BUS 141 - MT2

Third-party logistics service providers are carriers that may own assets such as trucks, airplanes, and warehouses. They act as intermediaries between trading partners, for example, shippers and carriers.

True

To achieve the Six-Sigma program objectives, there should be no more than 3.4 defects over a million parts/units produced or occurrences observed in a process.

True

Supply's role in logistics may include direct functional responsibility and acquisition of logistics services.

True

Transportation rates:

are established primarily through negotiation

"C" items as classified in ABC analysis of inventory are:

are in large quantities and ordered frequently.

The ability to extend the advantages of local sourcing to offshore suppliers is primarily due to:

transformations in communications and transportation

Hedging is a way to:

try to minimize price and exchange risks.

Edwards Deming states that the result of better relationships with employees and suppliers will eventually lead to higher overall costs incurred by the organization.

False

Environmental management, safety, diversity, human rights and quality of life, ethics, and community and philanthropic activities can be easily quantified and included in supply policy and practice.

False

ISO 14000 was established to promote reuse, recycle, and remanufacture in the office equipment industry in adoption of the ISO 9000' management principles.

False

Durability is a quality dimension that provides the customer a stipulation of how long the product will function over the course of its life cycle.

True

GM's recent failure to correct a faulty ignition switch despite the low price per part thereby incurring the risk of huge penalties from injuries and deaths is an example of loss exposure.

True

The bill of lading is the key document in the movement of goods.

True

Two effective cost reduction strategies for supply management are working in close partnership with logistics services provider and establishing long-term contracts.

True

Value engineering (VE) and value analysis (VA) use the same methods, but VE is performed in the design stage and VA is performed in the re-design stage.

True

Which of the following statements supports multiple sourcing?

concerns exist about supplier capacity of future volume

A transportation strategy should include consideration of:

- Alternative transport modes - Environmental factors such pollution - Safety on the ground, in the air and on water

Integrated carriers (truck-air) like UPS and Federal Express are able to capture a larger market share because they:

- Utilize their own aircraft - Have extensive ground networks - Have accurate, real-time tracking systems

The selection of the FOB point is important to the purchaser, for it determines:

- When legal title to goods being shipped passes to the buyer - Who is responsible for preparing and pursuing loss or damage claims - Who pays the carrier

Besides price determination, there are very few areas in supply management where negotiation is a useful and cost-effective tool.

False

Economic, safety and environmental regulations have been eliminated for the most part for all modes of transportation.

False

Internal failure costs include warranty costs and managerial time handling customer complaints.

False

Kaizen is a Japanese term for production.

False

One of the conditions that must be satisfied in a competitive bid process is that the bidders are allowed to discuss pricing strategy among themselves.

False

Reshoring decisions are driven by internal organizational concerns and domestic politics, but not by external market conditions.

False

Supply chain inventory management involves establishing operational design of the physical flow of goods and services, but does not deal with managing information flows.

False

The direct costs of a product are incurred in the operation of a production plant and often referred to as "overhead."

False

The single objective of negotiation at the supply side is to achieve the lowest purchase price for the products and/or services from their suppliers regardless of the suppliers' cost position.

False

Transportation contributes only a minor portion of logistics costs and thus not of a strategic consideration to supply management.

False

In the process of negotiation during a purchase agreement, the following elements may be subject to negotiation:

Price, Transportation, Quality, Supply & Support

An externally focused process of analyzing costs in terms of the overall value chain is called strategic cost management.

True

Any cost associated with having, as opposed to not having, inventory is included in inventory carrying costs, including (1) capital costs, (2) inventory service costs, (3) storage space costs, and (4) inventory risk costs.

True

Cancelling a contract with a buyer for a technically such as rising costs is considered an unacceptable and unethical practice.

True

Competitive bidding, in general, is the most efficient means of obtaining a fair price for items bought.

True

It is reasonable to expect a supplier to both improve quality and lower costs.

True

JIT requires frequent deliveries of relatively small quantities from suppliers to manufacturing site in compliance with quality standards.

True

Qualifying sources is an example of a pre-transaction cost in the total cost of ownership model.

True

Supplier development initiatives may be focused on (1) persuading an existing supplier to expand into new areas that meet the needs of the buying organization, and (2) locating a new, untried/unknown company and identifying potential areas of business.

True

The three main inputs of a material requirements planning (MRP) system are:

a bill of material, a master production schedule, and the inventory record.

The lowest price that ensures a continuous supply of the proper quality where and when needed and allows the supplier to make a reasonable profit, is commonly known as:

a fair price

A sampling technique in which every element in the population has an equal chance of being selected is called:

a random sampling.

Costs of quality do not include:

advertising costs

Reverse marketing is:

an aggressive, purchaser-initiated approach to finding and developing world class suppliers.

The supplier selection decision:

can be depicted by a decision tree identifying options, evaluation criteria, and probability of success and failure

Demand for buttons and zippers at a sportswear manufacturer is an example of:

dependent demand.

When estimating the cost structure of a manufacturing supplier:

equipment depreciation is typically the largest cost element in overhead

The fairest possible means of treating all suppliers alike in a competitive bidding situation is to:

establish clear terms and a policy in the bidding process

Vendor-Managed inventories has the following benefit:

improved inventory turnover rates

Costs incurred in the operation of a production plant or process, are called:

indirect costs

Life cycle costing (LCC):

may include costs that are 10-15 years in the future and highly uncertain

The cost approach to pricing:

means prices are set to cover direct costs, contribute to indirect, and attain profit

The goal of value engineering and value analysis is to:

perform a function at the same or an improved level while reducing cost

ISO 9001:2008 provides a tested framework for a systematic approach to consistently delivering product that satisfies customers' expectations by:

providing a set of standardized requirements a quality system must meet

The real costs of quality:

rise significantly as defects increase in the finished product

With deregulation of the transportation industry and the development of intermodal service, the focus for the transport buyer is:

the carrier's ability to develop and integrate multiple modes of the logistics process

Target costing starts with:

the selling price of an organization's end product minus the operating profit to establish the target cost

If the decision has been made that a new requirement cannot be made in-house and no existing supplier is adequate, then:

three options exists: search the marketplace for a new supplier, engage in reverse marketing, or redesign/respecify the requirements so that it is procurable

A supplier certification program:

may enable the buyer and seller to lower costs and improve quality.

A Six-Sigma (6S) approach to quality:

focuses on preventing defects by using data to reduce variation and waste

When cost analysis is applied to a supplier's price, the buyer:

identifies and analyzes each cost element for cost reduction opportunities