SCM 340 EXAM 1

Forecasting is a(n) ________ that should continually be reviewed for improvements.

(nested) process

An item is used in Process B at a rate of 150 units per day. Process A works one shift per day (480 minutes) and supplies Process B's requirements. What takt time is required in Process A to meet Process B's demand?

480 minutes per day ÷ 150 units = 3.2 minutes per unit, or 192 seconds per unit

An item sells at a rate of 240 units per day. If a plant works one shift per day (480 minutes), what takt time is required for the plant to meet this demand?

480 minutes per day ÷ 240 units = 2.0 minutes per unit, or 120 seconds per unit

An item sells at a rate of 600 units per day. If a plant works two shifts per day (480 minutes each shift), what takt time is required for the plant to meet this demand?

480 minutes per shift × 2 shifts = 960 minutes per day

A plant's manufacturing process has a takt time of 90 seconds per unit. This results in a process output of how many units per hour?

60 minutes per hour x 60 seconds per minute = 3600 seconds per hour 3600 seconds per hour ÷ 90 seconds per unit = 40 units per hour output

A plant's manufacturing process has a takt time of 72 seconds per unit. This results in a process output of how many units per hour?

60 minutes per hour × 60 seconds per minute = 3600 seconds per hour 3600 seconds per hour ÷ 72 seconds per unit = 50 units per hour output

What is the output for a process that has a takt time of 1.25 minutes per unit?

60 minutes per hour ÷ 1.25 minutes per unit = 48 units per hour output

Discuss the two keys to the success or failure of a company.

A company's success or failure is thus closely linked to the following keys: 1. The competitive strategy and all functional strategies must fit together to form a coordinated overall strategy. Each functional strategy must support other functional strategies and help a firm reach its competitive strategy goal. 2. The different functions in a company must appropriately structure their processes and resources to be able to execute these strategies successfully.

What is the impact of lack of coordination on the performance of the supply chain?

A lack of coordination occurs either because different stages of the supply chain have objectives that conflict or because information moving between stages gets delayed and distorted. Different stages of a supply chain may have objectives that conflict if each stage has a different owner. As a result, each stage tries to maximize its own profits, resulting in actions that often diminish total supply chain. Information is distorted as it moves within the supply chain because complete information is not shared between stages. This distortion is exaggerated by the fact that supply chains today produce a large amount of product variety. The lack of supply chain coordination leads to increased inventories, poorer product availability, and a drop in profits.

What did the production manager say to the pile of scrapped material? A) "Hello muda." B) "Hello fadduh." C) "We need more kanbans." D) "JIT II Brute?"

A) "Hello muda."

A takt time of 90 seconds generates a process output of: A) 40 units per hour. B) 30 units per hour. C) 4 units per hour. D) 90 units per hour.

A) 40 units per hour.

The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been: Week # special pizzas 1 50 2 65 3 53 4 56 5 55 6 60 If a four-week weighted moving average were used, what would be the forecast for week 7? (The weights are 0.60, 0.30, 0.07, and 0.03 with 0.60 applied to the most recent period and 0.03 applied to the oldest period.) A) 58 pizzas B) 60 pizzas C) 62 pizzas D) 64 pizzas

A) 58 pizzas

Mike's Mustard Company uses a Kanban system to manufacture bulk mustard in gallon containers for restaurants. The demand for container lids over an eight-hour production day is 1000 units. The average waiting time for a container of lids is 45 minutes. The processing time for a container of lids is 2 hours, and a container holds 70 lids. How many Kanban containers would be required if a 15% policy variable is used? A) 6 or fewer B) 7 or 8 C) 15 to 20 D) 20 or more

A) 6 or fewer

Which statement about forecast accuracy is TRUE? A) A manager must be careful not to "overfit" past data. B) The ultimate test of forecasting power is how well a model fits past data. C) The ultimate test of forecasting power is how a model fits holdout samples. D) The best technique in explaining past data is the best technique to predict the future.

A) A manager must be careful not to "overfit" past data.

The four bolts that hold the passenger seat in a pickup truck are tightened in a clockwise order beginning with the front right bolt in 24 seconds. This production factoid illustrates which of the following principles of the Toyota Production System? A) All work must be specified as to content. B) Every customer-supplier connection must be direct and unambiguous. C) The pathway for every service and product must be direct. D) Any improvements to the system must be made in accordance with the scientific method.

A) All work must be specified as to content.

Which of the following is not a cycle in the supply chain cycle view? A) Analysis cycle B) Customer order cycle C) Replenishment cycle D) Manufacturing cycle E) Procurement cycle

A) Analysis cycle

Which of the following managerial actions does not necessarily increase total supply chain profits and moderate information distortion? A) Assigning blame for demand fluctuations B) Building strategic partnerships and trust C) Aligning of goals and incentives D) Improving information visibility and accuracy

A) Assigning blame for demand fluctuations

Sourcing decisions directly impact the cost of goods sold and accounts payable. Which of the following is NOT listed as a source-related metric that a manager should track? A) Average selling price B) Range of purchase price C) Days payable outstanding D) Average purchase quantity

A) Average selling price

Which of the following defines the set of customer needs that a company seeks to satisfy through its products and services? A) Competitive strategy B) Product development strategy C) Marketing and sales strategy D) Supply chain strategy E) none of the above

A) Competitive strategy

A supply chain has many stages. It would NOT typically involve this stage. A) Customer's trip to retailer B) Retailers C) Manufacturers D) Raw materials suppliers

A) Customer's trip to retailer

Which of the following is not a major driver of supply chain performance? A) Customers B) Facilities C) Inventory D) Transportation E) Information

A) Customers

Which of the following is not a key step in designing effective supply chain partnerships? A) Devoting resources to coordination B) Assessing the value of the relationship C) Identifying operational roles and decision rights for each party D) Creating effective contracts E) Designing effective conflict resolution mechanisms

A) Devoting resources to coordination

Which of the following is a process consideration in the implementation of a lean system? A) Firms might have to change existing layouts. B) Workstations typically will have to be moved farther apart. C) A contract with strict job classifications will have to be adopted. D) Plant access by rail will become necessary.

A) Firms might have to change existing layouts.

Which of the following are technologies that share and analyze information in the supply chain? A) Internet B) Enterprise Data Planning (EDP) C) Electronic Resource Interchange (ERI) D) Chain Management (CM) software E) none of the above

A) Internet

The key weakness of the ________ view is that different functions within a firm may have conflicting objectives. A) Intrafunctional scope B) Intraoperation scope C) Interfunctional scope D) Intercompany scope

A) Intrafunctional scope

Pricing directly affects revenues but can also affect production costs and inventories depending upon its impact on consumer demand. Which of the following is not listed as a metric a manager should track? A) Inventory turnover B) Profit margin C) Days sales outstanding D) Average sales price

A) Inventory turnover

Regarding the Eight Types of Waste that must be eliminated to implement lean systems, which of the following statements is TRUE? A) Jobs with excessive motion should be redesigned. B) Work-in-process inventory is the direct result of underutilization of employees. C) Manufacturing an item before it is needed helps an organization detect and reduce defects. D) Product damage and deterioration result from using expensive high precision equipment.

A) Jobs with excessive motion should be redesigned.

Which of the following is not an accurate statement about pull processes? A) May also be referred to as speculative processes. B) Execution is initiated in response to a customer order. C) At the time of execution, demand is known with certainty. D) May also be referred to as reactive processes. E) All of the above are accurate.

A) May also be referred to as speculative processes.

Which of the following statements about push processes is accurate? A) May also be referred to as speculative processes. B) Execution is initiated in response to customer orders. C) At the time of execution, demand is known with certainty. D) May also be referred to as reactive processes. E) None of the above are accurate.

A) May also be referred to as speculative processes.

A ________ strategy specifies the portfolio of new products that a company will try to develop. A) Product Development B) Marketing and Sales C) Supply Chain D) Finance

A) Product Development

In the textbook, it mentions that Wal-Mart has mandated the use of a specific technology by its top 100 suppliers at the level of product cases. What is the technology? A) RFID B) ERP C) SCM D) EDI

A) RFID

"When in doubt, weed it out" describes which 5S element? A) Sort B) Straighten C) Shine D) Standardize

A) Sort

Assume that a time-series forecast is generated for future demand and subsequently it is observed that the forecast method did not accurately predict the actual demand. Specifically, the forecast errors were found to be: Mean absolute percent error = 10% Cumulative sum of forecast errors = 0 Which one of the statements concerning this forecast is TRUE? A) The forecast has no bias but has a positive standard deviation of errors. B) The forecast has a positive bias and a standard deviation of errors equal to zero. C) The forecast has no bias and has a standard deviation of errors equal to zero. D) The forecast has a positive bias and a positive standard deviation of errors.

A) The forecast has no bias but has a positive standard deviation of errors.

Which one of the following statements about forecasting is FALSE? A) The method for incorporating a trend into an exponentially smoothed forecast requires the estimation of three smoothing constants: one for the mean, one for the trend, and one for the error. B) The cumulative sum of forecast errors (CFE) is useful in measuring the bias in a forecast. C) The standard deviation and the mean absolute deviation measure the dispersion of forecast errors. D) A tracking signal is a measure that indicates whether a method of forecasting has any built-in biases over a period of time.

A) The method for incorporating a trend into an exponentially smoothed forecast requires the estimation of three smoothing constants: one for the mean, one for the trend, and one for the error.

Which of the following statements about the Toyota Production System is best? A) Toyota has built a learning organization over the course of 50 years. B) The key to success for Toyota is the set of tools and procedures readily apparent on a plant tour. C) The four principles that form the basis to TPS are impossible to replicate. D) Toyota has 23 manufacturing plants in North America alone.

A) Toyota has built a learning organization over the course of 50 years.

Which of the following is not a warehousing methodology? A) Warehouse unit storage B) Stock keeping unit (SKU) storage C) Job lot storage D) Cross-docking E) All of the above are warehousing methodologies.

A) Warehouse unit storage

Which of the following is a characteristic of a facility with excess capacity? A) Will likely be more efficient per unit of product it produces than one with a lot of unused capacity B) Would be very flexible and respond to wide swings in the demands placed on it C) Would be considered a high utilization facility D) Will have difficulty responding to demand fluctuations E) none of the above

A) Will likely be more efficient per unit of product it produces than one with a lot of unused capacity

Which of the following is NOT a barrier for an organization when implementing a lean system? A) Workers usually feel as if they have gained autonomy. B) Workers can feel increased stress and pressure due to specified cycle times. C) Organizational relationships must be reoriented to build close cooperation and trust. D) The reward system might require tweaking.

A) Workers usually feel as if they have gained autonomy.

Which one of the following statements about forecasting is FALSE? A) You should use the simple moving-average method to estimate the mean demand of a time series that has a pronounced trend and seasonal influences. B) The weighted moving-average method allows forecasters to emphasize recent demand over earlier demand. The forecast will be more responsive to change in the underlying average of the demand series. C) The most frequently used time-series forecasting method is exponential smoothing because of its simplicity and the small amount of data needed to support it. D) In exponential smoothing, higher values of alpha place greater weight on recent demands in computing the average.

A) You should use the simple moving-average method to estimate the mean demand of a time series that has a pronounced trend and seasonal influences.

Seasonal inventory should be used when A) a company can rapidly change the rate of its production system at a very low cost. B) changing the rate of production is expensive (e.g., when workers must be hired or fired). C) adjusting to a period of low demand without incurring large costs. D) the world is perfectly predictable. E) production rate is flexible.

A) a company can rapidly change the rate of its production system at a very low cost.

When the underlying mean of a time series is very stable and there are no trend, cyclical, or seasonal influences: A) a simple moving-average forecast with n = 20 should outperform a simple moving-average forecast with n = 3. B) a simple moving-average forecast with n = 3 should outperform a simple moving-average forecast with n = 15. C) a simple moving-average forecast with n = 20 should perform about the same as a simple moving-average forecast with n = 3. D) an exponential smoothing forecast with a = 0.30 should outperform a simple moving-average forecast with α = 0.01.

A) a simple moving-average forecast with n = 20 should outperform a simple moving-average forecast with n = 3.

10) The bullwhip effect moves a supply chain A) away from the efficient frontier by increasing cost and decreasing responsiveness. B) away from the efficient frontier by decreasing cost and increasing responsiveness. C) toward the efficient frontier by increasing cost and decreasing responsiveness. D) toward the efficient frontier by increasing cost and increasing responsiveness. E) none of the above

A) away from the efficient frontier by increasing cost and decreasing responsiveness.

Between 1993 and 2006, Dell's competitive strategy was to provide a large variety of customizable products at a reasonable price. Given the focus on customization, Dell's supply chain was designed to A) be responsive. B) provide a different product. C) operate on a low-cost basis. D) provide sustainable products.

A) be responsive.

A firm that is not on the cost-responsiveness efficient frontier can improve A) both responsiveness and cost performance. B) only responsiveness. C) only cost performance. D) responsiveness, but not cost performance. E) neither responsiveness nor cost performance.

A) both responsiveness and cost performance.

All of the following are components of inventory decisions except A) capacity. B) cycle inventory. C) safety inventory. D) seasonal inventory. E) sourcing.

A) capacity.

Which one of the following is most useful for measuring the bias in a forecast? A) cumulative sum of forecast errors B) standard deviation of forecast errors C) mean absolute deviation of forecast errors D) percentage forecast error in period t

A) cumulative sum of forecast errors

The customer order cycle occurs at the A) customer/retailer interface. B) retailer/distributor interface. C) distributor/manufacturer interface. D) manufacturer/supplier interface. E) none of the above

A) customer/retailer interface.

The average amount of inventory used to satisfy demand between receipt of supplier shipments is referred to as A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing. E) none of the above

A) cycle inventory.

A company's competitive strategy A) defines the set of customer needs that it seeks to satisfy through its products and services. B) specifies the portfolio of new products that it will try to develop. C) specifies how the market will be segmented and how the product will be positioned, priced, and promoted. D) determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product. E) determines how it will obtain and maintain the appropriate set of skills and abilities to meet customer needs.

A) defines the set of customer needs that it seeks to satisfy through its products and services.

Incentives that focus only on the local impact of an action result in decisions that A) do not maximize total supply chain profits. B) maximize total supply chain profits. C) minimize total supply chain profits. D) minimize total supply chain cost. E) none of the above

A) do not maximize total supply chain profits.

The places in the supply chain network where product is stored, assembled, or fabricated are known as A) facilities. B) inventory. C) transportation. D) information. E) customers.

A) facilities.

It is now near the end of May and you must prepare a forecast for June for a certain product. The forecast for May was 900 units. The actual demand for May was 1000 units. You are using the exponential smoothing method with = 0.20. The forecast for June is: A) fewer than 925 units. B) greater than or equal to 925 units but fewer than 950 units. C) greater than or equal to 950 units but fewer than 1000 units. D) greater than or equal to 1000 units.

A) fewer than 925 units.

The objective of customer order fulfillment is to A) get the correct orders to customers by the promised due date at the lowest possible cost. B) maintain a record of product receipt and complete payment. C) maximize the conversion of customer arrivals to customer orders. D) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes. E) none of the above

A) get the correct orders to customers by the promised due date at the lowest possible cost.

The electricity bill at Padco was driven solely by the lights throughout the office; everything else was driven by alternative energy sources. The office was open roughly 8 hours a day, five days a week and the cleaning crew spent about the same amount of time in the offices each week night. The kilowatt hour usage for the office was best described as a: A) horizontal demand pattern. B) random demand pattern. C) seasonal demand pattern. D) cyclical demand pattern.

A) horizontal demand pattern.

Situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits are referred to as A) incentive obstacles. B) information processing obstacles. C) operational obstacles D) pricing obstacles. E) behavioral obstacles.

A) incentive obstacles.

The push/pull view of the supply chain is useful when considering strategic decisions relating to supply chain design, because A) it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders. B) it specifies the roles and responsibilities of each member of the supply chain. C) it clearly defines the processes involved and the owners of each process. D) it focuses on processes that are external to the firm. E) it focuses on processes that are internal to the firm.

A) it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders.

Reducing the replenishment lead time can help dampen the bullwhip effect because A) it will decrease the uncertainty of demand during the lead time. B) the manufacturer is aware of the retailer's promotion plans to achieve coordination. C) it discourages retailers from artificially inflating their orders in the case of a shortage. D) all of the above E) none of the above

A) it will decrease the uncertainty of demand during the lead time.

The Delphi method of forecasting is useful when: A) judgment and opinion are the only bases for making informed projections B) a systematic approach to creating and testing hypotheses is needed and the data are usually gathered by sending a questionnaire to consumers C) historical data are available and the relationship between the factor to be forecast and other external or internal factors can be identified D) historical data is available and the best basis for making projections is to use past demand patterns

A) judgment and opinion are the only bases for making informed projections

The judgment methods of forecasting are to be used for purposes of: A) making adjustments to quantitative forecasts due to unusual circumstances B) forecasting seasonal demands in lieu of time-series approaches C) avoiding the calculations necessary for quantitative forecasts D) making forecasts more variable

A) making adjustments to quantitative forecasts due to unusual circumstances

When implementing a lean system: A) managers can mitigate some of the effects of worker stress by judiciously using safety stocks and emphasizing material flows rather than worker pace. B) management should base the reward system on production volume. C) the plant layout is the only environmental characteristic that need not be analyzed. D) it is critical to develop a master production schedule that changes frequently as forecasts change.

A) managers can mitigate some of the effects of worker stress by judiciously using safety stocks and emphasizing material flows rather than worker pace.

The local building supply store experienced what they considered to be irregular demands for lumber after the devastating hurricane season. These unusual data points were considered: A) nonbase data. B) outliers. C) residuals. D) erroneous.

A) nonbase data.

Polly Prognosticator was the greatest quantitative forecaster in recorded history. A skillful user of all techniques in your chapter on forecasting, she knew better than to try and develop a forecast for data that exhibited a: A) random pattern. B) horizontal pattern. C) seasonal pattern. D) cyclical pattern.

A) random pattern.

Which of the following is NOT a part of value stream mapping analysis? A) steady state drawing B) current state drawing C) future state drawing D) work plan and implementation

A) steady state drawing

When all the different stages of a supply chain work toward the objective of maximizing total supply chain profitability, rather than each stage devoting itself to its own profitability without considering total supply chain profit, it is known as A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management. E) pricing.

A) supply chain coordination.

Information distortion is exaggerated by the fact that A) supply chains today produce a large amount of product variety. B) supply chains today produce a small amount of product variety. C) the telephone effect is extreme in situations where technology is in use. D) different stages of supply chains send excessive data. E) none of the above

A) supply chains today produce a large amount of product variety.

The takt time of a process is defined as: A) the cycle time needed to match the rate of production to the rate of consumption. B) the total time required to move an item through a process. C) the time required to change a machine to run a new model. D) the lead time necessary to notify maintenance that a problem has occurred in an operation.

A) the cycle time needed to match the rate of production to the rate of consumption.

Customer arrival refers to A) the point in time when the customer has access to choices and makes a decision regarding a purchase. B) the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. C) the process where product is prepared and sent to the customer. D) the process where the customer receives the product and takes ownership. E) none of the above

A) the point in time when the customer has access to choices and makes a decision regarding a purchase.

When a single stage controls replenishment decisions for the entire chain, coordination is achieved because A) the problem of multiple forecasts is eliminated. B) each stage views its role as one of replenishing orders placed by the next stage. C) the manufacturer is aware of the retailer's promotion plans to achieve coordination. D) all of the above E) A and B only

A) the problem of multiple forecasts is eliminated.

The second step in achieving strategic fit between competitive and supply chain strategies is to A) understand the supply chain and map it on the responsiveness spectrum. B) understand customers and supply chain uncertainty. C) match supply chain responsiveness with the implied uncertainty of demand. D) ensure that all functional strategies within the supply chain support the supply chain's level of responsiveness. E) none of the above

A) understand the supply chain and map it on the responsiveness spectrum.

The lean system concept will not work without the proper environment. Which one of the following characteristics is most common to firms that have successfully implemented a lean system? A) uniform assembly schedules B) specialized workforce C) high rates of machine failures D) longer setup times

A) uniform assembly schedules

Explain the three macro processes within a supply chain.

All processes within a supply chain can be classified into three macro processes which are CustomerRelationship Management (CRM), Internal Supply Chain Management (ISCM), and Supplier Relationship Management (SRM). 1. Customer Relationship Management (CRM) includes all processes that focus on the interface between the firm and its customers such as marketing, sales, call center management and order management. 2. Internal Supply Chain Management (ISCM) includes all processes that are internal to the firm such as finalization of demand and supply plans, preparation of inventory management policies, order fulfillment and planning of capacity. 3. Supplier Relationship Management (SRM) includes all processes that focus on the interface between a firm and its suppliers such as evaluation and selection of suppliers, negotiation of supply terms and communication regarding new products and orders.

Discuss the impact of the product life cycle on strategic fit between implied demand uncertainty and supply chain responsiveness.

As products go through their life cycle, the demand characteristics and the needs of the customer segments being served change. Supply characteristics also change as the product and production technologies mature. High-tech products are particularly prone to these life cycle swings over a very compressed time span. A product goes through life cycle phases from the introductory phase, when only the leading edge of customers is interested in it and supply is uncertain, all the way to the point at which the product becomes a commodity, the market is saturated, and supply is predictable. Thus, if a company is to maintain strategic fit, its supply chain strategy must evolve as its products enter different phases. As products mature, the corresponding supply chain strategy should, in general, move from being responsive to being efficient. The key point here is that demand and supply characteristics change over a product's life cycle. Because demand and supply characteristics change, the supply chain strategy must also change over the product life cycle if a company is to continue achieving strategic fit.

The production of 150 units during a 480-minute work shift results in a takt time of: A) 150 seconds. B) 192 seconds. C) 120 seconds. D) 18.8 seconds.

B) 192 seconds.

Mike's Mustard Company uses a Kanban system to manufacture bulk mustard in gallon containers for restaurants. The demand for container lids over an eight-hour production day is 1000 units. The average waiting time for a container of lids is 45 minutes. The processing time for a container of lids is 2 hours, and a container holds 70 lids. How many Kanban containers would Mike's Mustard require if a 5% policy variable is used? A) fewer than 2 B) 5 or 6 C) 50 to 650 D) 700 or more

B) 5 or 6

A takt time of 72 seconds generates a process output of: A) 72 units per hour. B) 50 units per hour. C) 60 units per hour. D) 80 units per hour.

B) 50 units per hour.

________ typically measures the cost of bringing product into a facility as a percentage of sales or cost of goods sold (COGS). A) Average outbound transportation cost B) Average inbound transportation cost C) Average incoming shipment size D) Average inbound transportation cost per shipment

B) Average inbound transportation cost

Cisco has outsourced almost all of its manufacturing. It does, however, have a sourcing strategy that varies by product type. For low-end products such as routers for home networks, Cisco aims for efficiency. These routers are produced and packed in what country that supports this strategy? A) Italy B) China C) United States D) Canada

B) China

38) Supply chain macro processes include which of the following? A) Internal Relationship Management (IRM) B) Customer Relationship Management (CRM) C) External Relationship Management (ERM) D) Supply Chain Relationship Management (SCRM) E) none of the above

B) Customer Relationship Management (CRM)

Supply chain surplus involves what two parts? A) Manufacturing cost and selling price B) Customer value and supply chain cost C) Customer value and high quality products D) Reliable transportation and supply chain cost

B) Customer value and supply chain cost

Which of the following would not be a demand and supply characteristic toward the beginning stages of a product's life cycle? A) Demand is very uncertain and supply may be unpredictable. B) Demand has become more certain and supply is predictable. C) Margins are often high and time is crucial to gaining sales. D) Product availability is crucial to capturing the market. E) Cost is often of secondary consideration.

B) Demand has become more certain and supply is predictable.

The rack at my assembly station that holds rear view mirrors is empty, so a runner wheels it away and replaces it with a new rack, fully populated with rear view mirrors. This production factoid illustrates which of the following principles of the Toyota Production System? A) All work must be specified as to content. B) Every customer-supplier connection must be direct and unambiguous. C) The pathway for every service and product must be direct. D) Any improvements to the system must be made in accordance with the scientific method.

B) Every customer-supplier connection must be direct and unambiguous. B) Every customer-supplier connection must be direct and unambiguous.

Which of the following is not a component of facilities decisions? A) Warehousing methodology B) Forecasting methodology C) Operations methodology D) Capacity E) Location

B) Forecasting methodology

The ________ strategy results in a peak during the discount week, often followed by a steep drop in demand during the following weeks. A) Everyday low pricing B) High-low pricing C) Fixed price D) Menu pricing

B) High-low pricing

Which of the following managerial actions in the supply chain will not increase total supply chain profits and moderate the bullwhip effect? A) Aligning of goals and incentives B) Increasing information inaccuracy C) Improving operational performance D) Designing pricing strategies to stabilize orders E) Building partnerships and trust

B) Increasing information inaccuracy

With the ________ view firms attempt to align all operations within a function. In this view all supply chain functions including sourcing, manufacturing, warehousing, and transportation must align their strategy to minimize total functional cost. A) Intrafunctional scope B) Intraoperation scope C) Interfunctional scope D) Intercompany scope

B) Intraoperation scope

Which one of the following statements about forecasting is TRUE? A) The five basic patterns of demand are the horizontal, trend, seasonal, cyclical, and the subjective judgment of forecasters. B) Judgment methods are particularly appropriate for situations in which historical data are lacking. C) Casual methods are used when historical data are available and the relationship between the factor to be forecast and other external and internal factors cannot be identified. D) Focused forecasting is a technique that focuses on one particular component of demand and develops a forecast from it.

B) Judgment methods are particularly appropriate for situations in which historical data are lacking.

Which of the following customer needs will cause implied uncertainty of demand to increase? A) Product margin B) Lead time decreases C) Average stockout rate D) Average forced season end markdown E) none of the above

B) Lead time decreases

A ________ strategy specifies how the market will be segmented and how the product will be positioned, priced, and promoted. A) Product Development B) Marketing and Sales C) Supply Chain D) Finance

B) Marketing and Sales

Which of the following are key components of transportation decisions when designing and operating a supply chain? A) Software selection B) Mode of transportation C) Source selection D) Warehouse selection E) none of the above

B) Mode of transportation

Which of the following is not an issue companies need to consider in facility location decisions? A) Quality of workers B) Product development C) Proximity to customers and the rest of the network D) Cost of facility E) Tax effects

B) Product development

Which of the following specifies the portfolio of new products that a company will try to develop? A) Competitive strategy B) Product development strategy C) Marketing and sales strategy D) Supply chain strategy E) all of the above

B) Product development strategy

There are 5 major obstacles listed in the text to coordination in a supply chain. Which of the following is NOT one of these major obstacles? A) Incentive obstacles B) Quality obstacles C) Pricing obstacles D) Behavioral obstacles

B) Quality obstacles

Sellers and buyers in a supply chain often collaborate. Which of the following is not listed as a common activity of collaboration? A) Demand and supply management B) Shared engineering C) Analysis D) Execution

B) Shared engineering

Which of the following is not an approach to improve coordination within the supply chain by aligning goals and incentives? A) Aligning incentives across functions B) Sharing point of sales (POS) data C) Pricing for coordination D) Altering sales force incentives from sell-in to sell-through E) none of the above

B) Sharing point of sales (POS) data

"A place for everything, everything in its place" describes which 5S element? A) Sort B) Straighten C) Shine D) Standardize

B) Straighten

Which component of the supply chain decision-making framework would be established second? A) Customer strategy B) Supply chain strategy C) Supply chain structure D) Competitive strategy E) Replenishment strategy

B) Supply chain strategy

________ measures the average time between when an order is placed and the product arrives. A) Supplier reliability B) Supply lead time C) Fraction of on-time deliveries D) Supply quality

B) Supply lead time

Consider the following data concerning the performance of a forecasting method. Month.Actual Demand. Forecast 1 300 270 2 200 280 3 270 260 4 250 270 5 310 250 A) The CFE is greater than 100, and the MAD is less than 50. B) The CFE is less than 100, and the MAD is less than 50. C) The CFE is less than 100, and the MAD is greater than 50. D) The CFE is greater than 100, and the MAD is greater than 50.

B) The CFE is less than 100, and the MAD is less than 50.

Which one of the following statements is best? A) Two operating rules for the Kanban system are (1) the container size should be equal to at least seven days of supply and (2) each container must have a Kanban card. B) The Kanban system is more effective when the assembly schedule calls for small lots and does not fluctuate much from day to day. C) The number of Kanban cards should be equal to the desired safety stock times alpha. D) Supplier performance is much more important in U.S. environments than such factors as lot sizes, scrap losses, and worker flexibility.

B) The Kanban system is more effective when the assembly schedule calls for small lots and does not fluctuate much from day to day.

Which of the following is not a key to the success or failure of a company? A) The competitive strategy and all functional strategies must fit together to form a coordinated overall strategy. B) The competitive strategy and all functional strategies operate independently of each other. C) The different functions in a company must appropriately structure their processes and resources to be able to execute strategies successfully. D) Each functional strategy must support other functional strategies and help a firm reach its competitive strategy goal. E) All of the above are keys to success.

B) The competitive strategy and all functional strategies operate independently of each other.

In lean systems, if a defective product is found, which of the following is generally NOT done? A) The production line is stopped. B) The defective unit is passed on to the next workstation. C) The defective unit is returned to the worker responsible for creating the defect. D) The production line is made aware of the problem without necessarily stopping the line.

B) The defective unit is passed on to the next workstation.

A linear regression model is developed that has a slope of -2.5 and an intercept of 10. The sample coefficient of determination is 0.50. Which of the following statements is TRUE? A) The sample correlation coefficient must be 0.250. B) The sample correlation coefficient must be -0.707. C) The sample correlation coefficient must be -0.250. D) The sample correlation coefficient must be 1.00.

B) The sample correlation coefficient must be -0.707.

Regarding the Eight Types of Waste that must be eliminated to implement lean systems, excessive movement and material handling of product between processes is part of which general waste category? A) Motion B) Transportation C) Inappropriate Processing D) Underutilization of Employees

B) Transportation

Which of the following is not a characteristic of customer demand correlated with implied uncertainty? A) Product margin B) Unpredictable and low yields C) Average stockout rate D) Average forced season end markdown E) None of the above are correlated with implied uncertainty.

B) Unpredictable and low yields

A tracking signal greater than zero and a mean absolute deviation greater than zero imply that the forecast has: A) no bias and no variability of forecast error. B) a nonzero amount of bias and a nonzero amount of forecast error variability. C) no bias and a nonzero amount of forecast error variability. D) a nonzero amount of bias and no variability of forecast error.

B) a nonzero amount of bias and a nonzero amount of forecast error variability.

Operational improvements that reduce lot sizes can dampen the bullwhip effect by A) decreasing the uncertainty of demand during the lead time. B) decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain. C) discouraging retailers from artificially inflating their orders in the case of a shortage. D) allocating the available supply based on past retailer sales. E) none of the above

B) decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain.

Cycle inventory is used because A) the world is perfectly predictable. B) demand is uncertain and may exceed expectations. C) it involves making a trade-off between the costs of having too much inventory and the costs of losing sales due to not having enough inventory. D) it focuses on processes that are external to the firm. E) it focuses on processes that are internal to the firm.

B) demand is uncertain and may exceed expectations.

The uncertainty of customer demand for a product is the A) rate of strategic uncertainty. B) demand uncertainty. C) implied demand uncertainty. D) average forecast error. E) none of the above

B) demand uncertainty.

When forecasting total demand for all their services or products, few companies err by more than: A) one to four percent. B) five to eight percent. C) nine to twelve percent. D) thirteen to sixteen percent.

B) five to eight percent.

The art and science of making projections about what future demand and conditions will be is A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management. E) pricing.

B) forecasting.

The Edward James Toy Company uses a Kanban system to make plastic wheels that are a component of several toys. The waiting time for a container of the wheels during production is 0.25 day; average processing time is 0.15 day per container. Each container holds 200 wheels. The company uses 2000 wheels a day in the production of its products. Use the information in Case 8.1. How many Kanban containers would be required if a 10% policy variable is used? A) three or fewer B) four or five C) five or six D) seven or more

B) four or five

The Edward James Toy Company uses a Kanban system to make plastic wheels that are a component of several toys. The waiting time for a container of the wheels during production is 0.25 day; average processing time is 0.15 day per container. Each container holds 200 wheels. The company uses 2000 wheels a day in the production of its products. Use the information in Case 8.1. Using a policy variable of 5%, calculate the number of Kanban containers needed for the wheels. A) three or fewer B) four or five C) five or six D) seven or more

B) four or five

Month Actual Sales Jan 23 Feb 18 March 22 April 28 May 24 The forecasting equation for a three-month weighted moving average is: Ft =W1Dt + W2Dt - 1 + W3Dt - 2 If the sales for June were 40 units and the weights are W1= 1/2, W2 = 1/3, and W3 = 1/6, what is the forecast for July? A) fewer than or equal to 30 units B) greater than 30 but fewer than or equal to 33 units C) greater than 33 but fewer than or equal to 36 units D) greater than 36 units

B) greater than 30 but fewer than or equal to 33 units

Week Patient Arrivals 1 401 2 380 3 411 4 384 Calculate the exponential smoothing forecast for week 5 using α= 0.10 and F4 = 410. A) fewer than or equal to 400 B) greater than 400 but fewer than or equal to 408 C) greater than 408 but fewer than or equal to 416 D) greater than 416

B) greater than 400 but fewer than or equal to 408

The bullwhip effect A) positively impacts performance at every stage. B) hurts the relationships between different stages of the supply chain. C) enhances the relationships between different stages of the supply chain. D) none of the above E) both A and C

B) hurts the relationships between different stages of the supply chain.

A fundamental aspect of successful collaboration is A) sharing product designs. B) identification and resolution of exceptions. C) no stock outs. D) complete information sharing.

B) identification and resolution of exceptions.

Lean systems use the standardization of components because standardization: A) decreases the demand for each component. B) increases repeatability. C) allows for small lot sizes more easily. D) decreases repeatability.

B) increases repeatability.

Situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain are referred to as A) incentive obstacles. B) information processing obstacles. C) operational obstacles. D) pricing obstacles. E) behavioral obstacles.

B) information processing obstacles.

All raw materials, work in process, and finished goods within a supply chain are known as A) facilities. B) inventory. C) transportation. D) information E) customers.

B) inventory.

The cycle view of the supply chain is useful when considering operational decisions, because A) it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders. B) it specifies the roles and responsibilities of each member of the supply chain. C) processes are identified as either reactive or speculative. D) it focuses on processes that are external to the firm. E) it focuses on processes that are internal to the firm.

B) it specifies the roles and responsibilities of each member of the supply chain.

The phenomenal success of 7-Eleven Japan is attributed to A) being in the right place at the right time. B) its supply chain design and management ability. C) having 9000 locations. D) serving fresh food. E) none of the above

B) its supply chain design and management ability.

The impact of the lack of coordination on supply chain processes decreases for the following measure A) manufacturing cost. B) level of product availability. C) transportation cost. D) replenishment lead time.

B) level of product availability.

Which one of the following is an example of causal forecasting technique? A) weighted moving average B) linear regression C) exponential smoothing D) Delphi method

B) linear regression

The manufacturer developed and tested a questionnaire, designed to assist them in gauging the level of acceptance for their new product, and identified a representative sample as part of their: A) salesforce estimate. B) market research. C) executive opinion. D) Delphi method.

B) market research.

Lean systems try to: A) produce a product in anticipation of demand. B) maximize the value added by of each of its activities. C) organize production in large lots to minimize the number of setups. D) reduce the labor content in all processes.

B) maximize the value added by of each of its activities.

Each stage in a supply chain is connected through the flow of products, information, and funds. These flows often occur in both directions and is usually managed by A) pricing department. B) one of the stages. C) upper management. D) engineering department.

B) one of the stages.

The manufacturing and shipping process in the manufacturing cycle is equivalent to the A) order receiving process in the replenishment cycle. B) order fulfillment process in the replenishment cycle. C) order entry process in the replenishment cycle. D) order trigger process in the replenishment cycle. E) none of the above

B) order fulfillment process in the replenishment cycle.

Activities involved in the Internal Supply Chain Management (ISCM) macro process include A) marketing. B) order fulfillment. C) sales. D) order management. E) call center management.

B) order fulfillment.

Which word best describes forecasting? A) quantitative B) process C) resource D) managerial

B) process

The processes involved in the manufacturing cycle include A) order trigger. B) production scheduling. C) order fulfillment. D) order entry. E) manufacturing order analysis.

B) production scheduling.

One aspect of demand that makes every forecast inaccurate is: A) trend variation. B) random variation. C) cyclical variation. D) seasonal variation.

B) random variation.

The replenishment cycle occurs at the A) customer/retailer interface. B) retailer/distributor interface. C) distributor/manufacturer interface. D) manufacturer/supplier interface. E) none of the above

B) retailer/distributor interface.

The inventory held in case demand exceeds expectation in order to counter uncertainty is called A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing. E) none of the above

B) safety inventory.

With the multiplicative seasonal method of forecasting: A) the times series cannot exhibit a trend. B) seasonal factors are multiplied by an estimate of average demand to arrive at a seasonal forecast. C) the seasonal amplitude is a constant, regardless of the magnitude of average demand. D) there can be only four seasons in the time-series data.

B) seasonal factors are multiplied by an estimate of average demand to arrive at a seasonal forecast.

A company's product development strategy A) defines the set of customer needs that it seeks to satisfy through its products and services. B) specifies the portfolio of new products that it will try to develop. C) specifies how the market will be segmented and how the product will be positioned, priced, and promoted. D) determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product. E) determines how it will obtain and maintain the appropriate set of skills and abilities to meet customer needs.

B) specifies the portfolio of new products that it will try to develop.

The warehousing methodology that uses a traditional warehouse to store all of one type of product together is A) warehouse unit storage. B) stock keeping unit (SKU) storage. C) job lot storage. D) cross-docking. E) none of the above

B) stock keeping unit (SKU) storage.

The final assembly schedule in a lean system: A) should be developed for each product independent of the process requirements for the other products. B) strives to create a uniform flow at the work centers in the plant. C) avoids the use of small lot sizes because they create many production orders and cause confusion. D) allows daily changes in demand levels, regardless of size, to be incorporated immediately into the work center schedules.

B) strives to create a uniform flow at the work centers in the plant.

Companies using lean systems generally have: A) many suppliers to ensure that material shortages never occur. B) suppliers that are located nearby to decrease delivery lead time. C) suppliers that are willing to accept short-term contracts. D) suppliers who are low-cost producers.

B) suppliers that are located nearby to decrease delivery lead time.

The cost of making and delivering a product to the customer is referred to as A) supply chain responsiveness. B) supply chain efficiency. C) cost-responsiveness efficient frontier. D) implied uncertainty. E) none of the above

B) supply chain efficiency.

Customer order entry is A) the point in time when the customer has access to choices and makes a decision regarding a purchase. B) the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. C) the process where product is prepared and sent to the customer. D) the process where the customer receives the product and takes ownership. E) none of the above

B) the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer.

A forecaster that uses a holdout set approach as a final test for forecast accuracy typically uses: A) the entire data set available to develop the forecast. B) the older observations in the data set to develop the forecast and more recent to check accuracy. C) the newer observations in the data set to develop the forecast and older observations to check accuracy. D) every other observation to develop the forecast and the remaining observations to check the accuracy.

B) the older observations in the data set to develop the forecast and more recent to check accuracy.

The cycle view of a supply chain holds that A) the processes in a supply chain are divided into 2 categories. B) the processes in a supply chain are divided into a series of activities performed at the interface between successive stages. C) all processes in a supply chain are initiated in response to a customer order. D) all processes in a supply chain are performed in anticipation of customer orders. E) None of the above are true.

B) the processes in a supply chain are divided into a series of activities performed at the interface between successive stages.

Using customer demand to activate production of an item or service is called: A) the andon method. B) the pull method. C) the jidoka method. D) the push method.

B) the pull method.

The sales typically measured by a manufacturer are A) the quantity sold to final customers (sell-through). B) the quantity sold to distributors or retailers (sell-in). C) the quantity reported by the salesperson. D) all of the above E) none of the above

B) the quantity sold to distributors or retailers (sell-in).

A regression equation with a coefficient of determination near one would be most likely to occur when the data demonstrated a: A) seasonal demand pattern. B) trend demand pattern. C) cyclical demand pattern. D) random demand pattern.

B) trend demand pattern.

The first step in achieving strategic fit between competitive and supply chain strategies is to A) understand the supply chain and map it on the responsiveness spectrum. B) understand customers and supply chain uncertainty. C) match supply chain responsiveness with the implied uncertainty of demand. D) ensure that all functional strategies within the supply chain support the supply chain's level of responsiveness. E) none of the above

B) understand customers and supply chain uncertainty.

When a firm places orders in lot sizes that are much larger than the lot sizes in which demand arises, A) variability of orders is minimized up the supply chain. B) variability of orders is magnified up the supply chain. C) suppliers gain better visibility of consumer demand. D) suppliers gain a more stable demand pattern. E) none of the above

B) variability of orders is magnified up the supply chain.

Describe the impact of behavioral obstacles on supply chain coordination.

Behavioral obstacles refer to problems in learning within organizations that contribute to the bullwhip effect. These problems are often related to the way the supply chain is structured and the communication between different stages. Some of the behavioral obstacles are as follows: 1. Each stage of the supply chain views its actions locally and is unable to see the impact of its actions on other stages. 2. Different stages of the supply chain react to the current local situation rather than trying to identify the root causes. 3. Based on local analysis, different stages of the supply chain blame each other for the fluctuations, with successive stages in the supply chain becoming enemies rather than partners. 4. No stage of the supply chain learns from its actions over time because the most significant consequences of the actions any one stage takes occur elsewhere. The result is a vicious cycle where actions taken by a stage create the very problems that the stage blames on others. 5. A lack of trust between supply chain partners causes them to be opportunistic at the expense of overall supply chain performance. The lack of trust also results in significant duplication of effort. More important, information available at different stages is either not shared or is ignored because it is not trusted.

________ are often the result of neglecting or not accurately estimating patterns of demand such as a trend, seasonal, or cyclical pattern.

Bias errors

The production of 240 units during a 480-minute work shift results in a takt time of: A) 24 seconds. B) 30 seconds. C) 120 seconds. D) 240 seconds.

C) 120 seconds.

Mike's Mustard Company uses a Kanban system to manufacture bulk mustard in gallon containers for restaurants. The demand for container lids over an eight-hour production day is 1000 units. The average waiting time for a container of lids is 45 minutes. The processing time for a container of lids is 2 hours, and a container holds 70 lids. How many Kanban containers would Mike's Mustard require if the containers held only 15 pieces and a 5% policy variable is declared? A) 10 or fewer B) 11 to 20 C) 21 to 30 D) 31 or more

C) 21 to 30

A takt time of 1.25 minutes generates a process output of: A) 75 units per hour. B) 20.8 units per hour. C) 48 units per hour. D) 80 units per hour.

C) 48 units per hour.

The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been: Week # special pizzas 1 50 2 65 3 53 4 56 5 55 6 60 Using a three-week moving average, what is the forecast for week 7? A) 55 B) 56 C) 57 D) 58

C) 57

A Kanban system is an important mechanism for lean system management. Which one of the following statements regarding the operation of a Kanban system is best? A) A typical Kanban used in the JIT system includes information such as item number, unit price, competitor's product name, and its price. B) A Kanban can be used to set the order quantity but not the inventory level. C) A Kanban and a container move as a pair once production begins at the fabrication process. D) An empty container can be exchanged for a full container at the storage location even though no Kanban is on the full container.

C) A Kanban and a container move as a pair once production begins at the fabrication process.

Which one of the following statements regarding the Toyota production system is best? A) It is particularly well suited for making irregularly used parts and customized "specials." B) It is a "push system," with orders pushed out in anticipation of future requirements. C) Each container has either a withdrawal or production-ordering Kanban. D) It does not use poka yoke or 5S practices.

C) Each container has either a withdrawal or production-ordering Kanban.

Which one of the following statements is TRUE? A) The ideal of zero bias and zero MAD can be accomplished by systematically searching for the best values of the smoothing constants. B) Bias is always less than MAD. C) For projections of more stable demand patterns without trends, seasonal influences, or cyclical influences, use larger values of n in the simple moving-average approach. D) One disadvantage of a weighted moving average forecast is that it does not allow you to emphasize recent demand over earlier demand.

C) For projections of more stable demand patterns without trends, seasonal influences, or cyclical influences, use larger values of n in the simple moving-average approach.

The value chain consists of direct and indirect activities. Which of the following is an indirect activity for an enterprise? A) Marketing B) Distribution C) Human Resources D) Service

C) Human Resources

Regarding the Eight Types of Waste that must be eliminated to implement lean systems, using expensive high precision equipment when a simpler machine would suffice is part of which general waste category? A) Motion B) Overproduction C) Inappropriate Processing D) Defects

C) Inappropriate Processing

________ measures the incremental costs that are independent of the size of the order. A) Average sale price B) Incremental variable cost per unit C) Incremental fixed cost per order D) Incremental indirect cost per order

C) Incremental fixed cost per order

Which one of the following is an advantage of lean systems? A) Lean systems reduce equipment needs by using larger lot sizes. B) Lean systems can be implemented in any production environment. C) Lean systems result in a decrease in safety stock and work-in-process inventory. D) Lean systems result in an increase in manufacturing lead times.

C) Lean systems result in a decrease in safety stock and work-in-process inventory.

The lack of supply chain coordination on various measures of performance has costs associated with it. Which of the following is one of these costs? A) Quality B) Reliability C) Manufacturing D) Pricing

C) Manufacturing

Which of the following would be a demand and supply characteristic toward the beginning stages of a product's life cycle? A) Demand has become more certain and supply is predictable. B) Margins are lower due to an increase in competitive pressure. C) Product availability is crucial to capturing the market. D) Price becomes a significant factor in customer choice. E) none of the above

C) Product availability is crucial to capturing the market.

Which of the following would not be a demand and supply characteristic in the later stages of a product's life cycle? A) Demand has become more certain and supply is predictable. B) Margins are lower due to an increase in competitive pressure. C) Product availability is crucial to capturing the market. D) Price becomes a significant factor in customer choice. E) All of the above are characteristics of the later stages.

C) Product availability is crucial to capturing the market.

Which of the following managerial actions does not necessarily increase total supply chain profits and moderate information distortion? A) Designing pricing strategies to stabilize orders B) Building strategic partnerships and trust C) Purchasing from the lowest cost supplier D) Improving information visibility and accuracy

C) Purchasing from the lowest cost supplier

Supply chain macro processes include which of the following? A) Internal Relationship Management (IRM) B) External Relationship Management (ERM) C) Supplier Relationship Management (SRM) D) Supply Chain Relationship Management (SCRM) E) none of the above

C) Supplier Relationship Management (SRM)

Which component of the supply chain decision-making framework would be used to reach the performance level dictated by the supply chain strategy? A) Customer strategy B) Supply chain strategy C) Supply chain structure D) Competitive strategy E) Replenishment strategy

C) Supply chain structure

Management at Pepman has decided to switch from a push system to a pull system of manufacturing. They are a large repetitive manufacturer of bicycles. Which one of the following is most likely to occur? A) The cycle time will increase, resulting in higher inventory levels. B) The space required will increase due to the increase in the number of units that require rework. C) The decrease in WIP inventory levels will reduce the space requirements. D) The workers at any given process will produce units before they are needed by the subsequent process.

C) The decrease in WIP inventory levels will reduce the space requirements.

For a company to achieve strategic fit, it must accomplish the following keys: A) All functional strategies must fit together to form a coordinated overall strategy. B) The different functions in a company must appropriately structure their processes and resources to be able to execute these strategies successfully C) The overall supply chain must operate at the lowest cost possible to achieve success. D) The design of the overall supply chain and the role of each stage must be aligned to support the supply chain strategy.

C) The overall supply chain must operate at the lowest cost possible to achieve success.

Which one of the following statements about the patterns of a demand series is FALSE? A) The five basic patterns of most business demand series are the horizontal, trend, seasonal, cyclical, and random patterns. B) Estimating cyclical movement is difficult. Forecasters do not know the duration of the cycle because they cannot predict the events that cause it. C) The trend, over an extended period of time, always increases the average level of the series. D) Every demand series has at least two components: horizontal and random.

C) The trend, over an extended period of time, always increases the average level of the series.

Which one of the following statements about forecasting is FALSE? A) Causal methods of forecasting use historical data on independent variables (promotional campaigns, competitors' actions, etc.) to predict demand. B) Three general types of forecasting techniques are used for demand forecasting: time-series analysis, causal methods, and judgment methods. C) Time series express the relationship between the factor to be forecast and related factors such as promotional campaigns, economic conditions, and competitor actions. D) A time series is a list of repeated observations of a phenomenon, such as demand, arranged in the order in which they actually occurred.

C) Time series express the relationship between the factor to be forecast and related factors such as promotional campaigns, economic conditions, and competitor actions.

________ identifies the difference between the planned production/inventories and the actual values. A) Supplier reliability B) Forecast error C) Variance from plan D) Supply quality

C) Variance from plan

The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in A) forecasts based on actual consumer demand patterns. B) a reduction in demand as we move up the supply chain from the retailer to the manufacturer. C) a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer. D) an increase in forecast accuracy. E) none of the above

C) a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.

It would be most appropriate to combine a judgment approach to forecasting with a quantitative approach by: A) having a group of experts examine each historical data point to determine whether it should be included in the model. B) combining opinions about the quantitative models to form one forecasting approach. C) adjusting a forecast up or down to compensate for specific events not included in the quantitative technique. D) developing a trend model to predict the outcomes of judgmental techniques in order to avoid the cost of employing the experts.

C) adjusting a forecast up or down to compensate for specific events not included in the quantitative technique.

Transforming forecasts into plans of activity to satisfy the projected demand is known as A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management. E) pricing.

C) aggregate planning.

When identifying operational roles and decision rights for different parties in a supply chain relationship, managers must A) divide the tasks in a way that makes one party more dependent on the other. B) divide the tasks in a way that neither party is dependent on the other. C) consider the resulting interdependence between the parties. D) all of the above E) B and C only

C) consider the resulting interdependence between the parties.

The curve that shows the lowest possible cost for a given level of responsiveness is referred to as the A) supply chain responsiveness curve. B) supply chain efficiency curve. C) cost-responsiveness efficient frontier. D) responsiveness spectrum. E) none of the above

C) cost-responsiveness efficient frontier.

Activities involved in the Supplier Relationship Management (SRM) macro process include all of the following except A) negotiation of supply terms. B) design collaboration. C) demand planning. D) supplier evaluation and selection. E) supply collaboration.

C) demand planning.

A key issue facing Toyota is A) developing an internet marketing system. B) whether to specialize in a particular market. C) design of its global production and distribution network. D) how to implement model changes. E) all of the above

C) design of its global production and distribution network.

The relationship between the manufacturer and supplier during the procurement cycle is very similar to the relationship between A) customer and retailer. B) retailer and distributor. C) distributor and manufacturer. D) manufacturer and customer.

C) distributor and manufacturer.

The manufacturing cycle occurs at the A) customer/retailer interface. B) retailer/distributor interface. C) distributor/manufacturer interface. D) manufacturer/supplier interface. E) none of the above

C) distributor/manufacturer interface.

Lean systems maintain inventory in small lot sizes because small lot sizes: A) increase pipeline inventory, allowing the organization to buffer against demand uncertainties. B) increase the quality level of the product. C) enable schedules to use machine capacities more efficiently. D) increase manufacturing lead time because of the increase in waiting time.

C) enable schedules to use machine capacities more efficiently.

Continuous improvement with lean systems: A) involves navigating a ship over treacherous rocks. B) requires periodically increasing lot sizes or workforce levels to uncover problems. C) entails systematically stressing the system and focusing on problem areas. D) focuses exclusively on internal operations without addressing relationships with customers and suppliers.

C) entails systematically stressing the system and focusing on problem areas.

Barney took what he liked to call "the shotgun approach" to forecasting. Every period he tried a number of different forecasting approaches and at the end of the period he reviewed all of the forecasts to see which was the most accurate. The winner would be used for next period's forecast (but he still made forecasts all possible ways so he could use the system again for the following period). The more formal name for this technique is: A) combination forecasting. B) post-hoc forecasting. C) focus forecasting. D) shotgun forecasting. He is using the correct terminology.

C) focus forecasting.

Using salesforce estimates for forecasting has the advantage that: A) no biases exist in the forecasts. B) statistical estimates of seasonal factors are more precise than any other approach. C) forecasts of individual sales force members can be easily combined to get regional or national sales totals. D) confusion between customer "wants" (wish list) and customer "needs" (necessary purchases) is eliminated.

C) forecasts of individual sales force members can be easily combined to get regional or national sales totals.

Demand for a new five-inch color TV during the last six periods has been as follows: Period Demand 1 109 2 110 3 103 4 170 5 81 6 130 What is the forecast for period 7 if the company uses the simple moving-average method with n = 4? A) fewer than or equal to 115 B) greater than 115 but fewer than or equal to 120 C) greater than 120 but fewer than or equal to 125 D) greater than 125

C) greater than 120 but fewer than or equal to 125

Month Actual Sales Jan 23 Feb 18 March 22 April 28 May 24 Suppose actual sales in June turn out to be 40 units. Use the three-month moving-average method to forecast the sales in July. A) fewer than or equal to 27 B) greater than 27 but fewer than or equal to 29 units C) greater than 29 but fewer than or equal to 31 units D) greater than 31 units

C) greater than 29 but fewer than or equal to 31 units

Month Actual Sales Jan 23 Feb 18 March 22 April 28 May 24 What is the forecast for July with the two-month moving-average method and June sales of 40 units? A) fewer than or equal to 25 units B) greater than 25 but fewer than or equal to 30 units C) greater than 30 but fewer than or equal to 35 units D) greater than 35 units

C) greater than 30 but fewer than or equal to 35 units

Week Patient Arrivals 1 401 2 380 3 411 4 384 Compute a three-week moving-average forecast for the arrival of medical clinic patients in week 5. A) fewer than or equal to 382 B) greater than 382 but fewer than or equal to 389 C) greater than 389 but fewer than or equal to 396 D) greater than 396

C) greater than 389 but fewer than or equal to 396

Week Patient Arrivals 1 401 2 380 3 411 4 384 If the actual number of patients is 415 in week 5, what is the forecast for week 6, using a three-week moving-average forecast? A) fewer than or equal to 390 B) greater than 390 but fewer than or equal to 398 C) greater than 398 but fewer than or equal to 406 D) greater than 406

C) greater than 398 but fewer than or equal to 406

The Classical Consultant Company provides forecasting research for clients such as a group of five doctors associated with a new hospital health-maintenance program. The company has been asked to forecast the number of patients requesting blood analysis per week. The past weekly average is 38 and, for the trend, is 2 per week. This week's demand was 42 blood tests. How many patients will come next week? (Suppose = 0.10 and = 0.30.) A) fewer than or equal to 39 B) greater than 39 but fewer than or equal to 41 C) greater than 41 but fewer than or equal to 43 D) greater than 43

C) greater than 41 but fewer than or equal to 43

Demands for a newly developed salad bar at the Great Professional restaurant for the first six months of this year are shown in the following table. Month Demand Jan 394 Feb 365 March 380 April 439 May 412 June 467 What is the forecast for July if the 3-month weighted moving- average method is used? (Use weights of 0.5 for the most recent demand, 0.3, and 0.2 for the oldest demand.) A) fewer than or equal to 432 units B) greater than 432 units but fewer than or equal to 442 units C) greater than 442 units but fewer than or equal to 452 units D) greater than 452

C) greater than 442 units but fewer than or equal to 452 units

Combining parts or products with similar characteristics into families and setting machines aside for their production is known as: A) the one-worker, multiple machines (OWMM) method of production. B) the standardized component method of manufacturing. C) group technology. D) the flexible workforce approach to manufacturing.

C) group technology.

Webvan designed a supply chain with large warehouses in several major cities in the United States, from which groceries were delivered to customer homes. They failed partly because of A) low demand for their service. B) slow inventory turnover compared to industry averages. C) higher labor costs for picking orders. D) poor quality products.

C) higher labor costs for picking orders.

The uncertainty that exists due to the portion of demand that the supply chain is required to meet is the A) rate of strategic uncertainty. B) demand uncertainty. C) implied demand uncertainty. D) average forecast error. E) none of the above

C) implied demand uncertainty.

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur is known as: A) andon. B) muda. C) jidoka. D) poka-yoke.

C) jidoka.

The warehousing methodology in which all the different types of products needed to perform a particular job or satisfy a particular type of customer are stored together is A) warehouse unit storage. B) stock keeping unit (SKU) storage. C) job lot storage. D) cross-docking. E) none of the above

C) job lot storage.

Activities involved in the Customer Relationship Management (CRM) macro process include A) planning of internal production and storage. B) order fulfillment. C) marketing. D) supply planning. E) demand planning.

C) marketing.

The objective of the customer arrival process is to A) get the correct orders to customers by the promised due date at the lowest possible cost. B) maintain a record of product receipt and complete payment. C) maximize the conversion of customer arrivals to customer orders. D) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes. E) none of the above

C) maximize the conversion of customer arrivals to customer orders.

A supply chain strategy involves decisions regarding all of the following except A) inventory. B) transportation. C) new product development. D) operating facilities. E) information flows.

C) new product development.

Justin Thyme used to run one batch each of 500 As, 300 Bs and 100 Cs every month but now he runs a batch of 5 As, 3 Bs, and 1 C every half day: A) thanks to his employer's move away from single-digit setups. B) now that he has andon lights installed at the appropriate work centers. C) now that he embraces mixed-model assembly. D) in order to increase muda.

C) now that he embraces mixed-model assembly.

Actions taken in the course of placing and filling orders that lead to an increase in variability are referred to as A) incentive obstacles. B) information processing obstacles. C) operational obstacles. D) pricing obstacles. E) behavioral obstacles.

C) operational obstacles.

The production scheduling process in the manufacturing cycle is similar to the A) order receiving process in the replenishment cycle. B) order fulfillment process in the replenishment cycle. C) order entry process in the replenishment cycle. D) order trigger process in the replenishment cycle. E) none of the above

C) order entry process in the replenishment cycle.

Items to be assembled that fit together only the proper way are an example of: A) andon. B) jidoka. C) poka-yoke. D) muda.

C) poka-yoke.

The two major types of facilities are A) distribution sites and storage sites. B) production sites and distribution sites. C) production sites and storage sites. D) retail sites and distribution sites. E) distribution sites and inventory sites.

C) production sites and storage sites.

The lack of coordination within a supply chain will result in an increase in A) profitability. B) inventory accuracy. C) replenishment lead time. D) level of product availability. E) transportation cost.

C) replenishment lead time.

Implementing a lean system: A) has the advantage that workers have less stress because of the routine, repetitive work they perform. B) typically relieves the workers and first-line supervisors from activities such as scheduling, expediting, and productivity improvements. C) requires an examination of the reward system to make sure it is consistent with the JIT philosophy. D) involves the reorganization of material flows to that of a flexible flow.

C) requires an examination of the reward system to make sure it is consistent with the JIT philosophy.

The processes included in the replenishment cycle include A) order arrival. B) production scheduling. C) retail trigger. D) manufacturing. E) receiving.

C) retail trigger.

The functions and stages that devise an integrated strategy with a shared objective are referred to as A) competitive strategy. B) supply chain strategy. C) scope of strategic fit. D) scope of marketing strategy. E) scope of product development strategy.

C) scope of strategic fit.

The inventory that is built up to counter predictable variability in demand is called A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing. E) none of the above

C) seasonal inventory.

Professor Willis noted that the popularity of his office hours mysteriously rose in the middle and the end of each semester, falling off to virtually no visitors throughout the rest of the year. The demand pattern at work is: A) cyclical. B) random. C) seasonal. D) trend.

C) seasonal.

The Jewel Golf Club Company, which recently began using a Kanban system, has had problems with high inventory levels of one of the handle grips used to make several versions of its clubs. Daily demand for the grip is 3000 units, average waiting time during production is 0.20 day, processing time is 0.10 day per container, and a container holds 150 grips. How many Kanban containers would Jewel require if a 5% policy variable is used? A) three or fewer B) four or five C) six or seven D) eight or more

C) six or seven

A company's marketing and sales strategy A) defines the set of customer needs that it seeks to satisfy through its products and services. B) specifies the portfolio of new products that it will try to develop. C) specifies how the market will be segmented and how the product will be positioned, priced, and promoted. D) determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product. E) determines how it will obtain and maintain the appropriate set of skills and abilities to meet customer needs.

C) specifies how the market will be segmented and how the product will be positioned, priced, and promoted.

Activities involved in the Supplier Relationship Management (SRM) macro process include A) planning of internal production and storage. B) order fulfillment. C) supplier evaluation and selection. D) order management.

C) supplier evaluation and selection.

The decision phases in a supply chain include A) production scheduling. B) customer relationship management. C) supply chain operation. D) supply chain orientation. E) all of the above

C) supply chain operation.

The preferable supply chain strategy for a firm that sells multiple products and serves customer segments with very different needs is to A) set up independent supply chains for each different product or customer segment. B) set up a supply chain that meets the needs of the highest volume product or customer segment. C) tailor the supply chain to best meet the needs of each product's demand. D) set up a supply chain that meets the needs of the customer segment with the highest implied uncertainty. E) set up a supply chain that meets the needs of product with the highest implied uncertainty.

C) tailor the supply chain to best meet the needs of each product's demand.

Improperly structured sales force incentives A) help create stable demand. B) have very little effect on the timing of customer orders. C) tend to create spikes in customer orders. D) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes. E) none of the above

C) tend to create spikes in customer orders.

The situation in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers is known as A) market fluctuations. B) the whiplash effect. C) the bullwhip effect. D) lack of visibility. E) none of the above

C) the bullwhip effect.

For any supply chain, the source of revenue is generated by A) efficient operations. B) information flows. C) the customer. D) product flows.

C) the customer.

The drive for strategic fit should come from A) the supply chain manager. B) the strategic planning department. C) the highest levels of the organization, such as the CEO. D) middle management. E) sales and marketing.

C) the highest levels of the organization, such as the CEO.

Customer order fulfillment refers to A) the point in time when the customer has access to choices and makes a decision regarding a purchase. B) the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. C) the process where product is prepared and sent to the customer. D) the process where the customer receives the product and takes ownership. E) none of the above

C) the process where product is prepared and sent to the customer.

Moving inventory from point to point in the supply is known as A) facilities. B) inventory. C) transportation. D) information. E) customers.

C) transportation.

A graph with two axes with implied uncertainty along the horizontal axis and responsiveness along the vertical axis is referred to as the A) implied uncertainty spectrum. B) responsiveness spectrum. C)uncertainty/responsiveness map. D) zone of strategic fit. E) none of the above

C)uncertainty/responsiveness map.

What are the supply chain implications of the lean system emphasis on close supplier ties?

Close supplier ties lead to partnerships with a relatively few number of suppliers, close geographic locations, frequent supplier shipments, short lead times, on-time scheduled arrival of goods of high quality, with deliveries as often as several times per day. Close cooperation leads to better inventory planning and scheduled deliveries that improve both customer and supplier profit margins. Sometimes, a JIT II system is used, with the supplier having a representative in the customer's plant, and this representative is then empowered to plan and schedule the replenishment of materials from the supplier.

In a ________ system based on other Kanban signals, an empty bin signals a need to fill it.

Container

In a ________ system based on other Kanban signals, an empty space signals a need to fill it.

Containerless

How does cooperation and trust improve performance in a supply chain partnership?

Cooperation and trust within the supply chain help improve performance for the following reasons: 1. A more natural aligning of incentives and objectives is achieved. When stages trust each other, they are more likely to take the other party's objective into consideration when making decisions. 2. Action-oriented managerial levers to achieve coordination become easier to implement. Sharing of information is natural between parties that trust each other. Similarly, operational improvements are easier to implement and appropriate pricing schemes are easier to design if both parties are aiming for the common good. 3. An increase in supply chain productivity results, either by elimination of duplicated effort or by allocating effort to the appropriate stage. For example, a manufacturer receives material from a supplier without inspecting it as long as the supplier shares process control charts. 4. A greater sharing of detailed sales and production information results. This sharing allows the supply chain to coordinate production and distribution decisions. As a result, the supply chain is better able to match supply and demand, resulting in better coordination.

The Acme Computer Company has recorded sales of one of its products for a six-week period: Week Sales 1 25 2 23 3 20 4 22 5 23 6 24 Using the three-week moving-average method, forecast sales for week 7. A) 20 B) 21 C) 22 D) 23

D) 23

The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been: Week # special pizzas 1 50 2 65 3 53 4 56 5 55 6 60 If a naive forecast were constructed, the forecast for week 7 A) 53 pizzas. B) 55 pizzas. C) 56 pizzas. D) 60 pizzas.

D) 60 pizzas.

The production of 300 units during a 480-minute work shift results in a takt time of: A) 300 seconds. B) 37.5 seconds. C) 120 seconds. D) 96 seconds.

D) 96 seconds.

Which of the following statements regarding time-series methods is FALSE? A) A naive forecast is identical to a simple moving average of one period. B) Exponential smoothing with an alpha equal to 1.00 is identical to a naive forecast. C) A weighted moving average with weights of 0.5 and 0.5 is identical to a simple moving average of two periods. D) A simple moving average of three periods is identical to exponential smoothing with an alpha equal to 0.33

D) A simple moving average of three periods is identical to exponential smoothing with an alpha equal to 0.33

Blue Nile is an online retailer of diamonds that has used responsive transportation to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. Which is the mode of transportation used with this strategy? A) Sea B) Rail C) Internet D) Air

D) Air

Which of the following are basic steps to achieving strategic fit? A) Understanding the customer and supply uncertainty. B) Understanding the supply chain capabilities. C) Achieving strategic fit. D) All of the above are basic steps to achieving strategic fit. E) None of the above are a basic step to achieving strategic fit.

D) All of the above are basic steps to achieving strategic fit.

A facility with little excess capacity A) will likely be more efficient per unit of product it produces than one with a lot of unused capacity. B) would be considered a high utilization facility. C) will have difficulty responding to demand fluctuations. D) All of the above are true. E) None of the above are true.

D) All of the above are true.

Which of the following statements concerning decisions regarding location of facilities is false? A) Deciding where a company will locate its facilities constitutes a large part of the design of a supply chain. B) A basic trade-off here is whether to centralize to gain economies of scale or decentralize to become more responsive by being closer to the customer. C) Companies must also consider a host of issues related to the various characteristics of the local area in which the facility may be situated. D) All of these statements are true. E) None of these statements are true.

D) All of these statements are true.

When a customer purchases a book online from a company such as Amazon, which of the following is NOT part of the typical supply chain operations? A) The customer B) Amazon's web site C) Amazon's book supplier D) Amazon's accounting department

D) Amazon's accounting department

Which of these is NOT a so-called "hypothesis principle" of the Toyota Production System? A) All work must be specified as to content. B) Every customer-supplier connection must be direct and unambiguous. C) All workers must be guaranteed full employment for life. D) Any improvements to the system must be made in accordance with the scientific method.

D) Any improvements to the system must be made in accordance with the scientific method.

Which of the following is not a reason cooperation and trust within the supply chain help improve performance? A) A more natural aligning of incentives and objectives is achieved. B) Action-oriented managerial levers to achieve coordination become easier to implement. C) An increase in supply chain productivity results, either by elimination of duplicated effort or by allocating effort to the appropriate stage. D) Appropriate pricing schemes are harder to achieve if both parties are aiming for the common good. E) A greater sharing of detailed sales and production information results.

D) Appropriate pricing schemes are harder to achieve if both parties are aiming for the common good.

Which component of the supply chain decision-making framework would be established first? A) Customer strategy B) Supply chain strategy C) Supply chain structure D) Competitive strategy E) Replenishment strategy

D) Competitive strategy

An important mechanism for lean systems is a Kanban system. Which one of the following statements correctly describes the behavior of a two-card Kanban system? A) A withdrawal Kanban is issued to authorize production in the fabrication process. B) A production-ordering Kanban authorizes the assembly process to remove the materials from the storage location. C) The fabrication process produces certain units defined by the lot size and pushes them down to the assembly process. D) Containers must never be removed from the storage location without an authorizing withdrawal Kanban.

D) Containers must never be removed from the storage location without an authorizing withdrawal Kanban.

The following warehousing methodology is one in which goods are not actually warehoused in a facility. Instead, trucks from suppliers, each carrying a different type of product, deliver goods to a facility. There the inventory is broken into smaller lots and quickly loaded onto store-bound trucks that carry a variety of products, some from each of the supplier trucks. A) Warehouse unit storage B) Stock keeping unit (SKU) storage C) Job lot storage D) Cross-docking E) none of the above

D) Cross-docking

Which of the following is NOT a challenge that makes it increasingly difficult for supply chains to achieve strategic fit? A) Globalization B) Changing Technology C) Shorter Life Cycles D) Decreasing Product Variety

D) Decreasing Product Variety

Which of the following are key components of information that must be analyzed to increase efficiency and improve effectiveness in a supply chain? A) Software selection B) Source selection C) Warehouse selection D) Forecasting and aggregate planning E) none of the above

D) Forecasting and aggregate planning

Which of the following statements about pull processes is accurate? A) May also be referred to as speculative processes. B) Execution is initiated in anticipation of customer orders. C) At the time of execution, demand must be forecast. D) May also be referred to as reactive processes. E) None of the above are accurate.

D) May also be referred to as reactive processes.

Amazon uses different prices for the products that are purchased from the company — often for the speed of the shipping. What is the name of this pricing scheme? A) Everyday low pricing B) High-low pricing C) Fixed price D) Menu pricing

D) Menu pricing

Which of the following is not a stage within a typical supply chain? A) Customers B) Retailers C) Wholesalers/Distributors D) Merchandisers E) Component/Raw material suppliers

D) Merchandisers

Regarding the Eight Types of Waste that must be eliminated to implement lean systems, manufacturing an item before it is needed is part of which general waste category? A) Inappropriate Processing B) Waiting C) Inventory D) Overproduction

D) Overproduction

Which of the following is not an approach to achieve coordination by improving the accuracy of information available to different stages in the supply chain? A) Sharing point of sales (POS) data B) Implementing collaborative forecasting and planning C) Designing single stage control of replenishment D) Pricing for coordination E) none of the above

D) Pricing for coordination

________ is NOT a key sourcing decision that is made within a firm? A) Outsource B) Procurement C) Supplier selection D) Produce high quality products

D) Produce high quality products

Which of the following is not a supply chain capability that will impact supply uncertainty? A) Evolving production process B) Inflexible supply capacity C) Limited supply capacity D) Product margin E) Unpredictable and low yields

D) Product margin

The lack of supply chain coordination on various measures of performance has costs associated with it. Which of the following is one of these costs? A) Inventory B) Reliability C) Transportation D) Quality

D) Quality

Successful supply chain management requires many decisions relating to the flow of information, product, and funds. These decisions fall into three categories or phases. Which of the following is NOT one of these categories? A) Supply Chain Operation B) Supply Chain Planning C) Supply Chain Strategy and Design D) Supply Chain Alliances

D) Supply Chain Alliances

Which of the following determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service, and distribution of the product to the customer along with follow-up service? A) Competitive strategy B) Product development strategy C) Marketing and sales strategy D) Supply chain strategy E) none of the above

D) Supply chain strategy

Which of the following would be a characteristic of a facility with little excess capacity? A) Allows a facility to be very flexible and to respond to wide swings in the demands placed on it B) Costs money and therefore can decrease efficiency C) Requires proximity to customers and the rest of the network D) Will likely be more efficient per unit of product it produces E) none of the above

D) Will likely be more efficient per unit of product it produces

Weeding out unnecessary items, neatly arranging what's left, and cleaning the work area are components of: A) a Kanban system. B) a constraint management system. C) mixed-model assembly. D) a 5S program.

D) a 5S program.

Different stages of the supply chain must forecast and plan jointly if complete coordination is to be achieved, because A) just the sharing of POS data does not guarantee coordination. B) the manufacturer must be aware of the retailer's promotion plans to achieve coordination. C) successful coordination requires that the entire supply chain is operating to a common forecast. D) all of the above E) A and B only

D) all of the above

Pricing strategies that dampen the bullwhip effect include A) offering volume-based quantity discounts instead of lot-based quantity discounts. B) elimination of promotions that encourage forward buying by retailers. C) promotion dollars paid to the retailer based on the amount of sell-through rather than the amount purchased by the retailer. D) all of the above E) A and B only

D) all of the above

Rationing schemes that allocate limited production in proportion to the orders placed by retailers A) result in a game in which retailers try to increase the size of their orders to increase the amount supplied to them. B) lead to a magnification of the bullwhip effect. C) lead to the manufacturer being left with a surplus of product and capacity. D) all of the above E) B and C only

D) all of the above

Sharing point of sales (POS) data across the supply chain can help reduce the bullwhip effect because A) each stage of the supply chain uses orders from the previous stage to forecast future demand. B) all supply chain stages can forecast future demand based on final customer demand. C) all stages can respond to the same change in customer demand. D) all of the above E) B and C only

D) all of the above

Successful supply chain management requires which of the following decision phases? A) Supply chain strategy/design B) Supply chain planning C) Supply chain operation D) all of the above E) A and B only

D) all of the above

Supply chain macro processes include which of the following? A) Customer Relationship Management (CRM) B) Internal Supply Chain Management (ISCM) C) Supplier Relationship Management (SRM) D) all of the above E) none of the above

D) all of the above

The bullwhip effect causes A) a loss of supply chain coordination. B) distortion of demand information within the supply chain. C) different stages of the supply chain to have a very different estimate of what demand looks like. D) all of the above E) A and B only

D) all of the above

Which of the following activities occur during the step in design of a supply chain partnership where the parties assess the value of the relationship? A) Clearly identifying the mutual benefit that the relationship provides B) Determining how the total profits will be divided between the parties C) Clarifying the contribution of each party D) all of the above E) B and C only

D) all of the above

Which of the following are key components of transportation decisions when designing and operating a supply chain? A) Mode of transportation B) Route and network selection C) In-house or outsource D) all of the above E) none of the above

D) all of the above

Excess capacity A) allows a facility to be very flexible and to respond to wide swings in the demands placed on it B) costs money and therefore can decrease efficiency. C) requires proximity to customers and the rest of the network. D) both A and B E) all of the above

D) both A and B

A forecasting system that brings the manufacturer and its customers together to provide input for forecasting is a(n): A) nested system. B) harmonically balanced supply chain. C) iterative Delphi method system for the supply chain. D) collaborative planning, forecasting, and replenishment system.

D) collaborative planning, forecasting, and replenishment system.

Andy took what he liked to call "the sheriff without a gun" approach to forecasting. Every period he tried a number of different forecasting approaches and simply averaged the predictions for all of the techniques. This overall average was the official forecast for the period. The more formal name for this technique is: A) grand averaging. B) focus forecasting. C) simple average. D) combination forecasting.

D) combination forecasting.

Which one of the following basic patterns of demand is difficult to predict because it is affected by national or international events or because of a lack of demand history reflecting the stages of demand from product development to decline? A) horizontal B) seasonal C) random D) cyclical

D) cyclical

There are historically three 32-month periods of generally rising prices in the stock market for every one 9-month period of falling prices. This observation leads you to conclude that the stock market exhibits a: A) random pattern. B) trend pattern C) seasonal pattern. D) cyclical pattern.

D) cyclical pattern.

A company's supply chain strategy A) defines the set of customer needs that it seeks to satisfy through its products and services. B) specifies the portfolio of new products that it will try to develop. C) specifies how the market will be segmented and how the product will be positioned, priced, and promoted. D) determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product. E) determines how it will obtain and maintain the appropriate set of skills and abilities to meet customer needs.

D) determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product.

The objective of customer order entry is to A) get the correct orders to customers by the promised due date at the lowest possible cost. B) maintain a record of product receipt and complete payment. C) maximize the conversion of customer arrivals to customer orders. D) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes. E) none of the above

D) ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes.

Which of the following actions would decrease the number of containers in use in a Kanban system? A) smaller containers that can hold fewer parts than before B) higher demand for the part held by the container C) increased waiting time for the container D) faster processing times for the part held by the container

D) faster processing times for the part held by the container

Month Actual Sales Jan 23 Feb 18 March 22 April 28 May 24 Use the three-month moving-average method to forecast sales for June. A) fewer than or equal to 20 units B) greater than 20 but fewer than or equal to 22 units C) greater than 22 but fewer than or equal to 24 units D) greater than 24 units

D) greater than 24 units

Which of the following actions would increase the number of containers in use in a Kanban system? A) using larger containers that can hold more parts than before B) less demand for the part held by the container C) faster processing times for the part held by the container D) increased waiting time for the container

D) increased waiting time for the container

The data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain is known as A) facilities. B) inventory. C) transportation. D) information. E) customers.

D) information.

The just-in-time (JIT) system is a(n): A) management system of people and procedures to fulfill all delivery deadlines. B) production system of small-lot manufacturing to reduce work-in-process inventory. C) materials management system for removing all inventories. D) integrated system of managing resources, information, and decision processes to eliminate waste.

D) integrated system of managing resources, information, and decision processes to eliminate waste.

Forward buying results in A) a stabilized buying pattern. B) small orders during the promotion period followed by very small orders after that. C) small orders during the promotion period followed by large orders after that. D) large orders during the promotion period followed by very small orders after that. E) none of the above

D) large orders during the promotion period followed by very small orders after that.

The lack of coordination within a supply chain will result in a decrease in A) manufacturing cost. B) inventory cost. C) replenishment lead time. D) level of product availability. E) transportation cost.

D) level of product availability.

The procurement cycle occurs at the A) customer/retailer interface. B) retailer/distributor interface. C) distributor/manufacturer interface. D) manufacturer/supplier interface. E) none of the above

D) manufacturer/supplier interface.

Efficient supply chains A) respond quickly to demand. B) have higher margins because price is not a prime customer driver. C) maintain buffer inventory to deal with demand/supply uncertainty. D) maximize performance at a minimum cost.

D) maximize performance at a minimum cost.

The goal of single-digit setups is to have a setup time: A) of less than one shift. B) of less than one hour. C) of less than 30 minutes. D) of less than 10 minutes.

D) of less than 10 minutes.

Activities involved in the Internal Supply Chain Management (ISCM) macro process include all of the following except A) planning of internal production and storage. B) order fulfillment. C) supply planning. D) order management.

D) order management.

Mistake-proofing is known by the term: A) andon. B) muda. C) jidoka. D) poka-yoke.

D) poka-yoke.

Situations in which the pricing policies for a product lead to an increase in variability of orders placed are referred to as A) incentive obstacles. B) information processing obstacles. C) operational obstacles. D) pricing obstacles. E) behavioral obstacles.

D) pricing obstacles.

The use of differential pricing over time or customer segments to maximize profits from a limited set of supply chain assets is A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management. E) pricing.

D) revenue management.

The Jewel Golf Club Company, which recently began using a Kanban system, has had problems with high inventory levels of one of the handle grips used to make several versions of its clubs. Daily demand for the grip is 3000 units, average waiting time during production is 0.20 day, processing time is 0.10 day per container, and a container holds 150 grips. How many Kanban containers would Jewel require if a 10% policy variable is used? A) three or fewer B) four or five C) five or six D) six or seven

D) six or seven

The set of business processes required to purchase goods and services is known as A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing. E) none of the above

D) sourcing.

There are many requirements for the successful implementation of the lean system of production. Which one of the following is not such a requirement? A) uniform assembly schedule B) short setup time C) low machine failure and low defects D) substantial natural resources

D) substantial natural resources

The number of #2 pencils the bookstore sells appears to be highly correlated with the number of student credit hours each semester. The bookstore manager wants to create a linear regression model to assist her in placing an appropriate order. In this scenario: A) the dependent variable is student credit hours B) there are two independent variables C) there are two dependent variables D) the independent variable is student credit hours

D) the independent variable is student credit hours

Customer order receiving is A) the point in time when the customer has access to choices and makes a decision regarding a purchase. B) the customer informing the retailer of what they want to purchase and the retailer allocates product to the customer. C) the process where product is prepared and sent to the customer. D) the process where the customer receives the product and takes ownership. E) none of the above

D) the process where the customer receives the product and takes ownership.

The push/pull view of a supply chain holds that A) the processes in a supply chain are divided into a series of activities performed at the interface between successive stages. B) all processes in a supply chain are initiated in response to a customer order. C) all responses in a supply chain are performed in anticipation of customer orders. D) the processes in a supply chain are divided into 2 categories depending on whether they are initiated in response to or in anticipation of customer orders. E) None of the above are true.

D) the processes in a supply chain are divided into 2 categories depending on whether they are initiated in response to or in anticipation of customer orders.

A method in which production of an item begins in advance of customer needs is called: A) the andon method. B) the pull method. C) the jidoka method. D) the push method.

D) the push method.

The relationship where increasing implied uncertainty from customers and supply sources is best served by increasing responsiveness from the supply chain is known as the A) implied uncertainty spectrum. B) responsiveness spectrum. C)uncertainty/responsiveness map. D) zone of strategic fit. E) none of the above

D) zone of strategic fit.

The ________ is a process of gaining consensus from a group of experts while maintaining their anonymity.

Delphi method

Aligning goals and incentives within the supply chain will A) improve coordination within the supply chain. B) encourage every participant in supply chain activities to maximize total supply chain profits. C) reduce demand uncertainty. D) all of the above E) A and B only

E) A and B only

Supply chain coordination A) improves if all stages of the chain take actions that together increase total supply chain profits. B) requires each stage of the supply chain to take into account the impact its actions have on other stages. C) cannot be achieved in real world applications. D) all of the above E) A and B only

E) A and B only

A lack of coordination occurs either because A) different stages of the supply chain have objectives that conflict. B) the policies of most firms are contrary to cooperation. C) information moving between stages gets delayed and distorted. D) all of the above E) A and C only

E) A and C only

Behavioral obstacles to supply chain coordination are often related to A) the communication between different stages. B) pricing and operational decisions. C) the way the supply chain is structured. D) all of the above E) A and C only

E) A and C only

The lack of information sharing between the retailer and manufacturer A) magnifies the bullwhip effect. B) minimizes the fluctuation in manufacturer orders. C) leads to a large fluctuation in manufacturer orders. D) all of the above E) A and C only

E) A and C only

Which of the following is not a process in the customer order cycle? A) Customer arrival B) Customer order entry C) Customer order fulfillment D) Customer order receiving E) All are processes in the customer order cycle.

E) All are processes in the customer order cycle.

Which of the following is not an accurate statement about push processes? A) May also be referred to as speculative processes. B) Execution is initiated in anticipation of customer orders. C) At the time of execution, demand must be forecast. D) May also be referred to as reactive processes. E) All of the above are accurate.

E) All of the above are accurate.

Activities involved in the Customer Relationship Management (CRM) macro process include all of the following except A) marketing. B) sales. C) order management. D) call center management. E) All of the above are activities of CRM.

E) All of the above are activities of CRM.

All of the following are components of inventory decisions except A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing. E) All of the above are components of inventory decisions.

E) All of the above are components of inventory decisions.

Which of the following is not an issue companies need to consider in facility location decisions? A) Quality of workers B) Availability of infrastructure C) Proximity to customers and the rest of the network D) Cost of facility E) All of the above are issues companies need to consider in facility location decisions.

E) All of the above are issues companies need to consider in facility location decisions.

Which of the following is not a major driver of supply chain performance? A) Facilities B) Inventory C) Transportation D) Information E) All of the above are major drivers of supply chain performance.

E) All of the above are major drivers of supply chain performance.

Which of the following is not a cycle in the supply chain cycle view? A) Customer order cycle B) Replenishment cycle C) Manufacturing cycle D) Procurement cycle E) All of the above are part of the supply chain cycle view.

E) All of the above are part of the supply chain cycle view.

Which of the following is not a stage within a typical supply chain? A) Customers B) Retailers C) Wholesalers/Distributors D) Manufacturers E) All of the above are stages within a typical supply chain.

E) All of the above are stages within a typical supply chain.

Information is distorted as it moves within the supply chain because A) complete information is shared between stages. B) complete information is not shared between stages. C) firms try to be too accurate. D) all of the above E) B and C only

E) B and C only

Lot size based quantity discounts A) decrease the lot size of orders placed within the supply chain. B) increase the lot size of orders placed within the supply chain C) magnify the bullwhip effect. D) A and C only E) B and C only

E) B and C only

The important points to remember about achieving strategic fit are A) there is one best supply chain strategy for all competitive strategies. B) there is no right supply chain strategy independent of the competitive strategy. C) there is a right supply chain strategy for a given competitive strategy. D) all of the above E) B and C only

E) B and C only

To diminish the bullwhip effect, managers can design rationing schemes that A) decrease the uncertainty of demand during the lead time. B) discourage retailers from artificially inflating their orders in the case of a shortage. C) allocate the available supply based on past retailer sales. D) all of the above E) B and C only

E) B and C only

Supply chain profitability is A) not correlated to the value generated by the various stages of the supply chain. B) the total profit to be shared across all supply chain stages. C) the difference between the revenue generated from the customer and the overall cost across the supply chain. D) the total revenue generated by the distributor stage of the supply chain. E) B and C only

E) B and C only -the total profit to be shared across all supply chain stages. -the difference between the revenue generated from the customer and the overall cost across the supply chain.

A supply chain strategy involves decisions regarding A) inventory. B) transportation. C) operating facilities. D) information flows. E) all of the above

E) all of the above

Sourcing involves A) deciding the tasks that will be outsourced and those that will be performed within the firm. B) deciding whether to source from a single supplier or a portfolio of suppliers. C) identifying the set of criterion that will be used to select suppliers and measure their performance. D) selecting suppliers and negotiating contracts with them. E) all of the above

E) all of the above

The processes involved in the manufacturing cycle include A) receiving. B) manufacturing and shipping. C) production scheduling. D) order arrival. E) all of the above

E) all of the above

The processes involved in the replenishment cycle include A) retail order receiving. B) retail order entry. C) retail order trigger. D) retail order fulfillment. E) all of the above

E) all of the above

Which of the following are technologies that share and analyze information in the supply chain? A) Electronic Data Interchange (EDI) B) Internet C) Enterprise Resource Planning (ERP) D) Supply Chain Management (SCM) software E) all of the above

E) all of the above

Problems in learning within organizations that contribute to the bullwhip effect are referred to as A) incentive obstacles. B) information processing obstacles. C) operational obstacles. D) pricing obstacles. E) behavioral obstacles.

E) behavioral obstacles.

The processes included in the replenishment cycle include all of the following except A) retail order receiving. B) retail order entry. C) retail order trigger. D) retail order fulfillment. E) none of the above

E) none of the above

The replenishment cycle is initiated when A) the customer walks into the supermarket. B) the customer calls a mail order telemarketing center. C) customers load items intended for purchase into their carts. D) a product is received into stock at a store. E) none of the above

E) none of the above

Which of the following customer needs will cause implied uncertainty of demand to decrease? A) Range of quantity required increases B) Lead time decreases C) Variety of products required increases D) Required service level increases E) none of the above

E) none of the above

The process by which a firm decides how much to charge customers for its goods and services is A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management. E) pricing.

E) pricing.

Discuss the importance of managing supply chain relationships for cooperation and trust.

Effectively managed supply chain relationships foster cooperation and trust, thus increasing supply chain coordination. In contrast, poorly managed relationships lead to each party being opportunistic, resulting in a loss of total supply chain profits. The management of a relationship is often seen as a tedious and routine task. Top management, in particular, is often very involved in the design of a new partnership but rarely involved in its management. This has led to a mixed record in running successful supply chain alliances and partnerships. A supply chain partnership falters if the perceived benefit from the relationship diminishes or if one party is seen as being opportunistic. Problems arise when communication between the two parties is weak and the mutual benefit of the relationship is not reiterated regularly. When managing a supply chain relationship, managers should focus on the following factors to improve the chances of success of a supply chain partnership: 1. The presence of flexibility, trust, and commitment in both parties helps a supply chain relationship succeed. In particular, commitment of top management on both sides is crucial for success. The manager directly responsible for the partnership can also facilitate the development of the relationship by clearly identifying the value of the partnership for each party in terms of his own expectations. 2. Good organizational arrangements, especially for information sharing and conflict resolution, improve chances of success. Lack of information sharing and the inability to resolve conflicts are the two major factors that lead to the breakdown of supply chain partnerships. 3. Mechanisms that make the actions of each party and resulting outcomes visible help avoid conflicts and resolve disputes. Such mechanisms make it harder for either party to be opportunistic and help identify defective processes, increasing the value of the relationship for both parties. 4. The more fairly the stronger partner treats the weaker, vulnerable partner, the stronger the supply chain relationship tends to be. The issue of fairness is extremely important in the supply chain context because most relationships will involve parties with unequal power. Unanticipated situations that hurt one party more than the other often arise. The more powerful party often has greater control over how the resolution occurs. The fairness of the resolution influences the strength of the relationship in the future. Fairness requires that the benefits and costs of the relationship be shared between the two parties in a way that makes both winners. A relationship based on power would maximize all benefits on one side. It is thus important that the weaker party perceive the fairness of the stronger party's procedures and policies for dealing with its partners. The stronger party is in control of its policies and procedures and should not bias the policies in a way that is opportunistic and does not benefit the entire supply chain. Fair procedures should encourage two-way communication between the partners. The procedures should be impartial and should allow the weaker party an opportunity to appeal the stronger party's decisions. Finally, the stronger party should be willing to explain all its decisions.

A company will fail if there is a lack of strategic fit or because its overall supply chain design, processes, and resources do not provide the capabilities to support the maximum strategic fit.

FALSE

A company's product development strategy defines the set of customer needs that it seeks to satisfy through its products and services.

FALSE

A facility with little excess capacity will likely be no more or less efficient per unit of product it produces than one with a lot of unused capacity.

FALSE

A supply chain includes only the organizations directly involved in supplying components needed for manufacturing.

FALSE

A supply chain involves the constant flow of information, product, and funds between different stages and is typically static.

FALSE

Companies using seasonal inventory will maintain a level inventory increase rate of production for periods of high demand.

FALSE

Cycle inventory is inventory that is built up to counter predictable variability in demand.

FALSE

Every supply chain must include all 5 stages.

FALSE

Pull processes may also be referred to as speculative processes.

FALSE

The components of inventory decisions include capacity, cycle inventory, safety inventory, seasonal inventory, and sourcing.

FALSE

The cycle view of a supply chain holds that the processes in a supply chain are divided into 2 categories depending on whether they are initiated in response to or in anticipation of customer orders.

FALSE

The cycle view of the supply chain is useful when considering operational decisions, because it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders.

FALSE

The degree of supply chain responsiveness does not need to be consistent with the implied uncertainty.

FALSE

The following situation would likely work well. A situation in which marketing is publicizing a company's ability to provide a large variety of products very quickly; simultaneously, distribution is targeting the lowest cost means of transportation.

FALSE

The intercompany scope of strategic fit is no longer relevant today because the competitive playing field has shifted from company versus company to supply chain versus supply chain.

FALSE

The major drivers of supply chain performance are customers, facilities, inventory, transportation, and information.

FALSE

The manufacturing cycle occurs at the manufacturer/supplier interface.

FALSE

The objective of customer order entry is to maintain a record of product receipt and complete payment.

FALSE

The objective of every supply chain is to maximize the value generated for the manufacturing component of the supply chain.

FALSE

The objective of the customer arrival process is to ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes.

FALSE

The production scheduling process in the manufacturing cycle is similar to the order fulfillment process in the replenishment cycle.

FALSE

The push/pull view of a supply chain holds that the processes in a supply chain are divided into a series of activities performed at the interface between successive stages.

FALSE

The push/pull view of the supply chain is useful when considering strategic decisions relating to supply chain design, because it specifies the roles and responsibilities of each member of the supply chain.

FALSE

The replenishment cycle is initiated when customers load items intended for purchase into their carts.

FALSE

The replenishment cycle occurs at the distributor/manufacturer interface.

FALSE

To achieve complete strategic fit, a firm must ensure that all functions in the value chain have diverse strategies that support functional goals.

FALSE

Warehouse unit storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.

FALSE

Explain the role of each of the major drivers of supply chain performance in the competitive strategy.

Facilities and their corresponding capacities to perform their functions are a key driver of supply chain performance in terms of responsiveness and efficiency. For example, companies can gain economies of scale when a product is manufactured or stored in only one location; this centralization increases efficiency. The cost reduction, however, comes at the expense of responsiveness, as many of a company's customers may be located far from the production facility. The opposite is also true. Locating facilities close to customers increases the number of facilities needed and consequently reduces efficiency. If the customer demands and is willing to pay for the responsiveness that having numerous facilities adds, however, then this facilities decision helps meet the company's competitive strategy goals. Inventory plays a significant role in a supply chain's ability to support a firm's competitive strategy. If a firm's competitive strategy requires a very high level of responsiveness, a company can use inventory to achieve this responsiveness by locating large amounts of inventory close to the customer. Conversely, a company can also use inventory to make itself more efficient by reducing inventory through centralized stocking. The latter strategy would support a competitive strategy of being a low-cost producer. The trade-off implicit in the inventory driver is between the responsiveness that results from more inventory and the efficiency that results from less inventory. The role of transportation in a company's competitive strategy figures prominently when the company is considering the target customer's needs. If a firm's competitive strategy targets a customer that demands a very high level of responsiveness, and that customer is willing to pay for this responsiveness, then a firm can use transportation as one driver for making the supply chain more responsive. The opposite is true as well. If a company's competitive strategy targets customers whose main decision criterion is price, then the company can use transportation to lower the cost of the product at the expense of responsiveness. As a company may use both inventory and transportation to increase responsiveness or efficiency, the optimal decision for the company often means finding the right balance between the two. Information is a driver whose importance has grown as companies have used it to become both more efficient and more responsive. The tremendous growth of the importance of information technology is a testimony to the impact information can have on improving a company. Like all the other drivers, however, even with information, companies reach a point when they must make the trade-off between efficiency and responsiveness.

List and define the four major drivers of supply chain performance.

Facilities are the places in the supply chain network where product is stored, assembled, or fabricated. The two major types of facilities are production sites and storage sites. Inventory is all raw materials, work in process, and finished goods within a supply chain. Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain's efficiency and responsiveness. Transportation entails moving inventory from point to point in the supply chain. Transportation can take the form of many combinations of modes and routes. Information consists of data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain. Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.

Explain the role of each of the major drivers of supply chain performance.

Facilities are the where of the supply chain if we think of inventory as what is being passed along the supply chain and transportation as how it is passed along. They are the locations to or from which the inventory is transported. Within a facility, inventory is either processed or transformed into another state (manufacturing) or it is stored before being shipped to the next stage (warehousing). Inventory exists in the supply chain because of a mismatch between supply and demand. An important role that inventory plays in the supply chain is to increase the amount of demand that can be satisfied by having product ready and available when the customer wants it. Another significant role inventory plays is to reduce cost by exploiting any economies of scale that may exist during both production and distribution. Inventory is spread throughout the supply chain from raw materials to work in process to finished goods that suppliers, manufacturers, distributors, and retailers hold. Inventory is a major source of cost in a supply chain and it has a huge impact on responsiveness. The location and quantity of inventory can move the supply chain from one end of the responsiveness spectrum to the other. Inventory also has a significant impact on the material flow time in a supply chain. Another important area where inventory has a significant impact is throughput. Inventory and flow time are synonymous in a supply chain. Managers should use actions that lower the amount of inventory needed without increasing cost or reducing responsiveness, because reduced flow time can be a significant advantage in a supply chain. Transportation moves product between different stages in a supply chain. Like the other supply chain drivers, transportation has a large impact on both responsiveness and efficiency. Faster transportation, whether in the form of different modes of transportation or different amounts being transported, allows a supply chain to be more responsive but reduces its efficiency. The type of transportation a company uses also affects the inventory and facility locations in the supply chain. Information could be overlooked as a major supply chain driver because it does not have a physical presence. Information, however, deeply affects every part of the supply chain. Its impact is easy to underestimate as information affects a supply chain in many different ways. Information serves as the connection between the supply chain's various stages, allowing them to coordinate and bring about many of the benefits of maximizing total supply chain profitability. Information is also crucial to the daily operations of each stage in a supply chain. For instance, a production scheduling system uses information on demand to create a schedule that allows a factory to produce the right products in an efficient manner. A warehouse management system uses information to create visibility of the warehouse's inventory. The company can then use this information to determine whether new orders can be filled.

A bias error results from unpredictable factors that cause the forecast to deviate from actual demand.

False

A firm that averages sales of 320 units for every 480-minute shift it runs has a takt time of 40 seconds.

False

A five S program includes the activities of "simplify" and "system."

False

A reduction of lot sizes increases the amount of fluctuation that can accumulate between any pair of stages of a supply chain, thus increasing the bullwhip effect.

False

A value stream map shows the flows of materials and information and the lines of responsibility and authority.

False

After the earthquake and tsunami of 2011, Toyota's suppliers and plants were able to maintain production levels due to their efficiency.

False

Aggregating products or services together generally decreases the forecast accuracy.

False

An OWMM arrangement reduces labor requirements but increases inventory.

False

As the average processing time per container of parts increases, fewer containers are needed in a Kanban system.

False

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur is called heijunka.

False

Behavioral obstacles are often related to the way the supply chain is structured and reduce the bullwhip effect.

False

Combination forecasting is a method of forecasting that selects the best from a group of forecasts generated by simple techniques.

False

If infrequent, large shipments of purchased items are arranged with suppliers, large inventory savings for these items can be realized.

False

In a Kanban system, materials may be withdrawn without a withdrawal card if the operation requiring the material is about to run out of work.

False

In a lean system, large inventories are not considered a type of waste, because they prevent operator wait times.

False

In the Toyota Production System, services and goods flow to the next available person or machine to maintain smooth, rapid flow.

False

Incentives that focus only on the local impact of an action result in decisions that minimize total supply chain profits.

False

Information processing obstacles refer to actions taken in the course of placing and filling orders that lead to an increase in variability.

False

Judgment methods of forecasting are quantitative methods that use historical data on independent variables to predict demand.

False

Judgment methods of forecasting should never be used with quantitative forecasting methods.

False

Just-in-time (JIT) systems rely on inspectors to inspect quality into the product.

False

Lean systems do not need stable master production schedules.

False

Lot size based quantity discounts reduce the bullwhip effect within the supply chain.

False

Managers can encourage the bullwhip effect by devising pricing strategies that encourage retailers to order in smaller lots and reduce forward buying.

False

Manufacturing an item before it is needed in a lean system is not considered waste, because it helps keep material flowing through the system.

False

Market research is a systematic approach to determine consumer interest by gaining consensus from a group of experts while maintaining their anonymity.

False

Measuring performance based on sell-through is often justified on the grounds that the manufacturer's sales force does not control sell-in.

False

Often in value stream mapping, analysts must rely on process information from shop floor workers rather than direct observation in an effort to quickly develop a work plan and accelerate implementing the improved process.

False

One big advantage of lean systems is that they can usually be put in place without any major changes to existing layouts.

False

Preventive maintenance is typically given very low priority in just-in-time systems.

False

Push systems are often used in firms with highly repetitive processes and well defined work flows of standardized items.

False

Random variation is an aspect of demand that increases the accuracy of the forecast.

False

Regression equations with a coefficient of determination close to zero are extremely accurate because they have little forecast error.

False

Salesforce estimates are extremely useful for technological forecasting.

False

Sharing of POS data helps reduce the bullwhip effect because it allows each stage of the supply chain to use orders from the previous stage to forecast future demand.

False

Supply chain coordination improves if all stages of the chain take actions that are aligned and together decrease total supply chain surplus.

False

Takt time is the cycle time needed to maximize utilization of an organization's workers and equipment.

False

The Delphi method is a process of gaining consensus from a group of experts by debate and voting throughout several rounds of group discussion led by a moderator.

False

The Japanese practice of andon means that production does not begin until a card or bin is empty.

False

The bullwhip effect enables different stages of the supply chain to have a consistent estimate of what demand looks like.

False

The bullwhip effect leads to increased trust between different stages of the supply chain and enhances any potential coordination efforts.

False

The bullwhip effect reduces the profitability of a supply chain by making it simpler to provide a given level of product availability.

False

The bullwhip effect results in improved supply chain coordination.

False

The closer the value of the sample correlation coefficient is to -1.00, the worse the predictive ability of the independent variable for the dependent variable.

False

The goal of single-digit setup is to have a setup completed in fewer than 10 hours.

False

The larger the slope of the regression line, the more accurate the regression forecast.

False

The pull method begins the production of an item in advance of customer needs.

False

The standard error of the estimate measures how closely the data on the independent variable cluster around the regression line.

False

The trend projection with regression model is highly adaptive.

False

The value stream mapping tool often requires completion of the future state drawing before the current state drawing, to help managers see the future state goals and more easily identify problems with the current state of the process.

False

Toyota sets up all of its operations as experiments and teaches employees at all levels how to use the trial and error method of problem solving.

False

Using expensive, high precision equipment, even when simpler machines would suffice, is encouraged when lean systems are implemented, because this is the only way high quality manufacturing can be achieved.

False

When a single stage controls replenishment decisions for the entire chain, the problem of multiple forecasts is magnified and coordination within the supply chain follows.

False

While lean systems work very well for manufacturing systems, they cannot be applied to service systems.

False

While overproduction creates an item before it is needed, the extra time before an item is needed makes it easier to detect defects and reduce their impact on a process.

False

________ is a methodology consisting of five workplace practices that are conducive to visual controls and lean production.

Five S, 5S

________ selects the best forecast from a group of forecasts generated by individual techniques.

Focus forecasting

________ is the difference found by subtracting the forecast from actual demand for a given period.

Forecast error

________ is the prediction of future events used for planning purposes.

Forecasting

________ is the combining of parts or products with similar characteristics into families and setting aside groups of machines for their production.

Group technology (GT)

________ is the leveling of production load by both volume and product mix.

Heijunka

Which forecasting technique would you consider for technological forecasts?

I would consider the Delphi method because technological change takes place at a rapid pace and often the only way to make forecasts is to get the opinion of experts who devote their attention to those issues.

Explain how a line-flow strategy can be used to reduce or eliminate setups.

If line-flow volumes are high enough, a product layout can be used that eliminates setup requirements entirely. Another tactic, the one-worker-multiple-machines (OWMM) approach, can also be used to reduce or eliminate setups by having one person operate several machines simultaneously to achieve line-flow without requiring the machine to be changed over. In low volume processes, line- flow can be achieved through group technology (GT). This technique groups part or products with similar characteristics into families and sets aside groups of machines for their production. The goal is to group products with similar processing requirements and minimize changeover or setup.

List the attributes along which customer demand from different segments can vary.

In general, customer demand from different segments may vary along several attributes as follows: ∙ The quantity of the product needed in each lot ∙ The response time that customers are willing to tolerate ∙ The variety of products needed ∙ The service level required ∙ The price of the product ∙ The desired rate of innovation in the product

How do improperly structured incentives lead to a lack of coordination in the supply chain?

Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits. Incentives that focus only on the local impact of an action result in decisions that do not maximize total supply chain profits. Buying decisions based on maximizing profits at a single stage of the supply chain lead to ordering policies that do not maximize supply chain profits. Improperly structured sales force incentives are a significant obstacle to coordination in the supply chain. In many firms, sales force incentives are based on the amount the sales force sells during an evaluation period of a month or a quarter. The sales typically measured by a manufacturer are the quantity sold to distributors or retailers (sell-in), not the quantity sold to final customers (sell-through). Measuring performance based on sell-in is often justified on the grounds that the manufacturer's sales force does not control sell-through. This leads to spikes in orders that do not reflect actual customer needs.

________ refers to a form of supplier partnership that places a supplier representative, who is empowered to plan and schedule the replenishment of materials from the supplier, in the customer's plant on a full-time basis.

JIT II

A system that organizes the resources, information flows, and decision rules that enable a firm to realize the benefits of JIT principles is the ________.

Just-in-time system, JIT system

________ is the philosophy that waste can be eliminated by cutting unnecessary inventory and removing non-value-adding activities in operations.

Just-in-time, JIT

The Japanese term for continuous improvement in quality and productivity is ________.

Kaizen

A ________ is a card used to control the flow of production through a factory.

Kanban

________ are operating systems that maximize the value added of each of their activities by paring unnecessary resources and delays from them.

Lean systems

The ________ measure of forecast errors puts the size of the error in appropriate context by forming the ratio of the average forecast error to the average ________.

MAPE, demand

The dispersion of forecast errors is measured by both MAD and MSE, which behave differently in the way they emphasize errors. ________ gives larger weight to errors and ________ gives smaller weight to errors.

MSE, MAD

What is the bullwhip effect and how does it relate to lack of coordination in the supply chain?

Many firms have observed the bullwhip effect in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers. The bullwhip effect distorts demand information within the supply chain, with different stages having a very different estimate of what demand looks like. The result is a loss of supply chain coordination. This leads to increased inventories, poorer product availability, and a drop in profits. The bullwhip effect negatively impacts performance at every stage and thus hurts the relationships between different stages of the supply chain. There is the tendency to assign blame to other stages of the supply chain because each stage feels it is doing the best it can. The bullwhip effect thus leads to a loss of trust between different stages of the supply chain and makes any potential coordination efforts more difficult. It follows that the bullwhip effect and the resulting lack of coordination have a significant negative impact on the supply chain's performance. The bullwhip effect moves a supply chain away from the efficient frontier by increasing cost and decreasing responsiveness. The bullwhip effect reduces the profitability of a supply chain by making it more expensive to provide a given level of product availability.

________ is a systematic approach to determine consumer interest in a product or service by creating and testing hypotheses through data-gathering surveys.

Market research

Why are forecasts for product families typically more accurate than forecasts for the individual items within a product family?

More accurate forecasts are obtained for a group of items because the individual forecast errors for each item tend to cancel each other.

________ refers to mistake-proofing methods aimed at designing fail-safe systems that minimize human error.

Poka-yoke

Discuss the differences of push and pull supply chain processes.

Processes in a supply chain fall into one of two categories depending on the timing of their execution relative to end customer demand. With pull processes, execution is initiated in response to a customer order. With push processes, execution is initiated in anticipation of customer orders based on a forecast. Pull processes may also be referred to as reactive processes because they react to customer demand. Push processes may also be referred to as speculative processes because they respond to speculated (or forecasted) rather than actual demand. The push/pull boundary in a supply chain separates push processes from pull processes . Push processes operate in an uncertain environment because customer demand is not yet known. Pull processes operate in an environment in which customer demand is known. They are, however, often constrained by inventory and capacity decisions that were made in the push phase.

What are some of the approaches used to achieve the high quality levels associated with lean systems?

Quality at the source is one principle approach that is used-this is the philosophy that defects are caught and corrected where they are created. Other ways of building in quality include automatically stopping a process when something is wrong and then fixing the problems on the line itself as they occur (called jidoka), and using mistake-proofing methods to design fail-safe systems that minimize human error (called poka-yoke).

Explain scope of strategic fit.

Scope of strategic fit refers to the functions and stages that devise an integrated strategy with a shared objective. It is a key issue relating to strategic fit in terms of supply chain stages, across which the strategic fit applies. At one extreme, every operation within each functional area devises its own independent strategy with the objective of optimizing its individual performance. In this case, the scope of strategic fit is restricted to an operation in a functional area within a stage of the supply chain. At the opposite extreme, all functional areas within all stages of the supply chain devise strategy jointly with a common objective of maximizing supply chain profit. In this case, the scope of strategic fit extends to the entire supply chain. Expanding the scope of strategic fit improves supply chain performance. The scope of strategic fit can be represented on a two-dimensional grid. Horizontally, the scope of strategic fit is considered across different supply chain stages, starting from suppliers and moving all the way along the chain to the customer. Vertically, the scope is applied to the fit achieved across different functional strategies, competitive, product development, supply chain, and marketing.

________ refers to the goal of having a setup time of fewer than 10 minutes.

Singe-digit setup

What are the supply chain implications of the lean system emphasis on small lot sizes?

Small lot sizes reduce average inventory levels (relative to large lots) throughout the entire supply chain. Small lots also pass through the system more quickly, because they do not keep materials waiting. Defective items are discovered more quickly, and shorter delays result from correcting a problem with a smaller lot. In addition, they help achieve a uniform workload and prevent overproduction. One disadvantage of small lots is that they increase the frequency of setups, so lean systems direct a great deal of attention to reducing setup times. Often, an objective of single-digit setups is established, which represents the firm's goal to have setup times of less than 10 minutes.

With respect to lean systems, what is the advantage of standardized components?

Standardization tends to increase the repeatability of tasks, which in turn enables a higher degree of efficiency in production.

Explain why supply chain flows are important.

Supply chain flows are important, because there is a close connection between the design and management of supply chain flows (product, information, and cash) and the success of a supply chain. The success of many companies can be directly traced to the design and management of an appropriate supply chain. The failure of many businesses can be linked directly to their inability to effectively design and manage supply chain flows.

List the abilities included in supply chain responsiveness.

Supply chain responsiveness includes a supply chain's ability to do the following: ∙ Respond to wide ranges of quantities demanded ∙ Meet short lead times ∙ Handle a large variety of products ∙ Build highly innovative products ∙ Meet a very high service level ∙ Handle supply uncertainty

Supply chain responsiveness includes the ability to do which of the following? A) Handle supply uncertainty B) Understand customers and supply chain uncertainty C) Match supply chain responsiveness with the implied uncertainty of demand D) Ensure that all functional strategies within the supply chain support the supply chain's level of responsiveness E) none of the above

Supply chain responsiveness includes the ability to do which of the following? A) Handle supply uncertainty

Supply chain responsiveness includes the ability to do which of the following? A) Understand customers and supply chain B) Meet a very high service level C) Match supply chain responsiveness with the implied uncertainty of demand D) Ensure that all functional strategies within the supply chain support the supply chain's level of responsiveness E) none of the above

Supply chain responsiveness includes the ability to do which of the following? B) Meet a very high service level

Supply chain responsiveness includes the ability to do which of the following? A) Understand customers and supply chain B) Match supply chain responsiveness with the implied uncertainty of demand C) Meet short lead times D) Ensure that all functional strategies within the supply chain support the supply chain's level of responsiveness E) all of the above

Supply chain responsiveness includes the ability to do which of the following? C) Meet short lead times

A company's ability to find a balance between responsiveness and efficiency that best matches the needs of the customer it is targeting is the key to achieving strategic fit.

TRUE

A company's competitive strategy defines the set of customer needs that it seeks to satisfy through its products and services.

TRUE

A company's product development strategy specifies the portfolio of new products that it will try to develop.

TRUE

A company's supply chain strategy determines the nature of procurement and transportation of materials as well as the manufacture and distribution of the product.

TRUE

A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request.

TRUE

A supply chain could be more accurately described as a supply network or supply web.

TRUE

All stages of an enterprise are involved, either directly or indirectly, in fulfilling a customer request.

TRUE

All supply chain activities within a firm belong to one of three macro processes — CRM, ISCM and SRM.

TRUE

Because demand and supply characteristics change, the supply chain strategy must change over the product life cycle if a company is to continue achieving strategic fit.

TRUE

Companies using seasonal inventory will build up inventory in periods of low demand and store it for periods of high demand when they will not have the capacity to produce all that is demanded.

TRUE

Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.

TRUE

Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain's efficiency and responsiveness.

TRUE

Push processes may also be referred to as speculative processes.

TRUE

Seasonal inventory is inventory that is built up to counter predictable variability in demand.

TRUE

Stock keeping unit (SKU) storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.

TRUE

Supply chain strategy specifies what the operations, distribution, and service functions, whether performed in-house or outsourced, should do particularly well.

TRUE

The cycle view of a supply chain holds that the processes in a supply chain are divided into a series of activities performed at the interface between successive stages.

TRUE

The cycle view of the supply chain is useful when considering operational decisions, because it specifies the roles and responsibilities of each member of the supply chain.

TRUE

The degree of supply chain responsiveness should be consistent with the implied uncertainty.

TRUE

The difference between the value of the product and its price remains with the customer as consumer surplus.

TRUE

The high utilization facility will have difficulty responding to demand fluctuations.

TRUE

The manufacturing cycle occurs at the distributor/manufacturer interface.

TRUE

The objective of customer order entry is to ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes.

TRUE

The objective of every supply chain is to maximize the overall value generated.

TRUE

The objective of the customer arrival process is to maximize the conversion of customer arrivals to customer orders.

TRUE

The procurement cycle occurs at the manufacturer/supplier interface.

TRUE

The production scheduling process in the manufacturing cycle is similar to the order entry process in the replenishment cycle.

TRUE

The push/pull view of a supply chain holds that the processes in a supply chain are divided into 2 categories depending on whether they are initiated in response to or in anticipation of customer orders.

TRUE

The replenishment cycle is initiated when a supermarket runs out of stock of a particular item.

TRUE

The replenishment cycle occurs at the retailer/distributor interface.

TRUE

The two major types of facilities are production sites and storage sites.

TRUE

The value chain emphasizes the close relationship between all the functional strategies within a company.

TRUE

There is a close connection between the design and management of supply chain flows and the success of a supply chain.

TRUE

To achieve complete strategic fit, a firm must ensure that all functions in the value chain have consistent strategies that support the competitive strategy.

TRUE

To retain strategic fit, supply chain strategy must be adjusted over the life cycle of a product and as the competitive landscape changes.

TRUE

List and briefly define the 5S Practices that serve as an enabler and essential foundation of lean systems.

Table in book

List and briefly define the eight types of waste (or muda) that often occur in firms which must be eliminated in implementing lean systems.

Table in text

Explain the meaning of the term takt time, and use a numerical example to illustrate.

Takt time is the cycle time needed to match the rate of production to the rate of sales or consumption. Numerical examples may vary, but one might be as follows: Units are sold at a rate of 240 per day. A plant running one shift (480 minutes) per day would establish a takt time of 2 minutes per unit, or 120 seconds per unit (480 minutes ÷ 240 units). All manufacturing steps in the process would be planned to complete their work within the 2-minute takt time.

Explain the 3 decision phases (categories) that must be made in a successful supply chain.

The 3 decision phases that occur within a supply chain are supply chain strategy (or design), supply chain planning and supply chain operation. Decisions relate to the flow of information, product and funds. The difference between categories depends upon the frequency of each decision and the time frame over which it has an impact. 1. During the supply chain strategy phase, a company determines what the chain's configurations will be, how resources will be allocated, and what processes each stage will perform. This will establish the structure of the supply chain for several years. 2.Supply chain planning deals with decisions with a time frame from 3 months up to a year. The planning phase must work within the constraints established in the strategy phase. Planning decisions include which markets to supply from which locations, subcontracting of manufacturing, inventory policies and timing and size of marketing promotions. 3.The supply chain operation phase operates on a weekly or daily time horizon and deals with decisions concerning individual customer orders.

________ is a graphic representation of the Toyota Production System showing all of the essential elements of lean systems that make the TPS work well.

The House of Toyota

Briefly discuss the House of Toyota, including its origins and key points.

The House of Toyota is a graphic presentation of all the essential elements of lean systems that make the Toyota Production System (TPS) work well. It was originally used by Toyota to define TPS to its employees and suppliers. Its roof represents the primary goals of high quality, low cost, waste elimination, and short lead times. The roof is supported by the twin pillars of JIT and jidoka, which stand on a base of operational stability that comes from leveraging a number of lean concepts.

Describe the cycle view of the processes within a supply chain.

The cycle view divides the supply chain into a series of 4 cycles between the 5 different stages of a supply chain. The cycles are the customer order cycle, replenishment cycle, manufacturing cycle and procurement cycle. 1. The customer order cycle occurs at the customer/retailer interface and includes all processes directly involved in receiving and filling the customer. 2. The replenishment cycle occurs at the retailer/distributor interface and includes all processes involved in replenishing retailer inventory. 3. The manufacturing cycle typically occurs at the distributor/manufacturer (or retailer/manufacturer) interface and includes all processes involved in replenishing distributor (or retailer) inventory. 4. The procurement cycle occurs at the manufacturer/supplier interface and includes all processes necessary to ensure that the materials are available for manufacturing according to schedule.

The final step in achieving strategic fit between competitive and supply chain strategies is to A) understand the supply chain and map it on the responsiveness spectrum. B) understand customers and supply chain uncertainty. C) match supply chain responsiveness with the implied uncertainty of demand. D) combine customer and supply chain uncertainty and map it on the implied uncertainty spectrum. E) all of the above

The final step in achieving strategic fit between competitive and supply chain strategies is to C) match supply chain responsiveness with the implied uncertainty of demand.

What are the four underlying principles of the Toyota Production System?

The four underlying principles are: (1) all work must be completely specified as to content, sequence, timing and outcome; (2) every customer—supplier connection must be direct, unambiguously specifying the people involved, the form and quantity of goods and services, the way requests are made by customers, and the expected time in which the requests will be met; (3) the pathway for every product and service must be simple and direct; and (4) any improvement to the system must be made in accordance with the scientific method, under the guidance of a teacher, and at the lowest possible level.

Explain the basic trade-off between responsiveness and efficiency for each of the major drivers of supply chain performance.

The fundamental trade-off when making facilities decisions is between the cost of the number, location, and type of facilities (efficiency) and the level of responsiveness that these facilities provide the company's customers. The fundamental trade-off when making inventory decisions is between responsiveness and efficiency. Increasing inventory will generally make the supply chain more responsive to the customer. This choice, however, comes at a cost as the added inventory decreases efficiency. Therefore, a supply chain manager can use inventory as one of the drivers for reaching the level of responsiveness and efficiency the competitive strategy targets. The fundamental trade-off for transportation is between the cost of transporting a given product (efficiency) and the speed with which that product is transported (responsiveness). The transportation choice influences other drivers such as inventory and facilities. When supply chain managers think about making transportation decisions, they frame the decision in terms of this trade-off. Good information systems can help a firm improve both its responsiveness and efficiency. The information driver is used to improve the performance of other drivers and the use of information is based on the strategic position the other drivers support. Accurate information can help a firm improve efficiency by decreasing inventory and transportation costs. Accurate information can improve responsiveness by helping a supply chain better match supply and demand.

Explain the supply chain decision-making framework and the role of the four major drivers.

The goal of a supply chain strategy is to strike the balance between responsiveness and efficiency, resulting in a strategic fit with the competitive strategy. To reach this goal, a company uses the four supply chain drivers discussed earlier. For each of the individual drivers, supply chain managers must make a trade-off between efficiency and responsiveness. The combined impact of these four drivers then determines the responsiveness and efficiency of the entire supply chain. Most companies begin with a competitive strategy and then decide what their supply chain strategy ought to be. The supply chain strategy determines how the supply chain should perform with respect to efficiency and responsiveness. The supply chain must then use the supply chain drivers to reach the performance level the supply chain strategy dictates.

What are the general operating rules for a single-card kanban system?

The operating rules for the single-card system are simple and are designed to facilitate the flow of materials while maintaining control of inventory levels. 1. Each container must have a card. 2. The assembly line always withdraws materials from the fabrication cell. The fabrication cell never pushes parts to the assembly line because, sooner or later, parts will be supplied that are not yet needed for production. 3. Containers of parts must never be removed from a storage area without a kanban first being posted on the receiving post. 4. The containers should always contain the same number of good parts. The use of nonstandard containers or irregularly filled containers disrupts the production flow of the assembly line. 5. Only nondefective parts should be passed along to the assembly line to make the best use of materials and worker's time. This rule reinforces the notion of building quality at the source, which is an important characteristic of lean systems. 6. Total production should not exceed the total amount authorized on the kanbans in the system.

What are the organizational issues companies must address before implementing a lean system?

The organizational issues faced by companies include the human cost of lean systems (tends to create stress in workers), cooperation and trust (changes activities of workers and the relationships between them), and changing reward systems and labor classification.

When determining the number of kanban containers, discuss the impact of alpha, the policy variable, on the total amount of inventory in the system. If alpha is set equal to zero, is system inventory zero? What would be required to achieve a system-wide inventory of zero?

The policy variable alpha adds safety stock to cover for unexpected circumstances, for example a quality issue or delays in supply. Even if alpha is zero, there is still inventory in the system as dictated by the average demand during lead time DDLT. The DDLT is calculated by multiplying the daily demand for parts by the sum of the average container travel time plus the average container process time. One unappealing way for system-wide inventory of zero would be for demand to drop to zero. Another way for system-wide inventory to be close to zero would be for a manufacturer to have very large capacity and fast processing. Such capacity and speed would be prohibitively expensive for processing tangible goods.

Explain the push/pull view of the processes within a supply chain.

The push/pull view of the supply chain divides supply chain processes into two categories based on whether they are executed in response to a customer order or in anticipation of customer orders. Pull processes are initiated in response to a customer order. Push processes are initiated and performed in anticipation of customer orders. The push/pull boundary separates push processes from pull processes. This view is very useful when considering strategic decisions relating to supply chain design, because it forces a more global consideration of supply chain processes as they relate to the customer.

How can group technology be used in a service setting? Provide an example and describe two advantages of using this principle in a service setting.

The theory behind group technology is to group parts or products into families and set aside groups of machines for their production. In a service setting, the parts are customers and the groups of machines may be customer service representatives or could be machines. Examples will vary, but in a university setting, student advising is most likely done using group technology principles, e.g., students are assigned to an advisor based on their major rather than alphabetically. This means that the advisor can develop intimate knowledge of a few majors rather than the virtually impossible task of understanding the quirks of all majors and departments at a university. Many businesses parse their customer bases into commercial and residential groups as well.

What is group technology and what advantages are accrued from its use?

The theory is to group parts or products into families and set aside groups of machines for their production. By dedicating these groups of machines to specific part families, the overall setup time between parts is minimized, part routings are less complicated, shorter, and therefore faster, and material handling is minimized. Other less tangible benefits may also be realized; for example, it is typically easier to track down the status of an order if the expeditor knows the cell where it should be produced. Inventory levels may also be lower and learning effects may reduce overall production time.

List and explain the three basic steps to achieving strategic fit.

There are three basic steps to achieving strategic fit: 1. Understanding the customer and supply chain uncertainty. First a company must understand the customer needs for each targeted segment and the uncertainty the supply chain faces in satisfying these needs. These needs help the company define the desired cost and service requirements. The supply chain uncertainty helps the company identify the extent of disruption and delay the supply chain must be prepared for. 2. Understanding the supply chain capabilities. There are many types of supply chains, each of which is designed to perform different tasks well. A company must understand what its supply chain is designed to do well. 3. Achieving strategic fit. If a mismatch exists between what the supply chain does particularly well and the desired customer needs, the company will either need to restructure the supply chain to support the competitive strategy or alter its strategy.

________ analysis is a statistical approach that relies heavily on historical demand data to project the future size of demand, and it recognizes trends and seasonal patterns.

Time-series

________ practices include early testing of machine parts that may need to be replaced and making workers responsible for routine minor maintenance of their own equipment.

Total Preventive Maintenance, TPM

How does Toyota's two-card kanban system work?

Toyota uses a two-card system, based on a withdrawal card and a production-order card, to control inventory quantities more closely. The withdrawal card specifies the item and the quantity the user of the item should withdraw from the producer of the item, as well as the stocking locations for both the user and the producer. The production-order card specifies the item and the quantity to be produced, the materials required and where to find them, and where to store the finished item. Materials cannot be withdrawn without a withdrawal card, and production cannot begin without a production-order card. The cards are attached to containers when production commences. By manipulating the number of withdrawal and production cards in play at any time, management can control the flow of materials in the production system.

A Kanban is a card used to control the flow of production in many just-in-time systems.

True

A firm that averages sales of 320 units for every 480-minute shift it runs has a takt time of 90 seconds.

True

A lack of coordination occurs either because different stages of the supply chain have objectives that conflict or because information moving between stages gets delayed and distorted.

True

A linear regression model results in the equation Y = 15 - 23X. If the coefficient of determination is a perfect 1.0, the correlation coefficient must be -1.

True

A naive forecast is a time-series method whereby the forecast for the next period equals the demand for the current period.

True

A one-person cell in which a worker operates several different machines simultaneously to achieve a line flow is called a one-worker, multiple-machines (OWMM) cell.

True

A power cord that can be plugged in only one way is an example of a poka-yoke.

True

A reduction in replenishment lead time helps dampen the bullwhip effect by reducing the underlying uncertainty of demand.

True

A simple moving average of one period will yield identical results to a naive forecast.

True

Aggregation is the act of clustering several similar products or services.

True

An exponential smoothing model with an alpha equal to 1.00 is the same as a naive forecasting model.

True

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur is called jidoka.

True

Better forecasting processes yield better forecasts.

True

Bias is the worst kind of forecasting error.

True

Combination forecasting is most effective when the techniques being combined contribute different kinds of information to the forecasting process.

True

Cooperation and trust within the supply chain help improve performance for a variety of reasons.

True

Firms that have highly repetitive processes and well-defined work flows of standardized items often use the pull method.

True

Five S practices can be applied to both manufacturing and service settings and can include offices, work spaces, tool rooms, and shop floors.

True

Five S practices can enable workers to visually see everything differently, prioritize tasks, and achieve a greater degree of focus.

True

Focus forecasting selects the best forecast from a group of forecasts generated by individual techniques.

True

Forecast error is found by subtracting the forecast from the actual demand for a given period.

True

Forecasts almost always contain errors.

True

Group technology collects similar parts into families and organizes machine tools into separate cells.

True

Heijunka is the leveling of production load by both volume and product mix.

True

Improperly structured sales force incentives are a significant obstacle to coordination in the supply chain.

True

In a lean system, excess inventory hides problems on the shop floor, and thus prevents sources of waste from being identified and eliminated.

True

In a lean system, wait times can be caused to some extent by long production runs.

True

In lean systems, the need for single-digit setups is driven by the desire for small lot sizes.

True

In lean systems, work-in-process inventory is a direct result of overproduction and waiting.

True

In manufacturing systems, one way to achieve continuous improvement can be to maintain low inventories, and periodically cut safety stocks almost to zero.

True

In service systems, a common approach used to stress the system and identify problems is to reduce the number of employees doing an activity until the process begins to slow or come to a halt.

True

In the Toyota Production System, when a work station needs more material, it is obvious to both the worker and the supplier that material is needed. Further, the amount needed must be understood as well as the delivery time for replenishment.

True

Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits.

True

Information is distorted as it moves within the supply chain because complete information is not shared between stages.

True

Information processing obstacles refer to situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain.

True

JIT II refers to a form of supplier partnership that places a supplier representative, who is empowered to plan and schedule the replenishment of materials from the supplier, in the customer's plant on a full- time basis.

True

Just-in-time (JIT) systems need close relationships with suppliers.

True

Kaizen is the Japanese term for continuous improvement.

True

Lean systems are operating systems that maximize the value added of each of its activities by paring unnecessary resources and delays from them.

True

Long production runs, poor material flows, and processes that are not tightly linked to one another can cause over 90% of a product's lead time to be spent waiting.

True

Managers can improve coordination within the supply chain by aligning goals and incentives such that every participant in supply chain activities works to maximize total supply chain profits.

True

Mixed-model assembly is a type of assembly that produces a mix of models in smaller lots.

True

One benefit of a lean system is that it reduces space requirements.

True

One of the basic time series patterns is random.

True

One tactic of Total Preventive Maintenance (TPM) is to make workers responsible for routine minor maintenance of their own equipment.

True

Options for achieving line-flow layouts in a lean system include assigning one worker to operate several different machines in a line and creating cells to produce similar product groups called families.

True

Pricing obstacles refer to situations in which the pricing policies for a product lead to an increase in variability of orders placed.

True

Productivity tends to increase when components are standardized because each worker performs a standardized task or work method more often each day.

True

Quality at the source is a philosophy whereby defects are caught and corrected where they are created.

True

Some Kanban systems are set up without Kanban cards, and use the material containers or open spaces in a work area to withdraw materials.

True

Some analysts prefer to use a holdout set as the final test of a forecasting procedure.

True

Supply chain coordination improves if all stages of the chain take actions that are aligned and together increase total supply chain surplus.

True

Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages.

True

Takt time is the cycle time needed to match the rate of production to the rate of sales.

True

Technological forecasting is an application of executive opinion in light of the difficulties in keeping abreast of the latest advances in technology.

True

The Toyota Production System requires that any process improvements are to be made at the lowest level of the organization.

True

The bullwhip effect moves a supply chain away from the efficient frontier by increasing cost and decreasing responsiveness.

True

The bullwhip effect negatively impacts performance at every stage and thus hurts the relationships between different stages of the supply chain.

True

The causal method of forecasting uses historical data on independent variables (such as promotional campaigns and economic conditions) to predict the demand of dependent variables (such as sales volume).

True

The just-in-time (JIT) philosophy is the belief that cutting inventory and removing non-value-added activities in operations can eliminate waste.

True

The lack of information sharing between the retailer and manufacturer leads to a large fluctuation in manufacturer orders.

True

The push method begins the production of items in advance of customer needs.

True

The repeated observations of demand for a product or service in their order of occurrence form a pattern known as a time series.

True

The theory of constraints accepts existing system bottlenecks and works to maximize throughput given these constraints, while value stream mapping endeavors to understand how existing processes can be altered to eliminate bottlenecks and other wasteful activities.

True

The trend projection with regression model can forecast demand well into the future.

True

Time-series analysis is a statistical approach that relies heavily on historical demand data to project the future size of demand.

True

Time-series forecasts require information about only the dependent variable.

True

To complete the current state drawing of a process, a map of the current situation is developed, including such items as material and information flows, process times, setup times, batch sizes, scrap rates, and number of people required.

True

Trade promotions and other short-term discounts offered by a manufacturer result in large orders during the promotion period followed by very small orders after that.

True

Tying allocation to past sales removes any incentive a retailer may have to inflate orders, as a result dampening the bullwhip effect.

True

Use of value stream mapping requires construction of a current state drawing, a future state drawing, and an implementation plan.

True

When a significant trend is present, exponential smoothing forecasts can be below or above the actual demand, and must therefore be modified.

True

With an uncoordinated supply chain each stage tries to maximize its own profits, resulting in actions that often diminish total supply chain profits.

True

Without collaborative planning, sharing of POS data does not guarantee coordination.

True

Briefly outline the steps to be followed in evaluating and improving a process using value stream mapping.

VSM analysts begin by selecting a product family for which the mapping will be done. This is followed by drawing a current state map of the existing production situation, and gathering and including all pertinent information on material and information flows (cycle times, scrap rates, machine uptime, batch sizes, etc.). Once the current state map is completed, the analysts use lean systems principles (e.g., load leveling, pull scheduling, Kanban systems) to create a future state map with more streamlined product flows. In this step, sources of waste are highlighted, and means for eliminating them are identified. Finally an implementation plan for achieving the future state is developed, which then becomes the blueprint for implementing and fine tuning a lean system. The process does not stop here, but provides continuous improvement opportunities as a new future state map is drawn after the lean system has been further improved.

Choose a simple, common process and create a value stream map containing the current state, plus a realistic future state, and implementation plan.

VSM analysts begin by selecting a product family for which the mapping will be done. This is followed by drawing a current state map of the existing production situation, and gathering and including all pertinent information on material and information flows (cycle times, scrap rates, machine uptime, batch sizes, etc.). Once the current state map is completed, the analysts use lean systems principles (e.g., load leveling, pull scheduling, Kanban systems) to create a future state map with more streamlined product flows. In this step, sources of waste are highlighted, and means for eliminating them are identified. Finally an implementation plan for achieving the future state is developed, which then becomes the blueprint for implementing and fine tuning a lean system. The process does not stop here, but provides continuous improvement opportunities as a new future state map is drawn after the lean system has been further improved.

________ is a qualitative lean tool for eliminating waste that involves current state and future state drawings, and an implementation plan.

Value stream mapping (VSM)

Describe the impact of forecasts based on orders rather than actual customer demand.

When stages within a supply chain make forecasts that are based on orders they receive, any variability in customer demand is magnified as orders move up the supply chain to manufacturers and suppliers. In supply chains that exhibit the bullwhip effect, the fundamental means of communication between different stages are the orders that are placed. Each stage views its primary role within the supply chain as one of filling orders placed by its downstream partner. Thus, each stage views its demand to be the stream of orders received and produces a forecast based on this information. In such a scenario, a small change in customer demand becomes magnified as it moves up the supply chain in the form of customer orders. Consider the impact of a random increase in customer demand at the retailer. The retailer may interpret part of this random increase to be a growth trend. This interpretation will lead the retailer to order more than the observed increase in demand because the retailer expects growth to continue into the future and thus orders to cover for future anticipated growth. The increase in the order placed with the wholesaler is thus larger than the observed increase in demand at the retailer. Part of the increase is a one-time increase. The wholesaler, however, has no way to interpret the order increase correctly. The wholesaler simply observes a jump in the order size and infers a growth trend. The growth trend inferred by the wholesaler will be larger than that inferred by the retailer (recall that the retailer had increased the order size to account for future growth). The wholesaler will thus place an even larger order with the manufacturer. As we go further up the supply chain, the order size will be magnified. Now assume that periods of random increase are followed by periods of random decrease in demand. Using the same forecasting logic as earlier, the retailer will now anticipate a declining trend and reduce order size. This reduction will also become magnified as we move up the supply chain.The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.

What is the difference between the "push" and "pull" methods of material flow? Which method does lean systems use?

With the pull method, customer demand (an order) activates the production of the goods or services. The production system does not anticipate the need for more product until indicated by a customer order. The push method begins with a production schedule and customer demand is assumed (or hoped for). Lean system processes use the pull method of production.

________ methods use historical data on independent variables to predict demand.

casual

________ are produced by averaging independent forecasts based on different methods or different data, or both.

combination forecasts

In the Toyota Production System, all work must be completely specified as to ________, ________, ________ and ________.

content, sequence, timing, outcome

Value stream maps consist of a(n)________, a(n)________, and a(n)________.

current state drawing, future state drawing, implementation plan

The ________ variable is the variable that one wants to forecast.

dependent

A(n) ________ is a portion of data from more recent time periods that is used to test different models developed from earlier time period data.

holdout set

________ are assumed to "cause" the results that a forecaster wishes to predict.

independent variables

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur is called ________.

jidoka

________ methods of forecasting translate the opinions of management, experts, consumers, or salesforce into quantitative estimates.

judgement

Jones Electric Motors uses a Kanban system to make motors for several garage door companies in the southeastern United States. The daily demand for motor housings used in manufacturing is 100 units. The average waiting time for a container of parts is 0.2 day. The processing time for a container of housings is 0.1 day, and a container holds 5 housings. If Jones wishes to use a 10% policy variable, how many containers are needed?

k=d(w + p)(1+α)/c = 100(.2 + .1)(1+ .10)/5 = 6.6 → 7 containers

In an exponential smoothing model a ________ value for alpha results in greater emphasis being placed on more recent periods.

larger

________ is a causal method of forecasting in which one variable is related to one or more variables by a linear equation.

linear regression

All improvements to the Toyota Production System must be made at the ________ level.

lowest

A ________ assembly line produces a mix of models in smaller lots.

mixed-model

A(n) ________ forecast is a time-series method whereby the forecast for the next period equals the demand for the current period.

naive

A history file of past demand will often be separated into two parts; the ________ part will reflect irregular demands.

nonbase (data)

A ________ is a workstation in which a worker operates several different machines simultaneously to achieve a line flow.

one-worker, multiple-machines (OWMM) cell

The ________ method activates production of a service or item based on customer demand.

pull

The ________ method produces the item in advance of customer need.

push

Variations in demand that cannot be predicted are said to be a(n) ________ pattern.

random

The ________ measures the amount of variation in the dependent variable about its mean that is explained by the regression line.

sample coefficient of determination, r-squared

A(n) ________ measures the direction and strength between the independent variable and the dependent variable.

sample correlation coefficient, r

All improvements to the Toyota Production System must be made using the ________ method.

scientific

A(n) ________ is a group of activities needed to readjust a process between successive lots of items.

setup or changeover

If the inventory advantages of a lean system are to be realized, small lot sizes must be used; in order to use small lot sizes, manufacturers must significantly reduce ________ .

setup times

________ is a time-series method used to estimate the average of a demand time series by averaging the demand for the n most recent time periods.

simple moving average

The pathway for every service and product in the Toyota Production System must be ________ and _______.

simple, direct

The list of five S practices includes ________, ________, ________, ________ and ________.

sort, straighten, shine, standardize, sustain

A lean system's ________ refers to the cycle time needed to match the rate of production to the rate of sales or consumption.

takt time

Cyclical patterns arise from ________ and ________.

the business cycle, the product (or service) life cycle

A(n) ________ is a measure that indicates whether a method of forecasting is accurately predicting actual changes in demand.

tracking signal

A systematic increase or decrease in the mean of the series over time is a(n) ________.

trend

A ________ is based on both a withdrawal card and a production-order card, to control inventory quantities more closely.

two-card Kanban system