ISDS 3115 FINAL

In most manufacturing industries, which of the following would likely represent the largest cost to the firm? a) transportation b) purchasing c) insurance d) financing e) advertising

B

Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called? a) kanban b) keiretsu c) samurai d) poka-yoke e) kaizen

B

A firm that employs a response strategy should minimize inventory throughout the supply chain.

False

According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.

False

As the number of facilities increases, total logistics costs tend to follow a curve that first rises, then declines.

False

Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.

False

Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.

False

Cross-sourcing describes the practice of having two suppliers provide every component.

False

Designing distribution networks to meet customer expectations suggests three criteria: (1) rapid response, (2) cost, and (3) service.

False

Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation

False

Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.

False

Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers and part vertical integration.

False

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

False

How can a reduction of in-transit inventory be encouraged? A) supplier location near plants B) high setup costs C) low carrying costs D) use of trains, not trucks E) low-cost, global suppliers

A

If a factory wants to cut its current lot size in half, by what proportion must setup cost change? A) Setup cost must be cut to one fourth its current value. B) Setup cost must also be cut in half from its current value. C) Setup cost must double from its current value. D) Cannot be determined. E) Setup cost must quadruple from its current value.

A

In MRP, system nervousness is caused by: A) management's attempt to continually respond to minor changes in production requirements. B) the use of the lot-for-lot approach. C) management's marking part of the master production schedule as "not to be rescheduled". D) the use of phantom bills of material. E) management's attempt to evaluate alternative plans before making a decision.

A

In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will: A) increase by about 41%. B) increase by 100%. C) increase by 200%. D) increase, but more data is needed to say by how much. E) either increase or decrease.

A

Q is to ________ systems as P is to ________ systems. A) fixed quantity, fixed period B) variable demand, constant demand C) variable lead time, variable demand D) variable quantity, variable period E) quality, price

A

The fixed-period inventory system requires more safety stock than a fixed-quantity system because: A) a stockout can occur during the review period as well as during the lead time. B) this model is used for products that have large standard deviations of demand. C) this model is used for products that require very high service levels. D) replenishment is not instantaneous. E) setup costs and holding costs are large.

A

The list of 5Ss, although it looks like a housekeeping directive, supports lean production by: A) identifying non-value items and removing them, in the "sort/segregate" category. B) reducing inventory, in the "standardize" category. C) increasing variability through standardized procedures, in the "standardize" category. D) eliminating wasted motion through ergonomic studies, in the "support" category. E) building good safety practices, in the "shine/sweep" category.

A

The main trait of a single-period model is that: A) inventory has limited value after a certain period of time. B) it has the largest EOQ sizes. C) the order quantity should usually equal the expected value of demand. D) supply is limited. E) the cost of a shortage cannot be determined accurately.

A

The objective of aggregate planning is to meet forecast demand while ________ over the planning period. A) minimizing cost B) maximizing service level C) minimizing stock out D) minimizing fixed cost E) all of the above

A

Under which of the following do planning tasks associated with job assignments, ordering, job scheduling, and dispatching typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) mission-related planning E) strategic planning

A

What directly results from disaggregation of an aggregate plan? A) a master production schedule B) priority scheduling C) a transportation matrix D) a capacity-demand matrix E) detailed work schedules

A

What lot-sizing technique is generally preferred when inventory holding costs are extremely high? A) lot-for-lot B) EOQ C) POQ D) the Wagner-Whitin algorithm E) All of the above are appropriate for the situation.

A

Which of the following actions is consistent with the use of level scheduling? A) use inventory to meet demand requirements B) use overtime to meet higher-than-average demand requirements C) vary production levels to meet demand requirements D) vary work force to meet demand requirements E) none of the above

A

Which of the following aggregate planning strategies is a demand option? A) changing price B) subcontracting C) varying production levels D) changing inventory levels E) using part-time workers

A

Which of the following best describes a gross material requirements plan? A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started B) an intermediate range plan for the scheduling of families of products C) a chart illustrating whether capacity has been exceeded D) a table that corrects scheduled quantities for inventory on hand E) a schedule showing which products are to be manufactured and in what quantities

A

Which of the following is NOT a key benefit of MRP? A) increased quality B) better response to customer orders C) faster response to market changes D) improved utilization of facilities and labor E) reduced inventory levels

A

Which of the following is a requirement of Q systems? A) perpetual inventory system B) constant order spacing C) variable lead time D) constant demand E) all of the above

A

Which of the following is specifically characterized by continuous and forced problem solving via a focus on throughput and reduced inventory? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban

A

Which of the following items is mostly likely managed using a single-period order model? A) Christmas trees B) canned food at the grocery store C) automobiles at a dealership D) metal for a manufacturing process E) gas sold to a gas station

A

Which of the following lot-sizing techniques results in the lowest holding costs? A) lot-for-lot B) EOQ C) POQ D) Wagner-Whitin algorithm E) the quantity discount model

A

A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing which of the following? a) postponement b) drop shipping c) channel assembly d) passing the buck e) float reduction

B

A manager is applying the transportation model of linear programming to solve an aggregate planning problem. Demand in period 1 is 100 units, and in period 2, demand is 150 units. The manager has 125 hours of regular employment available for $10/hour each period. In addition, 50 hours of overtime are available for $15/hour each period. If holding costs are $2 per unit each period, how many hours of regular employment should be used in period 1? (Assume demand must be met in both periods 1 and 2 for the lowest possible cost and that production is 1 unit per hour.) A) 100 B) 125 C) 150 D) 50 E) none of the above

B

A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs. A) $400 B) $800 C) $1200 D) Zero; this is a class C item. E) Cannot be determined because the unit price is not known.

B

Which one of the following is a concern expressed by suppliers in JIT partnerships? A) having too many customers B) delivery to the point of use C) having limited ability to respond to changes in product and quality D) large lot sizes E) customers' infrequent engineering changes

C

"An optimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods" best describes which of the following? A) the linear decision rule B) simulation C) the management coefficients model D) the transportation method E) graphical methods

D

A bakery wants to determine how many trays of doughnuts it should prepare each day. Demand is normal with a mean of 5 trays and standard deviation of 1 tray. If the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete. A) 5 B) 4 C) 6 D) 7 E) unable to determine with the above information

D

Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A) about 18 B) about 24 C) about 32 D) about 38 E) more than 40

E

Distortion in MRP systems can be minimized when safety stock is held at the: A) purchased component or raw material level. B) work-in-process level. C) finished goods level. D) A and B E) A and C

E

Effective use of MRP and other dependent demand models does not require which of the following? A) master production schedule B) bill of materials C) inventory availability D) lead times E) cost of individual components

E

If safety stock is desired, it should be built into which portion of MRP? A) any B) none C) raw materials D) finished goods E) either C or D

E

If the standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock? A) 8 units B) 10 units C) 16 units D) 64 units E) Cannot be determined without lead time data.

E

In JIT partnerships, suppliers have several concerns. Which of the following is NOT such a concern? A) desire for diversification B) poor customer scheduling C) small lot sizes D) producing high enough quality levels E) customers' infrequent engineering changes

E

Just-in-time systems make demands on layouts, including the need for: A) distance reduction. B) increased flexibility. C) reduced space and inventory. D) cross-trained, flexible employees. E) all of the above

E

Lead time for cakes is 2 days with daily demand of 10 cakes and a safety stock of ½ a day. Each container (kanban) holds 1 cake. What is the correct number of kanbans? A) 4 B) 1 C) 5 D) 10 E) 25

E

Lead time for computers is 5 days with daily demand of 25 and safety stock of 5 computers. If management wants to use 10 kanbans how many computers should each one hold? A) 25 B) 1 C) 5 D) 10 E) 13

E

Lean operations are known for their: A) employee development. B) supplier education. C) supplier partnerships. D) challenging jobs. E) All of the above are attributes of lean operations.

E

Employee empowerment is unnecessary in the Toyota Production System, because automation and powerful information systems reduce the need for employee creativity and decision making.

FALSE

In MRP, a "bucket" refers to a fixed order quantity, such as an EOQ.

FALSE

In a JIT system, product inspection adds value by identifying defective items.

FALSE

Increasing inventory exposes variability in production processes.

FALSE

JIT brings about competitive advantage by faster response to the customer regardless of cost.

FALSE

JIT systems carry inventory just in case something goes wrong.

FALSE

Level scheduling means producing at a constant rate, regardless of customer demands.

FALSE

MRP can be effective only if very accurate lot sizes are calculated in advance.

FALSE

Operations splitting sends pieces to the next operation before the entire lot is completed on the previous operation.

FALSE

TPS stands for Total Production Streamlining.

FALSE

The number of kanbans decreases as safety stock is increased.

FALSE

The quality management tool called poka-yoke is not relevant to JIT systems.

FALSE

With level schedules, a few large batches, rather than frequent small batches, are processed.

FALSE

ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.

False

ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

False

Advertising and promotion are methods of manipulating product or service supply in aggregate planning.

False

At the economic order quantity, holding costs are equal to product costs.

False

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

False

Cycle counting is an inventory control technique exclusively used for cyclical items.

False

In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.

False

In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately.

False

In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.

False

Insurance and taxes on inventory are part of the costs known as setup or ordering costs.

False

MRP is an excellent tool for scheduling components with variable lead times.

False

Once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may decrease compared to the optimal number of facilities based on total logistics costs only.

False

One of the demand options of aggregate planning is to vary the workforce by hiring or layoffs.

False

Plans for new product development generally fall within the scope of aggregate planning.

False

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 not a large expense for most firms.

False

The EOQ model is best suited for items whose demand is dependent on other products.

False

The aggregate planning process usually includes dispatching of individual jobs.

False

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

False

The objective of aggregate planning is usually to meet forecast demand while smoothing employment and driving down inventory levels over the planning period.

False

When using the low-cost strategy for supply chain management, a firm should use buffer stocks to ensure speedy supply.

False

Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

False

With the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.

False

Work-in-process inventory is devoted to maintenance, repair, and operating materials.

False

A common JIT layout tactic is to minimize distance.

TRUE

A kanban system requires that the process has little variability in lead time because shortages impact the entire production system.

TRUE

A scheduler may find that freezing the portion of the schedule closest to the due dates allows the production system to function and the schedule to be met.

TRUE

Closed-loop MRP systems allow production planners to move work between time periods to smooth the load or to at least bring it within capacity.

TRUE

Cross-training is a common JIT layout tactic to improve flexibility.

TRUE

DRP is a time-phased stock-replenishment plan for all levels of a distribution network.

TRUE

Firms may discover that, rather than adapting ERP to the way they do business, they have to adapt the way they do business to accommodate the ERP software.

TRUE

Hidden problems are generally uncovered during the process of reducing inventory.

TRUE

If X consists of one A and one B, and each A consists of one F and two Gs, then A is the "parent" component of G.

TRUE

In general, the lot-for-lot approach should be used whenever economical.

TRUE

JIT suppliers have concerns that the JIT firm's demands for small lot sizes are simply a way of transferring holding cost from the JIT firm to the suppliers.

TRUE

Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of dependent inventory models.

TRUE

MRP is generally practiced on items with dependent demand.

TRUE

Many suppliers feel that having a variety of customers is better than being tied to long-term contracts with one customer.

TRUE

One goal of JIT partnerships is the removal of in-plant inventory by delivery in small lots directly to the using department as needed.

TRUE

Planning bills of material are bills of material for "kits" of inexpensive items such as washers, nuts, and bolts.

TRUE

Product storage is an example of waste in the sense that no value is added.

TRUE

Reduced inventory levels and faster response to market changes are both benefits of MRP.

TRUE

Smoothing a resource requirements profile to stay within capacity limits may increase setup costs.

TRUE

TPS stands for Toyota Production System.

TRUE

The 5Ss—sort/segregate, simplify/straighten, shine/sweep, standardize, and sustain/self discipline—are important to lean production because they act as a means to reduce waste.

TRUE

The Toyota Production System requires that activities have built-in, automatic tests to signal problems.

TRUE

The first step in reducing setup times is the separation of setup into preparation activities and actual setup, so that as much work as possible can be done while the machine or process is operating.

TRUE

The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set up cost is small compared to holding cost.

TRUE

The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.

TRUE

The supply-chain systems that result from using ERP in the grocery industry are called efficient consumer response (ECR) systems.

TRUE

The time-phased product structure, unlike the bill of material, adds the concept of lead times.

TRUE

Time fences divide that segment of the master schedule that can be revised from that section that is "not to be rescheduled."

TRUE

Variability in manufacturing can occur because engineering drawings or specifications are incomplete or inaccurate.

TRUE

Waste is anything that does not add value from the consumer's perspective.

TRUE

Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.

TRUE

When implemented as a comprehensive operations strategy, JIT, TPS, and lean systems sustain competitive advantage and result in increased overall returns.

TRUE

Aggregate planning for fast food restaurants is very similar to aggregate planning in manufacturing, but with much smaller units of time.

True

Aggregate planning in manufacturing ties organizational strategic goals to a production plan.

True

Aggregate planning occurs over the medium or intermediate future of 3 to 18 months.

True

Finding an ideal mixed strategy is complicated by the huge number of possible strategies.

True

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

True

If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced.

True

In ABC analysis, "A" items are the most tightly controlled.

True

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

True

In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.

True

In the production order quantity (POQ) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger production/order quantity than in an otherwise identical EOQ problem.

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

Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon.

True

One advantage of cycle counting is that it maintains accurate inventory records.

True

One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.

True

One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.

True

One question that operations managers must answer when generating an aggregate plan is whether prices or other factors should be changed to influence demand.

True

Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.

True

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

True

Techniques for controlling the cost of labor in services include accurate scheduling of labor hours to assure quick response to customer demand, on-call labor for unexpected demand, flexibility of labor skills for reallocation of available labor, and flexibility in rate of output or hours of work to meet changing demand.

True

The demand for automobiles would be considered as independent demand.

True

The fixed-period inventory model can have a stockout during the review period as well as during the lead time, which is why fixed-period systems require more safety stock than fixed-quantity systems.

True

The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally

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 transportation method of linear programming is an optimizing approach to aggregate planning.

True

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

True

When developing an aggregate plan, one of the adjustable elements of capacity is the extent of subcontracting.

True

When safety stock is deemed absolutely necessary, the usual policy is to build it into (increase) the inventory requirement of the MRP logic.

True

A fast-food retailer that acquired a spice manufacturer would be practicing backward integration

True

A hotel room that goes unrented and an airline seat that goes unsold are both examples of perishable inventory in services.

True

Disaggregation: A) breaks the aggregate plan into greater detail. B) transforms the master production schedule into an aggregate plan. C) calculates the optimal price points for yield management. D) converts product schedules and labor assignments to a facility-wide plan. E) is an assumption required for the use of the transportation model in aggregate planning.

A

A firm wants to develop a level material use schedule based on the following data. What should be the setup cost? Desired lot size: 60 Annual demand: 40,000 Holding cost: $20 per unit per year Daily production rate: 320 Work days per year: 250 A) $0.45 B) $4.50 C) $45 D) $450 E) $500

A

A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level? A) .60 B) .20 C) .84 D) .40 E) unable to determine given the above information

A

A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level? A) 41 B) 55 C) 133 D) 140 E) 165

A

An order for 50 units of Product A and 60 of B has been placed. There are currently 25 units of Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C available. What are the net requirements for C? A) 115 B) 175 C) 240 D) 690 E) 700

A

By convention, what is the top level in a product structure? A) level 0 B) level 1 C) level T D) level 10 E) level 100

A

Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT? A) close relationships with trust B) close relationships with skepticism C) distant relationships with trust D) distant relationships with skepticism E) none of the above

A

A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order: A) all 4000 units at one time. B) 200 units per order. C) every 20 days. D) 10 times per year. E) none of the above

B

A product has annual demand of 100,000 units. The plant manager wants production to follow a four-hour cycle. Based on the following data, what setup cost will enable the desired production cycle? d = 400 per day (250 days per year), p = 4000 units per day, H = $40 per unit per year, and Q = 200 (demand for four hours, half a day). A) $2.00 B) $7.20 C) $18.00 D) $64.00 E) $1,036.80

B

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order. The revised EOQ is: A) three times as large. B) one-third as large. C) nine times as large. D) one-ninth as large. E) cannot be determined

B

A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is: A) unchanged. B) increased by less than 50%. C) increased by 50%. D) increased by more than 50%. E) cannot be determined

B

A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem? A) 61 B) 245 C) 300 D) 306 E) 490

B

ABC analysis is based upon the principle that: A) all items in inventory must be monitored very closely. B) there are usually a few critical items, and many items that are less critical. C) an item is critical if its usage is high. D) more time should be spent on class "C" items because there are many more of them. E) as with grade distributions in many MBA courses, there should be more medium-level "B" items than either "A" or "C" items.

B

An advantage of the fixed-period inventory system is that: A) safety stock will be lower than it would be under a fixed-quantity inventory system. B) there is no physical count of inventory items when an item is withdrawn. C) no inventory records are required. D) orders usually are for smaller order quantities. E) the average inventory level is reduced.

B

An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE? A) One hundred is the reorder point, and 14 is the order quantity. B) Fourteen is the reorder point, and 100 is the order quantity. C) The number 100 is a function of demand during lead time. D) Fourteen is the safety stock, and 100 is the reorder point. E) None of the above is true.

B

Characteristics of just-in-time partnerships do NOT include: A) removal of in-transit inventory. B) large lot sizes to save on setup costs and to gain quantity discounts. C) long-term contracts. D) produce with zero defects. E) focus on core competencies.

B

Cycle counting: A) is a process by which inventory records are verified once a year. B) eliminates annual inventory adjustments. C) provides a measure of inventory turnover. D) assumes that all inventory records must be verified with the same frequency. E) assumes that the most frequently used items must be counted more frequently.

B

Dependence on an external source of supply is found in which of the following aggregate planning strategies? A) varying production rates through overtime or idle time B) subcontracting C) using part-time workers D) back ordering during high demand periods E) hiring and laying off

B

Distribution resource planning (DRP) is: A) a transportation plan to ship materials to warehouses. B) a time-phased stock replenishment plan for all levels of a distribution network. C) a shipping plan from a central warehouse to retail warehouses. D) material requirements planning with a feedback loop from distribution centers. E) a material requirements planning package used exclusively by warehouses.

B

Firms making many different final products use ________ to facilitate production scheduling. A) planning bills B) modular bills C) phantom bills D) overdue bills E) gross requirements bills

B

For the lot-sizing technique known as lot-for-lot to be appropriate: A) future demand should be known for several weeks. B) setup cost should be relatively small. C) annual volume should be rather low. D) item unit cost should be relatively small. E) the independent demand rate should be very stable.

B

Great Lakes Barge and Baggage Company makes, among other things, battery-operated bilge pumps. Which of the following activities is NOT part of JIT? They: A) communicate their schedules to suppliers. B) produce in long production runs to reduce the impact of setup costs. C) use a pull system to move inventory. D) continuously work on reducing setup time. E) produce in small lots.

B

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, a 90 percent service level will require how much safety stock? A) 7 units B) 10 units C) 13 units D) 16 units E) 26 units

C

If the goals of JIT partnerships are met, which of the following is a result? A) For incoming goods, receiving activity and inspection are outsourced. B) In-transit inventory falls as suppliers are located closer to facilities. C) Suppliers maintain a variety of customers to reduce risk. D) In-plant inventory replaces in-transit inventory. E) All of the above are consequences of meeting the JIT partnership goals.

B

In aggregate planning, which one of the following is not a basic option for altering demand? A) promotion B) subcontracting C) back ordering D) pricing E) personal selling

B

In the service sector, which of the following aggregate planning strategies might direct your client to a competitor? A) using part-time workers B) subcontracting C) changing inventory level D) varying production rates through overtime or idle time E) varying work force size by hiring or layoffs

B

Industries in which revenue management techniques are easiest to apply are those where: A) use tends to be predictable, and pricing tends to be fixed. B) use tends to be predictable, and pricing tends to be variable. C) use tends to be uncertain, and pricing tends to be fixed. D) use tends to be uncertain, and pricing tends to be variable. E) All of the above, i.e., there is no difference.

B

The cook in a fast-food restaurant knows that 2 hamburger patties and an order of fries should be started for each car that is waiting in line. This is best an example of: A) keiretsu. B) kanban. C) push production. D) kaizen. E) EOQ.

B

The number of kanbans should be equal to which of the following? A) one B) the ratio of (demand during lead time + safety stock) to container size C) one-half of the EOQ D) one full day's production divided by the EOQ E) the ratio of demand during lead time to (container size + safety stock)

B

To use revenue management strategies, a business should have which combination of costs? A) high variable and high fixed B) low variable and high fixed C) high variable and low fixed D) low variable and low fixed E) either A or B

B

Under which of the following do planning tasks associated with production planning and budgeting, as well as setting employment, inventory, and subcontracting levels, typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) demand options E) strategic planning

B

What does TPS stand for? A) Total Production Streamlining B) Toyota Production System C) Taguchi's Production S's D) Total Process Simplification E) Transparent Processing System

B

Which choice below best describes the counterseasonal product demand option? A) producing such products as lawnmowers and sunglasses during the winter B) developing a mix of products that smoothes out their demands C) lowering prices when demand is slack D) using subcontractors only when demand is excessive E) the breaking of the aggregate plan into finer levels of detail

B

Which lot-sizing technique orders the quantity needed during a predetermined time between orders? A) economic order quantity B) periodic order quantity C) lot-for-lot D) time fencing E) part-period balancing

B

Which of the following is not characteristic of a TPS employee? A) knowledgeable B) strict job classifications C) know more about their job than anyone else D) empowered E) All of the above characterize a TPS employee.

B

Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban

B

Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering? A) The quantity of gross requirements for a child item is always equal to the quantity of planned order releases for its parent. B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly. C) The quantity of gross requirements for a child item is always equal to the quantity of gross requirements for its parent. D) The quantity and gross requirements for a child item is always equal to the quantity of net requirements for its parent. E) All of the above are true.

B

Which of the following statements regarding Amazon.com is FALSE? A) The company was opened by Jeff Bezos in 1995. B) The company was founded as, and still is, a "virtual" retailer with no inventory. C) The company is now a world-class leader in warehouse automation and management. D) The company uses both United Parcel Service and the U.S. Postal Service as shippers. E) Amazon obtains its competitive advantage through inventory management.

B

Which of the following statements regarding lot-sizing is TRUE? A) EOQ principles should be followed whenever economical. B) Too much concern with lot-sizing results in false accuracy. C) Lot-for-lot cannot be modified for scrap allowance or process constraints. D) The Wagner-Whitin algorithm simplifies lot size calculations. E) All of the above are true.

B

Which of the following statements regarding the production order quantity model is TRUE? A) It applies only to items produced in the firm's own production departments. B) It relaxes the assumption that all the order quantity is received at one time. C) It relaxes the assumption that the demand rate is constant. D) It minimizes the total production costs. E) It minimizes inventory.

B

Which of these aggregate planning strategies is a capacity option? A) back ordering B) using part-time workers C) counterseasonal product mixing D) changing price E) promotion

B

Which of these is among the demand options of aggregate planning? A) subcontracting B) back-ordering during high-demand periods C) changing inventory levels D) varying workforce size E) varying production rates through overtime or idle time

B

Which one of the following is NOT a layout tactic in a JIT environment? A) work cells for families of products B) fixed equipment C) minimizing distance D) little space for inventory E) poka-yoke devices

B

Which one of the following is not a benefit of JIT implementation? A) cost reduction B) variability increase C) rapid throughput D) quality improvement E) rework reduction

B

Which one of the following statements is TRUE regarding JIT inventory? A) It exists just in case something goes wrong. B) It is the minimum inventory necessary to keep a perfect system running. C) It hides variability. D) It is minimized with large lot production. E) It increases if setup costs decrease.

B

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand: Q* = √2DS/H A) is smaller than the holding cost per unit. B) is zero. C) is one-half of the economic order quantity. D) is affected by the amount of product cost. E) goes down if the holding cost per unit goes down.

C

A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? A) 16 B) 70 C) 110 D) 183 E) 600

C

A firm practices a pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and layoff cost is $5 per unit. Over the next year, what will be the sum of hiring and layoff costs? A) $500 B) $2,500 C) $7,500 D) $7,000 E) $12,500

C

A firm uses graphical techniques in its aggregate planning efforts. Over the next twelve months (its intermediate period), it estimates the sum of demands to be 105,000 units. The firm has 250 production days per year. In January, which has 22 production days, demand is estimated to be 11,000 units. A graph of demand versus level production will show that: A) the January requirement is below level production of 420 units. B) level production is approximately 1000 units per day. C) level production of 420 units per day is below the January requirement. D) level production is approximately 420 units per month. E) the firm must hire workers between December and January.

C

A material requirements plan contains information with regard to all of the following EXCEPT: A) quantities and required delivery dates of all subassemblies. B) quantities and required delivery dates of final products. C) the capacity needed to provide the projected output rate. D) inventory on hand for each final product. E) inventory on hand for each subassembly.

C

A paint company mixes ten different base colors into 3,000 different color options. If production scheduling is organized around the ten different base colors , then the bills of material are classified as which of the following? A) phantom B) planning C) modular D) low-level E) A and B

C

An order for 110 units of Product A has been placed. There are currently 60 units of Product A on hand. Each A requires 4 units of Part B. There are 20 units of B available. What are the net requirements for B? A) 20 B) 120 C) 180 D) 240 E) 440

C

An order for 110 units of Product M has been placed. There are currently 30 units of Product M on hand. Each M requires 4 units of Component N. There are 20 units of N on hand. What are the net requirements for N? A) 150 B) 170 C) 300 D) 320 E) 440

C

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item? A) $1.50 B) $2.00 C) $3.00 D) $150.00 E) not enough data to determine

C

Frito-Lay uses aggregate planning to match capacity with demand because of the ________ associated with its specialized processes. A) high variable cost and high fixed cost B) high variable cost and low fixed cost C) low variable cost and high fixed cost D) low variable cost and low fixed cost E) none of the above

C

If a load report (resource requirements profile) shows a work center scheduled beyond capacity: A) the company must add capacity by enlarging the facility. B) the company must add capacity by such tactics as overtime and subcontracting. C) the work center's load may be smoothed by such tactics as operations splitting or lot splitting. D) the aggregate plan must be revised. E) the Wagner-Whitin algorithm should be used to rebalance the load.

C

If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires how much safety stock? A) 28 units B) 30 units C) 49 units D) 59 units E) 114 units

C

In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. What is the standard deviation of demand during lead time? A) 15 units B) 100 units C) 154 units D) 500 units E) 13,125 units

C

In level scheduling, what is kept uniform from month to month? A) product mix B) inventory levels C) production/workforce levels D) demand levels E) sub-contracting levels

C

In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity? A) 24 B) 100 C) 141 D) 490 E) 600

C

JIT makes quality cheaper because: A) the cost of low quality can be hidden as inventory cost. B) JIT adds more buffers to the system. C) JIT prevents long runs of defects. D) B and C E) A, B and C

C

Lead time for computers is 7 days with daily demand of 5 computers and a safety stock of 1 day. Each kanban holds 8 computers. What is the correct number of kanbans? A) 4.5 B) 1 C) 5 D) 7 E) 8

C

Low-level coding means that: A) a final item has only a few levels in the BOM structure. B) the code being used is the code for the lowest level in the BOM structure. C) a component item is coded at the lowest level at which it appears in the BOM structure. D) the top level of the BOM is below level zero and that BOMs are not organized around the finished product. E) the lowest-paid staff member in the production department performs the coding.

C

MRP II is accurately described as: A) MRP software designed for services. B) MRP with a new set of computer programs that execute on microcomputers. C) material resource planning. D) an enhancement of MRP that plans for all levels of the supply chain. E) a new generation of MRP software that extends MRP to planning and scheduling functions.

C

Most inventory models attempt to minimize: A) the likelihood of a stockout. B) the number of items ordered. C) total inventory-based costs. D) the number of orders placed. E) the safety stock.

C

Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level? A) .5 B) 0 C) .07 D) 1 E) unable to determine given only the above information

C

The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this problem? A) 139 B) 174 C) 184 D) 365 E) 548

C

The two most basic inventory questions answered by the typical inventory model are: A) timing of orders and cost of orders. B) order quantity and cost of orders. C) timing of orders and order quantity. D) order quantity and service level. E) ordering cost and carrying cost.

C

Top executives tend to focus their attention on which type of forecasts? A) short-range B) intermediate-range C) long-range D) weather E) the forecast for the next day's absentee levels

C

What does the Japanese word "kanban" mean? A) low inventory B) employee empowerment C) card D) continuous improvement E) lot size of one

C

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system? A) modular bills B) time phasing C) time fences D) lot sizing E) closed loop system

C

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement? A) net requirements planning B) time fencing C) pegging D) backtracking E) leveling

C

What is the typical time horizon for aggregate planning? A) less than a month B) up to 3 months C) 3 to 18 months D) over one year E) over 5 years

C

Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)? A) Wagner-Whitin B) EOQ C) lot-for-lot D) POQ E) Silver-Meal

C

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A) price cuts or discounts B) promotion C) subcontracting D) counterseasonal products or services E) advertising

C

Which of the following characteristics makes revenue management UNATTRACTIVE to organizations that have perishable inventory? A) demand can be segmented B) service can be sold in advance of consumption C) capacity is easily changed D) variable costs are low and fixed costs are high E) demand fluctuates

C

Which of the following is FALSE concerning enterprise resource planning (ERP)? A) It attempts to automate and integrate the majority of business processes. B) It shares common data and practices across the enterprise. C) It is inexpensive to implement. D) It provides and accesses information in a real-time environment. E) ERP software promises reduced transaction costs.

C

Which of the following is NOT a source of variability? A) Employees, machines, and suppliers produce units late. B) Customer demand is unknown. C) Employees, machines, and suppliers produce units that conform to standards. D) Engineering drawings are inaccurate. E) Drawings or specifications are incomplete.

C

Which of the following is NOT an advantage of level scheduling? A) stable employment B) lower absenteeism C) matching production exactly with sales D) lower turnover E) more employee commitment

C

Which of the following is NOT an attribute of lean operations? A) eliminating almost all inventory through just-in-time techniques B) minimizing space requirements by reducing the distance a part travels C) pushing responsibility to the highest level possible through centralized decision making D) educating suppliers to accept responsibility for helping meet customer needs E) building worker flexibility through cross-training and reducing job classifications

C

Which of the following is NOT one of the Seven Wastes? A) overproduction B) transportation C) assignment D) defective product E) motion

C

Which of the following is NOT one of the four things needed for aggregate planning? A) a logical overall unit for measuring sales and output B) a method to determine the relevant costs C) a mathematical model that will minimize costs over the intermediate planning period D) an aggregate demand forecast for an intermediate planning period E) All of these are needed for aggregate planning.

C

Which of the following is NOT one of the successful techniques for controlling the cost of labor in services? A) accurate scheduling of labor-hours to assure quick response to customer demand B) an on-call labor resource that can be added or deleted to meet unexpected demand C) little flexibility in worker hours to decrease the burden on management D) flexibility of individual worker skills that permits reallocation of available labor E) flexibility in rate of output or hours of work to meet changing demand

C

Which of the following is an illustration of employee empowerment? A) UPS drivers are trained to perform several motions smoothly and efficiently. B) Unionization of the work place brings better morale and therefore better quality. C) "No one knows the job better than those who do it." D) all of the above E) none of the above

C

Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban

C

Which of the following statements about aggregate planning is TRUE? A) An advantage of the counterseasonal product and service mixing option is that it matches seasonal fluctuations without hiring/training costs. B) In aggregate planning, back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand. C) A pure chase strategy allows lower inventories when compared to a pure level scheduling. D) A disadvantage of subcontracting is that it may require skills or equipment outside the firm's areas of expertise. E) The option of varying workforce size by hiring or layoffs is used where the size of the labor pool is small.

C

Which of the following statements regarding Wheeled Coach is FALSE? A) Wheeled Coach has found competitive advantage through MRP. B) Wheeled Coach builds ambulances in a repetitive process. C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise. D) Wheeled Coach's MRP system maintains excellent record integrity. E) Low inventory and high quality are two positive outcomes of Wheeled Coach's use of MRP.

C

Which of the following statements regarding aggregate planning is TRUE? A) In a pure level strategy, production rates or work force levels are adjusted to match demand requirements over the planning horizon. B) A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies. C) Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon. D) Because service firms have no inventory, the pure chase strategy does not apply. E) A disadvantage of the option of changing inventory levels is that it forces abrupt production changes.

C

Which of the following statements regarding control of service inventories is TRUE? A) Service inventory is a fictional concept, because services are intangible. B) Service inventory needs no safety stock, because there's no such thing as a service stockout. C) Effective control of all goods leaving the facility is one applicable technique. D) Service inventory has carrying costs but no setup costs. E) Good personnel selection, training, and discipline are easy.

C

A disadvantage of the fixed-period inventory system is that: A) it involves higher ordering costs than the fixed quantity inventory system. B) additional inventory records are required. C) the average inventory level is decreased. D) since there is no count of inventory during the review period, a stockout is possible. E) orders usually are for larger quantities.

D

A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. Which of the following tactics would be most representative of following a chase strategy? A) add 100 units to inventory in the next period B) add 200 units to inventory in the next period C) hire workers to match the 100-unit difference D) lay off workers to match the 200-unit difference E) implement a lower price point to increase demand

D

A grocery store is attempting to implement a kanban system. Which of the following would not be an application of kanbans? A) An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts. B) A line of 5 people in the Chinese department signaling the department to heat 5 Crab Rangoon. C) A red light on top of the cashier's lane signals that the cashier needs additional change replenished. D) The meat department stocking up on turkeys before Thanksgiving. E) All of the above are kanban applications.

D

A manufacturer took the following actions to reduce inventory. Which of these is generally not accepted as a JIT action? A) It used a pull system to move inventory. B) It produced in ever smaller lots. C) It required deliveries directly to the point of use. D) It picked the supplier that offered the lowest price based on quantity discounts. E) It worked to reduce the company's in-transit inventory.

D

Aggregate planning would entail which of the following production aspects at BMW for a 12-month period? A) number of cars with a hi-fi stereo system to produce B) number of two-door vs. four-door cars to produce C) number of green cars to produce D) total number of cars to produce E) B, C, and D

D

All EXCEPT which of the following statements about ABC analysis are true? A) In ABC analysis, inventory may be categorized by measures other than dollar volume. B) ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume. C) ABC analysis is an application of the Pareto principle. D) ABC analysis suggests that all items require the same high degree of control. E) ABC analysis suggests that there are the critical few and the trivial many inventory items.

D

Among the advantages of cycle counting is that it: A) makes the annual physical inventory more acceptable to management. B) does not require the detailed records necessary when annual physical inventory is used. C) does not require highly trained people. D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory. E) does not need to be performed for less expensive items.

D

Demand for a given item is said to be dependent if: A) it originates from the external customer. B) there is a deep bill of material. C) the finished products are mostly services (rather than goods). D) there is a clearly identifiable parent. E) the item has several children.

D

Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.

D

Enterprise resource planning (ERP): A) seldom requires software upgrade or enhancement. B) does not integrate well with functional areas other than operations. C) is inexpensive to implement. D) automates and integrates the majority of business processes. E) all of the above

D

Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes? A) overproduction B) queues C) transportation D) inventory E) defective product

D

If demand is not uniform and constant, then stockout risks can be controlled by: A) increasing the EOQ. B) spreading annual demand over more frequent, but smaller, orders. C) raising the selling price to reduce demand. D) adding safety stock. E) reducing the reorder point.

D

In MRP, the number of units projected to be available at the beginning of each time period refers to: A) net requirements. B) scheduled receipts. C) planned order releases. D) projected on hand. E) the amount necessary to cover a shortage.

D

It is week 1 and there are currently 20 As in stock. We need 300 As at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week, when and how large of an order should be placed to meet the requirement of 300 As? A) Week 1, 300 As B) Week 1, 40 As C) Week 5, 40 As D) Week 4, 40 As E) Week 4, 300 As

D

Kanban is associated with all EXCEPT which of the following? A) small lot sizes B) signals, such as cards, lights, or flags C) moving inventory only as needed D) increased material handling E) reductions in inventory

D

Revenue (or yield) management is best described as: A) a situation where management yields to labor demands. B) a situation where the labor union yields to management demands. C) a process designed to increase the rate of output. D) allocation of scarce resources to customers at prices that will maximize revenue. E) management's selection of a product mix yielding maximum profits.

D

The proper quantity of safety stock is typically determined by: A) using a single-period model. B) carrying sufficient safety stock so as to eliminate all stockouts. C) multiplying the EOQ by the desired service level. D) setting the level of safety stock so that a given stockout risk is not exceeded. E) minimizing total costs.

D

The purpose of safety stock is to: A) replace failed units with good ones. B) eliminate the possibility of a stockout. C) eliminate the likelihood of a stockout due to erroneous inventory tally. D) control the likelihood of a stockout due to variable demand and/or lead time. E) protect the firm from a sudden decrease in demand.

D

What is the effort to plan the coordination of demand forecasts with functional areas of the firm and its supply chain? A) enterprise resource planning B) material requirements planning C) capacity planning D) sales and operations planning E) new product development

D

What is the primary purpose of the basic economic order quantity model shown below? Q* = √2DS/H A) to calculate the reorder point, so that replenishments take place at the proper time B) to minimize the sum of carrying cost and holding cost C) to maximize the customer service level D) to minimize the sum of setup cost and holding cost E) to calculate the optimum safety stock

D

Which choice best describes level scheduling? A) Daily production is variable from period to period. B) Subcontracting, hiring, and layoffs manipulate supply. C) Price points are calculated to match demand to capacity. D) Inventory goes up or down to buffer the difference between demand and production. E) Overtime is used to handle seasonal demand fluctuations.

D

Which of the following aggregate planning methods does not work if hiring and layoffs are possible? A) the linear decision rule B) simulation C) the management coefficients model D) the transportation method E) graphical methods

D

Which of the following aggregate planning strategies is a capacity option? A) influencing demand by changing price B) counterseasonal product mixing C) influencing demand by extending lead times D) changing inventory levels E) influencing demand by back ordering

D

Which of the following aggregate planning strategies is known to lower employee morale? A) yield management B) counterseasonal product and service mixing C) changing inventory levels D) varying work force size by hiring or layoffs E) back ordering during high demand periods

D

Which of the following is NOT an assumption of the economic order quantity model shown below? Q* = √2DS/H A) Demand is known, constant, and independent. B) Lead time is known and constant. C) Quantity discounts are not possible. D) Production and use can occur simultaneously. E) The only variable costs are setup cost and holding (or carrying) cost.

D

Which of the following is NOT consistent with level scheduling? A) varying the use of subcontracting B) finding alternative work for employees during low-demand periods C) using built-up inventory to meet demand requirements D) varying production levels and/or work force to meet demand requirements E) All of the above are inconsistent with the pure level strategy.

D

Which of the following is NOT one of the four main types of inventory? A) raw material inventory B) work-in-process inventory C) maintenance/repair/operating supply inventory D) safety stock inventory E) finished-goods inventory

D

Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage.

FALSE

Which of the following is TRUE regarding the POQ lot-sizing method? A) Each POQ interval is recalculated at the time of the order release. B) Each order quantity and POQ interval are recalculated at the time of the order release. C) The POQ interval and all order quantities remain fixed throughout the planning horizon. D) Each order quantity is recalculated at the time of the order release. E) POQ lot sizes are always at least as large as the EOQ lot sizes would be.

D

Which of the following is characteristic of lean operations? A) inventory buffers between each workstation to minimize system downtime B) easy, mindless jobs C) specialty workers with no cross-training D) low space requirements E) no supplier partnerships

D

Which of the following is not a goal of JIT partnerships? A) removal of unnecessary activities B) removal of in-plant inventory C) removal of in-transit inventory D) inspect all incoming shipments to ensure zero defects E) All of the above are goals of JIT partnerships.

D

Which of the following is the term used for intermediate-range capacity planning with a time horizon of three to eighteen months? A) material requirements planning B) enterprise resource planning C) strategic planning D) aggregate planning E) job scheduling

D

Which of the following statements about ABC analysis is FALSE? A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. B) In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have. C) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. E) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.

D

Which of the following statements about quantity discounts is FALSE? A) The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. B) In inventory management, item cost becomes relevant to order quantity decisions when a quantity discount is available. C) If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. D) The larger the annual demand, the less attractive a discount schedule will be. E) The smaller the ordering cost, the less attractive a discount schedule will be.

D

Which of the following statements about the basic EOQ model is FALSE? A) If the setup cost were to decrease, the EOQ would fall. B) If annual demand were to double, the number of orders per year would increase. C) If the ordering cost were to increase, the EOQ would rise. D) If annual demand were to double, the EOQ would also double. E) All of the above statements are true.

D

Which of the following statements regarding MRP in services is TRUE? A) MRP is for manufacturing only, and it is not applicable to services. B) MRP can be used in services, but only in those that offer very limited customization. C) MRP only works in services for demand that is independent. D) Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling. E) None of the above is true.

D

Which of the following statements regarding a pull system is TRUE? A) Large lots are pulled from upstream stations. B) Work is pulled to the downstream stations before it is actually needed. C) Manufacturing cycle time is increased. D) Problems become more obvious. E) None of the above is true of a pull system.

D

Which of the following would NOT generally be a motive for a firm to hold inventories? A) to decouple various parts of the production process B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand C) to take advantage of quantity discounts D) to minimize holding costs E) to hedge against inflation

D

Which of these statements about the production order quantity model is FALSE? A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. B) Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. C) Average inventory is less than one-half of the production order quantity. D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. E) None of the above is false.

D

Which one of the following is a characteristic of a JIT partnership? A) third-party logistics never used B) maximal product specifications imposed on supplier C) active pursuit of vertical integration D) removal of incoming inspection E) frequent deliveries in large lot quantities

D

Which one of the following scenarios represents the use of a kanban to reduce inventories? A) A supervisor tells the operators to stay busy and start producing parts for next month. B) A "supplier" work center signals the downstream workstation that a batch has been completed. C) A supervisor signals to several work centers that the production rate should be changed. D) A "customer" work center signals to the "supplier" workstation that more parts are needed. E) An operator asks the next station's operator to help him fix his machine.

D

Who is credited with coining the phrase, "Inventory is evil"? A) Poka Yoke B) Pat "Keiretsu" Morita C) Kanban Polka D) Shigeo Shingo E) Taiichi Ohno

D

A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified? A) "pseudo" B) planning C) modular D) low-level E) A and B

E

ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A) item quality B) unit price C) the number of units on hand D) annual demand E) annual dollar volume

E

Aggregate planning for service firms that provide intangible output deals mainly with: A) smoothing the production rate and finding the optimal size of the workforce. B) capital investment decisions. C) centralized purchasing. D) centralized production. E) planning for human resource requirements and managing demand.

E

An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following? A) production rates B) labor levels C) inventory levels D) overtime work E) facility capacity

E

Capacity planning in closed-loop MRP: A) utilizes feedback about workload from each work center. B) may make use of resource requirements profiles (load reports). C) may smooth work center loads with such tactics as overlapping and lot splitting. D) does not add capacity, but rather seeks effective use of existing capacity. E) All of the above are true.

E

Manufacturing cycle time is best defined as the: A) length of the work shift, expressed in minutes per day. B) time it takes a unit to move from one workstation to the next. C) time between the start of one unit and the start of the next unit. D) sum of all the task times to make one unit of a product. E) time from raw materials receipt to finished product exit.

E

Revenue management is MOST likely to be used in which one of the following situations? A) a fast food restaurant with wide demand fluctuations during the day B) a dental clinic that wants to fill its appointment book C) a firm with a good counterseasonal product mix D) a shipping company that can change its fleet size easily E) an airline attempting to fill "perishable" seats at maximum revenue

E

Service level is: A) the probability of stocking out. B) the probability of not stocking out. C) something that should be minimized in retail. D) calculated as the cost of a shortage divided by (the cost of shortage + the cost of overage) for single-period models. E) B and D

E

The 5Ss: A) have the "flavor" of a housekeeping list. B) are a checklist for lean operations. C) have become a list of seven items in American practice. D) can be used to assist with necessary changes in organizational culture. E) All of these are true.

E

The minimum record accuracy required for successful MRP is approximately which of the following? A) lower than 90% B) 90% C) 95% D) 97% E) 99%

E

What does the POQ interval equal? A) the number of periods of average demand covered by the safety stock B) the same number of periods that are on the "not to be rescheduled" side of the time fence C) EOQ / maximum gross requirement D) the number of periods until the incoming projected on hand runs out E) EOQ / average demand per period

E

What is the difference between P and Q inventory systems? A) order size B) order spacing C) maximum service level D) lead time length E) A and B

E

When quantity discounts are allowed, the cost-minimizing order quantity: A) is always an EOQ quantity. B) minimizes the sum of holding and ordering costs. C) minimizes the unit purchase price. D) may be a quantity below that at which one qualifies for that price. E) minimizes the sum of holding, ordering, and product costs.

E

Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones? A) housing costs B) material handling costs C) labor cost D) investment costs E) pilferage, scrap, and obsolescence

E

Which of the following aggregate planning options attempts to manipulate product or service demand? A) inventories B) part-time workers C) subcontracting D) overtime/idle time E) price cuts

E

Which of the following is FALSE regarding the links between JIT and quality? A) Inventory hides bad quality; JIT immediately exposes it. B) JIT reduces the number of potential sources of error by shrinking queues and lead times. C) As quality improves, fewer inventory buffers are needed; in turn, JIT performs better. D) If consistent quality exists, JIT allows firms to reduce all costs associated with inventory. E) JIT increases the cost of obtaining good quality.

E

Which of the following is NOT a concern of suppliers as they prepare to enter into JIT partnerships? A) Suppliers feel that they would be less at risk if they contracted with more than one customer. B) Suppliers are concerned that customers will present frequent engineering changes with inadequate lead time to deal with them. C) Suppliers feel that their processes are suited for larger lot sizes than the customer wants. D) Suppliers are concerned that frequent delivery of small quantities is economically prohibitive. E) All of the above represent JIT supplier concerns.

E

Which of the following is NOT a goal of JIT partnerships? A) removal of unnecessary activities B) removal of in-plant inventory C) removal of in-transit inventory D) obtain improved quality and reliability E) All of the above are goals of JIT partnerships.

E

Which of the following is NOT an input to S&OP? A) capacity decisions B) supply-chain support C) workforce D) inventory on hand E) master production schedule

E

Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation? A) The material plan must meet both schedule requirements and facility capabilities. B) The plan must be executed as designed. C) Inventory investment must be minimized. D) Excellent record integrity must be maintained. E) The process must adhere to stringent quality control standards.

E

Which of the following is TRUE regarding the steps to reducing setup times? A) The first step involves performing as much setup preparation as possible while the process/machine is operating. B) The cycle of steps is repeated until setup time is reduced to under a minute. C) The standardization of both tooling and work procedures is advantageous to setup time reduction. D) Move material closer and improve material handling are done before operator training. E) All of the above are true.

E

Which of the following is a function of inventory? A) to decouple various parts of the production process B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand C) to take advantage of quantity discounts D) to hedge against inflation E) All of the above are functions of inventory.

E

Which of the following is an element of inventory holding costs? A) housing costs B) material handling costs C) investment costs D) pilferage, scrap, and obsolescence E) All of the above are elements of inventory holding costs.

E

Which of the following is consistent with a pure chase strategy? A) vary production levels to meet demand requirements B) vary work force to meet demand requirements C) vary production levels and work force to meet demand requirements D) little or no use of inventory to meet demand requirements E) All of the above are consistent with a pure chase strategy.

E

Which of the following is generally found in most lean environments? A) a push or pull system, depending upon the rate of demand B) a push system for high margin items and a pull system for low margin items C) a push system for purchased parts and a pull system for manufactured parts D) push systems E) pull systems

E

Which of the following should be higher in P systems than Q systems? A) lead time B) demand C) order size D) order spacing E) safety stock

E

Which of the following statements about the basic EOQ model is TRUE? A) If the ordering cost were to double, the EOQ would rise. B) If annual demand were to double, the EOQ would increase. C) If the carrying cost were to increase, the EOQ would fall. D) If annual demand were to double, the number of orders per year would increase. E) All of the above statements are true.

E

Which of the following statements best compares modular bills and phantom bills? A) Both pertain to assemblies that are not inventoried. B) There is no difference between the two. C) Both pertain to assemblies that are inventoried. D) Modular bills are used for assemblies that are not inventoried, unlike phantom bills. E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.

E

Which of the following statements regarding aggregate planning in services is FALSE? A) Approaches to aggregate planning differ by the type of service provided. B) Some service organizations conduct aggregate planning in exactly the same way as manufacturing firms, but with demand management taking a more active role. C) Aggregate planning in some service industries may be easier than in manufacturing. D) Labor is the primary aggregate planning vehicle. E) Level scheduling is far more common than using a chase strategy.

E

Which of the following statements regarding the gross material requirements plan is TRUE? A) It shows total demand for an item. B) It shows when an item must be ordered from a supplier or when production must be started. C) It combines a master production schedule with the time-phased schedule. D) It requires several inputs, including an accurate bill of material. E) All of the above are true.

E

Which of the following statements regarding the reorder point is TRUE? A) The reorder point is that quantity that triggers an action to restock an item. B) There is a reorder point even if lead time and demand during lead time are constant. C) The reorder point is larger than d × L if safety stock is present. D) A shorter lead time implies a smaller reorder point. E) All of the above are true.

E

Which of the following would most likely fall under the scope of only an operations manager? A) research and development B) new product plans C) capital investments D) facility location/capacity E) setting inventory levels

E

Which one of the following statements is TRUE about the kanban system? A) The quantities in the containers are usually large to reduce setup costs. B) It is associated with a push system. C) It is useful to smooth operations when numerous quality problems occur. D) The supplier workstation signals the customer workstation as soon as a batch is completed. E) The customer workstation signals to the supplier workstation when production is needed.

E

By convention, the top level in a product structure is designated level 1.

FALSE

Customer demand will always remain an unknown, so it is not considered a source of variability.

FALSE

"Phantom bills" are bills of material for subassemblies that do not exist in reality.

FALSE

A dependent demand item is so called because its demand is dependent on customer preferences.

FALSE

A push system means providing the next station with exactly what is needed when it is needed.

FALSE

Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the master production schedule.

true

Gross material requirements do not take into account the amount of inventory on hand.

true

If 100 units of Q are needed and 10 are already in stock, then the gross requirement is 100 and the net requirement is 90.

true

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 distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following? a) double marginalization b) the bullwhip effect c) CPFR d) postponement e) vendor-managed inventory

B

Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas? a) trucking b) railroads c) airfreight d) waterways e) pipelines

C

The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is: a) a standard use of the make-or-buy decision b) not allowed by the ethics code of the Supply Management Institute c) offshoring d) outsourcing e) keiretsu

D

Which of the following is NOT an opportunity for effective management in the supply chain? a) accurate "pull" data b) vendor-managed inventory c) postponement d) local optimization e) CPFR

D

All EXCEPT which of the following are "opportunities" in managing the integrated supply chain? a) postponement b) drop shipping c) blanket orders d) standardization e) line balancing

E

The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has reduced the overall level of supply chain risk.

False

The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.

False

The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.

False

Waterways are an attractive distribution system when speed is more important than shipping cost.

False

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

True

Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories

True

While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are negotiated.

True

By which distribution system is more than 90 percent of U.S. coal shipped? a) railroads b) trucks c) waterways d) pipelines e) none of the above

A

Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? A) 12.50 B) 10.00 C) 42.00 D) 4.16 E) 20.00

A

Distribution management focuses on which of the following? a) the outbound flow of products b) incoming materials c) allocation of demand among suppliers d) setting dividend rates e) balancing an assembly line

A

Local optimization is a supply-chain complication best described as: a) optimizing one's local area without full knowledge of supply chain needs b) obtaining very high production efficiency in a decentralized supply chain c) the prerequisite of global optimization d) the result of supply chains built on suppliers with compatible corporate cultures e) the opposite of the bullwhip effect

A

Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions? a) purchasing b) postponement c) break-bulk activities d) consolidation point e) cross-docking

A

What are the four stages of supplier selection? a) supplier evaluation, supplier development, negotiations, and contracting b) supplier evaluation, negotiations, supplier acquisition, and supplier development c) introduction, growth, maturity, and decline d) supplier evaluation, supplier development, negotiations, and centralized purchasing e) negotiations, contracting, centralized purchasing, and E-procurement

A

What is the practice of keeping a product generic as long as possible before customizing? a) postponement b) keiretsu c) vendor-managed inventory d) forward integration e) backward integration

A

What term describes a supply chain that is designed to optimize both forward and reverse flows? A) closed-loop supply chain B) full-journey supply chain C) circular supply chain D) network supply chain E) recycled supply chain

A

What type of negotiating strategy requires the supplier to open its books to the purchasers? a) cost-based price model b) market-based price model c) competitive bidding d) price-based model e) transparent negotiations

A

Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy? a) product development skills b) cost c) capacity d) speed e) flexibility

A

With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)? a) 1 b) 2 c) 3 d) equal to the total number of components e) equal to the number of countries to which the final product is sold

A

A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? a) horizontal integration b) forward integration c) backward integration d) current transformation e) keiretsu

B

Designing distribution networks to meet customer expectations suggests what three criteria? a) rapid response, service, and cost b) rapid response, product choice, and service c) product choice, cost, and service d) cost, process choice, and service e) rapid response, cost, and process choice

B

E-procurement: a) works best in long-term contract situations but is not suited for auctions b) is the same thing as Internet purchasing c) has many benefits but requires a lot of paperwork d) is illegal in all states except Nevada and New Jersey e) all of the above are true of e-procurement

B

Vertical integration appears particularly advantageous when the organization has: a) a very specialized product b) a large market share c) a very common, undifferentiated product d) little experience operating an acquired vendor e) purchases that are a relatively small percent of sales

B

Which of the following is NOT an advantage of a virtual company? a) speed b) total control over every aspect of the organization c) specialized management expertise d) low capital investment e) flexibility

B

Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model? A) Make B) Sell C) Plan D) Source E) Return

B

Which sourcing strategy is particularly common when the products being sourced are commodities? a) few suppliers b) many suppliers c) keiretsu d) vertical integration e) virtual companies

B

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? a) horizontal integration b) forward integration c) backward integration d) current transformation e) job expansion

C

Among which of the following industries are purchasing costs the LOWEST percentage of sales? a) automobiles b) petroleum c) restaurants d) lumber e) chemicals

C

Drop shipping: a) is equivalent to cross-docking b) is the opposite of a blanket order c) means the supplier will ship directly to the end consumer, rather than to the seller d) is the same thing as keiretsu e) is a good reason to find a new firm to ship your products

C

In what type of auction does a buyer initiate the process by submitting a description of the desired product or service? a) traditional b) buyer c) Dutch d) French e) Mexican

C

The Institute for Supply Management: a) establishes laws and regulations for supply management b) is an agency of the United Nations charged with promoting ethical conduct globally c) publishes the principles and standards for ethical supply management conduct d) prohibits backward integration into developing economies e) grants Ph.D. degrees in purchasing

C

The Japanese concept of a company coalition of suppliers is: a) poka-yoke b) kaizen c) keiretsu d) dim sum e) illegal

C

What three logistics-related costs are relevant when analyzing the choice of number of facilities in a distribution network? a) inventory costs, production costs, and transportation costs b) inventory costs, production costs, and facility costs c) inventory costs, transportation costs, and facility costs d) facility costs, production costs, and transportation costs e) facility costs, inventory costs, and marketing costs

C

When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following? a) keiretsu b) virtual companies c) joint venture d) vertical integration e) few suppliers

C

Which of the following best describes vertical integration? a) sell products to a supplier or a distributor b) develop the ability to produce products that complement the original product c) produce goods or services previously purchased d) develop the ability to produce the specified good more efficiently than before e) build long-term partnerships with few suppliers

C

Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other? a) outsourcing b) dual-sourcing c) cross-sourcing d) backup-sourcing e) parallel-sourcing

C

Which of the following is NOT an advantage of the "few suppliers" sourcing strategy? a) suppliers have a learning curve that yields lower transaction and production costs b) suppliers are more likely to understand the broad objectives of the end customer c) less vulnerable trade secrets d) creation of value by allowing suppliers to have economies of scale e) suppliers' willingness to provide technological expertise

C

Which of the following statements is true regarding the leverage of supply chain savings? a) Supply chain leverage is about the same for all industries b) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales c) Supply chain savings exert more leverage as the firm's net profit margin decreases d) Supply chain leverage depends only upon the percent of sales spent in the supply chain e) none of the above is true

C

Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain? a) suppliers b) distributors c) wholesaleers d) retailers e) landscaping contractors

E

A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing which of the following? a) postponement b) cross-docking c) channel assembly d) drop shipping e) float reduction

D

A disadvantage of the "few suppliers" sourcing strategy is: a) the risk of not being ready for technological change b) the lack of cost savings for customers and suppliers c) possible violations of the Sherman Antitrust Act d) the high cost of changing partners e) the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer

D

As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why? a) Transportation and inventory costs first decline steeply, then rise, while facility costs always rise b) Transportation costs always decline, but eventually the rise in facility and inventory costs outweigh the declining transportation costs. c) Facility costs first decline steeply, then rise, while transportation and inventory costs always rise. d) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise. e) Inventory costs first decline steeply, then rise, while transportation and facility costs always rise

D

Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of which of the following? a) vendor-managed inventory b) standardization c) backward integration d) postponement e) timely customization

D

Outsourcing: a) transfers traditional internal activities to outside vendors b) utilizes the efficiency that comes with specialization c) allows the outsourcing firm to focus on its key success factors d) all of the above are true of outsourcing e) none of the above is true of outsourcing

D

What are the three classic types of negotiation strategies? a) supplier evaluation, supplier development, and supplier selection b) Theory X, Theory Y, and Theory Z c) many suppliers, few suppliers, and keiretsu d) cost-based price model, market-based price model, and competitive bidding e) traditional auctions, reverse auctions, and online exchanges

D

Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels? a) supplier qualification b) product tracking c) independent audits d) refrigeration e) just-in-time delivery

D

Which of the following is NOT a condition that favors the success of vertical integration? a) availability of capital b) availability of managerial talent c) sufficiently high demand d) small market share e) all of the above favor the success of vertical integration

D

Which of the following is NOT a typical benefit of centralized purchasing? a) leverage purchase volume for better pricing b) develop specialized staff expertise c) reduce the duplication of tasks d) reduce lead times e) promote standardization

D

Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver? a) use multiple suppliers b) effective contracts with penalties c) subcontractors on retainer d) require overnight delivery e) pre-planning

D

Which of the following is NOT true about reverse logistics as compared to forward logistics? A) Inventory management is not consistent. B) Distribution costs are less directly visible. C) Pricing is dependent upon many factors. D) Speed is often very important. E) Forecasting is more uncertain.

D

Which one of the following is NOT one of the six sourcing strategies? a) negotiation with many suppliers b) vertical integration c) keiretsu d) short-term relationships with few suppliers e) virtual companies

D

While freight rates are often based on very complicated pricing systems, in general, the primary freight price factor is based on which of the following attributes? a) damage record b) on-time delivery c) door-to-door service d) speed of shipment e) consolidation capabilities

D

Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold? A) 12.50 B) 5.20 C) 2.60 D) 0.08 E) 4.16

E

For which corporate strategy(ies) should supply chain inventory be minimized? a) low cost b) response c) differentiation d) low cost and response e) low cost and differentiation

E

In supply chain management, ethical issues: A) are particularly important because of the enormous opportunities for abuse. B) may be guided by company rules and codes of conduct. C) become more complex the more global is the supply chain. D) may be guided by the principles and standards of the Institute for Supply Management. E) All of the above are true.

E

TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of which of the following? a) blanket orders b) standardization c) postponement d) lot size reduction e) single-stage control of replenishment

E

The bullwhip effect: a) occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers b) results in increasing fluctuations at each step of the sequence c) increases the costs associated with inventory in the supply chain d) occurs because of the distortions in information in the supply chain e) all of the above are true

E

What term is used to describe the outsourcing of logistics? a) e-logistics b) shipper-managed inventory (SMI) c) hollow logistics d) sub-logistics e) third-party logistics (3PL)

E

Which of the following best describes Vizio's sourcing strategy? a) few suppliers b) keiretsu c) joint venture d) vertical integration e) virtual company

E

Which of the following devices represents an opportunity for technology to improve security of container shipments? a) devices that identify truck and container location b) devices that sense motion c) devices that measure radiation or temperature d) devices that can communicate the breaking of a container lock or seal e) all of the above

E

Which of the following is an advantage of the postponement technique? a) reduction in automation b) early customization of the product c) better quality of the product d) reduction in training costs e) reduction in inventory investment

E

Which of the following statements does NOT accurately explain what occurs when the number of facilities in a distribution network increases? a) response time decreases b) profit first increases, then decreases c) total logistics costs first decrease, then increase d) inventory costs increase e) response time first decreases, then increases

E

Which of the following would NOT be subject to negotiation between buyer and supplier? a) price b) credit and delivery terms c) quality standards d) cooperative advertising agreements e) all of the above could be negotiated

E

A blanket order is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

True

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

True

Benchmark firms have driven down costs of supply-chain performance.

True

Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.

True

Drop shipping results in time and shipping cost savings.

True

Logistics management can provide a competitive advantage through improved customer service.

True

One classic type of negotiation strategy is the market-based price model.

True

One function of inventory is to take advantage of quantity discounts.

True

Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.

True

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

True

Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

True

Savings in the supply chain exert more leverage as the firm's net profit margin decreases.

True