Deck 2: Supply Chain Management

Question 1

One source of disruption caused by the external supply chain is

A) product or sales promotions.
B) late deliveries.
C) new product or service introduction.
D) engineering changes.

Answer 1

late deliveries.

Question 2

The objective of a firm in a responsive supply chain is likely to be realized if it has a

A) standardized product.
B) line flow process.
C) short lead time.
D) low- capacity cushion.

Answer 2

short lead time.

Question 3

Firms in a responsive supply chain are expected to have

A) high inventory investments.
B) low- capacity cushions.
C) long delivery times.
D) flexible flow process.

Answer 3

flexible flow process.

Question 4

It is recommended that a firm in the higher echelon of an efficient supply chain have

A) low inventory investments.
B) low- capacity utilization.
C) delivery by air.
D) high- capacity cushions.

Question 5

Which one of the following statements correctly represents a benefit of centralized buying?

A) Increased buying power can result in significant savings in purchasing costs.
B) Purchasing lead times may be shorter.
C) Local managers have more control over their business.
D) Purchases and production schedules are meshed more easily.

Question 6

Which of the following is an advantage of the postponement technique?

A) better quality of the product
B) reduction in inventory investment
C) reduction in training costs
D) reduction in automation

Question 7

Which one of the following statements about the relation between financial and supply chain performance measures is TRUE?

A) Lower aggregate inventory value means higher current assets.
B) Longer delivery times require higher levels of working capital.
C) Higher inventory turns call for higher working capital requirement.
D) Shorter new product development time decreases revenue.

Question 8

The tactic of packing products on incoming shipments so that they can be easily sorted and shipped out of intermediate warehouses in a supply chain is referred to as

A) vendor managed inventory.
B) inventoried pooling.
C) cross docking.
D) channel assembly.

Question 9

Which one of the following statements is TRUE about a competitive orientation in supplier relationships?

A) The supplier gains repeatability and can move toward a line flow process.
B) It tends to emphasize short- term advantages over long- term commitments.
C) The supplier is obliged to offer the lowest possible price every time.
D) The supplier is obliged to deliver the material in the shortest possible time, every time.

Question 10

It is recommended that a firm in a responsive supply chain have

A) standardized product.
B) flexible quality policy.
C) volume flexibility.
D) low- capacity cushion.

Question 11

Which one of the following statements regarding supplier selection criteria is TRUE?

A) Suppliers should be selected primarily on the basis of the shortest lead time because higher lead time increases the cost of inventory.
B) Suppliers should be selected on the basis of quality because quality is always the most important characteristic of a product.
C) Suppliers should be selected on the basis of quality, price, and delivery.
D) Suppliers should be selected on the basis of price only because the cost of materials is a significant portion of total product cost.

Question 12

One of the benefits of a cooperative orientation in supplier relationships would be

A) the supplier has complete freedom in choosing the delivery time.
B) the supplier implements its own quality standards.
C) the buyer does not have to share much information with the supplier.
D) the buyer sometimes suggests ways to improve the supplier's operations.

Question 13

Which one of the following statements on inventory placement of finished goods is best?

A) Forward placement might help reduce transportation cost.
B) Backward placement is consistent with a competitive priority that calls for fast delivery times.
C) Forward placement is consistent with a competitive priority that calls for customization.
D) Inventory pooling should be avoided when demand in various regions fluctuates month to month.

Question 14

The phenomenon in supply chains whereby ordering patterns show increasing variances the further upstream you move in the supply chain is referred to as

A) bullwhip effect.
B) forward placement.
C) inventory pooling.
D) postponement.

Question 15

Which of the following changes would decrease the likelihood of the bullwhip effect?

A) changing the mix of items in an order
B) sending partial shipments of an order
C) sending late deliveries of an order
D) instituting a policy of no discounts or promotion

Question 16

The basic purpose of supply chain management is to

A) synchronize the operations of all suppliers with those of purchasing, production, distribution, and customers.
B) reduce the inventory by proper selection of customers and transportation modes.
C) create an exclusive set of suppliers who will not supply your competitors.
D) link your customers together so that the flow of materials remains under control.

Question 17

Which of the following statements does NOT represent a positive link between supply chain performance and the financial status of a firm?

A) Lowering the cost of purchased materials reduces the level of working capital required and has a positive impact on the contribution margin.
B) Reduced inventory levels result in an increase in the percentage of partial orders shipped and an increased inventory turnover ratio.
C) Reducing supplier lead times reduces the level of working capital required.
D) Percentage of orders shipped on time reduces the level of working capital required and supports increased sales.

Question 18

One source of disruption caused by the internal supply chain is

A) late deliveries.
B) forecast error.
C) volume changes.
D) underfilled shipments.

Question 19

Which one of the following is TRUE for supply chain management?

A) Supply chain includes any operation that deals with materials.
B) Supply chain is about suppliers and does not include distributors or customers.
C) Supply chain concept applies to both manufacturing and service organizations.
D) Supply chain applies only to manufacturing because it deals with flow of materials.

Question 20

The practice whereby a manufacturer has inventories of materials on consignment from its suppliers falls under the scope of

A) electronic inventory control.
B) vendor- managed inventories.
C) virtual distribution.
D) inventory pooling control.

Question 21

The type of goods for which efficient supply chain is appropriate is

A) frequent design changes.
B) high contribution margin.
C) standardized products.
D) high product cost.

Question 22

Of the following measures of supply chain performance, which is likely to have the most direct and measurable impact on a company's financial performance based on the reduction in the level of working capital required?

A) percentage of suppliers' deliveries received on time
B) customer satisfaction with the order- fulfillment process
C) percentage of incomplete orders shipped
D) time required to fulfill orders

Question 23

Which one of the following statements is TRUE about purchasing?

A) Purchasing's primary role is to negotiate prices and delivery dates.
B) Purchasing must satisfy the firm's long- term supply needs.
C) Purchasing's primary role is to negotiate lower prices.
D) Purchasing's primary role should be placing and tracking orders.

Question 24

The general tendency toward increasing variation in demand and inventory levels as we move further away from the end customer in the supply chain is referred to as

A) bull- whip effect.
B) internally generated shortages.
C) capacity cushions.
D) continuous replenishment.

Question 25

Which location movement would fall under forward placement?

A) from the retailer to the manufacturer
B) from the wholesaler to the manufacture
C) from the retailer to the wholesaler
D) from the manufacturer to a distribution center

Question 26

A firm in the higher echelon of an efficient supply chain is likely to have

A) low inventory turns.
B) a flexible flow process.
C) high- capacity utilization.
D) high- capacity cushions.

Question 27

Which one of the following statements is TRUE?

A) Single sourcing is always desirable for high demand items.
B) A buying firm should always adopt a competitive orientation for a standard item with high demand.
C) Long- term contracts are consistent with a cooperative orientation to supplier relationships.
D) The buyer always wins in a competitive orientation to supplier relationships.

Question 28

Which one of the following is true for supply chain management?

A) Supply chain applies to both manufacturing and service organizations.
B) Supply chain is about suppliers and does not include distributors or customers.
C) Supply chain includes any operation that deals with materials.
D) Supply chain applies only to manufacturing because it deals with flow of materials.

Question 29

Possible causes of disruption due to internal supply chain are

A) underfilled shipments.
B) product and service mix changes.
C) machine breakdowns or inexperienced workers.
D) late deliveries.

Question 30

Efficient supply chain would be preferred when

A) product variety is high.
B) competitive priority is customization.
C) demand is unpredictable.
D) demand is highly predictable.

Question 31

What term do we use for a company arranging payments to suppliers and distributors to provide needed services and materials in order to perform those processes the organization does not perform itself?

A) forward integration
B) backward integration
C) outsourcing
D) system design

Question 32

Which of the following best describes vendor managed inventory?

A) There is minimal purchasing- oriented paperwork.
B) The supplier delivers only what the customer needs.
C) There is only one supplier for all units of a particular product.
D) The supplier maintains the inventory for the buyer.

Question 33

Which one of the following statements is TRUE about a cooperative orientation in supplier relationships?

A) It cannot be implemented in the Western countries because it always benefits the supplier.
B) It requires few suppliers for each item or service.
C) It requires all parts and subassemblies to be purchased from the same supplier.
D) It cannot be implemented in Western countries because competitive bidding is more effective in that culture.

Question 34

It is desirable for a firm in the higher echelon of an efficient supply chain to have

A) delivery by air.
B) high inventory investment.
C) high- capacity cushions.
D) a line flow process.

Question 35

The practice of locating stock closer to customers at a warehouse, distribution centre, wholesaler, or retailer is referred to as

A) channel assembly.
B) inventory pooling.
C) vendor managed inventories.
D) forward placement.

Question 36

The average inventory at Hamilton Industries, comprising raw materials, work- in- process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.

A) less than or equal to 3.50
B) greater than or equal to 3.50 but less than 3.75
C) greater than or equal to 3.75 but less than 4.00
D) greater than or equal to 4.00

Question 37

The type of goods for which a responsive supply chain is appropriate are

A) fashion goods.
B) those with infrequent design changes.
C) products with a long shelf life.
D) expensive products.

Question 38

Responsive supply chains would be preferred when

A) contribution margins are low.
B) product variety is high.
C) product variety is low.
D) demand is predictable.

Question 39

Some manufacturers and service providers want to measure the performance of supply chain by the percentage of on- time deliveries. The main reason for this measure is

A) it will discourage the competitors to enter the market.
B) it helps accounting to debit customer's accounts promptly.
C) increased on- time delivery increases revenue by inducing customers to buy more products from the firm.
D) it measures the satisfaction levels of suppliers.

Question 40

It is desirable for a firm in a responsive supply chain to have

A) high- capacity utilization consistent with high- volume delivery.
B) low- capacity cushions.
C) delivery by railroad.
D) low inventory investments consistent with fast delivery times.

Question 41

______ is the management of the acquisition process, which includes deciding which suppliers to use, negotiating contracts, and deciding whether to buy locally.

Question 42

What is the purpose of carrying safety stock?

Question 43

For improving the efficiency and productivity of a complex supply chain, a company should do which of the following?

A) Never adopt backward vertical integration.
B) Adopt backward vertical integration or enter into agreements with first- tier suppliers.
C) Adopt backward vertical integration, but avoid writing agreements with first- tier suppliers.
D) Enter into agreements with first- tier suppliers, and let them manage their suppliers.

Question 44

The practice of having the supplier monitor inventory levels at its customer and replenishing the stock as needed to avoid shortages is referred to as

A) channel assembly of vendor- managed inventory.
B) forward placement.
C) inventory pooling.
D) continuous replenishment vendor- managed inventory.

Question 45

______ is an inventory measure obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year.

Question 46

One of the benefits of a cooperative orientation in supplier relationships is

A) the supplier implements its own quality standards.
B) the supplier has complete freedom in choosing the delivery time.
C) the buyer sometimes suggests ways to improve the supplier's operations.
D) the buyer does not have to share much information with the supplier.

Question 47

Last year, CMS Enterprises had total inventories (raw materials, work- in- process, and finished goods) of $5.5 million. During this same year the cost of goods sold was $22 million. The company operates 52 weeks per year. What is the total inventory (measured as weeks of supply) held by CMS Enterprises last year?

A) less than or equal to 10 weeks of supply
B) greater than 10 but less than or equal to 12 weeks of supply
C) greater than 12 but less than or equal to 14 weeks of supply
D) greater than 14 weeks of supply

Question 48

Acme Corp averages $15 million worth of inventory in all of its worldwide locations. The enterprise operates 51 weeks a year with each week averaging $3 million in sales (at cost). Determine the inventory turnover.

A) 5 turns
B) 19 turns
C) 1.13 turns
D) 10.2 turns

Question 49

The ______ process addresses the interface between the firm and its customers
downstream in the supply chain.

Question 50

Maple Leaf, Inc., a television manufacturer, would like to reduce its inventory. To this end, you are asked by the operations manager to assess its inventory level. You have the following information on inventories from last year's financial statement: In addition, the cost of goods sold last year (50 weeks) was $15 million. What was the inventory turnover?

A) less than or equal to 2
B) greater than or equal to 2 but less than 3
C) greater than or equal to 3 but less than 4
D) greater than or equal to 4

Question 51

Define inventory.

Question 52

______ is a stock of material used to satisfy customer demand or support the production of goods and services.

Question 53

______ is an inventory measure obtained by dividing the average aggregate inventory value by sales per week at cost.

Question 54

is an important point of contact between the firm and its customers.

Question 55

Briefly state what responsive supply chains are.

Question 56

The______ process produces and delivers the service or product to the firm's
customers.

Question 57

Henderson Corporation is a supplier of alloy ball bearings to auto manufacturers in Windsor. Because of the specialized manufacturing process employed, considerable work- in- process and raw material inventories are created. The current inventory levels are $1,152,000 and $2,725,000, respectively. In addition, finished goods inventory is $3,225,000, and sales (at cost) for the current year are expected to be about $24 million. The inventory turnover that Henderson Corporation is currently expecting is

A) less than 2.0.
B) greater than or equal to 2.0 but less than 2.5.
C) greater than or equal to 2.5 but less than 3.0.
D) greater than or equal to 3.0.

Question 58

______ consists of items such as components or assemblies needed for a final product in manufacturing.

Question 59

What are the different types of e- purchasing?

Question 60

______ is a reduction in inventory and safety stock because of the merging of variable demands from customers.

Question 61

What the is radio frequency identification?

Question 62

______ is a supplier relation in which the buyer and seller are partners, each helping the other as much as possible.

Question 63

______ is the management of the transformation process devoted to producing the product or service.

Question 64

The performance of a(n) ______ process is directly linked to its capacity and variability
of demand.

Question 65

______ is a systematic effort to reduce the cost or improve the performance of products and services, either purchased or produced.

Question 66

______ is the awarding of a contract for an item or service to only one supplier.

Question 67

The ______ process is a core process that fundamentally shapes the supply chain.

Question 68

______ is the total of all items held in inventory for a firm.

Question 69

What is the order- fulfillment process?

Question 70

Describe value analysis.

Question 71

Describe green purchasing.

Question 72

Describe the weeks of supply measure.

Question 73

The new service/product development process begins with and ends with the
________ of the new offering.

Question 74

______ are inventories needed for the production of goods and services; they are considered the inputs to the transformation process.

Question 75

______ involves locating the stock closer to customers at a warehouse, distribution center, or retailer.

Question 76

power determines the clout that a firm has.

Question 77

Define EDI.

Question 78

______ is a supplier relation that views negotiations between buyer and seller as a zero- sum game: whatever one side losses, the other side gains.

Question 79

______ is a technology that enables the transmission of routine business documents having a standard format from computer to computer over telephone or direct leased lines.

Question 80

Discuss the trade- offs with locating the inventory at the factory versus locating it closer to the customer at a warehouse, distribution center, wholesaler, or retailers.