mgmtexam5

7. Costs associated with backordering products are called _____ costs. a. holding b. shortage c. ordering d. setup

b. shortage

34. _____ is the process of managing geographically dispersed service-providing facilities. a. Center-of-gravity method b. Reverse logistics c. Multisite management d. Postponement

c. Multisite management

2. Which one of the following is NOT directly related to a supply chain? a. Distribution center b. Inventory c. Promotion d. Supplier

c. Promotion

18. For General Motors' supply chain, the _____ is the push-pull boundary. a. supplier b. logistic provider c. dealer d. customer

c. dealer

1. A supply chain is broader in scope than the value chain, and encompasses all pre- and post-production activity.

ANS: F

1. Inventory management does not involve supplies and replacement parts.

ANS: F

10. Walmart uses a push supply chain.

ANS: F

11. A supply chain cannot be a combination of push and pull systems.

ANS: F

12. Accurate forecasts are more critical to a pull system.

ANS: F

15. If a multisite organization has a stable product line and highly predictable design, then a responsive supply chain is the best design.

ANS: F

18. Inventory turnover value tells managers how much of the firm's assets are tied up in inventory.

ANS: F

20. A great servicescape and facility layout can usually overcome a poor location decision.

ANS: F

22. The center-of-gravity method determines the best X and Y coordinates (location) for multiple facilities by finding a central location and then assigning the facilities around the periphery of that location.

ANS: F

27. Radio-frequency identification (RFID) tags are used to streamline information flow between global customers and suppliers and increase the velocity of supply chains.

ANS: F

3. The basic purpose of a supply chain is to coordinate communication among employees and customers in order to maximize customer satisfaction.

ANS: F

4. Distribution centers are warehouses that act as intermediaries between suppliers and factories.

ANS: F

6. In the supply chain operations reference (SCOR) model, the "make" step involves managing orders, transportation, and distribution to provide goods and services.

ANS: F

6. Work-in-process inventory is completed products ready for distribution or sale to customers.

ANS: F

7. In the supply chain operations reference (SCOR) model, the "plan" step involves identifying and selecting suppliers.

ANS: F

8. Setup costs depend on the number of items manufactured.

ANS: F

9. In designing an efficient supply chain, an organization would need high levels of inventory stored in many small distribution centers.

ANS: F

9. Inventory-holding costs are easily measured by accounting departments.

ANS: F

13. For Dell Inc., the push-pull boundary is very early in the supply chain, where suppliers store inventory for frequent deliveries to Dell factories.

ANS: T

14. An automobile company that installs satellite radio at the dealership instead of at the factory is applying a postponement strategy.

ANS: T

16. Delivery reliability is measured by perfect order fulfillment.

ANS: T

17. Responsiveness is measured by order fulfillment lead time or by perfect delivery fulfillment.

ANS: T

19. The facility location decision must attempt to minimize the combined cost of producing the good or service and delivering them to customers.

ANS: T

2. An airline seat is an example of an asset held for future use or sale.

ANS: T

2. Supply chains must be redesigned when a firm's product lines and markets change or expand.

ANS: T

23. The center-of-gravity model minimizes the weighted distance between the facility to be located and its supply and demand points.

ANS: T

24. Pipelines have limited use and accessibility and are used primarily for products like oil and natural gas.

ANS: T

25. With vendor-managed inventory (VMI), a manufacturer monitors and managers inventory for a customer.

ANS: T

26. One disadvantage of VMI is that it does not account for substitutable products from competing manufacturers and often results in higher customer inventories than necessary.

ANS: T

3. Safety stock inventory is an additional planned on-hand inventory that acts as a buffer to reduce the risk of a stockout.

ANS: T

4. Call center phone lines are examples of inventory in service organizations.

ANS: T

5. Marketing and operations generally prefer high inventory levels, while finance would prefer small inventories.

ANS: T

5. Orders are passed upstream in a supply chain, while materials and finished goods are sent downstream in a supply chain.

ANS: T

7. Finished-goods inventory consists of completed products that are ready for sale.

ANS: T

8. Contract manufacturers can provide the benefit of reducing the total costs resulting from economies of scale.

ANS: T

18. In ABC analysis, which of the following items typically comprise 60 to 80 percent of total dollar usage but only 10 to 30 percent of the items? a. A b. B c. C d. B and C

a. A

21. In a fixed order quantity (FOQ) system, which of the following is TRUE when interest rates increase and all other costs remain the same? a. Cycle inventory decreases b. Order quantity increases c. Order costs increase d. Safety stock quantity increases

a. Cycle inventory decreases (as Ch increases, EOQ decreases so Q/2 decreases)

1. _____ are warehouses that act as intermediaries between factories and customers, shipping directly to customers or to retail stores where products are made available to customers. a. Distribution centers b. Inventories c. Databases d. Retail shops

a. Distribution centers

21. _____ is the process of delaying product customization until the product is closer to the customer at the end of a supply chain. a. Postponement b. Sourcing c. Deferral d. Multisite management

a. Postponement

24. Which one of the following statements is FALSE? a. Postponement is a form of remanufacturing. b. Reverse logistics combined with forward supply chain is called a closed loop system. c. Selecting suppliers that support sustainability is a part of supply chain management. d. Reverse logistics includes remarketing and selling the recovered good for reuse or resale to wholesalers and retailers.

a. Postponement is a form of remanufacturing.

30. _____ is measured by order fulfillment lead time or perfect delivery fulfillment. a. Responsiveness b. Delivery reliability c. Supply chain efficiency d. Financial measure

a. Responsiveness

10. Where in its supply chain does Dell Inc. begin to use a pull system? a. Supplier b. Factory c. Distribution center d. Customer

a. Supplier

26. Which of the following statements concerning the economic order quantity (EOQ) model is NOT TRUE when the unit holding cost increases? a. The economic order quantity will decrease. b. The number of orders per year will increase. c. Annual ordering costs will increase. d. Sunk costs will decrease.

a. The economic order quantity will decrease.

28. Which is NOT a feature of the periodic review system? a. The order quantity, Q, is always fixed. b. The inventory position need not be monitored on a continuous basis. c. The review period, T, is constant. d. Placing an order is time-triggered.

a. The order quantity, Q, is always fixed.

1. Which of the following is NOT TRUE regarding inventory management? a. The two fundamental inventory decisions are: where to order and what to order. b. Inventory management applies to goods and to services. c. Different types of inventory characteristics require different approaches for control. d. Stock-keeping units (SKUs) are often aggregated or partitioned into groups with similar characteristics or dollar value.

a. The two fundamental inventory decisions are: where to order and what to order.

35. Which one of the following statements is TRUE about vendor-managed inventory (VMI)? a. VMI is a form of outsourcing. b. VMI accounts for substitutable products. c. VMI results in lower customer inventories. d. VMI is identical to pull systems.

a. VMI is a form of outsourcing.

29. Perfect order fulfillment is a metric that is used to measure _____. a. delivery reliability b. responsiveness c. supply chain efficiency d. supply chain financial performance

a. delivery reliability

5. Costs associated with configuring tools, equipment, and machines within a factory to produce an item are components of _____ costs. a. ordering b. inventory-holding c. shortage d. unit

a. ordering

20. Managing the flow of goods and materials from the customers toward either suppliers, distributers, or manufacturers for the purpose of reuse, resale, or disposal through the supply chain is called the _____. a. reverse logistics b. pull system c. push system d. response management

a. reverse logistics

13. Demand that is stable over time is called _____ demand. a. static b. dynamic c. statistical d. average

a. static

20. In a fixed-quantity system (FQS), as the reorder point increases: a. the safety stock increases. b. the safety stock decreases. c. the number of orders increases. d. the number of orders decreases.

a. the safety stock increases.

27. Two fundamental inventory decisions are: when to order and how much to order. Which of the following statement is TRUE about fixed-quantity (FQS) and fixed-period (FPS) inventory systems? a. An FPS orders a fixed-period quantity when the inventory position reaches or passes the reorder point (r). b. An FPS must cover a time period of T + L to cover the risk of a stockout. c. An FPS places an order for an economic order quantity (EOQ) on a continuous basis. d. An FQS places an order to replenish the inventory position up to a target level (M) when the inventory position reaches the reorder point (r).

b. An FPS must cover a time period of T + L to cover the risk of a stockout.

8. Which one of the following statements is FALSE? a. Boeing's new 787 Dreamliner airplane has encountered many startup and supply chain coordination problems. b. General Motors pushes finished goods from its dealers to the customers. c. Zappos uses third-party logistics for customer deliveries, return, and inbound shipping. d. Federal Express has over one million pickup and delivery sites and therefore, is a good example of multisite management.

b. General Motors pushes finished goods from its dealers to the customers.

15. Which of the following is TRUE regarding a responsive supply chain? a. Demand is stable and predictable. b. Product life cycles are short and change often because of innovation. c. Customers require standardization. d. Contribution margins are low.

b. Product life cycles are short and change often because of innovation.

25. Which one of the following statements about sustainable supply chains is FALSE? a. Cannibalization of parts for use and repair of other equipment is part of a reverse logistics supply chain. b. Reverse logistics includes using raw materials and parts to assemble new finished goods. c. A green sustainable supply chain process develops outputs that can be reclaimed and reused at the end of their life-cycle. d. For products that are of high enough value, it is normally more cost-effective to remanufacture or refurbish the product.

b. Reverse logistics includes using raw materials and parts to assemble new finished goods.

26. Which one of the following statements is FALSE? a. Cannibalization of parts for use and repair of other equipment is part of a reverse logistics supply chain. b. Social sustainability includes a commitment from an organization to improve the quality of life through industry-community partnerships. c. Increasing revenues by converting wastes to byproducts is an environmental activity to enhance supply chain management. d. Efficiencies associated with manufactured goods recovery can yield increases in customer loyalty and improve the new customer's uptime.

b. Social sustainability includes a commitment from an organization to improve the quality of life through industry-community partnerships.

15. A _____ is defined as the inability to satisfy the demand for an item. a. Reorder point b. Stockout c. Lost sale d. Backorder

b. Stockout

22. Which of the following statements is TRUE? a. Fixed costs associated with any ordering are relevant. b. Sunk costs associated with any ordering are irrelevant. c. Variable costs associated with inventory holding are irrelevant. d. Variable costs associated with ordering are irrelevant.

b. Sunk costs associated with any ordering are irrelevant.

4. _____ inventory acts as a buffer between workstations in flow shops or departments in job shops to enable the operating process to continue. a. Raw materials b. Work-in-process c. Cycle stock d. Safety stock

b. Work-in-process

2. _____ inventory consists of partially completed products in various stages of completion that are awaiting further processing. a. Raw materials b. Work-in-process (WIP) c. Cycle d. Safety stock

b. Work-in-process (WIP)

30. A fixed-period (FPS) inventory system: a. orders a fixed-period quantity when the inventory position reaches or drops below the reorder point (r). b. chooses a replenishment level (M) which includes the demand during the review period and lead time, plus any safety stock. c. maintains a constant order quantity every review period. d. assumes that the demand for an item is constant and continuous, and that the items are withdrawn at a constant rate.

b. chooses a replenishment level (M) which includes the demand during the review period and lead time, plus any safety stock.

11. A firm that specializes in certain types of goods-producing activities, such as customized design, manufacturing, assembly, and packaging, and works for end users is called a _____. a. third-party logistics provider b. contract manufacturer c. distribution center d. vendor-managed inventory supplier

b. contract manufacturer

12. Demand that varies over time is called _____ demand. a. static b. dynamic c. statistical d. average

b. dynamic

14. A(n) _____ seeks to balance capacity and demand, might use only a few large distribution centers, and minimize costs of routing products from factories to retail stores and customers. a. responsive supply chain b. efficient supply chain c. push system d. pull system

b. efficient supply chain

31. All of the following are considered noneconomic factors in location decisions EXCEPT: a. the availability of labor. b. operating costs c. transportation services. d. the quality of life.

b. operating costs

9. The point in the supply chain that separates the push system from the pull system is called the _____. a. point of separation b. push-pull boundary c. postponement site d. center of push-pull system

b. push-pull boundary

6. The function of Supply Chain Operations Reference (SCOR) model function that entails procuring goods and services to meet planned or actual demand is called _____. a. plan b. source c. make d. deliver

b. source

28. The "Xi and Yi" used in the center-of-gravity method are the: a. transportation costs. b. x and y coordinates of location i. c. volume of goods moved to or from location i. d. x and y coordinates of the center of gravity.

b. x and y coordinates of location i.

7. Which one of the following statements is FALSE? a. Historically, General Motors used the push system to get vehicles to their dealers. b. Walmart is a good example of a company that runs a highly efficient supply chain. c. Apple and Nordstrom companies are examples of having push supply chains. d. Zappos is a good example of using third-party logistics (3PL) providers for customer deliveries and returns.

c. Apple and Nordstrom companies are examples of having push supply chains.

17. In ABC inventory analysis, which of the following is TRUE of class A items? a. Class A items need not be closely controlled. b. Class A items account for 5 to 15 percent of the total dollar value. c. Class A items account for a relatively small percentage of total items. d. Class A items have a relatively low volume and low unit costs compared to Class C items.

c. Class A items account for a relatively small percentage of total items.

16. In ABC inventory analysis, which of the following is TRUE of class C items? a. Close control of Class C items (more than of class A or class B items) is required. b. Class C items are critical items that must be monitored with a fixed-period system as they have low unit costs and a high volume. c. Class C items make up a lower percentage of total dollar value than either class A or class B items. d. Class C items make up for 10 to 20 percent of inventory items and 60 to 80 percent of the total dollar usage.

c. Class C items make up a lower percentage of total dollar value than either class A or class B items.

32. Which level of the facility location hierarchy is most closely related to factors such as managers' preferences, services and taxes, available transportation systems, banking services, and environmental impacts? a. Global (National) location b. Regional location c. Community location d. Local site selection

c. Community location

23. Which of the following is NOT a key assumption underlining the classic economic order quantity (EOQ) model? a. The entire order quantity arrives in the inventory at one time. b. There are only two types of relevant costs: order/setup and inventory holding. c. Demand is assumed to be stochastic. d. Stockouts are not allowed.

c. Demand is assumed to be stochastic.

8. Which of the following statements is TRUE? a. Inventory is any physical asset held for future use or sale. b. When using ABC analysis, C items require close control by operations managers as they account for a large dollar value but a relatively small percentage of total items. c. Dependent demand is directly related to the demand of other stock-keeping units (SKUs) and can be calculated without needing to be forecasted. d. Stockouts occur in a fixed-quantity system (FQS) whenever the lead-time demand exceeds the replenishment level (M).

c. Dependent demand is directly related to the demand of other stock-keeping units (SKUs) and can be calculated without needing to be forecasted.

23. _____ is a manufactured good recovery option in which a physical good is disassembled and the parts or the scrap materials are sold to other suppliers. a. Refurbishing b. Repairing c. Recycling d. Cannibalizing

c. Recycling

9. Which of the following statements is NOT TRUE? a. Inventory is any asset held for future use or sale. b. When using ABC analysis, "C" items comprise of a small dollar value. c. Stock keeping unit (SKU) is a single item or asset stored at multiple locations. d. The lead time is the time between placement of an order and its receipt.

c. Stock keeping unit (SKU) is a single item or asset stored at multiple locations.

29. Which of the following statements is NOT TRUE regarding the fixed-period system (FPS)? a. The time between orders is constant, but the order quantity might vary. b. An order is time-triggered, not inventory-triggered. c. The optimal replenishment level includes the demand during the review period, plus any desired safety stock. d. When demand is not certain, the FPS addresses stockouts by adding safety stock to the expected demand during time T + L.

c. The optimal replenishment level includes the demand during the review period, plus any desired safety stock.

16. A push system _____. a. works best when there are a large number of distribution centers b. is more appropriate for make-to-order items c. can reduce transportation costs by using full-truckload shipments d. works best with variable sales patterns

c. can reduce transportation costs by using full-truckload shipments

22. A reverse logistics is used to: a. send unused parts back to the suppliers. b. ship products from suppliers to customers. c. collect and send unusable or discarded products back from the customer to the producer or suppliers. d. provide flow of information from customers to the producer.

c. collect and send unusable or discarded products back from the customer to the producer or suppliers.

14. Backorders: a. result from lost sales. b. have little financial impact. c. may occur as a result of a stockout. d. force a customer to purchase elsewhere.

c. may occur as a result of a stockout.

24. Average inventory in the economic order quantity (EOQ) model is defined as: a. the order quantity divided by the number of inventory cycles per year. b. the annual usage divided by the number of inventory cycles per year. c. one-half of the order quantity. d. one-half of the annual usage.

c. one-half of the order quantity.

12. A(n) _____ produces goods in advance of customer demand using a forecast of sales and moves them to points of sale where they are stored as finished goods inventory. a. responsive supply chain b. efficient supply chain c. push system d. pull system

c. push system

11. Demand that incorporates uncertainty is called _____ demand. a. statistical b. average c. stochastic d. deterministic

c. stochastic

4. The basic purpose of a(n) _____ is to coordinate the flow of materials, services, and information among its elements to maximize customer value. a. product layout b. servicescape c. supply chain d. assembly line

c. supply chain

17. A pull system _____. a. requires high levels of finished goods inventory b. relies heavily on accurate sales forecasts c. waits for customer orders d. produces goods in advance of demand

c. waits for customer orders

3. Which of the following is NOT a basic function of the Supply Chain Operations Reference (SCOR) model? a. Source b. Make c. Deliver d. Control

d. Control

25. Which of the following statements is TRUE? a. The level of safety stock maintained decreases when the desired cycle service level increases. b. The level of safety stock maintained decreases when the standard deviation of demand during lead time increases. c. In a fixed-period inventory system, the value of Q is kept the same from one cycle to another. d. In a fixed-order-quantity system, the reorder point is the average demand during the lead time, plus the additional safety stock when demand is uncertain.

d. In a fixed-order-quantity system, the reorder point is the average demand during the lead time, plus the additional safety stock when demand is uncertain.

6. Which of the following is NOT a component of holding cost? a. Tax b. Insurance c. Material handling d. Order processing

d. Order processing

19. A contract manufacturer can offer significant competitive advantages. Which one of the following is NOT an advantage of using a contract manufacturer? a. Access to advanced manufacturing technologies b. Faster product time to market c. Lower costs from economies of scale d. Standardized goods in regional markets

d. Standardized goods in regional markets

33. The _____ method takes into account the location of facilities and markets, demand, and transportation costs in arriving at the best location for a single facility. a. global sourcing b. inventory management c. multisite management d. center-of-gravity

d. center-of-gravity

5. The function of Supply Chain Operations Reference (SCOR) model function that entails all order management activities from processing customer orders to routing shipments, managing goods at distribution centers, and invoicing the customer is called _____. a. return b. source c. make d. deliver

d. deliver

19. Inventory position is computed using all the following EXCEPT: a. on-hand quantity. b. scheduled receipts. c. backorders. d. lead-time demand.

d. lead-time demand.

10. Independent demand: a. can be calculated. b. is related to other stock-keeping units (SKUs). c. is also called finished-goods inventory. d. needs to be forecasted.

d. needs to be forecasted.

27. The center-of-gravity method takes all the following into account EXCEPT the: a. location of facilities and markets. b. demand. c. transportation costs. d. production costs.

d. production costs.

13. A(n) _____ produces only what is needed at upstream stages in the supply chain in response to customer demand signals. a. responsive supply chain b. efficient supply chain c. push system d. pull system

d. pull system

3. Additional inventory that is kept over and above the average amount required to meet demand is called _____ inventory. a. seasonal b. work-in-process c. finished goods d. safety stock

d. safety stock