MGT 3332 Ch 15
49. Strategies to address supply chain risks include: (I) risk avoidance. (II) risk reduction. (III) risk projection. (IV) risk sharing. A. I, II, and IV only B. II and III only C. I and IV only D. II and IV only E. I, II, III, and IV
A. I, II, and IV only Risk management strategies include risk avoidance, risk reduction, and risk sharing with supply chain partners.
Which of the following is not true of vendor analysis? A. It involves an examination of the function of purchased parts or raw materials. B. Its purpose is to reduce costs and/or improve performance of purchased goods or services. C. It is usually performed only periodically. D. Representatives from design and operations may work with purchasing. E. If improvements are identified, purchasing implements those that purchasing agrees are justified.
A. It involves an examination of the function of purchased parts or raw materials. The function of purchased parts or raw materials would be done by the procuring department.
It is especially the case for small businesses that closer interactions and increased agility make __________ relatively more attractive. A. domestic suppliers B. centralized purchasing C. global suppliers D. decentralized purchasing E. risk transfer
A. domestic suppliers For small businesses, the advantages of domestic suppliers include lower shipping times and costs, closer interactions with suppliers, and increased agility.
Last quarter, a retailer sold 8,000 T-shirts, 7,000 of which were sold directly from on-hand inventory. This retailer's ________ was 88 percent. A. fill rate B. inventory yield C. profit margin D. inventory turnover E. working yield
A. fill rate This retailer's fill rate (i.e., the percentage of demand filled from stock on hand) was 88 percent.
The interface between the firm and its suppliers is: A. purchasing. B. production. C. distribution. D. engineering. E. accounting.
A. purchasing. The purchasing function bridges the organization and its suppliers.
Which of the following is not a measure of the reliability of the supply chain? A. supply chain response time B. on-time delivery C. fill rate D. lead time variability E. improving e-fulfillment statistics
A. supply chain response time Response time is a measure of supply chain effectiveness.
Examination of the sources of supply for purchased parts or materials in order to improve performance is called: A. vendor analysis. B. value analysis. C. negotiated purchasing. D. reverse engineering. E. disintegration.
A. vendor analysis. Performance can be evaluated with respect to price, quality, reputation, or service.
Which of the following is part of the purchasing cycle? (I) Purchasing selects a supplier. (II) Orders from vendors are received. (III) Purchasing receives a requisition. A. II and III B. I, II, and III C. I only D. I and II E. I and III
B. I, II, and III These are all part of the purchasing cycle.
The automatic identification of material is part of/facilitated by: A. holding costs. B. RFID. C. working capital reduction. D. net present value calculations. E. vendor analysis.
B. RFID. RFID facilitates the automatic identification of material.
One important role of purchasing is to: A. set quality standards for purchased items from suppliers. B. be knowledgeable about new products from suppliers. C. maintain numerous sources of supply. D. obtain the lowest prices on all purchased items. E. determine the processes that should be used by suppliers.
B. be knowledgeable about new products from suppliers. Purchasing can share information about new products and materials improvements from suppliers with design personnel to enhance product designs.
The website and fulfillment are essential features of: A. delayed differentiation. B. e-commerce. C. Internet service providers. D. inventory balancing. E. market segmentation.
B. e-commerce. These are front-end and back-end facets of e-commerce.
The more __________ a company's supply chain, the more difficult it is to ensure that the supply chain is managed ethically. A. interconnected B. global C. visible D. shortened E. Competitive
B. global Problems with supply chain ethics are particularly difficult to manage when supply chains are global.
A factor that makes it desirable for business organizations to actively manage their supply chains is: A. more potential vendors. B. increasing globalization. C. downsizing. D. the Internet. E. RFIDs.
B. increasing globalization. Globalization is making supply chain management more important.
The purchasing perspective of the supplier as a partner is characterized by: A. an emphasis on low prices. B. one or a few suppliers. C. low flexibility. D. 100 percent inspection for quality. E. low volume.
B. one or a few suppliers. Fewer suppliers enhance the chances of building real partnerships.
The activity which begins with a request from within the organization is: A. outsourcing search. B. purchasing cycle. C. supplier selection. D. order receipt. E. supply chain management.
B. purchasing cycle. The purchasing cycle begins with a requisition.
Vendor analysis is the examination of the _________ of purchased materials. A. function B. source C. quality D. cycle E. quantity
B. source Sources of supply are evaluated in vendor analysis.
Our organization can obtain visibility to potential trading partners on the Internet by using: A. C2C websites. B. B2C enablers. C. B2B exchanges. D. C2B marketplaces. E. 2BC commerce.
C. B2B exchanges. B2B exchanges help the organization let the market know of the organization's needs.
Which of the following is an advantage of E-business? (I) reduction of transaction costs (II) shortened supply chain response time (III) greater customer loyalty A. I B. II C. I and II D. II and III E. I, II, and III
C. I and II Gaining and maintaining customer loyalty is even more difficult once a firm is involved in E-business.
_________ has/have helped firms to concentrate on their core business. A. Supply chains B. Scheduling C. Outsourcing D. ERP E. Lean production
C. Outsourcing Outsourcing enables firms to focus on what they do, or should do, best.
After outsourcing to global suppliers, __________ is not simple. A. integration B. unionization C. back-shoring D. computerization E. just-in-time
C. back-shoring Backsourcing is difficult to implement effectively if outsourcing has been done.
Which of the following is least likely to be a key consideration when a company chooses a supplier? A. lead time and on-time delivery B. reputation and financial stability C. current inventory D. quality and quality assurance E. flexibility of design change
C. current inventory All the others are highly likely to be considered in supplier selection.
Which of the following is not a benefit of RFID? A. increased productivity B. elimination of paperwork C. frequent deliveries of smaller shipments D. reduction in clerical labor E. increased accuracy
C. frequent deliveries of smaller shipments RFID does little to facilitate the cost reductions required to make frequent, small deliveries feasible.
One of the biggest ethical risks in supply chain management is that the __________ supply chain member tends to be the one that suffers the blame and/or lost goodwill when something goes wrong. A. most responsible B. buying C. most visible D. supplying E. most ethical
C. most visible Consumers tend to blame the major company or brand in the supply chain associated with the ethical infractions.
Which of the following is not a benefit of centralized purchasing? A. potential for quantity discounts B. better service from suppliers C. quick response to local needs D. potential for use of purchasing specialists E. supplier research
C. quick response to local needs Quick response to local needs is a benefit of decentralized purchasing.
Which of the following is a barrier to the integration of separate organizations in the supply chain? (I) conflicting objectives of the companies in the chain (II) different capacity levels of the companies in the chain (III) reluctance of the organizations in the chain to allow other organizations access to their data A. I only B. I and II C. II and III D. I and III E. I, II, and III
D. I and III Capacity imbalances can be overcome, but conflicting objectives and mistrust are substantial barriers.
Which of the following is a principle required for ethical behavior in purchasing? (I) loyalty to employer (II) justice to those you deal with (III) faith in your profession A. III only B. I only C. II only D. I, II, and III E. II and III only
D. I, II, and III All of these are ethical principles in purchasing.
RFID chips: (I) are used to track goods in distribution. (II) are used to track job progress in production. (III) are used to provide special instructions to operators. (IV) can be used in inventory record keeping. A. II and III only B. I and II only C. II, III, and IV D. I, II, and IV E. IV only
D. I, II, and IV RFID chips do not contain special instructions.
Small changes in consumer demand can result in large variations in orders placed because of the: A. supply chain. B. safety stock requirement. C. lead time effect. D. bullwhip effect. E. FCFS scheduling.
D. bullwhip effect. Variations are amplified as they move backwards in the supply chain.
Logistics includes all of these except: A. the movement of materials within a production facility. B. incoming shipments of goods or materials. C. outgoing shipments of goods or materials. D. customer selection. E. returned goods processing.
D. customer selection. Logistics involves moving goods.
Which of the following would not usually be a main factor in selecting a vendor? A. location B. price C. quality D. inventory turnover E. vendor services
D. inventory turnover Turnover would only rarely be associated with the vendor that is selected.
Which of the following is not a goal of supply chain management? A. fewer suppliers and long-term relationships B. small lot sizes C. on-time deliveries D. lowest possible transportation costs E. delivery often to the place of use
D. lowest possible transportation costs Minimizing transportation costs might lead to an unacceptable trade-off elsewhere.
Real-time information about product movement on store shelves could benefit from the use of: A. batch processing. B. economic order quantities. C. statistical process control. D. radio frequency identification tags. E. infrared remote scanners.
D. radio frequency identification tags. RFID facilitates real-time data gathering.
. A given inventory item has a per-year holding cost of $500. One method of shipping this item is three days faster than the other, but it is $2.50 more per unit. Using the slower method would be __________ more expensive overall than using the faster method. A. $1.08 B. $1.16 C. $2.37 D. $2.73 E. $1.61
E. $1.61 Multiply the holding cost by the speed differential, then divide by 365. Compare this to the actual shipping cost difference. $500 x 3/365 = $4.11 holding cost which is $1.61 more than the additional $2.50 cost for the faster shipping method.
Which of these aspects of supply chain management are especially concerning to small business? (I) customer reliability (II) inventory management (III) purchasing costs (IV) risk management (V) international trade A. III, IV, and V only B. I, II, and III only C. I, III, and IV only D. I and II only E. II, IV, and V only
E. II, IV, and V only Three aspects of supply chain management that are often of concern to small businesses are: (1) inventory management (2) reducing risks and (3) international trade.
Vendor analysis has the greatest potential for savings for items which have: A. low cost per unit. B. low annual cost-volume. C. high cost per unit. D. high annual usage. E. high annual cost-volume.
E. high annual cost-volume. These represent the bulk of purchasing costs.
Which of the following is not a benefit of effective supply chain management? A. lower inventory costs B. higher productivity C. shorter lead times D. greater customer loyalty E. larger number of suppliers
E. larger number of suppliers Supply chain management often results in fewer suppliers.
The purchasing cycle begins with: A. selecting a supplier. B. placing an order. C. evaluating potential vendors. D. conducting a value analysis. E. receiving a requisition.
E. receiving a requisition. The requisition notes what is needed, in what quantity, and when it is needed.
Which of the following is not an application of E-business? A. Internet buying and selling B. e-mail C. order and shipment tracking D. electronic data interchange (EDI) E. universal product codes
E. universal product codes Universal product codes are not part of E-business.
Event-response capability is the advanced planning required to respond to planned events such as receiving a scheduled shipment.
Event-response capability involves detecting and responding to unplanned events such as a delayed shipment.
In e-commerce, the front-end design is significantly more important than the back-end design.
FALSE Back-end (order fulfillment) design is often more consequential in e-commerce than front-end (website) design.
Forming strategic partnerships is beneficial for two or more business organizations that have the same products or services.
FALSE Complementarity is key to successful strategic partnering.
E-commerce involves business-to-business (B2B) interaction only.
FALSE E-commerce can also involve business-to-consumer (B2C) interactions.
In supply chain organizations, functions must operate independently of each other.
FALSE Functions should be integrated.
Gatekeeping contracts with 3PLs to minimize the cost of shipping returned goods.
FALSE Gatekeeping oversees the acceptance of returned goods by screening returns and refusing to accept goods that should not be returned.
Global supply chains make purchasing easier because there are more options.
FALSE Global purchasing is more complex because of the variety of issues and risks that must be considered.
The materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the beginning of the chain.
FALSE Material flows toward the final consumer and dollars flow upstream. However, information flows both ways.
The optimization of the supply chain uses a mathematical model to determine the optimal number of business organizations to be included in the chain.
FALSE Optimizing a supply chain through mathematical models is typically not feasible.
Outsourcing logistics gives a company less flexibility because it forces them to focus more on core businesses.
FALSE Outsourcing logistics can lead to more flexibility.
The importance of purchasing relates only to the cost of parts and materials purchased, which is often 60 percent or more of the cost of finished goods.
FALSE Purchasing is important because other factors resulting from the purchase of parts and materials are highly consequential, including quality and timing of deliveries.
In purchasing, one's only ethical obligation is to one's suppliers.
FALSE Purchasing personnel have ethical obligations with regard to a variety of stakeholders, primarily the organizations that employ them.
One disadvantage to RFID is that it requires a clear "line of sight" to operate.
FALSE RFID doesn't need line-of-sight reading.
A 30 percent reduction in product and service variety will not affect the efficiency of a supply chain.
FALSE Reducing variety is a prominent means of increasing efficiency.
Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease.
FALSE Starting with the final customer and moving backward through the supply chain, batch sizes tend to increase, as do the levels of safety stocks.
Managing supply chain visibility involves making sure that potential supply chain partners are aware of your organization's needs.
FALSE Supply chain visibility has to do with making sure that current trading partners have access to needed data in real time.
Centralized or decentralized purchasing is directly related to the size of an organization.
FALSE The use of centralized or decentralized purchasing is independent of organization size.
The design of the supply chain and establishing partnerships with vendors and distributors are examples of operational issues in a supply chain.
FALSE These are strategic and tactical responsibilities.
Traffic management refers to truck movement within our parking areas.
FALSE Traffic management is the management of the shipment of incoming and outgoing goods.
Using third-party logistics involves using your organization's logistics function to ship to customers that are not officially part of the supply chain.
FALSE Using third-party logistics involves outsourcing the logistics function.
Inventory velocity refers to the average speed (in miles/hour) of material handling equipment in a warehouse.
FALSE Velocity refers to the rate at which goods pass through a supply chain.
Vendor analysis examines the function of purchased parts and materials with a view toward improvement or cost reduction.
FALSE Vendor analysis evaluates sources of supply with respect to price, quality, reputation, and service.
Price is the primary determining factor in choosing a vendor since most products are essentially the same.
FALSE With vendor analysis, price is just one of many considerations.
Which of the following, while desirable from some perspectives, might actually increase the risk of supply chain disruptions? (I) fewer supply chain partners (II) a shorter supply chain (III) greater supply chain visibility A. I and II only B. II and III only C. I and III only D. I only E. I, II, and III
Fewer suppliers results in greater concentration among suppliers, making the supply chain riskier.
The need for risk management increases as globalization of supply chains increases.
TRUE As globalization increases, supply chain management is becoming more complex with greater risks than occur in domestic supply chains.
Decentralized purchasing can usually offer quicker response than centralized purchasing.
TRUE Centralized purchasing can be more efficient, but decentralized purchasing can offer faster response.
Strategic partnering is encouraged when two or more business organizations have complementary products or services that would benefit the others.
TRUE Complementarity is key to successful strategic partnering.
An advantage of decentralized purchasing is the attention given to local needs.
TRUE Decentralized purchasing is more responsive to specific needs.
Delayed differentiation is a means of increasing product variety without building the customized product from scratch or keeping large inventories of custom products.
TRUE Delayed differentiation is used to create customized output without large inventories.
Disintermediation occurs when the traditional retailer or service provider is reduced or eliminated in a supply chain.
TRUE Disintermediation involves reducing one or more steps in a supply chain by cutting out intermediaries.
E-commerce refers to the use of electronic technology to facilitate business transactions.
TRUE E-commerce is a growing trend in supply chain management.
Every business organization is part of at least one supply chain.
TRUE Either the business organization is a complete supply chain or it is a player in a supply chain.
Vendor analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service.
TRUE Evaluating sources in terms of price, quality, reputation, and service is vendor analysis.
A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users.
TRUE Flow of materials and information are the central focus of supply chain management.
Information technology is a key to integrating operations across global supply chains.
TRUE Global supply chains are made possible by the use of information technology to link operations with real-time data exchange.
Some firms have structured their procurement function to include both centralized and decentralized purchasing.
TRUE Good purchasing can involve both centralized and decentralized elements.
To avoid temporary storage in a warehouse, cross-docking can be used.
TRUE In cross-docking, inbound goods are moved directly onto outbound trucks.
Most people working for a business organization are somehow involved with the supply chain of that business.
TRUE Most people working for a business organization are involved in the flow of materials, money, or information.
Scheduling operations and shipping are operational responsibilities in supply chain management.
TRUE Operational responsibilities include scheduling and shipping.
One of the major reasons for a company to adopt third-party logistics is to concentrate on one's core business.
TRUE Outsourcing logistics to third parties enables a company to focus on its core business.
Using third-party fulfillment means losing control of fulfillment.
TRUE Outsourcing this key function means a loss of control.
The service function of purchasing interfaces with many areas, including legal, accounting, and engineering functions.
TRUE Purchasing interfaces with a wide variety of areas.
RFID eliminates the need for manual counting and bar-code scanning of goods at receiving docks.
TRUE RFID does away with the need for counting and bar-code scanning.
Returned goods are part of reverse logistics.
TRUE Reverse logistics involves managing the flow of goods back up the supply chain.
The goal of supply chain management is to synchronize supply and demand of all of the organizations that are part of the chain.
TRUE Synchronizing multiple organizations is one of the difficulties of supply chain management.
Bullwhip effect refers to a phenomenon in which demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain.
TRUE The effect of demand variations grows as it works its way back through the supply chain.
Important factors in purchasing include the cost of goods purchased, the quality of goods and services, and the timing of deliveries of goods or services.
TRUE These costs resulting from the purchase of parts and materials are highly consequential.
Frequent deliveries of small shipments can reduce inventory but also result in an increase in the transportation cost per unit.
TRUE This is one of the trade-offs inherent in supply chain management.
Creating an effective supply chain requires linking the marketing, distribution, and supplier channels.
These need to be synchronized if the supply chain is to be effective.
