Question 1

Inventory Turnover is equal to cost of goods sold during a time period divided by the average inventory valued cost during the time period.

Accepted Answer

Inventory Turnover is calculated by dividing the cost of goods sold (COGS) by the average inventory during a specific period, indicating how many times a company's inventory is sold and replaced over that period.

Question 2

There are five performance areas that are regarded as essential to accomplishing customer service and profitability goals. They are cost, customer service, proactive ness, and quality.

Accepted Answer

The statement is incorrect because it only lists four performance areas (cost, customer service, proactiveness, and quality) instead of five. The missing area could be flexibility, productivity, or another relevant factor depending on the specific model or framework being referenced.

Question 3

Benchmarking, the formal process of comparing the positive attributes of one organization to those of another, is a critical component of a company's performance assessment arsenal.

Accepted Answer

Benchmarking allows companies to identify areas where they excel or lag behind their competitors, enabling them to make informed decisions on where to allocate resources for improvement.

Question 4

Most supply chain measures do capture what is going on across the entire supply chain.

Accepted Answer

Many supply chain measures focus on specific parts or aspects of the supply chain rather than capturing the entirety of what is happening across the whole supply chain, leading to a lack of comprehensive visibility.

Question 5

Benchmarking can help companies identify and emulate best practices.

Accepted Answer

Benchmarking allows companies to compare their processes and performance metrics to industry bests or best practices from other companies, thereby identifying areas for improvement and adopting strategies that lead to superior performance.

Question 6

The generic benchmarking process consists of three steps; define the attribute to be studied, document the comparison company's process at strategic and operational levels, and develop a strategy, complete with specific methods for adopting best practices.

Accepted Answer

The first step in the generic benchmarking process is to define the attribute to be studied.

Question 7

The proactive use of balanced scorecards focuses resource use to drive constant improvements in performance.

Accepted Answer

Balanced scorecards are strategic planning and management tools used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. Their proactive use indeed focuses resources on driving constant improvements in performance by providing a framework for strategic planning and measurement.

Question 8

Customer demands necessitate much better satisfaction information that comes straight from the customer.

Accepted Answer

Direct feedback from customers provides the most accurate and actionable information for improving satisfaction and tailoring products or services to meet their needs.

Question 9

Customer-centric measures should be tailored to important customers.

Accepted Answer

Customer-centric measures are designed to focus on understanding and meeting the needs and expectations of important customers, ensuring that the services or products provided are aligned with their preferences and requirements.

Question 10

A perfect order is one that is received, processed, picked, packed, shipped, documented, and delivered on time without damage.

Accepted Answer

A perfect order is indeed one that meets all the criteria mentioned: it is processed efficiently, picked accurately, packed securely, shipped promptly, accompanied by the correct documentation, and delivered on time and in perfect condition, without any damage.

Question 11

In his book, The Goal, Eliyu Goldratt pointed out that minimal emphasis on capacity utilization generates excess inventory that can create chaos and confusion, greatly reducing a manager's ability to make good, competitive decisions.

Accepted Answer

In "The Goal," Eliyahu Goldratt emphasizes that an overemphasis on capacity utilization, rather than minimal emphasis, can lead to excess inventory and associated operational inefficiencies, which in turn can hinder effective decision-making.

Question 12

A company's ability to monitor and manage its value-added processes as well as those of its supply chain partners depends on its measurement capability.

Accepted Answer

Effective measurement capability allows a company to accurately assess, monitor, and manage its own value-added processes and those of its supply chain partners, leading to improved efficiency and performance.

Question 13

Managers cannot effectively control processes that they do not understand.

Accepted Answer

Managers need to understand the processes they oversee to effectively control and improve them, as understanding is crucial for identifying issues, making informed decisions, and implementing effective solutions.

Question 14

One of the easiest challenges encountered in benchmarking is to identify the right company to use as the benchmark.

Accepted Answer

Identifying the right company to use as a benchmark can be challenging due to differences in business models, operational processes, market segments, and scale among companies, making it difficult to find a truly comparable benchmark.

Question 15

Accurate total costing and activity-based costing create process transparency and make trade-offs to understand.

Accepted Answer

The answer of Accurate total costing and activity-based costing create...

Question 16

The role of measurement in a business creates understanding, drives behavior, and it leads to results.

Accepted Answer

Measurement in business helps in understanding performance, drives behavior by setting targets and expectations, and leads to results by enabling informed decision-making and tracking progress towards goals.

Question 17

The key to maximizing throughput is to alleviate the bottleneck, keeping it operating at maximum capacity all the time.

Accepted Answer

Maximizing throughput involves identifying and alleviating the bottleneck in a process, ensuring it operates at its maximum capacity continuously, as the bottleneck dictates the overall capacity of the system.

Question 18

To manage the supply chain for competitive advantage, modern measurement systems must provide a broader array of historical information that is better balanced between internally focused and externally oriented measures.

Accepted Answer

The answer of To manage the supply chain for competitive...

Question 19

Scorecards incorporate financial and key qualitative measures to communicate expectations, evaluate performance, and motivate improvement.

Accepted Answer

Scorecards are tools used by organizations to track and measure performance against predefined goals. They include both financial metrics, such as revenue and profit margins, and key qualitative measures, such as customer satisfaction and employee engagement, to provide a comprehensive view of an organization's performance. This helps in setting expectations, evaluating outcomes, and encouraging continuous improvement.

Question 20

Measurement is more critical than communication, training, or perhaps anything else when it comes to managing human behavior.

Accepted Answer

Measurement is essential for managing human behavior because it allows managers to track progress, identify areas for improvement, and make informed decisions. Without measurement, it is difficult to know whether or not a training program is effective, or if a new communication strategy is reaching its target audience.

Quiz 13: Performance Measurement