Supply chain exam 2

If a company's' net income (i.e., profits before taxes) is $8.1 billion US Dollars and it has total assets of $135.0 Billion US Dollars, the Return on Assets (expressed as a percentage) is

6%

Which of the following is the best description of a Preferred Supplier?

A supplier who best meets all of your company's overall purchasing requirements

Which one of the following is NOT one of the Seven Tools of Quality Control?

Hysterical Charts

The keys to developing successful supply partnerships include all of the following EXCEPT?

Individualized Objectives

A strategic partnership with a supplier:

Is a commitment over an extended period to work together to the mutual benefit of both parties

A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers.

Linear Barcode

Which one of the following is NOT an element of Lean Manufacturing?

Mass Customization

Intermittent Production Processes are used to produce a large variety of products with different processing requirements in lower volumes

True

Root Cause Analysis is a term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems

True

A key supplier's activities to help the buyer's company reduce cost, improve quality and reduce new product development time beginning with the initial design phase, are known as?

Value Engineering

Duties, taxes, or customs imposed by the host country for imported or exported goods, are known as Tariffs

true

What is a Request for Quote (RFQ)?

A document used to solicit bids (i.e., price and delivery) from interested and qualified suppliers for goods or services that the organization needs to obtain.

This type of inventory depletes gradually as customer orders are received, and is replenished cyclically when supply orders are received.

Cycle Stock

A strong supplier partnership requires that both buyer and supplier adopt a strong tactical perspective.

False

When a company utilizes a "make to stock" strategy, the company is also said to be using a "pull" business model

False

Benefits of implementing an effective supplier certification program include all of the following EXCEPT?

Increasing the supplier base

If you want to reduce the risk of a supply disruption, you would choose?

Multiple Suppliers

The quality management philosophy that focuses on improving the overall quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes, is known as?

Six Sigma

Calculate RBS Company's Reorder Point (ROP), including safety stock, for their top selling Pen Set using the following information: Demand (D) is 750 Pen Sets per month (1 month = 30 days). Supplier Lead Time (LT) is 50 days. Safety Stock (SS) is 625 Pen Sets.

1,875

Item A is high value, low risk, and there are multiple potential suppliers.

Leverage

This type of inventory is in the transportation network and the distribution system, being held by wholesalers, distributors, retailers, and consumers

Pipeline Inventory

If you want to create transportation economies, you would choose?

Single Supplier

The Weighted-Criteria Evaluation System is typically used to select a supplier or to evaluate the performance of a supplier?

True

Name at least three (3) typical inventory ordering costs.

Order preparation costs Order transportation costs Order receipt processing costs Material handling costs Cost to prepare a purchase requisition Cost to issue payment to a supplier

If you want to develop strong supplier relationships, you would choose?

Single Supplier

Backward Vertical Integration refers to a company acquiring one or more of their sources of supply.

true

One of the main reasons to consider purchasing from an international global source is the opportunity to improve quality, cost, and delivery performance

true

What is Strategic Sourcing?

A comprehensive approach for locating and sourcing key suppliers, so that an organization can leverage its consolidated purchasing power to find the best possible values in the marketplace.

Which cost of quality category includes performing audits to confirm that the quality system is operating properly?

Appraisal Cost

Which of the following new technologies can improve supplier selection and increase the effectiveness of supplier relationship management?

Artificial Intelligence

Item B is low value, high risk, and there are a small number of alternative suppliers

Bottleneck

The best supplier candidates for Supplier Relationship Management (SRM) include all of the following EXCEPT?

Developmental suppliers that need to make improvements

If you wanted to obtain the most information, you would choose?

Multiple Suppliers

The inventory control tool that does not require direct line of sight to read the tag on a product(s).

Radio Frequency Identification

Item C is high value, high risk, and there are few suppliers, but they are excellent.

Strategic

This type of inventory is generally used for a very specific purpose or future event, and for a defined period of time.

Strategic Stock

An arrangement where a representative of the supplier is embedded in the buyer's purchasing group to forecast demand, monitor inventory, and place orders

Supplier Co-Location

What is Ethical Sourcing?

That which attempts to take into account the public consequences of organizational buying, or to bring about positive social change through organizational buying behavior.

What is Total Cost of Ownership (TCO)?

The sum of all the costs associated with every activity in the supply stream of a product.

Which one of the following is NOT a reason to have a single supplier?

To spread the risk of a supply disruption

Cost associated with a late delivery

Transaction Cost

Cost for closing out the purchase order

Transaction Cost

"Rationalizing the supplier base" would mean that the purchasing firm is attempting to reduce the number of suppliers in its supplier network.

True

The primary design objective of a Lean layout is to reduce wasted movements of workers and/or materials

True

Suppliers directly manage buyer inventories to reduce the buyer's inventory carrying costs and avoid stockouts for the buye

Vendor Managed Inventory

Which sourcing concept involves a supplier directly managing the buyer's inventories to reduce the buyer's inventory carrying costs and avoid stockouts?

Vendor Managed Inventory

Forward Vertical Integration refers to a company acquiring one or more of their sources of supply.

false

Which general sourcing category comprises commodity items where many alternatives of supply exist, and supply risk is low. Spend is high and there are potential procurement savings?

Leverage

The concept of Distributive Negotiations refers to both sides work together to maximize the outcome or create a win-win result.

False

Cost associated with the loss of customer goodwill

Post Transaction Cost

Cost for replacing defective finished goods

Post-Transaction Cost

What is a Spend Analysis?

Categorizing and analyzing expenditure data for the purpose of decreasing costs, improving efficiency, and monitoring compliance

This type of inventory is needed to run the manufacturing operations and the business, but does not end up as part of the finished product

Maintenance, Repair, and Operating (MRO) supplies

A sourcing technique where pre-qualified suppliers enter a website and at pre-designated time and date, and try to underbid competitors to win the buyer's business

Reverse Auction

A type of inventory system that issues an order whenever a withdrawal is made from inventory.

Base Stock Level System

The term used to describe a debt secured by a bidder for the purpose of providing a guarantee that the successful bidder will accept the contract once awarded, is known as?

Bid bond

Which element of Lean is described as a system based on making little changes on a regular basis, anywhere changes can be made, to reduce process, delivery, and quality problems?

Continuous Improvement

Cost of warranty repairs

Post-Transaction Cost

Cost to transport purchased materials

Transaction Cost

Payment for the purchased materials

Transaction Cost

The purchasing function is one of the most value-enhancing functions in any organization, however, it is still necessary to periodically monitor the purchasing function's performance against a set of standards or industry benchmarks.

True

Cost associated with investigating the need for a purchased material

Pre-Transaction Cost

Cost to understand suppliers needs and operations

Pre-Transaction Cost

Item D is low value, low risk, and there are lots of potential suppliers.

Non-critical

ISO 14000 is a widely accepted management and quality certification standard.

False

A high Return on Assets (ROA) is an indication that a company has a high level/value of assets compared to a low profit margin.

false

Calculate RBS Company's Economic Order Quantity (EOQ) for their top selling Pen Set using the following information: RBS Company expects to sell 1,265 Pen Sets per month for the next 12 months. RBS Company purchases the Pen Sets from a supplier for $150 dollars each and incurs a cost of $50 dollars for each order that they place. RBS Company estimates that their inventory carrying cost is 20% annually.

225

The Profit-Leverage Effect states . . . ?

A decrease in purchasing expenditures directly increases profits before taxes (assuming no decrease in quality or purchasing total cost).

Name at least three (3) typical inventory carrying costs.

Cost of Capital - specified by senior management Taxes - on inventory held in warehouses (also known as a Service Cost) Insurance Cost - based on estimated risk or loss over time and facility characteristics (also known as a Service Cost) Obsolescence Cost - deterioration of product during storage, and shelf-life Storage Cost - facility expense related to product holding rather than product handling Opportunity Cost

What are the four (4) primary reasons that companies hold inventory?

1. To meet customer demand 2. To buffer against uncertainty in demand and/or supply 3. To decouple supply from demand 4. To decouple dependencies in the supply chain

What is a Request for Proposal (RFP)?

A detailed capabilities document used to determine a supplier's capability and interest in the production of a product or service.

Candidates for a Supplier Certification Program include suppliers who meet one or more of the following criteria, EXCEPT?

A supplier who has a minimal number of significant negative quality related incidents for a specified time period

Why might a company decide to outsource (i.e., buy) a product that they currently make in their company-owned operations?

Because they don't have the capacity in their internal factory to meet demand

An arrangement where a specific quantity of an item is stored at the buyer's location. Once the inventory is used, the item is replaced by the supplier, with the full knowledge and approval of the buyer

Co- Managed Inventory

Products with low profit margin, relatively stable demand, and high levels of competition, are known as Innovative Products.

False

When using a weighted-criteria evaluation system with five or more categories, suppliers should be ranked based on their score in only the two highest weighted categories.

False

Which quality expert is credited with introducing the concepts of zero defects?

Philip Crosby

Cost for a site visit to qualify a new supplier

Pre-Transaction Cost

This type of inventory is above and beyond what is actually needed to meet anticipated demand, and is maintained o protect against fluctuations in demand or supply

Safety Stock

If your purchase volume is very small, you would choose?

Single Supplier

A Supplier Code of Conduct is intended to inform suppliers of ethical sourcing expectations and is typically a condition for becoming an approved supplier.

True

The following term refers to an act that creates the greatest good for the greatest number of people?

Utilitarianism

Industrial buyers purchase raw materials and other components for conversion into a finished product, but they do not purchase services or capital equipment.

false

Buying materials and components from suppliers instead of making them in your company-owned operations, is known as?

outsourcing