Supply Chain Management Midterm Exam Questions May 2026

Old model: Production = 140,000 units (to cover forecast error). Markdown costs = 40,000 units × ($25 lost value) = $1M. Holding cost = Avg inventory (70,000 units × $20 × 25%) = $350k. Freight (slow boat) = negligible. Total waste = $1.35M.
New model: Production = 110,000 units. Markdown costs = 10,000 units × $25 = $250k. Holding cost = Avg inventory (5,500 units × $20 × 10% reduced rate) = $11k. Freight (air) = 110,000 units × $5 extra = $550k. Total waste = $811k.
Conclusion: The new model saves ~$539k despite higher freight.

What percentage of global trade is estimated to move by sea?

What is the "bullwhip effect," and how can collaborative planning and information sharing reduce it? [6, 18]. supply chain management midterm exam questions