Drill 6 ·
Supply Chains: Haverlee Orchard is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.
This drill explores a supply-chain disruption and response decision and uses an invented company and original figures.
Haverlee Orchard bottles apple juice. It buys glass bottles from one main supplier. A storm has damaged that supplier's plant, and the supplier now warns of a longer wait before bottles arrive. Haverlee asks two backup suppliers for quotes. The table shows the bottle price and the lead time, which is the number of days between placing an order and receiving it, for all three suppliers.
Bottle price and lead time by supplier
| Supplier | Price per bottle | Lead time (days) |
|---|---|---|
| Main supplier (current) | $0.40 | 30 |
| Backup A | $0.50 | 10 |
| Backup B | $0.45 | 21 |
Question 1. According to the table, what is the lead time for Backup A?
Explanation: The table gives Backup A a 10-day lead time, so B is correct. A, 30 days, is the main supplier's lead time. C, 21 days, is Backup B's. D, 45 days, does not appear in the table.
Question 2. The number of days between placing an order and receiving the bottles is best described by which supply-chain term?
Explanation: This is lead time (D). Lead time is the gap between ordering and receiving goods, which is exactly what the passage defines. A, profit margin, measures earnings, not time. B, inventory turnover, measures how fast stock is sold. C, market share, measures a firm's slice of sales, none of which is a count of waiting days.
Question 3. Haverlee needs 2,000 bottles for its next batch. How much more would those bottles cost from Backup A than from the main supplier?
Explanation: The extra cost is $200, so C is correct. Backup A costs $0.50 per bottle and the main supplier costs $0.40, a difference of $0.10 per bottle. For 2,000 bottles, 0.10 times 2,000 equals $200. A, $100, would use a $0.05 difference. B, $800, is 2,000 times $0.40, the main supplier's full cost, not the difference. D, $1,000, is 2,000 times $0.50, Backup A's full cost, not the difference.
Question 4. Why does relying on a single main supplier create a risk for Haverlee, as this situation shows?
Explanation: B is the best answer because a single-source disruption, here a storm at the main supplier, can delay or halt Haverlee's bottling, since there is no backup arrangement already in place to fill the gap immediately. A is wrong because the table shows the main supplier is actually the cheapest, not the most expensive. C is wrong because single sourcing does not raise stock on hand by itself. D is wrong because one supplier does not automatically shorten lead times; the main supplier's lead time is the longest here.
Question 5. Haverlee has already run out of bottles and needs them as fast as possible for an order due soon, even at a higher price. Based on the table, which supplier should it choose?
Explanation: When speed matters most, Backup A wins (D): the shortest lead time wins, and Backup A's 10 days is the fastest in the table. A picks the cheapest supplier, but its 30-day wait is too slow for an urgent order. B picks a middle price, but Backup B's 21 days is still slower than Backup A. C is wrong because the longest lead time is the worst choice under time pressure, not the best.