ISDS 3115 Final T/F

T/F "Phantom bills" are bills of material for subassemblies that do not exist in reality.

false

T/F A client firm should not include its home country when conducting a country risk assessment.

false

T/F A dependent demand item is so called because its demand is dependent on customer preferences.

false

T/F A firm that outsources its internal business activities is called the outsource provider.

false

T/F A firm that provides outsourcing activity is called the client firm.

false

T/F A push system means providing the next station with exactly what is needed when it is needed.

false

T/F A reduction in inventory costs is one reason for making rather than buying.

false

T/F ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.

false

T/F ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

false

T/F According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.

false

T/F Advertising and promotion are methods of manipulating product or service supply in aggregate planning.

false

T/F At the economic order quantity, holding costs are equal to purchasing costs.

false

T/F Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage.

false

T/F Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.

false

T/F Because service firms do not inventory their output, pure chase strategy is not appropriate.

false

T/F Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.

false

T/F By convention, the top level in a bill of material is designated level 1.

false

T/F Core competencies are good candidates for outsourcing.

false

T/F Customer demand will always remain an unknown, so it is not considered a source of variation.

false

T/F Cycle counting is an inventory control technique exclusively used for cyclical items.

false

T/F Developing long-term, "partnering" relationships with a few suppliers is a long-standing American purchasing strategy.

false

T/F Employee empowerment is unnecessary in the Toyota Production System, because automation and powerful information systems reduce the need for employee creativity and decision making.

false

T/F Even though a firm may have a low cost strategy, supply chain strategy can select suppliers primarily on response or differentiation.

false

T/F Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.

false

T/F In MRP, a "bucket" refers to a fixed order quantity, such as an EOQ.

false

T/F In a JIT system, product inspection adds value by identifying defective items.

false

T/F In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.

false

T/F In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately.

false

T/F In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.

false

T/F In the vendor evaluation phase, most companies will use the same list of criteria and the same criteria weights.

false

T/F Increasing inventory exposes variability in production processes.

false

T/F Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

false

T/F JIT brings about competitive advantage by faster response to the customer regardless of cost.

false

T/F JIT systems carry inventory just in case something goes wrong.

false

T/F Level scheduling means producing at a constant rate, regardless of customer demands.

false

T/F MRP can be effective only if very accurate lot sizes are calculated in advance.

false

T/F MRP is an excellent tool for scheduling products with variable lead times.

false

T/F McDonald's was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.

false

T/F Offshoring is the practice of procuring from foreign external sources services or products that are normally part of an organization.

false

T/F One of the demand options of aggregate planning is to vary the workforce by hiring or firing.

false

T/F Operations splitting sends pieces to the next operation before the entire lot is completed on the previous operation.

false

T/F Outsourcing is the practice of moving a business process to a foreign country but retaining control of it.

false

T/F Plans for new product development generally fall within the scope of aggregate planning.

false

T/F Safety stock in inventory systems depends only on the average demand during the lead time.

false

T/F Since MRP is quite detailed in nature, it has no influence on the longer-range, less detailed aggregate planning.

false

T/F Some business activities, such as human resources and legal processes, cannot be outsourced.

false

T/F Supply chain decisions are not generally strategic in nature, because purchasing is an ordinary expense to most firms.

false

T/F TPS stands for Total Production Streamlining.

false

T/F The Aggregate Plan, derived from the Master Production Schedule, specifies in more detail how much of which products is to be made at what times.

false

T/F The EOQ model is best suited for items whose demand is dependent on other products.

false

T/F The Wagner-Whitin algorithm is the most widely used MRP lot-sizing technique.

false

T/F The aggregate planning process usually includes expediting and dispatching of individual products.

false

T/F The economic part period is a fraction of a time bucket.

false

T/F The key to effective supply chain management is to get many suppliers to compete with each other, in order to drive down prices

false

T/F The level scheduling strategy allows lower inventories than the pure chase strategy.

false

T/F The master production schedule is a forecast of demand for families of products.

false

T/F The number of kanbans decreases as safety stock is increased.

false

T/F The number-one reason driving outsourcing for many firms is to focus on core competencies.

false

T/F The only objective of aggregate planning is to minimize the cost of matching capacity to demand over the planning period.

false

T/F The quality management tool called poka-yoke is not relevant to JIT systems.

false

T/F The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.

false

T/F The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.

false

T/F The term "India price" has become the global benchmark—interchangeable with "lowest price possible."

false

T/F The term "Mexico price" has become the global benchmark—interchangeable with "lowest price possible."

false

T/F The term renewal has been created to describe the return of business activity to the client firm.

false

T/F The theory of competitive advantage states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can.

false

T/F U.S. government data suggest that foreigners outsource far fewer services to the U.S. than American companies send abroad.

false

T/F Vertical integration, whether forward or backward, requires the firm to become more specialized.

false

T/F Waterways are an attractive distribution system when speed is more important than shipping cost.

false

T/F When using the low-cost strategy for supply chain management, the firm should invest aggressively to reduce production lead time.

false

T/F Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

false

T/F With level schedules, a few large batches, rather than frequent small batches, are processed.

false

T/F With the growth of just-in-time practices, railroads have made large gains in the share of the nation's transport that they haul.

false

T/F With the many-suppliers strategy, the order usually goes to the supplier that offers the best quality.

false

T/F Work-in-process inventory is devoted to maintenance, repair, and operations.

false

T/F A bill of material lists all components, ingredients, and materials needed to produce one unit of an end item.

true

T/F A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.

true

T/F A firm that outsources its internal business activities is called the client firm.

true

T/F A hotel room that goes unrented and an airline seat that goes unsold are both examples of perishability of services inventory.

true

T/F A kanban system requires little variability in lead time because shortages have their impact on the entire productive system.

true

T/F A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

true

T/F A scheduler may find that freezing the portion of the schedule closest to the due dates allows the production system to function and the schedule to be met.

true

T/F Aggregate planning for fast food restaurants is very similar to aggregate planning in manufacturing, but with much smaller units of time.

true

T/F Aggregate planning in manufacturing ties organizational strategic goals to a production plan.

true

T/F Aggregate planning occurs over the medium or intermediate future of 3 to 18 months.

true

T/F An organization's unique skills, talents, and capabilities are referred to as its core competencies.

true

T/F Bar code and radio frequency technology, like that used to track UPS or FedEx packages on their global journeys, can also be used to track objects within the boundaries of a warehouse or shop.

true

T/F Benchmark firms have driven down costs of supply chain performance.

true

T/F Blanket orders are a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

true

T/F Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.

true

T/F Closed-loop MRP systems allow production planners to move work between time periods to smooth the load or to at least bring it within capacity.

true

T/F Controlling the cost of labor in services involves quick response to consumer demand, on-call labor for unexpected demand, flexibility of labor for reallocation, and flexibility of hours or rate of output of individual workers.

true

T/F Cross-training is a common JIT tactic to improve flexibility.

true

T/F DRP is a time-phased stock-replenishment plan for all levels of a distribution network.

true

T/F Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the Master Production Schedule.

true

T/F Drop shipping results in time and shipping cost savings.

true

T/F Finding an ideal mixed strategy is complicated by the huge number of possible strategies.

true

T/F Finite capacity scheduling, unlike MRP, recognizes the capacity limitations of departments and machines when building schedules.

true

T/F Firms may discover that, rather than adapting ERP to the way they do business, they have to adapt the way they do business to accommodate the ERP software.

true

T/F Graphical techniques are easy to understand and use, but are not well-suited for generating optimal strategies.

true

T/F Gross material requirements do not take into account the amount of inventory on hand.

true

T/F Hidden problems are generally uncovered during the process of reducing inventory.

true

T/F High levels of efficiency at Anheuser-Busch are the result of excellence in aggregate planning and in high facility utilization.

true

T/F If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90.

true

T/F If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent" component of G.

true

T/F If parts and subassemblies common to a variety of products are managed through the supermarket concept, formal order releases for such parts are not necessary.

true

T/F If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced.

true

T/F If setup times and costs can be reduced enough, the JIT ideal of "Lot Size = 1" can be achieved.

true

T/F In ABC analysis, "A" Items are the most tightly controlled.

true

T/F In aggregate planning, one of the adjustable elements of capacity is the extent of subcontracting.

true

T/F In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.

true

T/F In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.

true

T/F In general, the lot-for-lot approach should be used whenever economical.

true

T/F In several industries, online exchanges have been created by buyers.

true

T/F In the production order quantity (POQ) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger lot size than in an otherwise identical EOQ problem.

true

T/F In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs.

true

T/F Inventory has only one positive aspect, which is availability; inventory has several negatives, including increased material handling, obsolescence, and damage.

true

T/F JIT suppliers have concerns that the JIT firm's demands for small lot sizes are simply a way of transferring holding cost from manufacturer firm to the supplier firm.

true

T/F Keiretsus offer a middle ground between few suppliers and vertical integration.

true

T/F Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of MRP.

true

T/F Logistics management can provide a competitive advantage through improved customer service.

true

T/F Lower average inventory is feasible only if setup times are short.

true

T/F MRP is generally practiced on items with dependent demand.

true

T/F Many suppliers feel that having a variety of customers is better than being tied to long-term contracts with one customer.

true

T/F Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.

true

T/F Nearly any business activity can be outsourced.

true

T/F Nearshoring is the practice of choosing an outsource provider in the home country or in a nearby country.

true

T/F Offshoring is the practice of moving a business process to a foreign country but retaining control of it.

true

T/F One advantage of cycle counting is that it maintains accurate inventory records.

true

T/F One classic type of negotiation strategy is the market-based price model.

true

T/F One function of inventory is to take advantage of quantity discounts.

true

T/F One goal of JIT partnerships is the removal of in-plant inventory by delivery in small lots directly to the using department as needed.

true

T/F One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.

true

T/F One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.

true

T/F One question that operations managers must ask when generating an aggregate plan is what factors are likely to influence demand and by how much.

true

T/F Outsourcing has expanded to become a major strategy in business due to the continuing move toward specialization in an increasingly technological society.

true

T/F Outsourcing is a form of specialization that allows the outsourcing firm to focus on its critical success factors.

true

T/F Outsourcing is not a new concept; it is simply an extension of the long-standing practice of subcontracting production activities.

true

T/F Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

true

T/F Outsouring is the practice of procuring from external sources services or products that are normally part of an organization.

true

T/F Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.

true

T/F Product storage is an example of waste, in the sense that no value is added.

true

T/F Reduced inventory levels and faster response to market changes are both benefits of MRP.

true

T/F Reducing distance is a common JIT goal.

true

T/F Research indicates that of all the reasons given for outsourcing failure, the most common is that the decision was made without sufficient understanding of the options through quantitative analysis.

true

T/F Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.

true

T/F Savings in the supply chain exert more leverage as the firm has a lower net profit margin.

true

T/F Service level is the complement of the probability of a stockout.

true

T/F Smoothing a resource requirements profile to stay within capacity limits may increase setup costs.

true

T/F Some organizations use outsourcing to replace entire purchasing, information systems, marketing, finance, and operations departments.

true

T/F Supply chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets.

true

T/F TPS stands for Toyota Production System.

true

T/F The 5S's—sort/segregate, simplify/straighten, shine/sweep, standardize, and sustain/self discipline—are important to lean production because they act as a means to reduce waste.

true

T/F The Toyota Production System requires that activities have built-in, automatic tests so that gaps between expectations and actuality are immediately evident.

true

T/F The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.

true

T/F The demand for automobiles would be considered an independent demand.

true

T/F The factor-rating method is an excellent tool for dealing with both country risk assessment and source provider selection problems.

true

T/F The first step in reducing setup times is the separation of setup into preparation activities and actual setup, so that as much work as possible can be done while the machine or process is operating.

true

T/F The fixed-period inventory model can have a stockout during the review period as well as during the reorder period, which is why fixed-period models require more safety stock than fixed-quantity models.

true

T/F The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set up cost is small compared to holding cost.

true

T/F The management coefficients model is a formal planning model built around a manager's experience and performance.

true

T/F The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.

true

T/F The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.

true

T/F The reorder point is the inventory level at which action is taken to replenish the stocked item.

true

T/F The strategies of aggregate planning are broadly divided into demand options and capacity options.

true

T/F The supply chain systems that result from using ERP in the grocery industry are called efficient consumer response (ECR) systems.

true

T/F The term "China price" has become the global benchmark—interchangeable with "lowest price possible."

true

T/F The theory of comparative advantage states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can.

true

T/F The time phased product structure, unlike the bill of material, adds the concept of lead times.

true

T/F The transportation method of linear programming is an optimizing approach to aggregate planning.

true

T/F The use of part-time workers as an aggregate planning option may be less costly than using full- time workers, but may also reduce quality levels.

true

T/F Time fences divide that segment of the MPS that can be revised from that section that is "frozen."

true

T/F U.S. government data suggest that foreigners outsource far more services to the U.S. than American companies send abroad.

true

T/F Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length of lead time, or both.

true

T/F Variability in manufacturing can occur because engineering drawings or specifications are incomplete or inaccurate.

true

T/F Vendor Managed Inventory is a form of outsourcing.

true

T/F Waste is anything that does not add value, such as storage or inspection of items; waste also includes any activity that does not add value from the consumer's perspective.

true

T/F Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.

true

T/F When implemented as a comprehensive manufacturing strategy, JIT, TPS, and lean systems sustain competitive advantage and result in increased overall returns.

true

T/F When safety stock is deemed absolutely necessary, the usual policy is to build it into the projected on-hand inventory of the MRP logic.

true

T/F While ERP may provide a strategic advantage over competitors, it is so complex that many companies cannot adjust to it.

true

T/F operations managers are finding online auctions a fertile area for disposing of discontinued inventory

true