SCMT 2103 Test 1
Average inventory last year was $160,000 and turns were 7. What was cost of goods sold last year?
$1,120,000
Imagine a customer is looking for a giant specialty candy bar in a store but it is not on the shelf. Suppose that the retail margin on the candy bar is $4.50 and that 27% of the customers forgo having the candy bar but the other 73% switch to another brand. Suppose that the margin the retailer makes on this brand is also $4.50 per unit. Then the cost of a stockout per unit of lost sale to the retailer is ____.
$1.22
Imagine a customer is looking for a giant specialty candy bar in a store but it is not on the shelf. Suppose that the retail margin on the candy bar is $5 and that 27% of the customers forgo having the candy bar but the other 73% switch to another brand. Suppose that the margin the retailer makes on this brand is also $5 per unit. Then the cost of a stockout per unit of lost sale to the retailer is ____.
$1.35
magine a customer is looking for a giant specialty candy bar in a store but it is not on the shelf. Suppose that the retail margin on the candy bar is $5 and that 27% of the customers forgo having the candy bar but the other 73% switch to another brand. Suppose that the margin the retailer makes on this brand is also $5 per unit. Then the cost of a stockout per unit of lost sale to the retailer is
$1.35
The inventory holding cost factor is 10% and the average inventory next year is expected to be $1.5 billion. What is the expected inventory holding cost
$150,000,000
The inventory holding cost factor is 25% and the average inventory next year is expected to be $185,000. What is the expected inventory holding cost?
$46,250
The inventory holding cost factor is 20% and the average inventory next year is expected to be $130,000. What is the expected inventory holding cost?
$650,000
In an exponential smoothing model, alpha can take on any value between ______.
0 and 1
Imagine you are a small format grocer and that on average you sell 30 squash per day. Some days you sell more and some days you sell less, but on average you sell 30. In fact, you have been doing this for a while and have calculated the probability of selling different quantities of squash, reproduced in the table of discrete probabilities below. Quantity Sold Probability 20 0.10 25 0.20 30 0.40 35 0.20 40 0.10 You have decided to stock fewer squash and instead stock more tomatoes. You decided to stock 35 squash each day. About how many sales of squash do you expect to lose each day as a result of this decision to stock more tomatoes?
0.50
Given a sample of weekly sales data of 10, 15, 13, and 10, what is the four-period moving average sales forecast for the next week?
12
A distribution center has 180,000 pounds of sugar and the forecast is 1,200 pounds of sugar per day. What is the estimate of the days of supply?
150
The concept of Supply Chain emerged
1990s
Consider the following analysis for four SKUs in a product category. Which is the best estimate of the turns of the category as a whole? SKU Annual Sales Average Inventory Inventory Turns SKU 1 1,900 125 15.20 SKU 2 17,400 8,500 2.05 SKU 3 17,400 8,500 2.05 SKU 4 17,400 8,500 2.05 54,100 25,625 X
2.11
MegaMart operates 365 days a year. Annual inventory turns of a popular product is 11. How many days of supply does that represent?
33
Ron's Sports operates 365 days a year. Annual inventory turns of basketballs is 10. How many days of supply does that represent?
37
Imagine you are a small format grocer and that on average you sell 90 grapes per day. Some days you sell more and some days you sell less, but on average you sell 90. In fact, you have been doing this for a while and have calculated the probability of selling different quantities of grapes, reproduced in the table of discrete probabilities below. Quantity Sold Probability 70 0.10 80 0.20 90 0.40 100 0.20 110 0.10 You have decided to stock fewer grapes and instead stock more berries. You decided to stock 90 grapes each day. About how many sales of grapes do you expect to lose each day as a result of this decision to stock more berries?
4.00
Assume an item has a demand of 1 per day and a demand of 6 every 5th day. However, the item is out of stock every 5th day. What would be the item fill rate (IFR).
40%
A distribution center has 50,000 cases of ketchup and the forecast is 1,000 cases per day. What is the estimate of the days of supply?
50
Assume an item has a demand of 1 per day and a demand of 3 every 7th day. However, the item is out of stock every 7th day. What would be the item fill rate (IFR).
67%
The amount received by a firm is 100 units and it sold 25 units. Assuming initial inventory is zero, what is the perpetual inventory?
75
The amount received by a firm is 200 units and it sold 125 units. Assuming initial inventory is zero, what is the perpetual inventory?
75 units
Michael's Bakery bakes brownies for 70 local supermarkets and sells them through the supermarkets on a consignment basis, which means he only gets paid for the brownies that sell. He destroys brownies that don't sell. People in this city love his brownies. The total delivered cost of brownies is $ 0.35 per unit and he sells it to retailers for $2.00. Given this information, calculate the optimal service level.
83%
Carol's Bakery bakes sweet rolls for 210 local supermarkets and sells them through the supermarkets on a consignment basis, which means she only gets paid for the sweet rolls that sell. She destroys sweet rolls that don't sell. People in this city love her sweet rolls. The total delivered cost of sweet rolls is $ 1.05 per unit and she sells it to retailers for $8.00. Given this information, calculate the optimal service level
87%
John's Bakery bakes cakes for 50 local supermarkets and sells them through the supermarkets on a consignment basis, which means he only gets paid for the cakes that sell. He destroys cakes that don't sell. People in this city love his cakes. The total delivered cost of cakes is $ 0.25 per unit and he sells it to retailers for $2.00. Given this information, calculate the optimal service level.
88%
Jose's Bakery bakes cake donuts for 130 local supermarkets and sells them through the supermarkets on a consignment basis, which means he only gets paid for the cake donuts that sell. He destroys cake donuts that don't sell. People in this city love his cake donuts. The total delivered cost of cake donuts is $ 0.65 per unit and he sells it to retailers for $6.00. Given this information, calculate the optimal service level.
89%
Linda's Bakery bakes cookies for 150 local supermarkets and sells them through the supermarkets on a consignment basis, which means she only gets paid for the cookies that sell. She destroys cookies that don't sell. People in this city love her cookies. The total delivered cost of cookies is $ 0.75 per unit and she sells it to retailers for $8.00. Given this information, calculate the optimal service level.
91%
Based on the table below, which product's forecast indicates the lowest magnitude of forecast error? Product Mean Absolute Percent Error (MAPE) Mean Forecast Error (MFE) A 11% 220 B 13% 210 C 23% 405 D 24% 500
A
Globalization of production has led to ___________________.
A & B: extended supply chains and uncertainty in supply
When promotions exist in demand data, forecasters may respond by ______________.
A & B: filtering out the promotions or estimating what demand would have been without the promotion
An organization has developed three alternate sales and operations plans for the coming six months and now must choose between them. They should consider:
All are good criteria for a sales and operation plan: how their plan will impact supply chain partners what the cash flows are like, how flexible the plan is
Firms that practice S&OP with discipline are likely to experience higher levels of _____________ relative to firms with weak undisciplined implementation.
All of above: order fill rate, gross margin, customer retention
Which of the following metrics can be used in evaluating SKU inventory performance?
All of the above
Example of business process include which of the following
All of the above and more
Logistics costs include which of the following?
All of the above and more
Which of the following are common elements of the total cost of ownership model
All of the above are the part of the TCO model
The costs associated with prediction error can be substantial. Which of the following is a potential cost:
All of the above: lost sales, safety stock, dissatisfied customers
Companies outsource for many reasons. Which of the following is typically a reason for outsourcing?
All of these
Examples of business processes include which of the following
All of these and more
When a shopper in a retail store encounters an out-of-stock, there are a number of reactions that are possible. Which of the following are options discussed in this lesson
All of these are options
When a shopper in a retail store encounters an out-of-stock, there are a number of reactions that are possible. Which of the following are options discussed in this lesson?
All of these are options
Which of the following is true of the item fill rate?
All of these are true
Which of the following benefits did Walmart achieve from their early network design strategy?
All of these were benefits
Sales and operations planning should consider:
All: capabilities of logistics service providers, capabilities of suppliers, customer demand
Inventory is a component of __________ on the balance sheet.
Assets
ROA is profit divided by _____.
Assets
Forecast ____________ describes whether we are on average forecasting too high or low.
Bias
When supply Chain relationships are asymmetrical, who tends to have more power
Buyers
Based on the table below, which product's forecast is the least biased? Product Mean Absolute Percent Error (MAPE) Mean Forecast Error (MFE) Standard Deviation of Forecast Error A 16% 600 64,700 B 18% 525 54,817 C 20% 395 43,466 D 5% 400 42,281
C
Two major classifications of quantitative forecasting methods are _______ and ________ models.
Causal; series
Fill rate is the % of __________ from on hand inventory.
Demand fulfilled
Friendships allow managers to increase the ease of communication and the sensitivity of business information exchanged which results in which of the following categories of actions
Echanced Communaction
Suppose a company orders 10 pallets of bottled water, 14 oz. per bottle, and $0.05 per bottle. There are 2,000 bottles per pallet. Suppose they use a truckload carrier and it costs a flat rate of $1,000 for the transportation. So the purchase cost is $0.05 per bottle X 2,000 bottles per pallet X 10 pallets = $1,000. So the purchase cost plus the transportation cost is $2,000, hence, the total cost per bottle is $2,000 / 20,000 bottles = $0.10 per bottle. In this example, the company only ordered 10 pallets but a truck load has a capacity of about 20 pallets of bottled water. Instead, suppose they ordered 20 pallets of bottled water, the transportation cost will be the same but the purchase cost will now be $0.05 per bottle X 2,000 bottles per pallet X 20 pallets = $2,000. Hence the purchase cost plus the transportation cost is $3,000, so the total cost per bottle is $3,000 / 40,000 bottles ≈ $0.08 per bottle (rounded up from $0.075 per bottle). This demonstrates which of the following concepts?
Economies of scale
If a manager grows his or her business with a specific supplier that increases dependence on that supplier and increases risk if something happens, this may be the dark side of which category of actions of supply chain friendships
Enhanced Business Volume
Friendships allow managers to better assess the personal and business-related characteristics of their counterparts which leads to which of the following categories of actions?
Enhanced Personal and business understanding
Friendships allow managers to better relate to each other, disclose personal information and be honest which leads to which of the following categories of actions?
Enhanced Trust
If a manger lets a supplier get away with providing inferior services and products, this may be the dark side of which category of actions of supply chain friendships
Enhanced Trust
Friendships allow managers to cultivate loyalty and reciprocity which can lead to which of the following categories of actions?
Enhanced business volume
One approach to estimating the cost of a stockout per unit of lost sale is to calculate an estimate of the
Expected Value
Adjusting last period's forecast by a fraction of last period's forecast error is called ___________.
Exponential smoothing
Logistics and supply chain managers should only calculate performance at the organization level
False
The % of demand fulfilled from on hand inventory is called _____.
Fill rate
Validating cost savings from SC activities and identifying the impact of SC initiatives on corporate performance indicators, including ROI and RONA are examples of supply chain support from which NON-Supply Group?
Finance
which of the following is not one of the ways to promote the good and eliminate the bad in supply chain frienships
Forbid any social interactions outside of business
Which of the following is the 7 R's definition of logisitics
Getting the right product to the right customer in the right quantity, in the right condition, at the right place, at the right time, and at the right cost
If a supply chain manager for Wendy's desires a strategic item relationship approach with the supplier of Frosty mix, how would you describe this type of relationship?
High value strategic item purchase that needs a collaborative approach, seek ways to create value, few other qualified suppliers
Which of the following is a theme throughout the course?
How logistics and supply chain management can be used to create a competitive advantage
Methods used to forecast the introduction of a new product normally include: I. Delphi method II. Judgmental method III. Poll method
I & II
By spending more money on transportation, one can most likely I: Increase the lead time II: Decrease the lead time III: Increase the variability of lead time IV: Decrease the variability of lead time.
II & IV
Which is a component of logistics lead time? I. Customers order cycle time II. Procurement time III. Manufacturing time & delivery time
II and III
Supply chain management is the management of the _______ of business processes between functions in a firm and with suppliers and customers.
Integration
If General Mills is forced to increase their order cycle from 7 days to 14 days, what should be the impact on overall inventory levels?
Inventory Levels increase
The Delphi method is a(n) ______ method of forecasting
Iterative
Bob is really good at forecasting demand for televisions, but he couldn't tell you how he does it, exactly. The ____________ method would be a good approach for helping Bob quantify his method.
Judgement capturing
Which component of demand represents the demand that would like exist without the existence of either trend or seasonality?
Level
The objective of Walmart's early network design strategy was to:
Locate stores close to a Distribution Center
The management of the flow and storage of inventory, such that total costs are minimized and customer service targets are achieved is referred to as:
Logistics
According to the most recent State of Logistics report, how would you describe the 2017 logistics cost as a percentage of GDP
Logistics cost as a percent of GDP increased slightly in 2017 over 2016
Causal models might best be used for ______ forecasting while time series model are mostly used for ________ forecasting.
Long-term; short term
The logistic relationship with ________involves considerations of price, product, place and promotion
Marketing
Which industry has a long history of prioritizing the importance of logistics
Military
For the normal distribution, about 68% of the observations are within +/- 1 standard deviation of the mean, _______ within +/- 2 standard deviations, and about 99% within +/- 3 standard deviations.
None of the above
For the normal distribution, about 68% of the observations are within +/- 1 standard deviation of the mean, 95% within +/- 2 standard deviations, and about _________ within +/- 3 standard deviations.
None of these
What is the most commonly used DC Metric
On-time shipments
The common logistics activity responsible for the transmission, processing, preparation, and delivery of orders is known as:
Order fulfilment
The 4 pillars of supply chain excellence are human resources, organizational design, information technology, and
Organizational measurement
ABC company is looking to develop a successful supply chain relationship with another organization. When looking to develop this relationship, ABC Company should start by
Perform a strategic assessment of their organizational objectives and needs
Which of the following metrics tells you how many periods it will take to sell through your inventory on hand?
Periods of supply
______________ is when a retailer thinks there is more inventory than there actually is.
Phantom inventory
Which of the following products would you expect to require the most safety stock? Product A: Standard Deviation of Sales = 30, Standard Deviation of Lead Time = 30 Product B: Standard Deviation of Sales = 25, Standard Deviation of Lead Time = 15 Product C: Standard Deviation of Sales = 20, Standard Deviation of Lead Time = 20 Product D: Standard Deviation of Sales = 20, Standard Deviation of Lead Time = 25
Product A
Which of the following products would you expect to require the most safety stock? Product A: Standard Deviation of Sales = 25, Standard Deviation of Lead Time = 19 Product B: Standard Deviation of Sales = 29, Standard Deviation of Lead Time = 25 Product C: Standard Deviation of Sales = 15, Standard Deviation of Lead Time = 20 Product D: Standard Deviation of Sales = 25, Standard Deviation of Lead Time = 20
Product B
Which of the following products would you expect to require the most safety stock? Product A: Standard Deviation of Sales = 18, Standard Deviation of Lead Time = 23 Product B: Standard Deviation of Sales = 20, Standard Deviation of Lead Time = 20 Product C: Standard Deviation of Sales = 30, Standard Deviation of Lead Time = 31 Product D: Standard Deviation of Sales = 29, Standard Deviation of Lead Time = 15
Product C
Which of the following products would you expect to require the most safety stock? Product A: Standard Deviation of Sales = 10, Standard Deviation of Lead Time = 10 Product B: Standard Deviation of Sales = 20, Standard Deviation of Lead Time = 10 Product C: Standard Deviation of Sales = 10, Standard Deviation of Lead Time = 20 Product D: Standard Deviation of Sales = 20, Standard Deviation of Lead Time = 20
Product D
Which of the following is not a trait of an appropriate logistics performance measure
Qualitative
Which type of forecasting methods are more subjective?
Qualitative
Policy capturing or judgment capturing are subjective ways of using ______ methods to extract __________ models.
Qualitative; quantitative
Time series forecasting approaches are primarily ___________ methods.
Quantitative
Profit divided by assets is
ROA
The direct effect of an increase in inventory is reduction in __________.
ROA
The direct effect of an increase in the number of distribution centers is to increase assets which reduces __________.
ROA
Having more distribution centers __________ the lead time from the store faces.
Shortens
Which of the following are measures of reliability of a logistics process
Standard deviation & Coefficient of variation
Which of the following are measures of reliability of a logistics process?
Standard deviation & Coefficient of variation
Which forecast error metric is used in the traditional calculation of safety stock in automated systems?
Standard deviation of forecast error
is a set of 3 or more organizations directly linked by one or more of the upstream and downstream flows of products, services, finances and information from a source to a customer
Supply Chain
You want to compute an optimal service level for stocking inventory. The correct formula is
The cost of not having enough per unit, divided by the sum of the cost of having too much and the cost of not having enough
You want to compute an optimal service level for stocking inventory. The correct formula is:
The cost of not having enough per unit, divided by the sum of the cost of having too much and the cost of not having enough.
If a company uses the Panama Canal instead of sailing around South America, which type of logistics utility are they focusing on
Time
Performance measure can be broken down into process measure categories. On-time delivery and order cycle time would be examples of which process measure category
Time
_____________ is the idea that there are many other costs than just the acquisition cost that should be accounted for in a purchase.
Total cost of ownership
Which of the following is not one of the flows of supply chain management
Transportation
Which component of demand represents the degree to which the data is increasing or decreasing over time?
Trend
When we generate more profit with fewer assets, ROA will be
UP
When calculating inventory turns, it is acceptable to use _______________ in the numerator and __________ in the denominator.
Unit Sales; Average Unit Inventory & Cost of Goods Sold; Average Inventory Cost
Which of the following formulae calculate annual inventory turns?
Units sold in a year / average number of units in inventory
A store manager says: "I shoot for a 95% service level." What the manager means is that:
When the customer wants a product, she wants it to be there at least 95% of the time.
When calculating inventory turns, it is acceptable to use _______________ in the numerator and __________ in the denominator.
a & b
A process is an ordered set of _____.
activities
If you wanted to assess inventory turns of a category with multiple SKUs, the best way to do that would be to ________________:
add up the unit sales for the category and divide by the total inventory level for the category.
In general, forecasters must consider which of the following?
all of the above (trend seasonality noise, promotional activity)
A leveling of production costs between China, Mexico, and the United States means that U.S. firms will increasingly focus on _____________ to be competitive.
all of these
GMROI _________________________
all of these a,b,c are correct
Which of the following is an example of noise in demand data?
an unexplained decrease in sales of bottled water on the hottest day of the year.
Forecast error is expected to decrease ___________________.
as the planning horizon decreases
You can estimate the mean by taking the ________________
average
Economies of scale is defined as a reduction in ________ when volumes are increased.
average cost per unit
Full collaboration is the dynamic combination of
buyers, sellers, retailers, 3PLs, and appropriate government agencies
Noise is random variation in demand that ______.
cannot be explained
Which is NOT a disadvantage of causal models relative to time series models?
causal models require input from multiple forecasters
Responsiveness in the 4 R's of supply chain competition is defined as being able to _________________.
change logistics and supply chain management activities quickly
Lowe's and Home Depot working together to get products to areas ravaged by the recent hurricanes is an example of:
competitive collaboration
Logistics is the management of the flow and storage of inventory such that total cost is minimized and ____________ are achieved.
customer service targets
Which is NOT a component of the logistics lead time?
customer's order cycle time
Resilience in the 4 R's of supply chain competition is defined as being able to _________________.
deal with unexpected disruptions in the supply chain
As a firm increases spending for transportation services, the cost of lose sales should
decrease
When logistics costs increase, profit will
decrease
As the number of periods included in a moving average forecast model _______, the forecast becomes ___________ responsive.
decreases; more
One approach to estimating the cost of a stockout per unit of lost sale is to calculate an estimate of the ____________.
expected value
One of the direct effects of investing in third party logistics provider is a reduction of _________ costs and an increase in ___________ costs.
fixed; variable
Logistics lead time is the time ________________.
from when an order is placed until it's actually received and ready for use or sale
Time series methods are is quantitative methods based on assumption that ______ demand is reflected in _________ demand patterns
future; past
If forecast error is negative, then the forecast was too _____.
high
A __________ alpha in exponential smoothing is like having a moving average with very few periods. A ____ alpha in exponential smoothing is having lots of periods in a moving average.
high; low
What is the final step in developing a successful supply chain relationship
implementation and continuous improvement
As the planning horizon increases, forecast error is expected to ________________.
increase
As the prediction error increases, safety stock costs ______________.
increase
One of the effects of adding distribution centers is reducing store lead time and inventory. If store inventory is reduced, the ROA will _______.
increase
The direct effect of an increase in the number of distribution centers is to ________ assets which reduces ROA
increase
To make a weighted moving average forecast model less responsive, the forecaster should _____________________.
increase the number of periods included
The direct effect of a (an) _______ in transportation costs is to _____ ROA.
increase; reduce
The direct effect of a (an) __________ in the number of distribution centers is to increase assets which ___________ ROA.
increase; reduces
To increase stability in forecasts, the number of periods in a moving average should be
increased
As supply chains become longer, supply uncertainty _____________.
increases
When the inventory level increases, the fill rate _________.
increases
As the number of periods included in a moving average forecast model _______, the forecast becomes ___________ stable.
increases, more
Causal forecasting models estimate the effects of __________________ on __________________to forecast future demand.
independent variables; dependent variables
Unit sales divided by inventory is called ______.
inventory turns
Subjective ways of using quantitative methods to extract quantitative models is called _______.
judgement capturing
When there is too much noise in the data, the only component of demand that can be estimated is the_______ of demand.
level
An arm's length relationship is characterized as having:
little or no collaboration and low switching cost
Procurement time, manufacturing time and delivery time are components of _______.
logistics lead time
The lead time gap is defined as the difference between ________ and the customer's order cycle.
logistics lead time
If the RSFE or MFE is positive, then on average the forecasts are too _____.
low
Calculating the __________ means taking the running sum of the forecast errors and dividing it by the number of observations or the number of forecasts.
mean forecast error
ROA will increase if we generate ________ profit with _____ assets.
more; fewer
Julie is estimating demand for a future period using a time series model. She sums the demand for the past three periods and then divides that sum by 3. Julie is using the ___________ method.
moving average
One of the simplest time series models used for forecasting is ____________.
moving average
Extended lead times _________ agility and flexibility
none of the above
Which of the following is an example of noise in demand data?
none of the above - must be no explanation
Perpetual inventory is one of the major ways that percentage of time in stock and ________________are measured.
percentage of items in stock
The ___________ component of customer service includes such factors as availability of spare parts, technical support, feedback and complaint processes, et cetera.
post-transaction
The _____________ component of customer service concerns how the policies, organizational structure, and culture of a company affect customer service.
pre-transaction
Judgmental methods are __________ forecasting approaches.
qualitative
Market research is a _________ kind of forecasting method.
qualitative
A purpose of the consensus meeting is to _______________________.
quantify the gap between supply and demand
As alpha is increased in an exponential smoothing model, the forecast becomes more ______.
reactive
One of the fundamental challenges faced by supply chain managers is the gap created when the customer's order cycle is ___________ than the total lead time.
shorter than
If store perpetual inventory is greater than zero for 40 of the 100 SKUs in a category, then
the calculated percentage of items in stock is 40% (assuming perpetual inventory is accurate)
If store perpetual inventory is greater than zero for 65 days of the 100 days checked for a particular item in a category, then
the calculated percentage of time in stock is 65% (assuming perpetual inventory is accurate)
Safety stock is _______________.
the expected number of units on hand just before a replenishment is received and available for use or sale
The difference between the logistics lead time and the customer's order cycle is called _________.
the lead time gap
Retail shelf is very expensive because
the opportunity cost of alternate products
Retail shelf is very expensive because ___________:
the opportunity cost of alternate products
Process redesign is concerned with improving performance but does so by changing ______.
the order of the activities
Assume an item is in stock for 2 weeks but out of stock on the third week. We could use this information to calculate __________________.
the percentage of time in stock (PTIS)
In pantry loading, the rate of consumption is ______, but the frequency of purchase is reduced
the same or Consumption;purchases
You only need two parameters to define a normal distribution; the mean and_____________
the standard deviation
The term______today refers to a firm that supplies logistics and possibly other supply chain management services
thrid-party logistics (3PL) provider
Moving average is one of the simplest ____________ used for forecasting.
time series models
The ___________ component of customer service includes common metrics of customer service such as percentage of items in stock, percentage of time an item is in stock, fill rate, lead time, et cetera
transaction
Inventory Turns is __________ divided by ___________.
unit sales; average inventory