SCM Exam 1

Material Requirement Planning is the system intended to develop long-range plans (more than a year away) concerning product families manufactured by the organization. A. True B. False

B. False

Service firms offer intangible products (meaning products that cannot be physically touched), therefore, they do not have a supply chain. A. True B. False

B. False

The Chase Production Strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern. A. True B. False

B. False

The goal of Supply Chain Management is to increase customer service by increasing inventory and reducing costs. A. True B. False

B. False

The lowest inventory level at which a new order must be placed to avoid a stockout is known as the Replenishment Threshold A. True B. False

B. False

There are no inventories in the service industry. A. True B. False

B. False

The process of converting a parent item's planned order releases into component gross requirements is called? A. Lot Sizing B. MRP Explosion C. Bill of Materials D. Pegging

B. MRP Explosion

Which of the following statements is TRUE? A. Supply chain management was invented by the auto manufacturing industry B. Strategic partnerships are seen as one of the foundations of supply chain management C. Purchasing is seen as the final and most difficult step in the supply chain D. Logistics and Supply Chain Management are synonymous terms (i.e., they mean the same thing).

B. Strategic partnerships are seen as one of the foundations of supply chain management

In the absence of any other information or visibility, individual supply chain participants can begin second-guessing what is happening with ordering patterns, and potentially start over-reacting. This is known as? A. Forecast Bias B. The Bullwhip Effect C. A Tracking Signal D. The Running Sum of Forecast Errors

B. The Bullwhip Effect

A type of inventory system that issues an order whenever a withdrawal is made from inventory, is known as? A. ABC System B. Bin System C. Base Stock Level System D. Single Period Inventory Model

C. Base Stock Level System

Successful modern supply chain management typically includes the practice of? A. Keeping high inventories throughout the supply chain B. Always purchasing materials with the lowest per unit cost C. Collaborating and sharing information between supply chain partners D. Issuing ultimatums to your supply chain partner

C. Collaborating and sharing information between supply chain partners

Which one of the following is NOT one of the four Foundations of Supply Chain Management? A. Logistics Management B. Operations Management C. Demand Management D. Supply Management E. Integration

C. Demand Management

Which one of the following is NOT a type of qualitative forecasting? A. Sales force composite B. Consumer survey C. Jury of executive opinion D. Naïve method

D. Naïve method

Which of the following MRP terms represents a committed order awaiting delivery for a specific period? A. Projected on-hand inventory B. Time bucket C. Net requirement D. Scheduled receipt

D. Scheduled receipt

Which of the following is NOT an example of an ordering cost for products purchased from a supplier? A. The cost of transmitting the order B. The cost of receiving the product C. The cost associated with processing the invoice D. The opportunity cost of not ordering from a least cost supplier E. The cost of handling the product

D. The opportunity cost of not ordering from a least cost supplier

The primary purpose of the basic economic order quantity model is A. To calculate the reorder point, so that replenishments take place at the proper time B. To minimize the sum of carrying cost and holding cost C. To maximize the customer service level D. To minimize the sum of ordering cost and holding cost

D. To minimize the sum of ordering cost and holding cost

Cause-and-Effect Models can have multiple independent variables. A. True B. False

A. True

It was intense global competition that led manufactures to adopt Supply Chain Management (SCM) and other practices such as Just-in-Time (JIT). A. True B. False

A. True

Supply chain management starts with understanding the flow. A. True B. False

A. True

The Economic Order Quantity (EOQ) is the optimal order size because it minimizes the annual total inventory cost. A. True B. False

A. True

The Qualitative forecasting method is based on opinion & intuition. A. True B. False

A. True

The four broad categories of inventory are raw materials, work-in-process, MRO, and finished goods. A. True B. False

A. True

The goal of supply chain planning is to balance supply and demand in a way that realizes the financial and service objectives of the company. A. True B. False

A. True

The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the mixed production strategy. A. True B. False

A. True

The top 2 primary functions of inventory are (1) To meet customer demand, and (2) To buffer against uncertainty in demand and/or supply. A. True B. False

A. True

Which of the following is an engineering document that shows an inclusive listing of all the component parts and assemblies making up the final product? A. Master Production Schedule B. Bill of Materials C. Distribution Requirement Plan D. Resource Requirement Plan

B. Bill of Materials

Which one of the following is NOT a common mode of transportation in the supply chain? A. Air B. Bus C. Pipeline D. Rail E. Truck F. Water

B. Bus

What does the acronym CPFR represent? A. Coordinated Planning & Forecasting Relationships B. Collaborative Planning, Forecasting, & Replenishment C. Centralized Purchasing & Forecasting Relationships D. Collaborative Purchasing, Forecasting, & Receivables

B. Collaborative Planning, Forecasting, & Replenishment

Forecasts are more accurate the farther out into the future that you forecast. A. True B. False

B. False

Independent Demand is demand for an item that is directly related to other items or finished products, such as a component or material used in making a finished product. A. True B. False

B. False

Master Production Scheduling is a process that brings all the demand and supply plans for the business (sales, marketing, development, production, sourcing, and finance) together to provide management with the ability to strategically direct the business to achieve a competitive advantage A. True B. False

B. False

The medium-range capacity planning technique used to check the feasibility of the Master Production Schedule (MPS) is called? A. Resource Requirement Planning (RRP) B. Rough-cut Capacity Planning (RCCP) C. Capacity Requirement Planning (CRP) D. None of the above

B. Rough-cut Capacity Planning (RCCP)

Inventory costs which are independent of the output quantity are called? A. Indirect Costs B. Variable Costs C. Fixed Costs D. Carrying Costs

C. Fixed Costs

When creating a quantitative forecast, data should be evaluated to detect for a repeating pattern of demand from year to year, or over some other time interval, with some periods of considerably higher demand than others. This is known as a? A. Trend Variation B. Random Variation C. Seasonal Variation D. Cyclical Variation

C. Seasonal Variation

Organizations that choose to implement one single system with all of the desired applications from a single vendor is said to have chosen a? A. Best-of-breed solution B. Elite integrator solution C. Single integrator solution D. Premier application solution

C. Single integrator solution

Which inventory stock level is generally used for a very specific purpose or future event, and for a defined period of time? A. Cycle Stock B. Safety Stock C. Strategic Stock D. Pipeline Stock

C. Strategic Stock