CSCP (Fundamentals of Supply Chain Management)

A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:

A. $29,000,000. B. $15,750,000. C. $10,500,000. D. $ 5,250,000. Answer : D

Which of the following situations is an example of inventory being held as a way to balance supply and demand?

A. A manufacturer holds inventory of key components to maintain a level production schedule. B. A manufacturer of seasonal products builds finished-goods inventory before the peak selling period. C. A distributor maintains safety stock of slow-moving items at a central distribution center. D. A retailer stocks a variety of sizes and colors of a fast-selling item to avoid losing sales. Answer : B

Using an independent service provider for logistics would be most appropriate in which of the following situations?

A. A shoe company that wants to penetrate a foreign market B. A business that owns plants and warehouses globally C. A financial services company that wants to expand its services D. A cable television company that wants to add services Answer : A

Demand management involves which of the following undertakings?

A. Adjusting capacity to support expected demand B. Engaging in activities associated with customer relationship management C. Creating higher customer demand by improving performance in areas such as lead time and service levels D. Understanding events and managing activities that could influence future demand Answer : D

A manufacturer of plastic components that are sold either directly or through distributors wants to identify the requirements of the end customers for each market segment. Which of the following approaches would be most appropriate?

A. Analyzing the buying history for each of the market segments B. Asking the manufacturer's direct customers C. Conducting a market research project D. Sending samples of potential future products to the final customers Answer : C

Which of the following benefits of supplier relationship management typically results from collaboration with a few critical suppliers?

A. Automation of supplier sales activities B. Elimination of formal contracts C. Reduction in customer and supplier inventories D. Standardization of communications Answer : C

Which of the following corporate strategies is most consistent with a flexible supply chain strategy?

A. Being the low-price leader B. Providing the highest-quality service C. Providing mature products with stable sales D. Emphasizing the quality of the product Answer : B

Which of the following strategies is used primarily for demand planning?

A. Build-to-order scheduling B. Push-pull replenishment C. Collaborative planning, forecasting, and replenishment D. Vendor-managed inventory Answer : C

Which of the following relationship activities is most impacted by a lack of trading partner trust?

A. Collaboration B. Coordination C. Cooperation D. Communication Answer : A Explanation: A lack of trust among trading partners often creates a condition where every transaction has to be scrutinized and verified, thereby increasing the transaction costs to an unacceptably high level. Productivity is lost and efficiency and effectiveness, cornerstones of supply chain goals, will be compromised. Creating value-added activities with such partners becomes almost impossible and the supply chain tools used to improve efficiency, effectiveness and productivity (such as vendor- managed inventory (VMI), cross-docking (CD), and collaborative forecasting, planning and replenishment (CFPR)) eventually become ineffective. Under the less than open-trust conditions, decision makers often spend their time mostly on analyzing their trading partner's credibility, reliability and trustworthiness, rather than optimizing their operations. Although there are studies focusing on the relationship between related variables and the level of trust, there is a lack of empirical studies that examine the relationship between trust and the ultimate facilitator of supply chain success, commitment. This study attempts to bridge the gap in supply chain management.

A company considers outsourcing its information technology support to a low-cost region on another continent. The company currently has no business presence there. Which of the following actions is most effective in helping to select a service provider?

A. Contacting the country's consulate for leads B. Contacting the country's local government for recommendations C. Visiting several potential providers before making a selection D. Finding a trusted local business agent to help in the search Answer : D

Which of the following organizational design choices is an example of vertical integration?

A. Contracting with a third-party logistics provider B. Producing components used internally C. Externally staffing a customer service center D. Awarding a one-time trade show contract Answer : B

Which of the following marketing strategies emphasizes offering services at a lower price than rival services with comparable features?

A. Cost leadership B. Service differentiation C. Customer focus D. Market responsiveness Answer : A

Which of the following actions typically would be the first step in implementing the philosophy of customer relationship management?

A. Creating a customer-centric organization B. Developing a map of the customer segments C. Documenting the objectives for implementation D. Selecting an information technology solution Answer : A

A firm has identified groups of customers based on specific characteristics the customers desire from products and services the firm can provide. Characteristics include lead times, pricing tiers, and service levels. The firm is engaged in which of the following activities?

A. Customer differentiation B. Order winner segregation C. Market segmentation D. Channel definition Answer : C

The probability of customer dissatisfaction is highest when which of the following conditions exists?

A. Customer expectations are clearly defined. B. Supplier execution is too low. C. There is a gap between expected performance and perceived performance. D. There is a gap between what was indicated and what was accomplished. Answer : C

A firm supplies a single line of products to consumers using retail stores and on-line sales, distributors, and wholesalers. Currently the firm has common pricing and response times for sales in each sales channel. Which of the following tools is most appropriate to employ to improve profitability?

A. Customer segmentation B. Customer-facing ordering systems C. Customer relationship management (CRM) D. Supply Chain Operations Reference (SCORֲ®) Answer : A

A firm supplies products and services to a wide variety of industries with varying requirements for responsiveness and reliability. Many customers across these industries are not satisfied with the firmג€™s ability to meet the lead time and on time delivery requirements. Which of the following tools is most appropriate for the firm to use to improve customer service?

A. Customer service ratio metrics B. Market segmentation C. Customer relationship management (CRM) D. Supply Chain Operations Reference (SCORֲ®) Answer : B

Which of the following consequences is a result of shipping directly from the point of manufacture to the customer rather than through a distribution network?

A. Delivery lead times are consistent. B. Risk pooling benefits are negated. C. Distribution overhead is increased. D. Order-fill rate is decreased. Answer : B

Which of the following forecasting methods relies on the opinions of a panel of experts?

A. Delphi technique B. Survey method C. Causal method D. Time series analysis Answer : A

Which of the following actions by a group of trading partners is most likely to quickly improve their economic performance?

A. Developing a comprehensive product and service strategy B. Implementing collaborative interorganizational systems C. Outsourcing interorganizational business processes D. Redesigning product packaging to reduce volume and weight Answer : A

Attaching a fuel tank cap to a fuel tank door on a car is an example of which of the following lean techniques?

A. Five Ss B. Five whys C. Poka-yoke D. Kaizen Answer : A

The question below is based on the following flowchart: Which of the following phrases most accurately describes the complete flow of demand information?

A. From supplier to customer B. From customer to manufacturer C. From customer to supplier D. From supplier to manufacturer Answer : C

Which of the following customer relationship management activities most appropriately is used for revenue generation?

A. Generating customer leads B. Generating graphic sales models C. Measuring customer preferences D. Identifying customer margins Answer : A

A company plans to maximize profitability by charging more for its products at retail locations than on its website. Which of the following segmentation strategies would best support this plan?

A. Group B. Channel C. Regional D. Location Answer : B

After identifying the potential causes for delays in communicating demand information up the supply chain, the trading partners should take which of the following actions?

A. Implement a higher-speed data communications network. B. Change procedures so data is communicated more frequently. C. Identify the root causes for the delays. D. Map and analyze the value stream. Answer : C

Which of the following results can be expected from sharing a common understanding of demand and consumption patterns among supply chain participants?

A. Improved transparency of collaboration relationships B. Increased performance in balanced scorecard C. Reduced inventory levels for key items D. Better synchronization of planning and operations Answer : D

A companyג€™s decision to charge different prices for the same service sold in different market segments is most likely based on which of the following metrics?

A. Internal rate of return (IRR) B. Lifetime customer value (LCV) C. Net present value (NPV) D. Return on investment (ROI) Answer : B

Reverse supply chain activity typically peaks nearest the beginning of which of the following stages of the product life cycle?

A. Introduction B. Growth C. Maturity D. Decline Answer : D

In addition to sales history, current customer orders, and forecasted demand, which of the following data sources should be used as part of a demand management process?

A. Inventory levels B. Contractual obligations C. Customer profitability D. Scheduled marketing activities Answer : D

Risk pooling enables a lower total inventory level without affecting service levels based on which of the following assumptions?

A. Inventory turnover ratio can be reduced. B. Aggregate demand is more accurate than disaggregate demand. C. The planning time fence can be adjusted as needed. D. The supplier shares some risk for holding inventory. Answer : B

Which of the following attributes typically makes reverse logistics processes more complicated than outbound logistics processes?

A. Lead times for shipments are more variable. B. Individual packages and cartons are less uniform. C. There are more regulations mandated by local governments. D. There is more competition for scarce transportation lanes. Answer : B

Which of the following types of information would be an appropriate basis for a qualitative forecast?

A. Leading indicators B. Regression analysis C. Order history D. Shipment history Answer : B

A company that produces standardized products and sells them through retailers via a responsive transportation system has decided to expand its sales with an online store for customized products. Which of the following distribution strategies would be the most appropriate for the business-strategy change?

A. Local distribution centers serving retailers and online sales B. Centralized cross-docking facilities serving retailers and online sales C. A centralized distribution center serving retailers and direct shipment from the factory serving online sales D. A centralized distribution center serving retailers with transshipment arrangements serving online sales Answer : C

A remanufacturer of equipment is most likely to have what type of supply chain?

A. Modular logistics B. Reverse logistics C. Mixed model D. Lateral Answer : B

Which of the following actions typically would be considered part of a reverse logistics strategy?

A. Offering a discount on new purchases when used products are returned B. Reducing the amount of packaging material used in shipping C. Manufacturing products in batches consistent with full-truckload shipments D. Batching returns of defective components to the suppliers Answer : A

Which of the following methods is used to minimize the bullwhip effect?

A. Outsourcing noncore business activities B. Reducing the number of stock keeping units (SKUs) C. Reducing lead time D. Increasing factory inventory Answer : C

A manufacturer uses standard costing, and a potential supplier uses activity-based costing. This difference most likely will have implications for which of the following types of future decisions?

A. Price concessions B. Make-or-buy C. Distribution warehouse locations D. Freight terms Answer : B

Which of the following considerations is an important supply chain design decision?

A. Product design B. Selecting supporting information systems C. Identifying labor force requirements D. Identifying training programs Answer : B

Which of the following indicators is most appropriate to use as a measure of supply chain utilization?

A. Production equipment productivity B. Net asset turns C. Value-added productivity per employee D. Upside flexibility Answer : B

Which of the following is the most important result when a company implements customer relationship management?

A. Profits are maximized. B. Retention of key customers is increased. C. Product options are increased. D. Transaction costs are decreased. Answer : B

Which of the following measures best describes fill rate?

A. Ratio of available inventory to cost of goods sold (COGS) B. Ratio of cost of goods sold to available inventory C. Percentage of demand satisfied by available inventory D. Percentage of closed orders to total orders Answer : C

Which of the following outcomes is a benefit typically expected of customer relationship management (CRM)?

A. Reducing the size of the sales force by automating activities B. Gaining a better understanding of customer requirements C. Implementing automated inter-organizational processes D. Focusing sales efforts on the most profitable customers Answer : B

Which of the following practices has improved management of the customer pipeline?

A. Reverse auctions B. Sales force automation C. Finite capacity planning D. Point-of-purchase metrics Answer : B

Which of the following scenarios represents a correct application of the Supply-Chain Operations Reference-model (SCOR)?

A. Sales and marketing refers to SCOR to improve demand generation. B. Production and engineering uses SCOR best practices to design a new "make" process flow. C. Distribution and logistics selects suppliers from the SCOR reference list. D. Marketing and development incorporates SCOR Level I metrics for new product design. Answer : B

What is the primary role of marketing in supporting supply chain management?

A. Selecting favored supplier partners B. Developing efficient customer channels C. Focusing on short-term forecasting accuracy D. Working with research and development on slow-moving products Answer : B

A large wholesaler formerly owned a number of delivery trucks. The wholesaler sold all of its trucks and now purchases transportation services from fleet operators. This is an example of which of the following strategies?

A. Selling and leasing back equipment. B. Renting equipment on consignment. C. Using a third-party logistics provider. D. Using an owner-operator fleet. Answer : C

Which of the following situations is an example of postponement?

A. Shipments are broken down into small groups for reshipment. B. Shipments are consolidated immediately for reshipment. C. Production begins after a customer order is received. D. Partially assembled goods are assembled at a later stage. Answer : D

Which of the following levels in a supply chain network represents the most upstream external activity?

A. Supplier to contractor B. Manufacturing to supplier C. Customer to distribution D. Customer to contractor Answer : A

Which of the following factors typically is the most significant impediment to implementing collaborative commerce?

A. Technology barriers B. Security C. Corporate culture D. Return on investment (ROI) Answer : C

Which of the following statements regarding transportation negotiation is correct?

A. The lowest possible cost for transportation is the lowest total cost of logistics. B. The lowest possible rate must be consistent with the level of service required. C. The key to effective negotiation is to maximize distributor profitability. D. The key to building solid career relationships is the acceptance of a carrierג€™s rate. Answer : B

Which of the following statements represents a major assumption needed to effectively use days of supply as a measure?

A. The reorder point for the inventory has been calculated correctly. B. The forecast for the item usage is reasonably accurate. C. The item is in the growth phase of the product life cycle. D. The item is subjected to statistical process control (SPC) during production. Answer : D

Which of the following practices allows each process to operate at maximum efficiency rather than having the speed of the entire process constrained by the slowest operation?

A. Theory of constrains (TOC) B. Supply/demand balancing C. Decoupling D. Pull production Answer : C Explanation: Decoupling allows economy of scale within a single facility and permits each process to operate at maximum efficiency rather than having the speed of the entire process constrained by the slowest.

A high level of which of the following attributes is considered to be undesirable in a supply chain?

A. Velocity B. Variability C. Visibility D. Variety Answer : B

Continuous improvement is best described as:

A. a never-ending effort to expose and eliminate root causes of problems. B. a never-ending effort by the management team to reduce cycle time. C. identifying and implementing big-step improvements within a process. D. a process in which a supplier commits to replenishing inventory based on demand without receiving replenishment orders. Answer : A

The process of gathering data about what customers need and ensuring that desired features are included in the design and initial planning phase of a new product or service is known as:

A. a quick response program. B. quality function deployment. C. total quality management. D. early supplier involvement. Answer : B

A primary objective of a lean enterprise is to:

A. analyze and focus the value stream along all functions to maximize value for the ultimate customer. B. employ people who have enhanced abilities to learn and adapt to the corporate culture. C. continuously improve processes and procedures to maintain a level production schedule. D. create value for its suppliers by incorporating lean manufacturing principles into a supplier certification process. Answer : A

A company has been delivering a global product that no longer appears profitable. Senior managementג€™s best response is to:

A. analyze product profitability by market segment. B. discontinue the product based on eroding profitability. C. provide additional incentives to the sales force. D. increase promotional activity across all markets. Answer : A

The use of a seasonal index as a forecasting technique measures the ratio of the:

A. average seasonal demand to the average demand for all periods. B. average demand for all periods to the average seasonal demand. C. average seasonal demand to the standard deviation of the demand for all periods. D. standard deviation of the seasonal demand to the standard deviation of demand for all periods. Answer : A

A manufacturer can simplify the forecasting process by pooling demand forecasts for a product group and then:

A. averaging total demand and spreading it evenly across all items. B. disaggregating demand to the item level based on marketing input. C. disaggregating demand to the item level based on historical proportions. D. allocating demand to each production site. Answer : C

Compared to mass-media marketing, customer relationship management has the advantage of allowing the organization to:

A. compete for customers based on service. B. reach a larger number of potential customers. C. reduce inventory to improve cash flow. D. focus on attracting new customers. Answer : A

Medium-term demand management projections are used primarily to:

A. complete strategic business planning of facilities. B. complete forecasts at the item level. C. aggregate demand for production planning. D. develop the master production schedule. Answer : C

A media company offers a majority of its movies through a specific distributor. The media company is beginning to produce content for a new foreign market to which the distributor has exclusive access. To maximize savings and gain entry to this new market, the media company should:

A. create a contract for the new market. B. enter into a partnership. C. form a strategic alliance. D. acquire the distributor. Answer : C

A firm wants to lose customers that don't value the unique products and services the firm offers and to attract and retain customers that want what the firm offers. Engaging in this activity should allow the firm to:

A. create a more loyal customer base. B. improve customer satisfaction rates. C. increase market share. D. target higher-profit customers. Answer : A

A company manufactures special products for select customers. When demand for these products drops, the manufacturer can switch the production line to a commodity-type product that can be sold on the open market at reduced terms to generate cash. The company is executing a corporate strategy that is based on:

A. customer focus and alignment. B. forecast accuracy. C. multiple downstream channels. D. multiple upstream supply chains. Answer : D

Requirements for successful application of a demand-driven supply network include:

A. demand synchronization between stakeholders. B. automatic communications of data from point-of-sale (POS) terminals. C. safety stock determined jointly by suppliers and customers. D. supply provided by a single source. Answer : A

The factors to consider in the make-or-buy decision include costs, proprietary knowledge, and:

A. design history. B. available capacity. C. inventory balance. D. warehouse location. Answer : B

Compared to a blanket purchase order, a supplier alliance agreement is best differentiated by:

A. efficient material replenishment processes. B. clearly identified roles for the buyer and seller. C. a shared vision of added value. D. a sole-source agreement. Answer : C

The purpose of continuous improvement in the supply chain is to:

A. eliminate the root causes of problems. B. improve interorganizational communication. C. develop better written procedures. D. reduce product costs. Answer : A

When evaluating several possible supply chain options, a firm considering the minimal total cost should:

A. ensure that the inventory levels are as low as possible to minimize holding costs while still providing adequate customer service. B. account for the combined costs of holding buffer inventory and incurring inventory shortages. C. consider the costs of acquiring, holding, and transporting inventory and of servicing customers. D. place buffer inventory in the lowest cost locations that meet lead time and service level requirements from customers. Answer : C

The primary reason for the evolution of the supply chain is:

A. fewer rejects due to poor quality. B. increased on-time delivery. C. increased cost savings. D. increased communication. Answer : D

Maintaining a long-term collaborative relationship with a trading partner requires:

A. formal and informal communication. B. interconnected information systems. C. one partner regularly exercising power. D. standardized terms of agreement. Answer : A

Companies are more likely to consider the consequences of their product design decisions when they view the reverse supply chain as an extension of the:

A. forward supply chain. B. marketing process. C. manufacturing process. D. sales and operations planning process. Answer : A

A large manufacturer wanting to be more competitive in the global market place decided to outsource its transportation and return processing to other companies on a contractual basis. The companies providing the services would be referred to as:

A. fourth party logistics providers. B. third party logistics providers. C. retail services providers. D. distribution services providers. Answer : B

The primary reason for a firm to pursue strategic supply chain activities is to:

A. gain competitive advantage. B. reduce costs. C. increase productivity. D. decrease product lead time. Answer : A

In the analysis of costs, fixed costs are those that are:

A. independent of the volume of output. B. dependent on the utilization of the asset. C. inversely proportionate to the volume of output. D. constant through the useful life of the asset. Answer : D

One key factor to consider when selecting suppliers for their potential to sustain long-term, mutually profitable relationships is:

A. landed cost. B. quality metrics. C. operational performance. D. financial viability. Answer : C

The most likely benefit of implementing a collaborative transportation management system (TMS) is:

A. lower distribution center (DC) operating costs. B. fewer transportation planners. C. less variability in picking and packing time. D. less variability in transportation costs. Answer : D

Incorporating supplier input into product and process design helps to:

A. maintain quality. B. stabilize product costs. C. reduce time to market. D. save costs to the buyer. Answer : C

A main benefit of using customer relationship management (CRM) is:

A. maximization of on-time delivery. B. minimization of product returns. C. identification of customers with high lifetime value. D. finding new markets for existing products and services. Answer : C

The primary objective of supply chain management is:

A. minimizing transportation costs. B. reducing inventory levels. C. taking a systems approach. D. implementing advanced technologies. Answer : C

An advantage of using a third-party logistics service (3PL) is improved:

A. on-time delivery of shipments due to higher inventory levels. B. cost structure due to economies of scale. C. access to smaller markets due to localization. D. risk visibility due to inventory consolidation. Answer : B

A return material authorization (RMA) policy is used in reverse logistics to:

A. physically transport returned items by using an efficient transportation mode. B. minimize the number of returned items by involving product design and demand forecasting. C. reduce the cost of returned items by refusing to accept items that should not be returned. D. reclaim substantial value from returned items by recycling. Answer : C

Supply chains delivering products or services are most able to respond quickly to changing market requirements when:

A. products have been standardized. B. products have a modular design. C. production processes have been standardized. D. production processes have been simplified. Answer : B

The value that logistics provides within the supply chain can best be summarized as:

A. satisfying customer expectations about availability and delivery at an acceptable total cost. B. meeting promised location and on-time delivery goals with minimal use of expediting. C. establishing inventory and delivery goals with various customers that fulfill the firm's profit objectives. D. providing accurate in-transit and delivery information to customers and salespeople. Answer : A

The main benefit of a mass customization product design strategy is to:

A. sell high quantities of product to specific customer segments. B. achieve economies of scale in purchasing components. C. offer more product variety while keeping inventories low. D. avoid assembly of finished products. Answer : C

Compared to a global strategy, a multicountry strategy would be characterized by:

A. strategy coordination across countries. B. preferred suppliers located in host countries. C. major strategic decisions coordinated centrally. D. products adapted to local needs. Answer : D

Cost reduction, improvement of company focus, and freeing assets from noncore activities are among the results achieved through effective implementation of:

A. supply chain management. B. service supplier management. C. collaboration. D. outsourcing. Answer : C

When designing a supply chain for strategic advantage, a company first should consider:

A. the impact on customers using Just-in-Time manufacturing. B. the financial stability of suppliers. C. matching the supply chain to product type. D. whether to use custom or standard parts. Answer : C

The focus of collaborative supply chain management differs from a transactional approach by its emphasis on the:

A. transportation of goods to the next link in the chain. B. flow of product information up to the next level of the chain. C. flow of demand information and cash up the chain. D. flow of supply into an organization. Answer : C

Keeping all other factors equal, a company typically will try to maintain higher service levels for products with:

A. wider variety. B. shorter lead time. C. higher profit margins. D. lower sales volumes. Answer : C