EXAM 1-Supply Chain Management

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Which of the following is true under the Periodic Review System?

A higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system

Which of the following statements is TRUE?

Strategic partnerships are seen as one of the foundations of supply chain management

Which of the following activities allows buyers to assume the supplier will meet certain product quality and service requirements?

Supplier certification

According to the textbook, the top three challenges for CPFR implementation include all of the following EXCEPT:

Supplier lead times

When linear trend forecasts are developed, demand would typically be:

The dependent variable

CPFR is more likely to succeed if companies educate their employees on the benefits of the process changes and the disadvantages of maintaining the status quo

True

Criteria to evaluate a purchasing department's performance should include both quantitative and qualitative assesments

True

Cycle counting means to physically count inventory on a periodic basis

True

Cyclical variations are longer than a year and are influenced by macroeconomics and political factors

True

Forecast error is actual quantity minus the forcast

True

Forecast error is the actual quantity minus the forecast

True

It is important for firms to address the impact of ethical and sustainable sourcing on other facets of the organizations and its trading partners

True

Minimizing the negative impacts of the bullwhip effect on supply chains is one of the goals of an effective CPFR system

True

purchasing can be broadly classified into two categories: merchants and industrial buyters

True

A negotiation where both sides work together to maximize the joint outcome or to create a joint optimal result is referred to as:

Win-win negotiations

The Ethical Trading Initiative (ETI) does NOT include which of the followng?

Workers receive a 30 minute break for an 8 hour shift

The primary goals of purchasing include all EXCEPT:

Ensure the highest quality raw materials are purchased

If an item is ordered at its economic order quantity, the annual carrying cost should be:

Equal to the annual ordering cost

Promoting diversity by intentionally buying from small firms or ethnic minority businesses is an example of:

Ethical Sourcing

The purchasing department at Big Horn Sheep Corporation decided to intentionally increase purchases from small, underdeveloped nations. This decision can be considered:

Ethical Sourcing

______ considers the public consequences of organizational buying

Ethical sourcing

Which of the following can happen as a result of the bullwhip effect?

Excess costs for each firm in a supply chain

Sustainable sourcing practices include promoting diversity by intentionally buying from ethnic minority businesses

False

The use of ethical and environmental certifications for suppliers is decreasing.

False

Which of the following is NOT a reason firms are expanding their supply bases to include foreign suppliers?

Lower shipping rates due to lower tariffs

Blanket or open-end purchase orders are suitable for buying

Office supplies

Random variations in a Time Series component are due to:

Unpredictable events

Cost savings is an advantage of using an e-procurement system

True

Creating strategic supplier alliances benefits firms by increasing the performance and value of suppliers as well as increasing brand awareness

True

Demands by customers for companies to become more ethically and environmentally focused have placed added pressures on firms to improve their performance in supply chain management

True

Developing a collaborative negotiation infrastructure includes four steps: build a preparation process, develop a negotiation database, design a negotiation launch process, and institute a feedback mechanism

True

ERP provides the mechanism for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing the bullwhip effect and supply chain inventories

True

ERP systems were designed to coordinate the information requirements for purchasing, planning, scheduling and distribution of an organization operating in a complex multi-unit global environment

True

Foreign suppliers located farther away may be able to deliver goods faster than domestic suppliers due to more efficient transportation and logistical systems

True

Functional products are characterized by low profit margins, relatively stable demands, and high levels of competition.

True

One of the assumptions of the economic order quantity model (EOQ) is that purchase price must remain constant

True

One of the benefits of CPFR include integration of planning, forecasting, and logistics activities

True

Without supply chain trading partners collaborating and exchanging information, the supply chain will always be suboptimal and contain excess inventories, resulting in less-than-maximum supply chain profits

True

According to the text, the goal of a good performance evaluation system is to provide metrics that are:

Understandable, easy to measure, focused on value-added results

Radio Frequency Identification (RFID) is beginning to replace bar code inventory tracking, however a weakness is that it requires a direct line of sight for RFID tags to be read

False

Random variations represent either increasing or decreasing movements over many years due to factors such as population growth, population shift, cultural changes and income shifts

False

The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information.

False

When there is not a lot of currently relevant data available it is generally best to use:

Qualitative forecasting

According to the SCM profile Honda, _______ based on a supplier relations index developed by Planning Perspectives

Ranked near the top in 2015

Which if the following is a reverse logistics activity

Recycling products and components

When a product is purchased which is complicated or highly technical a ________ may be issued instead of a request for quotation

Request for proposal

What component of a time series has variations in demand which show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, months, or years?

Seasonal Variations

When using a Weighted Criteria Evaluation System to evaluate suppliers, all of the following are true EXCEPT

Select the key dimensions of performance based on what is important to the end consumer

The following time-series approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time:

Simple Moving Average

Which company is experimenting with the management of the final mile of deliver in some markets, using small aerial drones to deliver shoebox-size packages from fulfillment centers?

Amazon

According to the textbook, conditions which must be present for successful supply chain management include:

Cooperation among firms

The (s,S) continuous review policy is to order the same quantity, Q, when physical inventory reaches the reorder point

False

The optimal order quantity for the quantity discount model is always at one of the price breakpoints

False

The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the aggregate production strategy

False

Transactional SRM, allows the company to analyze the complete supplier base

False

Which one of the following statements regarding the economic order quantity (EOQ) is true?

If an order quantity is larger than the EOQ, then the annual holding cost will exceed the annual ordering cost

If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the:

Most recent positive ATP

The primary purpose of the basic economic order quantity (EOQ) model is to:

None of the above

Field failures, loss of goodwill, a decreased reputation, and warranty costs can all be classified as:

Post-transaction costs

Which of the following MRP terms represents a committed order awaiting delivery for a specific period?

Scheduled Receipt

Firms can use total cost analysis to:

Select the most cost-effective supplier

Which of the following acronyms is NOT paired with its correct "translation?"

TLS-Third-party Logistics Services

Environmental supplier certifications can be used to identify rogue suppliers before they can cause problems

True

MRO supplies are a type of indirect costs.

True

The economic order quantity model (EOQ) is the optimal independent demand order quantity that minimizes total annual inventory costs

True

When both the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level

True

Which of the following is a major cultural issue and big hurdle for widespread implementation of CPFR

Trust

In designing an ethical and sustainable strategy a firm might make use of which of the following?

Use performance measures to identify weaknesses

Which of the following terms refers to an act that creates the greatest good for the greatest number of people:

Utilitarianism

Which of the following is TRUE?

VMI stands for Vendor Managed Inventory

The formula for the forecast error is calculated by using the equation:

Actual demand for period t minus the forecasted demand for period t

A follow up is considered a reactive approach to speed up an overdue shipment

False

A forecast tracking signal is used to determine:

If the forecast bias is within the acceptable control limits

Which of the following should NOT be used as assessment criteria to evaluate the purchasing department's performance?

Lowering inventory turnover rates

Lubricants for production equipment which are not part of the final products are called:

Maintenance, repair and operating supplies

Which of the following is NOT a common module of ERP system?

Marketing Resources Management

Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to a few weeks?

Material requirement plan

Which of the following refers to the measurement of the impact of change in purchase spend on a firm's profit before taxes, assuming gross sales and other expenses remain unchanged?

Profit-Leverage Effect

Total Cost of Ownership does NOT consider which of the following factors?

Purchase order costs

Direct benefits of ISO 14000 include:

Reduction of pollution emission

The ______ is used to check the feasibility of the Master Production Schedule

Rough-Cut Capacity Plan

Summers, Inc. needs to generate a list of good/services purchased per supplier. Which type software program can the manager consult to obtain the information?

SRM

Which of the following illustrates Forward Vertical Integration?

Sony buying trucks to deliver their finished goods inventories to their customers' warehouses

Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand?

The Level Production Strategy

Legacy MRP systems typically utilized multiple software packages and databases which caused:

The same information to be stored in multiple locations

While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth?

The year 20000 millennium bug

A level production strategy works well for make-to-stock manufacturing firms, which typically emphasize immediate delivery of off-the-shelf, standard goods at relatively low prices

True

A material requisition and a purchasing requisition are the same thing

True

A practice aimed at ensuring that purchased products or materials meet environmental objectives of the organization is referred to as green purchasing

True

According to the textbook, supply chains include raw material suppliers, intermediate component manufacturers, end-product manufacturers, wholesale distributors, retailers, and end-product consuemers

True

A service where key customers ask suppliers to take on the job of store level replenishment planning is called:

Vendor managed inventory

The EOQ model with quantity discounts attempts to determine:

how many units should be ordered

Individual biases could negatively impact the effectiveness of the Sales Force Composite forecasting approach, due to the proximity of the sales personnel to the consumers

True

Lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation

True

Legacy systems were designed to perform a very specific operational function

True

Regression analysis is commonly used in the cause-and-effect forecasting model

True

Steering wheels purchased by Ford is an example of dependent demand

True

Successful supplier relationships involve equal decision-making control

True

System nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans.

True

The ABC inventory matric combines two ABC analyses--one based on current inventory valuation and the other is based on annual dollar usage

True

The Delphi forecasting approach is applicable for high-risk technology forecasting; large, expensive projects; or major new product introductions

True

The bullwhip effect causes an amplification of the variation in the demand pattern along the supply chain

True

The inventory turnover ratio shows how efficiently a firm is using its inventory to generate revenue

True

The statistical reorder point is calculated as the average demand during the delivery lead time plus the desired safety stock

True

Two reasons ERP implementations have been known to fail include: lack of top management commitment and lack of communication between the firm and it ERP software provider

True

Benefits derived from implementing e-procurement systems include all of the following EXCEPT:

Creates numerous additional job opportunities in the purchasing department

Independent demand is:

Demand for a firm's end product

Which of the following activities would fall under the foundational element of operation

Demand management

Which of the following is considered a disadvantage of utilizing an ERP system?

ERP systems are very complex and have proven difficult to implement

As firms seek to improve the products they offer to the market, companies are seeking help from their suppliers in new product design and development through:

Early supplier involvement

Which of the following is considered an advantage of utilizing an ERP system?

Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries

The acronym ERP is short for

Enterprise Resource Planning

If a company is effectively focusing on its core competencies, its level of outsourcing is likely to decrease

False

If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average.

False

In a Total Cost of Ownership system, certification and training of suppliers would be considered post-transaction costs

False

In a weighted-criteria evaluation system the weights of all the performance dimensions must add up to more than 1.00 and less than 100

False

In general, single integrator ERP solutions are better suited to more intricate workplaces

False

It is best for firms to learn through their own experiences the methods and tools that work best, rather than benchmarking

False

It is considered unethical for a frim to intentionally buy from women-owned businesses

False

It is critical that buyers and suppliers develop stronger relationships and partnerships based on a tactical rather than a strategic perspective

False

It is possible to expect 100 percent forecast accuracy most of the time

False

MRO supplies are a type of work-in-progress

False

Many large firms are moving to in-house vertically integrated structures where they have more control over each business unit

False

Pareto Analysis means that 20 percent of the items get about 80 percent of the safety stock

False

Quantitative forecasting methods are based on opinion and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts

False

Reverse logistics has become an important trend in ethical and sustainable sourcing

False

The ABC inventory control prioritizes dependent demand inventory items into three groups, A, B, and C. A items receive the smallest amount of safety stock, while C items typically have the most safety stock

False

The EOQ equation is derived by setting the annual purchase cost equal to the annual holding cost

False

The Naive forecast, Mean Profit Leverage, and Mean Square Error are examples of forecasting accuracy measures

False

The Total Cost of Ownership does NOT include quantitative factors

False

The best-of-breed solution picks all the desired applications from a single vendor for the ERP system

False

The bullwhip effect is the result of companies producing excessive defective products; defective items are whipped back from the end customer toward the manufacturer of the defect

False

The chase production strategy works well when highly skilled workers are needed, especially in a tight labor market

False

The foundation elements of supply chain management are Supply, Operations, Customer Service, Logistics

False

The legacy MRP system was programmed to coordinate with other functional areas in the firm

False

Inaccurate forecasts can result in negative outcomes like:

Imbalances in supply and demand

Which of the following is NOT one of the three basic methods used to calculate the available-to-promise quantities?

Indiscrete available-to-promise

Which of the following is a disadvantage of carrying too much inventory?

It creates an unnecessary waste of scarce resouces

Which of the following is NOT a form of countertradeV?

Kaizen Blitz

Which of the following is NOT a key tenant of an SRM System

Lean operations

Customer relationship management, distribution network, transportation management, and service response logistics are all important issues that are most closely related to

Logistics

Which one of the following is NOT a type of qualitative forecasting?

Simple moving average

Which of the following is NOT a reason for firms to carry inventory

To increase production change/setup costs

According to the textbook, the keys to successful supply chain management include trust, cooperation, collaboration, and honest, accurate communications between supply chain partners

True

An ERP system is generally a multi-module application software for managing an enterprise's internal functional activities, as well as its suppliers and customers

True

Automating procurement activities can lead to significant cost savings as buyers move toward managing processes by exception

True

Because internationally recognized certifications like ISO 9000 are becoming so common among suppliers, it is becoming more important that purchasing firms develop internal certification programs that are geared toward the specific needs of the purchasing organization

True

Ethical sourcing policies should NOT include determining where all purchased goods come from and how they are made

False

What is considered an acceptable range for a tracking signal?

+-3

SRM software should be capable of:

All of these

Which of the following MRP terms represents the parts demanded by a parent?

Component

The _____specifies which end product is to be made, how many are required, and when they need to be completed

Aggregate production plan

When a particular item is in short supply accompanied by rising prices, a firm might find it beneficial to:

Align itself with one of the suppliers to ensure a continued supply of the scarce item

Which of the following is true of today's purchasing staff members?

All of the above

Legacy MRP systems had which of the following limitations?

All of these

Successful strategic alliances can result in which of the following?

All of these

Which of the following is a trend in ethical and sustainable sourcing?

All of these

The main benefit(s) from benchmarking sourcing practices is/are:

Allows firms to leapfrog the experience-gaining stage by trying things that have worked well for other companies

Leading companies practicing sustainable sourcing and seeking to reduce costs would NOT use which of the following strategies?

Backward integration to purchase suppliers

The following is an example of the bullwhip effect:

Barkley's incorrectly anticipates consumer demand resulting in stockouts at several popular retailers

The smoothing constant for exponential smoothing must be?

Between 0 and 1

Which of the following would be considered a dependent demand item?

Bicycle tires used to assemble a bicycle

Which of the following results from using the chase production strategy

Both A & B

The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the:

Bullwhip effect

A SRM strategy refers to a situation wherein a supplier's employee is permanently housed in the purchasing department of the buyer's organization

False

According to the textbook, environmental and social impacts are considered outside of supply chain management

False

According to the textbook, in the 1950's and 1960's, mass production techniques focused on creating supplier partnerships, improving process design and flexibility, and improving product quality

False

According to the textbook, third-party logistics providers (3LPs) do not offer assistance with helping products clear customs

False

As companies outsource more and more parts, it becomes easier to achieve cost savings internally

False

Dependent demand must be forecasted to be accurate

False

Distribution requirements plan (DRP) operates in a dependent demand situation

False

Trend variations are wavelike movements that are shorter than a year

False

Which of the following is NOT a typical strategy for firms to obtain benchmarking data about other companies?

Hiring former employees from other companies and assessing their knowledge

Which of the following would refer to the 80/20 rule when applied to the ABC inventory control system?

80 percent of the total annual $ usage is accounted for, by 20 percent of the items

Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include:

Customer relationship management and Human resource management

The Hormel company awards their Hormel Food Corporation's No. 1 Award to their top supplier. How often do they give this award?

Every 5 years

The real value of Collaborative Planning, Forecasting and Replenishment (CPFR) comes from:

Exchanging of forecasting information

ERP Implosion is the process of converting a parent item's planned order releases into component gross requirements

False

What is the most important output of the MRP

Planned order releases

Developed in the 1990's as a popular way of developing radically new business processes in an effort to reduce waste and increase performance is referred to as:

Business process reengineering

When calculating Return on Investment, current assets include:

Cash, Accounts Receivable, and Inventory

A company using a weighted-criteria evaluation system has established these 3 categories and the appropriate weight in parentheses: Quality (0.30), Delivery (0.40), Cost (0.30) The scores for each category are shown below. Which of the following companies has the highest total score?

Company C: Quality (70), Delivery (95), Cost (60)

Supply chain management includes the planning and management of all activities involved in sourcing and procurement, conversions, and all logistics management activities. It also includes:

Coordination and collaboration with channel partners

Which of the following is NOT important in developing a successful strategic alliance?

Developing efficient processes that will remain unchanged for the duration of the partnership

Merchants primary task is to purchase raw materials for conversion purpose

False

The possibility of events like strikes, assembly line breakdowns, and natural disasters are all reasons a company should favor using a single supplier.

False

Trends in supply chain management include expansion of the supply chain and decreasing supply chain visibility

False

When developing successful partnerships, it is best to avoid inter-personal business relationships between buyers and suppliers.

False

While most public procurement is focused on goals like those of purchasing departments in the private sector, U.S. federal government purchases must comply with the:

Federal Acquisition Regulation

Which of the following ca be used as a punishment for suppliers that perform poorly?

All of these

Which of the following is a reason small value purchases are handled differently?

To control unnecessary administrative costs

Before supplier relationship management (SRM), buyers typically spent 40% of their time on expediting orders. After SRM implementation buyers spent about:

10% of their time expediting orders

The term Supply Chain Management and the field of study it represents today seems to have emerged in the:

1980s

Which of the following would be a good reason to outsource (buy) versus making?

A firm lack the technology or expertise to produce an item

Which of the following is TRUE?

Performance metrics and personal business relationships are both keys to building successful partnerships

A form of purchasing that is placed directly to the supplier and suitable when firms use the same components to make standard goods over a relatively long period of time is referred to as:

Planned order release

Costs associated with investigating alternative suppliers and investigating alternative delivery options can be classified as:

Pre-transaction costs

Which of the following is NOT a potential challenge for global sourcing?

Relaxed trade barriers

Streamlining the processes and communications between the buyer and supplier using software applications that enable these processes to be managed more efficiently and effectively can be referred to as:

SRM

The following strategy is usually employed by lean organizations in an effort to ensure continued quality compliance among suppliers and with internal production facilities

Six Sigma

Which of the following is an advantage of a centralized purchasing department?

Specialization

According to the text, the FOUR important elements of the supply chain are:

Supply, operations, logistics, integration

Which of the following can be defined as "The ability to meet the needs of current supply chain members without hindering the ability to meet the needs of future generations"

Sustainability

What type of major cost category is considered they cost associated with placing and receiving the order?

Transaction Cost

Which type of requisition is used for materials and standard parts that are requested on a recurring basis?

Traveling requisition

A reason for making items instead of buying them would include better quality control

True

A seven-step approach to supplier development might include identifying critical suppliers not meeting performance requirements

True

According to the text, only about half of companies recognize excellent performance with supplier awards and appreciations banquets

True

According to the textbook, a supply chains' end customers are the only true source of income for all supply chain organizations

True

Blank check orders, Corporate purchasing cards, Petty cash, and Open-end purchase orders are all possible alternatives to dealing with small value purchases such as those for office supplies

True

Decentralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs

True

Highly valued customers with large purchasing budgets who achieve moderate supply chain management success have been known to lower purchasing and inventory carrying costs, and create better quality products with higher levels of customer service

True

ISO 14000 is a family of international standards for environmental management

True

Offering an awards program to suppliers both motivates the suppliers to commit to a program of continuous improvement as well as provides role models for suppliers to follow.

True

One definition of supply chain management is "Coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers"

True

Procurement credit cards can be used for small purchases including meals, lodging, and travel expenses

True

Rewarding suppliers for maintaining high levels of performance is an important step used in maintaining a successful alliance program

True

Supply chain analytics can be used along the supply chain to schedule production according to expected supplier deliveries

True

The goal of a good purchasing system is to ensure efficient information transitions between the materials users, the purchasing personnel, and the suppliers

True

The purchase is NOT a legally binding contract until it is accepted by the supplier

True

The total cost analysis demonstrates how other costs beside the unit cost can affect purchase decisions

True

Trucking companies, airfreight shipping companies, and information system providers can all be considered service providers to the supply chain

True


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