Supply Chain Logistics for a Large Distribution Company

Background

A retail company has a large supply chain.  Many steps are required to get items to the shelves of the retail stores.  One of the last steps is a delivery of items from the company’s distribution centers to the stores.  On-time deliveries are critical to the store’s ability to maintain its inventory and generate good results for the business.  The retail company contracts with a trucking company (A) for these deliveries.  The retail company can track each truck to see if its delivery was on time or not.  Historically, company A has performed reasonably well in terms of delivering these shipments on time.  However, the retail company recently received a bid from an alternative trucking company (B).  This new competitor offers similar prices but promises improved on-time delivery performance.  The retail company is considering whether to switch from company A to company B for its deliveries from the distribution centers to the stores.

You will be providing support to the retail company’s manager in charge of logistics.  The retail company would like to run a test of the new trucking company.  They are willing to devote 100 trips by truck from a distribution center to a store for the test.  For each of the 100 trips, you can choose which trucking company will perform the delivery.

Instructions

Based on this information, please answer the following questions.  For multiple choice questions, select the best answer.  For questions with a free response, please answer in approximately 2-4 sentences.  The explanations will be directed to the logistics manager.

1. What is the primary goal of the logistics manager with regard to the choice of a trucking company in this setting?

Group of answer choices

1. To spend as little on the deliveries as possible.
2. To maximize the rate of on-time deliveries.
3. To select 100 trucks for the deliveries.
4. To ensure that all deliveries arrive without damage to the products.

• From the logistic manager’s point of view, what are the tradeoffs of company A and company B for these deliveries?

Group of answer choices

1. Company A: Track record of prior performance versus B: Unknown performance in deliveries but possibility of improvements.
2. Company A: Greater mean profit per delivery versus Company B: Greater on-time delivery performance.
3. Company A: Good performance in deliveries versus Company B: Better performance in deliveries.
4. Company A: Unknown performance in deliveries but possibility of improvements versus Company B: Track record of prior performance.

• Before running a study, do you know which option is better and why?

Group of answer choices

1. Company A is better because the company has been satisfied with its performance so far.
2. Company B is better because they promised improved results.
3. We are not sure how well Company B performs in terms of on-time deliveries relative to company A.
4. We are not sure which company to select because we do not know which one has lower delivery costs.

• Undertaking a research study in this setting will:

Group of answer choices

1. Only tell us whether company A or B performed better in the test.
2. Definitively answer the question of whether to use company A or company B for deliveries from the distribution centers to the stores.
3. Provide evidence that can help us decide whether to use company A or company B for deliveries from the distribution centers to the stores.
4. Help us to obtain actionable insights because we will be segmenting the population according to important subgroups.

• The results of the research study would lead to:

Group of answer choices

1. No clear guidance on the choice of company A versus company B for deliveries from the distribution centers to the stores.
2. A recommendation for whether to choose company A or company B for future deliveries from the distribution centers to the stores.
3. Only indications of what we might study next.
4. A reason to justify a pre-determined decision to stick with company A.
5. The population of interest consists of:

Group of answer choices

1. The 100 deliveries we will consider for the test.
2. The percentage of on-time performance in the two groups.
3. The distribution centers and the retail stores.
4. The company’s deliveries by truck from the distribution centers to the stores.

• The sample consists of:

Group of answer choices

1. The 100 deliveries we will consider for the test.
2. The percentage of on-time performance in the two groups.
3. The distribution centers and the retail stores.
4. The company’s deliveries by truck from the distribution centers to the stores.

• What is the independent variable for this research question?

Group of answer choices

1. The cost per mile of each delivery.
2. Average profit per delivery.
3. The choice of the trucking company (A or B) for each delivery.
4. The percentage of deliveries with company A and the percentage of deliveries with company B.

• The independent variable is

Group of answer choices

1. Not actionable because it is not within the company’s control.
2. Not actionable because it is within the company’s control.
3. Actionable because it is not within the company’s control.
4. Actionable because it is within the company’s control.

1. What is the dependent variable for this research question?

Group of answer choices

1. A binary indicator (1 or 0) of the on-time status for each delivery.
2. Average profit per delivery.
3. The choice of the trucking company (A or B) for each delivery.
4. The percentage of deliveries with company A and the percentage of deliveries with company B.
5. The dependent variable is

Group of answer choices

1. Measurable because the choice of the trucking company is known.
2. Measurable because the on-time status of each delivery can be recorded.
3. Not measurable because we don’t yet know which trucking company will be recommended.
4. Not measurable because the company’s calculation of profit has fixed costs and variable costs.

1. Which metric would you select to understand the performance of the trucking companies in meeting the goals of the business?

Group of answer choices

1. The proportion/percentage of on-time deliveries.
2. The number of on-time deliveries.
3. The total profit for products sold from each delivery.
4. The average profit for products sold from each delivery.

1. 13. Which of the following options best structures the primary research question?

Group of answer choices

1. Relative to company A, does company B have the same proportion of on-time deliveries?
2. Relative to company A, does company B have a higher proportion of on-time deliveries?
3. Relative to company B, does company A have a higher proportion of on-time deliveries?
4. Relative to company B, does company A have a lower mean cost per mile on deliveries?

1. In plain words, which of the following options best states the null hypothesis associated with this research question?

Group of answer choices

1. The proportion of on-time deliveries for company B is not greater than the proportion of on-time deliveries for company A.
2. The proportion of on-time deliveries for company B is not less than the proportion of on-time deliveries for company A.
3. The proportion of on-time deliveries for company B is higher than the proportion of on-time deliveries for company A.
4. The proportion of on-time deliveries for company B is exactly equal to the proportion of on-time deliveries for company A.

1. In plain words, which of the following options best states the alternative hypothesis associated with this research question?

Group of answer choices

1. The proportion of on-time deliveries for company B equal to the proportion of on-time deliveries for company A.
2. The proportion of on-time deliveries for company B is greater than the proportion of on-time deliveries for company A.
3. The proportion of on-time deliveries for company B is lower than the proportion of on-time deliveries for company A.
4. The average cost per mile for deliveries with company B is greater than the average cost per mile for deliveries with company A.

1. If you fail to reject the null hypothesis:

Group of answer choices

1. You will recommend staying with company A for future deliveries because company B did not demonstrate an improvement in its on-time performance.
2. You will recommend switching to company B for future deliveries because it has improved upon company A in its cost effectiveness.
3. You will recommend staying with company A for future deliveries because you demonstrated that company B less cost effective.
4. You will recommend switching to company B for future deliveries because it has improved upon company A in its proportion of on-time deliveries.

1. If you reject the null hypothesis:

Group of answer choices

1. You will recommend staying with company A for future deliveries because company B did not demonstrate an improvement in its on-time performance.
2. You will recommend switching to company B for future deliveries because it has improved upon company A in its proportion of on-time deliveries.
3. You will recommend staying with company A for future deliveries because you demonstrated that company B less cost effective.
4. You will recommend switching to company B for future deliveries because it is more cost effective and has a similar rate of on-time performance.

Answer the following question in 2-4 sentences that explain your reasoning.

1. How would you design a study to investigate the research question?
2. Without any statistical analysis, what would you consider a sizable drop in the proportion of on-time deliveries?  Select a minimal effect size that would be persuasive for the company.  Justify your reasoning in 1-2 sentences.
3.  How would you convince the logistics manager to undertake this research study?  Write a persuasive argument (2-4 sentences) in favor of adopting this approach.