Chapter 11 and 12
four main categories of inventory
1. Raw Materials 2. Work-in-Process (WIP) sometimes called Work-in-Progress 3. Finished Goods 4. Maintenance, Repair and Operating (MRO) supplies (not directly related to product creation)
Which of the following statements is TRUE? A. All suppliers will be disrupted simultaneously if either a super-event occurs or a super-event does not occur but a unique-event occurs for all of the suppliers. B. Large probabilities of a unique event decrease the likelihood of needing more suppliers. C. To compute the probability of all n suppliers being disrupted simultaneously, we assume that the probabilities are all dependent on each other. D. As the probability of a super-event decreases, the advantage of utilizing multiple suppliers diminishes.
A. All suppliers will be disrupted simultaneously if either a super-event occurs or a super-event does not occur but a unique-event occurs for all of the suppliers.
Which of the following statements is NOT true? A. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting. B. A supply chain includes suppliers; manufacturers and/or service providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer. C. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain's competitive advantage and benefits to the ultimate consumer. D. Supply chain management describes the coordination of all supply chain activities, starting with raw materials, and ending with a satisfied customer.
A. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.
Which of the following statements is NOT true regarding the bullwhip effect? A. The bullwhip effect occurs as order are relayed from retails, to distributors, to wholesalers, to manufacturers, with fluctuations decreasing at each step in the sequence. B. Bullwhip fluctuations in the supply chain increase the costs associated with inventory, transportation, shipping and receiving. C. Inaccurate information results in distortions and fluctuations, causing what is known as the bullwhip effect. D. Bullwhip fluctuations in the supply chain decrease customer service and profitability.
A. The bullwhip effect occurs as order are relayed from retails, to distributors, to wholesalers, to manufacturers, with fluctuations decreasing at each step in the sequence.
Faster shipping usually means A. a more expensive shipper and lower holding costs. B. a less expensive shipper and higher holding costs. C. a more expensive shipper and higher holding costs. D. a less expensive shipper and lower holding costs.
A. a more expensive shipper and lower holding costs.
The advantage of having many potential suppliers is their willingness to A. offer lower prices in the short term. B. provide technical expertise. C. participate in JIT. D. provide innovations.
A. offer lower prices in the short term.
Which of the following is NOT one of the major causes of the bullwhip effect? A. shared demand information B. order batching C. price fluctuations D. demand forecast errors
A. shared demand information
What event in 2011 caused manufacturers in several industries worldwide to wait 6 months or longer to see their supply chains working normally again? A. Chinese flood B. Japanese earthquake and tsunami C. U.S. hurricane D. German tornado
B. Japanese earthquake and tsunami
With regard to the cost-based price model negotiation strategy, which of the following is true? A. Prices float based on what the customer is willing to pay. B. Prices are based upon supplier costs. C. Prices are based in some way upon market standards agreed to by both supplier and purchaser. D. Potential suppliers each submit quotations as to price, delivery, and so on.
B. Prices are based upon supplier costs.
A statistical model applicable when product demand or any other variable is not known but can be specified by means of a probability distribution is referred as A. the EOQ. B. a probabilistic model. C. a robust model. D. a quantity discount model.
B. a probabilistic model.
The cost to produce the goods or services sold for a given period is referred to as A. inventory turnover. B. cost of goods sold. C. inventory investment. D. weeks of supply.
B. cost of goods sold.
The advantage of having few suppliers is to A. look for short-term attributes. B. form a long-term relationship. C. take advantage of diseconomies of scale. D. pursue low cost.
B. form a long-term relationship.
The advantage of having few suppliers is to A. take advantage of diseconomies of scale. B. form a long-term relationship. C. pursue low cost. D. look for short-term attributes.
B. form a long-term relationship.
Which of the following statements is NOT true? A. A closed-loop supply chain prepares for returns prior to product introduction. B. Reverse logistics involves the processes of sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal. C. A closed-loop supply chain is a designed to optimize only reverse flows. D. "Closed-loop supply chain" is sometimes used as a synonym for "reverse logistics."
C. A closed-loop supply chain is a designed to optimize only reverse flows.
Extra units that are held in inventory to reduce stockouts are called A. just-in-time inventory. B. demand variance. C. safety stock. D. reorder point.
C. safety stock
What is the cost to prepare a machine or process for production? A. preparation cost B. holding cost C. setup cost D. ordering cost
C. setup cost
Which of the following is an opportunity for effective management in the supply chain?
Channel assembly
The production order quantity model
is appropriate when units are produced and sold simultaneously.
Airfreight A. is the oldest means of freight transportation. B. represents about 10% of the tonnage shipped in the United States. C. is a fast-growing mode of shipping. D. is the best way to transport natural gas.
is a fast-growing mode of shipping.
Keeping a product generic as long as possible before customizing is known as __________.
postponement
In the single-period inventory model, the overage cost is A. cost per unit minus salvage value per unit. B. cost per unit minus sales price per unit. C. salvage value per unit. D. sales price per unit minus cost per unit.
A. cost per unit minus salvage value per unit.
Which one of the following distribution systems offers quickness and reliability when emergency supplies are needed overseas?
Airfreight
ABC analysis generally divides on-hand inventory into three classes based upon
Annual Dollar Volume
What is transferring a firm's activities that have traditionally been internal to external suppliers? A. make-or-buy B. outsourcing C. keiretsu network D. vertical integration
B. Outsourcing
ch of the following is NOT one of the basic assumptions of the basic EOQ model? A. Lead time is known and consistent B. Receipt of inventory is instantaneous and complete. C. Quantity discounts are possible. D. Demand for an item is known.
C. Quantity discounts are possible.
What is transferring a firm's activities that have traditionally been internal to external suppliers? A. make-or-buy B. outsourcing C. vertical integration D. keiretsu network
Outsourcing
Extra units that are held in inventory to reduce stockouts are called __________.
Safety Stock
The appropriate level of safety stock is typically determined by
choosing the level of safety stock that assures a given service level
The three classic types of negotiation strategies are __________.
cost-based price model, market-based price model, and competitive bidding
In the probabilistic model, increasing the service level will __________.
increase the cost of the inventory policy
Local optimization is a supply-chain complication best described as __________.
optimizing one's local area without full knowledge of the organizational need
The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is __________.
outsourcing
The difference between the basic Economic Order Quantity (EOQ) model and the production order quantity model is that
the production order quantity model does not require the assumption of instantaneous delivery.
The primary purpose of the basic economic order quantity model shown below is
to minimize the sum of setup cost and holding cost.
The three major variations of online catalogs are grouped by __________.
vendors, intermediaries, and buyer exchange systems
The two most important inventory-based questions answered by the typical inventory model are
when to place an order and how many of an item to order.
Which of the following is NOT true about reverse logistics as compared to foward logistics? A. Speed is often very important. B. Distribution costs are less directly visible. C. Forecasting is more uncertain. D. Pricing is dependent on many factors.
A. Speed is often very important.
Which of the following statements is NOT one of the differentiation strategy decisions? A. Use buffer stocks to ensure speedy supply. B. Gather and communicate market research data. C. Modular design to aid product differentiation. D. Minimize inventory to avoid product obsolescence.
A. Use buffer stocks to ensure speedy supply
Which of the following is TRUE regarding the bullwhip effect measure? A. Variance amplification is present if the bullwhip measure is greater than one. B. No amplification is present if the bullwhip measure is equal to zero. C. A smoothing or dampening scenario exists as orders move up the supply chain towards suppliers if the bullwhip measure is greater than one. D. Variance amplification is present if the bullwhip measure is greater than zero.
A. Variance amplification is present if the bullwhip measure is greater than one.
Which of the following statements is TRUE? A. When multiple suppliers are used, having geographically dispersed suppliers could lessen the probability of all failing simultaneously. B. When multiple suppliers are used, having geographically centralized suppliers could lessen the probability of all failing simultaneously. C. The risk mitigation effectiveness of using multiple suppliers has nothing to do with the probability of a super-event occurring. D. It is usually less risky to use single suppliers rather than multiple suppliers.
A. When multiple suppliers are used, having geographically dispersed suppliers could lessen the probability of all failing simultaneously.
Which of the following is NOT a remedy for the bullwhip effect? A. allocate orders based on forecasts B. channel coordination C. information sharing D. price stabilization
A. allocate orders based on forecasts
Which of the following mitigation tactics is NOT designed to reduce the risk of information loss or distortion? A. alternate sourcing B. secure IT systems C. redundant databases D. training of supply chain partners on the proper interpretations and use of information
A. alternate sourcing
A system that triggers ordering on a uniform time basis is called A. a fixed-period system. B. a fixed-quantity system. C. an EOQ system. D. a reorder point system.
A. a fixed-period system.
The cost to produce the goods or services sold for a given period is referred to as A. cost of goods sold. B. weeks of supply. C. inventory investment. D. inventory turnover.
A. cost of goods sold.
Inventory record accuracy would be decreased by A. increasing stockroom accessibility. B. ABC analysis. C. reorder points. D. cycle counting.
A. increasing stockroom accessibility.
Airfreight A. is a fast-growing mode of shipping. B. is the oldest means of freight transportation. C. is the best way to transport natural gas. D. represents about 10% of the tonnage shipped in the United States.
A. is a fast-growing mode of shipping.
A response strategy requires suppliers be selected based primarily on A. capacity, speed, and flexibility. B. being willing to share information. C. product development skills. D. cost.
A. capacity, speed, and flexibility.
Which negotiation strategy bases price on a published, auction, or index price? A. market-based price model B. cost-based price model C. supply-based price model D. competitive bidding
A. market-based price model
Which of the following statements is TRUE? A. Large probabilities of a unique event decrease the likelihood of needing more suppliers. B. All suppliers will be disrupted simultaneously if either a super-event occurs or a super-event does not occur but a unique-event occurs for all of the suppliers. C. To compute the probability of all n suppliers being disrupted simultaneously, we assume that the probabilities are all dependent on each other. D. As the probability of a super-event decreases, the advantage of utilizing multiple suppliers diminishes.
B. All suppliers will be disrupted simultaneously if either a super-event occurs or a super-event does not occur but a unique-event occurs for all of the suppliers.
Which of the following statements is NOT true? A. Supply chain management describes the coordination of all supply chain activities, starting with raw materials, and ending with a satisfied customer. B. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting. C. A supply chain includes suppliers; manufacturers and/or service providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer. D. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain's competitive advantage and benefits to the ultimate consumer.
B. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.
Which of the following statements is NOT true about a fixed-period system? A. The disadvantage of the fixed-period system is that because there is no tally of inventory during the review period, there is the possibility of a stockout during this time. B. A fixed-period system is also called "continuous review." C. The advantage of the fixed-period system is that there is no physical count of inventory items after an item is withdrawn. D. A fixed-period system is appropriate when vendors make routine visits to customers to take fresh orders or when purchasers want to combine orders to save ordering and transportation costs.
B. A fixed-period system is also called "continuous review."
Which of the following statements is NOT true? A. The factor weighting approach can help firms evaluate potential suppliers. B. The factor weighting approach does not involve subjective judgment. C. The factor weighting approach can help firms identify the features that are important to them. D. The factor weighting model adds objectivity to decision making.
B. The factor weighting approach does not involve subjective judgment.
Which of the following statements is TRUE? A. It is usually less risky to use single suppliers rather than multiple suppliers. B. When multiple suppliers are used, having geographically dispersed suppliers could lessen the probability of all failing simultaneously. C. When multiple suppliers are used, having geographically centralized suppliers could lessen the probability of all failing simultaneously. D. The risk mitigation effectiveness of using multiple suppliers has nothing to do with the probability of a super-event occurring.
B. When multiple suppliers are used, having geographically dispersed suppliers could lessen the probability of all failing simultaneously.
What is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship? A. advanced shipping notice B. blanket order C. postponement D. drop shipping
B. blanket order
A single-period inventory model is NOT applicable for A. newspapers. B. furniture. C. seasonal goods. D. milk.
B. furniture.
Which of the following does NOT belong to ordering costs? A. clerical support B. interest payments C. cost of supplies D. order processing
B. interest payments
Trucking A. is one of the least flexible transportation modes. B. is increasingly using computers to manage its operations. C. does not play a role in multimodal shipping. D. is the least used transportation mode for manufacturing goods.
B. is increasingly using computers to manage its operations.
Trucking A. is the least used transportation mode for manufacturing goods. B. is increasingly using computers to manage its operations. C. does not play a role in multimodal shipping. D. is one of the least flexible transportation modes.
B. is increasingly using computers to manage its operations.
Policies based on ABC analysis might include investing A. more in inventory security for C items. B. more in supplier development for A items. C. the most time and effort verifying the accuracy of records for B items. D. extra care in forecasting for C items.
B. more in supplier development for A items.
The advantage of having many potential suppliers is their willingness to A. participate in JIT. B. offer lower prices in the short term. C. provide innovations. D. provide technical expertise.
B. offer lower prices in the short term.
Which of the following does NOT belong to holding costs? A. pilferage, scrap, and obsolescence B. order processing C. storage costs D. insurance on inventory
B. order processing
Three common measures of supply chain performance are: A. debt/equity ratio, inventory turnover, and weeks of supply. B. percentage invested in inventory, inventory turnover, and weeks of supply. C. percentage invested in inventory, inventory turnover, and debt/equity ratio. D. percentage invested in inventory, debt/equity ratio, and weeks of supply.
B. percentage invested in inventory, inventory turnover, and weeks of supply.
Which of the following mitigation tactics could reduce economic risk? A. subcontractors on retainer B. purchasing contracts that address price fluctuations C. franchising and licensing D. multiple transportation modes and warehouses
B. purchasing contracts that address price fluctuations
Three criteria for designing distribution networks to meet customer expectations are: A. low cost, rapid response and product choice. B. rapid response, product choice, and service. C. rapid response, low cost, and service. D. low cost, product choice and service.
B. rapid response, product choice, and service.
Efficiency in a warehouse is primarily improved by A. creating wider aisles. B. reducing worker travel time. C. using taller shelves. D. increasing order quantities.
B. reducing worker travel time.
For seasonal products, the service level should be set to equal A. overage cost / (overage cost minus shortage cost). B. shortage cost / (overage cost + shortage cost). C. overage cost / (overage cost + shortage cost). D. shortage cost / (overage cost minus shortage cost).
B. shortage cost / (overage cost + shortage cost).
The objective of inventory management is to A. provide a selection of goods for anticipated customer demand. B. strike a balance between inventory investment and customer service. C. decouple various parts of the production process. D. take advantage of quantity discounts.
B. strike a balance between inventory investment and customer service.
Which of the following is the first stage of supplier selection? A. negotiations B. supplier evaluation C. supplier development D. contracting
B. supplier evaluation
Which of the following is the first stage of supplier selection? A. supplier development B. supplier evaluation C. negotiations D. contracting
B. supplier evaluation
Which of the following elements is NOT used in a decision tree analysis for selection of the number of suppliers under risk? A. the marginal cost of managing a supplier B. the probability of a "unique-event" that would disrupt all suppliers simulataneously C. the 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
B. the probability of a "unique-event" that would disrupt all suppliers simulataneously
What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor? A. outsourcing B. vertical integration C. virtual companies D. horizontal integration
B. vertical integration
Prior to embarking on supply chain design, operations managers must first consider A. how to manage supply chain inventory. B. "make-or-buy" and outsourcing decisions. C. how to select suppliers. D. what kind of distribution network to have.
B. "make-or-buy" and outsourcing decisions.
A lawnmower assembly plant uses a variety of nuts, bolts, screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of A. postponement. B. vendor-managed inventory. C. e-procurement. D. single stage control of replenishment.
B. vendor-managed inventory.
Which of the following statements is NOT true regarding channel assembly? A. Channel assembly postpones final assembly of a product so the distribution channel can assemble it. B. Channel assembly represents one way to implement postponement. C. Channel assembly sends individual components, modules, and finished products, to the distributor. D. Channel assembly treats distributors more as manufacturing partners than as distributors.
C. Channel assembly sends individual components, modules, and finished products, to the distributor.
Which of the following statements is NOT true? A. Packaging and logistics are important distribution decisions, because the manufacturer is usually held responsible for breakages and serviceability. B. Top-notch supply chain performance requires good downstream management, just as it does good upstream management. C. Finding the optimal number of facilities represents a critical and static decision. D. An effective supplier management program and an effective distribution management program may make the difference between supply chain success and failure.
C. Finding the optimal number of facilities represents a critical and static decision.
Which of the following is NOT one of the benefits accrued from a centralized purchasing function? A. Maintain professional control over the purchasing process. B. Devote more resources to the supplier selection and negotiation process. C. Increase the duplication of tasks. D. Leverage purchase volume for better pricing.
C. Increase the duplication of tasks.
Which organization has developed principles and standards to be used as guidelines for ethical behavior? A. Institute for Procurement Management B. Institute for Vendor Management C. Institute for Supply Management D. Institute for Purchasing Management
C. Institute for Supply Management
Which of the following is NOT true about reverse logistics as compared to foward logistics? A. Pricing is dependent on many factors. B. Forecasting is more uncertain. C. Speed is often very important. D. Distribution costs are less directly visible.
C. Speed is often very important.
A system that keeps track of each withdrawal or addition to inventory continuously is A. a continuous inventory system. B. a constant monitoring system. C. a perpetual inventory system. D. a fixed period system.
C. a perpetual inventory system.
Which of the following statements is NOT generally an implication stemming from an increase in the number of facilities? A. increased facility costs B. increased customer satisfaction C. decreased total logistics cost D. quicker response
C. decreased total logistics cost
Supply chain managers outsource logistics to meet three goals: A. drive down inventory investment, improve delivery reliability and speed, and provide better market response. B. drive down inventory investment, lower delivery costs, and provide better market response. C. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed. D. lower delivery costs, improve delivery reliability and speed, and provide better market response.
C. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed.
Supply chain managers outsource logistics to meet three goals: A. drive down inventory investment, lower delivery costs, and provide better market response. B. drive down inventory investment, improve delivery reliability and speed, and provide better market response. C. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed. D. lower delivery costs, improve delivery reliability and speed, and provide better market response.
C. drive down inventory investment, lower delivery costs, and improve delivery reliability and speed.
Inventory control models assume that demand for an item is A. always independent on the demand for other items. B. identical to the demand for other items. C. either independent of or dependent on the demand for other items. D. always dependent on the demand for other items.
C. either independent of or dependent on the demand for other items.
Inventory record accuracy would be decreased by A. ABC analysis. B. cycle counting. C. increasing stockroom accessibility. D. reorder points.
C. increasing stockroom accessibility.
Cycle counting A. involves shutting down production once per year to perform the annual inventory count. B. cannot be performed in an independent demand situation. C. is a process by which inventory records are verified. D. increases annual inventory adjustments.
C. is a process by which inventory records are verified.
Three common measures of supply chain performance are: A. percentage invested in inventory, inventory turnover, and debt/equity ratio. B. percentage invested in inventory, debt/equity ratio, and weeks of supply. C. percentage invested in inventory, inventory turnover, and weeks of supply. D. debt/equity ratio, inventory turnover, and weeks of supply.
C. percentage invested in inventory, inventory turnover, and weeks of supply.
Which of the following types of inventory describes inventory that has been purchased but not processed? A. finished-goods inventory B. work-in-process inventory C. raw material inventory D. maintenance/repair/operating supply inventory
C. raw material inventory
Which of the following is NOT one of the major causes of the bullwhip effect? A. price fluctuations B. order batching C. shared demand information D. demand forecast errors
C. shared demand information
The difference between the basic EOQ model and the production order quantity model is that A. there are no holding costs in the production order quantity model. B. the production order quantity model does not require the assumption of known, constant demand. C. the production order quantity model does not require the assumption of instantaneous delivery. D. the EOQ model does not require the assumption of known, constant lead time.
C. the production order quantity model does not require the assumption of instantaneous delivery.
What is a supply chain designed to optimize both forward and reverse flows? A. open-loop supply chain B. bullwhip-loop supply chain C. closed-loop supply chain D. reverse-loop supply chain
C. closed-loop supply chain
What is a system for ordering items that have little or no value at the end of a sales period? A. ROP B. EOQ C. single-period inventory model .D. production order quantity model
C. single-period inventory model
A lawnmower assembly plant uses a variety of nuts, bolts, screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of A. postponement. B. single stage control of replenishment. C. vendor-managed inventory. D. e-procurement.
C. vendor-managed inventory.
What type of negotiation strategy requires the supplier to open its books to the purchasers?
Cost-based price model
Which of the following statements is NOT true? A. Inventory holding costs can be computed for various shipping alternatives to better compare their overall cost impact. B. To do transportation mode analysis, the operations or logistics manager not only needs to consider the holding cost and shipping cost, but also other factors such as on-time delivery, getting a new product to market, and so on. C. The longer a product is in transit, the longer the firm has its money invested. D. A less expensive shipper tends to result in slower shipments and lower holding costs.
D. A less expensive shipper tends to result in slower shipments and lower holding costs.
Which of the following statements is NOT true? A. Reverse logistics involves the processes of sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal. B. A closed-loop supply chain prepares for returns prior to product introduction. C. "Closed-loop supply chain" is sometimes used as a synonym for "reverse logistics." D. A closed-loop supply chain is a designed to optimize only reverse flows.
D. A closed-loop supply chain is a designed to optimize only reverse flows.
Which of the following statements is NOT true regarding channel assembly? A. Channel assembly postpones final assembly of a product so the distribution channel can assemble it. B. Channel assembly represents one way to implement postponement. C. Channel assembly treats distributors more as manufacturing partners than as distributors. D. Channel assembly sends individual components, modules, and finished products, to the distributor.
D. Channel assembly sends individual components, modules, and finished products, to the distributor.
Which of the following statements is NOT true about the factor weighting technique? A. The factor weighting technique considers multiple supplier criteria. B. Each factor must be assigned an importance weight. C. Each potential supplier is scored on each factor. D. Factors can be scored using different scales.
D. Factors can be scored using different scales.
Which of the following statements is NOT true? A. An effective supplier management program and an effective distribution management program may make the difference between supply chain success and failure. B. Top-notch supply chain performance requires good downstream management, just as it does good upstream management. C. Packaging and logistics are important distribution decisions, because the manufacturer is usually held responsible for breakages and serviceability. D. Finding the optimal number of facilities represents a critical and static decision.
D. Finding the optimal number of facilities represents a critical and static decision.
Which of the following is NOT one of the assumptions of fixed-period systems? A. Items are independent of one another. B. The only relevant costs are the ordering and holding costs. C. Lead times are known. D. Lead times are variable.
D. Lead times are variable.
A supply chain ends with A. manufacturers. B. suppliers. C. distributors. D. a satisfied customer.
D. a satisfied customer.
Which of the following could reduce distribution risk? A. cross-country diversification B. use multiple suppliers C. secure IT systems D. careful selection, monitoring and effective contracts with penalties
D. careful selection, monitoring and effective contracts with penalties
The appropriate level of safety stock is typically determined by A. taking the square root of the economic order quantity. B. carrying sufficient safety stock so as to eliminate all stockouts. C. minimizing the expected stockout cost. D. choosing the level of safety stock that assures a given service level.
D. choosing the level of safety stock that assures a given service level.
nventory turnover is equal to A. inventory investment / (annual cost of goods sold / 52 weeks). B. (total inventory investment / total assets) times 100. C. (total assets / total inventory investment) times 100. D. cost of goods sold / inventory investment.
D. cost of goods sold / inventory investment.
Which of the following statements is NOT generally an implication stemming from an increase in the number of facilities? A. increased facility costs B. quicker response C. increased customer satisfaction D. decreased total logistics cost
D. decreased total logistics cost
Which of the following risks is NOT a form of disaster risk? A. terrorism B. hurricanes C. tsunamis D. exchange rate fluctuations
D. exchange rate fluctuations
Which of the following statements is NOT one of the response strategy decisions? A. low setup time B. fast transportation C. use buffer stocks to ensure speedy supply D. gather and communicate market research data
D. gather and communicate market research data
How is cash-to-cash cycle time computed? A. days of receivables outstanding + days of payables outstanding minus inventory days of supply B. inventory days of supply + days of receivables outstanding + days of payables outstanding C. inventory days of supply + days of payables outstanding minus days of receivables outstanding D. inventory days of supply + days of receivables outstanding minus days of payables outstanding
D. inventory days of supply + days of receivables outstanding minus days of payables outstanding
Which of the following strategies is part collaboration, part purchasing from few suppliers, and part vertical integration? A. horizontal integration B. virtual companies C. joint ventures D. keiretsu networks
D. keiretsu networks
Given a set of items needing to be stored in a warehouse in which the number of daily trips and blocks of storage space needed are both known for all items, the item with which of the following should be placed furthest from the dock? A. lowest value of TRIPS × BLOCKS B. highest value of TRIPS × BLOCKS C. highest value of TRIPS ÷ BLOCKS D. lowest value of TRIPS divided by BLOCKS
D. lowest value of TRIPS divided by BLOCKS
Which of the following does NOT belong to holding costs? A. pilferage, scrap, and obsolescence B. storage costs C. insurance on inventory D. order processing
D. order processing
When determining the optimal number of facilities, logistics-related costs do NOT usually include which of the following costs? A. transportation B. inventory C. facility D. purchasing
D. purchasing
Which of the following mitigation tactics could reduce economic risk? A. franchising and licensing B. subcontractors on retainer C. multiple transportation modes and warehouses D. purchasing contracts that address price fluctuations
D. purchasing contracts that address price fluctuations
Three criteria for designing distribution networks to meet customer expectations are: A. low cost, rapid response and product choice. B. rapid response, low cost, and service. C. low cost, product choice and service. D. rapid response, product choice, and service.
D. rapid response, product choice, and service.
Efficiency in a warehouse is primarily improved by A. creating wider aisles. B. using taller shelves. C. increasing order quantities. D. reducing worker travel time.
D. reducing worker travel time.
The objective of inventory management is to A. take advantage of quantity discounts. B. decouple various parts of the production process. C. provide a selection of goods for anticipated customer demand. D. strike a balance between inventory investment and customer service.
D. strike a balance between inventory investment and customer service.
With a probabilistic model, increasing the service level A. will decrease the level of safety stock. B. will reduce the cost of the inventory policy. C. will have no impact on the cost of the inventory policy. D. will increase the cost of the inventory policy.
D. will increase the cost of the inventory policy.
Prior to embarking on supply chain design, operations managers must first consider A. what kind of distribution network to have. B. how to select suppliers. C. how to manage supply chain inventory. D. "make-or-buy" and outsourcing decisions.
D. "make-or-buy" and outsourcing decisions
Which of the following statements is true regarding cross-sourcing? A. Cross-sourcing describes suppliers who become part of a company coalition. B. Cross-sourcing develops the ability to produce goods or services previously purchased or actually buying a supplier or distributor. C. Cross-sourcing enhances technological skills. D. Cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.
D. Cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.
What is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship? A. drop shipping B. postponement C. advanced shipping notice D. blanket order
D. Blanket Order
Which of the following industries has the highest supply chain cost as a percentage of sales? A. metals B. restaurants C. automobile D. petroleum
D. Petroleum
Which one of the following performance measures is not true of a world class firm?
Long Lead Time
Which of the following supply-chain strategies creates value by allowing suppliers to have economies of scale?
Long-term partnering with a few suppliers
Which of the following is NOT a type of inventory? A. MRP B. work-in-process C. raw material D. finished goods
MRP
Which of the following is not a concern of the supply chain?
Maintenance Scheduling
Which of the following is an aspect of environmental risk in supply-chain management?
Political Issues
With the growth of the JIT, which of the following distribution systems has been the biggest loser?
Railroads
Which of the following types of inventory describes inventory that has been purchased but not processed? A. finished-goods inventory B. maintenance/repair/operating supply inventory C. work-in-process inventory D. raw material inventory
Raw-Material Inventory
Which of the following should be higher in P systems than Q systems?
Safety Stock
Which of the following is not an advantage of the "few suppliers" concept?
Sharing Trade secrets between firms
Which one of the following is not a supply-chain strategy?
Short-term relationship with few suppliers
A disadvantage of the "few suppliers" strategy is __________.
The high cost of changing partners
Which of these conditions is not necessary for the economic order quantity model to be valid?
The item has a constant purchase price.
What term is used to describe the outsourcing of logistics?
Third-Party Logistics
Which of the following best describes vertical integration?
To produce goods or services previously purchased
A system that triggers ordering on a uniform time basis is called
a fixed period system
A system that keeps track of each withdrawal or addition to inventory continuously is __________.
a perpetual inventory system
A supply chain ends with A. a satisfied customer. B. suppliers. C. manufacturers. D. distributors.
a satisfied customer
A disadvantage of the fixed-period inventory system is that
a stockout is possible.
If demand is not uniform and constant, the stockout risks can be controlled by __________.
adding safety stock
A furniture maker has delivered a dining set to the end consumer rather than to the furniture store. The furniture maker is practicing __________.
drop shipping
The trucking industry is establishing Web sites, which let shippers and truckers find each other in order to ________.
improve logistics efficiency
Inventory record accuracy would be decreased by __________.
increasing stockroom accessibility
Cycle Counting
is a process by which inventory records are verified for accuracy
The purchasing approach that holds the suppliers responsible for maintaining the necessary technology, expertise, and forecasting ability plus cost, quality, and delivery competencies is __________.
many suppliers
Inventory management policies based on ABC analysis might include investing
more in supplier development for A items.
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 distributer, the distributer assumes the large size is a trend, not a one-time event. The distributer, therefore, places an even larger order with the lobsterman. This is the result of __________.
the bullwhip effect
One use of inventory is
to provide a hedge against inflation
Most inventory models attempt to minimize __________.
total inventory based costs
The three stages of vendor selection, in order, are __________.
vendor evaluation, vendor development, and negotiations