ISDS 3115 Conceptual (Ch 11 to 13)

Q is to _____ systems as P is to _____ systems.

fixed quantity, fixed period

One reason complex models have not found widespread use and application is that

good models are time-consuming and managers must often react swiftly to dynamic demand.

Which of the following items is mostly likely managed using a single-period order model?

Christmas trees

When using the low-cost strategy for supply chain-management, the firm should invest aggressively to reduce production lead time.

False

With the many-suppliers strategy, the order usually goes to the supplier that offers the best quality.

False

Because service firms do not inventory their output, pure chase strategy is not appropriate.

False.

The advantage of a joint venture over vertical integration is

reduced risk.

In the basic EOQ model, if D=6,000 per year, S=$100, H=$5 per month, the economic order quantity is approximately

141

Which of the following statements about ABC analysis is FALSE?

ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

Which of the following statements about aggregate planning is FALSE?

Aggregate planning produces a plan detailing which products are made and in what quantities.

Which of the following statements about aggregate planning is TRUE?

Aggregate planning uses the adjustable part of capacity to meet production requirements.

Vertical integration, whether forward or backward, requires the firm to become more specialized.

False

A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing

Drop shipping.

Which of the following statements regarding control of service inventories is TRUE?

Effective control of all goods leaving the facility is one applicable technique.

Safety stock in inventory systems depends only on the average demand during the lead time.

False

Supply-chain decisions are not generally strategic in nature, because purchasing is an ordinary expense to most firms.

False

The key to effective supply-chain management is to get many suppliers to compete with each other, in order to drive down prices.

False

The level scheduling strategy allows lower inventories than the pure chase strategy.

False

The "bullwhip" effect (all of the above)

Increases the costs associated with inventory in the supply chain. Results in increasing fluctuations at each step of the sequence. Occurs as orders are relayed from retailers to wholesalers. Occurs because of distortions in information in the supply chain.

Which choice best describes level scheduling?

Inventory goes up or down to buffer the difference between demand and production.

Which of the following statements regarding the production order quantity model is TRUE?

It relaxes the assumption that all the order quantity is received at one time.

Which of the following statements regarding aggregate planning in services is false?

Level scheduling is far more common than chase.

To use yield management strategies a business should have which combination of costs?

Low variable and high fixed

Which of the following uses regression to incorporate historical managerial performance into aggregate planning?

Management coefficients model

The objective of aggregate planning is to meet demand while ______ over the planning period.

Minimizing cost

Which category of inventory holding costs is much higher than average for rapid-change industries such as PCs and cell phones?

Pilferage, scrap, & obsolescence

Which of the following is NOT an assumption of the economic order quantity model shown above?

Production and use can occur simultaneously.

By which distribution system is 90 percent of U.S. coal shipped?

Railroads

A disadvantage of the fixed-period inventory system is that

Since there is no count of inventory during the review period, a stockout is possible.

Which of the following is NOT a condition that favors the success of vertical integration?

Small market share

In aggregate planning, which of the following is NOT a basic option for altering demand?

Subcontracting

Which of the following statements is true regarding the leverage of supply-chain savings?

Supply chain savings exert more leverage as the firm has a lower net profit margin.

Which of the following statements regarding the reorder point is true? (all if the above)

There is a reorder point even if lead time and demand during lead time are constant. The reorder point is larger than dxL if safety stock is present. The fixed-period model has no reorder point. The reorder point is that quantity that triggers an action to restock an item.

What term is used to describe the outsourcing of logistics?

Third-party logistics

The two most basic inventory questions answered by the typical inventory model are

Timing and quantity of orders

Controlling the cost of labor in services involves quick response to consumer demand, on-call labor for unexpected demand, flexibility of labor for reallocation, and flexibility of hours or rate of output of individual workers.

True

Graphical techniques are easy to understand and use, but are not well-suited for generating optimal strategies.

True

In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.

True

In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs.

True

Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

True

Service level is the complement of the probability of a stockout.

True

The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.

True

The fixed-period inventory model can have a stockout during the review period as well as during the reorder period, which is why fixed-period models more safety than fixed-quantity models.

True

The reorder point is the inventory level at which action is taken to replenish the stocked item.

True

The strategies of aggregate planning are broadly divided into demand options and capacity options.

True

The use of part-time workers as an aggregate planning option may be less costly than using full-time workers, but may also reduce quality levels.

True

Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length for lead time, or both.

True

Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length of lead time, or both.

True

Vertical integration appears particularly advantageous when the organization has

a large market share.

Which of the following is the term used for medium range capacity planning with a time horizon of three to eighteen months?

aggregate planning

Which of the following distribution systems offers quickness and reliability when emergency supplies are needed overseas?

airfreight

Yield management is most likely to be used in which one of the following situations?

an airline attempting to fill "perishable" seats at maximum revenue.

ABC analysis divides on-hand inventory into three classes, generally based upon

annual dollar volume.

Which of these is among the demand options of aggregate planning?

back-ordering during high-demand periods

Disaggregation

breaks the aggregate plan into greater detail.

"Yield management" is best described as

capacity allocation to different classes of customers in order to maximize profits.

The purpose of safety stock is to

control the likelihood of a stockout due to the variability of demand during lead time.

A firm's demand for the next four quarters (its aggregate planning horizon) is forecast to be 80, 50, 40, and 90 units. Last quarter, the firm produced 60 units. If it uses level scheduling, the firm will

hire workers to permit production of 65 units per quarter for the next four quarters.

The EOQ model with quantity discounts attempts to determine

how many units should be ordered.

Planning tasks associates with staffing, production, inventory, and sub-contracting levels typically fall under

intermediate-range plans.

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown above, the average amount of inventory on hand

is one-half of the economic order quantity.

Outsourcing (all of the above are true of outsourcing)

lets the outsourcing firm focus on its key success factors. utilizes the efficiency which comes with specialization. transfers traditional internal activities to outside vendors.

Which of the following is not an opportunity for effective management in the supply chain?

local optimization

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.

Which of the following is NOT an advantage of level scheduling?

matching production exactly with sales

Drop shipment

means the supplier will ship directly to the end consumer, rather than to the seller.

The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is

outsourcing.

Which of the following is a requirement of Q systems?

perpetual inventory system

Aggregate planning for service firms that provide intangible output deals mainly with

planning for human resource requirements and managing demand.

Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of

postponement.

Keeping a product generic as long as possible before customizing is known as

postponement.

Which of the following attempts to manipulate product or service demand?

price cuts

In level scheduling, what is kept uniform from month to month?

production/workforce levels

With the growth of JIT, which of the following distribution systems has been the biggest loser?

railroads

Which of the following would most likely fall under the scope of only an operations manager?

setting inventory levels

Planning tasks associated with loading, sequencing, expediting, and dispatching, typically fall under

short-range plans.

Which of the following is NOT a supply-chain strategy?

short-term relationships with few suppliers

In aggregate planning, which one of the following is NOT a basic option for altering demand?

subcontracting

Which of the following aggregate planning models is based primarily upon a manager's past experience?

the management coefficients model

Which of the following is a function of inventory? (all of the above are functions of inventory)

to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers to decouple or separate parts of the production process to take advantage of quantity discounts to hedge against inflation

Which of the following would NOT generally be a motive for a firm to hold inventories?

to minimize holding costs

Which of the following best describes vertical integration?

to produce goods or services previously purchased

Most inventory models attempt to minimize

total inventory based costs

Aggregate planning would entail which of the following production aspects at BMW for a 12 month period?

total number of cars to produce

In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity

true

In several industries, online exchanges have been created by buyers.

true

Which of these aggregate planning strategies adjusts capacity to match demand?

using part-time workers

Which of the following is NOT an advantage of the "few suppliers" concept?

vulnerability of trade secrets