Deck 11: Purchasing Logistics and Supply Chain Management

Question 1

Which of the following is a characteristic of 'priority management)'? 

A) Customer orders, the sales plan, the planned stocks of finished products, and the purchasing plans are linked together. 
B) The resources needed are recorded in a document from which the required composition of manufacturing resources is derived. 
C) This is a basis for computing the quantities of materials, semi-manufactured products and components which must be manufactured. 
D) Priorities are derived directly from the master production schedule.

Answer 1

  D

Question 2

Which of the following best explains the concept of 'supply chain'? 

A) A series of companies (links) in which the consecutive stages of production of an economic product take place, from primary producer to final consumer. 
B) The way in which finished products are distributed by the company to its customers. 
C) Includes the management of materials planning, the supply of raw materials and other purchased goods, internal transportation, storage and physical distribution. 
D) The way in which materials processes are managed within a company.

Answer 2

  A

Question 3

Which of the following is a characteristic of 'pure competition'? 

A) Neither the supplier nor the buyer can influence the price of the product because there are a large number of buyers and sellers. 
B) There is a high degree of product differentiation. 
C) A limited number of suppliers and a limited product differentiation. 
D) The supplier cannot influence the price of the product because there are a large number of buyers.

Answer 3

  A

Question 4

Which of the following best explains the concept of 'diverging supply chain'? 

A) The finished product of one link is the main or sole input for the next production stage of various other industry columns. 
B) The finished product of one link is the main or sole input for the subsequent link. 
C) Various finished products of links of various supply chains are the input for the next link. 
D) A company producing a diverse range of products.

Question 5

Which of the following best explains the concept of 'logistics management'? 

A) Identifying saving in direct and indirect activities. 
B) Recycling packaging materials and surplus materials. 
C) Includes the management of materials planning, the supply of raw materials and other purchased goods, internal transportation, storage and physical distribution. 
D) The way in which materials processes are managed within a company.

Question 6

Which of the following is a characteristic of 'oligopoly'? 

A) Neither the supplier nor the buyer can influence the price of the product because there are a large number of buyers and sellers. 
B) There is a high degree of product differentiation. 
C) A limited number of suppliers and a limited product differentiation. 
D) The supplier cannot influence the price of the product because there are a large number of buyers.

Question 7

Which of the following is a characteristic of 'master production scheduling (MPS)'? 

A) Customer orders, the sales plan, the planned stocks of finished products, and the purchasing plans are linked together. 
B) The resources needed are recorded in a document from which the required composition of manufacturing resources is derived. 
C) This is a basis for computing the quantities of materials, semi-manufactured products and components which must be manufactured. 
D) Priorities are derived directly from the master production schedule.

Question 8

Which of the following is a characteristic of 'Manufacturing Resources Planning (MRP-II)'? 

A) Customer orders, the sales plan, the planned stocks of finished products, and the purchasing plans are linked together. 
B) The resources needed are recorded in a document from which the required composition of manufacturing resources is derived. 
C) This is a basis for computing the quantities of materials, semi-manufactured products and components which must be manufactured. 
D) Priorities are derived directly from the master production schedule.

Question 9

Which of the following is not a characteristic of 'Materials Requirements Planning (MRP-I)'? 

A) Releasing manufacturing orders. 
B) Releasing purchasing requisitions. 
C) Managing manufacturing orders and purchasing requisitions. 
D) Controls relevant materials flows and production capacity.

Question 10

Which of the following best explains the concept of 'industrial branch'? 

A) A series of companies (links) in which the consecutive stages of production of an economic product take place, from primary producer to final consumer. 
B) A number of links (companies) that are connected via markets. 
C) The horizontal relationship of organizations that experience each other as effective competitors. 
D) A sub-division of an organization.

Question 11

Which of the following best explains the concept of 'external structure'? 

A) A series of companies (links) in which the consecutive stages of production of an economic product take place, from primary producer to final consumer. 
B) A number of links (companies) that are connected via markets. 
C) The horizontal relationship of organizations that experience each other as effective competitors. 
D) A sub-division of an organization.

Question 12

Which of the following is a characteristic of 'monopolistic competition'? 

A) Neither the supplier nor the buyer can influence the price of the product because there are a large number of buyers and sellers. 
B) There is a high degree of product differentiation. 
C) A limited number of suppliers and a limited product differentiation. 
D) The supplier cannot influence the price of the product because there are a large number of buyers.

Question 13

Which of the following best explains the concept of 'converging supply chain'? 

A) The finished product of one link is the main or sole input for the next production stage of various other industry columns. 
B) The finished product of one link is the main or sole input for the subsequent link. 
C) Various finished products of links of various supply chains are the input for the next link. 
D) A company producing a diverse range of products.

Question 14

Which of the following is a characteristic of 'monopoly'? 

A) Price can be set by a market- or price leader, or arranged through some form or price arrangement. 
B) There is a high degree of product differentiation. 
C) A limited number of suppliers and a limited product differentiation. 
D) Only one supplier a product.

Question 15

Which of the following best explains the concept of 'supply chain management'? 

A) Identifying saving in direct and indirect activities. 
B) Recycling packaging materials and surplus materials. 
C) Includes the management of materials planning, the supply of raw materials and other purchased goods, internal transportation, storage and physical distribution. 
D) The way in which materials processes are managed within a company.

Question 16

Which of the following is not a characteristic of 'Manufacturing Resources Planning (MRP-II)'? 

A) Controls production capacity. 
B) Releasing purchasing requisitions. 
C) Taking into account the relationship between materials flows and the required capacity. 
D) Controls relevant materials flows.

Question 17

Which of the following is a characteristic of 'master planning'? 

A) Customer orders, the sales plan, the planned stocks of finished products, and the purchasing plans are linked together. 
B) The resources needed are recorded in a document from which the required composition of manufacturing resources is derived. 
C) This is a basis for computing the quantities of materials, semi-manufactured products and components which must be manufactured. 
D) Priorities are derived directly from the master production schedule.

Question 18

Which of the following best explains the concept of 'logistics'? 

A) The activities needed to optimize the goods flow from suppliers to the point of consumption. 
B) Recycling packaging materials and surplus materials. 
C) Includes the management of materials planning, the supply of raw materials and other purchased goods, internal transportation, storage and physical distribution. 
D) The way in which materials processes are managed within a company.

Question 19

Which of the following best explains the concept of 'outgoing materials flow'? 

A) The activities needed to optimize the goods flow from suppliers to the point of consumption. 
B) The way in which finished products are distributed by the company to its customers. 
C) Includes the management of materials planning, the supply of raw materials and other purchased goods, internal transportation, storage and physical distribution. 
D) The way in which materials processes are managed within a company.

Question 20

Which of the following is a characteristic of 'cartel'? 

A) Price can be set by a market- or price leader, or arranged through some form or price arrangement. 
B) There is a high degree of product differentiation. 
C) A limited number of suppliers and a limited product differentiation. 
D) The supplier cannot influence the price of the product because there are a large number of buyers.

Question 21

Which of the following best explains 'assembly to order (ATO)'? 

A) Only raw materials and components are kept in stock. 
B) All activities are planned based upon customer order. 
C) There is no stock held at all. 
D) Manufacture takes place based on forecasts and final assembly takes place based on customer orders.

Question 22

Which of the following is not a feature of 'make to stock (MTS)'? 

A) Finished products are kept in stock at the end of the production process. 
B) Finished products are distributed to various distribution points. 
C) Orders are not released to customers. 
D) Finished products are shipped directly to many geographically dispersed customers.

Question 23

Which of the following best explains 'Camp's formula'? 

A) Mathematical formula based upon inventory costs and ordering costs to decide on optimal economic order quantity (EOQ). 
B) Mathematical formula based upon ordering costs to decide on optimal economic order quantity (EOQ). 
C) Mathematical formula based upon inventory costs to decide on optimal economic order quantity (EOQ). 
D) Mathematical formula based upon forecasted demand.

Question 24

Which of the following best explains 'just-in-time management (JIT)'? 

A) Only raw materials and components are kept in stock. 
B) All activities are planned based upon customer order. 
C) There is no stock held at all the purchase and order of materials takes place on the basis of the specific customer order. 
D) All materials and products become available at the very moment when they are needed in the production process.

Question 25

Which of the following best explains 'pay for production'? 

A) Payment is made monthly based on units supplied. 
B) Payment is made by the manufacturer on the basis of labour costs of the component supplier. 
C) The manufacturer only pays the supplier for the components which have actually been consumed during the production of a given day or batch. 
D) Payment is based on the number of hours required for the production of each unit of the component.

Question 26

Which of the following best explains 'make to order (MTO)'? 

A) Only raw materials and components are kept in stock. 
B) All activities are planned based upon customer order. 
C) There is no stock held at all. 
D) Manufacture takes place based on forecasts and final assembly takes place based on customer orders.

Question 27

Which of the following is a disadvantage of JIT for the supplier? 

A) It may take some time for a supplier to deliver at zero defects or to produce zero defects. 
B) Not regularly informed about the quantities to be delivered. 
C) Delivery times and specification often change. 
D) Additional costs.

Question 28

Which of the following best explains the shape of the JIT management supply structure? 

A) Circular. 
B) Pyramid. 
C) Oval. 
D) Hexagonal.

Question 29

Which of the following best explains zero defects principle? 

A) Everything goes right the first time. 
B) Reduce defects over time. 
C) Learn from your mistakes. 
D) Continuous improvement.

Question 30

Which of the following best explains the term 'vendor managed inventory'? 

A) An infrequent replenishment programme that uses the exchange of information between the retailer and the supplier to allow the supplier to manage and replenish product at the store or warehouse level. 
B) A continuous replenishment programme that uses forecasts to allow the supplier to manage and replenish product at the store or warehouse level. 
C) A monthly replenishment programme that uses the exchange of information between the retailer and the supplier to allow the supplier to manage and replenish product at the store or warehouse level. 
D) A weekly replenishment programme that uses the exchange of information between the retailer and the supplier to allow the supplier to manage and replenish product at the store or warehouse level.

Question 31

Which of the following is a characteristic of the JIT approach? 

A) Minimum of two suppliers. 
B) Payment per order. 
C) Delivery times and specification often change. 
D) Delivery time and specifications fixed, quantities are adjusted within predetermined margins if necessary.

Question 32

Which of the following best explains 'customer order decoupling point (CODP)'? 

A) The point in the supply chain where a production order becomes customer specific. 
B) Activities are planned based upon customer order. 
C) Orders are ready for distribution. 
D) Activities are planned based upon forecast.

Question 33

Which of the following is not a feature of 'make and send stock (MSS)'? 

A) Products are manufactured and distributed to various distribution points which are dispersed and located close to the customer. 
B) Products are distributed to various distribution points. 
C) Orders are ready for distribution. 
D) Manufacturing is based upon forecasts and on expected stock turnover at the points of distribution.

Question 34

Which of the following is not a step in the process of setting up a production line? 

A) Preparation. 
B) Setting up. 
C) Distributing. 
D) Conversion.

Question 35

Which of the following is an advantage of JIT for the supplier? 

A) Higher profits. 
B) Suppliers regularly informed about the quantities to be delivered. 
C) Constant inspection of quantities and quality. 
D) Delivery time unknown.

Question 36

Which of the following is not a variable used in 'Camp's formula'? 

A) Fixed usage per period. 
B) Order quantity. 
C) Costs per order. 
D) Delivery time.

Question 37

Which of the following best explains 'Kanban'? 

A) A form of JIT based upon fixed volume lot delivery. 
B) The exact same as just-in-time (JIT). 
C) Where the ordering costs per unit is lowest. 
D) A form of JIT based upon fixed volume lot delivery. When a lot is used, the kanban (card) will be sent to the supplier as a signal to replenish that lot

Question 38

Which of the following best explains 'economic order quantity (EOQ)'? 

A) Where the inventory costs per unit is lowest. 
B) Where the sum of inventory costs and ordering costs per unit is lowest. 
C) Where the ordering costs per unit is lowest. 
D) Where inventory costs minus ordering costs per unit is lowest.

Question 39

Which of the following best explains 'engineering and make to order (ETO)'? 

A) Only raw materials and components are kept in stock. 
B) All activities are planned based upon customer order. 
C) There is no stock held at all the purchase and order of materials takes place on the basis of the specific customer order. 
D) Manufacture takes place based on forecasts and final assembly takes place based on customer orders.

Question 40

Which of the following best explains 'optimal batch size'? 

A) The optimal batch size is achieved when the sum of the inventory costs and set up costs per unit produced is lowest. 
B) The optimal batch size is achieved when the sum of price and the inventory costs is highest. 
C) The optimal batch size is achieved when the set up costs per unit produced is lowest. 
D) The optimal batch size is achieved when the inventory costs per unit produced is lowest.

Question 41

Which of the following is not an element of a purchasing information system? 

A) Delivery. 
B) Invoice handling and payment. 
C) Order follow-up. 
D) Reduced purchase prices.

Question 42

What is the driver for all activities upstream from the order penetration point? 

A) Customer orders. 
B) Forecast-based. 
C) Internal audit. 
D) Quality control.

Question 43

Which of the following is not a potential consequence of Just-in-time (JIT)? 

A) Single sourcing. 
B) Closing long-term contracts. 
C) Engaging local suppliers. 
D) Reduced purchase prices.

Question 44

Which of the following best explains an Enterprise Resource Planning (ERP) system? 

A) Company wide information system for managing the company's operational and support processes. 
B) Company wide information system for managing the company's administrative processes, its human resources and its materials resources. 
C) Company wide information system for managing the company's financial resources. 
D) Company wide information system for managing the company's operational and support processes, its administrative processes, its human resources, its materials resources and financial resources.

Question 45

Which of the following describe the focus of demand-chain management? 

A) Physical distribution. 
B) Purchasing. 
C) Material management. 
D) Suppliers.

Question 46

Which of the following are not logistic activities? 

A) Invoicing. 
B) The supply of raw materials. 
C) Internal transportation. 
D) Storage.

Question 47

Which of the following is not an aspiration of logistics management? 

A) Achieving the highest delivery reliability. 
B) Achieving the best order fulfilment. 
C) Achieving the shortest delivery time. 
D) Relationship management.

Question 48

Which of the following best explains reverse logistics? 

A) Recycling packaging materials. 
B) Outsourcing transportation. 
C) Achieving the shortest delivery time. 
D) Relationship management between the company and its suppliers as well as its customers.

Question 49

Which of the following e-procurement system activities is out of sequence? 

A) Get another approval. 
B) Send order electronically to supplier. 
C) Order delivery. 
D) Electronic invoice matching and payment.

Question 50

Which of the following describe the focus of supply-chain management? 

A) Physical distribution. 
B) Marketing. 
C) Customers. 
D) Suppliers.

Question 51

Which of the following is not a co-ordination problem between purchasing and logistics? 

A) Insufficient integration of purchasing in logistics management. 
B) Frequent changes in materials planning. 
C) Standardization. 
D) Unreliable planning information.

Question 52

Which of the following is an aspiration of supply chain management? 

A) Achieving the highest delivery reliability. 
B) Achieving the best order fulfilment. 
C) Achieving the shortest delivery time. 
D) Relationship management between the company and its suppliers as well as its customers.

Question 53

What is the driver for all activities downstream from the order penetration point? 

A) Customer orders. 
B) Forecast-based. 
C) Internal audit. 
D) Quality control.

Question 54

Which of the following are not logistic activities? 

A) The management of materials planning. 
B) The supply of raw materials. 
C) Internal transportation. 
D) Quality control.

Question 55

Which of the following is not a co-ordination problem between purchasing and logistics? 

A) Lack of well-defined specifications. 
B) Frequent changes in materials planning. 
C) Lack of standardization. 
D) Electronic invoice matching and payment.

Question 56

Which of the following best explains an e-procurement system? 

A) A system which enables authorized users within organizations to order directly from an electronic catalogue without the interference of a purchasing department. 
B) A system which enables authorized users within organizations to order directly from a purchasing department. 
C) A system which enables authorized users within organizations to order directly from a purchasing department who then us an electronic catalogue. 
D) A system which enables anyone to order directly from an electronic catalogue without the interference of a purchasing department.

Question 57

Which of the following e-procurement system activities is out of sequence? 

A) Search catalogue. 
B) Fill in electronic shopping list. 
C) Order delivery. 
D) Get budgetary approval.

Question 58

Which of the following are not logistic activities? 

A) The management of materials planning. 
B) The supply of raw materials. 
C) Internal transportation. 
D) Quality control.

Question 59

Which of the following are not logistic activities? 

A) Physical distribution. 
B) Recycling packaging materials. 
C) Recycling surplus materials. 
D) Customer feedback.

Question 60

Which of the following is not an element of a purchasing information system? 

A) Requisitioning and ordering. 
B) Product, contract and supplier database. 
C) Order follow-up. 
D) Reduced purchase prices.