Operations Management Ch 13
Which statement is true of order amplification?
Order amplification in the supply chain leads to the bullwhip effect.
_____ inventory is inventory that has been ordered but is in transit.
Pipeline
What is one tactic to mitigate the risk involved with capacity risks?
Schedule overtime.
Domestically, most consumer items are shipped by all of the following methods except _____.
pipelines
Chronic inventory and capacity shortages are examples of _____ risks.
product
Technology upgrades and backup systems and sites can help mitigate security risks.
True
Inventory turnover (IT) =____/_____
cost of goods sold; average inventory value
A(n) _____ is any entity—real or virtual—that coordinates and shares information between buyers and sellers.
intermediary
All of the following are true about supply chains in e-commerce except _____.
B2B commerce focuses on selling between buyers of goods
What is one tactic to mitigate the risk involved with product risks?
Better strategic planning and demand forecasting capability
Which of the following is a security risk to supply chains?
E-commerce system downtime
Which of the following is a responsibility of logistics managers?
Filing claims for damaged goods
All of the following are one of the five basic functions of the SCOR model, except ____.
operate
A backhaul occurs when
a truck delivers its load and also carries freight on the return journey.
Supply chain management is the management of:
all activities that facilitate the fulfillment of a customer order for a manufactured good to achieve customer satisfaction at reasonable cost.
Research has found that upward of 60 to 70 percent of a company's carbon footprint is found _____.
along their supply chain
Warehouse stockouts are examples of _____ risks.
inventory
In the context of measuring supply chain performance, _____ is a category of supply chain metrics that is measured by perfect order fulfillment.
delivery reliability
Import tariffs help in preventing the dumping of low-cost products in the domestic economy.
True
Bragg Johnson, materials manager at Johnson & Sons, has determined that a certain product experienced 3.4 turns last year, with an annual sales volume (at cost) of $972,000. What was the average inventory value for this product last year? Round your answer to the nearest dollar.
$ 285,882
If an online retail store has cost of goods sold equal to $2 million, has 200 operating days in a year, and has a total average on-hand inventory of $500,000, what is the cost of goods sold per day?
$10,000.
Speedex, an automobile company, has an annual sales volume of $3 million, cost of goods sold equal to $2 million, total average on-hand inventory of $600,000, and 150 operating days in a year. What is the daily revenue earned by the company?
$20,000
Bragg Johnson, materials manager at Johnson & Sons, has determined that a certain product experienced 3.9 turns last year, with an annual sales volume (at cost) of $987,000. What was the average inventory value for this product last year? Round your answer to the nearest dollar.
253,077
In your company, the inventory holding period is 46 days, the average collection period is 35 days, and the average accounts payable payment period is 31 days. What is the cash to cash conversion cycle in days based on this information?
50 days
In your company, the inventory holding period is 16 days, the average collection period is 5 days, and the average accounts payable payment period is 15 days. What is the cash to cash conversion cycle in days based on this information?
6 days
TekSupply, Inc., an automobile parts supplier, held an average automobile parts inventory of $4 million last year. Its cost of goods sold was $25 million. Therefore, the automobile parts experienced an inventory turnover of _____ turns last year.
6.25
Andrew Manufacturing held an average inventory of $1.2 million (raw materials, work-in-process, finished goods) last year. Its sales were $8.0 million, and its cost of goods sold was $5.2 million. The firm operates 270 days a year. What is the inventory days supply? Do not round intermediate calculations. Round your answer to one decimal place.
62.3
Inventory days' supply (IDS) is calculated as _____ / Cost of goods sold per day.
Average total inventory
Logistics involves what primary responsibilities?
Buying transportation services, managing the transportation of goods through the supply chain.
A high average inventory value reduces the chances of inventory obsolescence.
False
Air shipments have the lowest transportation cost and can carry unlimited weight.
False
Electronic data interchange and Internet links decrease the velocity of supply chains.
False
Which statement best defines inventory turnover?
Inventory turnover is a measure of how quickly goods are moving through the supply chain.
Which of the following is true of inventory turnover?
It can be computed over any time period such as months, quarters, or years.
Which of the following is a disadvantage of vendor-managed inventory (VMI)?
It does not account for substitutable products from competing manufacturers.
In the context of the Supply Chain Operations Reference (SCOR) model, which of the following is true of planning?
It involves developing a strategy that balances resources with requirements.
Which of the following is true of responsiveness?
It is measured by order fulfillment lead time or by perfect delivery fulfillment.
In the context of transportation, which of the following is true of rail transport?
It provides a good balance between costs, delivery speed, tonnage capacity, and environmental sustainability.
Which of the following is true of the Supply Chain Operations Reference (SCOR) model?
It requires a clear understanding of the interactions among all parts of the supply chain management system.
_____ refers to managing the flow of finished goods, materials, or components that may be unusable or discarded through the supply chain from customers toward either suppliers, distributors, or manufacturers for the purpose of reuse, resale, or disposal.
Reverse logistics
Which of the following is NOT true about returns of sold goods?
The cost of returns averages between 7 to 10 percent of the cost of goods sold, but it is decreasing.
What is the supply chain operations reference model?
The supply chain operations reference model is a framework for understanding the scope of supply chain management (SCM) that is based on five basic functions involved in managing a supply chain: plan, source, make, deliver, and return.
Cash-to-cash conversion cycle is the average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished good.
True
Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 30,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?
Xiajing Supplier, 30000
All of the following are true about order amplification except _____.
a distributor might order extra raw materials or parts
Equipment shortage is an example of a(n) _____ risk. Poor transportation infrastructure by country is an example of a(n) _____ risk.
capacity; logistics and scheduling
The Pharmaceutical Manufacturers Association defines a _____ as one that, after extensive investigation, is found to provide material of such quality that routine testing on each lot received is unnecessary.
certified supplier
In supply chains such as B2C and G2C, C stands for _____ and G stands for _____.
customer; government
In the context of measuring supply chain performance, the goal of sustainability measures is to:
have a carbon-neutral supply chain.
All of the following are true about the impact of returns, except: ______.
in many situations, moving new products forward in the supply chain is more costly than moving an item backwards in the supply chain
_____ is how quickly goods are moving through the supply chain. The _____ is the average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished good.
inventory turnover; cash-to-cash conversion cycle
The _____ function of a supply chain is responsible for selecting transportation carriers and managing company-owned fleets of vehicles.
logistics
Global economic risks can be mitigated through:
multicountry sourcing of suppliers.
_____ integration is the process of coordinating the physical flow of materials. ______ is the process of managing information, physical goods, and services.
supply chain; value chain
The principal goal of the purchasing department is to:
support its key internal customers.
In the context of risk management in supply chains, _____ risks are those risks that influence the day-to-day management of operations.
tactical
Josh Smith, the materials manager at a retail store, has determined that a particular product experienced 5 turns last year, with an annual sales volume of $15 million. What was the average inventory value for this product last year?
$3 million
ProShopper, a sportswear store, held an average sportswear inventory of $10 million last year and reported an inventory turnover of 5 times per year. What was its cost of goods sold?
$50 million
Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 40,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?
Boston Medical Supplier, 20000
Inventory days' supply (IDS) is calculated as Average total inventory / _____.
Cost of goods sold per day
What is one tactic to mitigate the risk involved with logistics and scheduling risks?
Increase quality control inspections
Which of the following is NOT an advantage of import tariffs?
Less competitive pressure on domestic firms to improve.
_____ is the discipline of managing the flow of materials and transportation activities to ensure adequate customer service at reasonable cost.
Logistics
What is logistics?
Logistics is the management of transportation activities and the flow of materials within a supply chain to ensure adequate customer service at reasonable cost.
Which of the following is a disadvantage of import tariffs?
More expensive goods and services
Managing supplier relationships involves:
establishing trust, openness, and honesty with the supplier
Logistics play a key role both externally, by _____ , and internally, by _____.
satisfying customers' needs and expectations; leading to efficiency in supply chain performance
E-commerce system downtime is an example of a(n) _____ risk. Goods and service obsolescence is an example of a(n) _____ risk.
security; product
_____ and ______ are both examples of the responsibilities of a logistics manager regarding purchasing transportation services.
selecting appropriate modes of shipment and mix of specific carriers; negotiating transportation rates, and shipping, insurance, and liability contracts
In the context of the metrics used to identify improvements to the operation of supply chains, financial measures
show how supply chain performance affects the bottom line.
As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $23.0 million, cost of goods sold of $20.4 million, 40 operating weeks a year, total average on hand inventory of $2,100,000, accounts receivable equal to $2,480,000, and accounts payable of $3,580,000. Assume the operating manager reduces total average inventory on-hand by 25 percent by using better operations and supply chain methods. What is the revised cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.
1.2
As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $22.9 million, cost of goods sold of $19.7 million, 32 operating weeks a year, total average on hand inventory of $2,150,000, accounts receivable equal to $2,445,000, and accounts payable of $3,755,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.
1.7
As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $24.1 million, cost of goods sold of $19.8 million, 32 operating weeks a year, total average on hand inventory of $2,250,000, accounts receivable equal to $2,430,000, and accounts payable of $3,715,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.
1.9
Andrew Manufacturing held an average inventory of $1.5 million (raw materials, work-in-process, finished goods) last year. Its sales were $8.1 million, and its cost of goods sold was $5.6 million. The firm operates 265 days a year. What is the inventory days supply? Do not round intermediate calculations. Round your answer to one decimal place.
71.0
Based on the following information, how many days of supply of inventory is the firm holding (assume 260 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Inventory days' supply?
89.7
Based on the following information, how many days of supply of inventory is the firm holding (assume 230 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Inventory days' supply?
91.2
Based on the following information, how many days of supply of inventory is the firm holding (assume 270 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Inventory days' supply?
91.2
Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 20,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?
Boston Medical Supplier, 10000
Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 30,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?
Boston Medical Supplier, 15000
_____ is the supply chain function responsible for acquiring raw materials, component parts, tools, services, and other items required from external suppliers.
Procurement
Which statement is true of purchasing?
Purchasing can have a significant impact on total supply chain costs.
What is one tactic to mitigate the risk involved with inventory risks?
Reduce lead times
_____ specialize in handling all aspects of customers giving back a manufactured good or delivered service and requesting their money back, repairing the manufactured good and giving it to the customer, and/or invoking the service guarantee.
Return facilitators
What is a disadvantage of vendor-managed inventory (VMI)?
VMI often results in higher customer inventories than necessary.
_____ inventory outsources the inventory management function in supply chains to suppliers.
Vendor-managed
What is one tactic to mitigate the risk involved with global economic risks?
Virtual versus direct sales channel mix
All of the following are activities include in reverse logistics except _____.
assembly of raw materials
Managing orders, transportation, and distribution to provide goods and services is part of the _____ function of the Supply Chain Operations Reference (SCOR) model.
deliver
