intro scm chapter 5-8

Which cost of quality category includes performing audits to confirm that the quality system is operating properly?

Appraisal Costs

What are the four (4) primary reasons that companies hold inventory?

1. To meet customer demand 2. To buffer against uncertainty in demand and/or supply 3. To decouple supply from demand 4. To decouple dependencies in the supply chain

The Profit-Leverage Effect states . . . ?

A decrease in purchasing expenditures directly increases profits before taxes (assuming no decrease in quality or purchasing total cost).

Which of the following is the best description of a Preferred Supplier?

A supplier who best meets all of your company's overall purchasing requirements

Candidates for a Supplier Certification Program include suppliers who meet one or more of the following criteria, EXCEPT?

A supplier who has a minimal number of significant negative quality related incidents for a specified time period

Why might a company decide to outsource (i.e., buy) a product that they currently make in their company-owned operations?

Because they don't have the capacity in their internal factory to meet demand

In which sourcing category would the following items typically be classified? Item B is low value, high risk, and there are a small number of alternative suppliers.

Bottleneck

Which Statistical Tool of Six Sigma is used to determine the frequency of a specific problems?

Check Sheet

The Six Sigma 5-Step Plan referred to as DMAIC stands for?

Define, Measure, Analyze, Improve, Control

Which one of the following is NOT a reason for buying or outsourcing?

Due to a lack (i.e., shortage) of procurement personnel

Forward Vertical Integration refers to a company acquiring one or more of their sources of supply.

False

The process to evaluate a supplier's capabilities, and their capacity to supply a product or service to the buyer, is known as Supplier Certification.

False

When a company utilizes a "make to stock" strategy, the company is also said to be using a "pull" business model

False

The keys to developing successful supply partnerships include all of the following EXCEPT?

Individualized Objectives

Which one of the following is NOT part of the seven (7) tools of Quality Control?

LEAN Layouts

Which one of the following Manufacturing Strategies has the shortest (i.e., fastest) Customer Delivery Cycle?

Make-to-Stock

Which one of the following is NOT an element of Lean Manufacturing?

Mass Customization

In which sourcing category would the following items typically be classified? Item D is low value, low risk, and there are lots of potential suppliers.

Non-Critical

The process commonly utilized in continuous improvement is known as?

Plan, Do, Check, Act

The inventory control tool that does not require direct line of sight to read the tag on a product(s), is known as

Radio Frequency Identification

The purchasing tool described as "A document used to solicit bids (i.e., price and delivery) from interested and qualified suppliers for goods or services that the organization needs to obtain", is known as?

Request for Quote

In which sourcing category would the following items typically be classified? Item C is high value, high risk, and there are few suppliers, but they are excellent.

Strategic

In which item category would the sourcing strategies of ensuring availability of supply, focusing on relationship building, encouraging process integration and innovation, frequent communications, and establishing mutually agreeable supplier performance criteria, be appropriate?

Strategic Items

What is Ethical Sourcing?

That which attempts to take into account the public consequences of organizational buying, or to bring about positive social change through organizational buying behavior.

If you understand the Total Cost of Ownership (TCO) then you know:

That you need to consider all the related costs over the life of the product

Ethical sourcing policies should include such things as the reporting of supplier compliance to stakeholders, and detailing ethical sourcing expectations to suppliers.

True

Root Cause Analysis is a term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems

True

Which one of the following is NOT a reason to have a single supplier?

To spread the risk of a supply disruption

A purchase order is legally binding only after accepted and confirmed by the supplier.

true

Products with low profit margin, relatively stable demand, and high levels of competition, are known as Functional Products.

true

If a firms' net income (i.e., profits before taxes) is $11.7 billion US Dollars and it has total assets of $90.0 Billion US Dollars, the Return on Assets (expressed as a percentage) is

Calculation: 11.7bn USD / 90bn USD = 0.13 = 13%

The concept of Distributive Negotiations refers to both sides work together to maximize the outcome or create a win-win result.

False

In which sourcing category would an item typically be classified, if it is considered to be high value, low risk, and there are multiple potential suppliers?

Leverage

In which sourcing category would the following items typically be classified? Item A is high value, low risk, and there are multiple potential suppliers.

Leverage

The sum of all costs associated with every activity in the supply stream of a product, is referred to as?

Total Cost of Ownership

The practice of Supplier Co-location involves a supplier's employee being embedded in a buyer's purchasing department to forecast demand, monitor inventory and place orders for the item(s) provided by the supplier.

True

The Weighted-Criteria Evaluation System is typically used to select a supplier or to evaluate the performance of a supplier?

true

Reorder Point (Refer to Slides 29 through 31 in Chapter 04 -or- Pages 114 and 115 in the textbook) Calculate RBS Company's Reorder Point, including safety stock, for their top selling Pen Set using the following information: Demand (D) is 150 Pen Sets per month (30 days = 1 month). Lead Time (LT) from Supplier X is 10 days. Safety Stock (SS) is 125 Pen Sets.

Calculation: 150/30 x 10 + 125 = 5 x 10 + 125 = 175 Correct Answer:175

Total Quality Management is the term used in business to describe the in-depth process of capturing internal and external customer's expectations, preferences, likes, and dislikes

False

The goal of a good supplier performance evaluation system is to provide metrics that are:

Understandable, easy to measure, and focused on real value-added results

Outsourcing allows the company that is outsourcing a product, to concentrate on core capabilities and increase staffing levels.

False

Forward Vertical Integration refers to a company acquiring one or more of their customer organizations.

True

The purchasing function is one of the most value-enhancing functions in any organization, however, it is still necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks.

True

In which item category would the sourcing strategies of simplifying and streamlining the purchasing process, reducing the number of suppliers and simplifying the ordering process, and transferring the buying responsibility to users within the company, be appropriate?

Non-Critical Items

Which quality expert is is widely considered to be the father of Total Quality Management?

W. Edwards Demming

The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is known as

bid bond

What is Strategic Sourcing?

A comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace.

Economic Order Quantity (Refer to Slide 38 in Chapter 04 -or- Pages 117 through 120 in the textbook) Calculate RBS Company's EOQ for their top selling Pen Set using the following information: RBS Company expects to sell 300 Pen Sets per month for the next 12 months. RBS Company purchases the Pen Sets from a supplier for $50 dollars each and incurs a cost of $100 dollars for each order that they place RBS Company estimates that their inventory carrying cost is 24% annually.

Calculation: √2 x 100 x 3,600 = √720,000 = √60,000 = 244.949 ≈ 245 0.24 x 50 12 Correct Answer:244.9 to 245 inclusive

The best supplier candidates for Supplier Relationship Management (SRM) include all of the following EXCEPT?

Developmental suppliers that need to make improvements

A strong supplier partnership requires that both buyer and supplier adopt a strong tactical perspective.

False

An effective supplier certification program may increase the time spent on incoming inspections.

False

Award-winning suppliers serve as role models for other suppliers and may therefore be exempt from audits and certification programs

False

In which sourcing category would an item typically be classified, if it is considered to be high value, high risk, and there are few suppliers, but they are excellent?

Strategic