SCMA 331 Ch. 11 Part 1 and 2
Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called? A) kanban B) keiretsu C) samurai D) poka-yoke E) kaizen
B
Suppose that a product's value is $1000. The manufacturer experiences a holding cost of 2.5% per month. The firm ships the product across country by truck, and it arrives six days later. The shipping cost is $80 per unit. What is the holding cost on each unit shipped? (Assume 30 days per month.) A) $0.83 B) $5.00 C) $0.07 D) $0.40 E) $150.00
B
Suppose that in month 1, both the retailer and the wholesaler in a supply chain ordered 20,000 units. Then in month 2, the retailer decreases its order size by 1000 units. If the wholesaler then decreases its order size in month 2 by 700 units, which of the following is TRUE? A) The wholesaler is contributing to the bullwhip effect. B) The wholesaler is providing a dampening (anti-bullwhip) effect. C) The bullwhip measure for the wholesaler equals 0.70. D) Neither amplification nor smoothing is present. E) The wholesaler is providing both amplification and smoothing.
B
The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.
True
The overarching solution to the bullwhip effect is simply for supply chain members to share information and work together.
True
The primary trade-off in transportation mode analysis involves evaluating holding cost against the cost of shipping.
True
Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories.
True
While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are negotiated.
True
By which distribution system is more than 90 percent of U.S. coal shipped? A) railroads B) trucks C) waterways D) pipelines E) none of the above
A
Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? A) 12.50 B) 10.00 C) 42.00 D) 4.16 E) 20.00
A
Distribution management focuses on which of the following? A) the outbound flow of products B) incoming materials C) allocation of demand among suppliers D) setting dividend rates E) balancing an assembly line
A
Local optimization is a supply-chain complication best described as: A) optimizing one's local area without full knowledge of supply chain needs. B) obtaining very high production efficiency in a decentralized supply chain. C) the prerequisite of global optimization. D) the result of supply chains built on suppliers with compatible corporate cultures. E) the opposite of the bullwhip effect.
A
Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions? A) purchasing B) postponement C) break-bulk activities D) consolidation point E) cross-docking
A
What are the four stages of supplier selection? A) supplier evaluation, supplier development, negotiations, and contracting B) supplier evaluation, negotiations, supplier acquisition, and supplier development C) introduction, growth, maturity, and decline D) supplier evaluation, supplier development, negotiations, and centralized purchasing E) negotiations, contracting, centralized purchasing, and E-procurement
A
What is the formula for the bullwhip measure? A) variance of orders / variance of demand B) variance of orders - variance of demand C) variance of demand / variance of orders D) variance of orders2 / variance of demand2 E) variance of demand - variance of orders
A
What is the practice of keeping a product generic as long as possible before customizing? A) postponement B) keiretsu C) vendor-managed inventory D) forward integration E) backward integration
A
What term describes a supply chain that is designed to optimize both forward and reverse flows? A) closed-loop supply chain B) full-journey supply chain C) circular supply chain D) network supply chain E) recycled supply chain
A
What type of negotiating strategy requires the supplier to open its books to the purchasers? A) cost-based price model B) market-based price model C) competitive bidding D) price-based model E) transparent negotiations
A
What value of the bullwhip measure would indicate that the bullwhip effect exists? A) greater than 1 B) greater than 0 C) less than 0 D) less than 1 E) 1
A
Which of the following elements of the factor weighting technique in supplier selection analysis does NOT contain a certain degree of subjectivity? A) the formula used to calculate the total weighted score for each supplier B) the weights applied to each supplier criterion C) the scores for each potential supplier on each criterion D) the set of supplier criteria E) the numerical scale used to rate suppliers
A
Which of the following is NOT an element of the disaster risk decision tree model? A) the buyer's financial loss incurred in a supply cycle if supplier i were disrupted B) the marginal cost of managing a supplier C) the buyer's financial loss incurred in a supply cycle if all suppliers were disrupted D) the probability of a "super-event" that would disrupt all suppliers simultaneously E) the probability of a "unique-event" that would disrupt only one supplier
A
Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy? A) product development skills B) cost C) capacity D) speed E) flexibility
A
With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)? A) 1 B) 2 C) 3 D) equal to the total number of components E) equal to the number of countries to which the final product is sold
A
A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing which of the following? A) postponement B) drop shipping C) channel assembly D) passing the buck E) float reduction
B
A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following? A) double marginalization B) the bullwhip effect C) CPFR D) postponement E) vendor-managed inventory
B
A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) keiretsu
B
Designing distribution networks to meet customer expectations suggests what three criteria? A) rapid response, service, and cost B) rapid response, product choice, and service C) product choice, cost, and service D) cost, process choice, and service E) rapid response, cost, and process choice
B
E-procurement: A) works best in long-term contract situations but is not suited for auctions. B) is the same thing as Internet purchasing. C) has many benefits but requires a lot of paperwork. D) is illegal in all states except Nevada and New Jersey. E) All of the above are true of e-procurement.
B
If the variance of orders of a manufacturer equals 800, and the variance of orders of its supplier equals 750, what is happening at this part of the supply chain? A) The bullwhip effect is present. B) The supplier is providing a dampening (anti-bullwhip) effect. C) The bullwhip measure for the supplier equals 1.067 D) Neither amplification nor smoothing is present. E) Both amplification and smoothing are present.
B
In most manufacturing industries, which of the following would likely represent the largest cost to the firm? A) transportation B) purchasing C) insurance D) financing E) advertising
B
Suppose that the manager of a company has estimated the probability of a super-event sometime during the next three years that will disrupt all suppliers as 2%. In addition, the firm currently uses four suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next three years to be 20%. Supplier management costs during this period are $50,000 per supplier. The financial cost incurred if all four suppliers are disrupted at the same time is estimated to be $10,000,000. What is the expected monetary value (cost) of the current supplier diversification arrangement? A) $412,800 B) $415,680 C) $10,200,000 D) $215,680 E) $8,240,000
B
Under the disaster risk decision tree model, which of the following conditions would create the HIGHEST incentive to use FEWER suppliers? A) lower L, lower C B) lower L, higher C C) higher L, lower C D) higher L, higher C E) lower L, higher C, lower S
B
Under the disaster risk decision tree model, which of the following conditions would create the HIGHEST incentive to use MORE suppliers? A) lower S, lower U B) lower S, higher U C) higher S, lower U D) higher S, higher U E) higher S, higher U, higher C
B
Vertical integration appears particularly advantageous when the organization has: A) a very specialized product. B) a large market share. C) a very common, undifferentiated product. D) little experience operating an acquired vendor. E) purchases that are a relatively small percent of sales.
B
Which of the following is NOT a potential cause of the bullwhip effect? A) shortage gaming B) channel coordination C) order batching D) demand forecast errors E) price fluctuations
B
Which of the following is NOT an advantage of a virtual company? A) speed B) total control over every aspect of the organization C) specialized management expertise D) low capital investment E) flexibility
B
Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model? A) Make B) Sell C) Plan D) Source E) Return
B
Which sourcing strategy is particularly common when the products being sourced are commodities? A) few suppliers B) many suppliers C) keiretsu D) vertical integration E) virtual companies
B
A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) job expansion
C
A grocery store is trying to find a new supplier for carrots. Its three most important supplier criteria are freshness, lot size, and cost, with factor weights of 0.6, 0.1, and 0.3, respectively. What would a supplier with ratings of 6, 8, and 10 in the three respective categories score as a weighted total? A) 24 B) 1 C) 7.4 D) 9.8 E) 8
C
Among which of the following industries are purchasing costs the LOWEST percentage of sales? A) automobiles B) petroleum C) restaurants D) lumber E) chemicals
C
Drop shipping: A) is equivalent to cross-docking. B) is the opposite of a blanket order. C) means the supplier will ship directly to the end consumer, rather than to the seller. D) is the same thing as keiretsu. E) is a good reason to find a new firm to ship your products.
C
In what type of auction does a buyer initiate the process by submitting a description of the desired product or service? A) traditional B) buyer C) Dutch D) French E) Mexican
C
The Great East Japan Earthquake of 2011 was centered off of the Pacific coast of which region of Japan? A) Kanto B) Chubu C) Tohoku D) Kansai E) Chugoku
C
The Institute for Supply Management: A) establishes laws and regulations for supply management. B) is an agency of the United Nations charged with promoting ethical conduct globally. C) publishes the principles and standards for ethical supply management conduct. D) prohibits backward integration into developing economies. E) grants Ph.D. degrees in purchasing.
C
The Japanese concept of a company coalition of suppliers is: A) poka-yoke. B) kaizen. C) keiretsu. D) dim sum. E) illegal.
C
Typically, a more expensive shipping option is: A) slower with a lower holding cost. B) slower with a higher holding cost. C) faster with a lower holding cost. D) faster with a higher holding cost. E) faster, but holding cost is unaffected by delivery speed.
C
What is the value of the bullwhip measure for a company with a standard deviation of demand equal to 20, and a variance of orders equal to 450? A) 0.889 B) 22.5 C) 1.125 D) 0.044 E) 50
C
What three logistics-related costs are relevant when analyzing the choice of number of facilities in a distribution network? A) inventory costs, production costs, and transportation costs B) inventory costs, production costs, and facility costs C) inventory costs, transportation costs, and facility costs D) facility costs, production costs, and transportation costs E) facility costs, inventory costs, and marketing costs
C
When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following? A) keiretsu B) virtual companies C) joint venture D) vertical integration E) few suppliers
C
Which of the following best describes vertical integration? A) sell products to a supplier or a distributor B) develop the ability to produce products that complement the original product C) produce goods or services previously purchased D) develop the ability to produce the specified good more efficiently than before E) build long-term partnerships with a few suppliers
C
All EXCEPT which of the following are "opportunities" in managing the integrated supply chain? A) postponement B) drop shipping C) blanket orders D) standardization E) line balancing
E
Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other? A) outsourcing B) dual-sourcing C) cross-sourcing D) backup-sourcing E) parallel-sourcing
C
Which of the following is NOT a remedy for the bullwhip effect? A) share demand information B) channel coordination C) order batching D) price stabilization E) allocate orders based on past demand
C
Which of the following is NOT an advantage of the "few suppliers" sourcing strategy? A) suppliers have a learning curve that yields lower transaction and production costs B) suppliers are more likely to understand the broad objectives of the end customer C) less vulnerable trade secrets D) creation of value by allowing suppliers to have economies of scale E) suppliers' willingness to provide technological expertise
C
Which of the following statements is true regarding the leverage of supply chain savings? A) Supply chain leverage is about the same for all industries. B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. C) Supply chain savings exert more leverage as the firm's net profit margin decreases. D) Supply chain leverage depends only upon the percent of sales spent in the supply chain. E) None of the above is true.
C
Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas? A) trucking B) railroads C) airfreight D) waterways E) pipelines
C
A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing which of the following? A) postponement B) cross-docking C) channel assembly D) drop shipping E) float reduction
D
A disadvantage of the "few suppliers" sourcing strategy is: A) the risk of not being ready for technological change. B) the lack of cost savings for customers and suppliers. C) possible violations of the Sherman Antitrust Act. D) the high cost of changing partners. E) the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer.
D
As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why? A) Transportation and inventory costs first decline steeply, then rise, while facility costs always rise. B) Transportation costs always decline, but eventually the rise in facility and inventory costs outweigh the declining transportation costs. C) Facility costs first decline steeply, then rise, while transportation and inventory costs always rise. D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise. E) Inventory costs first decline steeply, then rise, while transportation and facility costs always rise.
D
Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of which of the following? A) vendor-managed inventory B) standardization C) backward integration D) postponement E) timely customization
D
The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is: A) a standard use of the make-or-buy decision. B) not allowed by the ethics code of the Supply Management Institute. C) offshoring. D) outsourcing. E) keiretsu.
D
What are the three classic types of negotiation strategies? A) supplier evaluation, supplier development, and supplier selection B) Theory X, Theory Y, and Theory Z C) many suppliers, few suppliers, and keiretsu D) cost-based price model, market-based price model, and competitive bidding E) traditional auctions, reverse auctions, and online exchanges
D
What technique does the text use to determine the best number of suppliers to manage disaster risk? A) linear programming B) factor weighting technique C) transportation model D) decision tree E) simulation
D
What value of the bullwhip measure would indicate that a dampening scenario exists? A) greater than 1 B) greater than 0 C) less than 0 D) less than 1 E) 0
D
Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels? A) supplier qualification B) product tracking C) independent audits D) refrigeration E) just-in-time delivery
D
Which of the following is NOT REQUIRED information to obtain to conduct the factor weighting technique in supplier selection analysis? A) a set of supplier criteria B) a weight for each supplier criterion C) a score for each potential supplier on each criterion D) a qualitative scale on which to rate suppliers E) a numerical scale on which to rate suppliers
D
Which of the following is NOT a condition that favors the success of vertical integration? A) availability of capital B) availability of managerial talent C) sufficiently high demand D) small market share E) All of the above favor the success of vertical integration.
D
Which of the following is NOT a typical benefit of centralized purchasing? A) leverage purchase volume for better pricing B) develop specialized staff expertise C) reduce the duplication of tasks D) reduce lead times E) promote standardization
D
Which of the following is NOT an opportunity for effective management in the supply chain? A) accurate "pull" data B) vendor-managed inventory C) postponement D) local optimization E) CPFR
D
Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver? A) use multiple suppliers B) effective contracts with penalties C) subcontractors on retainer D) require overnight delivery E) pre-planning
D
Which of the following is NOT true about reverse logistics as compared to forward logistics? A) Inventory management is not consistent. B) Distribution costs are less directly visible. C) Pricing is dependent upon many factors. D) Speed is often very important. E) Forecasting is more uncertain.
D
Which one of the following is NOT one of the six sourcing strategies? A) negotiation with many suppliers B) vertical integration C) keiretsu D) short-term relationships with few suppliers E) virtual companies
D
While freight rates are often based on very complicated pricing systems, in general, the primary freight price factor is based on which of the following attributes? A) damage record B) on-time delivery C) door-to-door service D) speed of shipment E) consolidation capabilities
D
An industrial producer is searching for a supplier for ball bearings. Its three most important supplier criteria are price, quality, and delivery reliability. The firm has decided that quality and delivery reliability should carry the same weight, and that each of them are twice as important as price. If the weights sum to 100%, what would a supplier with ratings of 40, 90, and 75 in the three respective categories score as a weighted total? A) 37 B) 370 C) 49 D) 205 E) 74
E
Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold? A) 12.50 B) 5.20 C) 2.60 D) 0.08 E) 4.16
E
For which corporate strategy(ies) should supply chain inventory be minimized? A) low cost B) response C) differentiation D) low cost and response E) low cost and differentiation
E
Suppose that the manager of a company has estimated the probability of a super-event sometime during the next five years that will disrupt all suppliers as 0.23%. In addition, the firm currently uses three suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next five years to be 1.4%. What is the probability that all three suppliers will be disrupted at the same time at some point during the next five years? A) 4.4203% B) 0.2300% C) 4.4300% D) 0.2297% E) 0.2303%
E
TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of which of the following? A) blanket orders B) standardization C) postponement D) lot size reduction E) single-stage control of replenishment
E
What term is used to describe the outsourcing of logistics? A) e-logistics B) shipper-managed inventory (SMI) C) hollow logistics D) sub-logistics E) third-party logistics (3PL)
E
Which of the following best describes Vizio's sourcing strategy? A) few suppliers B) keiretsu C) joint venture D) vertical integration E) virtual company
E
Which of the following is an advantage of the postponement technique? A) reduction in automation B) early customization of the product C) better quality of the product D) reduction in training costs E) reduction in inventory investment
E
Which of the following is the prescribed remedy when the bullwhip effect is caused by shortage gaming? A) share demand information B) channel coordination C) increase capacity D) price stabilization E) allocate orders based on past demand
E
Which of the following statements does NOT accurately explain what occurs when the number of facilities in a distribution network increases? A) response time decreases B) profit first increases, then decreases C) total logistics costs first decrease, then increase D) inventory costs increase E) response time first decreases, then increases
E
Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain? A) suppliers B) distributors C) wholesalers D) retailers E) landscaping contractors
E
A blanket order is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.
True
A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.
True
Benchmark firms have driven down costs of supply-chain performance.
True
Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.
True
Choosing suppliers simply based on the lowest bid has become a somewhat rare approach.
True
Drop shipping results in time and shipping cost savings.
True
Firms often use multiple suppliers for important components to mitigate the risks of total supply disruption.
True
Logistics management can provide a competitive advantage through improved customer service.
True
One classic type of negotiation strategy is the market-based price model.
True
Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.
True
Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.
True
Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.
True
Savings in the supply chain exert more leverage as the firm's net profit margin decreases.
True
The bullwhip effect can occur when orders decrease as well as when they increase.
True
The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.
True