SCM Exam #3
A zero defects quality strategy emphaizes:
"do it right the first time."
Three major challenges facing supply executives when setting supply strategies and objectives are:
(1) What is the effective interpretation of corporate objectives and supply objectives? (2) What is the appropriate action plan or strategy to achieve the desired objectives? and, (3) How can supply issues be identified and integrated into organizational objectives and strategies?
The newsvendor model balances which two costs?
- Cost of ordering too many - Running out and losing profits
The Critical Fraction formula balances which two costs?
- Cost of over stock (ordering too many) - Cost of ordering too few (under stock)
Which two things drive the need for safety stock?
- Demand variability - Delays
When lead time and demand are both variable, the formula we use consists of which two parts?
- Demand variability - Lead time variability
What are the three main challenges of the Q-system?
- Inventory monitoring system - Having enough when you order - Figuring out how much to order
What are the two main challenges of the P-system?
- Length of review period - Amount of inventory to have
Which of the following would be considered part of Ordering Cost?
- Minimum shipping charge - Renting a truck to haul the order (and only this order, no other business is used for this truck's one time rental)
Which of the following would be considered a direct holding cost?
- Refrigeration costs - Weekly inventory quality checks for every unit in inventory
Which of the following is true about forecasting errors?
- The accuracy of forecasting has improved over time. - Forecasting becomes easier when the specifications are more detailed.
HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days. Standard deviation of demand during lead time = 90 Desired service level = 95 percent What is the safety stock that HighLife Corporation should carry for its desired service level of 95 percent? 1.28 standard deviations cover 90 percent 1.65 standard deviations cover 95 percent 1.96 standard deviations cover 97.5 percent
149
In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues?
50 to 80
For an organization with annual sales of $500 million, purchases of $300 million and profit of $50 million, a 10% reduction in the cost of purchases would result in profit-leverage effect of:
60% (sales increase of 60% would be required to achieve the same percentage increase in profit).
For an organization with revenue of $100 million, purchases of $60 million, and profit of $8 million before tzx, a 10% reduction in purchase spend would result in an increase in profit of:
75%
Which of the following is not a purpose of APS planning charts?
Aid employees in understanding production purposes.
Which of the following is not a theoretical factor of forecasting?
Amount.
A strategy is:
An action plan to achieve specifc long-term goals and objectives.
Strategic planning can be defined as:
An action plan to achieve specific long-term goals and objectives.
Linking current and future needs with current and future markets is the primary focus of:
An effective supply strategy.
Supply strategies that are based on changes in demand and supply are known as:
Assurance-of-supply strategies.
When planning for an increase in production, APS helps to ____.
Both determine what is best for the customer and identify and calculate the cost of strategic options are correct.
When small changes generated by a customer produce progressively larger changes at each stage upstream in the supply chain, this is known as:
Bullwhip effect.
Taxes and insurance costs are an example of which of the following costs?
Carrying (or holding) costs.
Which of the following is not a stage in the S&OP maturity model?
Competing.
Which of the following is not a key component of forecast accuracy?
Competition.
Supply strategies that are designed to exploit market opportunities and organizational strengths to give the buying organization and advantage in the marketplace are known as:
Competitive-edge strategies.
What is another name for "Q-system" of inventory?
Continuous Review Inventory System.
Promotions such as "buy one get one free" are somewhat risky in terms of forecasting. Why?
Could dcrease future sales.
Which of the following is NOT often associated with supplier-managed inventory (SMI) arrangements?
Customers recommend to suppliers how they should schedule production.
The critical fraction gives us a probability because:
Demand is unknown.
What is typically the first planning stage of the APS technology tool?
Demand planning.
Organizational objectives and supply objectives typically are expressed:
Differently, making it difficult to translate organizational objectives into supply objectives.
Interest in the supply fuction as a managerial activity began:
During World Wars I and II becuase of global materials shortages.
Supply strategies that are designed to anticipate and recognize shifts in the ecnonomy, organization, people, legal, government regulations and controls, and technologies are:
Environmental change strategies.
(T/F) An offered discount makes no change to determining optimal order quantity.
False
(T/F) Ordering cost only consists of the shipping cost from supplier to customer.
False
(T/F) The P-system of inventory submits inventory orders at random times.
False
(T/F) The standard deviation of demand during lead time is the same whether or not leade time is variable.
False
(T/F) The time value of money, opportunity cost, is not part of the calculation of EOQ holding cost
False
(T/F) The trend is to decentralize risk management, and allow each function to assess its risk exposure and develop strategies to best manage functional risks.
False
(T/F) The critical fraction formula output is the optimal quantity to order in a newsvendor model.
False.
Which of the following is not an APS application issue?
Financial flow.
Supply can influence risk management in which area(s)?
Financial, operational and reputation.
___________ inventory is the costliest form of inventory one can hold.
Finished goods.
Holding cost is which type of cost?
Fixed.
Which of the following is not a demand planning requirement?
Handle time fences.
When a supply-related risk exists, the supply management team should:
Identify and classify risks, assess possible impact, develop a mitigation strategy, inform the chief supply officer, await instructions, and implement the directive.
Which of the following is not a benefit that is offered by advanced planning and scheduling (APS)?
Improved forecast accuracy.
Which of the following is not a role of inventory?
Increasing quality of finished goods
Evidence of the growth and influence and supply management in an organization includes:
Involvement in strategic planning and executive status of the chief supply officer.
On average, the dollars spent with suppliers as a percent of revenues:
Is greater in manufacturing organizations than in service organizations.
The optimization module of an advanced planning and scheduling (APS) system ___.
Is the computational engine of the supply chain planning system.
Which of the following is not true about CPFR?
It is good for low-volume items.
If organizational objectives and supply objectives are incongruent:
It will be difficult to translate organizational objectives into supply objectives.
Evaluation of the supply function's contribution to organizational goals and strategies can be viewed in the context of:
Operational and strategic Direct and indirect
The basic calculation in the newsvendor model will result in a calculation of:
Optimal probability of running out.
If i calculate the EOQ with the new, discounted material cost and the resulting quantity is enough to get the discount, what should I do?
Order the discounted EOQ amount.
The ABC analysis used for analyzing inventory is an exmaple of:
Pareto's law.
Which of the following is not input needed for an APS?
Past inventories.
What is another name for the "P-system" of inventory?
Periodic Review Inventory System.
In the end,the point of using the EOQ formula is to:
Point us toward the possible lowest cost option.
Which of the following is not a reason for increased importance of S&OP?
Precise demands by key customers.
The supply area is a good training ground for managers because it provides exposure to:
Pressure of decision making under uncertainty and various levels and functions in the organization.
A successful supply chain management strategy integrates:
Processes and systems within and across organizations.
In a situation where there are low economies of scale and a long response time, the supply chain strategy should focus on ___.
Production flexibility since detailed and accurate forecasting is not of critical importance.
Supply has the potential to contribute to:
Profitabilty, competitive position and sustainability performance.
Advanced planning and scheduling (APS) facilitates improvements in customer service by ____.
Reducing the time to make accurate commitments to customers.
What does the R stand for in CPFR?
Replenish.
What is the great benefit of the Q-system?
Responsiveness.
The impact of supply management actions on the inventory asset base and the balance sheet is measured by the:
Return on assets effect.
What is the great benefit of the P-system?
Simplicity in managing the system.
The questions: "How can supply and the supply chain contribute effectively to organizational objectives and strategy?" is a key question in:
Strategic supply management
Finding average demand during lead time involves doing which of the following?
Summing the daily average demand per day.
The design and management of seamless, value-added processes across organizational boundaries to meet the real needs of the end customer is called:
Supply chain management
A systems approach to managing the flow of information, materials, and services from tiers of suppliers through the buying organization to tiers of customers is:
Supply chain management.
Strategies designed to make available the knowledge and capabilities of supply chain members to others in the the buying organization are called:
Supply-chain-support strategies.
Normally, most organizational objectives can be summarized as:
Survival, growth, financial, and sustainability.
Normally, most organizational objectives can be summarized under four categories:
Survival, growth, financial, and sustainability.
When developing strategies related to "how to buy," decisions must be made about:
Systems and processes.
Which of the following is not a benefit of sales and operations planning?
The S&OP process eliminates the need to have finished goods inventory.
Which of the following statements is true when comparing the total cost curve for a product without discounting and the total cost curve with discounting?
The discounted curve is always below the undiscounted curve but does not really exit for values less than the minimum order amount to receive the discount.
The return on assets effect (ROA) quantifies and measures:
The impact of supply actions on inventory and the balance sheet.
Supply decisions can affect:
The income statement and the balance sheet.
The use of the concepts of purchasing, procurement, supply, and supply chain management will vary from organization to organization depending on:
The organization's stage of development and/or sophistication, the industry in which they operate and organization's competitive position
The "right" amount of safety stock is often a function of Service Level. Service Level is:
The probability of meeting demand during a delay.
Safety stock exists for which of the following reasons?
To provide protection against the uncertainties of supply and demand.
Which of the following optimizes resources to move materials and goods within supply chains to minimize cost while meeting deadline constraints?
Transportation planning.
Company image may be directly influenced by:
Treating suppliers in a fair and equitable manner, complying with regulatory reqirements and sustainability practices of suppliers.
(T/F) Safety stock is inventory held to guard against uncertainty
True
(T/F) Supply chain sustainability performance must comply with legal obligations and meet the values and standards of the organization's stakeholders, including employees, shareholders, and customers.
True
(T/F) The key decisions and plans in corporate strategy address: What business are we in and how will be allocate resources among these businesses?
True
(T/F) The true test of supply's contribution is when the chief executive officer and the senior management team recognize that supply and suppliers are critical to organizational success and competitive advantage.
True
(T/F) There is not one best way for all organizations to organize and manage the supply function, conduct activities, and effectively integrate suppliers.
True
(T/F) The Q-system of inventory submits inventory orders at random times.
True.
(T/F) The newsvendor model works well for perishable products.
True.
Ordering cost is which type of cost?
Variable.
Since standard deviations don't sum, we have to sum which thing instead?
Variance.
When developing supply strategies, the supply manager must determine:
What to make or buy, when to buy, how much to buy and how it should be ordered.
A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory?
Work in process.