Download Reliable Study Materials and full Test Banks at testbankmall.

com

Solution Manual for Supply Chain Management, 7th

Edition, Sunil Chopra

https://testbankmall.com/product/solution-manual-for-supply-
chain-management-7th-edition-sunil-chopra/

OR CLICK HERE

DOWLOAD NOW

Visit now to discover comprehensive Test Banks for All Subjects at testbankmall.com
 Instant digital products (PDF, ePub, MOBI) ready for you
Download now and discover formats that fit your needs...

Start reading on any device today!

Test Bank for Supply Chain Management 7th Edition Sunil

Chopra

https://testbankmall.com/product/test-bank-for-supply-chain-
management-7th-edition-sunil-chopra/

testbankmall.com

Solution manual for Supply Chain Management 5th Edition by

Chopra & Meindl

https://testbankmall.com/product/solution-manual-for-supply-chain-
management-5th-edition-by-chopra-meindl/

testbankmall.com

Supply Chain Management Strategy Planning And Operation

7th Edition Chopra Solutions Manual

https://testbankmall.com/product/supply-chain-management-strategy-
planning-and-operation-7th-edition-chopra-solutions-manual/

testbankmall.com

Test Bank for Supply Chain Management 5th Edition by

Chopra & Meindl

https://testbankmall.com/product/test-bank-for-supply-chain-
management-5th-edition-by-chopra-meindl/

testbankmall.com
Supply Chain Management Strategy Planning and Operation
6th Edition Chopra Test Bank

https://testbankmall.com/product/supply-chain-management-strategy-
planning-and-operation-6th-edition-chopra-test-bank/

testbankmall.com

Solution Manual for Supply Chain Logistics Management 5th

by Bowersox

https://testbankmall.com/product/solution-manual-for-supply-chain-
logistics-management-5th-by-bowersox/

testbankmall.com

Solution Manual for Operations Management Creating Value

Along the Supply Chain 7th Edition by Russell

https://testbankmall.com/product/solution-manual-for-operations-
management-creating-value-along-the-supply-chain-7th-edition-by-
russell/
testbankmall.com

Solution Manual for Principles of Supply Chain Management

5th Edition Wisner

https://testbankmall.com/product/solution-manual-for-principles-of-
supply-chain-management-5th-edition-wisner/

testbankmall.com

Solution manual for Operations and Supply Chain Management

Russell Taylor 8th edition

https://testbankmall.com/product/solution-manual-for-operations-and-
supply-chain-management-russell-taylor-8th-edition/

testbankmall.com
 errors and stockout rates, and once the season is over, these items are sold at deep
discounts at their Nordstrom Rack outlet stores.

3. What level of responsiveness would be most appropriate for Nordstrom’s supply

chain? What should the supply chain be able to do particularly well?

Supply chain responsiveness takes many forms, including the ability to respond to
a wide range of quantities, meet short lead times, handle a large variety of
products, build innovative products, meet a high service level, and handle supply
uncertainty. The Nordstrom supply chain must be highly responsive in the areas
of handling highly innovative fashion products, customer response, and service
level; they are effective in supplying well-heeled customers with merchandise and
their return policy is legendary in the Pacific Northwest.

4. How can Nordstrom expand the scope of the strategic fit across its supply chain?

Copyright © 2019 Pearson Education, Inc.

 Scope of strategic fit refers to the functions within the firm and stages across the
supply chain that devise an integrated strategy with a shared objective. By
adopting an intercompany interfunctional scope strategy, Nordstrom will
maximize supply chain surplus. Nordstrom can move in this direction by working
with its suppliers as if they are actually owned by Nordstrom. Rather than viewing
the supply chain as a zero-sum game of inventory cost minimization and profit
maximization, Nordstrom must recognize that spreading the wealth and
occasionally taking on more inventory than is optimal for them will result in
improved customer service. The intercompany interfunctional scope of strategic
fit requires more effort than the other approaches presented in this section;
Nordstrom must evaluate all aspects of its supply web.

5. Reconsider the previous four questions for other companies such as Amazon, a
supermarket chain, an auto manufacturer, and a discount retailer such as Walmart.

Amazon focuses on cost and variety by providing books, music, and a host of
other household products at low prices. Customers place orders online and expect
to receive purchases in a number of days. Customer orders are processed at
central warehouses or are drop shipped from suppliers by mail or common
carrier. For the most part, the implied demand uncertainty for Amazon is lower as
they cast such a wide net. Amazon’s supply chain must be responsive in terms of
flexibility; they handle an incredibly diverse range of products. Amazon’s supply
chain should be able to provide low prices, wide variety, and reasonable delivery
schedules for its customers. In every link of the supply chain, Amazon must
function on the cost-responsiveness efficient frontier in order to support its
competitive strategy.

A supermarket chain focuses on cost and quality, with some specialty chains
adding flexibility by carrying a broader range of products that may be targeted
toward customers interested in organic products or ethnic cuisine. Implied
demand uncertainty for a supermarket chain tends to be low; shoppers are
typically repeat customers and have a constant demand level. The supermarket
supply chain must be responsive by receiving produce quickly to ensure freshness
and have a high service level. Supermarket supply chains tend to be well-
established and can improve strategic fit by emphasizing speed to maintain
freshness, hence perceived quality.

Auto manufacturers have extremely complicated supply chains that are

increasingly focused on flexibility and lean operations. Implied demand
uncertainty for auto manufacturers varies considerably by target market and
manufacturer. Automotive supply chains among the big three in the United States
have made great progress in the last decade and recognize that they must be
responsive from a time and flexibility standpoint.

Walmart’s supply chain is obsessed with cost and is facilitated by a low implied
demand uncertainty, its impressive logistics system and its management

Copyright © 2019 Pearson Education, Inc.

 information systems. Its supply chain is able to respond quickly to fill a wide
variety of products to keep merchandise on Walmart’s shelves. Walmart’s level of
coordination along the supply chain is excellent; it would be difficult to point out
areas where true intercompany interfunctional scope of strategic fit has not been
achieved. The sole supply chain criticism that surfaces is an occasional report that
suppliers feel as if supply chain surplus is not shared equitably.

6. Give arguments to support the statement that Walmart has achieved very good
strategic fit between its competitive and supply chain strategies. What challenges
does it face as it works to open smaller format stores?

The best argument to support the statement that Walmart has achieved very good
strategic fit is its success as a company. Competition today is supply chain versus
supply chain, not company versus company, so a company’s partners in the
supply chain often determine the company’s success. Walmart’s strategic focus
on cost is evident in its competitive, product development, supply chain, and
marketing strategy. Its marketing strategy of advertising everyday low prices
appeals to consumers and does not disrupt the supply chain by causing surges in
demand. Visiting one of its big box stores reveals low-priced merchandise, both
national and store brands, stacked from floor to ceiling without elaborate displays
or decoration. Walmart’s logistics and information systems are famous for
coordinating its entire supply chain and allowing it to meet customer needs at
minimal cost.

Walmart has had difficulty both with small format stores and its online sales.
Challenges have arisen because the supply chain structure that is ideal for the
standard Walmart stores is not as effective for both small format stores and online
sales. Small format stores require replenishment in much smaller quantities and
online sales requires the ability to handle a wide variety of slow moving items.
The current supply chain structure is not very good at handling either.

7. What are some factors that influence implied uncertainty? How does the implied
uncertainty differ between an integrated steel mill that measures lead times in
months and requires large orders and a steel service center that promises 24-hour
lead times and sells orders of any size?

From a customer perspective, implied demand uncertainty increases when the

customer’s range of quantity required increases, lead times decrease, variety of
product increases, rate of innovation increases, and required service levels
increase. We also see high implied uncertainty attributed with high product
margins, forecast errors above 40 percent, stockout rates above 10 percent and
forced season-end markdowns. On the supply side we see increased supply
uncertainty when the supply source has frequent breakdowns, unpredictable and
low yields, poor quality, limited supply capacity, and evolving production
processes.

Copyright © 2019 Pearson Education, Inc.

 For the steel mill that requires large orders and has lead times measured in months
both the implied demand and supply uncertainty is less due to a better predictable
capability and a better defined schedule for production. Due to the increasing
number of sizes and the shorter response time associated with the steel service
center, implied uncertainty is high.

8. What is the difference in implied uncertainty faced by a convenience store chain

such as 7-Eleven, a supermarket chain, and a discount retailer such as Costco?

When customers go to a convenience store chain such as 7-Eleven, they go there

for the convenience of a nearby store and are not necessarily looking for the
lowest price. Implied demand uncertainty would be high as customers are looking
for a variety of products and convenience versus cost and demand levels are hard
to predict.

A supermarket chain focuses on cost and quality, with some specialty chains
adding flexibility by carrying a broader range of products that may be targeted
toward customers interested in organic products or ethnic cuisine. Implied
demand uncertainty for a supermarket chain tends to be low; shoppers are
typically repeat customers and have a constant demand level. The supermarket
supply chain must be responsive by receiving produce quickly to ensure freshness
and have a high service level. Supermarket supply chains tend to be well-
established and can improve strategic fit by emphasizing speed to maintain
freshness, hence perceived quality.

Low price is very important to customers of discount retailers such as Costco.

This customer is willing to tolerate less variety and even purchase very large
package sizes as long as the price is low. Customer demand can be more
predictable and supply side needs are large and fairly stable.

9. What are some problems that can arise when each stage of a supply chain focuses
solely on its own profits when making decisions? Identify some actions that can
help a retailer and a manufacturer work together to expand the scope of strategic
fit.

High inventories, poor quality, low customer service, increased returns are just a
number of problems that occur when each stage of a supply chain focuses solely
on its own profits. The trucking company requires full truck loads for delivery
forcing the retailer to carry more inventory than wanted or needed. The supplier
offers discounts to their buyers to maximize production but forcing the buyers to
purchase in larger quantities than desired. Ordering in large batches was very
prevalent during the 1950s and 1960s as companies to minimize local costs and
maximize their own profits.

Today, retailers and manufacturers have the opportunity to plan promotions

jointly such as Walmart and P&G. They can share sales information to determine

Copyright © 2019 Pearson Education, Inc.

 customer trends. Joint product development opportunities are being explored
throughout the supply chain among retailers, manufacturers, and raw material
suppliers.

10. For each of the five levers—capacity, inventory, time, information, and price—
identify an example where a supply chain has focused on this lever to deal with
uncertainty. In each case, identify reasons why you think it is or is not an
appropriate choice.

The paint supply chain carries mixing capacity at every paint store to deal with
demand uncertainty across colors. This is an appropriate choice because the
relative cost of a mixer is low and the inventory saved by carrying base colors is
large.

W.W. Grainger and McMaster Carr carry inventory in centralized warehouses to

meet demand. This is an appropriate choice because pooling allows them to lower
the inventory required and they carry products that have a long shelf life.
Zara uses speedy replenishment to deal with uncertain demand for its trendy
products. This is appropriate because demand for its products is highly
unpredictable and the ability to match supply and demand more than makes up for
the higher cost of speedy replenishment.

Seven-Eleven Japan and Zara use current demand information to drive

replenishment. The investment in information coupled with speedy replenishment
allows them to deal with uncertainty.

The airline and hotel industries use price variation as the main lever to deal with
uncertain demand with prices falling when demand is low and prices rising when
demand is high.

Copyright © 2019 Pearson Education, Inc.

 5-310-507TN

SUNIL CHOPRA

Teaching Note:
Movie Rental Business: Blockbuster, Netflix, and Redbox

Teaching Objectives

The objective of this case is to discuss how different business models and supply chain
structures impact the financials of the firms in the DVD rental business. In particular, the goal is
to convey that the characteristics of the movie (recent/big hit or old/eclectic) affect whether it is
best rented from a centralized or decentralized model. By comparing the financials of
Blockbuster, Netflix, and Redbox, we identify the strengths and weaknesses of each model. In
addition, as streaming gains market share, the impact will be different for movie types and
business models.

Case Questions and Discussions

1. How do the different players in the movie rental value chain provide and capture value?

Movie Studios

Studios were the creators and owners of the content. Most of their costs (stars, production,
and marketing) were incurred up front, but revenues did not begin coming in until the movie was
released. Revenues arose from a variety of channels, including theaters, DVD and digital releases,
and video on demand/pay per view. Studios had recently moved to sharing more risk with their
stars, with smaller upfront payments for the star accompanied by a share of the revenue. After about
a decade of high revenues from DVD sales, studios had seen a recent decline. In recent years, the
international market had come to represent a large fraction of theater sales for studios. For example,
Avatar had worldwide box office revenues of $2.78 billion, only $0.76 billion of which was from
the U.S. market.

Movie Theaters

Movies were released first to movie theaters. Studios tended to enjoy a greater cut (as high as
70 to 90 percent) of the ticket sales in the opening weeks of the movie release, and the theater
owners enjoyed an increased share in the later weeks of the release. The studio’s cut had declined
over time, now averaging about 50–55 percent of ticket sales. Consequently, the length of the
theatrical window also had declined in recent years.

Movie theaters were increasingly adopting measures to increase revenue by releasing movies
as “premiere experience” screenings such as in IMAX or 3D. This allowed movie theaters to charge
an additional $2–3 per movie ticket.

Copyright © 2019 Pearson Education, Inc.

TEACHING NOTE: MOVIE RENTAL BUSINESS 5-310-507TN

In addition, a significant fraction of theater revenues had started to come from concessions
and onscreen advertising.

DVD Retail Stores

A period of three or more months after the movie was released in theaters, it was released in
DVD format to retail stores such as Walmart and Best Buy. These retail stores sourced DVDs
from movie studios at a discounted wholesale rate. Movie studios were most attracted to this
channel, as it offered them a higher profit margin/revenue than any other channel. Movie studios
delayed the DVD release to the rental chains and other channels in order to tap the revenue from
the retail channel as much as possible. (Studios received up to $18 on each DVD sold compared
to less than $4 for a rental.) Studios also tended to actively promote and advertise the DVDs when
they were released.

Blockbuster

Blockbuster started with the business model of having physical storefronts in high-traffic
neighborhood locations. Its primary value addition was to bring recent content close to the customer
in the form of a VHS tape (originally) or DVD. By building stores that were larger than existing
mom-and-pop rental stores, Blockbuster offered customers a wider choice of movies and better
availability on recent releases. Movies were typically rented out for $5 for five nights. Blockbuster
had difficulty with older or niche movies that did not have a broad audience. Even with nearly 8,000
titles in a store, a store could only keep a small fraction of old titles.

Netflix

Netflix started as a mail-order DVD rental service that later turned into a mail-based
subscription service (eventually with a greater focus on streaming) that offered customers greater
choice in the variety of movies they were able to rent and watch. Due to physical limitations of
the store size, Blockbuster’s storefront model could not offer customers as wide a variety of movies
to choose from. (Netflix offered more than 100,000 titles compared to less than 8,000 at the largest
Blockbuster store.)

In addition, Netflix had a robust recommendation system that could suggest movies for
customers. Netflix customers were requested to rate the movies they watched, and a taste profile
was generated for each customer based on these ratings. Movies were then recommended to
customers based on their taste profiles and what other customers with similar profiles seemed to
enjoy. Thus, Netflix reduced the search cost that customers had to bear in identifying movies to
watch (among the over 100,000 titles they carried). By introducing customers to older or less-
known movies, Netflix was also profitable for movie studios, as they would get a share of the rental
revenues from these titles.

Netflix also solved an important problem for studios by generating demand for its catalog of
older movies. If a studio were to offer a Netflix-like monthly subscription plan for its movies, it
would be not as attractive to customers, as studios only had access to the movies in their own
catalogs. By consolidating and sourcing movie titles from various studios, Netflix effectively
generated demand for a wider variety of movies, including older titles.

Netflix focused on adding value through inventory aggregation (for DVDs), search
efficiency, and content aggregation (for video on demand). From a financial perspective, we will
argue that Netflix (with its centralized business model that aggregates inventories) adds much

2 KELLOGG SCHOOL OF MANAGEMENT

5-310-507TN TEACHING NOTE: MOVIE RENTAL BUSINESS

more value for older movies with small and sporadic demand compared to hit movies with large
and predictable demand. Netflix therefore served the “long tail” of the customer demand
corresponding to a wide variety of movies with relatively low demand.

Redbox

Redbox’s primary value proposition was to deliver content in the form of a recently released
DVD very close to the customer (much closer than Blockbuster historically accomplished).
Redbox offered customers a cheap and easy way to rent movies through its vending machines that
were located in high-trafficked locations such as fast food restaurants and supermarkets. Because
Redbox vending machines were located at places people tended to frequent, the service offered
the easiest way to rent DVDs.

Redbox’s vending machines tended to stock newly released DVDs, which were rented out at
$1.20 a night. Redbox thus offered customers the cheapest way to watch new movies. Thus far,
the company had stayed away from the long tail and focused on recent releases. Its recently
announced partnership with Verizon, however, could represent a channel for distributing long-tail
content.

Video on Demand

Video on demand (VOD) services offered customers the most convenience in renting and
watching movies. As long as they had a cable subscription and set-top box available, customers
could rent movies directly through their TV sets and start watching. No additional hardware or
separate boxes were necessary. Movie studios also preferred the VOD channel to DVD rentals, as
they received higher revenue than through DVD rentals.

There was also a strong push from the on-demand players to make studios release movies on
VOD channels on the same day as the DVD release. The major value additions provided by cable
companies were content aggregation, fund transfer aggregation, along with access to customer TVs.

Digital on-Demand

Players such as Apple, Amazon, and Google were becoming increasingly active in the digital
pay-per-view and on-demand rental channel. Most of their offerings could be streamed directly
from the Internet and watched on computers. New devices had been developed (Apple TV,
Google TV, Roku, etc.) that allowed the digital content from these companies to be streamed to
TVs. Netflix was also an active player in this field; it allowed its monthly subscription plan
customers to watch movies by streaming through devices such as Roku, PlayStation, Xbox, and
Wii. The value additions provided by these digital channels were content aggregation, fund transfer
aggregation, and strong brand recognition to get customer access.

2. What factors led to Netflix’s growth? How should Blockbuster have responded to the challenge
posed by Netflix?
The factors that led to Netflix’s success were:

Transition from VHS to DVD. Transition from the VHS to DVD storage of movies
coincided with the emergence of Netflix as a major player in the movie rental business.
DVDs were cheaper and easier to handle and transport. This allowed Netflix to introduce

KELLOGG SCHOOL OF MANAGEMENT 3

TEACHING NOTE: MOVIE RENTAL BUSINESS 5-310-507TN

the DVD-by-mail subscription plans. Sending VHS tapes by mail would have been much
more expensive.
Low costs. Blockbuster incurred high operating costs due to its storefront rental model (in
the form of PP&E, inventory, and SG&A). Netflix, through its distribution center–based
delivery model, was able to reduce its costs of operation and PP&E. Netflix’s PP&E was
one-tenth that of Blockbuster, whereas its revenue was just 40 percent that of
Blockbuster.
Netflix also had low inventory costs (2.21 percent of revenue or 4.5 percent of COGS)
compared to that of Blockbuster (15.73 percent of revenue or 33.98 percent of COGS), as
well as a much lower SG&A (see Exhibit 1 for details).
Wide inventory selection. Compared to Blockbuster, Netflix carried a wider variety of
older titles sourced from studios at a cheaper rate compared to the cost of new releases. The
Blockbuster model was not well suited to carrying a wide variety of older movies because
a typical store carried only 3,000 titles (compared to more than 100,000 available at
Netflix). The centralized Netflix model, in contrast, was much better suited to carrying
large variety.
Recommendation system. Netflix’s model of providing high variety (for both DVDs and
streaming) was bolstered by a robust recommendation system, which suggested movies to
customers based on their interests and rental history. With high variety, reducing search
costs becomes important (something that the recommendation engine helped with).
Subscription model. Netflix’s subscription model of renting DVDs for a fixed monthly
fee was attractive to customers who wanted the privilege or comfort of watching as many
movies as they wanted for a fixed subscription price. Blockbuster’s high-cost store rental
($5 for five nights per DVD) was not attractive to those customers. In 2010, Netflix’s
monthly subscription fee of $8.99 was lower than two rentals at Blockbuster. Even when
the service was priced at $19.95 a month (in 2000), it was comparable to renting four videos
at Blockbuster.

So me Cha l le n ge s f or N etfl i x

High transportation cost was one of the biggest challenges Netflix faced for its DVD
business. Shipping a DVD (to the customer and back) can cost as much as 75 cents per disc. This
increases the SG&A costs for Netflix for its DVD business. The cost of streaming has been
estimated to be significantly lower (around 5 to 10 cents to deliver a movie online). As a result,
Netflix tried to encourage users of DVDs to transition to streaming by increasing the price of the
service (it charged $7.99 for the DVD service and a separate $7.99 for streaming instead of the
previous $8.99 for both).

The challenge in both cases has been new content. The DVD service is ideally suited for a wide
variety of old content. It can be argued that streaming a wide variety of old content allows Netflix
to reduce its distribution costs while maintaining its advantages. With new content, however, there
is a problem using DVDs (high transportation cost). In fact, the company had been accused of
“throttling” in a class action lawsuit (Frank Chavez v. Netflix). The company gave preference to
customers who used a few DVDs each month over others that used many DVDs each month for
new releases. This is because frequent users increase transportation costs (even though Netflix
denied that this was the cause in its settlement). New releases also have higher

4 KELLOGG SCHOOL OF MANAGEMENT

5-310-507TN TEACHING NOTE: MOVIE RENTAL BUSINESS

acquisition costs for streaming. In fact, Netflix has had to pay significantly higher prices for
acquiring new digital content.

Another challenge for Netflix for DVD rentals comes from the difficulties faced by the Postal
Service. As the Postal Service raises prices and cuts service, costs at Netflix will rise while response
time will get worse for DVD delivery.

Netflix did not transition to streaming without difficulties. The company briefly separated its
DVD and streaming business in 2011, but pulled back based on customer response. Its DVD
rental business continued to generate profits, but Netflix had to pay increasing costs for its
streaming rights, especially for newer content.

Moving forward, Netflix’s biggest challenge continues to be the cost of new content
especially for its streaming service. It can be argued that Netflix would be better off continuing to
focus on only the long tail for both its DVD and streaming service. This would keep the cost of
content acquisition low while taking advantage of the aggregate distribution model that Netflix has.

Blockbuster’s Response

In response to Netflix, Blockbuster should have pressed its advantage in multiple channels. It
should have utilized its physical storefronts and the newly introduced mail-subscription service
(in response to Netflix’s mail offering) much more effectively and as complements to each other.

In addition, Blockbuster did not move into the mail-subscription online model early enough,
as it had invested heavily in its physical storefront model. Once Blockbuster introduced its own
offering in the DVD-by-mail category, Netflix already had a firm lead. Further, Netflix’s mail
offering had many more DVD titles than Blockbuster had, and was also complemented by a
robust recommendation engine, which Blockbuster’s service lacked.

In short, Blockbuster should have been looking to move into the low-cost (online) models much
sooner and should have diversified from its high-cost (physical storefront) model.

The company could also have brought in vending machines to rent and return the high-
volume rental movies. Its stores already had slots where customers could return DVDs. Once the
movie was dropped into a slot, however, more work had to be done by employees to update
inventory records and restock shelves. A vending machine would have reduced Blockbuster’s
cost of rentals and return while also making rentals available when the store was closed.

Blockbuster effectively missed an opportunity to create a hybrid system that both improved
customer service and reduced costs.

3. What factors led to Redbox’s growth? How and why was it able to capture market already
dominated by big players such as Blockbuster and Netflix?
Although Netflix already occupied a strong position in renting a wide variety of titles,
Redbox attacked Blockbuster in the new-movie segment. Its business model provided greater
convenience to customers while also reducing both price and cost. The factors that led to
Redbox’s success were:

KELLOGG SCHOOL OF MANAGEMENT 5

TEACHING NOTE: MOVIE RENTAL BUSINESS 5-310-507TN

Low fixed and variable costs. Redbox’s kiosks offered a low fixed-cost business model
compared to the high-cost physical storefront rental business model of Blockbuster. Each
vending kiosk was relatively inexpensive at $15,000 and generated $30,000 revenue in
the first year, rising to $40,000 and $50,000 in Years 2 and 3. The company had very low
fixed investment in PP&E (this is not entirely reflected in the Coinstar financial
statement) and also relatively low operating costs, as Redbox employees only came once
a week to restock the vending machines when new DVDs were released. The model
incurred virtually no variable cost in renting DVDs or accepting returns (all the work was
done by the customer).
Access and availability. Redbox’s kiosks were accessible close to customers in high-
trafficked locations such as grocery stores, restaurants, and supermarkets Redbox had
around 30,000 vending machines by early 2012). As a result, a Redbox vending machine
was typically much closer to customers than the closest Blockbuster store. The locations
also allowed customers to get a DVD while shopping instead of making a special trip to
rent a DVD. Redbox implemented an online reservation system that allowed customers to
find the closest vending machine with their desired movie in stock and to reserve the movie
for a night. This ensured that customers did not waste a trip.
Low pricing. Redbox’s $1-a-night model of DVD rental, (which increased to $1.20 a
night by 2012) was attractive to customers. Customers were more likely to prefer to pick
up the DVD for $1 and return it at their convenience.

Blockbuster improved availability of its titles (despite holding them in vending machines with
only a few hundred DVDs each) by allowing customers to go online and identify the closest vending
machine with the desired title in stock. Overall, the Redbox model was ideally suited to provide
recent movies, (which rented at high and predictable rates) to customers at low cost.

4. What are key success factors in the movie rental business? How do Redbox, Blockbuster, and
Netflix compare along those dimensions?
The key success factors in the movie rental business were costs, which included fixed and
operational costs (facilities, transport), content (acquisition and inventories), delivery channels,
and pricing. Companies needed to adequately control all of these factors to be profitable in this
business.

In addition, customers were increasingly moving away from the physical storefront model
rentals to online and on-demand viewing. As seen from Exhibit 4 in this case, in-store rentals
were forecasted to decline going forward, but vending, online subscription, and VOD channels were
expected to continue to grow. This shift in customer behavior had a greater impact on the costs,
delivery channels, content, and pricing models adopted by the firms in the movie rental industry.

Facilities

Blockbuster had a high-cost physical storefront model of movie rental. Blockbuster leased the
storefronts at high costs in high-trafficked neighborhood locations (this increased SG&A and
PP&E). Only a single wall at a Blockbuster store was dedicated to new releases, (which
constituted a significant fraction of the rentals). Redbox, in contrast, used very low cost vending
machines (with low fixed installation costs of $15,000) in high-trafficked locations such as

6 KELLOGG SCHOOL OF MANAGEMENT

5-310-507TN TEACHING NOTE: MOVIE RENTAL BUSINESS

grocery stores, supermarkets, and malls to rent the same recent releases (much lower
PP&E/SG&A) compared to Blockbuster.

Whereas a Blockbuster store carried around 3,000 titles that were not recent releases, this
represented a very small fraction of old movies. In contrast, Netflix carried a very wide variety of
titles but in centralized distribution centers. Netflix had about 60 distribution centers, where
DVDs were processed and shipped all over the United States. These distribution centers were
located close to post office locations, allowing Netflix to afford timely processing and delivery at
relatively low cost. Thus, Netflix had much lower facility costs than Blockbuster while providing
a much higher variety of movies.

Inventories

Inventories at Blockbuster were high (relative to revenues) because of the decentralized

nature of its operations. In particular, carrying many low-volume rental titles (after all, there were
perhaps only about 30 movies at any given time that were renting in large quantities) exacerbated
the inventory requirements. This increased the cost of both inventory and space for Blockbuster.
Netflix carried a wider selection of titles in its distribution centers, but was able to carry lower
inventories because of aggregation. Redbox stocked newly released DVDs, which rented in large
volumes with relatively predictable demand. As a result, there was much less inventory sitting
around. Each Redbox kiosk carried close to 630 DVDs comprising 200 of the newest movie titles.
Each DVD was rented out on average 15 times, after which it was sold to the customer.

Transportation

Blockbuster’s physical storefront model incurred low transportation costs, whereas Netflix bore
the high shipping and handling costs of processing DVDs by mail. As per an MSNBC article by
Ethan Epstein, Netflix estimated an expenditure of $600 million on postage in 2010. Redbox
incurred low replenishment costs in restocking its vending kiosks.

Delivery Channels

Netflix offered customers the choice of renting DVD titles by mail and streaming movies
directly through a Netflix-enabled home entertainment device. Redbox’s focus was on renting
DVDs through its vending kiosks. (It recently partnered with Verizon to offer streaming
services.) Blockbuster followed the physical storefront rental model, and later tried to match
Netflix’s DVD-by-mail offering. Blockbuster did not develop significant capabilities and
partnerships for streaming movies. Toward the end, through a partnership with NCR, Blockbuster
started installing its own brand of vending kiosks throughout the United States. Blockbuster never
took effective advantage of a multichannel hybrid strategy.

Pric in g
Redbox followed a pricing model of $1 a night per DVD (the price increased to $1.20 in
2011), while Netflix followed an all-you-can-watch monthly subscription model. Redbox’s offering
was attractive to users who wanted to watch new movies and return them quickly. Netflix’s plan
was geared toward heavy users who were attracted to particular movie genres and interested in
discovering movies based on their tastes. Both pricing schemes significantly undercut
Blockbuster’s model of $5 per DVD for five nights for its in-store rentals.

KELLOGG SCHOOL OF MANAGEMENT 7

TEACHING NOTE: MOVIE RENTAL BUSINESS 5-310-507TN

After comparing the firms on the above dimensional factors it is clear that Blockbuster, Netflix,
and Redbox had their own advantages in their offerings. Redbox’s model was suitable for the price-
value customer looking to watch recent titles, whereas customers who valued variety and choice
and also were attracted to a simple fixed monthly subscription plan would appreciate Netflix’s
offering. Blockbuster’s emphasis of storefront rentals was highly successful during the era of VHS
tapes (and little other competition) but was found wanting when DVDs became the preferred storage
medium and new competition arrived in the form of Netflix. Blockbuster had the opportunity to
implement a multichannel strategy using each channel for the type of movies it was best suited for.
Unfortunately Blockbuster took no action until it was too late.

5. How would you advise these companies to modify their strategies and structures going
forward?
An explosion of online on-demand rental options had recently become available. Companies
such as Apple, Amazon, and Google were providing their own on-demand stores. Many more
new devices were being introduced to the market (Apple TV, Google TV, Roku, Boxee, etc.) that
could stream on-demand content to TVs. It became increasingly likely that DVDs would be
replaced in the future as a content storage medium, and more and more content would be directly
streamed or accessed from the cloud.

Netflix understood this development and was increasingly offering the online streaming
option to its existing monthly subscription plan customers. Netflix was also pursuing more and
more licensing deals with movie studios to be able to offer an increased selection of streaming titles
for its customers. (Netflix recently signed a licensing deal to pay close to $1 billion to the Epix
movie channel to add Paramount, Lions Gate, and MGM movies to its catalog.)

The challenge for Netflix was the cost of acquiring content, as well as deciding which content
it should focus on. For existing old content and eclectic content (e.g., Iranian movies), the move
from DVD to streaming could help Netflix because it significantly reduced shipping cost while
keeping the acquisition cost of content low. For new content, however, acquisition costs for
streaming were likely to be much higher for Netflix (as has been the case), making this a segment
that Netflix was better off staying away from.

From a strategic perspective, the Netflix model (DVD rentals plus streaming) was best suited
for older and more eclectic titles rather than newer titles. In addition, Netflix might have had
more to gain by sticking to this segment and offering some discount for customers that used the
DVD service and wanted to add streaming (the cost of both at $15.98 was the sum of the costs of
each). This was because offering a discount would likely have customers streaming instead of
getting a DVD, thus lowering transportation cost.

Netflix’s efforts to buy recent content for streaming and to pay for original content seemed
misplaced because it did not leverage the company’s existing strengths with DVD rentals. Instead
it put the company in head-to-head competition with much bigger players for the streaming
business.

Redbox enjoyed a competitive advantage in that it allowed people to rent recent movies cheaply.
It continued to grow its number of vending machines (recently acquiring NCR’s machines
as well) and recently announced a partnership with Verizon for streaming content. A hybrid model
in which Redbox rented recent DVDs through its vending machines and streamed older content
through the Verizon partnership could be quite powerful because it would allow Redbox to use
each channel to serve the appropriate product/customer. The vending machine

8 KELLOGG SCHOOL OF MANAGEMENT

5-310-507TN TEACHING NOTE: MOVIE RENTAL BUSINESS

model could serve price-sensitive customers looking for recent content while the streaming model
could serve customers looking for variety (while keeping acquisition costs low if they stayed
away from recent content).

Blockbuster unfortunately missed its opportunities to create the hybrid model that Redbox
seemed to be aiming for.

KELLOGG SCHOOL OF MANAGEMENT 9

TEACHING NOTE: MOVIE RENTAL BUSINESS 5-310-507TN

Exhibit 1: Company Comparisons (%)

Metric Blockbuster Netflix Coinstar
SG&A (% of Revenue) 49.50 24.16 13.60
COGS (% of Revenue) 46.30 49.20 69.60
Inventories (% of Revenue) 15.73 2.21 9.12
Inventories (% of COGS) 33.98 4.50 13.10
PP&E (% of Revenue) 58.47 15.92 66.57
PP&E with Depreciation (% of Revenue) 6.13 7.90 35.08
Liabilities (% of Revenue) 45.64 28.80 71.05

Exhibit 2: Blockbuster

Both Netflix and Redbox operated with lower costs because they were not burdened with the
heavy fees of leasing thousands of retail locations as Blockbuster was. The table below shows
that the general and administrative expenses for Blockbuster were 47.48 percent and 44.13
percent of revenues in 2009 and 2008, respectively.1 The figures for Netflix for the same period
were 3.1 percent and 3.6 percent, respectively.2

Fiscal Year Ended

3-Jan-2010 4-Jan-2009
($ in millions) ($ in millions)
Total Revenues 4,062.4 5,065.4

Operating Expenses
General and Administrative 1,928.7 2,235.3
Advertising 91.4 117.7
Depreciation/Amortization 144.1 146.6
Impairment of Goodwill 369.2 435

General and Administrative Expenses as a Percentage of Revenue 47.48% 44.13%

Source: Blockbuster 2009 Annual Report.

1
Blockbuster 2009 Annual Report.
2
Netflix 2009 Annual Report.

10 KELLOGG SCHOOL OF MANAGEMENT

5-310-507TN TEACHING NOTE: MOVIE RENTAL BUSINESS

Exhibit 3: Netflix
Economic of Shift from DVDs to Digital

The shift from physical DVD mailing to digital delivery for older eclectic titles (the long tail)
would help Netflix lower its high shipping cost in mailing out DVDs. Netflix estimated that it
will spend $600 million on postage expenses in 2010, and the expense would rise to $800 million
within the next few years. For Netflix, the cost of subscription was 54.4 percent and 55.8 percent
of revenues in 2009 and 2008, respectively (see table below). Internet streaming was considerably
cheaper, and it was estimated that the costs would be as low as 5 cents a gigabyte for bandwidth—
about a nickel a movie.

Year Ended December 31

2009 2008
Cost of subscription ($ in thousands) 909,461 761,133
As a percentage of revenues 54.40% 55.80%

Source: Netflix 2009 Annual Report.

KELLOGG SCHOOL OF MANAGEMENT 11

TEACHING NOTE: MOVIE RENTAL BUSINESS 5-310-507TN

Exhibit 4: Digital File Purchase and Rentals

Amazon

Amazon’s catalog of more than 50,000 movies and TV shows was available for rental or
purchase. These titles could be rented and watched online, through desktop software, or via
compatible devices from Panasonic, Roku, Samsung, Sony, and TiVo. Amazon streams at 720p,
like Netflix, or HD (1080p) on HD devices.

iTunes

iTunes dominated the online music download market and enjoyed a popular premium
positioning. The store carried more than 30,000 TV episodes and more than 2,500 films,
including 600 in HD. Apple also sold Apple TV hardware for transferring files from computers to
TV screens.

Conver gence of TV and Internet

Consumers, particularly young consumers, increasingly viewed the Internet as their primary
source of entertainment. This trend in attitude was the driving force between innovations that sought
to merge the functionality of TVs and computers. Players in this new space focused on ways to
facilitate the watching of downloaded or streaming movies on TV:

Online vendors Netflix, Amazon, and Blockbuster all partnered with third-party hardware
manufacturers such as TiVo and Roku to launch low-cost set-top boxes for video download
and streaming. Movies could be downloaded through gaming consoles such as the Xbox.
Independent upstart VUDU offered HD movie downloads to the TV via its own set-top
box.
Riding on the success of its iTunes application as a way to purchase music and video,
Apple offered Apple TV as a way to integrate computer and TV files. Users could view
any purchased media on their computers, video iPod, iPhone, or TV through a syncing
process, (which can be performed wirelessly within the home).
The newest HDTVs on the market offered direct Ethernet connections to the TV set,
which allowed the viewer to watch streaming video or download from partnered services.
Panasonic’s Viera Cast service, for example, offered easy TV access to YouTube, Picasa
web albums, movie downloads from Amazon, and other programs (e.g., weather forecasts
and stock ticker data).
Google, through its video-sharing site YouTube, started providing video rental service,
offering selections from more than 500 content partners.

12 KELLOGG SCHOOL OF MANAGEMENT

5-310-507TN TEACHING NOTE: MOVIE RENTAL BUSINESS

Bibliography
Chmielewski, Dawn C. “Studios, Cable Companies Band Together To Promote Video-On-
Demand.” Los Angeles Times, March 16, 2010. http://latimesblogs.latimes.com/
entertainmentnewsbuzz/2010/03/studios-cable-companies-band-together-to-promote-video-
on-demand.html.

“Crunching Numbers in the ‘Hollywood Economy.’” Fresh Air: NPR, April 1, 2010.
http://www.npr.org/templates/story/story.php?storyId=124535538.

Epstein, Edward Jay. “Hollywood’s Profits, Demystified.” Slate, August 8, 2005.

http://www.slate.com/id/2124078.

———. “Hollywood by the (Secret) Numbers: The Rise of DVDs.” 2005.

http://www.edwardjayepstein.com/table2.htm

Goldstein, Patrick. “Hollywood’s Slipped Discs.” The Guardian, May 21, 2009.
http://www.guardian.co.uk/film/2009/may/22/falling-dvd-sales.

Graser, Marc. “Blockbuster Battles Redbox.” Variety, April 27, 2010. http://www.variety.com/
article/VR1118018342.html.

Harrar, Derek. “Day-and-Date VOD Movie Release Windows . . . and 48 Hour Rentals.”
Comcast Voices, June 3, 2009. http://blog.comcast.com/2009/06/day-and-date-vod-movie-
release-windows-and-48-hour-rentals.html.

“Digital Entertainment: Streaming Video—US.” Mintel, January 2010.

KELLOGG SCHOOL OF MANAGEMENT 13

 CASE STUDY—The Demise of Blockbuster

Teaching Objectives

The objective of this case is to discuss how different business models and supply chain structures impact
the financials of the firms in the DVD rental business. In particular, the goal is to convey that the
characteristics of the movie (recent/big hit or old/eclectic) affect whether it is best rented from a
centralized or decentralized model. By comparing the financials of Blockbuster, Netflix and Redbox, we
identify the strengths and weaknesses of each model. The centralized Netflix model displays strategic fit
for a wide variety of somewhat older movies whose demand is hard to predict. The decentralized
Redbox model displays strategic fit for a few new releases whose demand is large and predictable. The
growth of both companies left Blockbuster squeezed in the middle because its model did not have the
same level of strategic fit.

Case Questions and Discussions

1. In what ways did Blockbuster achieve better strategic fit than local stores?

Blockbuster started with the business model of having large physical storefronts in high-traffic
neighborhood locations. By building stores that were larger than existing mom-and-pop rental stores,
Blockbuster offered customers a wider choice of movies and better product availability. Movies were
typically rented out for about $5 for five nights.

Given that mom-and-pop stores were much smaller, even though they carried only a few hundred titles,
it was very difficult for them to provide availability of these movies given the high cost of inventory (VHS
tapes sold for $60–$80 each at that time) and space. Blockbuster built larger stores that aggregated
demand across a wider area than a typical mom-and-pop store. The larger store allowed Blockbuster to
provide greater variety and better availability at lower cost than mom-and-pop stores. The aggregation
of inventory and physical space allowed Blockbuster to fill demand from its customers better than mom-
and-pop stores.

2. How much implied uncertainty do Netflix and Redbox face? What levers do they use to deal with
this uncertainty?

Redbox focuses on a few new releases. The demand for these movies is large and relatively predictable.
As a result, Redbox faces a relatively low level of implied uncertainty that can effectively be served using
decentralized inventory that is close to customers. In contrast, Netflix provides a very wide variety of
older movies whose demand can be difficult to predict. The wide variety increases the level of implied
uncertainty. Netflix, however, makes its customer wait a bit to get their movies, allowing it to lower the
implied uncertainty to some extent. Netflix then pools this uncertainty and serves its customers using
inventory that is stored in centralized warehouses, allowing it to further reduce the uncertainty it must
absorb.

3. How did Netflix and Redbox achieve better strategic fit than Blockbuster?

Copyright © 2019 Pearson Education, Inc.

Netflix and Redbox achieved better strategic fit than Blockbuster by targeting different segments of
movie rentals. Whereas Blockbuster attempted to provide its customers both new releases as well as
older movies, Netflix and Redbox divided the market among themselves. Netflix primarily targeted a
wide variety of older movies while Redbox primarily targeted a much smaller variety of new releases.
Blockbuster’s attempt to serve both markets increased its cost for both new releases and older movies.
In contrast, Netflix was able to provide variety to its customers more effectively (100,000 titles rather
than 5,000 at Blockbuster) and at lower cost through its aggregate model of shipping from DCs. Redbox
was able to provide new releases at lower cost than Blockbuster by using vending machines.

Whereas a Blockbuster store carried around 3,000 titles that were not recent releases, this represented
a very small fraction of old movies. In contrast, Netflix carried a very wide variety of titles but in
centralized distribution centers. Netflix had about 60 distribution centers (at its peak of mailing DVDs),
where DVDs were processed and shipped all over the United States. Thus, Netflix had much lower
facility costs than Blockbuster while providing a much higher variety of movies.

Only a single wall at a Blockbuster store was dedicated to new releases, (which constituted a significant
fraction of the rentals). Given that Blockbuster was paying for the whole store, this increased the facility
cost per rental because most of the space was used by other movies that rented at a much lower rate
than the new releases. Redbox, in contrast, used very low cost vending machines (with low fixed
installation costs of $15,000) in high-trafficked locations such as grocery stores, supermarkets, and malls
to rent the same recent releases (much lower PP&E/SG&A) compared to Blockbuster. As a result, the
facility cost per rental was much lower at Redbox compared to Blockbuster.

Inventories at Blockbuster were high (relative to revenues) because of the decentralized nature of its
operations. In particular, carrying many low-volume rental titles (after all, there were perhaps only
about 30 movies at any given time that were renting in large quantities) exacerbated the inventory
requirements. This increased the cost of both inventory and space for Blockbuster. Netflix carried a
wider selection of titles in its distribution centers, but was able to carry lower inventories because of
aggregation at its DCs. Redbox stocked newly released DVDs, which rented in large volumes with
relatively predictable demand. As a result, there was much less inventory sitting around. Each Redbox
kiosk carried close to 630 DVDs comprising 200 of the newest movie titles. Each DVD was rented out on
average 15 times, after which it was sold to the customer.

Netflix used a centralized supply chain structure to provide variety in the form of old movies (high
uncertainty) to its customers at low cost. Redbox used a decentralized supply chain structure to provide
predictability in the form of new releases (low uncertainty) close to its customers at low cost. A
combination of the two focused supply chains performed significantly better than the Blockbuster
supply chain as illustrated in a comparison of the financials in Exhibits 1 and 2 (in the absence of Redbox
financials, we use Coinstar financials).

Copyright © 2019 Pearson Education, Inc.

Exhibit 1: Company Comparisons (%)
Metric Blockbuster Netflix Coinstar
SG&A (% of Revenue) 49.50 24.16 13.60
COGS (% of Revenue) 46.30 49.20 69.60
Inventories (% of Revenue) 15.73 2.21 9.12
Inventories (% of COGS) 33.98 4.50 13.10
PP&E (% of Revenue) 58.47 15.92 66.57
PP&E with Depreciation (% of Revenue) 6.13 7.90 35.08
Liabilities (% of Revenue) 45.64 28.80 71.05

Exhibit 2: Blockbuster

Both Netflix and Redbox operated with lower costs because they were not burdened with the heavy
fees of leasing thousands of retail locations as Blockbuster was. The table below shows that the general
and administrative expenses for Blockbuster were 47.48 percent and 44.13 percent of revenues in 2009
and 2008, respectively.1 The figures for Netflix for the same period were 3.1 percent and 3.6 percent,
respectively.2

Fiscal Year Ended

3-Jan-2010 4-Jan-2009
($ in millions) ($ in millions)
Total Revenues 4,062.4 5,065.4

Operating Expenses
General and Administrative 1,928.7 2,235.3
Advertising 91.4 117.7
Depreciation/Amortization 144.1 146.6
Impairment of Goodwill 369.2 435

General and Administrative Expenses as a Percentage of Revenue 47.48% 44.13%

Source: Blockbuster 2009 Annual Report.

1
Blockbuster 2009 Annual Report.
2
Netflix 2009 Annual Report.

Copyright © 2019 Pearson Education, Inc.

Supply Chain Management: Strategy,
Planning, and Operation
Seventh Edition

Chapter 2
Achieving Strategic Fit in a
Supply Chain

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Learning Objectives
2.1 Explain why achieving strategic fit is critical to a
company’s overall success.
2.2 Describe how a company achieves strategic fit between
its supply chain strategy and its competitive strategy.
2.3 Identify the main levers to deal with uncertainty in a
supply chain.
2.4 Discuss the importance of expanding the scope of
strategic fit across the supply chain.

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Competitive and Supply Chain Strategies
• Competitive strategy defines the set of customer needs a company
seeks to satisfy through its products and services
• Product development strategy specifies the portfolio of new
products that the company will try to develop
• Marketing and sales strategy specifies how the market will be
segmented and product positioned, priced, and promoted
• Supply chain strategy determines the nature of material
procurement, transportation of materials, manufacture of product or
creation of service, distribution of product, follow-up service, whether
processes will be in-house or outsourced
• All functional strategies must support one another and the
competitive strategy

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
The Value Chain

Figure 2-1 The Value Chain in a Company

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Achieving Strategic Fit (1 of 2)
• Strategic fit – competitive and supply chain strategies
have aligned goals
• A company may fail because of a lack of strategic fit or
because its overall supply chain design, processes, and
resources do not provide the capabilities to support the
desired strategy

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Achieving Strategic Fit (2 of 2)
1. The competitive strategy and all functional strategies
must fit together to form a coordinated overall strategy.
Each functional strategy must support other functional
strategies and help a firm reach its competitive strategy
goal.
2. The different functions in a company must appropriately
structure their processes and resources to be able to
execute these strategies successfully.
3. The design of the overall supply chain and the role of
each stage must be aligned to support the supply chain
strategy.

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Summary of Learning Objective 1
Strategic fit requires that all functions within a firm and
stages in the supply chain target the same goal—one that
is consistent with customer needs. A lack of strategic fit
between the competitive and supply chain strategies can
result in the supply chain taking actions that are not
consistent with customer needs, leading to a reduction in
supply chain surplus and a decrease in supply chain
profitability.

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
How Is Strategic Fit Achieved?
1. Understanding the customer and supply chain
uncertainty
2. Understanding the supply chain capabilities
3. Achieving strategic fit

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Step 1: Understanding the Customer and
Supply Chain Uncertainty (1 of 2)
• Quantity of product needed in each lot
• Response time customers are willing to tolerate
• Variety of products needed
• Service level required
• Price of the product
• Desired rate of innovation in the product

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Step 1: Understanding the Customer and
Supply Chain Uncertainty (2 of 2)
• Demand uncertainty – uncertainty of customer demand
for a product
• Implied demand uncertainty – resulting uncertainty for
only the portion of the demand that the supply chain
plans to satisfy based on the attributes the customer
desires

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Customer Needs and Implied Demand
Uncertainty
Table 2-1 Impact of Customer Needs on Implied Demand
Uncertainty
Customer Need Causes Implied Demand Uncertainty to …
Range of quantity required increases Increase because a wider range of the quantity required
implies greater variance in demand
Lead time decreases Increase because there is less time in which to react to
orders
Variety of products required increases Increase because demand per product becomes less
predictable
Required service level increases Increase because the firm now has to handle unusual
surges in demand
Rate of innovation increases Increase because new products tend to have more
uncertain demand
Number of channels through which Increase because the total customer demand per channel
product may be acquired increases becomes less predictable

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Implied Uncertainty and Other
Attributes (1 of 2)
1. Products with uncertain demand are often less mature
and have less direct competition. As a result, margins
tend to be high.
2. Forecasting is more accurate when demand has less
uncertainty.
3. Increased implied demand uncertainty leads to
increased difficulty in matching supply with demand. For
a given product, this dynamic can lead to either a
stockout or an oversupply situation.
4. Markdowns are high for products with greater implied
demand uncertainty because oversupply often results.
Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Implied Uncertainty and Other
Attributes (2 of 2)
Table 2-2 Correlation Between Implied Demand
Uncertainty and Other Attributes

Low Implied High Implied

Uncertainty Uncertainty
Product margin Low High
Average forecast error 10% 40% to 100%
Average stockout rate 1% to 2% 10% to 40%
Average forced season-end markdown 0% 10% to 25%

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Impact of Supply Source Capability

Table 2-3 Impact of Supply Source Capability on Supply

Uncertainty

Supply Source Capability Causes Supply Uncertainty to...

Frequent breakdowns Increase

Unpredictable and low yields Increase
Poor quality Increase
Limited supply capacity Increase
Inflexible supply capacity Increase
Evolving production process Increase

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Implied Uncertainty (Demand and Supply)
Spectrum

Figure 2-2 The Implied Uncertainty (Demand and Supply) Spectrum

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Step 2: Understanding Supply Chain
Capabilities (1 of 2)
• How does the firm best meet demand?
• Supply chain responsiveness is the ability to
– Respond to wide ranges of quantities demanded
– Meet short lead times
– Handle a large variety of products
– Build highly innovative products
– Meet a high service level
– Handle supply uncertainty

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Step 2: Understanding Supply Chain
Capabilities (2 of 2)
• Responsiveness comes at a cost
• Supply chain efficiency is the inverse to the cost of
making and delivering the product to the customer
• The cost-responsiveness efficient frontier curve
shows the lowest possible cost for a given level of
responsiveness

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Cost-Responsiveness Efficient Frontier

Figure 2-3 Cost-Responsiveness Efficient Frontier

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Responsiveness Spectrum

Figure 2-4 The Responsiveness Spectrum

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Step 3: Achieving Strategic Fit
• Ensure that the degree of supply chain responsiveness is
consistent with the implied uncertainty
• Assign roles to different stages of the supply chain that
ensure the appropriate level of responsiveness
• Ensure that all functions maintain consistent strategies
that support the competitive strategy

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Zone of Strategic Fit

Figure 2-5 Finding the Zone of Strategic Fit

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Roles and Allocations

Figure 2-6 Different Roles and Allocations of Implied Uncertainty for a

Given Level of Supply Chain Responsiveness
Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Efficient and Responsive Supply Chains
Table 2-4 Comparison of Efficient and Responsive Supply Chains

Efficient Supply Chains Responsive Supply Chains

Primary goal Supply demand at the lowest cost Respond quickly to demand

Maximize performance at a Create modularity to allow

Product design strategy
minimum product cost postponement of product differentiation
Lower margins because price is a Higher margins because price is not a
Pricing strategy
prime customer driver prime customer driver
Lower costs through high Maintain capacity flexibility to buffer
Manufacturing strategy
utilization against demand/supply uncertainty
Maintain buffer inventory to deal with
Inventory strategy Minimize inventory to lower cost
demand/supply uncertainty
Reduce, but not at the expense of Reduce aggressively, even if the costs
Lead-time strategy
costs are significant
Select based on speed, flexibility,
Supplier strategy Select based on cost and quality
reliability, and quality

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Tailoring the Supply Chain
• Achieve strategic fit while serving many customer
segments with a variety of products across multiple
channels
• Requires sharing operations for some links in the supply
chain, while having separate operations for other links

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Changes over Product Life Cycle (1 of 2)
• Beginning stages

1. Demand is very uncertain, and supply may be

unpredictable
2. Margins are often high, and time is crucial to gaining
sales
3. Product availability is crucial to capturing the market
4. Cost is often a secondary consideration

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Changes over Product Life Cycle (2 of 2)
• Later stages

1. Demand has become more certain, and supply is

predictable
2. Margins are lower as a result of an increase in
competitive pressure
3. Price becomes a significant factor in customer choice

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Summary of Learning Objective 2
To achieve strategic fit, a company must first understand
the needs of the customers being served and the
capabilities of all supply sources. Both the needs and the
capabilities should be used to identify the implied
uncertainty that the supply chain must absorb. The second
step is to understand the supply chain’s capabilities in
terms of efficiency and responsiveness. The key to
strategic fit is ensuring that supply chain responsiveness is
consistent with customer needs, supply capabilities, and
the resulting implied uncertainty. Tailoring the supply chain
is essential to achieving strategic fit when supplying a wide
variety of customers with many products through different
channels.
Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Supply Chain Levers
• Five basic levers to deal with uncertainty
– Capacity, combination of excess capacity and flexible
capacity
– Inventory, one of the most common levers used in
practice to deal with uncertainty
– Time, combination of speedy supply and the
willingness of customers to wait
– Information, appropriate information can help a supply
chain reduce uncertainty
– Price, prices of products and services that vary over
time

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Supply Chain Uncertainty

Figure 2-7 Five Key Levers to Deal with Supply Chain Uncertainty

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Summary of Learning Objective 3
The implied uncertainty that a supply chain needs to
absorb depends on the needs of the customer segment(s)
targeted. Capacity, inventory, time, information, and price
are the five levers that a supply chain can use to deal with
this uncertainty. Investing more in one lever generally
allows the supply chain to invest less in one or more of the
other levers. To achieve strategic fit, a supply chain must
find the right balance between investments in the five
levers to effectively serve the target customer segment(s).

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Expanding Strategic Scope (1 of 3)
• Scope of strategic fit – the functions within the firm and
stages across the supply chain that devise an integrated
strategy with an aligned objective
• Intraoperation Scope: Minimizing Local Cost
– Each stage of the supply chain devises strategy
independently

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Expanding Strategic Scope (2 of 3)
• Intrafunctional Scope: Minimizing Functional Cost
– Firms align all operations within a function
• Interfunctional Scope: Maximizing Company Profit
– Functional strategies are developed to align with one
another and with the competitive strategy

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Expanding Strategic Scope (3 of 3)
• Intercompany Scope: Maximizing Supply Chain Surplus
– Supplier and customer work together and share
information to reduce total cost and increase supply
chain surplus
• Agile Intercompany Scope
– A firm’s ability to achieve strategic fit when partnering
with supply chain stages that change over time

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Summary of Learning Objective 4
The scope of strategic fit refers to the functions and stages
within a supply chain that coordinate strategy and target a
common goal. When the scope is narrow, individual
functions try to optimize their performance based on their
own goals. This practice often results in conflicting actions
that reduce the supply chain surplus. As the scope of
strategic fit is enlarged to include the entire supply chain,
actions are evaluated based on their impact on overall
supply chain performance, which helps increase supply
chain surplus.

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Copyright

Copyright © 2019, 2016, 2013 Pearson Education, Inc. All Rights Reserved
Other documents randomly have
different content
 R. of Rs. 35: 639. Mr. ’07. 140w.

Hall, Rev. Charles Cuthbert. Christ and the

human race; or, The attitude of Jesus Christ
toward foreign races and religions; being the
William Belden Noble lectures for 1906. **$1.25.
Houghton.
6–42357.

“In these lectures ... Dr. Hall ... is concerned with the proper
attitude of a Christian man toward the non-Christian religions....
To-day, he affirms, ‘the East denounces Western Christendom,
yet in spirit approaches nearer and nearer to the worship of
Christ.’ ... In conclusion, Dr. Hall gives the standpoints now to be
taken by the Christian educator, physician, and minister in the
East.”—Outlook.

Reviewed by A. K. Parker.
+ Am. J. Theol. 11: 363. Ap. ’07. 810w.
−
“He approaches the East with a courtesy equal to that for
which the East is eminent. He is a student as well as a teacher,
and expects to receive as well as give.” George Hodges.
+ Atlan. 99: 562. Ap. ’07. 380w.

Ind. 62: 390. F. 14, ’07. 40w.

Nation. 84: 105. Ja. 31, ’07. 70w.

 Outlook. 85: 237. Ja. 26, ’07. 370w.

Hall, Charles Cuthbert. Christian belief interpreted

by Christian experience. *$1.50. Univ. of Chicago
press.
5–25392.

Descriptive note in December, 1905.

“His irenic tone, and tactful, almost adroit, presentation of the
points of difference between Christianity and Hinduism, are
certainly admirable.” Andrew C. Zenos.
+ Bib. World. 29: 397. My. ’07. 790w.

Hall, Edward Henry. Paul, the apostle, as viewed

by a layman. **$1.50. Little.
6–19782.

A sympathetic estimate done in the historical spirit of “a great,

though very human actor in an important crisis in the world’s
spiritual life. Critical scholarship since Baur has been laid under
tribute, and me opinions of such students as Pfleiderer,
Hausrath, Wernle, and Weizsacher have been diligently
compared and carefully estimated.” (Nation.)

“Gives his view of the apostle’s religious character and

theological doctrines, in an interesting and instructive way.”
+ Am. J. Theol. 11: 530. Jl. ’07. 170w.
“A rapid and suggestive survey.”
+ Bib. World. 29: 79. Ja. ’07. 20w.
 “A just and sympathetic appreciation. The author’s limitation
would appear to be lack of grasp of the importance of the
service which Paul rendered to early Christianity.”
+ Nation. 84: 33. Ja. 10, ’07. 250w.
−

Hall, Eliza Calvert. Aunt Jane of Kentucky; il. by

Beulah Strong. †$1.50. Little.
7–12978.

As Aunt Jane cuts squares for patchwork out of “caliker that

won’t fade in the first washin’ and wear out in the second,” and
fashions them into her wild-goose pattern quilt she grows
reminiscent and with pristine verve and histrionism recounts
delicious tales of long ago: how Sally Ann delivered her message
of denunciation to the men of Goshen church for demanding that
their wives be the submittin’ kind, and how the women of the
Mite society bought a new organ for the church in spite of the
husbands who thought it a frivolous proceeding. Unruly human
nature, bits of scandal and gossip are all softened by time, and
as Aunt Jane recalls them she touches them up with her quaint
philosophy and delightful sentiment.

+ A. L. A. Bkl. 3: 177. O. ’07. ✠

“The musings of Aunt Jane’s anonymous listener are
somewhat startlingly in contrast to the prevailing rusticity and
simplicity of the anecdotes. Even a note of great beauty may
produce discord; and discord, as the portrayers of New England
life have so well realized, is even less desirable than monotony.
With this possible exception, the book is one of the most
creditable of its kind, and Aunt Jane’s sympathetic optimism
should win her many friends.”
 + Cath. World. 85: 688. Ag. ’07. 290w.
+
−
“The author who listens to Aunt Jane, and who records the
stories, has added much to their beauty by her sympathy of
expression.”
+ Ind. 62: 1212. My. 23, ’07. 180w.
“The flavor of the book lies in the point of view of the old
woman, in the wise things she says, and the homely way she
says them.”
+ N. Y. Times. 12: 188. Mr. 30, ’07. 860w.
“In this little volume Eliza Calvert Hall has achieved the
unusual—except in the matter of the title.”
+ N. Y. Times. 12: 381. Je. 15, ’07. 250w.
“Her stories of Aunt Jane’s experiences are full of real human
feeling, and awaken thoroughly wholesome emotion.”
+ Outlook. 86: 117. My. 18, ’07. 150w.
“A little more humour as pungent and appealing as that in the
opening sketch, ‘Sally Ann’s experiences,’ and ‘Mrs. Wiggs,’ would
have had a rustic rival.”
+ Putnam’s. 2: 749. S. ’07. 110w.

Hall, Florence Howe. Social usages at Washington.

**$1. Harper.
6–41786.

Descriptive note in Annual, 1906.

+ A. L. A. Bkl. 3: 42. F. ’07.
Reviewed by Hildegarde Hawthorne.
N. Y. Times. 11: 866. D. 15, ’06. 310w.

+ Outlook. 85: 144. Ja. 19, ’07. 60w.

Hall, Gertrude. Wagnerian romances. **$1.50.
Lane.
A volume of essays in which the author takes the poems too
often submerged in the Wagner music and reveals the intrinsic
value of the myth, poetry and romance in them. Beginning with
“Parsifal” and ending with “The flying Dutchman,” she includes
ten of the Wagnerian romances.

“There can be no doubt that her conscientious transcript will

be welcomed by many opera-goers.”
+ Nation. 85: 404. O. 31, ’07. 240w.
“While the author’s method in this book is excellent, and she is
able to preserve the intense spirit and mystic atmosphere of the
great romances, her English occasionally suffers from too literal
a rendering of the German. With that unimportant reservation,
one can thoroughly enjoy her conscientious and sympathetic
work.”
+ Outlook. 87: 499. N. 2, ’07. 190w.
+
−

Hall, Granville Stanley. Youth: its education,

regimen and hygiene. **$1.50. Appleton.
7–30473.

An abridgment of “Adolescence” which offers in briefer form

and at less cost the far-reaching pedagogical principles and
conclusions of the original volume. There have been added a
chapter on moral and religious training and a glossary of seven
pages, the latter being useful as well to the larger work.
 “The book has been more carefully proofed and the
bibliographic references made more complete than in
‘Adolescence.’ Good judgment has characterized the selection
and condensation, and normal schools and teacher’s classes,
outside of the preferred geographic zone, are certain to find it a
useful book, if they can get hold of it.” Will S. Monroe.
+ J. Philos. 4: 218. Ap. 11. ’07. 130w.
+
“There will be great advantage in the existence of this
handbook to ‘Adolescence,’ tho it might be regretted that the
terminology and philosophical allusions have not been adapted
to the understanding of the layman.”
+ Lit. D. 35: 695. N. 9, ’07. 120w.
+
−
“The anxious parent or teacher, seeking for the light upon his
problems of how best to deal with either child or youth, no
matter what his troubles are, will be able to find help of some
sort in these pages, crammed full as they are, with the wisdom
of the scientist, the observer, the lover of his kind.”
+ N. Y. Times. 12: 581. S. 28, ’07. 960w.
+

N. Y. Times. 12: 666. O. 19, ’07. 30w.

Hall, H. R. Days before history. 50c. Crowell.

7–21361.

A book for children which in story form tells of uncouth men

who lived in caves and on floating islands in the days before
history.
 Ath. 1906, 2: 732. D. 8. 100w.
“We congratulate the author on a singularly attractive little
book, the very thing for imaginative boys.”
+ Ath. 1907, 1: 537. My. 4. 60w.
“The writer has a good subject, although his handling of it is
not of the best.”
+ R. of Rs. 36: 764. D. ’07. 90w.
−

Hall, Prescott F. Immigration and its effects upon

the United States. **$1.50. Holt.
6–6769.

Descriptive note in Annual, 1906.

“I cannot find that Mr. Hall has inaccurately or carelessly
stated or omitted any of the essential facts, though he has not
failed to indicate the conclusions he draws from them. Only a
few minor errors can be noted, and they proceed from the
mistakes of others upon nonessential points, or from the
imperfections of government statistics, whose weaknesses Mr.
Hall points out. Altogether the book stands out as the most
important contribution that has been made to the study of this
most important American problem.” John R. Commons.
+ Charities. 17: 504. D. 15, ’08. 400w.
+
−
“The treatise is detailed and exhaustive in summing up the
experience of the United States in solving its hydra-headed
immigration problem.”
+ J. Pol. Econ. 15: 125. F. ’07. 130w.
+
“A book quite indispensable to serious students of the problem
of immigration.” Montgomery Schuyler.
 + Putnam’s. 3: 231. N. ’07. 400w.
+

+ Spec. 97: 540. O. 13, ’06. 250w.

−

Hallock, William, and Wade, Herbert T. Outlines

of the evolution of weights and measures, and the
metric system. *$2.25. Macmillan.
6–36443.

“The book contains a clear and well-written account (largely

taken from M. Bigourdan’s ‘Le système metrique’) of the
foundations of the metric system by the French, who were its
real inventors, and of its gradual spread since 1872 over nearly
the whole of Europe and America with the single exception of
these islands.”—Ath.

“The archaeological part, touching, among other things, on the

Babylonian cubit and the Egyptian measures, we cannot
commend, for there is no evidence that the authors have any
first hand knowledge of the subject, and neither Professor
Hommel nor the Rev. W. Shaw-Caldecott, whom they quote, is so
great an authority upon it as the authors evidently imagine.”
+ Ath. 1906, 2: 775. D. 15. 210w.
−
“The work is an argument for the metric system, but it is not
partisan. It is excellently handled and should have general
attention; it should certainly be read by every senator and
representative at Washington.”
+ Ind. 62: 504. F. 28, ’07. 360w.
 “This is an admirable piece of work, in which the result of
much tedious research is presented in a bright and lucid
narrative.”
+ Nature. 75: 290. Ja. 24, ’07. 1740w.
+
“A noteworthy piece of special pleading.”
+ Outlook. 83: 768. Jl. 28, ’06. 190w.
+
−
“A complete and exhaustive discussion—for the general reader,
at least—of the whole subject.”
+ R. of Rs. 34: 254. Ag. ’06. 100w.
+
“This book can well be declared the most complete and most
authentic work extant on this important subject.” J. H. Gore.
+ Science, n.s. 24: 652. N. 23, ’06. 390w.
+
+

Halsham, John. Lonewood Corner: a countryman’s

horizon. *$1.50. Dutton.
Leisure, an unknown luxury to commercial America, fills this
volume. “The author has ample time in which to read Theocritus
—not in translation—in the beech tree shade on summer
mornings, to sit on a log for long June afternoons and look at
the landscape ... to perch on the meadow gate by the hour and
watch the mowers and the mowing machine ... to wander far
and aimlessly across fields and through woods—and afterward to
write exquisite water-colors in words describing all he has seen
and thought and felt, and delicate little bas-reliefs of the people
with whom he has met and talked.” (N. Y. Times.)
 “We heartily commend it to all lovers of the contemplative life.
The style is admirable—rich without being ornate.”
+ Ath. 1907, 1: 784. Je. 29. 970w.
“There is much good browsing in the unpretentious pages of
this modestly learned and pleasantly chatty writer.”
+ Dial. 43: 170. S. 16, ’07. 370w.
“It is on the whole better reading than ‘Idlehurst,’ written with
more gusto and less pedantry. His pessimism does not dismay
us, but rather amuses us as a mood which we like to share in
holiday hours.”
+ Lond. Times. 6: 180. Je. 7, ’07. 1460w.
“Arrives at a certain charm from its impregnation with the
quality—so grateful to some palates—of being unutterably,
deeply English.”
+ Nation. 85: 211. S. 5, ’07. 420w.
−
“It is the sort of book that demands of the reader a
sympathetic mental temperament and given that, the sort of
book in which such a reader can find a companion and intimate
and an unfailing source of pleasure and content. But to those
who have not that temperament its pages will be even as the
Greek sentence which forms its motto.”
+ N. Y. Times. 12: 534. S. 7, ’07. 410w.
−
“We have read his book twice from end to end and we do not
feel we have wasted time. Could critic say more?”
+ Sat. R. 104: 515. O. 26, ’07. 1500w.
+
“‘Idlehurst’ quickly became a classic; ‘Lonewood Corner,’ its
sequel, or second volume, will stand beside it, we fancy, on most
shelves where the earlier book has established its footing. If not
on all, it is because of a slight suggestion of what is not exactly
bitterness, but is rather like it—an added hint of aloofness—that
may not be agreeable to the palate of all.”
 + Spec. 99: 164. Ag. 3, ’07. 1890w.
−

Hamilton, Angus. Afghanistan. *$5. Scribner.

6–41815.

Descriptive note in Annual, 1906.

+ A. L. A. Bkl. 3: 43. F. ’07.
−
“The work required two years to be spent in its preparation
and the result is most satisfactory, as the book contains much
information under historical, geographical, ethnographical,
commercial and political groupings.” Laura Bell.
+ Ann. Am. Acad. 30: 610. N. ’07. 220w.
+
“It should take a high place as a book of reference. It should
be prized not only as that, but for its clear presentation of an
inadequately understood subject.” George R. Bishop.
+ N. Y. Times. 12: 108. F. 23, ’07. 3590w.
+

Hamilton, Anthony Count. Memoirs of Count de

Gramont; ed. by Allan Fea. *$5. Scribner.
A handsomely illustrated edition of the memoirs of Count de
Gramont, “a soldier of fortune, and a boldly unscrupulous
gamester and wit in the reign of Louis XIII, and Louis XIV.”

“Mr. Fea also supplies copious footnotes—almost too copious.

The half-tones are not always distinct, partly because many of
the originals are dimmed with age.”
 + Nation. 84: 32. Ja. 10, ’07. 330w.
−
“The volume would be desirable if only for the sake of these
illustrations, but these represent only a small part of the editor’s
work.”
+ N. Y. Times. 12: 58. F. 2, ’07. 750w.
+

+ Sat. R. 102: 682. D. 1, ’06. 90w.

* Hamilton, Cosmo. Adam’s clay. † $1.50.

Brentano’s.
A diatribe against the thoughtless, heartless, irreverent
“woman of the world.”

“In spite of clever delineation of character, plenty of humour,

and considerable skill in skating over thin ice, we cannot say that
this novel has left a pleasant impression on us.”
− Ath. 1907, 1: 193. F. 16. 100w.
+

N. Y. Times. 12: 656. O. 19, ’07. 10w.

Hamilton, Sir Ian Standish Monteith. Staff

officer’s scrapbook during the Russo-Japanese
war. 2v. ea. *$4.50. Longmans.
6–1100.

Descriptive note in Annual, 1906.

 “Powers of Keen observation and the facile pen of a cultured
citizen of the world are noticeable on every page, and perhaps
the greatest charm of the writer lies in the fact that, while the
professional reader cannot fail to profit by his expert criticisms,
the layman finds himself led on from episode to episode with
ever-increasing interest, it is hardly an exaggeration to say that,
full though it be of brilliant and expert professional knowledge
and criticism, no work of more enthralling interest could well be
placed before a reader.”
+ Acad. 72: 212. Mr. 2, 07. 1240w. (Review of v. 2.)
+
“It is even better than its forerunner.”
+ Ath. 1907, 1: 224. F. 23. 530w. (Review of v. 2.)
“A vivid and trustworthy account. General Hamilton’s pictures
of the atrocious sides of war are among the most striking
features of his admirable book.”
+ Lit. D. 34: 723. My. 4, ’07. 490w. (Review of v. 2.)
“The peculiar charm of this second instalment ... lies in the
extreme humility and taking simplicity of language in which he
narrates the stirring scenes of which he was a witness. Most
fascinating military work.”
+ Lond. Times. 6: 60. F. 22, ’07. 1110w. (Review of v. 2.)
+
“This really brilliant book deserves a wide public.”
+ Nation. 84: 290. Ap. 25, ’07. 380w. (Review of v. 2.)
+

N. Y. Times. 12: 124. Mr. 2, ’07. 120w. (Review of v. 2.)

“Gen. Hamilton has a style that draws the reader irresistibly
along with him. His comments from the standpoint of a highly
competent military authority, greatly enhance the value of his
volumes.” George R. Bishop.
+ N. Y. Times. 12: 487. Ag. 10, ’07. 1120w.
+
 “This volume is more reticent, is fuller of really useful
information, and is altogether more valuable.”
+ Sat. R. 103: 271. Mr. 2, ’07. 1220w. (Review of v. 2.)
+
“Undoubtedly a work of first-rate importance.”
+ Spec. 98: 499. Mr. 30, ’07. 2180w. (Review of v. 2.)

Hamilton, Joseph. Spirit world. **$1.50. Revell.

6–36932.

The author “thinks that we have not only proof of the

existence of a supernatural world, but also knowledge of its
inhabitants and governing laws. He bases his views almost
entirely upon the accounts given in the Bible of angelic
visitations, miraculous events, etc. It is astonishing what an
elaborate structure he rears on their foundations. The
supernatural world he conceives on the analogy of the natural....
The angelic beings ... have bodies like the human, only more
ethereal; senses like the human, only more refined; and are
nourished, not by food taken in the mouth, but by elements
absorbed from the atmosphere. Fancies like these are multiplied,
and curious speculations abound.”—Am. J. Theol.

“One is bound to respect the reverence with which he

approaches his subject, and the frank and earnest manner in
which he avows his beliefs.” Henry W. Wright.
− Am. J. Theol. 11: 361. Ap. ’07. 340w.
+
“Only the need of protesting against it entitles such books to
serious notice.”
− Outlook. 84: 633. N. 10, ’06. 160w.
Hamilton, M. First claim. †$1.50. Doubleday.
7–5067.

“This is the story of a woman who, having made in extreme

youth an uncongenial marriage, is tempted beyond withstanding
to skip blithely away with a young subaltern, Charley Osborne,
less from love of him than from aversion to her husband.”
(Nation.) “It may be a very just punishment for a woman who
elopes with another man, leaving a little child behind her, to find
that this child is treated with a strictness amounting to cruelty by
the woman whom her husband marries after the inevitable
divorce. There is, however, no reason why the innocent reader’s
feelings should be wrung by such a recital.” (Spec.)

“It is not great creative work, but it is remarkably good of its

kind; it is the work of a novelist with an eye for character, a
spontaneous sense of humour, and a standard of truth to which
every line of the story is adjusted.”
+ Lond. Times. 5: 360. O. 26, ’06. 450w.
“The ending in a ghastly triumph of falsehood makes an
unsatisfying conclusion to a story of struggle not without
genuine power.”
− Nation. 84: 292. Mr. 28, ’07. 230w.
+
“There is no denying that ‘The first claim’ is interesting; but it
is an unpleasant tale.”
+ N. Y. Times. 12: 242. Ap. 13, ’07. 190w.
−
“The plot which Miss Hamilton has chosen for her book is
carried out with great cleverness and detail; but we feel bound
to say that the story is one which very few people will be able to
take any pleasure in reading.”
− Spec. 97: 990. D. 15, ’06. 140w.
+
Hamilton, Samuel. Recitation. **$1.25. Lippincott.
6–15713.

“The first part of the book treats of the purpose and essentials
of the recitation and the art of study; the second part, of the five
formal steps of general method; and the third and last part, of
the more specific problems of individual method, the use of text-
books, oral and written work, English, etc., in the recitation.”—J.
Philos.

“A sensible and practical book.”

+ Ind. 61: 262. Ag. 2, ’06. 90w.
“Made accessible by marginal topics and synoptical summaries
and outlines.” W. F. Dearborn.
+ J. Philos. 4: 217. Ap. 11, ’07. 420w.
“The presentation is clear and orderly; the subdivision of
topics is minute.” J. H. T.
+ School R. 15: 239. Mr. ’07. 200w.

Hammond, Harold. Further fortunes of Pinkey

Perkins. †$1.50. Century.
6–30932.

Descriptive note in Annual, 1906.

“Boy readers can scarcely help being absorbed in his doings.”
+ Bookm. 24: 529. Ja. ’07. 60w.

+ R. of Rs. 34: 767. D. ’06. 40w.

Hamp, Sidford F. Boys of Crawford’s Basin: the
story of a mountain ranch in the early days of
Colorado. †$1.50. Wilde.
7–26966.

Experiences in ranching, prospecting, and working as a miner

in the early seventies has afforded the author a first-hand
intimacy with facts and scenes which he records here. He shows
how two sturdy young men, prone to honesty and not afraid to
work, do their share in advancing the prosperity of the state in
its infancy.

Hamp, Sidford Frederick. Dale and Fraser,

sheepmen. †$1.50. Wilde.
6–30460.

Descriptive note in Annual, 1906.

A. L. A. Bkl. 3: 82. Mr. ’07.

Hampson, W. Paradoxes of nature and science.

$1.50. Dutton.
W 7–163.

“In this, which may be perhaps regarded as the true type of

‘popular’ science book, Mr. Hampson explains, in language clear
to the ordinary man the principle of the boomerang, of the
gyroscope, of bird flight, of double vision, and of much else....
‘Curiosities of freezing and melting,’ and his discourse on ‘Liquid
air,’ on which, as a subject he has made his own, he is
particularly lucid and informing.”—Ath.
 “On one page we find him laying down that electricity is ‘a
form of energy.’ This idea, which was popular in the seventies,
may be said to have received its quietus at the hands of Prof.
Silvanus Thompson. Except for this we have nothing but praise
for Mr. Hampson’s book, which is excellent reading, and written
with a sense of humour as unexpected as it is pleasant.”
+ Ath. 1906, 2: 776. D. 15. 320w.
−
“His explanations are appeals to prejudices as unscientific as
those which gave rise to the appearance of the paradox. Even
when his arguments are sound they must convey to a reader a
wholly untrue idea of scientific method. But they are not always
sound.”
− Nature. 75: 341. F. 7, ’07. 160w.
“His book is an extremely readable one, and in the article on
the navigation of the air it supplies many useful and timely
hints.”
+ N. Y. Times. 12: 462. Jl. 27, ’07. 1040w.

Handasyde. For the week-end. †$1.50. Lane.

“The week-end here is the country house gathering of an
exalted social circle, animated, it would appear, by the purpose
of philandering with each other’s wives and husbands, while
prudently keeping on the safe side of the divorce court—a half-
hearted method of procedure which has perhaps suggested the
author’s curious pseudonym.”—Ath.

“This book is slight, but what there is of it is true, direct, and

simple.”
+ Acad. 72: 539. Je. 1, ’07. 290w.
“The style, though marred by grammatical lapses, shows
considerable facility both in dialogue and description.”
 + Ath. 1907, 1: 660. Je. 1. 110w.
−
“The character drawing is excellent, the atmosphere is well
preserved, and the details in excellent taste.”
+ N. Y. Times. 12: 636. O. 19, ’07. 70w.
−
“The writer seems to be a rather inefficient disciple of Mr. E. F.
Benson.”
− Sat. R. 103: 787. Je. 22, ’07. 110w.

Haney, William H. Mountain people of Kentucky.

$1.50. W: H: Haney, P. O. box 431, Lexington, Ky.
6–26563.

A book whose purpose is to show the existing conditions in the

mountains of Kentucky and the attitude of the people of this
region toward the improvement of the conditions affecting life
and character.

“The style is not always clear and one at times is not quite
sure just how much of a given statement is one of fact and how
much is what a young and optimistic teacher hopes to see
realized. On the whole, however, the author has shown up the
modern, progressive side of the mountain people in a very
creditable manner.” Samuel MacClintock.
+ Am. J. Soc. 13: 273. S. ’07. 920w.
−
“The work is rather crudely arranged and written.”
+ Ann. Am. Acad. 29: 637. My. ’07. 130w.
−
“Most interesting sketch.”
+ R. of Rs. 36: 638. N. ’07. 100w.
Hankin, St. John. Three plays with happy endings.
French, S:
The three plays are “The prodigal’s return,” “The charity that
began at home” and “The Cassilis engagement.” “They have no
plots, present no conflicts of character, and are practically
destitute of dramatic action.... Familiar as most of the
personages are in the world of the footlights—the rich and vulgar
parvenu, the complacent parson, the self-excusing wastrel, the
East Indian military bore, the quack, the music hall siren, her
mother, and their rich young dupe—they are sketched with such
happy dexterity and vivacity that they assume a certain
semblance of freshness and reality.” (Nation.)

“Since realism has come to mean something violent,

something even indecent, let us call Mr. Hankin a naturalist who
is doing for the English stage what Constable did for European
landscape. He contrives beauty and interest, decoration even, by
keeping the tones and values of drama in their true relation to
life. He is a fairy godmother who has saved the rather vulgar
coach from being run over by the motor-car of realism.”
+ Acad. 73: 941. S. 28, ’07. 1280w.
“He has a fine, fastidious, deft talent, as any one who reads
the three plays in his present volume (and skips the preface) will
agree.”
+ Lond. Times. 6: 278. S. 13, ’07. 1070w.
−
“As a dramatist Mr. Hankin has a good deal to learn, but there
ought to be a future for a man who can see the humorous side
of things so clearly.”
+ Nation. 85: 288. S. 26, ’07. 400w.
−
Hannis, Margaret. Emancipation of Miss Susana.
**40c. Funk.
7–24766.

The story of Susana Adams who relieves the monotony of her

spinster life by going to New York and entering upon a fictitious
matrimonial venture which finally leads to a real one.

N. Y. Times. 12: 683. O. 26, ’07. 100w.

Hanotaux, Gabriel. Contemporary France; tr. by

John C. Tarver. 4v. ea. *$3.75. Putnam.
v. 3. France from 1874–1877 occupies this volume. It includes
the latter days of the National assembly with its work on the
constitution, the first year’s sittings of the Chamber and the
Senate, and closes with Marshal MacMahon’s opposition to
Gambetta and the Left majority, announced in his letter to M.
Jules Simon of May 15th, 1877.

“The translation appears to be fairly executed, but we regret

to find that the serious blunders in the French original pointed
out in our review are not corrected, even in cases where they
concern English facts and names.”
+ Ath. 1907, 1: 758. Je. 22. 590w. (Review of v. 3.)
−
“M. Hanotaux’s third volume is in no way inferior in interest to
the first and second. The English translator, who has to attempt
no easy task in rendering M. Hanotaux’s picturesque periods and
somewhat violent metaphors, improves by practice. But he might
do better still if he took more pains.” P. F. Willert.