Deck 13: Performance Management

Question 1

Last year,Able Company had Sales of $10 million,Cost of Goods Sold of $6 million,Gross Profit of $4 million and Net Profit of $1 million.Average inventory at cost was $2 million.Able's inventory turn rate was:

A)5 times
B)3 times
C)2 times
D)0.5 times

Answer 1

B

Question 2

In the above "Strategic Profit Model" what is the hypothetical firm's net profit margin?

A)8%
B)16%
C)40%
D)none of the above

Answer 2

B

Question 3

Measuring transportation cost per order would be appropriate for the Operations Perspective of the Balanced Scorecard.

Answer 3

True

Question 4

In the above Strategic Profit Model what is the hypothetical firm's ROA?

A)8%
B)0.8
C)32%
D)2

Question 5

People who support the use of the contribution approach to segmental profitability feel that the net profit approach is wrong because it allocates costs:

A)arbitrarily
B)on a predetermined basis
C)equally among the products or customers
D)all of the above

Question 6

Joe Jones has put in place a new set of performance metrics for the Logistics Department at his firm.He is convinced that these will give him better information about the department's performance,but is concerned that he doesn't know what type of behavior the new measurement system will encourage in his employees.Joe seems to be concerned about which objective of performance measurement?

A)monitoring
B)directing
C)controlling
D)measuring

Question 7

Recent research suggests that most firms currently are unable to actually measure the profitability of serving specific customers.

Question 8

A firm performs at a level of 90% on each individual dimension of its logistics service performance.This suggests that the firm is providing 90% perfect order performance.

Question 9

It is more difficult to achieve a high percentage order fill rate than a high percentage item fill rate.

Question 10

What is the firm's new net profit margin?

A)22%
B)16%
C)20%
D)5%

Question 11

Jingle Corporation received an order from a customer for 100 units of bells,200 units of whistles,and 200 units of dingers.The customer received from Jingle Corporation 90 units of bells,190 units of whistles,and 200 units of dingers.Jingle's item fill rate was:

A)90%
B)95%
C)33.33%
D)96%

Question 12

Suppose two companies have identical profit margins.However,Company A has a higher gross margin than company B.Which one of the following would best explain how company B ends up with the same profit margin?

A)Company A has a more efficient supply chain.
B)Company A has a higher asset turnover rate.
C)Company B has a more efficient supply chain.
D)Company B has a higher asset turnover.

Question 13

The firm's new asset turnover is closest to?

A)1.67 times
B)2.5 times
C)1.52 times
D)0.6 times

Question 14

Which of the following metrics would be part of the "internal operations perspective" in the Balanced Scorecard?

A)return on investment
B)fill rate
C)number of credit claims
D)units shipped per employee

Question 15

Which of the following supply chain comprehensive metrics is likely the most difficult to actually quantify?

A)supply chain response time
B)inventory days of supply
C)dwell time
D)cash-to-cash conversion

Question 16

In the above question,Jingle's line fill rate was:

A)90%
B)95%
C)33.33%
D)96%

Question 17

A firm has an asset turnover of 3 times and a net profit margin of 4%.In the next year its margin decreases to 2%.This is not necessarily bad if

A)asset turnover increases to at least 6 times
B)asset turnover decreases to 1.5 times
C)asset turnover doesn't change
D)gross margin increases enough to offset the decrease in net profit margin

Question 18

Suppose your company receives trade credit from your suppliers which allows you 10 days to pay for the goods you buy.You flow your inventory through your company every 30 days.You allow your customers 30 days to pay you.Your cash-to-cash cycle time is:

A)10 days
B)50 days
C)70 days
D)none of the above

Question 19

What is dwell time:

A)A key component of system design
B)The ratio of asset idle time to total time required to complete a mission
C)The total time inventory is waiting to be processed.
D)A key concept in manufacturing efficiency

Question 20

What is the firm's new return on assets (choose the closest answer)?

A)33.33%
B)28%
C)33.44%
D)12%

Question 21

A product's direct costs should not be considered when determining the profitability of that product.

Question 22

A product with low gross margin can provide a higher return on its direct investment than a product with a high gross margin.

Question 23

Activity-based costing is a methodology for avoiding allocation of expenses to customer or product segments.

Question 24

Customer satisfaction with logistics performance can be determined by measuring perfect order performance.

Question 25

On-shelf in-stock percentage is the retailer's sole responsibility.

Question 26

Benchmarking processes is less common than benchmarking performance metrics.