OM TEST

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

False

True or false? Developing long-term, "partnering" relationships with a few suppliers is a long-standing American purchasing strategy.

False

True or false? In the vendor evaluation phase, most companies will use the same list of criteria and the same criteria weights.

False

True or false? McDonald's was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.

False

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

False

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

False

True or 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

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

False

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

False

True or false? Waterways are an attractive distribution system when speed is more important than shipping cost.

False

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

False

True or false? With the growth of just-in-time practices, railroads have made large gains in the share of the nation's transport that they haul.

False

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

False

The purchasing approach that holds the suppliers responsible for maintaining the necessary technology, expertise, and forecasting ability plus cost, quality, and delivery competencies is

many suppliers

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

outsourcing

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

postponement

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

postponement

The Institute for Supply Management

publishes the principles and standards for ethical supply management conduct

ABC analysis is used to establish policies that focus on the few critical parts and not the many trivial ones (the Pareto Principle)

true

Control of Service Inventories can be a critical component of profitability

true

Control of Service Inventories losses may come from shrinkage or pilferage

true

an advantage of cycle counting is Eliminates annual inventory adjustment

true

an advantage of cycle counting is Eliminates shutdowns and interruptions

true

an advantage of cycle counting is Maintains accurate inventory records

true

an advantage of cycle counting is Trained personnel audit inventory accuracy

true

in ABC analysis other criteria than annual dollar volume may be used

true

1. Volkswagen's Rio de Janeiro plant is an excellent example of traditional supply chain management.

False

10. Outsourcing refers to transferring a firm's activities that have traditionally been internal to outside vendors in other countries.

False

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

False

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

False

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

False

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

False

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

fasle

which of the following statements regardin fed ex is true

fedex believes the hub system helps reduc mishandling and delays due to better controls

which of the following is the best example for the proximity rule that, for service firms, proximity to market is the most important location factor

few people will travel out of state for a haircut

Outsourcing

transfers traditional internal activities to outside vendors, utilizes the efficiency which comes with specialization, lets the outsourcing firms focus on its critical success factors

which of these factors would be considered when making a location decision at the region/community level?

proximity to raw materials and customers

the Institute for Supply Management

publishes the principles and standards for ethical supply management conduct

E-procurement

purchasing facilitated through the Internet

Which one of the following statements about purchasing is true

purchasing has an impact on the quality of the goods and services sold

which of the following is a location analysis technique typically employed by a service organization

purchasing power analysis

which of the following is most like to affect the location strategy of a manufacturing firms

purchasing power of drawing area

By which distribution system is 90 percent of the nation's coal shipped?

railroads

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

railroads

by which distribution system is 90 percent of the nation's coal shipped?

railroads

Which of the following is an advantage of the postponement technique?

reduction in inventory investment

in location planning, environmental regulations, cost and availability of utilities, and taxes are

regional, community factors

the traffic counts and demographic analysis of drawing area are associated with

service location decisions

which of the following is not among the eight determinants of revenue and volume for a service firm?

shipment cost of finished goods

Drop shipping

shipping directly from the supplier to the end consumer, rather than from the seller, saving both time and re-shipping costs

Which one of the following is not a supply chain strategy?

short-term relationships with few suppliers

lean production

supplies the customer with their exact wants when the customer wants it without waste

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

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

holding costs

the costs of holding or "carrying" inventory over time

ordering costs

the costs of placing an order and receiving goods

independent demand

the demand for the item is independent of the demand for any other item in inventory

a disadvantage of the "few suppliers" strategy is

the high cost of changing parners

A disadvantage of the "few suppliers" strategy is

the high cost of changing partners

Bullwhip effect

the increasing fluctuation in orders that often occurs as orders move through the supplychain

which of the following is not one of the predictive variable choses by the profitability regression model used by the la quinta inns

the number of inns in a region

Shadow Price

the value of one additional unit of a scarce resource.

What term is used to describe the outsourcing of logistics?

third party logistics

In the make-or-buy decision, one of the reasons for making

to assure adequate supply in terms of quantity

In the make-or-buy decision, one of the reasons for making is:

to assure adequate supply in terms of quantity.

Which of the following is a function of inventory?

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

The primary purpose of the basic economic order quantity model shown below is

to minimize the sum of setup cost and holding cost

In the make-or-buy decision, which of the following is not a reason for buying?

to obtain desired quality

Which of the following best describes vertical integration?

to produce goods or service previously purchased

Which of the following is not an advantage of a virtual company?

total control over every aspect of the organization

on the crossover chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity at which

total costs are equal for 2 alternative locations

Most inventory models attempt to minimize

total inventory based cost

Outsourcing

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

production and transportation costs are always considered in which of the following location design methods

transportation model

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

true

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

true

14. Reducing distance is a common JIT goal.

true

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

true

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

true

18. Lower average inventory is feasible only if setup times are short.

true

19. If setup times and costs can be reduced enough, the JIT ideal of "Lot Size = 1" can be achieved.

true

20. 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

21. 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

25. A kanban system requires little variability in lead time because shortages have their impact on the entire productive system.

true

26. Inventory has only one positive aspect, which is availability; inventory has several negatives, including increased material handling, obsolescence, and damage.

true

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

true

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

true

8. Waste is anything that does not add value, such as storage or inspection of items; waste also includes any activity that does not add value from the consumer's perspective.

true

Bar code and radio frequency technology, like that used to track UPS or FedEx packages on their global journeys, can also be used to track objects within the boundaries of a warehouse or shop

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

EOQ answers the "how much" question

true

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

true

In several industries, online exchanges have been created by buyers

true

Keiretsus offer a middle ground between few suppliers and vertical integration

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 critical success factors

true

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

true

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

true

The reorder point (ROP) tells "when" to order

true

Vendor Managed Inventory is a form of outsourcing

true

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

true

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

true

an advantage of cycle counting is Allows causes of errors to be identified and corrected, which improves inventory accuracy

true

blanket orders are a long term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship

true

drop shipping results in time and shipping cost savings

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 lot size 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

logistics management can provide a competitive advantage through improved customer service t

true

one advantage of cycle counting is that it maintains accurate inventory records

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

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

true

savings in the supply chain exert more leverage as the firm has a lower net profit margin

true

service level is the complement of the probability of a stockout

true

supply chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets

true

tf an example of an intangible cost, as it relates to location decision, is the quality of education

true

tf manufacturers may want to locate close to their customers if the transportation of finished goods is expensive or difficult

true

tf service firms choose locations based, in part, on the revenue potential of a site

true

tf the factor rating method can consider both tangible and intangible costs

true

tf the graphic approach to locational cost-volume analysis displays the range of volume over which each location is preferable

true

tf the ratio of labor cost per day to productivity, in unit per day, is the labor cost per unity

true

tf unfavorable exchange rates can offset other savings in a location decision

true

the demand for automobiles would be considered an independent demand

true

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

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

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

true

la quinta inns has a competitive edge over its rivals because it

uses regression analysis to determine which variables most influence proifitability

currency risk is based on what assumption?

values of foreign currencies continually rise and fall in most countries

the 3 stages of vendor selection, in order, are

vendor evaluation, vendor development and negotiations

The three stages of vendor selection, in order, are

vendor evaluation, vendor development, and negotiations

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

vulnerability of trade secrets

Objective Function

A mathematical expression in linear programming that maximizes or minimizes some quantity (profit, cost, etc.)

Corner-point Method

A method for solving graphical linear programming problems.

Decision Variables

Choices available to a decision

tf lists have been developed that rank countries on issue such as competitiveness and corruption

true

tf one reason for a firm locating near its competitors is the presence of a major resource it needs

true

Graphical Solution Approach

a means of plotting a solution to a two-variable problem on a graph.

traffic counts and purchasing power analysis of drawing are are techniques associated with

a retail or professional service location decision

Advanced shipping notice (ASN)

a shipping notice delivered directly from vendor to purchaser

82. 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. close relationships with trust

51. Reduction of in-transit inventory can be encouraged through use of a. supplier location near plants b. low setup costs c. low carrying costs d. use of trains, not trucks e. low-cost, global suppliers

a. supplier location near plants

46. What is the time required to move orders through the production process, from receipt to delivery? a. throughput b. manufacturing cycle time c. pull time d. push time e. queuing time

a. throughput

Pull data

accurate sales data that initiates transactions to "pull" product through the supply-chain

If demand is not uniform and constant, then stockout risks can be controlled by

adding safety stock

Which distribution system is the fastest growing mode of shipping?

airfreight

which distribution system is the fastest growing mode of shipping?

airfreight

as described in the book Aerotropolis, nowadays location decisions worldwide are often being based on

airport

intangible costs include which of the following?

all of the above

location analysis techniques typically employed by service organizations include

all of the above

which of the following is among the eight determinants of revenue and volume for a service firm

all of the above

Logistics management

an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities

Negotiation strategies

approaches taken by supply-chain personnel to develop contractual relationships with suppliers

59. 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. $7.20

43. 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. Lean operations

66. The word "kanban" means a. low inventory b. employee empowerment c. card d. continuous improvement e. lot size of one

c. card

Which of the following supply chain strategies creates value by allowing suppliers to have economies of scale? a. suppliers becoming part of a company coalition b. vertical integration c. long-term partnering with a few suppliers d. negotiating with many suppliers e. developing virtual companies

c. long-term partnering with a few suppliers

50. Which one of the following is a concern expressed by suppliers? a. elimination of in-plant inventory b. delivery to the point of use c. production with zero defects d. large lot sizes e. customers' infrequent engineering changes

c. production with zero defects

Which of the following is NOT an advantage of the "few suppliers" concept? a. suppliers' willingness to participate in JIT systems b. trust c. vulnerability of trade secrets d. creation of value by allowing suppliers to have economies of scale e. suppliers' willingness to provide technological expertise

c. vulnerability of trade secrets

The three major variations of online catalogs are:

catalogs by vendors, catalogs by intermediaries, and exchanges provided by buyers.

a regional bookstore chain wants to build a distribution center that is centrally located for its eight retail outlets. it will most likely employ which of the following tools of analysis

center of gravity method

which of the following statements regarding proximity in the location decision is false

clustering among fast food chains occurs because they need to be near to their labor supply

geographic location information systems can assist the location decision by

combining geography with demographic analysis

Virtual companies

companies that rely on a variety of supplier relationships to provide services on demand; also known as hollow corporations or network companies

Inventory turnover equation

cost of goods sold / inventory investment

setup costs

cost to prepare a machine or process for manufacturing an order May be highly correlated with setup time

67. 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. A "customer" work center signals to the "supplier" workstation that more parts are needed.

80. 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. It picked the supplier that offered the lowest price based on quantity discounts.

Which one of the following statements about purchasing is TRUE? a. The cost of purchases as a percent of sales is often small. b. Purchasing provides a major opportunity for price increases. c. Purchasing is always more efficient than making an item. d. Purchasing has an impact on the quality of the goods and services sold. e. Competitive bidding is a major factor in long-term cost reductions.

d. Purchasing has an impact on the quality of the goods and services sold

42. Which one of the following is a characteristic of a JIT partnership? a. large number of suppliers 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. removal of incoming inspection

Which one of the following is NOT a supply chain strategy? a. negotiation with many suppliers b. vertical integration c. keiretsu d. short-term relationships with few suppliers e. virtual companies

d. short-term relationships with few suppliers

ABC analysis

Divides inventory into three classes based on annual dollar volume* -Class A - high annual dollar volume -Class B - medium annual dollar volume -Class C - low annual dollar volume

A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. This carpet manufacturer is practicing:

Drop shipping

Purchasing facilitated through the internet

E-procurement

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

False

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

False

17. Developing long-term, "partnering" relationships with a few suppliers is a long-standing American purchasing strategy.

False

24. In the vendor evaluation phase, most companies will use the same list of criteria and the same criteria weights.

False

24. The number of kanbans decreases as safety stock is increased.

False

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

False

4. 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

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

False

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

False

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

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

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

True or false? A reduction in inventory costs is one reason for making rather than buying.

False

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

False

True or false? Even though a firm may have a low cost strategy, supply chain strategy can select suppliers primarily on response of differentiation.

False

True or 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

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

False

what describes a system that stores and displays information that can be linked to a geographic location

GIS

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 has a lower net profit margin. d. Supply chain leverage depends only upon the percent of sales spent in the supply chain. e. None of the above is true.

e. None of the above is true.

52. 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. customers' infrequent engineering changes

why is northern mexico used as a cluster for electronics firms

NAFTA

Parameter

Numerical value that is given in a model

Constraints

Restrictions that limit the degree to which a manager can pursue an objective.

Which of the following is not one of the four main types of inventory?

Safety Stock Inventory

TPS

emphasizes continuous improvement, respect for people, and standard work practices

Pass-through facility

expedites shipment by holding merchandise and delivering from shipping hubs

Corner point

extreme point of the feasible region

basic EOQ model

The EOQ model is robust It works even if all parameters and assumptions are not met The total cost curve is relatively flat in the area of the EOQ

Feasible Region

The set of all feasible combinations of decision variables

Which of the following statements regarding the reorder point is true?

There is a reorder point even if lead time and demand during lead time are constant. The reorder point is that quantity that triggers an action to restock an item. The fixed-period model has no reorder point. The reorder point is larger than d x L if safety stock is present. All of the above are true.

What term is used to describe the outsourcing of logistics?

Third-Party Logistics

quantity discount model trade off

Trade-off is between reduced product cost and increased holding cost

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

True

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

True

20. Keiretsus offer a middle ground between few suppliers and vertical integration.

True

23. Vendor Managed Inventory is a form of outsourcing.

True

29. Blanket orders are a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

True

30. Internet purchasing may be part of an integrated enterprise resource planning (ERP) system.

True

30. The 5S's—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

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

True

A kanban system requires little variability in lead time because shortages have their impact on the entire productive system.

True

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

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

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

True

Inventory has only one positive aspect, which is availability; inventory has several negatives, including increased material handling, obsolescence, and damage.

True

Lower average inventory is feasible only if setup times are short.

True

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

True

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

True

Reducing distance is a common JIT goal.

True

TPS stands for Toyota Production System.

True

The 5S's--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 so that gaps between expectations and actuality are immediately evident.

True

The demand for automobiles would be considered an independent demand.

True

True or false? A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.

True

True or false? Bar code and radio frequency technology, like that used to track UPS or FedEx packages on their global journeys, can also be used to track objects within the boundaries of a warehouse or shop.

True

True or false? Keiretsus offer a middle ground between few suppliers and vertical integration.

True

True or false? Logistics management can provide a competitive advantage through improved customer service.

True

True or false? One classic type of negotiation strategy is the market-based price model.

True

True or false? Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.

True

True or false? Vendor Managed Inventory is a form of outsourcing.

True

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

True

Waste is anything that does not add value, such as storage or inspection of items; waste also includes any activity that does not add value from the consumer's perspective.

True

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

True

Probabilistic Models and Safety Stock

Use safety stock to achieve a desired service level and avoid stockouts

community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods

factor rating method

evaluating location alternatives by comparing their composite (weighted-average) scores involves which of the following

factor-rating analysis

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

false

16. JIT systems carry inventory just in case something goes wrong.

false

2. TPS stands for Total Production Streamlining.

false

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

false

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

false

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

false

9. Increasing inventory exposes variability in production processes.

false

ABC analysis classifies inventories 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

In the vendor evaluation phase, most companies will use the same list of criteria and the same criteria weights

false

McDonald's was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.

false

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

false

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

false

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

false

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

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

at the economic order quantity, holding costs are equal to purchasing costs

false

cycle counting is an inventory control technique exclusively used for cyclical items

false

developing long-term "partnering" relationships with a few suppliers is a long-standing American purchasing strategy

false

improvements in security, especially regarding the millions of shipping containers that enter the US each year are being held back by the lack of technological advances

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 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

tf for a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion

false

tf in location decisions, intangible costs are easier to measure than tangible costs

false

tf location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations

false

tf location decisions of goods-producing companies often assume that costs are relatively constant for a given area; therefore, the revenue function is critical

false

tf the center of gravity method finds the location centralized facility, such as a distribution center that will maximize the organization's revenue

false

tf the transportation model calculates an optimal shipping system between a central facility and several outlying customers

false

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

false

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

false

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

false

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

false

Single stage control of replenishment

fixing responsibility for monitoring and managing inventory for the retailer

A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of

forward integration

JIT

is a philosophy of continuous and forced problem solving via a focus on throughput and reduced inventory

Basic EOQ model assumptions: receipt of inventory

is instantaneous and complete

Basic EOQ model assumptions: demand is

is known, constant, and independent

Probabilistic Models and Safety Stock used when demand

is not constant or certain

Which of the following supply chain strategies creates value by allowing suppliers to have economies of scale?

long-term partnering with a few suppliers

Which of the following is not a concern of the supply chain?

maintenance scheduling

Supply-chain management

management of activities that procure materials and services, transforming them into intermediate goods and final products, and delivering products through a distribution System

The purchasing approach that holds the suppliers responsible for maintaining the necessary technology, expertise and forecasting ability plus cost, quality and delivery competencies is:

many suppliers

the transportation model, when applied to location analysis

minimize total production and transportation costs

When quantity discounts are allowed, the cost-minimizing order quantity

minimizes the sum of holding, ordering, and product costs

Visibility throughout the supply chain is a requirement among supply chain members for:

mutual trust

which of the following is most likely to affect the location decision of a service firm rather an a manufacturing firm.

parking and access

governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. What term is associated with this phenomenon?

political risk

The term vertical integration means to:

produce goods or services previously purchased

a location decision for an appliance manufacturer would tend to have what type of focus

revenue focus

the process of sending returned products back up the supply chain for value recovery or disposal

reverse logistics

EOQ model: only variable costs are the

setup (or ordering) costs and holding costs

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

small market share

tangible costs include which of the following?

taxes

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

timing and quantity of orders

which of the following is a location analysis technique typically employed by a manufacturing organization

transportation method

1. TPS stands for Toyota Production System.

true

11. 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

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

true

What is the average capacity utilization in the motor carrier (trucking) industry?

50%

a set of processes, metrics and best practices developed by the Supply Chain Council

Supply Chain Operations (SCOR) model

Linear Programming

A mathematical technique designed to help operations managers plan and make decisions necessary to allocate resources.

Sensitivity Analysis

An analysis that projects how much a solution may change if there are changes in the variables or input data.

Iso-profit Line Method

An approach to solving a linear programming maximization problem graphically.

Models for independent demand

Economic order quantity Reorder point Production order quantity Quantity discount model

21. If the purchasing firm and the supplying firm have compatible corporate cultures, substantial efficiencies related to the use of independent specialists, each with their objectives, will be lost.

False

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

False

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

False

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

False

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

False

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

False

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

False

33. With the growth of just-in-time practices, railroads have made large gains in the share of the nation's transport that they haul.

False

34. 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

6. McDonald's was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.

False

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

False

9. A reduction in inventory costs is one reason for making rather than buying.

False

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

False

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

False

Which of the following statements about the basic EOQ model is true?

If annual demand were to double, the EOQ would increase. If annual demand were to double, the number of orders per year would increase. If the carrying cost were to increase, the EOQ would fall. If the ordering cost were to double, the EOQ would rise. All of the above statements are true.

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

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

cycle counting

Items are counted and records updated on a periodic basis Often used with ABC analysis

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

false (demand for EOQ is constant)

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

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

Cycle counting

provides a measure of inventory accuracy

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

True

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

True

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

True

26. Drop shipping results in time and shipping cost savings.

True

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

True

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

True

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

True

5. Supply chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets.

True

8. Savings in the supply chain exert more leverage as the firm has a lower net profit margin.

True

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

True

If setup times and costs can be reduced enough, the JIT idea of "Lot Size=1" can be achieved.

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

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

True

True or false? Drop shipping results in time and shipping cost savings.

True

True or false? In several industries, online exchanges have been created by buyers.

True

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

True

True or false? Savings in the supply chain exert more leverage as the firm has a lower net profit margin.

True

True or false? Supply chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets.

True

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

True

Production Order Quantity Model

Used when inventory builds up over a period of time after an order is placed Used when units are produced and sold simultaneously

Keiretsu

a Japanese term that describes suppliers who become part of a company coalition

Make-or-buy decisions

a choice between producing a component or service in-house or purchasing it from an outside source

Vertical integration appears particularly advantageous when the organization has

a large market share

Blanket order

a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship

Electronic data interchange (EDI)

a standardized data-transmittal format for computerized communications between organizations

Vendor managed inventory (VMI)

a system in which a supplier maintains material for the buyer, often delivering directly to the buyers using department

Collaborative planning, forecasting, and replenishment (CPFR)

a system in which members of a supplychain share information in a joint effort to reduce supply-chain costs

78. 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. produce in long production runs to reduce the impact of setup costs

79. Which one of the following is an example of JIT being used for competitive advantage? a. Jones Company has decreased the number of job classifications to just a few. b. Lafourche Metals increases the number of its suppliers to be less dependent on just a few. c. Houma Fabricators is proud to announce that incoming goods are inspected. d. Acme Company tells its maintenance department to intervene only if a machine breaks down. e. Caro Specialty Metals, Inc. has built a new, huge warehouse to store inventory.

a. Jones Company has decreased the number of job classifications to just a few.

38. 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. Just-in-time (JIT)

62. Factory X is trying to use level use scheduling. If their first target were to cut the 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. none of the above

a. Setup cost must be cut to one fourth its current value.

48. A characteristic of JIT partnerships with respect to quality is to a. help suppliers meet quality requirement b. inspect all incoming parts c. maintain a steady output rate d. impose maximum product specifications on the supplier e. draw up strict contracts ensuring that all defectives will be immediately replaced

a. help suppliers meet quality requirement

74. The list of 5S's, although it looks like a housekeeping directive, supports lean production by a. identifying non-value items and removing them, in the "sort/segregate" item b. reducing inventory, in the "standardize" item c. increasing variability through standardized procedures, in the "standardize" item d. eliminating wasted motion through ergonomic studies, in the "support" item e. building good safety practices, in the "shine/sweep" item

a. identifying non-value items and removing them, in the "sort/segregate" item

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

airfreight

fedex chose Memphis as its US hub becasue

all of the above are true

Among the advantages of cycle counting is that it

allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory

Simplex Method

an algorithm for solving linear programming problems of all sizes.

Iso-cost line approach

an approach to solving linear programming minimization problem graphically.

Requirements for Linear Programming Problem

an objective constraints alternatives linearity

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

annual dollar volume

a jewelry store is more likely than a jewelry manufacturer to consider ____ in making a location decision

appearance/image of the location

Basic EOQ model assumptions: quantity discounts

are not possible

In supply chain management, ethical issues:

are particularly important because of the important because of the enormous opportunities for abuse, may be guided by company rules and codes of conduct, become more complex the more global is the supply chain

Basic EOQ model assumptions: only variable costs

are setup (or ordering) and holding

41. 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. The number of suppliers increases. d. In-plant inventory replaces in-transit inventory. e. All of the above are consequences of meeting the JIT partnership goals.

b. In-transit inventory falls as suppliers are located closer to facilities.

57. 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. It is the minimum inventory necessary to keep a perfect system running.

33. What does TPS stand for? a. Total Production Streamlining b. Toyota Production System c. Taguchi's Production S's d. Total Process Simplification e. None of the above

b. Toyota Production System

37. 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. Toyota Production System (TPS)

55. 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. fixed equipment

68. If a casual-dining restaurant is attempting to practice JIT and lean operations, which of the following would not be present? a. close relationship with the restaurant's suppliers of food, utensils, and equipment b. food preparation in large batches c. a kitchen set up to minimize wasteful movements d. lean inventories of food e. All of the above should be present.

b. food preparation in large batches

45. 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. few suppliers e. buyer helps supplier to meet the quality requirements

b. large lot sizes to save on setup costs and to gain quantity discounts

69. The number of kanbans is a. one b. the ratio of the reorder point to container size c. the same as EOQ d. one full day's production e. none of the above

b. the ratio of the reorder point to container size

35. Which one of the following is not a benefit of the implementation of JIT? a. cost reduction b. variability increase c. rapid throughput d. quality improvement e. rework reduction

b. variability increase

Among the following choices, an operations manager might best evaluate political risk of a country

based on corruption

The objective of supply chain management is to ________

build a chain of suppliers that focuses on maximizing value to the ultimate customer

71. 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. "No one knows the job better than those who do it."

83. Which of the following statements regarding JIT in services is true? a. Restaurants do not use JIT layouts because they interfere with creation of a good servicescape. b. Excess customer demand in services such as air travel is met by dipping into safety stocks. c. All of the JIT techniques for dealing with suppliers, layout, inventory, and scheduling are used in services. d. Scheduling is not relevant to effective use of JIT in services. e. All of the above are false.

c. All of the JIT techniques for dealing with suppliers, layout, inventory, and scheduling are used in services.

36. Which of the following is not a reason for 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. Employees, machines, and suppliers produce units that conform to standards.

81. Which of the following is not one of the Seven Wastes? a. overproduction b. transportation c. assignment d. defective product e. motion

c. assignment

72. Which of the following is not an attribute of lean operators? 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. All of the above are attributes of lean producers.

c. pushing responsibility to the highest level possible through centralized decision making

44. Characteristics of JIT partnerships with respect to suppliers include a. competitive bidding encouraged b. buyer plant pursues vertical integration to reduce the number of suppliers c. support suppliers so they become or remain price competitive d. most suppliers at considerable distance from purchasing organization e. All of the above are characteristics of JIT partnerships.

c. support suppliers so they become or remain price competitive

The 3 major variations of online catalogs are:

catalogs by vendors, catalogs by intermediaries and exchanges provided by buyers

Which of the following is an opportunity for effective management in the supply chain?

channel assembly

a system that postpones final assembly of a product so the distribution channel can assemble it

channel assembly

a supply chain designed to optimize all forward and reverse flows

closed-loop supply chain

Basic EOQ model assumptions: stockouts can be

completely avoided

EOQ model: stockout can be

completely avoided

when making a location decision at the region/community level, which of these would be considered

cost and availability of utilities

The 3 classic types of negotiation strategies are

cost based price model, market-based price model and competitive bidding

Inventory turnover

cost of goods sold divided by average inventory

A major issue in logistics is

cost of shipping alternatives

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

false

76. Which one of the following does not exemplify JIT used for competitive advantage? a. Acme Foods decides to decrease the number of its suppliers to just a few. b. Ajax, Inc. is proud to announce that incoming goods are delivered directly to the point of use. c. Ardoyne Builders has a scheduled preventive maintenance program. d. Cheramie Trucking trains workers to specialize and become very efficient in one job. e. Cajun Contractors has reduced the amount of space for inventory.

d. Cheramie Trucking trains workers to specialize and become very efficient in one job.

39. 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. Problems become more obvious.

56. Which of the following is the author of the phrase "Inventory is evil"? a. Poka Yoke b. Pat "Keiretsu" Morita c. Kanban Polka d. Shigeo Shingo e. none of the above

d. Shigeo Shingo

65. Kanban is associated with all of the following except 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. increased material handling

47. 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. removal of engineering changes e. All of the above are goals of JIT partnerships.

d. removal of engineering changes

60. Throughput measures the time a. that it takes to process one unit at a station b. between the arrival of raw materials and the shipping of finished products c. to produce one whole product through an empty system (i.e., with no waiting) d. required to move orders through the production process, from receipt to delivery e. none of the above

d. required to move orders through the production process, from receipt to delivery

77. Which one of the following is not a requirement of JIT systems? a. quality deliveries on time b. low setup time c. training support d. strong job specialization e. employee empowerment

d. strong job specialization

Postponement

delaying any modification or customization to a product as long as possible in the production process

Vertical integration

developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor

Which of the following devices represents an opportunity for technology to improve security of container shipments?

devices that identify truck and container location, devices that sense motion, devices that measure radiation or temperature, devices that can communicate the breaking of a container lock or seal

the center of gravity method is used primarily to determine what type of locations

distribution center locations

54. Just-in-time systems make demands on layouts, including a. distance reduction b. increased flexibility c. reduced space and inventory d. cross-trained, flexible employees e. All of the above are JIT influences on layout.

e. All of the above are JIT influences on layout.

75. In the quest for competitive advantage, which of the following is a JIT requirement? a. small number of job classifications b. reduced number of vendors c. reduced space for inventory d. quality by suppliers e. All of the above are JIT requirements.

e. All of the above are JIT requirements.

49. 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. All of the above are goals of JIT partnerships.

63. The technique known as level schedules a. requires that schedules be met without variation b. processes many small batches rather than one large one c. is known as "jelly bean" scheduling d. is based on meeting one day's demand with that day's production e. All of the above are true regarding level scheduling.

e. All of the above are true regarding level scheduling.

61. 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. Standardize tooling and standardize training are included in the same step. d. Improved material handling and move material closer are done before operator training. e. All of the above are true.

e. All of the above are true.

with the growth of just-in-time practices, railroads have made large gains in the share of the nation's transport that they haul

false

work-in-process inventory is devoted to maintenance, repair, and operations

false

70. 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. All of the above are true.

e. All of the above are true.

53. 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. All of the above represent JIT supplier concerns.

73. The 5S's 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. All of these are true.

64. 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. The customer workstation signals to the supplier workstation when production is needed.

34. Which of the following is generally found in most JIT 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. pull systems

40. 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. time from raw materials receipt to finished product exit

what is an approach to location analysis that includes both qualitative a quantitative considerations

factor rating method

which of the following methods best considers intangible costs related to a location decision

factor rating method

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

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

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

false

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

false

a reduction in inventory costs is one reason for making rather than buying

false

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

false

tf FedEx chose Memphis or its central location, or hub, primarily because of the incentives offered by the city of Memphis and the state of Tennessee

false

tf the location decisions of goods-producing firms will generally pay more attention to parking, access, and traffic counts that will service location decisions

false

which of the following assumptions is not associated with strategies for goods producing location decisions

high customer contact issues are critical

globalization of the location decision is the result of all except which of the following

higher quality of labor overseas

In the make-or-buy decision, one of the reasons for BUYING is

inadequate capacity

In the make-or-buy decision, one of the reasons for buying is

inadequate capacity

E-procurement

is the same thing as Internet purchasing

which of the following statements regarding the center of gravity method is false

it is designed to minimize the maximum possible travel distance to any of the locations

The Japanese concept of a company coalition of suppliers is

keiretsi

Japanese manufacturers often take a middle ground between purchasing from a few suppliers and vertical integration. This approach is

keiretsu

The Japanese concept of a company condition of supplies is

keiretsu

Basic EOQ model assumptions: lead time is

known and constant

____ and _____ are to key country success factors as ___ and ____ are to key region success factors

labor cost, currency risk; land costs, proximity to customers

Which one of the following performance measures is not true of a world class firm?

large lead time

Quantity Discount Models reduced prices are often available when

larger quantities are purchased

All of the following are"opportunities" for supply chain management except

line balancing

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

local optimization

The bullwhip effect can be aggravated by:

local optimization, sales incentives, quantity discounts, promotions

the reason fast food restaurants often are found in close proximity to each other is

location clustering near high traffic flows

when making a location decision at a country level, which of these would be considered?

location of markets

when making a location decision at the country level, which of these would be considered?

location of markets

an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities

logistics management

In the make-or-buy decision, which of the following is a reason for making an item?

lower production cost

Which of the following is an element of inventory holding costs?

material handling costs investment costs pilferage, scrap, and obsolescence housing costs All of the above are elements of inventory holding cost.

Drop shipment

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

industrial location analysis typically attempts to

minimize costs

Visibility throughout the supply chain is a requirement among supply chain members for:

mutual trust.

Supplier selection requires:

negotiations, supplier evaluation, supplier development, and contracts

the "bullwhip" effect

occurs as orders are relayed from retailers to wholesalers, results in increasing fluctuations at each step of the sequence, increases the costs associated with inventory in the supply chain, occurs because of distortions in information in the supply chain

Local optimization is a supply chain complication best described as

optimizing one's local area without full knowledge of organizational needs

Local optimization is a supply chain complication ebst described as

optimizing one's local area without full knowledge of organizational needs

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

outsourcing

Channel assembly

postpones final assembly of a product so the distribution channel can assemble it

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

postponment

One dollar saved in purchasing is

worth even more than a dollar earned in sales revenue

One dollar saved in purchasing is:

worth even more than a dollar earned in sales revenue.

which of the following is not one of the top considerations in choosing a country for a facility location

zoning regulations

which of these factors would be considered when making a location decision at the site level

zoning regulations

ABC analysis policies may include

-More emphasis on supplier development for A items -Tighter physical inventory control for A items -More care in forecasting A items -less care for B items - focus on avoiding shortages -C items - put on autopilot if possible

True or false? Benchmark firms have driven down costs of supply chain performance.

True

True or false? Blanket orders are a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

True

True or false? Outsourcing is a form of specialization that allows the outsourcing firm to focus on its critical success factors.

True

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

True

What type of negotiating strategy requires the supplier to open its books to the purchasers?

cost-based price model

In the make-or-buy decision, which of the following is a reason for MAKING an item? a. management can focus on its primary business b. lower production cost c. inadequate capacity d. reduce inventory costs e. None of the above is a reason for making an item.

b. lower production cost

With the growth of JIT, which of the following distribution systems has been the biggest loser? a. trucking b. railroads c. airfreight d. waterways e. pipelines

b. railroads

In the make-or-buy decision, which of the following is NOT a reason for buying? a. inadequate capacity b. to obtain desired quality c. patents or trade secrets d. lower inventory costs e. All of the above are reasons for buying.

b. to obtain desired quality

Which of the following is NOT a 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. total control over every aspect of the organization

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed

backward integration

The three classic types of negotiation strategies are

cost-based price model, market-based price model, and competitive bidding

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

c. airfreight

Which one of the following performance measures is NOT true of a world class firm? a. short time placing an order b. high percentage of accepted material c. large lead time d. high percentage of on-time deliveries e. low number of shortages per year

c. large lead time

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

c. to produce goods or services previously purchased

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. channel assembly

d. local optimization

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. required demand d. small market share e. All of the above favor the success of vertical integration

d. small market share

A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing

drop shipping

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

drop shipping

Outsourcing: a. transfers traditional internal activities to outside vendors b. utilizes the efficiency which comes with specialization c. lets the outsourcing firm focus on its critical success factors d. None of the above are true or outsourcing. e. All of the above are true of outsourcing.

e. All of the above are true of outsourcing.

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. All of the above are true.

The "bullwhip" effect a. occurs as orders are relayed from retailers to wholesalers 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 distortions in information in the supply chain e. all of the above

e. all of the above

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. all of the above

Which of the following is an opportunity for effective management in the supply chain? a. random "pull" data b. multistage control of replenishment c. the bullwhip effect d. customer managed inventory e. channel assembly

e. channel assembly

All of the following are "opportunities" for supply chain management EXCEPT a. postponement b. drop shipment c. blanket orders d. channel assembly e. line balancing

e. line balancing

Which of the following is NOT a concern of the supply chain? a. warehousing and inventory levels b. credit and cash transfers c. suppliers d. distributors and banks e. maintenance scheduling

e. maintenance scheduling

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. reduction in inventory investment