Supply Chain Final
When selecting a mode of transportation, managers must account for unit costs and cycle, safety, and in-transit inventory costs that result from using each mode. Modes with high transportation costs can be justified if they result in significantly lower inventory costs.
True
With an uncoordinated supply chain, each stage tries to maximize its own profits, resulting in actions that often decrease total supply chain surplus.
True
Which of the following is a form of safety capacity?
Use overtime. Carry extra workforce permanently. Use subcontractors. Purchase capacity from an open or spot market.
In practice an aggregate planner likely uses a combination of approaches which is referred to as the:
tailored or hybrid strategy.
When either the supply of raw materials or the demand for the finished product is highly variable, forecasting and the accompanying managerial decisions:
are very difficult.
By combining software, sensors, and location technologies, devices that can operate themselves to perform specific functions are called ____________ devices.
autonomous
When designing a sourcing strategy, it is important for a firm to:
be clear on the factors that have the greatest influence on performance and target improvement on those areas.
The value chain illustrates the vertical integration of stages in a supply chain.
false
What is a supply chain
how a product or service moves from manufacturer down to retailer
A fundamental aspect of successful collaboration is:
identification and resolution of exceptions.
The uncertainty that exists due to the portion of demand that the supply chain is required to meet is the:
implied demand uncertainty.
A strategic information system is one that attempts to do which of the following: - deliver a product or a service at a lower cost. - deliver a product or service that is differentiated. - help an organization focus on a specific market segment. enable innovation. - One or more of the above.
One or more of the above.
__________ sales can lower inventory levels by aggregating inventories if most customers are willing to wait for delivery. However, for some products, such as groceries, __________ sales require the firm to perform tasks currently performed by the customer at retail stores, affecting both handling and transportation costs.
Online
There are five major obstacles listed in the text to coordination in a supply chain. Which of the following is not one of these major obstacles?
Quality obstacles.
If a company carries no debt, what can be determined about return on equity (ROE) and return on assets (ROA)?
ROE = ROA.
What type of distribution network is typically well suited for commodity items?
Retail storage with customer pickup.
An important factor that affects the increase in supply chain surplus that a third party provides is:
Scale, uncertainty, and specificity of assets.
Which of the following is a not a support activity in a value chain? Human resources management. Technology development (including IT). Procurement. Service.
Service.
Which of the following is a component of an information system?
Software. Data. People. Process.
It is important to focus on total cost of ownership (TCO) when selecting a supplier. What does TCO include?
Supplier price. Delivery costs. Reputation.
Why has same-day delivery of pizza been successful, whereas the practice has failed in other settings?
Temporal aggregation of orders. Many delivery locations close to the customer. Relatively low variety of ingredients held in inventory.
As companies have outsourced supply chain activities, it has become harder to align the goals of all parties involved. Supply chain ____________ can have unintended consequences when the third party's information and actions are hard to observe.
incentives
The operational parameter concerned with the planned inventory carried over the various periods in the planning horizon is:
inventory on hand.
In a 2003 Harvard Business Review article, Nicholas Carr argued that information technology:
is just a commodity and cannot be used to gain competitive advantage.
Temporal aggregation:
is the process of combining orders across time.
The strategy where a stable machine capacity and workforce are maintained with a constant output rate, with inventory levels fluctuating over time, is the:
level strategy.
Less expensive modes of transport typically have:
longer lead times and larger minimum shipment quantities.
The lack of coordination hurts both responsiveness and cost in a supply chain by making it more expensive to provide a given level of product availability. The impact of the lack of coordination includes:
manufacturing cost. inventory cost. transportation cost. replenishment lead time.
Efficient supply chains:
maximize performance at a minimum cost.
The measure of forecast error where the amount of error of each forecast is squared and then an average is calculated is:
mean squared error (MSE).
For supplier selection in general, ___________ are best used when the ownership cost or post-ownership cost is the primary component of total cost.
negotiations
Toyota has the end goal of opening a manufacturing facility in every major market that they enter. Toyota is using facilities to increase:
responsiveness
The concept of __________ the supply chain to achieve strategic fit is important in industries such as high-tech and pharmaceuticals. New products are typically introduced using flexible capacity that is more expensive but responsive. Mature products with high demand are shifted to dedicated capacity that is highly efficient.
tailoring
Any observed demand can be broken down into two components. Observed demand (O) =
systematic component (S) + random component (R).
The moving average forecast method is used when:
systematic component (S) = level.
Which of the following is not an example of information system hardware? Facebook. PC. Printer. Mobile phone.
A decrease in the desired response time decreases the number of facilities required in the distribution network.
False
Agile intercompany scope refers to the static context of strategic fit, that is, supply chain partners and customer needs do not change over time.
False
As the number of facilities in a supply chain increases, the required inventory decreases.
False
Data—a collection of facts—is synonymous with information and knowledge.
False
Disaggregate forecasts are usually more accurate than aggregate forecasts.
False
Distribution does not occur between every pair of stages in the supply chain.
False
Even in the post-PC world, PCs will continue to be the primary way that people interact and do business.
False
For pull processes, a forecast is not necessary because customer demand will have materialized.
False
Forecasts are always accurate.
False
Incentives that focus only on the local impact of an action result in decisions that maximize total supply chain profits.
False
Information processing obstacles refer to situations where supply information is distorted as it moves between different stages of the supply chain, leading to decreased variability in orders within the supply chain.
False
Intermodal traffic has declined considerably with the decreased use of containers for shipping and the rise of global trade. Containers are difficult to transfer from one mode to another.
False
Inventory exists in the supply chain because of a match between supply and demand.
False
Lot size based quantity discounts reduce the bullwhip effect within the supply chain.
False
Managers can improve coordination within the supply chain by creating goals and incentives such that participants work primarily to reduce functional costs (i.e., local optimization).
False
Microsoft Word is an example of an operating system.
False
Most companies are best served with a single distribution network.
False
Outsourcing is the practice of using an organization's own personnel and resources to accomplish a supply chain function.
False
Qualitative forecasting methods assume that the demand forecast is highly correlated with certain factors in the environment (e.g. state of the economy, interest rates).
False
Sourcing is the entire set of business processes required to move product from one location to another in a supply chain.
False
Strategic fit does not necessarily require that both competitive strategy and supply chain strategy have aligned goals.
False
Supply chain coordination requires each stage of the supply chain to focus on local objectives rather than taking into account the impact its actions have on other stages.
False
Supply chain efficiency is directly related to the cost of making and delivering a product to the customer. Decreases in cost lower efficiency.
False
Supply chain strategy is an explicit specification of the logistics strategy and therefore should not include supplier strategy or operations strategy.
False
Information distortion is exaggerated by:
the lack of information sharing between supply chain stages.
When a single stage controls replenishment decisions for the entire chain (e.g., continuous replenishment programs or vendor managed inventory), coordination is achieved because:
the problem of multiple forecasts is eliminated.
The planning horizon is:
the time period over which the aggregate plan is to produce a solution.
Aggregate planning, to be effective, requires inputs from:
throughout the supply chain.
The measure of how significantly a forecast method consistently over- or underestimates demand is:
tracking signal (TS).
Temporal aggregation of demand results in an increase of transportation costs because it entails smaller shipments and increases the variation in shipment sizes from one shipment to the next. It does not hurt customer response time.
False
The Mumbai dabbawalas use a direct shipment network in order to pick up and deliver lunches every workday.
False
The bullwhip effect enables different stages of the supply chain to have a consistent estimate of what demand looks like.
False
The bullwhip effect results in improved supply chain coordination.
False
The carrier is the party that requires the movement of the product between two points in the supply chain. The shipper is the party that moves or transports the product.
False
The degree of supply chain responsiveness should be consistent with the implied uncertainty. The goal is to target high responsiveness for a supply chain facing low implied uncertainty, and efficiency for a supply chain facing high implied uncertainty.
False
The first microcomputer was the IBM PC.
False
The use of risk sharing between supply chain partners will result in locally optimal decisions that decrease the total supply chain profits.
False
To retain strategic fit, supply chain strategy must not be adjusted over the life cycle of a product and as the competitive landscape changes.
False
Total logistics costs are the sum of customer, information, and sourcing costs for a supply chain network.
False
When transportation infrastructure is publicly owned, underuse and uncongested conditions result because the cost borne by a user is less than the user's marginal impact on total cost.
False
Firms must evaluate the risks when they move any function to a third party. Which of the following is not a risk to the firm?
Gain of supply chain visibility.
Which of the following is an example of a collaborative system?
Google Drive. Microsoft SharePoint. Cisco WebEx. IBM Lotus Notes.
An aggressive investment in customer analytics represents the use of which lever to reduce supply chain uncertainty?
Information
All raw materials, work in process, and finished goods within a supply chain are known as:
Inventory
__________ is a cost factor performance characteristic of Retail Storage with Customer Pickup that is higher than all other distribution network options.
Inventory
The cost of holding inventory incurred by the shipper's supply chain network is:
Inventory Cost
Changing the distribution network design affects which supply chain cost?
Inventory. Transportation. Facilities. Information.
What difference in the retail environment may justify the fact that the fast-moving consumer goods supply chain in India has far more distributors than in the United States?
The sheer volume of small store owners in India requires a large number of distributors to service them.
From the late 1950s through the 1960s into the 1970s, computers were seen as a way to more efficiently do calculations. This was known as the:
Mainframe Era.
What type of distribution network is better suited to highly differentiated products?
Manufacturer storage with direct shipping (drop-shipping).
Which of the following is an example of application software? Microsoft Windows. Google Android. Microsoft Excel. Apple iOS.
Microsoft Excel.
Third parties increase the supply chain surplus if they either increase value for the customer or decrease the supply chain cost relative to the firm performing the task in-house. A third party may aggregate transportation to a higher level than any shipper sending packages or LTL quantities can on its own. What mechanism is the third party using to grow the surplus?
Transportation aggregation.
Which of the following is an advantage of manufacturer/distributor storage with customer pickup?
Transportation cost is lower than the use of package carriers.
What trade-offs do managers need to consider when making transportation decisions?
Transportation cost versus inventory cost and transportation cost versus customer responsiveness.
Firms can significantly reduce safety inventory they require by physically aggregating inventories in one location. _________________, however, generally increases when inventory is aggregated.
Transportation cost.
A company is said to have competitive advantage over its rivals when it is able to sustain profits that exceed industry average.
True
A company's competitive strategy defines the set of customer needs that it seeks to satisfy through its products and services.
True
A customer does not necessarily want the highest level of performance along all dimensions of customer service, including response time, product variety, product availability, customer experience, order visibility, and returnability.
True
A firm gains the most by outsourcing to a third party if its needs are small, highly uncertain, and shared by other firms sourcing from the same third party.
True
A fundamental aspect of successful collaboration is the identification and resolution of exceptions. Exceptions refer to a gap between forecasts made by the two sides or some other performance metric that is falling or is likely to fall outside acceptable bounds. It is important to have a process in place that allows the two parties to resolve exceptions.
True
A planning horizon is usually between three and eighteen months for an aggregate plan.
True
A poor aggregate plan may result in a large amount of excess inventory and capacity, thereby raising costs.
True
A process is a series of steps undertaken to achieve a desired outcome or goal.
True
A third party may be able to provide a sustainable growth of surplus by aggregating to a higher level than the firm itself. The growth in surplus comes from aggregating capacity, inventory, inbound/outbound transportation, warehousing, procurement, information, receivables, or relationships to a level that the firm cannot achieve on its own.
True
Aggregate planning is a process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon.
True
Aggregate planning solves problems involving aggregate decisions rather than stock keeping unit (SKU)-level decisions.
True
Both markdowns and lost sales reduce net income and arguably represent the biggest impact of supply chain performance on the financial performance of a firm.
True
Data are raw facts. Information gives meaning to data. Knowledge provides context to information.
True
Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners.
True
Faster transportation modes are usually more expensive than slower transportation modes, and allow a supply chain to be more responsive.
True
Firms must consider a tailored sourcing strategy that couples responsive onshore or near-shore sources with low-cost offshore sources. The responsive onshore/near-shore sources should focus on high-value products with high demand volatility, whereas the low-cost offshore sources should focus on the lower-value, high-volume products.
True
Firms must decide whether production facilities will be flexible (more responsive, many types of products) or dedicated (more efficient, limited number of products).
True
Forecasting errors are dealt with in aggregate plans using safety inventory and/or safety capacity.
True
Forecasts should include both the expected value of the forecast and a measure of forecast error.
True
From an aggregate plan, a planner must disaggregate the available information and build a rough master production schedule (MPS) that identifies the batches produced in each time period.
True
If a firm has high responsiveness to customer orders, this will result in higher transportation costs than if the firm decreased its responsiveness.
True
If the assets required are specific to a firm and cannot be used by others, outsourcing to a third party is unlikely to increase the supply chain surplus.
True
In the absence of risk sharing, retailers aim for a lower level of product availability than would be required to maximize supply chain profits.
True
Inbound transportation costs are the costs incurred in bringing material into a facility. Outbound transportation costs are the costs of sending material out of a facility.
True
Information presents management with the opportunity to make supply chains more responsive and more efficient.
True
Inventory aggregation decisions must account for inventory and transportation costs. Inventory aggregation decreases supply chain costs if the product has a high value-to-weight ratio, high demand uncertainty, low transportation cost, and customer orders are large.
True
Inventory encompasses all raw materials, work in process, and finished goods within a supply chain.
True
Managers can improve coordination within the supply chain by aligning goals and incentives such that every participant in supply chain activities works to maximize total supply chain profits.
True
Mature products with stable demand are usually the easiest to forecast.
True
Milk runs make sense when the quantity destined for each location is too small to fill a truck but multiple locations are close enough to each other such that their combined quantity fills the truck.
True
One outcome of the lack of supply chain coordination is the bullwhip effect, in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers. The bullwhip effect distorts demand information with the supply chain, with each stage having a different estimate of what demand looks like.
True
Outbound transportation costs per unit tend to be higher than inbound costs, because inbound lot sizes are typically larger.
True
Pricing obstacles refer to situations in which the pricing policies for a product lead to an increase in variability of orders placed.
True
Purchasing, also known as procurement, is the process used to acquire raw materials, components, products, services, or other resources from suppliers.
True
Qualitative forecasting methods are primarily subjective and rely on human judgment.
True
Sharing the rewards from improvements can induce performance improvement from a supplier along dimensions, such as lead time, for which the benefit of improvement accrues primarily to the buyer but the effort for improvement comes primarily from the supplier.
True
Short-term forecasts are usually more accurate than long-term forecasts.
True
Supplier performance should be compared based on the impact on total cost of ownership. In addition to acquisition costs, ownership and post-ownership costs should also be considered. In many instances, a higher acquisition cost is more than compensated for by lower ownership and post-ownership costs.
True
Supply Chain Surplus = Customer Value - Supply Chain Cost.
True
Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages.
True
The Internet was invented before the personal computer (PC) era (mid-1980s) of business computing.
True
The aggregate planner must make a trade-off between capacity, inventory, and backlog costs.
True
The degree of supply chain responsiveness should be consistent with the implied uncertainty. The goal is to target high responsiveness for a supply chain facing high implied uncertainty, and efficiency for a supply chain facing low implied uncertainty.
True
The first step in achieving strategic fit between competitive and supply chain strategies is to understand customers and supply chain uncertainty.
True
The five obstacles to coordination in a supply chain include: incentive obstacles, information processing obstacles, operational obstacles, pricing obstacles, and behavioral obstacles.
True
The following situation would likely not work well. A situation in which marketing is publicizing a company's ability to provide a large variety of products very quickly; simultaneously, distribution is targeting the lowest cost means of transportation.
True
The forecast of demand forms the basis for all supply chain planning decisions.
True
The goal of aggregate planning is to satisfy demand in a way that maximizes profit.
True
The high-utilization facility will have difficulty responding to demand fluctuations.
True
The major drivers of supply chain performance are facilities, inventory, transportation, information, sourcing, and pricing.
True
The manufacturer storage with direct shipping distribution network classification is also referred to as "drop-shipping."
True
The overall impact of the Internet has been a decrease in average industry profitability.
True
The sharing of information can help a supply chain meet customer needs at lower cost. However, the marginal value of information shared diminishes as more and more information becomes available.
True
The use of the Internet is growing all over the world, and with it the use of digital devices.
True
Time series forecasting methods are based on the assumption that past demand history is a good indicator of future demand.
True
To create an aggregate plan, a company must specify the planning horizon for the plan and the duration of each period within the planning horizon.
True
To improve the quality of these aggregate plans, forecast errors must be taken into account when formulating aggregate plans.
True
Total logistics costs are the sum of facility, inventory, and transportation costs for a supply chain network.
True
Transportation entails moving inventory from point to point in the supply chain. Transportation choices have a large impact on supply chain responsiveness and efficiency.
True
Transportation plays a key role in every supply chain because products are not usually produced and consumed in the same location.
True
Tuckman's Group Development Model describes four stages that a team will go through in its sequence of decision making.
True
At the highest level, performance of a distribution network should be evaluated along two dimensions: (1) Value provided to the customer. (2) Cost of meeting customer needs.
true
The operational parameter concerned with the number of workers/units of capacity needed for production is:
workforce
Seven-Eleven's supply chain strategy in Japan can be described as attempting to micro-match supply and demand using rapid replenishment. What has Seven-Eleven Japan done to develop capabilities that support its supply chain strategy?
- Their facility location choices are to saturate an area with stores, thereby making it easy for customers to shop and their own delivery trucks to move from store to store to replenish inventory. - Their inventory system is run on an information system that transmits directly to the supplier and distribution center; goods are produced using a pull system to replace what has been sold during that delivery period. - Their transportation system is flexible to maximize responsiveness while also achieving efficiency. - Their suppliers are required to deliver to a distribution center where products are sorted by temperature.
Rationing schemes that allocate limited production in proportion to the orders placed by retailers:
- result in a game in which retailers try to increase the size of their orders to increase the amount supplied to them. - lead to a magnification of the bullwhip effect. - lead to the manufacturer being left with a surplus of product and capacity.
what flows in a supply chain
1. material 2. Information 3. funds/money
The Old Guys Rule Surfboard Production (OGRSP) Co. produces on average 5 surfboards per day, which are delivered to surf shops all over the world. It usually takes 10 days to produce a surfboard from raw material to finished good. Little's Law tells us that I = DT where: I = inventory; D = throughput (or demand); and T = flow time. How much inventory does OGRSP Co. hold?
50 surfboards
A surf shop has experienced weekly demand for surfboard wax of D1 = 4, D2 = 5, D3 = 8, and D4 = 5 units over the last four weeks. Forecast demand for Week 5 using a three-week moving average.
6.00
Which of the following is not a distinct aggregate planning strategy for achieving balance between capacity, inventory, and backlog costs?
Adjustable strategy.
_________ carriers offer a fast and fairly expensive mode of transportation for cargo.
Air
Which transportation network design option has the storing of product at an intermediate location between supplier and buyer locations?
All shipments via central DC.
In a supply chain why is the customer an intergal part?
Because the customers = funds
Which of the following is not a benefit of effective sourcing decisions?
Better economies of scale can be achieved if orders within a firm are disaggregated.
Which of the following is not a stage in Tuckman's Group Development Model?
Bonding.
Which of the following is a form of safety inventory?
Build and carry extra inventories.
To improve overall profits, the supplier must share risk in a way that encourages the buyer to purchase more and increase the level of product availability. This requires the supplier to share in some of the buyer's demand uncertainty. What is an approach to risk sharing between the supplier and the buyer?
Buybacks or returns. Revenue sharing. Quantity flexibility.
Which distribution network design is being used when the distributor delivers the product to the customer's site instead of using a package carrier?
Distributor storage with last-mile delivery.
The bullwhip effect causes:
a loss of supply chain coordination. distortion of demand information within the supply chain. different stages of the supply chain to have a very different estimate of what demand looks like.
The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in:
a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.
The main advantage of __________ forecasting is that estimates incorporate all new data that are observed.
adaptive
The operational parameter concerned with demand not satisfied in the period in which it arises, but carried over to future periods is:
backlog
Which of the following is a financial asset recorded on the balance sheet?
cash and cash equivalents. accounts receivable. inventory. property, plant, and equipment (PP&E).
Another useful metric is the ______________________, which roughly measures the average amount of time from when cash enters the process as cost to when it returns as collected revenue.
cash-to-cash (C2C) cycle.
Direct materials are:
components used to make finished goods.
Tailored transportation is the use of different transportation networks and modes based on:
customer density and distance from warehouse. customer size. product demand and value.
The uncertainty of customer demand for a product is the:
demand uncertainty.
A company's supply chain strategy:
determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product.
Companies in the same industry often select very different distribution networks because:
different companies have different objectives for their supply chain.
The scope of strategic fit refers to the functions and stages within a supply chain that coordinate strategy and target a common goal. As the scope of strategic fit is enlarged to include the entire supply chain, actions are evaluated based on their impact on:
overall supply chain performance.
For push processes, a manager must forecast what customer demand will be in order to:
plan the level of production and transportation.
A good forecasting method should:
predict the systematic component of demand and account for forecast errors.
The process by which a firm decides how much to charge customers for its goods and services is:
pricing
The competitive strategy is defined based on how the customer prioritizes:
product cost. delivery time. variety. quality.
The number of different products/configurations that a customer desires from the distribution network is:
product variety.
From a shareholder perspective, ______________________ is the main summary measure of a firm's performance.
return on equity (ROE).
The trucking industry consists of two major segments—truckload (TL) and less than truckload (LTL). LTL operators tend to:
run hub-and-spoke networks that allow for consolidation of partial loads.
Inventory held to satisfy demand that is higher than forecasted is:
safety inventory.
A decision support system (DSS) works best when the decision-maker is making a:
semi-structured decision.
Forecasting methods that imitate the consumer choices that give rise to demand to arrive at a forecast are known as:
simulation forecasting methods.
The main advantage of in-transit merge over drop-shipping is:
somewhat lower transportation cost and improved customer experience, because only a single delivery is made to the customer.
The set of business processes required to purchase goods and services is known as:
sourcing
A company's product development strategy:
specifies the portfolio of new products that it will try to develop.
One drawback of vendor managed inventory (VMI) arises because retailers often sell products from competing manufacturers that are ___________ in the customer's mind.
substitutes.
