SCM exam 3

Which of the following is not a theoretical factor of forecasting?

Amount

True or false: While objectives are great, reputation is fostered through action and results.

True

IBP stands for _____ business planning.

integrated

Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Alpha's order cost has been determined to be $50 per order. Alpha carries no safety stock at all. What is Alpha's annual inventory carrying cost?

$500

How to buy goods and services include a vast array of questions around - systems contracts. - choice of make or buy. - ethical acquisitions. - technology systems.

- systems contracts. - ethical acquisitions. - technology systems.

Accurate supply measurements will give managers the ability - to compare results of various supply experiments. - to provide less information to upper management. - to see supply's contribution. - to eliminate all waste throughout the supply chain.

- to see supply's contribution. - to compare results of various supply experiments.

Organizational financial objectives can include - total expected revenue. - increase in return on assets. - total budget size. - the corporate values and standards.

- total expected revenue. - increase in return on assets. - total budget size.

Identify the supply chain method in which supply chain partners periodically share forecasts, demand plans, and resource plans to reduce uncertainty and the risks in meeting customer demand.

A collaborative planning, forecasting, and replenishment initiative

What does forecast accuracy improvement require besides error measurement?

Analysis

The S&OP process collaboratively establishes a coordinated plan for responding to customer _____ within the resource constraints of the enterprise.

Blank 1: requirements

Strategic _____ focuses on long-term supplier relationships.

Blank 1: sourcing

_____ is the amount of demand that occurs while awaiting receipt of an inventory replenishment order.

Demand during lead time

True or false: The mean absolute deviation does is not a computation of the absolute error.

Fasle

Which markets demand that supply chain planning focus on reducing the supply chain asset requirements?

Financial

Define the bullwhip effect.

It is a small disturbance generated by a customer that produces successively larger disturbances at each upstream stage in a supply chain.

___________ supply decisions are the day-to-day decisions that allow management to focus on their strategic contribution. _________ choices, however, focus on new and innovative solutions and supply challenges.

Operational; Strategic

The ABC analysis used for analyzing inventory is an example of:

Pareto's law.

_______________ is a financial ratio that shows the percentage of profit a company earns in relation to its overall resources.

Return-on-assets (ROA)

In which environment are demand planning, production planning, and logistics planning more common?

Supply chain

Define raw materials and component parts.

These are the items that are bought from suppliers to use in the production of a product.

Supply decisions can affect:

income statement and balance sheet

Supply chain risk planning focuses on

long term opportunities

Purchasers who have the means and readiness to pay have:

valuable bargaining strength.

Identify the primary modification to the basic economic order quantity (EOQ) formula when determining production order quantity.

A ratio of the demand rate to the production rate is used as a multiplier on the carrying cost.

Which of the following is not a forecast component?

Audit

_____ _____ is a fixed time period that passes between inventory reviews.

Blank 1: Order Blank 2: interval

_____ cost is the cost incurred when inventory is not available to meet demand.

Blank 1: Stockout or Shortage

A(n) _____ is a supply of items held by a firm to meet demand.

Blank 1: inventory

There are at least _____ major challenges that the supply industry is facing moving into the next decade.

Blank 1: seven or 7

A supply strategy has _____ major categories to consider when developing strategic plans.

Blank 1: six or 6

Traditionally risks were controlled departmentally, but now they are assessed for _____ risk exposure to the organization as a whole.

Blank 1: total or overall

The first driver of planning system development is the need for _____ regarding location and status of supply chain inventory and resources.

Blank 1: visibility

When planning for an increase in production, APS helps to ______.

Both determine what is best for the customer and identify and calculate the cost of strategic options are correct

Taxes and insurance costs are an example of which of the following costs?

Carrying (or holding) costs.

What does supply chain visibility require for management to highlight the need regarding the flow to minimize or prevent potential problems?

Change

Which of the following is not a stage in the S&OP maturity model?

Competing

What will the S&OP process, which includes information sharing and accountability, systematically develop?

Consistent plan

What is collaborative planning forecasting and replenishments' function in the planning and process between supply chain partners for demand fulfillment activities?

Coordinates

Which of the following best illustrates a dependent demand inventory system?

Demand for the binding of a book at a store

A multinational firm has customer demand for its product all over the world. To meet the demand, the firm has strategically placed its manufacturing facilities closer to the customer demand zones and near transportation hubs to facilitate easy transport. Which of the following does this scenario illustrate?

Enabling geographic specialization

This level of decisions mold the particular department and involve the allocation of internal resources.

Function

Which of the following is not a benefit that is offered by advanced planning and scheduling (APS)?

Improved forecast accuracy.

Which of the following is NOT a role of inventory?

Increasing quality of finished goods

Define transit inventory.

It is the inventory of items being transported from one location to another.

Define reorder point.

It is the minimum level of inventory that triggers the need to order more.

Items that are used as maintenance, repair, and operating supplies are classified as _____.

MRO inventory

ISM launched the Certified Professional in Supply Management (CPSM) program in

May 2008.

Which of the following is not a response to the broad benefits that accrue from planning and system utilization?

Planning

Which of the following is not a reason for increased importance of S&OP?

Precise demands by key customers.

What does the R stand for in CPFR?

Replenish

What is the great benefit of the P-system?

Simplicity in managing the system

Which of the following does APS not include in its network?

Stakeholders

_____ is an event that occurs when no inventory is available.

Stockout

Which of the following is not a benefit of sales and operations planning?

The S&OP process eliminates the need to have finished goods inventory.

The basic calculation in the newsvendor model will result in a calculation of:

The basic calculation in the newsvendor model will result in a calculation of:

Define carrying costs.

They are the expenses that are incurred due to the fact that inventory is held.

What constraint deems a qualitative method as generally not appropriate for supply chain forecasting in regards to generating detailed SKU forecasts?

Time

_____ cost is the sum of all relevant inventory costs incurred each year.

Total acquisition

An trexoid inventory saw-tooth diagram is an illustration of the pattern of ordering and inventory levels.

True

True or false: Logistics planning and coordination require the best possible estimate of SKU/location demand.

True

True or false: The requirements planning process is intended to develop a common and consistent plan for each time period, location and item.

True

True or false: Organizations of the future will focus on aggressive strategies to achieve organizational goals.

True Reason: In the past organizations took defensive strategies, where now most take imaginative approaches.

Identify the expression used for computing the days of supply.

current inventory / expected rate of daily demand.

The reputation of an organization is affected by the decisions and behavior of supply personnel; this includes communication that is both

internal and external.

Evidence of the growth and influence of supply management in an organization includes:

involvement in strategic planning and executive status of the chief supply officer.

The square root rule _____.

is a method of estimating the impact of changing the number of locations on the quantity of inventory held.

On average, the dollars spent with suppliers as a percent of revenues:

is greater in manufacturing organizations than in service organizations.

Define a single period inventory model.

it is used to determine the order size for a one time purchase

If supplier fails to deliver parts that are of poor quality, it can negatively impact production by

leading to issues that necessitate higher direct labor costs.

The stronger a buying organization is financially, the:

more attractive it becomes as a potential customer.

Control charts that monitor production for signs of problems and make needed adjustment are managed under a

process quality control program.

A successful supply chain management strategy integrates:

processes and systems within and across organizations.

In a situation where there are low economies of scale and a long response time, the supply chain strategy should focus on ______.

production flexibility since detailed and accurate forecasting is not of critical importance

Supply has the potential to contribute to:

profitability, competitive position and sustainability performance.

Suppliers and purchasers work to eliminate supply chain interruptions and

reduce the level of inventory needed.

Advanced planning and scheduling (APS) facilitates improvements in customer service by ______.

reducing the time to make accurate commitments to customers

The impact of supply management actions on the balance sheet is measured by the:

return on assets effect.

When making decisions supply managers must balance

risk and reward

The formula zσddlt is used to calculate the _____.

safety stock

What averages does the moving average forecasting use during a specific period?

sales

Supply functions can increase customer satisfaction by

securing suppliers who deliver better quality, faster, and with a better price.

The category of inventory performance metrics that addresses effectiveness in terms of meeting demand requirements is referred to as _____.

service level

Supply sustainability efforts of the future will be

to identify solutions.

Logistics forecasts are necessary for all of the following reasons EXCEPT:

to predict market trends

Organizations with multiple sites face additional concerns with regards to

transportation and storage issues.

Company image may be directly influenced by:

treating suppliers in a fair and equitable manner, complying with regulatory requirements and sustainability practices of suppliers.

The newsvendor model works well for perishable products

true

True or false: Two-bin systems are frequently used to manage inventory of low-value but necessary items and high-volume parts.

true

Items that are in a production process are classified as _____.

work in process inventory

A plan that focuses on "do it right the first time" is known as

zero defects.

Match the assumptions underlying the economic order quantity (EOQ) formulation (in the left column) with their respective descriptions (in the right column). 1. No quantity discounts 2. No lot size restrictions 3. No partial deliveries 4. No variability 5. No product interactions

1. Product cost is constant regardless of quantity ordered. 2. It is possible to order a lot size equal to the economic order quantity (EOQ). 3. The product is produced and delivered in a single batch. 4. Product demand and replenishment lead time are known and constant. 5. matches Choice The ordering of one product is not tied to the ordering of some other product.

Some of the challenges the supply industry is facing include - risk management. - employee turnover. - sustainability. - technology.

- risk management. - sustainability. - technology.

Supply chain management focuses on cost saving opportunities like - shorter lead times. - removal of waste throughout the supply chain. - reduction of inventories. - adding more processes and outsourcing fewer processes.

- shorter lead times. - removal of waste throughout the supply chain. - reduction of inventories.

Where to buy decisions involve making strategic choices concerning - small versus large suppliers. - technology used in production. - single versus multiple suppliers. - supplier certification.

- small versus large suppliers. - single versus multiple suppliers. - supplier certification.

Supply managers have to focus on strategies when making supply decisions, these include - social responsibility. - employee health. - innovation. - the environment. - transparency.

- social responsibility. - the environment. - innovation. - transparency.

Where to buy decisions involve making strategic choices concerning - supplier certification. - small versus large suppliers. - single versus multiple suppliers. - technology used in production.

- supplier certification. - small versus large suppliers. - single versus multiple suppliers.

Public organizations have stricter policies than private to help - support disadvantaged groups. - allow transparency and fairness to suppliers. - support only government owned suppliers. - allow for multiple bidders during supply acquisition.

- support disadvantaged groups. - allow transparency and fairness to suppliers. - allow for multiple bidders during supply acquisition.

Decide if an organization is a manufacture, service provider, or a combination. 1. Manufacturer 2. Service Provider 3. Combination

1. An organization that produces a cellphone and keeps it in stock, prior to the customer purchasing. 2. A facility that repairs television products at a consumers request. 3. An electronics producer who service their products after sales as required by customers.

Define cycle counting.

It is a process where each item in inventory is physically counted on a routine schedule.

Define a two-bin system.

It is a system in which the inventory of an item is stored in two different locations.

True or false: In a firm, the demand for inventory will come only from an external customer.

False

True or false: One benefit of production freezes is that they increase flexibility and responsiveness.

False

True or false: Supply chain risks will only occur once at a time, so supply chain managers will be able to focus their recovery efforts.

False

True or false: The supply function often contributes directly to the organization through information exchanges with suppliers and consumers.

False

True or false: The supply industry uses the same types of measurements throughout every industry to measure supply contribution.

False

Define seasonal stock.

It is the additional inventory produced in advance of seasonal peak demands.

Define ABC analysis.

It is the ranking of all items of an inventory according to a specific criterion of importance.

Define Pareto's law.

It is the rule that a small percentage of items account for a large percentage of sales, profit, or importance to a company.

A chef orders excess ingredients for cookies than what is required to cater to sudden increase in customer demand. This scenario is an illustration of _____.

buffering for uncertainty in supply and demand

A decrease in purchasing expenditures that directly increase profits before taxes (assuming no reduction in quality or buying total cost) is known as

the profit-leverage effect. Reason: A decrease in purchasing expenditures that directly increase profits before taxes (assuming no reduction in quality or buying total cost) is known as the profit-leverage effect.

Suppliers sometimes prefer to maintain an inventory of common finished goods that are used by more than one buyer because

the safety stock of all buyers combined is less than if managed individually.

Interest in the supply function as a managerial activity began:

during World Wars I and II because of global materials shortages.

Capacity constraints consider all of the following aggregate limitations EXCEPT:

employee turnover

The P-system of inventory submits inventory orders at random times.

false

True or false: Most suppliers accept all risk instead of the purchaser.

false

Return on assets (ROA) is an indicator of

how profitable a company is relative to its total assets.

Companies must increase revenue, decrease costs, or do both to

increase long-term shareholder value. Reason: A company must increase revenue, decrease costs, or both to increase long-term shareholder value.

The optimization module of an advanced planning and scheduling (APS) system ______.

is the computational engine of the supply chain planning system

Evaluation of the supply function's contribution to organizational goals and strategies can be viewed in the context of:

operational and strategic.direct and indirect.

Providing training to new managers in supply functions can help them

quickly grasp organizational goals and needs.

Multiple sourcing was once believed to increase supply security, the trend now focuses on

single sourcing. Reason: Single sourcing trends have increased over the traditional multiple sourcing for supply security.

The formula σddlt = √tσ2d+d2σ2ttσd2+d2σt2 is used to calculate the

standard deviation of demand during lead time

A systems approach to managing the flow of information, materials, and services from tiers of suppliers through the buying organization to tiers of customers is:

supply chain management.

Organizational success relies considerably on effective purchasing and

supply management. Reason: Effective purchasing and supply management contribute considerably to organizational success.

Ensuring that an organization meets all of their environmental obligations falls under corporate ________ objectives.

sustainability

The formula NnNe × SSe, where Nn is the total number of new locations, Ne is the total number of existing locations, and SSe is the system safety stock for the number of existing locations, is used to calculate the _____.

system safety stock for the new number of locations

Strategic management decisions can have an impact on supply functions, gains can be made in

technology advancements.

The return on assets effect (ROA) quantifies and measures:

the impact of supply actions on inventory and the balance sheet.

When the supply function can provide information about new advertising techniques and distribution systems, this may be useful to

the marketing department.

The use of the concepts of purchasing, procurement, supply, and supply chain management will vary from organization to organization depending on:

the organization's stage of development and/or sophistication, the industry in which they operate and the organization's competitive position.

Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Alpha has determined its annual inventory carrying cost is $2,000. Alpha carries no safety stock at all. What is Alpha's order cost per order?

$200

Identify the formula used to calculate production order quantity in terms of D,Co, Ci, U, d, and p, where D is the annual demand, Co is the setup cost, U is the unit cost, Ci is the inventory carrying cost percentage, d is the daily rate of customer demand, and p is the daily rate of production..

(2 DCo)/(CiU{1-(d/p)})

Which of the following are important in the formulation of a strategy? - Achieving the desired relationship(s) through efficient and effective allocation of resources - Establishing long-term objectives - Determining the relationship of the organization to its environment - Establishing short-term objectives

- Achieving the desired relationship(s) through efficient and effective allocation of resources - Establishing long-term objectives - Determining the relationship of the organization to its environment

Identify the factors that are necessary to calculate the reorder point. (Check all that apply.) - Number of products per year - Rate of production - Average demand per time period - Average supplier lead time

- Average demand per time period - Average supplier lead time

Identify the true statements about order and setup costs. (Check all that apply.) - Both order costs and setup costs are typically considered to be fixed. - Order preparation, order transmittal, and order receiving are examples of order costs. - In a setup cost, inventory is produced internally. - The total annual order/setup cost remains fixed.

- Both order costs and setup costs are typically considered to be fixed. - Order preparation, order transmittal, and order receiving are examples of order costs. - In a setup cost, inventory is produced internally.

Which supply management techniques have increased over the traditional ideals? - Close supplier relationships in place of arm's-length dealings. - Negotiation instead of competitive bidding. - Traditional purchasing in place of e-commerce. - Long-term contracts opposed to short-term buying.

- Close supplier relationships in place of arm's-length dealings. - Negotiation instead of competitive bidding. - Long-term contracts opposed to short-term buying.

Identify the different expenses that a carrying cost encompasses. (Check all that apply.) - Costs of obsolescence, loss, and disposal - Costs of materials handling, tracking, and management - Costs due to shortage of inventory - Insurance - Taxes - Cost of owning and maintaining storage space - Costs of replenishing inventories - Opportunity cost

- Costs of obsolescence, loss, and disposal - Costs of materials handling, tracking, and management - Insurance - Taxes - Cost of owning and maintaining storage space - Opportunity cost

Which are considered financial risks that supply chain managers must take into account to prevent supply interruptions? - Wild fire that damages supplier warehouse. - Currency rate changes. - Price change in raw materials. - Increased duties and tariffs.

- Currency rate changes. - Price change in raw materials. - Increased duties and tariffs.

Which of the following statements are true? (Select all that apply.) - Standard items provide a higher competitive edge. - Standard items are generally scarce in the marketplace. - Custom-specified requirements provide a higher competitive edge. - Standard items may be readily acquired in the marketplace.

- Custom-specified requirements provide a higher competitive edge. - Standard items may be readily acquired in the marketplace.

Identify the categories of inventory performance metrics that address the issues of asset productivity. (Check all that apply.) - Days of supply - Inventory turnover - Service level

- Days of supply - Inventory turnover

Allowing managers to make decisions under pressure while training supply functions carries which benefits? - The individual's ability to make friends with fellow coworkers. - Evaluation of the individual's ability to make sound decisions. - Evaluation of the managers willingness to make sound decisions. - The individual's capacity to take responsibility for decisions that are made.

- Evaluation of the individual's ability to make sound decisions. - Evaluation of the managers willingness to make sound decisions. - The individual's capacity to take responsibility for decisions that are made.

Allowing managers to make decisions under pressure while training supply functions carries which benefits? - Evaluation of the managers willingness to make sound decisions. - The individual's capacity to take responsibility for decisions that are made. - Evaluation of the individual's ability to make sound decisions. - The individual's ability to make friends with fellow coworkers.

- Evaluation of the managers willingness to make sound decisions. - The individual's capacity to take responsibility for decisions that are made. - Evaluation of the individual's ability to make sound decisions.

Supply chain operational risks can be separated into which two factors? - Events that are beyond the supplier's control. - Events that involve changes in the price of commodities. - Events that are directly within the supplier's capability. - Events that involve changes in tools, fees, duties, or tariffs.

- Events that are beyond the supplier's control. - Events that are directly within the supplier's capability.

Supply chain operational risks can be separated into which two factors? - Events that involve changes in tools, fees, duties, or tariffs. - Events that are beyond the supplier's control. - Events that are directly within the supplier's capability. - Events that involve changes in the price of commodities.

- Events that are beyond the supplier's control. - Events that are directly within the supplier's capability.

Supply functions that are mismanaged can lead to which types of organizational risks? - Financial - Strategic - Consumer - Reputation

- Financial - Reputation

What are the significant challenges supply managers face when setting objectives and strategies? - Identifying concerns from supply goals and giving feedback into the organizational objectives. - Choosing the appropriate plan to achieve goals. - Translating corporate objectives into supply objectives. - Keeping the supply objective separated from the organizational objectives.

- Identifying concerns from supply goals and giving feedback into the organizational objectives. - Choosing the appropriate plan to achieve goals. - Translating corporate objectives into supply objectives.

Identify the disadvantages of having an extremely high inventory turn rate. (Check all that apply.) - Increased purchasing, ordering, and receiving time, effort, and cost - Lower asset investment - Lowered sales volume - Increased cost of goods sold

- Increased purchasing, ordering, and receiving time, effort, and cost - Lowered sales volume - Increased cost of goods sold

Identify the true statements about inventory information systems and accuracy. (Check all that apply.) - Inventory audits are important to ensure that entry and count errors are identified and corrected. - Human error or accidents can be totally eliminated with the use of point-of-sale scanning systems. - Technologies such as bar codes and electronic identification tags can help in managing inventory record. - An inaccurate inventory record causes firms to hold additional safety stocks.

- Inventory audits are important to ensure that entry and count errors are identified and corrected. - Technologies such as bar codes and electronic identification tags can help in managing inventory record. - An inaccurate inventory record causes firms to hold additional safety stocks.

Which of the following is true of supply management? (Select all that apply.) - It is both interesting and challenging. - It is interesting and simple. - It is simple because the process is straightforward and static. - It is challenging because the of the complexity and because the process is dynamic.

- It is both interesting and challenging. - It is challenging because the of the complexity and because the process is dynamic.

Identify the true statements about the single period inventory model. (Check all that apply.) - A single period inventory model requires a replenishment order. - It is frequently referred to as the newsvendor problem. - The value of the inventory of a single period inventory model remains the same after the period is over. - It requires estimates of an expected demand and a standard deviation.

- It is frequently referred to as the newsvendor problem. - It requires estimates of an expected demand and a standard deviation.

Identify the outcomes of the bullwhip effect. (Check all that apply.) - It results in increased costs. - It incites excessive expediting. - It causes collaborative planning and forecasting. - It causes increased levels of inventory. - It introduces uneven levels of capacity utilization.

- It results in increased costs. - It incites excessive expediting. - It causes increased levels of inventory. - It introduces uneven levels of capacity utilization.

What are the two main challenges of the P-system? (select two)

- Length of review period - Amount of inventory to have

Identify the true statements about managing cycle stocks. (Check all that apply.) - One way to reduce total average inventory is to reduce the order quantity. - Offering the lowest possible price per unit regardless of order quantity would result in smaller order quantities. - Reduction in order costs results in an increase in cycle stock. - The primary driver of cycle stock is the order quantity.

- One way to reduce total average inventory is to reduce the order quantity. - Offering the lowest possible price per unit regardless of order quantity would result in smaller order quantities. - The primary driver of cycle stock is the order quantity.

Identify the methods of reducing order costs that in turn reduce cycle stocks. (Check all that apply.) - Online ordering - Automated payment of invoices - Process improvements and automations - Reducing receiving costs

- Online ordering - Automated payment of invoices - Reducing receiving costs

Contributions from supply can be viewed from which contexts? - Operational - Strategic - Financial - Investment

- Operational - Strategic

Which of the following supply decisions can lead to poor operational efficiency. - Employees not arriving to work on time. - Operation procedures that do not meet customers expectations. - Parts that arrive to the facility that do not meet quality standards. - Raw materials that arrive late from the supplier.

- Parts that arrive to the facility that do not meet quality standards. - Raw materials that arrive late from the supplier.

Identify the assumptions underlying the economic order quantity (EOQ) formulation that often do not hold true in practice. (Check all that apply.) - Unit prices change based on the ordered amounts. - Partial deliveries are made. - Product demand is known and constant. - There are no quantity discounts. - There are no lot size restrictions.

- Product demand is known and constant. - There are no quantity discounts. - There are no lot size restrictions.

Which term(s) are used to describe related functions within an organization that provides effective and efficient materials and services management? - Purchasing - Supply management - Procurement - Sourcing

- Purchasing - Supply management - Procurement

What are some opportunities to explore when integrating supply management with business processes? - Reduce the number of purchasing agents. - Reduce costs throughout business processes. - Increase a products speed to market. - Increase quality of products.

- Reduce costs throughout business processes. - Increase a products speed to market. - Increase quality of products.

Identify the methods of reducing order costs that in turn reduce cycle stocks. (Check all that apply.) - Reducing receiving costs - Automated payment of invoices - Process improvements and automations - Online ordering

- Reducing receiving costs - Automated payment of invoices - Online ordering

A supply manager must use which of the following to manage and evaluate supply decisions? - Risk strategy - Risk identification and classification. - Government duties and tariff requirements. - Impact assessment

- Risk strategy - Risk identification and classification. - Impact assessment

The newsvendor model balances which two costs (choose all that apply)?

- Running out and losing profits - Cost of ordering too many

Key strategy questions that supply managers use to guide "when" they purchase are? - Should forward buying be implemented? - Do we buy domestically or internationally? - Who in top management will make purchasing decisions? - How much inventory is needed or wanted on hand?

- Should forward buying be implemented? - How much inventory is needed or wanted on hand?

Which of the following are true of the supply function in management strategy? - Supply function rarely offers a competitive advantage. - Supply function is not related to management strategy. - The supply function can contribute a great deal to an overall organization strategy. - Supply can be used as a tool of social policy.

- Supply can be used as a tool of social policy. - The supply function can contribute a great deal to an overall organization strategy.

Which term(s) are used to describe related functions within an organization that provides effective and efficient materials and services management? - Supply management - Procurement - Sourcing - Purchasing

- Supply management - Procurement - Purchasing

The terms supply or value chain may is often substituted with which of the following throughout academics and persons involved in supply management? - Supply strategies - Operations management - Supply web - Supply network

- Supply web - Supply network

Identify the advantages a customer faces by implementing a vendor-managed inventory. (Check all that apply.) - The customer receives more responsive service from the vendor. - The customer saves the costs associated with managing inventories. - The customer can profit from a short-term vendor-managed inventory (VMI) commitment.

- The customer receives more responsive service from the vendor. - The customer saves the costs associated with managing inventories.

Which of the following can affect how organizations apply the concepts of purchasing, procurement, supply, and supply chain management? - The organizations competitive position. - The industry the organization operates in. - Product stage of development. - The physical location of the organization.

- The organizations competitive position. - The industry the organization operates in. - Product stage of development.

Supply managers have room for growth and influence by being more involved in ares they have not traditionally been such as - writing employee work instructions. - real estate purchases. - benefit programs. - consulting.

- real estate purchases. - benefit programs. - consulting.

Organizations who turn over inventory control over to the suppliers benefit from which of the following? - The organization is responsible for all disposal costs. - The supplier is responsible for all disposal costs. - The supplier takes on inventory carrying risk. - removes asset dollars from the ROA calculations.

- The supplier is responsible for all disposal costs. - The supplier takes on inventory carrying risk. - removes asset dollars from the ROA calculations.

Identify the true statements about stockout costs. (Check all that apply.) - Stockout costs are typically considered to be fixed. - When stockout costs are known to exist, a company can incur significant back ordering and expediting costs. - A potential stockout cost is the cost of a lost sale. - A company may never know the actual amount of stockout cost for a product. - Stockouts cause disruptions of materials flows in the supply chain.

- When stockout costs are known to exist, a company can incur significant back ordering and expediting costs. - A potential stockout cost is the cost of a lost sale. - A company may never know the actual amount of stockout cost for a product. - Stockouts cause disruptions of materials flows in the supply chain.

Valuable contributors that give supply managers leverage when selecting quality suppliers are - product innovation. - a strong corporate image. - reputation. - employee satisfaction.

- a strong corporate image. - reputation.

Which of the following are criteria for evaluating the applicability of a technique? Select all that apply: - accuracy - experience of the forecaster - the overall demand management process - type of data pattern - the bullwhip effect - the distribution channel

- accuracy - experience of the forecaster - type of data pattern

Controlling spending within the supply chain can afford an organization the ability to - acquire a supplier through integration. - pursue specialized requirements. - choose who makes purchasing decisions in the corporate offices. - whether or not to purchase goods locally or internationally.

- acquire a supplier through integration. - pursue specialized requirements.

In order to be effective supply management includes the acquisition of materials, services, and equipment: - at the right time. - in the right geographical area. - at the right prices. - in the right quantities.

- at the right time. - at the right prices. - in the right quantities.

A cost-based strategy will require supply personnel to use the tools of - cost analysis. - value analysis. - aggressive purchasing. - negotiation.

- cost analysis. - value analysis. - negotiation.

To be competitive an organization must - deliver goods that meet quality expectations. - deliver goods that have a fair price to consumers. - deliver goods with lower quality to cut overhead costs. - deliver goods to consumers on time.

- deliver goods that meet quality expectations. - deliver goods that have a fair price to consumers. - deliver goods to consumers on time.

To be an effective member of the organization, supply must contribute - only when asked to. - only in areas that involve direct purchase of raw materials. - directly and indirectly. - operationally and strategically.

- directly and indirectly. - operationally and strategically.

Lean supply management refers to using techniques of just-in-time to - ensuring that employees are properly trained. - ensuring every step in a process adds value. - keep inventories at a minimum. - remove delays between process as much as possible.

- ensuring every step in a process adds value. - keep inventories at a minimum. - remove delays between process as much as possible.

Lean supply management refers to using techniques of just-in-time to - ensuring every step in a process adds value. - ensuring that employees are properly trained. - remove delays between process as much as possible. - keep inventories at a minimum.

- ensuring every step in a process adds value. - remove delays between process as much as possible. - keep inventories at a minimum.

How to buy goods and services include a vast array of questions around - ethical acquisitions. - technology systems. - choice of make or buy. - systems contracts.

- ethical acquisitions. - technology systems. - systems contracts.

Organizational objectives normally fall into four categories of survival, ________, _________, and __________. - financial - sustainability - transferability - growth

- financial - sustainability - growth

Key strategic decisions that a supply chain manager must take into account when deciding who should conduct buying is - how involved top management will be in acquisitions. - what raw materials manufacturing engineering will use for production. - geographic location. - centralized or not.

- how involved top management will be in acquisitions. - geographic location. - centralized or not.

Supply chain technology has allowed organizations to - improve customer service. - reduce inventory costs. - reduce transaction costs. - reduce the amount of information shared.

- improve customer service. - reduce inventory costs. - reduce transaction costs.

An organization must ask the fundamental questions of - local or international. - insourcing or outsourcing. - make or buy. - quality or quantity.

- insourcing or outsourcing. - make or buy.

Information that is often provided by the supply function includes - new products. - new technology. - new sources of supply. - new customers.

- new products. - new technology. - new sources of supply.

Supply chain management risks can be classified into categories of - operational. - reputation. - financial. - consumer.

- operational. - reputation. - financial.

Key trade-offs an organization may face when deciding on pricing strategies are - premium price for additional benefits. - type of raw material used in production. - low price for a cost advantage. - standard price in line with the market.

- premium price for additional benefits. - low price for a cost advantage. - standard price in line with the market.

Higher quality received from suppliers helps to reduce - production costs. - shipping costs. - price of raw materials. - in-house quality administrative costs.

- production costs. - in-house quality administrative costs.

Identify each item as either risk avoidance techniques or increased risks to monitor. 1. Risk avoidance techniques 2. Increased risks to monitor A. Carrying safety stock. B. Regulatory changes that increase price of supplies.

1. Carrying safety stock. 2. Regulatory changes that increase price of supplies.

Match the supply strategy category to the correct description. 1. Assurance-of-supply 2. Cost-reduction 3. Supply chain support 4. Environmental-change 5. Competitive-edge 6. Risk-management Understand shifts in the environment and regulatory controls. Reduce the prices of purchased supplies. Exploiting market opportunities. Better communication between buyers and sellers. Ensuring adequate coverage of business needs. Ensure future needs are met.

1. Ensure future needs are met. 2. Reduce the prices of purchased supplies. 3. Better communication between buyers and sellers. 4. Understand shifts in the environment and regulatory controls. 5. Exploiting market opportunities. 6. Ensuring adequate coverage of business needs.

Match the standard steps of the procurement process. Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7

1. Recognition of need. 2. Translation of need into commercially equivalent description. 3. Search for potential suppliers. 4. Selection of a suitable source. 5. Agreement on the contract details. 6. Delivery of the products or services. 7. Payment of suppliers.

Match the different types of inventory management systems (in the left column) with their respective descriptions (in the right column). Instructions 1. Independent demand inventory system 2. Dependent demand inventory system

1. The inventory management system that is used when the demand for an item is beyond the control of an organization 2. The inventory management system that is used when the demand for an item is derived from the demand for some other item

Match the stages of supply chain involvement. 1. None 2. Documentary 3. Professional 4. Meaningful

1. The lowest level of involvement. 2. Transactionary involvement only. 3. Personnel use expertise to assess acquisition decisions. 4. True team member status.

HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days. Standard deviation of demand during lead time = 90 Desired service level = 95 percent What is the safety stock that HighLife Corporation should carry for its desired service level of 95 percent? 1.28 standard deviations cover 90 percent 1.65 standard deviations cover 95 percent 1.96 standard deviations cover 97.5 percent

149

Calculate the current inventory of a furniture showroom if the expected sales of chairs is 500 units per day and the days of supply is 4 days.

2000 units Reason: The expression that is used for computing days of supply is CurrentinventoryExpectedrateofdailydemand. ie, 4 = current inventory / 500 So, 500 units per day × 4 days = 2000 units in the current inventory.

Identify the formula used to calculate the economic order quantity.

2DCo/UCi where D is the annual demand, Co is the order cost, U is the unit cost, and Ci is the inventory carrying cost percentage

In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues?

50 to 80

In manufacturing, supply costs range from _____% to _____% of revenue.

50 to 80

For an organization with annual sales of $500 million, purchases of $300 million and profit of $50 million, a 10 percent reduction in the cost of purchases would result in a profit-leverage effect of:

60 percent (sales increase of 60 percent would be required to achieve the same percentage increase in profit).

For an organization with revenue of $100 million, purchases of $60 million, and profit of $8 million before tax, a 10 percent reduction in purchase spend would result in an increase in profit of:

75 percent.

Decide if the operational risk that caused a supply chain interruption was within the purchaser's control or outside of their control. 1. Outside of the purchaser's control 2. Within the purchaser's control A. A massive wildfire caused the warehouse of the supplier of a critical component to burn, and production will be delayed while the supplier rebuilds. B. The supply chain purchaser ordered parts and had them delivered to the incorrect facility; the components must be redelivered.

A. A massive wildfire caused the warehouse of the supplier of a critical component to burn, and production will be delayed while the supplier rebuilds. B. The supply chain purchaser ordered parts and had them delivered to the incorrect facility; the components must be redelivered.

The most critical issues supply chain managers face, are supply chain _____ and supply chain _____ . (Enter only one word per blank.)

Blank 1: risks or risk Blank 2: disruptions or disruption

Inventory _____ activity can be completed independently by individual supply chain functions, in an integrated manner by supply chain overall, or in a coordinated manner by the entire firm.

Blank 1: deployment

Forecast accuracy refers to the _____ between forecasts and corresponding actual sales.

Blank 1: difference

A manufacturers largest expenditure is _____ requirements while a service provider spends more on _____ requirements. (Enter only one word per blank.)

Blank 1: direct, materials, or material Blank 2: resale or service

Mean absolute percentage error is calculated by _____ mean absolute error by the mean demand.

Blank 1: dividing

Service organizations spend between _____ % and _____ % on costs for outside suppliers.

Blank 1: 25 Blank 2: 35

_____ level decisions answer the questions of what business we are in and how we will allocate resources among the businesses.

Blank 1: Corporate or Organization

_____ _____ _____ minimizes the sum of annual inventory carrying cost and annual ordering cost.

Blank 1: Economic Blank 2: order Blank 3: quantity

_____ _____ is the ratio between average inventory and the level of sales.

Blank 1: Inventory Blank 2: turnover

_____ _____ is the period of time when an unknown amount of inventory is on hand.

Blank 1: Uncertainty Blank 2: period

Sustainability efforts of supply managers involve effective capture and disposition of products _____ customers have used them.

Blank 1: after

APS major components are fundamentally the same: demand management, resource management, resource optimization, and resource _____ .

Blank 1: allocation

Causal techniques are commonly used to generate _____ or national sales forecasts.

Blank 1: annual

Demand management develops the forecast that drives _____ supply chain processes.

Blank 1: anticipatory

Managers cite their major considerations to be integrated versus bolt-on application, data integrity, and _____ education.

Blank 1: application

Some quality assurance programs _____ suppliers with quality requirements and implementation of programs to achieve the desired results.

Blank 1: assist

Exponential smoothing bases the estimate of future sales on the weighted average of the previous _____ and forecast levels.

Blank 1: averages or demand

Under the quality _____ program, the supplier is depended upon to complete all quality checks, and the incoming inspection can be bypassed.

Blank 1: certification

Changes that happen within an organizations strategy will cause _____ within the supply strategy.

Blank 1: changes or adjustments

The effective use of a technique requires matching the _____ of the situation with the abilities of the technique.

Blank 1: characteristics

Logistics forecasts are necessary to support _____ planning, to drive requirements planning, and to improved resources management.

Blank 1: collaborative

No single activity involved in supply chain management requires cross-organizational _____ and shared ownership more than successful S&OP.

Blank 1: commitment

The technique component is the mathematical or statistical _____ used to combine base, seasonal, and cyclical components with elements of promotion history into a forecast quantity.

Blank 1: computation

Production planning uses the statement of requirements obtained from demand management in conjunction with manufacturing resources and _____ to develop a workable manufacturing plan.

Blank 1: constraints

Collaborative planning, forecasting, and replenishment is a process initiated by the _____ products industry to achieve coordination. (Enter one word in the blank.)

Blank 1: consumer

Demand planning responsiveness, customer relationship collaboration, order fullfillment/service delivery, manufacturing customization, supplier relationship collaboration, life cycle support, and reverse logistics must be _____ to satisfy customers and effectively deploy resources.

Blank 1: coordinated

A primary way an organization can achieve reduced costs, improved quality, and faster speed to market is with the use of _____ -functional teams.

Blank 1: cross

Corporate image is the responsibility of _____ employee.

Blank 1: every or each

Supply chain applications are _____ to consider a broader range of activities and resources within the scope of supply chain planning. (Enter one word in the blank.)

Blank 1: evolving

The forecast is generally a monthly or weekly _____ for each stockkeeping unit and distribution location.

Blank 1: figure

A collaborative _____ provides a common goal that can be the basis for developing effective operating plans. (Enter one word in the blank.)

Blank 1: forecast

It is very important that an effective forecasting process include a support system to facilitate the maintenance, update, and manipulation of the _____ database and the forecast.

Blank 1: historical

Integrated business planning is designed to include greater financial integration, increased inclusion of strategic _____ and activities, improved simulation and modeling of alternatives, and easier translation between aggregate and detailed levels of planning.

Blank 1: initiatives

Forecast management process should incorporate _____ from multiple sources, appropriate mathematical and statistical techniques, decision support capability, and trained and motivated individuals.

Blank 1: input

The forecast support system includes the supply chain _____ to gather and analyze data, develop the forecast, and communicate the forecast to relevant personnel and planning systems.

Blank 1: intelligence

Where to buy involves decision trade-offs of local, regional, domestic, or _____ sources. (Enter only one word per blank.)

Blank 1: international

Logistics and supply chain management decisions influence many enterprise resources, including production, distribution facilities, inventory and equipment, transportation equipment, and _____ .

Blank 1: inventories

Two major supply chain performance measures are inventory turnover and _____ .

Blank 1: level

Probability and impact assessments go from _____ probability and _____ impact to probability and _____ impact.

Blank 1: low Blank 2: low Blank 3: high Blank 4: high

Small organization supply chains do not have the same _____ as larger organizations. (Enter only one word per blank.)

Blank 1: luxuries, opportunities, options, or luxury

Qualitative techniques are ideal for situations where little historical data and much _____ judgment are required.

Blank 1: managerial

The Institute for Supply Management releases the monthly "ISM Report on Business" for the _____ sector.

Blank 1: manufacturing

Inventory reduction and purchasing savings are direct contributions that are _____ and tangible. (Enter only one word per blank.)

Blank 1: measurable or quantifiable

Key drivers for an organizations supply decisions are the _____ , _____ , and _____ . (Use a single word to fill each blank.)

Blank 1: mission Blank 2: vision Blank 3: strategy

Supply managers must decide _____ versus _____ when making purchases.

Blank 1: now Blank 2: later

Forecast administration includes the _____ , procedural, motivational, and personnel aspect of forecasting and its integration into the other firm functions.

Blank 1: organizational

The primary reason for supply strategy is to match _____ goals with _____ chain goals at the operational and strategic level.

Blank 1: organizational or corporate Blank 2: supply

Logistics planning coordinates transportation, warehousing, and inventory within the firm and between supply chain _____ .

Blank 1: partners

Financial risks involve supply interruptions that are directly related to the changes in the _____ of a good or service.

Blank 1: price or cost

Organizations must meet strategic goals by placing importance on _____ and knowledge management.

Blank 1: process

S&OP is a _____ that coordinates demand and supply plans across the organization.

Blank 1: process

Resource management can be used to manage critical supply chain processes such as _____ , inventory, and transportation.

Blank 1: production

Private organizations have fewer restrictions with supplier selection compared to _____ organizations.

Blank 1: public

Supply's measure of its contribution needs to be seen in the success of an organization as a whole. Meaningful involvement of supply can be demonstrated by the _____ accorded supply by all members of the organization.

Blank 1: recognition or appreciation

The requirements planning process determines inventory projections and resulting _____ or production requirements for the planning horizon.

Blank 1: replenishments or replenishment

APS is a network that reflects the _____ status and allocation at a point in time.

Blank 1: resource

The objective of an integrated supply chain planning capability is coordinated capacity management of relevant logistics and supply chain _____ including manufacturing plants, distribution centers, and transportation resources.

Blank 1: resources

Organizations where unethical supply decisions are made can have an increase in reputation _____ .

Blank 1: risk

If planning system visibility highlights resource status and availability, the _____ planning system requirement is the need to simultaneously consider supply chain demand, capacity, material requirements, and constraints.

Blank 1: second

Without a collaborative plan, the supplier-customer combination typically results in either inventory excess or _____ .

Blank 1: shortage, deficiency, or scarcity

The forecast is the specific definition of what is projected to be _____ , when, and where.

Blank 1: sold

Forecasting software offers a wide range of capabilities in terms of both _____ and _____ .

Blank 1: techniques Blank 2: sophistication

Promotions such as "buy one get one free" are somewhat risky in terms of forecasting. Why?

Could decrease future sales.

Who defines logistics management as that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements?

Council of Supply Chain Management Professionals (CSCMP) Reason: This is the definition of logistics management as detailed by the Council of Supply Chain Management Professionals (CSCMP).

Which module develops the requirements projections for the planning horizon?

Demand management

Which of the following does not involve logistics planning integration for a common decision support system, that seeks to minimize overall freight expenses?

Facility maintenance

T/F Under the 'who should do the buying' category, the organization decides on whether to outsource or make in-house.

False

Techniques can easily connect historical patterns into future forecasts, and they are best at incorporating the input of anticipated future events.

False

Which of the following is not an APS application issue?

Financial flow.

Which of the following does inventory deployment represent as part of a major enterprise integrator?

Financial goals

What are projections of monthly, weekly, or daily demand that determine production and inventory requirements?

Forecasts

What type of management will focus on the resource utilization within its scope of responsibility to minimize resources consumed by a typical firm?

Functional

Which of the following is not a demand planning requirement?

Handle time fences.

Which of the following does supply chain design not consider in regards to demand?

Higher charges

_________ is measured by the increase in profit obtained by a decrease in purchase spend.

Profit-leverage effect

Logistics includes which types of movements of goods, services, and related information?

Inbound, outbound, internal, and external.

What is forecasting identifying and scheduling within supply chain activities?

Inventory

In the context of an organization, which of the following statements related to reputation is true?

Legal supply issues may affect a company's reputation.

A car manufacturing company stocks adequate quantities of cleaning supplies for its shop floor at any given point of time. The cleaning supplies held by the company is an example of the _____.

MRO inventory

Identify the formula used to calculate the total acquisition cost.

Order cost + Inventory carrying cost

Which of the following is not input needed for an APS?

Past inventories.

What is another name for the "P-system" of inventory?

Periodic Review Inventory System

What is used to satisfy the necessary requirements at the minimum total production cost, while not violating any constraints?

Production planning

_____ specifies the amount of risk of incurring a stockout that a firm is willing to incur.

Service level policy

What type of information system is in conjunction with the supply chain planning system in seeking to integrate information and coordinate overall logistics and supply chain decisions, while recognizing the dynamics between other firm functions and processes?

Supportive

Which of the following is true related to the size of an organization?

The larger the organization, the greater the absolute amount of spend with suppliers.

Define setup costs.

They are the administrative expenses and the expenses of rearranging a work center to produce an item.

Which of the following is a significant obstacle supply managers may face when developing an adequate supply strategy?

Translating organizational objectives into supply objectives.

Which of the following optimizes resources to move materials and goods within supply chains to minimize cost while meeting deadline constraints?

Transportation planning.

After analyzing data, it is implied that past demand patterns will continue into the future.

True

True or false: Dollars spent on supplier costs compared to total revenues is a good indicator of supply's performance for an organization.

True

True or false: Effective forecast administration requires that organizational responsibility and procedural guidelines are documented and measured.

True

True or false: How to buy options involve decisions on types of orders such as competitive bids, blanket orders, and open order systems.

True

True or false: It is common to measure stockouts in terms of the number or percentage of inventory items for which there is no inventory on hand at the time of demand.

True

A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory?

Work in process

Steve's shop sells seashells by the seashore. Steve buys shells from local collectors for an average price of $0.50 per shell. Steve sells on average 1,000 shells each month. Each time he orders shells from collectors, there is a $20 shipping and handling fee. Steve estimates a unit holding cost of $0.50 per shell per year (many of them get broken if held in inventory too long). How often should Steve order seashells?

about one time each month

The trade-offs associated with supply chain decisions consider all of the relative costs of supply chain strategies EXCEPT:

accurate forecasting

Strategic planning provides organizations a way to

achieve specific long-term goals and objectives for an organization.

Strict regulatory requirements regarding _______ processes and policies are one way public organizations differ from private organizations.

acquisition

Confidence in an organization's ability can be improved by

applying sound and ethical policies.

Private organizations have custom requirements as a form of

competitive advantage.

Supply function growth and influence is represented in four areas including total spend of the organization, the span of supply chain activities, supply chain responsibilities including acquisitions, and

corporate activity involvement.

Although there have been many technological advances in supply chains, there are still many opportunities for new product development, better internal and external collaboration, and

waste elimination.