Deck 10: Coordination in a Supply Chain

Question 1

A lack of coordination occurs either because different stages of the supply chain have objectives that conflict or because information moving between stages gets delayed and distorted.

Answer 1

TRUE

Question 2

Measuring performance based on sell-through is often justified on the grounds that the manufacturer's sales force does not control sell-in.

Answer 2

FALSE

Question 3

The bullwhip effect moves a supply chain away from the efficient frontier by increasing cost and decreasing responsiveness.

Answer 3

TRUE

Question 4

Managers can encourage the bullwhip effect by devising pricing strategies that encourage retailers to order in smaller lots and reduce forward buying.

Question 5

The bullwhip effect enables different stages of the supply chain to have a consistent estimate of what demand looks like.

Question 6

Pricing obstacles refer to situations in which the pricing policies for a product lead to an increase in variability of orders placed.

Question 7

Supply chain coordination improves if all stages of the chain take actions that are aligned and together increase total supply chain surplus.

Question 8

Trade promotions and other short-term discounts offered by a manufacturer result in large orders during the promotion period followed by very small orders after that.

Question 9

Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits.

Question 10

With an uncoordinated supply chain each stage tries to maximize its own profits, resulting in actions that often diminish total supply chain profits.

Question 11

Behavioral obstacles are often related to the way the supply chain is structured and reduce the bullwhip effect.

Question 12

The lack of information sharing between the retailer and manufacturer leads to a large fluctuation in manufacturer orders.

Question 13

Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages.

Question 14

The bullwhip effect reduces the profitability of a supply chain by making it simpler to provide a given level of product availability.

Question 15

Improperly structured sales force incentives are a significant obstacle to coordination in the supply chain.

Question 16

When a single stage controls replenishment decisions for the entire chain, the problem of multiple forecasts is magnified and coordination within the supply chain follows.

Question 17

Sharing of POS data helps reduce the bullwhip effect because it allows each stage of the supply chain to use orders from the previous stage to forecast future demand.

Question 18

Tying allocation to past sales removes any incentive a retailer may have to inflate orders, as a result dampening the bullwhip effect.

Question 19

A reduction of lot sizes increases the amount of fluctuation that can accumulate between any pair of stages of a supply chain, thus increasing the bullwhip effect.

Question 20

Lot size based quantity discounts reduce the bullwhip effect within the supply chain.

Question 21

The lack of information sharing between the retailer and manufacturer

A) improves supply chain coordination.
B) minimizes the fluctuation in manufacturer orders.
C) leads to a large fluctuation in manufacturer orders.
D) leads to smaller fluctuations in suppliers' orders.

Question 22

The impact of the lack of coordination on supply chain processes decreases for the following measure:

A) manufacturing cost.
B) level of product availability.
C) transportation cost.
D) replenishment lead time.

Question 23

The situation in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers is known as

A) market fluctuations.
B) the whiplash effect.
C) the bullwhip effect.
D) lack of visibility.

Question 24

The bullwhip effect moves a supply chain

A) away from the efficient frontier by increasing cost and decreasing responsiveness.
B) away from the efficient frontier by decreasing cost and increasing responsiveness.
C) toward the efficient frontier by increasing cost and decreasing responsiveness.
D) toward the efficient frontier by increasing cost and increasing responsiveness.

Question 25

The bullwhip effect decreases

A) product availability.
B) manufacturing cost.
C) replenishment lead time.
D) transportation cost.

Question 26

Situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain are referred to as

A) incentive obstacles.
B) information processing obstacles.
C) operational obstacles.
D) behavioral obstacles.

Question 27

Information distortion is exaggerated by the fact that

A) supply chains today produce a large amount of product variety.
B) supply chains today produce a small amount of product variety.
C) the telephone effect is extreme in situations where technology is in use.
D) different stages of supply chains send excessive data.

Question 28

Incentives that focus only on the local impact of an action result in decisions that

A) do not maximize total supply chain profits.
B) maximize total supply chain profits.
C) minimize total supply chain profits.
D) minimize total supply chain cost.

Question 29

The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in

A) forecasts based on actual consumer demand patterns.
B) a reduction in demand as we move up the supply chain from the retailer to the manufacturer.
C) a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.
D) an increase in forecast accuracy.

Question 30

The bullwhip effect causes

A) maximization of supply chain surplus.
B) improved accuracy of demand information within the supply chain.
C) different stages of the supply chain to have a very different estimate of what demand looks like.
D) less need for aggregate planning.

Question 31

The lack of supply chain coordination on various measures of performance has costs associated with it. Which of the following is one of these costs?

A) Quality
B) Reliability
C) Manufacturing
D) Pricing

Question 32

Long term boom and bust cycles that mimic the bullwhip effect include

A) calendars and greeting cards.
B) the length of hemlines.
C) university textbooks.
D) memory chips for personal computers.

Question 33

Improperly structured sales force incentives

A) help create stable demand.
B) have very little effect on the timing of customer orders.
C) tend to create spikes in customer orders.
D) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes.

Question 34

The lack of coordination within a supply chain will result in an increase in

A) profitability.
B) inventory accuracy.
C) replenishment lead time.
D) level of product availability.

Question 35

The lack of supply chain coordination on various measures of performance has costs associated with it. Which of the following is one of these costs?

A) Inventory
B) Reliability
C) Transportation
D) Quality

Question 36

The sales typically measured by a manufacturer are

A) the quantity sold to final customers (sell-through).
B) the quantity sold to distributors or retailers (sell-in).
C) the quantity reported by the salesperson.
D) based on the quantity of supplies purchased from key suppliers.

Question 37

The lack of coordination within a supply chain will result in a decrease in

A) manufacturing cost.
B) inventory cost.
C) replenishment lead time.
D) level of product availability.

Question 38

The bullwhip effect

A) positively impacts performance at every stage.
B) hurts the relationships between different stages of the supply chain.
C) enhances the relationships between different stages of the supply chain.
D) results in improved on-time order delivery.

Question 39

The bullwhip effect decreases

A) transportation cost.
B) profitability.
C) replenishment lead time.
D) shipping and receiving cost.

Question 40

Situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits are referred to as

A) incentive obstacles.
B) information processing obstacles.
C) operational obstacles.
D) behavioral obstacles.

Question 41

A manufacturer with significant market power should use

A) two-part tariffs and volume discounts to achieve coordination.
B) lot-size-based quantity discounts to achieve coordination.
C) forward-buying with retail coupons to achieve coordination.
D) liquidators and reverse-buying to achieve coordination.

Question 42

If retailers sell products from competing manufacturers in a VMI system,

A) inventory at the manufacturer will be lower than optimal.
B) inventory at the manufacturer will be higher than optimal.
C) sales at the retailer will be lower than optimal.
D) inventory at the retailer will be higher than optimal.

Question 43

In a VMI system, the ________ must share demand information with the ________.

A) manufacturer, customer
B) customer, retailer
C) retailer, manufacturer
D) manufacturer, designer

Question 44

Operational improvements that reduce lot sizes can dampen the bullwhip effect by

A) decreasing the uncertainty of demand during the lead time.
B) decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain.
C) discouraging retailers from artificially inflating their orders in the case of a shortage.
D) allocating the available supply based on past retailer sales.

Question 45

In a continuous replenishment program, the wholesaler or manufacturer replenishes a retailer regularly based on

A) the POS data of the wholesaler.
B) the forecast of the retailer.
C) the POS data of the retailer.
D) the forecast of the manufacturer.

Question 46

Which method would serve to reduce the information distortion in a supply chain consisting of a fabricator, manufacturer, supplier, and a retailer?

A) Make both the fabricator and retailer responsible for all decisions regarding product inventories at the retailer.
B) Make the manufacturer responsible for all decisions regarding product inventories at the retailer.
C) Make the supplier responsible for all decisions regarding product inventories at the retailer.
D) Make the customer responsible for all decisions regarding product inventories at the retailer.

Question 47

If demand is uncertain, a manufacturer can incentivize retailers to provide high levels of product availability by using

A) high fixed costs.
B) buyback contracts.
C) low fixed costs.
D) zero-cost contracts.

Question 48

Managers can improve coordination within the supply chain by

A) holding product in inventory but off official inventory records.
B) listing product in inventory without actually holding the physical goods.
C) aligning goals and incentives.
D) decreasing product visibility.

Question 49

The replenishment decision in a VMI system is owned by the

A) manufacturer.
B) retailer.
C) customer.
D) cloud.

Question 50

What is the responsibility of a designated category leader?

A) The category leader manages replenishment decisions for all suppliers.
B) The category leader manages purchasing decisions for all retailers.
C) The category leader manages purchasing decisions for all customers.
D) The category leader manages replenishment decisions for all retailers.

Question 51

Situations in which the pricing policies for a product lead to an increase in variability of orders placed are referred to as

A) incentive obstacles.
B) information processing obstacles.
C) operational obstacles.
D) pricing obstacles.

Question 52

Coordination requires every stage of the supply chain to focus on

A) the functional revenues for each supply chain member.
B) the functional profits for each supply chain member.
C) the functional costs for each supply chain member.
D) supply chain surplus.

Question 53

One appropriate measure to reduce replenishment lead times is to

A) reduce flexibility.
B) increase the planning horizon.
C) order electronically.
D) average the aggregate plans from each supply chain member.

Question 54

Forward buying results in

A) a stabilized buying pattern.
B) small orders during the promotion period followed by very small orders after that.
C) small orders during the promotion period followed by large orders after that.
D) large orders during the promotion period followed by very small orders after that.

Question 55

Problems in learning within organizations that contribute to the bullwhip effect are referred to as

A) incentive obstacles.
B) information processing obstacles.
C) pricing obstacles.
D) behavioral obstacles.

Question 56

All transportation decisions should be evaluated based on their effect on

A) transportation costs.
B) fuel costs.
C) total costs.
D) sales revenue.

Question 57

When a firm places orders in lot sizes that are much larger than the lot sizes in which demand arises,

A) variability of orders is minimized up the supply chain.
B) variability of orders is magnified up the supply chain.
C) suppliers gain better visibility of consumer demand.
D) suppliers gain a more stable demand pattern.

Question 58

Quite often in a VMI system, the inventory is

A) owned by the retailer before it is shipped by the supplier.
B) owned by the supplier until it is sold by the retailer.
C) sold by the supplier before it is owned by the retailer.
D) sold by the retailer before it is shipped by the supplier.

Question 59

Actions taken in the course of placing and filling orders that lead to an increase in variability are referred to as

A) incentive obstacles.
B) information processing obstacles.
C) operational obstacles.
D) pricing obstacles.

Question 60

In most instances, CRP systems are driven by

A) the withdrawal of inventory from distributor warehouses.
B) the withdrawal of materials from supplier warehouses.
C) the withdrawal of goods customer pantry shelves.
D) the withdrawals of inventory from retailer warehouses.

Question 61

Describe the impact of behavioral obstacles on supply chain coordination.

Question 62

Mickey the manager reviewed his company's customers' orders for the past year and compared the variability of those orders with the variability of the orders he placed with his suppliers. This comparison allowed him to estimate his own company's contribution to

A) the forecast.
B) supply chain surplus.
C) market demand.
D) the bullwhip effect.

Question 63

How does cooperation and trust improve performance in a supply chain partnership?

Question 64

What is the bullwhip effect and how does it relate to lack of coordination in the supply chain?

Question 65

How do improperly structured incentives lead to a lack of coordination in the supply chain?

Question 66

A high fashion retailer should rely on

A) historical data to forecast next season's demand.
B) interpretation of industry trends and customer tastes to forecast next season's demand.
C) store-level POS data to forecast next season's demand.
D) distribution center withdrawals to forecast next season's demand.

Question 67

The most common form of collaboration observed in practice is

A) store replenishment.
B) retail event.
C) collaborative assortment.
D) distribution center replenishment.

Question 68

Successful collaborative planning, forecasting and replenishment must be built on a foundation of

A) a common logistics carrier and data synchronization.
B) a single forecasting approach and a common logistics carrier.
C) data synchronization and established standards for exchanging information.
D) established standards for exchanging information and a single forecasting approach.

Question 69

A fundamental aspect of successful collaboration is

A) sharing product designs.
B) identification and resolution of exceptions.
C) no stock outs.
D) complete information sharing.

Question 70

The local hominy man is anticipating a bumper crop this year, so he arranges with a chain of grocery stores to stock up on his hominy as part of a Homina Homina Hominy campaign to lure customers in to the stores during September for cans of the divinely salty, yet nutritious vegetable. This approach is an example of

A) DC replenishment collaboration.
B) store replenishment collaboration.
C) retail event collaboration.
D) assortment planning collaboration.

Question 71

Trading partners collaborate on store-level POS forecasts in

A) store replenishment collaboration.
B) DC replenishment collaboration.
C) retail event collaboration.
D) collaborative assortment planning.

Question 72

Retailers of all sizes can explore CPFR as a strategic option, but in order to be scalable, ________ is needed.

A) a process
B) labor
C) money
D) technology

Question 73

The full benefit of coordination is achieved when

A) all adjacent pairs of supply chain partners are coordinated.
B) the entire supply chain network is coordinated.
C) the POS data is shared with the manufacturer.
D) the POS data is shared with the retailer.

Question 74

What is the impact of lack of coordination on the performance of the supply chain?

Question 75

Describe the impact of forecasts based on orders rather than actual customer demand.

Question 76

One of the best ways to solve coordination problems is

A) through teams comprised of different members of the supply chain.
B) through investments in cutting edge information technology.
C) by institution penalties for supply chain members that don't cooperate.
D) by implementing a supply chain resource planning module.