EXAM 1-Supply Chain Management
Which of the following is true under the Periodic Review System?
A higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system
Which of the following statements is TRUE?
Strategic partnerships are seen as one of the foundations of supply chain management
Which of the following activities allows buyers to assume the supplier will meet certain product quality and service requirements?
Supplier certification
According to the textbook, the top three challenges for CPFR implementation include all of the following EXCEPT:
Supplier lead times
When linear trend forecasts are developed, demand would typically be:
The dependent variable
CPFR is more likely to succeed if companies educate their employees on the benefits of the process changes and the disadvantages of maintaining the status quo
True
Criteria to evaluate a purchasing department's performance should include both quantitative and qualitative assesments
True
Cycle counting means to physically count inventory on a periodic basis
True
Cyclical variations are longer than a year and are influenced by macroeconomics and political factors
True
Forecast error is actual quantity minus the forcast
True
Forecast error is the actual quantity minus the forecast
True
It is important for firms to address the impact of ethical and sustainable sourcing on other facets of the organizations and its trading partners
True
Minimizing the negative impacts of the bullwhip effect on supply chains is one of the goals of an effective CPFR system
True
purchasing can be broadly classified into two categories: merchants and industrial buyters
True
A negotiation where both sides work together to maximize the joint outcome or to create a joint optimal result is referred to as:
Win-win negotiations
The Ethical Trading Initiative (ETI) does NOT include which of the followng?
Workers receive a 30 minute break for an 8 hour shift
The primary goals of purchasing include all EXCEPT:
Ensure the highest quality raw materials are purchased
If an item is ordered at its economic order quantity, the annual carrying cost should be:
Equal to the annual ordering cost
Promoting diversity by intentionally buying from small firms or ethnic minority businesses is an example of:
Ethical Sourcing
The purchasing department at Big Horn Sheep Corporation decided to intentionally increase purchases from small, underdeveloped nations. This decision can be considered:
Ethical Sourcing
______ considers the public consequences of organizational buying
Ethical sourcing
Which of the following can happen as a result of the bullwhip effect?
Excess costs for each firm in a supply chain
Sustainable sourcing practices include promoting diversity by intentionally buying from ethnic minority businesses
False
The use of ethical and environmental certifications for suppliers is decreasing.
False
Which of the following is NOT a reason firms are expanding their supply bases to include foreign suppliers?
Lower shipping rates due to lower tariffs
Blanket or open-end purchase orders are suitable for buying
Office supplies
Random variations in a Time Series component are due to:
Unpredictable events
Cost savings is an advantage of using an e-procurement system
True
Creating strategic supplier alliances benefits firms by increasing the performance and value of suppliers as well as increasing brand awareness
True
Demands by customers for companies to become more ethically and environmentally focused have placed added pressures on firms to improve their performance in supply chain management
True
Developing a collaborative negotiation infrastructure includes four steps: build a preparation process, develop a negotiation database, design a negotiation launch process, and institute a feedback mechanism
True
ERP provides the mechanism for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing the bullwhip effect and supply chain inventories
True
ERP systems were designed to coordinate the information requirements for purchasing, planning, scheduling and distribution of an organization operating in a complex multi-unit global environment
True
Foreign suppliers located farther away may be able to deliver goods faster than domestic suppliers due to more efficient transportation and logistical systems
True
Functional products are characterized by low profit margins, relatively stable demands, and high levels of competition.
True
One of the assumptions of the economic order quantity model (EOQ) is that purchase price must remain constant
True
One of the benefits of CPFR include integration of planning, forecasting, and logistics activities
True
Without supply chain trading partners collaborating and exchanging information, the supply chain will always be suboptimal and contain excess inventories, resulting in less-than-maximum supply chain profits
True
According to the text, the goal of a good performance evaluation system is to provide metrics that are:
Understandable, easy to measure, focused on value-added results
Radio Frequency Identification (RFID) is beginning to replace bar code inventory tracking, however a weakness is that it requires a direct line of sight for RFID tags to be read
False
Random variations represent either increasing or decreasing movements over many years due to factors such as population growth, population shift, cultural changes and income shifts
False
The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information.
False
When there is not a lot of currently relevant data available it is generally best to use:
Qualitative forecasting
According to the SCM profile Honda, _______ based on a supplier relations index developed by Planning Perspectives
Ranked near the top in 2015
Which if the following is a reverse logistics activity
Recycling products and components
When a product is purchased which is complicated or highly technical a ________ may be issued instead of a request for quotation
Request for proposal
What component of a time series has variations in demand which show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, months, or years?
Seasonal Variations
When using a Weighted Criteria Evaluation System to evaluate suppliers, all of the following are true EXCEPT
Select the key dimensions of performance based on what is important to the end consumer
The following time-series approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time:
Simple Moving Average
Which company is experimenting with the management of the final mile of deliver in some markets, using small aerial drones to deliver shoebox-size packages from fulfillment centers?
Amazon
According to the textbook, conditions which must be present for successful supply chain management include:
Cooperation among firms
The (s,S) continuous review policy is to order the same quantity, Q, when physical inventory reaches the reorder point
False
The optimal order quantity for the quantity discount model is always at one of the price breakpoints
False
The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the aggregate production strategy
False
Transactional SRM, allows the company to analyze the complete supplier base
False
Which one of the following statements regarding the economic order quantity (EOQ) is true?
If an order quantity is larger than the EOQ, then the annual holding cost will exceed the annual ordering cost
If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the:
Most recent positive ATP
The primary purpose of the basic economic order quantity (EOQ) model is to:
None of the above
Field failures, loss of goodwill, a decreased reputation, and warranty costs can all be classified as:
Post-transaction costs
Which of the following MRP terms represents a committed order awaiting delivery for a specific period?
Scheduled Receipt
Firms can use total cost analysis to:
Select the most cost-effective supplier
Which of the following acronyms is NOT paired with its correct "translation?"
TLS-Third-party Logistics Services
Environmental supplier certifications can be used to identify rogue suppliers before they can cause problems
True
MRO supplies are a type of indirect costs.
True
The economic order quantity model (EOQ) is the optimal independent demand order quantity that minimizes total annual inventory costs
True
When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level
True
Which of the following is a major cultural issue and big hurdle for widespread implementation of CPFR
Trust
In designing an ethical and sustainable strategy a firm might make use of which of the following?
Use performance measures to identify weaknesses
Which of the following terms 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
The formula for the forecast error is calculated by using the equation:
Actual demand for period t minus the forecasted demand for period t
A follow up is considered a reactive approach to speed up an overdue shipment
False
A forecast tracking signal is used to determine:
If the forecast bias is within the acceptable control limits
Which of the following should NOT be used as assessment criteria to evaluate the purchasing department's performance?
Lowering inventory turnover rates
Lubricants for production equipment which are not part of the final products are called:
Maintenance, repair and operating supplies
Which of the following is NOT a common module of ERP system?
Marketing Resources Management
Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to a few weeks?
Material requirement plan
Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged?
Profit-Leverage Effect
Total Cost of Ownership does NOT consider which of the following factors?
Purchase order costs
Direct benefits of ISO 14000 include:
Reduction of pollution emission
The ______ is used to check the feasibility of the Master Production Schedule
Rough-Cut Capacity Plan
Summers, Inc. needs to generate a list of good/services purchased per supplier. Which type software program can the manager consult to obtain the information?
SRM
Which of the following illustrates Forward Vertical Integration?
Sony buying trucks to deliver their finished goods inventories to their customers' warehouses
Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand?
The Level Production Strategy
Legacy MRP systems typically utilized multiple software packages and databases which caused:
The same information to be stored in multiple locations
While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth?
The year 20000 millennium bug
A level production strategy works well for make-to-stock manufacturing firms, which typically emphasize immediate delivery of off-the-shelf, standard goods at relatively low prices
True
A material requisition and a purchasing requisition are the same thing
True
A practice aimed at ensuring that purchased products or materials meet environmental objectives of the organization is referred to as green purchasing
True
According to the textbook, supply chains include raw material suppliers, intermediate component manufacturers, end-product manufacturers, wholesale distributors, retailers, and end-product consuemers
True
A service where key customers ask suppliers to take on the job of store level replenishment planning is called:
Vendor managed inventory
The EOQ model with quantity discounts attempts to determine:
how many units should be ordered
Individual biases could negatively impact the effectiveness of the Sales Force Composite forecasting approach, due to the proximity of the sales personnel to the consumers
True
Lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation
True
Legacy systems were designed to perform a very specific operational function
True
Regression analysis is commonly used in the cause-and-effect forecasting model
True
Steering wheels purchased by Ford is an example of dependent demand
True
Successful supplier relationships involve equal decision-making control
True
System nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans.
True
The ABC inventory matric combines two ABC analyses--one based on current inventory valuation and the other is based on annual dollar usage
True
The Delphi forecasting approach is applicable for high-risk technology forecasting; large, expensive projects; or major new product introductions
True
The bullwhip effect causes an amplification of the variation in the demand pattern along the supply chain
True
The inventory turnover ratio shows how efficiently a firm is using its inventory to generate revenue
True
The statistical reorder point is calculated as the average demand during the delivery lead time plus the desired safety stock
True
Two reasons ERP implementations have been known to fail include: lack of top management commitment and lack of communication between the firm and it ERP software provider
True
Benefits derived from implementing e-procurement systems include all of the following EXCEPT:
Creates numerous additional job opportunities in the purchasing department
Independent demand is:
Demand for a firm's end product
Which of the following activities would fall under the foundational element of operation
Demand management
Which of the following is considered a disadvantage of utilizing an ERP system?
ERP systems are very complex and have proven difficult to implement
As firms seek to improve the products they offer to the market, companies are seeking help from their suppliers in new product design and development through:
Early supplier involvement
Which of the following is considered an advantage of utilizing an ERP system?
Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries
The acronym ERP is short for
Enterprise Resource Planning
If a company is effectively focusing on its core competencies, its level of outsourcing is likely to decrease
False
If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average.
False
In a Total Cost of Ownership system, certification and training of suppliers would be considered post-transaction costs
False
In a weighted-criteria evaluation system the weights of all the performance dimensions must add up to more than 1.00 and less than 100
False
In general, single integrator ERP solutions are better suited to more intricate workplaces
False
It is best for firms to learn through their own experiences the methods and tools that work best, rather than benchmarking
False
It is considered unethical for a frim to intentionally buy from women-owned businesses
False
It is critical that buyers and suppliers develop stronger relationships and partnerships based on a tactical rather than a strategic perspective
False
It is possible to expect 100 percent forecast accuracy most of the time
False
MRO supplies are a type of work-in-progress
False
Many large firms are moving to in-house vertically integrated structures where they have more control over each business unit
False
Pareto Analysis means that 20 percent of the items get about 80 percent of the safety stock
False
Quantitative forecasting methods are based on opinion and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts
False
Reverse logistics has become an important trend in ethical and sustainable sourcing
False
The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C. A items receive the smallest amount of safety stock, while C items typically have the most safety stock
False
The EOQ equation is derived by setting the annual purchase cost equal to the annual holding cost
False
The Naive forecast, Mean Profit Leverage, and Mean Square Error are examples of forecasting accuracy measures
False
The Total Cost of Ownership does NOT include quantitative factors
False
The best-of-breed solution picks all the desired applications from a single vendor for the ERP system
False
The bullwhip effect is the result of companies producing excessive defective products; defective items are whipped back from the end customer toward the manufacturer of the defect
False
The chase production strategy works well when highly skilled workers are needed, especially in a tight labor market
False
The foundation elements of supply chain management are Supply, Operations, Customer Service, Logistics
False
The legacy MRP system was programmed to coordinate with other functional areas in the firm
False
Inaccurate forecasts can result in negative outcomes like:
Imbalances in supply and demand
Which of the following is NOT one of the three basic methods used to calculate the available-to-promise quantities?
Indiscrete available-to-promise
Which of the following is a disadvantage of carrying too much inventory?
It creates an unnecessary waste of scarce resouces
Which of the following is NOT a form of countertradeV?
Kaizen Blitz
Which of the following is NOT a key tenant of an SRM System
Lean operations
Customer relationship management, distribution network, transportation management, and service response logistics are all important issues that are most closely related to
Logistics
Which one of the following is NOT a type of qualitative forecasting?
Simple moving average
Which of the following is NOT a reason for firms to carry inventory
To increase production change/setup costs
According to the textbook, the keys to successful supply chain management include trust, cooperation, collaboration, and honest, accurate communications between supply chain partners
True
An ERP system is generally a multi-module application software for managing an enterprise's internal functional activities, as well as its suppliers and customers
True
Automating procurement activities can lead to significant cost savings as buyers move toward managing processes by exception
True
Because internationally recognized certifications like ISO 9000 are becoming so common among suppliers, it is becoming more important that purchasing firms develop internal certification programs that are geared toward the specific needs of the purchasing organization
True
Ethical sourcing policies should NOT include determining where all purchased goods come from and how they are made
False
What is considered an acceptable range for a tracking signal?
+-3
SRM software should be capable of:
All of these
Which of the following MRP terms represents the parts demanded by a parent?
Component
The _____specifies which end product is to be made, how many are required, and when they need to be completed
Aggregate production plan
When a particular item is in short supply accompanied by rising prices, a firm might find it beneficial to:
Align itself with one of the suppliers to ensure a continued supply of the scarce item
Which of the following is true of today's purchasing staff members?
All of the above
Legacy MRP systems had which of the following limitations?
All of these
Successful strategic alliances can result in which of the following?
All of these
Which of the following is a trend in ethical and sustainable sourcing?
All of these
The main benefit(s) from benchmarking sourcing practices is/are:
Allows firms to leapfrog the experience-gaining stage by trying things that have worked well for other companies
Leading companies practicing sustainable sourcing and seeking to reduce costs would NOT use which of the following strategies?
Backward integration to purchase suppliers
The following is an example of the bullwhip effect:
Barkley's incorrectly anticipates consumer demand resulting in stockouts at several popular retailers
The smoothing constant for exponential smoothing must be?
Between 0 and 1
Which of the following would be considered a dependent demand item?
Bicycle tires used to assemble a bicycle
Which of the following results from using the chase production strategy
Both A & B
The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the:
Bullwhip effect
A SRM strategy refers to a situation wherein a supplier's employee is permanently housed in the purchasing department of the buyer's organization
False
According to the textbook, environmental and social impacts are considered outside of supply chain management
False
According to the textbook, in the 1950's and 1960's, mass production techniques focused on creating supplier partnerships, improving process design and flexibility, and improving product quality
False
According to the textbook, third-party logistics providers (3LPs) do not offer assistance with helping products clear customs
False
As companies outsource more and more parts, it becomes easier to achieve cost savings internally
False
Dependent demand must be forecasted to be accurate
False
Distribution requirements plan (DRP) operates in a dependent demand situation
False
Trend variations are wavelike movements that are shorter than a year
False
Which of the following is NOT a typical strategy for firms to obtain benchmarking data about other companies?
Hiring former employees from other companies and assessing their knowledge
Which of the following would refer to the 80/20 rule when applied to the ABC inventory control system?
80 percent of the total annual $ usage is accounted for, by 20 percent of the items
Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include:
Customer relationship management and Human resource management
The Hormel company awards their Hormel Food Corporation's No. 1 Award to their top supplier. How often do they give this award?
Every 5 years
The real value of Collaborative Planning, Forecasting and Replenishment (CPFR) comes from:
Exchanging of forecasting information
ERP Implosion is the process of converting a parent item's planned order releases into component gross requirements
False
What is the most important output of the MRP
Planned order releases
Developed in the 1990's as a popular way of developing radically new business processes in an effort to reduce waste and increase performance is referred to as:
Business process reengineering
When calculating Return on Investment, current assets include:
Cash, Accounts Receivable, and Inventory
A company using a weighted-criteria evaluation system has established these 3 categories and the appropriate weight in parentheses: Quality (0.30), Delivery (0.40), Cost (0.30) The scores for each category are shown below. Which of the following companies has the highest total score?
Company C: Quality (70), Delivery (95), Cost (60)
Supply chain management includes the planning and management of all activities involved in sourcing and procurement, conversions, and all logistics management activities. It also includes:
Coordination and collaboration with channel partners
Which of the following is NOT important in developing a successful strategic alliance?
Developing efficient processes that will remain unchanged for the duration of the partnership
Merchants primary task is to purchase raw materials for conversion purpose
False
The possibility of events like strikes, assembly line breakdowns, and natural disasters are all reasons a company should favor using a single supplier.
False
Trends in supply chain management include expansion of the supply chain and decreasing supply chain visibility
False
When developing successful partnerships, it is best to avoid inter-personal business relationships between buyers and suppliers.
False
While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S. federal government purchases must comply with the:
Federal Acquisition Regulation
Which of the following ca be used as a punishment for suppliers that perform poorly?
All of these
Which of the following is a reason small value purchases are handled differently?
To control unnecessary administrative costs
Before supplier relationship management (SRM), buyers typically spent 40% of their time on expediting orders. After SRM implementation buyers spent about:
10% of their time expediting orders
The term Supply Chain Management and the field of study it represents today seems to have emerged in the:
1980s
Which of the following would be a good reason to outsource (buy) versus making?
A firm lack the technology or expertise to produce an item
Which of the following is TRUE?
Performance metrics and personal business relationships are both keys to building successful partnerships
A form of purchasing that is placed directly to the supplier and suitable when firms use the same components to make standard goods over a relatively long period of time is referred to as:
Planned order release
Costs associated with investigating alternative suppliers and investigating alternative delivery options can be classified as:
Pre-transaction costs
Which of the following is NOT a potential challenge for global sourcing?
Relaxed trade barriers
Streamlining the processes and communications between the buyer and supplier using software applications that enable these processes to be managed more efficiently and effectively can be referred to as:
SRM
The following strategy is usually employed by lean organizations in an effort to ensure continued quality compliance among suppliers and with internal production facilities
Six Sigma
Which of the following is an advantage of a centralized purchasing department?
Specialization
According to the text, the FOUR important elements of the supply chain are:
Supply, operations, logistics, integration
Which of the following can be defined as "The ability to meet the needs of current supply chain members without hindering the ability to meet the needs of future generations"
Sustainability
What type of major cost category is considered they cost associated with placing and receiving the order?
Transaction Cost
Which type of requisition is used for materials and standard parts that are requested on a recurring basis?
Traveling requisition
A reason for making items instead of buying them would include better quality control
True
A seven-step approach to supplier development might include identifying critical suppliers not meeting performance requirements
True
According to the text, only about half of companies recognize excellent performance with supplier awards and appreciations banquets
True
According to the textbook, a supply chains' end customers are the only true source of income for all supply chain organizations
True
Blank check orders, Corporate purchasing cards, Petty cash, and Open-end purchase orders are all possible alternatives to dealing with small value purchases such as those for office supplies
True
Decentralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs
True
Highly valued customers with large purchasing budgets who achieve moderate supply chain management success have been known to lower purchasing and inventory carrying costs, and create better quality products with higher levels of customer service
True
ISO 14000 is a family of international standards for environmental management
True
Offering an awards program to suppliers both motivates the suppliers to commit to a program of continuous improvement as well as provides role models for suppliers to follow.
True
One definition of supply chain management is "Coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers"
True
Procurement credit cards can be used for small purchases including meals, lodging, and travel expenses
True
Rewarding suppliers for maintaining high levels of performance is an important step used in maintaining a successful alliance program
True
Supply chain analytics can be used along the supply chain to schedule production according to expected supplier deliveries
True
The goal of a good purchasing system is to ensure efficient information transitions between the materials users, the purchasing personnel, and the suppliers
True
The purchase is NOT a legally binding contract until it is accepted by the supplier
True
The total cost analysis demonstrates how other costs beside the unit cost can affect purchase decisions
True
Trucking companies, airfreight shipping companies, and information system providers can all be considered service providers to the supply chain
True
