Deck 9: Supply Chain Design

Question 1

A contract manufacturer can offer significant competitive advantages. Which one of the following is NOT an advantage of using a contract manufacturer?

A) Access to advanced manufacturing technologies
B) Faster product time to market
C) Lower costs from economies of scale
D) Standardized goods in regional markets

Answer 1

D

Question 2

For General Motors' supply chain, the _____ is the push-pull boundary.

A) supplier
B) logistic provider
C) dealer
D) customer

Answer 2

C

Question 3

A pull system _____.

A) requires high levels of finished goods inventory
B) relies heavily on accurate sales forecasts
C) waits for customer orders
D) produces goods in advance of demand

Answer 3

C

Question 4

A firm that specializes in certain types of goods-producing activities, such as customized design, manufacturing, assembly, and packaging, and works for end users is called a _____.

A) third-party logistics provider
B) contract manufacturer
C) distribution center
D) vendor-managed inventory supplier

Question 5

The function of Supply Chain Operations Reference (SCOR) model function that entails procuring goods and services to meet planned or actual demand is called _____.

A) plan
B) source
C) make
D) deliver

Question 6

Which of the following is NOT a basic function of the Supply Chain Operations Reference (SCOR) model?

A) Source
B) Make
C) Deliver
D) Control

Question 7

The function of Supply Chain Operations Reference (SCOR) model function that entails all order management activities from processing customer orders to routing shipments, managing goods at distribution centers, and invoicing the customer is called _____.

A) return
B) source
C) make
D) deliver

Question 8

A(n) _____ seeks to balance capacity and demand, might use only a few large distribution centers, and minimize costs of routing products from factories to retail stores and customers.

A) responsive supply chain
B) efficient supply chain
C) push system
D) pull system

Question 9

A(n) _____ produces goods in advance of customer demand using a forecast of sales and moves them to points of sale where they are stored as finished goods inventory.

A) responsive supply chain
B) efficient supply chain
C) push system
D) pull system

Question 10

Which one of the following statements is FALSE?

A) Boeing's new 787 Dreamliner airplane has encountered many startup and supply chain coordination problems.
B) General Motors pushes finished goods from its dealers to the customers.
C) Zappos uses third-party logistics for customer deliveries, return, and inbound shipping.
D) Federal Express has over one million pickup and delivery sites and therefore, is a good example of multisite management.

Question 11

Which of the following is TRUE regarding a responsive supply chain?

A) Demand is stable and predictable.
B) Product life cycles are short and change often because of innovation.
C) Customers require standardization.
D) Contribution margins are low.

Question 12

Managing the flow of goods and materials from the customers toward either suppliers, distributers, or manufacturers for the purpose of reuse, resale, or disposal through the supply chain is called the _____.

A) reverse logistics
B) pull system
C) push system
D) response management

Question 13

Which one of the following statements is FALSE?

A) Historically, General Motors used the push system to get vehicles to their dealers.
B) Walmart is a good example of a company that runs a highly efficient supply chain.
C) Apple and Nordstrom companies are examples of having push supply chains.
D) Zappos is a good example of using third-party logistics (3PL) providers for customer deliveries and returns.

Question 14

Where in its supply chain does Dell Inc. begin to use a pull system?

A) Supplier
B) Factory
C) Distribution center
D) Customer

Question 15

A push system _____.

A) works best when there are a large number of distribution centers
B) is more appropriate for make-to-order items
C) can reduce transportation costs by using full-truckload shipments
D) works best with variable sales patterns

Question 16

Which one of the following is NOT directly related to a supply chain?

A) Distribution center
B) Inventory
C) Promotion
D) Supplier

Question 17

The point in the supply chain that separates the push system from the pull system is called the _____.

A) point of separation
B) push-pull boundary
C) postponement site
D) center of push-pull system

Question 18

A(n) _____ produces only what is needed at upstream stages in the supply chain in response to customer demand signals.

A) responsive supply chain
B) efficient supply chain
C) push system
D) pull system

Question 19

_____ are warehouses that act as intermediaries between factories and customers, shipping directly to customers or to retail stores where products are made available to customers.

A) Distribution centers
B) Inventories
C) Databases
D) Retail shops

Question 20

The basic purpose of a(n) _____ is to coordinate the flow of materials, services, and information among its elements to maximize customer value.

A) product layout
B) servicescape
C) supply chain
D) assembly line

Question 21

Being an entrepreneur, Steve decides to open his own custom flower shop in an area and began to look for possible locations for his store. He just can't play the corporate career game and wants to "just-do-it-yourself." He researches the zip codes in his area and finds the following information: $\begin{array}{lllr}\text { Market Segment }&\text { Location Coordinates }&&\text { Potential Number of Customers }\\&X&Y\\\text { A } & 4 & 8 & 80,000 \\\text { B } & 6 & 3 & 90,000 \\\text { C } & 10 & 7 & 120,000\end{array}$
Identify the TRUE statement about the best preliminary location (i.e., the center of gravity) for the possible store location.

A) The x-axis and the y-axis are less than 5.0.
B) The x-axis is less than 7.0, and the y-axis is more than 7.0.
C) The x-axis is more than 7.0, and the y-axis is less than 7.0.
D) The x-axis and the y-axis are more than 7.0.

Question 22

The "X_i and Y_i" used in the center-of-gravity method are the:

A) transportation costs.
B) x and y coordinates of location i.
C) volume of goods moved to or from location i.
D) x and y coordinates of the center of gravity.

Question 23

The "weights (W_i)" typically used in the numerator and denominator of the center-of-gravity computational method is:

A) based on service quality standards.
B) based on distances.
C) based on volumes.
D) based on times.

Question 24

Given the retail location coordinates and the value of material movement in the following chart, find the best supply point location using the center-of-gravity method. $\begin{array}{lll}\text { Reta1 Outlet }&\text { Location Coordinates } \mathrm{X}, \mathrm{Y}&\text { Material Movement }\\1 & 25,05 & 1,500 \\2 & 17,20 & 3,000 \\3 & 12,12 & 1,000 \\4 & 06,09 & 2,200\end{array}$ Which of the following is a TRUE statement about the best preliminary location (i.e., the center of gravity) for the possible store location?

A) The x-axis and the y-axis are less than 10.0.
B) The x-axis is less than 10.0, and the y-axis is more than 10.0.
C) The x-axis is more than 10.0, and the y-axis is less than 10.0.
D) The x-axis and the y-axis are more than 10.0.

Question 25

A manufacturer is considering some expansion alternatives. One is to increase the capacity at their current location. A second set of alternatives is to build a new plant at one of two possible locations. The projected operating costs have been estimated as follows: $\begin{array}{lccc}&\text { Expand at Current }\\\text { Cost Category }&\text { Location }&\text { Location A }&\text { Location B }\\\text { Fixed } & \$ 125,000 & \$ 225,000 & \$ 175,000 \\\text { Direct labor per unit } & \$ 32.5 & \$ 30 & \$ 33 \\\text { Direct material per unit } & \$ 16 & \$ 17 & \$ 15.50 \\\text { Overhead cost per unit } & \$ 2.90 & 2.40 & \$ 2.50 \\\text { Transportation cost per } 100 \text { units } & \$ 125 & \$ 100 & \$ 110\end{array}$ If the forecast of additional demand for the next year is 25,000 units, which alternative should be selected to minimize costs?

A) Expand at current location
B) Location A
C) Location B
D) None of the above

Question 26

_____ is the process of delaying product customization until the product is closer to the customer at the end of a supply chain.

A) Postponement
B) Sourcing
C) Deferral
D) Multisite management

Question 27

Using the following information about material volume shipped from a factory to four retail outlets, find the best location for the factory using the center-of-gravity method. $\begin{array}{|c|c|c|}\hline \text { RETAIL } & \text { LOCATION COORDINATES } & \text { MATERIAL } \\\text { OUTLET } & \underline{\mathrm{X} Y \mathrm{Y}} & \text { MOVEMENT } \\\hline 1 & 18,6 & 1,500 \\\hline 2 & 12,15 & 2,100 \\\hline 3 & 7,10 & 1,900 \\\hline 4 & 7,20 & 1,200 \\\hline\end{array}$ Which one of the following statements is TRUE for this set of center-of-gravity data?

A) Cx is less than 10.00 and Cy is more than 10.00.
B) Cx is more than 10.00 and Cy is less than 10.00.
C) Cx is less than 10.00 and Cy is less than 10.00.
D) Cx is more than 10.00 and Cy is more than 10.00.

Question 28

Which one of the following statements about sustainable supply chains is FALSE?

A) Cannibalization of parts for use and repair of other equipment is part of a reverse logistics supply chain.
B) Reverse logistics includes using raw materials and parts to assemble new finished goods.
C) A green sustainable supply chain process develops outputs that can be reclaimed and reused at the end of their life-cycle.
D) For products that are of high enough value, it is normally more cost-effective to remanufacture or refurbish the product.

Question 29

Using the following information about material volume shipped from a plant to four retail outlets, which of the following is a TRUE statement about the center of gravity for the best location of the plant? $\begin{array}{rrr}\text { Reta1 Outlet }&\text { Location Coordinates } \mathrm{X}, \mathrm{Y}&\text { Material Movement }\\1 & 18,6 & 1,500 \\2 & 12,15 & 2,100 \\3 & 7,10 & 1,900 \\4 & 7,20 & 1,200\end{array}$

A) The x-axis and the y-axis are less than 10.0.
B) The x-axis is less than 10.0, and the y-axis is more than 10.0.
C) The x-axis is more than 10.0, and the y-axis is less than 10.0.
D) The x-axis and the y-axis are more than 10.0.

Question 30

Supreme Redeem, Inc. plans to open a large manufacturer's rebate processing center. Supreme has narrowed the potential sites to three locations. Data for each location are provided in the following table. (A score of 1 is least favorable and 5 is most favorable.) $\begin{array}{ll|lll}&&&\text { Location }\\\text { Factors } & \text { Weight } & \text { Phoenix }&\text { Miami } &\text { Detroit } \\\text { Cost to process rebate } & 0.45 & 3 & 3 & 4 \\\text { Cost of living } & 0.20 & 3 & 4 & 5 \\\text { Transportation } & 0.15 & 4 & 5 & 3 \\\text { Union activities } & 0.05 & 5 & 3 & 2 \\\text { Recreation } & 0.15 & 4 & 4 & 3\end{array}$ $\text { Which location should be chosen, based on total weighted score? }$

A) Phoenix
B) Miami
C) Detroit
D) None of the above

Question 31

_____ is measured by order fulfillment lead time or perfect delivery fulfillment.

A) Responsiveness
B) Delivery reliability
C) Supply chain efficiency
D) Financial measure

Question 32

Perfect order fulfillment is a metric that is used to measure _____.

A) delivery reliability
B) responsiveness
C) supply chain efficiency
D) supply chain financial performance

Question 33

The As-You-Like-It Hamburger Shop is considering adding a new location. The investment at each of the four potential sites is the same. The price they can charge for hamburgers is set by the competition in the area. Given the information below, which site is expected to be the most profitable (i.e., net profit)?
$\begin{array}{lcccr}\text { Factor }&\text { Site A }&\text { Site B }&\text { Site C }&\text { Site D }\\\text { Fixed Cost } & \$ 10,000 & \$ 8,000 & \$ 6,000 & \$ 11,000 \\\text { Variable Cost per Unit } & \$ 0.70 & \$ 0.70 & \$ 0.85 & \$ 0.65 \\\text { Price per Unit } & \$ 1.30 & \$ 1.20 & \$ 1.25 & \$ 1.10 \\\text { Forecast Volume (Units) } & 20,000 & 22,000 & 18,000 & 24,000\end{array}$

A) Site A
B) Site B
C) Site C
D) Site D

Question 34

Use the following information about vehicle traffic to and from a proposed sports stadium (not built yet) to find the best location for the stadium that minimizes total distance travelled using the center-of-gravity method. $\begin{array}{|c|c|c|}\hline \begin{array}{c}\text { Zip Code } \\\text { Location } \\\text { Options }\end{array} & \frac{\text { LOCATION COORDINATES }}{\underline{\mathrm{X} Y}} &\begin{array}{c}\text { Vehicles per } \\\text { Stadium Event }\end{array} \\\hline 1 & 4,6 & 3,500 \\\hline 2 & 12,15 & 1,100 \\\hline 3 & 10,10 & 4,900 \\\hline 4 & 7,20 & 2,200 \\\hline\end{array}$ Which one of the following statements is TRUE for this set of center-of-gravity data?

A) C_x is less than 10.00 and C_y is more than 10.00.
B) C_x is more than 10.00 and C_y is less than 10.00.
C) C_x is less than 10.00 and C_y is less than 10.00.
D) C_x is more than 10.00 and C_y is more than 10.00.

Question 35

Which one of the following statements is FALSE?

A) Postponement is a form of remanufacturing.
B) Reverse logistics combined with forward supply chain is called a closed loop system.
C) Selecting suppliers that support sustainability is a part of supply chain management.
D) Reverse logistics includes remarketing and selling the recovered good for reuse or resale to wholesalers and retailers.

Question 36

A reverse logistics is used to:

A) send unused parts back to the suppliers.
B) ship products from suppliers to customers.
C) collect and send unusable or discarded products back from the customer to the producer or suppliers.
D) provide flow of information from customers to the producer.

Question 37

_____ is a manufactured good recovery option in which a physical good is disassembled and the parts or the scrap materials are sold to other suppliers.

A) Refurbishing
B) Repairing
C) Recycling
D) Cannibalizing

Question 38

A major grocery chain desires to build a facility in a city with three distinct market demographic segments. The number of possible customers in each segment and the central location coordinates of the segments are given below. Using the center-of-gravity method for the best location, identify the TRUE statement. $\begin{array}{lrr}\text { Market Segment }&\text { Location Coordinates } \mathrm{X}, \mathrm{Y}&\text { Number of Customers }\\1 & 15,18 & 2,500 \\2 & 2,13 & 3,200 \\3 & 8,10 & 3,900\end{array}$

A) The x-axis and the y-axis are less than 10.0.
B) The x-axis is less than 10.0, and the y-axis is more than 10.0.
C) The x-axis is more than 10.0, and the y-axis is less than 10.0.
D) The x-axis and the y-axis are more than 10.0.

Question 39

The center-of-gravity method takes all the following into account EXCEPT the:

A) location of facilities and markets.
B) demand.
C) transportation costs.
D) production costs.

Question 40

Which one of the following statements is FALSE?

A) Cannibalization of parts for use and repair of other equipment is part of a reverse logistics supply chain.
B) Social sustainability includes a commitment from an organization to improve the quality of life through industry-community partnerships.
C) Increasing revenues by converting wastes to byproducts is an environmental activity to enhance supply chain management.
D) Efficiencies associated with manufactured goods recovery can yield increases in customer loyalty and improve the new customer's uptime.

Question 41

Contract manufacturers can provide the benefit of reducing the total costs resulting from economies of scale.

Question 42

In designing an efficient supply chain, an organization would need high levels of inventory stored in many small distribution centers.

Question 43

In the supply chain operations reference (SCOR) model, the "make" step involves managing orders, transportation, and distribution to provide goods and services.

Question 44

Orders are passed upstream in a supply chain, while materials and finished goods are sent downstream in a supply chain.

Question 45

Walmart uses a push supply chain.

Question 46

Supply chains must be redesigned when a firm's product lines and markets change or expand.

Question 47

The _____ method takes into account the location of facilities and markets, demand, and transportation costs in arriving at the best location for a single facility.

A) global sourcing
B) inventory management
C) multisite management
D) center-of-gravity

Question 48

In the supply chain operations reference (SCOR) model, the "plan" step involves identifying and selecting suppliers.

Question 49

_____ is the process of managing geographically dispersed service-providing facilities.

A) Center-of-gravity method
B) Reverse logistics
C) Multisite management
D) Postponement

Question 50

Which one of the following statements is TRUE about vendor-managed inventory (VMI)?

A) VMI is a form of outsourcing.
B) VMI accounts for substitutable products.
C) VMI results in lower customer inventories.
D) VMI is identical to pull systems.

Question 51

If a multisite organization has a stable product line and highly predictable design, then a responsive supply chain is the best design.

Question 52

The basic purpose of a supply chain is to coordinate communication among employees and customers in order to maximize customer satisfaction.

Question 53

All of the following are considered noneconomic factors in location decisions EXCEPT:

A) the availability of labor.
B) operating costs
C) transportation services.
D) the quality of life.

Question 54

An automobile company that installs satellite radio at the dealership instead of at the factory is applying a postponement strategy.

Question 55

Accurate forecasts are more critical to a pull system.

Question 56

For Dell Inc., the push-pull boundary is very early in the supply chain, where suppliers store inventory for frequent deliveries to Dell factories.

Question 57

A supply chain cannot be a combination of push and pull systems.

Question 58

Distribution centers are warehouses that act as intermediaries between suppliers and factories.

Question 59

A supply chain is broader in scope than the value chain, and encompasses all pre- and post-production activity.

Question 60

Which level of the facility location hierarchy is most closely related to factors such as managers' preferences, services and taxes, available transportation systems, banking services, and environmental impacts?

A) Global (National) location
B) Regional location
C) Community location
D) Local site selection

Question 61

The center-of-gravity method determines the best X and Y coordinates (location) for multiple facilities by finding a central location and then assigning the facilities around the periphery of that location.

Question 62

Summarize the supply chain operations reference (SCOR) model.

Question 63

Radio-frequency identification (RFID) tags are used to streamline information flow between global customers and suppliers and increase the velocity of supply chains.

Question 64

Differentiate between a push system and a pull system. Include the advantages of each.

Question 65

The facility location decision must attempt to minimize the combined cost of producing the good or service and delivering them to customers.

Question 66

What are the key functions of a supply chain?

Question 67

The center-of-gravity model minimizes the weighted distance between the facility to be located and its supply and demand points.

Question 68

Responsiveness is measured by order fulfillment lead time or by perfect delivery fulfillment.

Question 69

Explain the difference between an efficient and a responsive supply chain, and the business context for which each works best.

Question 70

Explain the concept of postponement and provide an example of it.

Question 71

Inventory turnover value tells managers how much of the firm's assets are tied up in inventory.

Question 72

Which of the following statements in the Boston Red Sox (BRS) case study is TRUE?

A) Break-even analysis is the dominant method used in the case analysis to evaluate the four potential stadium locations.
B) The location with zero land cost is the best site to locate the stadium.
C) Qualitative criteria are not important in this case study.
D) None of the above is true.

Question 73

Explain about a supply chain.

Question 74

Pipelines have limited use and accessibility and are used primarily for products like oil and natural gas.

Question 75

Explain the typical structure of a supply chain.

Question 76

Delivery reliability is measured by perfect order fulfillment.

Question 77

A great servicescape and facility layout can usually overcome a poor location decision.

Question 78

One disadvantage of VMI is that it does not account for substitutable products from competing manufacturers and often results in higher customer inventories than necessary.

Question 79

Both economic and noneconomic factors should play an important role in location decisions in supply and value chains.

Question 80

With vendor-managed inventory (VMI), a manufacturer monitors and managers inventory for a customer.