Supply Chain Exam 2

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All of the following are included in the eight wastes EXCEPT?

Overspending

Which element of Lean is described as a system based on making little changes on a regular basis, anywhere changes can be made, to reduce process, delivery, and quality problems?

Continuous Improvement

Industrial buyers purchase raw materials and other components for conversion into a finished product, but they do not purchase services or capital equipment

False

Lean Manufacturing emphasizes all of the following EXCEPT?

Large batch sizes

When using a weighted-criteria evaluation system with five or more categories, suppliers should be ranked based on their score in only the two highest weighted categories.

False

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

Define, Measure, Analyze, Improve, Control

Which of the following is NOT one of the Seven Tools of Quality Control?

Small Batch Scheduling

The Profit-Leverage Effect states . . . ?

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

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

LEAN layouts

The manufacturing strategy in which the product is designed, engineered, and built to specifications only after the order has been received is called what? It is used when products are unique and extensively customized for the specific needs of individual customers.

Engineer-to-Order (ETO)

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

False

Through collaborative negotiations both side work together to maximize the outcome or create a win-win result

True

Calculate RBS Company's EOQ for their top selling Pen Set using the following information: RBS Company expects to sell 300 Pen Sets per month for the next 12 months. RBS Company purchases the Pen Sets from a supplier for $50 dollars each and incurs a cost of $100 dollars for each order that they place RBS Company estimates that their inventory carrying cost is 24% annually.

Calculation: √2 x 100 x 3,600/0.24x50 = √720,000/12 = √60,000 = 244.949 ≈ 245

Successful supplier relationships involve equal decision-making control between both the buyer and the supplier

True

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

Appraisal Costs

In which sourcing category would an item typically be classified, if it is considered to be low value, high risk, and there are a small number of alternative suppliers?

Bottleneck

In which item category would the sourcing strategies of maintaining safety/strategic stocks, developing contingency plans, strengthening relationships, and searching for alternatives, be appropriate?

Bottleneck Items

The goal of Six Sigma is the elimination of waste and the minimization of the amount of all resources (including time) used in the operation of a company

False

To make or process raw materials into finished products, especially by means of a large-scale industrial operation, is called what?

Manufacturing

Which sourcing strategy would typically be used for items with low profit margins, relatively stable demand, and high levels of competition?

Multi-Source

Managing a firm's external resources in ways that support the long-term goals of the firm can be referred to as?

Strategic sourcing

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

W. Edwards Demming

One of the main reasons to consider purchasing from an international global source is the opportunity to improve quality, cost, and delivery performance

True

The process of taking a statistically significant representative sample to be measured against the quality acceptance standard, is known as?

Acceptance Sampling

All of the following are reasons for Buying or Outsourcing an item from a supplier, EXCPET for which one?

Because you want to use existing idle capacity in your own company operation

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

Bid Bond

The application of ethical principles in business situations is known as?

Business Ethics

Which tool of quality control is used to study how a process changes over time?

Control Chart

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

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

Which Lean related process can be described as a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers?

Efficient Consumer Response

Which one of the following is NOT part of the eight (8) wastes identified through LEAN manufacturing?

Insufficient Capacity

A strategic partnership with a supplier:

Is a commitment over an extended period to work together to the mutual benefit of both parties

The term for a visual signal that authorizes production or the movement of materials to the next workstations is?

Kanban

Which element of Lean can be described as moving people and materials when and where needed, and as soon as possible?

Lean Layouts

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

Leverage

Which Manufacturing Strategy can be described as producing products to put into inventory based on demand forecast?

Make-to-Stock

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

Request for Quote

The e-Procurement process has many advantages. Which one of those listed below is NOT one of these advantages?

Segmentation

An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections can be referred to as?

Supplier Certification

In-sourcing is defined as reverting to in-house production when external quality, delivery, and services do not meet expectations

True

Products with short product life cycles, volatile demand, high-profit margins, and relatively little competition, are known as Innovative Products

True

Lean is an operating philosophy or mindset that attempts to minimize the impact of supply variability and flaws in forecasting through the use of safety stock inventories

False

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

False

Products with short product life cycles, volatile demand, high-profit margins, and relatively little competition, are known as Functional Products.

False

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

Total Cost of Ownership

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

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

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

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

In which type of manufacturing process would each individual item in the group go through one stage of the production process before the whole group moves on to the next stage?

Batch Production

Calculate RBS Company's Reorder Point, including safety stock, for their top selling Pen Set using the following information: Demand (D) is 150 Pen Sets per month (30 days = 1 month). Lead Time (LT) from Supplier X is 10 days. Safety Stock (SS) is 125 Pen Sets.

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

The purchasing tool described as "A standard business process whose purpose is to collect written information about the capabilities of various suppliers", is known as?

Request for Information

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

True

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

False

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

False

ISO 14000 is a series of management and quality standards in design, development, production, installation, and service

False

Strategic Sourcing is the process of identifying a company that provides a needed good or service

False

Which of the following is NOT one of the Seven Tools of Quality Control?

Hysterical Charts

In which item category would the sourcing strategies of consolidating volumes as a negotiation tool, using the competitive marketplace to reduce costs, and automating supplier interfaces to minimize process related costs, be appropriate?

Leverage Items

Performance Measures should be S.M.A.R.T which is an acronym that means?

Specific, Measurable, Achievable, Relevant, Time-Oriented

"Supply Management" is a newer term that encompasses all acquisition activities beyond the simple purchase transaction

True

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

True

What is Strategic Sourcing?

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

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

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

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

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

In which sourcing category would the following items typically be classified? Item A is high value, low risk, and there are multiple potential suppliers. Item B is low value, high risk, and there are a small number of alternative suppliers. Item C is high value, high risk, and there are few suppliers, but they are excellent. Item D is low value, low risk, and there are lots of potential suppliers.

A- Leverage B- Bottleneck C- Strategic D-Non-Critical

Which of the following new technologies can improve supplier selection and increase the effectiveness of supplier relationship management?

Artificial Intelligence

A proposal or quotation submitted in response to a solicitation from a contracting authority is known as what?

Bid

Which of the following is NOT one of the keys to successful strategic partnerships?

Building independent objectives

Total Quality Management (TQM) is an integrated organizational effort to improve quality at every level. Which one of the following is NOT part of TQM?

Customer Segmentation

The key characteristics to consider in the development and implementation of a Supplier Relationship Management System, include all of the following EXCEPT?

Detachment

The primary goals of purchasing include all of the below, EXCEPT?

Develop as many good quality suppliers as possible for each material or service

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

Developmental suppliers that need to make improvements

All of the following are reasons for making an item in your company operations, EXCEPT for which one?

Due to insufficient capacity in your company operations

The concept which attempts bring about positive social change through organizational buying behavior, is known as?

Ethical Sourcing

Which one of the following is NOT one of the 12 steps in the basic Purchasing Process?

Expediting

A high Return on Assets (ROA) is an indication that a company has a high level/value of assets compared to a low profit margin.

False

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

False

Duties, taxes, or customs imposed by the host country for imported or exported goods as knew as Tenders

False

ISO 14000 is a widely accepted management and quality certification standard

False

In the context of Total Cost of Manufacturing (TCM), in general terms, procurement, manufacturing, inventory, warehousing, and transportation per unit costs each go up as volume goes up.

False

Lean is a disciplined, statistical-based, data-driven methodology for identifying and removing the causes of defects and minimizing variability in manufacturing and in business processes

False

Supplier Relationship Management is a comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace

False

The Profit-Leverage Effect states that a decrease in purchasing expenditures will directly decrease profits

False

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

False

The role of workers in Lean is to create the cultural change needed for Lean to succeed

False

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

False

Which of the following are described as Agents licensed by the governmental regulatory authority to conduct business on behalf of importers, for a service fee?

Import Brokers

Which one of the following is NOT one of the advantages of e-Procurement?

Inaccuracy

Which of the following is NOT one of the drivers of Strategic Sourcing?

Increasing the selling price of the product

Benefits of implementing an effective supplier certification program include all of the following EXCEPT?

Increasing the supplier base

Which general sourcing category comprises items where many alternatives of supply exits, and supply risk is low. Spend is high and there are potential procurement savings?

Leverage

In public purchasing in the government & non-profit business sector, bidders (i.e.,potential suppliers) are generally required to furnish bonds as an incentive to ensure that the successful bidder will fulfill the contract awarded. Which type of bond provides protection against 3rd party liens (i.e., debts) not fulfilled by the bidder?

Payment Bonds

What is the term for an internal document that defines the need for goods and/or services?

Purchase Requisition

What is Ethical Sourcing?

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

Intermittent Production Processes are used to produce a large variety of products with different processing requirements in lower volumes

True

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

True

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

True

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

True

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

True

Total Cost of Ownership is the sum of the cost elements Quality, Service, Delivery, and Price

True

Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value-adding activity

True

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

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

The following term refers to an act that creates the greatest good for the greatest number of people?

Utilitarianism

Which of the following is TRUE?

VMI stands for Vendor-Managed Inventory

A key supplier's activities to help the buyer's company reduce cost, improve quality and reduce new product development time beginning with the initial design phase, are known as?

Value Engineering

Which sourcing concept involves a supplier directly managing the buyer's inventories to reduce the buyer's inventory carrying costs and avoid stockout?

Vendor Managed Inventory


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