Question 1

Most firms must decide what fraction of an asset to

Accepted Answer

A)  sell in bulk and what fraction of the asset to discard. 
B)  save for the spot market and what fraction of the asset to discard. 
C)  save for emergencies and what fraction of the asset to rework. 
D)  sell in bulk and what fraction of the asset to save for the spot market. 
A)  sell in bulk and what fraction of the asset to discard. 
B)  save for the spot market and what fraction of the asset to discard. 
C)  save for emergencies and what fraction of the asset to rework. 
D)  sell in bulk and what fraction of the asset to save for the spot market.

Question 2

The cost of a capacity shortage is the increase in productivity that results from having to go to a backup source.

Accepted Answer

A) True 
 B)False

Question 3

In most instances of differential pricing,demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

Accepted Answer

A) True 
 B)False

Question 4

The goal when making the overbooking decision is to maximize supply chain profits by minimizing the cost of wasted capacity and the cost of capacity shortage.

Accepted Answer

A) True 
 B)False

Question 5

To differentiate between the various market segments,the firm must

Accepted Answer

A)  create barriers by identifying product or service attributes that the segments value differently. 
B)  eliminate barriers that identify product or service attributes that the segments value differently. 
C)  negotiate separately with different market segments that value product or service attributes differently. 
D)  develop pricing structures based on the volume of various product or service attributes. 
A)  create barriers by identifying product or service attributes that the segments value differently. 
B)  eliminate barriers that identify product or service attributes that the segments value differently. 
C)  negotiate separately with different market segments that value product or service attributes differently. 
D)  develop pricing structures based on the volume of various product or service attributes.

Question 6

Which of the following is (are)revenue management tactics appropriate for perishable assets?

Accepted Answer

A)  Vary price over time to maximize expected revenue 
B)  Under book sales of the asset to account for unexpected demand 
C)  Overbook sales of the asset to account for cancellations 
D)  all of the above 
A)  Vary price over time to maximize expected revenue 
B)  Under book sales of the asset to account for unexpected demand 
C)  Overbook sales of the asset to account for cancellations 
D)  all of the above

Question 7

Revenue management is

Accepted Answer

A)  the use of marketing tools to increase revenue. 
B)  the use of pricing to increase the profit generated from a limited supply of supply chain assets. 
C)  a process designed to determine the best use of funds generated through sales. 
D)  the use of accounting tools to monitor cash flow. 
A)  the use of marketing tools to increase revenue. 
B)  the use of pricing to increase the profit generated from a limited supply of supply chain assets. 
C)  a process designed to determine the best use of funds generated through sales. 
D)  the use of accounting tools to monitor cash flow.

Question 8

The tactic of overbooking or overselling the available asset is suitable where

Accepted Answer

A)  there is a clear date beyond which the asset loses a lot of its value. 
B)  there is no clear date beyond which the asset loses a lot of its value. 
C)  customers are able to cancel orders and the value of the asset drops significantly after a deadline. 
D)  customers are unable to cancel orders and the value of the asset drops significantly after a deadline. 
A)  there is a clear date beyond which the asset loses a lot of its value. 
B)  there is no clear date beyond which the asset loses a lot of its value. 
C)  customers are able to cancel orders and the value of the asset drops significantly after a deadline. 
D)  customers are unable to cancel orders and the value of the asset drops significantly after a deadline.

Question 9

A manufacturer of industrial sales has production capacity of 1,000 units per day.Currently,the firm sells production capacity for $10 per unit.At this price,all production capacity gets booked about one week in advance.A group of customers have said that they would be willing to pay $15 per unit if capacity was available on the last day.About ten days in advance,demand for the high-price segment is normally distributed with a mean of 250 and a standard deviation of 100.How much production capacity should the manufacturer reserve for the last day?

Accepted Answer

Revenue from segment A,pA = $15 per unit

Question 10

Revenue management adjusts the pricing and available supply of assets to maximize profits.

Accepted Answer

A) True 
 B)False

Question 11

Capacity assets in the supply chain do not exist for

Accepted Answer

A)  transportation. 
B)  production. 
C)  inventory. 
D)  storage. 
A)  transportation. 
B)  production. 
C)  inventory. 
D)  storage.

Question 12

The basic trade-off to consider during overbooking is between

Accepted Answer

A)  having wasted capacity (or inventory) or a shortage of capacity (or inventory). 
B)  having lost sales or a shortage of capacity (or inventory). 
C)  having wasted capacity (or inventory) or excess capacity (or inventory). 
D)  having high sales or a shortage of capacity (or inventory). 
A)  having wasted capacity (or inventory) or a shortage of capacity (or inventory). 
B)  having lost sales or a shortage of capacity (or inventory). 
C)  having wasted capacity (or inventory) or excess capacity (or inventory). 
D)  having high sales or a shortage of capacity (or inventory).

Question 13

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

Accepted Answer

A) True 
 B)False

Question 14

The sales force must understand the revenue management tactic in place

Accepted Answer

A)  in order to align their sales pitch accordingly. 
B)  in order to identify those customers who truly need the supply chain asset during the peak period. 
C)  in order to identify those customers that will benefit from moving their order to the off-peak period. 
D)  all of the above 
A)  in order to align their sales pitch accordingly. 
B)  in order to identify those customers who truly need the supply chain asset during the peak period. 
C)  in order to identify those customers that will benefit from moving their order to the off-peak period. 
D)  all of the above

Question 15

The cost of wasted capacity is

Accepted Answer

A)  the reduction in margin that results from having to go to a backup source. 
B)  the margin that would have been generated if the capacity had been used for production. 
C)  the productivity increase generated when the capacity is used for production. 
D)  the sales potential of excess capacity kept in reserve for emergency production. 
A)  the reduction in margin that results from having to go to a backup source. 
B)  the margin that would have been generated if the capacity had been used for production. 
C)  the productivity increase generated when the capacity is used for production. 
D)  the sales potential of excess capacity kept in reserve for emergency production.

Question 16

Explain how revenue management is beneficial.

Accepted Answer

Revenue management adjusts the pricing a

Question 17

The use of differential pricing should

Accepted Answer

A)  decrease total profits for a firm. 
B)  increase total profits for a firm. 
C)  increase capacity for a firm. 
D)  decrease capacity utilization for a firm. 
A)  decrease total profits for a firm. 
B)  increase total profits for a firm. 
C)  increase capacity for a firm. 
D)  decrease capacity utilization for a firm.

Question 18

Successful revenue management requires

Accepted Answer

A)  a proper understanding of customer preferences. 
B)  a quantification of the impact of various tactics on consumer behavior. 
C)  a clear focus on profitability. 
D)  A and B only 
A)  a proper understanding of customer preferences. 
B)  a quantification of the impact of various tactics on consumer behavior. 
C)  a clear focus on profitability. 
D)  A and B only

Question 19

The cost of wasted capacity is the margin that would have been generated if the capacity had been used for production.

Accepted Answer

A) True 
 B)False

Question 20

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

Accepted Answer

A) True 
 B)False

Most firms must decide what fraction of an asset to

The cost of a capacity shortage is the increase in productivity that results from having to go to a backup source.

In most instances of differential pricing,demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

The goal when making the overbooking decision is to maximize supply chain profits by minimizing the cost of wasted capacity and the cost of capacity shortage.

To differentiate between the various market segments,the firm must

Which of the following is (are)revenue management tactics appropriate for perishable assets?

Revenue management is

The tactic of overbooking or overselling the available asset is suitable where

Revenue management adjusts the pricing and available supply of assets to maximize profits.

Capacity assets in the supply chain do not exist for

The basic trade-off to consider during overbooking is between

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

The sales force must understand the revenue management tactic in place

The cost of wasted capacity is

Explain how revenue management is beneficial.

The use of differential pricing should

Successful revenue management requires

The cost of wasted capacity is the margin that would have been generated if the capacity had been used for production.

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

Understanding the Supply Chain

Supply Chain Performance: Achieving Strategic Fit and Scope

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Coordination in a Supply Chain

Managing Economies of Scale in the Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Determining the Optimal Level of Product Availability

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Information Technology in a Supply Chain

Sustainability and the Supply Chain

Filters

Exam 16: Pricing and Revenue Management in a Supply Chain

Most firms must decide what fraction of an asset to

The cost of a capacity shortage is the increase in productivity that results from having to go to a backup source.

In most instances of differential pricing,demand from the segment paying the lower price arises earlier in time than demand from the segment paying the higher price.

The goal when making the overbooking decision is to maximize supply chain profits by minimizing the cost of wasted capacity and the cost of capacity shortage.

To differentiate between the various market segments,the firm must

Which of the following is (are)revenue management tactics appropriate for perishable assets?

Revenue management is

The tactic of overbooking or overselling the available asset is suitable where

Revenue management adjusts the pricing and available supply of assets to maximize profits.

Capacity assets in the supply chain do not exist for

The basic trade-off to consider during overbooking is between

The goal of optimization is to use forecasts of customer behavior to identify a revenue management tactic that will be most effective.

The sales force must understand the revenue management tactic in place

The cost of wasted capacity is

Explain how revenue management is beneficial.

The use of differential pricing should

Successful revenue management requires

The cost of wasted capacity is the margin that would have been generated if the capacity had been used for production.

Wastage occurs if higher price buyers have to be turned away because the capacity has already been committed to lower price buyers.

Understanding the Supply Chain

Supply Chain Performance: Achieving Strategic Fit and Scope

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to E-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Coordination in a Supply Chain

Managing Economies of Scale in the Supply Chain: Cycle Inventory

Managing Uncertainty in a Supply Chain: Safety Inventory

Determining the Optimal Level of Product Availability

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Information Technology in a Supply Chain

Sustainability and the Supply Chain

Filters