Deck 10: Coordination in a Supply Chain

Question 1

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.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

Information processing obstacles refer to actions taken in the course of placing and filling orders that lead to an increase in variability.

Answer 3

False

Question 4

The bullwhip effect results in improved supply chain coordination.

Question 5

Incentives that focus only on the local impact of an action result in decisions that minimize total supply chain profits.

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

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

Question 8

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

Question 9

Information is distorted as it moves within the supply chain because complete information is not shared between stages.

Question 10

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

Question 11

Information processing obstacles refer to 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.

Question 12

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

Question 13

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

Question 14

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

Question 15

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 16

The bullwhip effect negatively impacts performance at every stage and thus hurts the relationships between different stages of the supply chain.

Question 17

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.

Question 18

The bullwhip effect leads to increased trust between different stages of the supply chain and enhances any potential coordination efforts.

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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.
E) none of the above

Question 25

The bullwhip effect causes

A) a loss of supply chain coordination.
B) distortion 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) all of the above
E) A and B only

Question 26

Without collaborative planning,sharing of POS data does not guarantee coordination.

Question 27

Supply chain coordination

A) improves if all stages of the chain take actions that together increase total supply chain profits.
B) requires each stage of the supply chain to take into account the impact its actions have on other stages.
C) cannot be achieved in real world applications.
D) all of the above
E) A and B only

Question 28

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.
E) none of the above

Question 29

Cooperation and trust within the supply chain help improve performance for a variety of reasons.

Question 30

A reduction in replenishment lead time helps dampen the bullwhip effect by reducing the underlying uncertainty of demand.

Question 31

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 32

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.
E) transportation cost.

Question 33

Managers can improve coordination within the supply chain by aligning goals and incentives such that every participant in supply chain activities works to maximize total supply chain profits.

Question 34

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 35

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 36

Information is distorted as it moves within the supply chain because

A) complete information is shared between stages.
B) complete information is not shared between stages.
C) firms try to be too accurate.
D) all of the above
E) B and C only

Question 37

A lack of coordination occurs either because

A) different stages of the supply chain have objectives that conflict.
B) the policies of most firms are contrary to cooperation.
C) information moving between stages gets delayed and distorted.
D) all of the above
E) A and C only

Question 38

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

Question 39

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.
E) transportation cost.

Question 40

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

Question 41

Behavioral obstacles to supply chain coordination are often related to

A) the communication between different stages.
B) pricing and operational decisions.
C) the way the supply chain is structured.
D) all of the above
E) A and C only

Question 42

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.
E) none of the above

Question 43

Lot size based quantity discounts

A) decrease the lot size of orders placed within the supply chain.
B) increase the lot size of orders placed within the supply chain.
C) magnify the bullwhip effect.
D) A and C only
E) B and C only

Question 44

Aligning goals and incentives within the supply chain will

A) improve coordination within the supply chain.
B) encourage every participant in supply chain activities to maximize total supply chain profits.
C) reduce demand uncertainty.
D) all of the above
E) A and B only

Question 45

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) all of the above
E) none of the above

Question 46

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.
E) none of the above

Question 47

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.
E) behavioral obstacles.

Question 48

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) pricing obstacles.
E) behavioral obstacles.

Question 49

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.
E) none of the above

Question 50

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) none of the above
E) both A and C

Question 51

Which of the following is not an approach to improve coordination within the supply chain by aligning goals and incentives?

A) Aligning incentives across functions
B) Sharing point of sales (POS) data
C) Pricing for coordination
D) Altering sales force incentives from sell-in to sell-through
E) none of the above

Question 52

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.
E) none of the above

Question 53

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) pricing obstacles.
E) behavioral obstacles.

Question 54

Which of the following managerial actions in the supply chain will not increase total supply chain profits and moderate the bullwhip effect?

A) Aligning of goals and incentives
B) Increasing information inaccuracy
C) Improving operational performance
D) Designing pricing strategies to stabilize orders
E) Building partnerships and trust

Question 55

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.
E) none of the above

Question 56

The lack of information sharing between the retailer and manufacturer

A) magnifies the bullwhip effect.
B) minimizes the fluctuation in manufacturer orders.
C) leads to a large fluctuation in manufacturer orders.
D) all of the above
E) A and C only

Question 57

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.
E) behavioral obstacles.

Question 58

Rationing schemes that allocate limited production in proportion to the orders placed by retailers

A) result in a game in which retailers try to increase the size of their orders to increase the amount supplied to them.
B) lead to a magnification of the bullwhip effect.
C) lead to the manufacturer being left with a surplus of product and capacity.
D) all of the above
E) B and C only

Question 59

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

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

Question 60

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.
E) none of the above

Question 61

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 62

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 63

Which of the following is not a reason cooperation and trust within the supply chain help improve performance?

A) A more natural aligning of incentives and objectives is achieved.
B) Action-oriented managerial levers to achieve coordination become easier to implement.
C) An increase in supply chain productivity results, either by elimination of duplicated effort or by allocating effort to the appropriate stage.
D) Appropriate pricing schemes are harder to achieve if both parties are aiming for the common good.
E) A greater sharing of detailed sales and production information results.

Question 64

Sharing point of sales (POS)data across the supply chain can help reduce the bullwhip effect because

A) each stage of the supply chain uses orders from the previous stage to forecast future demand.
B) all supply chain stages can forecast future demand based on final customer demand.
C) all stages can respond to the same change in customer demand.
D) all of the above
E) B and C only

Question 65

Which of the following activities occur during the step in design of a supply chain partnership where the parties assess the value of the relationship?

A) Clearly identifying the mutual benefit that the relationship provides
B) Determining how the total profits will be divided between the parties
C) Clarifying the contribution of each party
D) all of the above
E) B and C only

Question 66

There are 5 major obstacles listed in the text to coordination in a supply chain.Which of the following is NOT one of these major obstacles?

A) Incentive obstacles
B) Quality obstacles
C) Pricing obstacles
D) Behavioral obstacles

Question 67

Which of the following managerial actions does not necessarily increase total supply chain profits and moderate information distortion?

A) Assigning blame for demand fluctuations
B) Building strategic partnerships and trust
C) Aligning of goals and incentives
D) Improving information visibility and accuracy

Question 68

Which of the following is not a key step in designing effective supply chain partnerships?

A) Devoting resources to coordination
B) Assessing the value of the relationship
C) Identifying operational roles and decision rights for each party
D) Creating effective contracts
E) Designing effective conflict resolution mechanisms

Question 69

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 70

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.
E) none of the above

Question 71

Which of the following is not an approach to achieve coordination by improving the accuracy of information available to different stages in the supply chain?

A) Sharing point of sales (POS) data
B) Implementing collaborative forecasting and planning
C) Designing single stage control of replenishment
D) Pricing for coordination
E) none of the above

Question 72

Different stages of the supply chain must forecast and plan jointly if complete coordination is to be achieved,because

A) just the sharing of POS data does not guarantee coordination.
B) the manufacturer must be aware of the retailer's promotion plans to achieve coordination.
C) successful coordination requires that the entire supply chain is operating to a common forecast.
D) all of the above
E) A and B only

Question 73

When identifying operational roles and decision rights for different parties in a supply chain relationship,managers must

A) divide the tasks in a way that makes one party more dependent on the other.
B) divide the tasks in a way that neither party is dependent on the other.
C) consider the resulting interdependence between the parties.
D) all of the above
E) B and C only

Question 74

To diminish the bullwhip effect,managers can design rationing schemes that

A) decrease the uncertainty of demand during the lead time.
B) discourage retailers from artificially inflating their orders in the case of a shortage.
C) allocate the available supply based on past retailer sales.
D) all of the above
E) B and C only

Question 75

When a single stage controls replenishment decisions for the entire chain,coordination is achieved because

A) the problem of multiple forecasts is eliminated.
B) each stage views its role as one of replenishing orders placed by the next stage.
C) the manufacturer is aware of the retailer's promotion plans to achieve coordination.
D) all of the above
E) A and B only

Question 76

Reducing the replenishment lead time can help dampen the bullwhip effect because

A) it will decrease the uncertainty of demand during the lead time.
B) the manufacturer is aware of the retailer's promotion plans to achieve coordination.
C) it discourages retailers from artificially inflating their orders in the case of a shortage.
D) all of the above
E) none of the above

Question 77

Sellers and buyers in a supply chain often collaborate.Which of the following is not listed as a common activity of collaboration?

A) Demand and supply management
B) Shared engineering
C) Analysis
D) Execution

Question 78

Pricing strategies that dampen the bullwhip effect include

A) offering volume-based quantity discounts instead of lot-based quantity discounts.
B) elimination of promotions that encourage forward buying by retailers.
C) promotion dollars paid to the retailer based on the amount of sell-through rather than the amount purchased by the retailer.
D) all of the above
E) A and B only

Question 79

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 80

Which of the following managerial actions does not necessarily increase total supply chain profits and moderate information distortion?

A) Designing pricing strategies to stabilize orders
B) Building strategic partnerships and trust
C) Purchasing from the lowest cost supplier
D) Improving information visibility and accuracy