.e., segment 2) increases from 40p1 to 80p1? What did you learn from this exercise?
Note: Use the “Solver” capability under the ”Tools” menu (but you must set sensitivity in cell C6 to desired level before you run “Solver”).
3. Right click and download the Dynamic Pricing DataPreview the documentView in a new window to your hard drive. What happens to the quantity purchased and profitability if the price sensitivity increases to from 1.8p3 to 1.9p3 in the third period? What did you learn from this exercise?
Note: Use the “Solver” capability under the ”Tools” menu (but you must set sensitivity in cell C8 to desired level before you run “Solver”).
*Note on using the “Solver” Add-In: The Solver Add-in is an Excel add-in program that is available when you install Microsoft Office or Excel. To use it in Excel, however, you need to load it first. You should have completed doing so in Module 3.