Supply Chain Final True and False

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

False

A bullwhip measure value greater than zero indicates that the bullwhip effect exists.

False

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

False

A firm that employs a response strategy should minimize inventory throughout the supply chain.

False

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

False

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

False

According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.

False

Advertising and promotion are methods of manipulating product or service supply in aggregate planning

False

As the number of facilities increases, total logistics costs tend to follow a curve that first rises, then declines.

False

At the economic order quantity, holding costs are equal to product costs.

False

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

False

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

False

Because service firms do not inventory their output, a pure chase strategy is not appropriate.

False

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

False

By convention, the top level in a product structure is designated level 1.

False

Cross-sourcing describes the practice of having two suppliers provide every component.

False

Customer demand will always remain an unknown, so it is not considered a source of variability.

False

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

False

Designing distribution networks to meet customer expectations suggests three criteria: (1) rapid response, (2) cost, and (3) service.

False

Earliest due date is a shop floor dispatching (sequencing) rule that relates the time available to complete a job to the amount of work left to be completed.

False

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

False

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

False

Gantt charts are useful for scheduling jobs, but not for loading them.

False

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

False

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

False

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

False

In the disaster risk model, as the probability of a super-event (S) increases, the advantage of utilizing multiple suppliers increases.

False

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

False

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

False

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

False

Increasing inventory exposes variability in production processes.

False

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

False

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

False

JIT systems carry inventory just in case something goes wrong.

False

Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers, and part vertical integration.

False

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

False

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

False

MRP is an excellent tool for scheduling components with variable lead times.

False

Once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may decrease compared to the optimal number of facilities based on total logistics costs only.

False

One of the demand options of aggregate planning is to vary the workforce by hiring or layoffs.

False

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

False

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

False

Process-focused facilities and repetitive facilities generate forward-looking schedules, but process-focused facilities do this with JIT and kanban while repetitive facilities generally use MRP.

False

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

False

Scheduling optimization systems used in retail stores typically track customer traffic in 4-hour time increments.

False

Short-term scheduling is important to efficiency and to cost reduction, but its impact is not of strategic importance.

False

Supply chain decisions are not generally strategic in nature, because purchasing is not a large expense for most firms

False

TPS stands for Total Production Streamlining.

False

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

False

The aggregate planning process usually includes dispatching of individual jobs.

False

The bullwhip effect describes the tendency for larger order size fluctuations in the supply chain as orders move from suppliers toward retailers.

False

The critical ratio sequencing rule prioritizes the jobs based on the importance or value of the customers who have placed the orders.

False

The factor weighting model is an attempt to add subjectivity to decision making when selecting among suppliers.

False

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

False

The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has reduced the overall level of supply chain risk.

False

The number of kanbans decreases as safety stock is increased.

False

The objective of aggregate planning is usually to meet forecast demand while smoothing employment and driving down inventory levels over the planning period.

False

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

False

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

False

The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.

False

Unfortunately, not many supply chain metrics exist that can be effectively used to evaluate performance within a company and for its supply chain partners.

False

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

False

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

False

When using the factor weighting approach, most companies will use the same list of criteria and the same criteria weights.

False

When using the low-cost strategy for supply chain management, a firm should use buffer stocks to ensure speedy supply.

False

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

False

With forward scheduling, jobs are scheduled as late as possible within the time allowed by the customer due dates.

False

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

False

With the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.

False

Work-in-process inventory is devoted to maintenance, repair, and operating materials.

False

) Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.

True

A Gantt load chart shows the loading and idle time of several departments, machines, or facilities.

True

A blanket order is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

True

A common JIT layout tactic is to minimize distance.

True

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

True

A hotel room that goes unrented and an airline seat that goes unsold are both examples of perishable inventory in services.

True

A kanban system requires that the process has little variability in lead time because shortages impact the entire production system.

True

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

True

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

True

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

True

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

True

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

True

Because of the significance of labor in the scheduling of services, behavioral and social issues, wage and hour laws, and union contracts all complicate the scheduling process.

True

Benchmark firms have driven down costs of supply-chain performance.

True

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

True

Choosing suppliers simply based on the lowest bid has become a somewhat rare approach.

True

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

True

Cross-training is a common JIT layout tactic to improve flexibility.

True

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

True

Delta uses mathematical short-term scheduling techniques and a high-tech nerve center to manage the rapid rescheduling necessary to cope with weather delays and similar disruptions.

True

Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the master production schedule.

True

Dispatching rules are typically judged by four effectiveness criteria: average completion time, utilization, average number of jobs in the system, and average job lateness.

True

Drop shipping results in time and shipping cost savings.

True

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

True

Finite capacity scheduling provides the user with graphical interactive computing, which is the technique's primary advantage over rule-based scheduling.

True

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

True

Firms often use multiple suppliers for important components to mitigate the risks of total supply disruption.

True

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

True

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

True

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

True

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

True

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

True

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

True

In ABC analysis, "A" items are the most tightly controlled.

True

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

True

In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.

True

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

True

In manufacturing scheduling, physical inventories of goods can buffer variations in demand, but service scheduling normally lacks that buffer because services are generally consumed at the same time they are delivered.

True

In services, the scheduling emphasis is usually on staffing levels, not materials.

True

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

True

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

True

JIT suppliers have concerns that the JIT firm's demands for small lot sizes are simply a way of transferring holding cost from the JIT firm to the suppliers.

True

Johnson's rule sequences a set of jobs through two different machines or work centers in the same order.

True

Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of dependent inventory models.

True

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

True

MRP is generally practiced on items with dependent demand.

True

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

True

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

True

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

True

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

True

One criterion for developing effective schedules is minimizing completion time.

True

One function of inventory is to take advantage of quantity discounts.

True

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

True

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

True

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

True

One question that operations managers must answer when generating an aggregate plan is whether prices or other factors should be changed to influence demand.

True

Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

True

Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

True

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

True

Product storage is an example of waste in the sense that no value is added.

True

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

True

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

True

Savings in the supply chain exert more leverage as the firm's net profit margin decreases.

True

Service level is the complement of the probability of a stockout.

True

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

True

TPS stands for Toyota Production System.

True

Techniques for controlling the cost of labor in services include accurate scheduling of labor hours to assure quick response to customer demand, on-call labor for unexpected demand, flexibility of labor skills for reallocation of available labor, and flexibility in rate of output or hours of work to meet changing demand.

True

The 5Ss—sort/segregate, simplify/straighten, shine/sweep, standardize, and sustain/self discipline—are important to lean production because they act as a means to reduce waste.

True

The Toyota Production System requires that activities have built-in, automatic tests to signal problems.

True

The assignment method provides an optimum, one-to-one assignment of jobs to resources.

True

The benefits of effective scheduling include lower cost, faster throughput, and dependable delivery.

True

The bullwhip effect can occur when orders decrease as well as when they increase.

True

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

True

The constant work-in-process (ConWIP) card aids input-output control by limiting the amount of work in a work center.

True

The demand for automobiles would be considered as independent demand.

True

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

True

The fixed-period inventory model can have a stockout during the review period as well as during the lead time, which is why fixed-period systems require more safety stock than fixed-quantity systems.

True

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

True

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

True

The overarching solution to the bullwhip effect is simply for supply chain members to share information and work together.

True

The primary trade-off in transportation mode analysis involves evaluating holding cost against the cost of shipping.

True

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

True

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

True

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

True

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

True

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

True

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

True

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

True

Time fences divide that segment of the master schedule that can be revised from that section that is "not to be rescheduled."

True

Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories.

True

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

True

Waste is anything that does not add value from the consumer's perspective.

True

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

True

When developing an aggregate plan, one of the adjustable elements of capacity is the extent of subcontracting.

True

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

True

When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the inventory requirement of the MRP logic.

True

While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are negotiated.

True