Question

1. Currently the TFC is receiving bonuses from all customers. If, after reviewing the following customer report, the VP of Sales increases the promised service level agreement percentage from 90% for SAVE to 99% and no other changes are made, which of the following do you expect to happen?

		Bonuses for SAVE will decrease.
		Contracted sales revenue will decrease.
		Cube utilization in the finished good warehouse will increase.
		Product obsoletes will increase.
		Penalties will be incurred from SAVE.

2. In Feb 2020, a retailer, Tarzhay, had a Cost of Goods Sold of $67.1 million. Average inventory for the same period is $10.14 million. Determine the weeks of supply for Tarzhay. (Round your response to 2 decimal places using normal rounding rules. Enter only the numeric value.)

3. You manage a car dealership, Flagstaff Nissan. Which of the following can you use as a way to alter demand when you do aggregate planning?

		part-time workers
		overtime/idle time
		inventories
		subcontracting
		price cuts

Answer 1

1. Currently the TFC is receiving bonuses from all customers. If, after reviewing the following customer report, the VP of Sales increases the promised service level agreement percentage from 90% for SAVE to 99% and no other changes are made, which of the following do you expect to happen?

SLA is Service Level Agreement and is shows your performance against target. It is calculated as (Performed/Targeted) x 100, expressed in a percentage. Therefore 90% to 99% means that the workload and risk will increase.

		Bonuses for SAVE will decrease – This is correct because the percentage has increased from 90% to 99% which increases the target.
		Contracted sales revenue will decrease – This is incorrect because 90% to 99% shows that an increase of sales is required. When trying to rev-up sales, revenue will increase.
		Cube utilization in the finished good warehouse will increase – Cube utilization is the efficiency of space utilization expressed in a percentage. When production is increased, cube utilization will increase.
		Product obsoletes will increase – This is not true as production is happening according to the required targets.
		Penalties will be incurred from SAVE – If it is stated in contract that non achievement of SLA will incur penalties and if SLA is not achieved, penalty will be incurred.