OPSM 4810 Exam 1 Quiz Questions

A zero defects quality strategy emphasizes:

Do it right the first time

Supply chain risk can be classified as:

Operational, Financial, Reputational

The decision to make or buy a good or service is:

a decision of strategic importance that deserves careful evaluation.

ISO 9001: 2015:

defines the requirements a quality system must meet but does not dictate how they should be met.

The characteristic of a service that has the greatest impact on the ability to define, measure and control service quality is:

degree of tangibility

Internal business partnerships between supply and other functional areas such as marketing/sales, finance/accounting, operations, and engineering are:

desirable because of the interdependencies between and among functions

Independent demand items are:

determined directly by customer orders.

Interest in the supply function as a managerial activity began:

during World Wars I and II because of global materials shortages

The growth in outsourcing in the logistics area is attributed to:

enhanced logistics technologies that provide real time data

Supply strategies that are designed to anticipate and recognize shifts in the economy, organization, people, legal, government regulations and controls, and technologies are:

environmental change strategies

Supply's growing involvement in the acquisition of services may be explained by:

high dollar value on services and the opportunities to reduce costs

Supply can provide an uninterrupted flow of materials, supplies and services by:

holding large inventories and standardizing capital equipment, materials, MRO and services.

Small dollar value purchase orders for MRO can be efficiently and effectively managed by:

implementing a vendor or supplier-managed inventory system

A centralized supply structure is designed to:

increase the strategic focus of purchasing and supply management.

In an outsourcing decision, developing and negotiating the outsourcing contract:

is of less strategic importance than identifying opportunities for outsourcing

When the carrying cost of inventory is expressed as a percentage:

it is multiplied by the unit variable manufacturing cost to calculate the per unit carrying cost.

Concerns about outsourcing include:

layoffs, exposure to supplier's risks, and loss of control

Lean quality management philosophy is based on:

maximizing customer value and minimizing waste.

Deciding what represents a core competency in an organization is:

often a fairly complex decision and a function of many factors

The supply area is a good training ground for managers because it provides exposure to:

pressure of decision making under uncertainty and various levels and functions in the organization

A successful supply chain management strategy integrates:

processes and systems within and across organizations

Supply has the potential to contribute to:

profitability, competitive position, and sustainability performance.

Closed-loop MRP:

provides a feedback loop between capacity and the master production schedule.

The return on assets effect (ROA) quantifies and measures:

the impact of supply actions on inventory and the balance sheet

The use of concepts of purchasing, procurement, supply, and supply chain management will vary from organization to organization depending on:

the organization's stage of development and/or sophistication, the industry in which they operate, and the organization's competitive position

The size and activities of the supply function in a single business unit organization will depend on:

the size of the company and the nature of the company's business

Company image may be directly influenced by:

treating suppliers in a fair and equitable manner, complying with regulatory requirements and sustainability practices of suppliers.

When a retailer uses daily sales of each product to identify patterns and to forecast inventory requirements, this is an example of:

a time series forecasting technique

Supply strategies that are based on changes in demand and supply are known as:

assurance-of-supply strategies

The three main inputs of a material requirements planning (MRP) system are:

bill of material, a master production schedule, and the inventory record.

High-performing cross-functional supply teams:

concentrate most of the work at the front-end of the process.

The demand for a particular service may be:

continuous, discrete, or periodic.

A criterion in establishing whether a purchase is strategic can be:

determined by performing Pareto analysis to determine if the purchase is an "A" item

Radio Frequency Identification (RFID) will:

eliminate bar coding and manual counting.

Quality improvement programs for goods are initiated by a desire to:

eliminate incoming inspection

Examples of prevention costs include:

employee training and awareness costs, and costs of pre-certifying and qualifying suppliers.

Supply can influence risk management in which area(s)?

financial, operational, and reputation

New technology:

frequently enables competitive advantage from product/service differentiation at lower cost

Application software for the procurement process is available:

from an ERP system, a systems developer, or a cloud solution

When a supply-related risk exists, the supply management team should:

identify and classify risks, assess possible impact, develop a mitigation strategy, inform the chief supply officer, await instructions, and implement the directive

Subcontracts can only occur:

if there is a prime contractor bidding out part of a job.

Information systems technology can:

increase data accuracy and accessibility at lower cost.

Evidence of the growth and influence of supply management in an organization includes:

involvement in strategic planning and executive status of the chief supply officer

Invoice clearance and payment procedures:

may be streamlined with an invoice-less system within an e-procurement system.

A supplier certification program:

may enable the buyer and seller to lower costs and improve quality.

Overall, the objectives of supply management focus on:

operational and strategic issues

Traditional criteria for supply management are:

quality, quantity, delivery, price and service

If the buyer does not have a clear and unambiguous description or specification and wants to find out which supplier can deliver the best value when and where needed, he or she will typically issue a:

request for proposal (RFP)

The three options for soliciting business from potential suppliers are:

request for quotation (RFQ), request for proposal (RFP), and request for invitation or bid (RFB or IFB)

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

standard specification

An organization may decide to continue to produce a good or service in-house rather than outsource:

to control the quality of customer service and to reduce risk

Anticipation inventories are carried:

to cover a well-defined future need.

A change from a decentralized supply structure to a centralized one:

typically requires experience and skills not present in the existing structure.

An example of an external failure cost is:

warranty costs

Three major challenges facing supply executives when setting supply strategies and objectives are:

1. What is the effective interpretation of corporate objectives and supply objectives? 2. What is the appropriate action plan or strategy to achieve the desired objectives? 3. How can supply issues be identified and integrated into organizational objectives and strategies?

Insourcing and outsourcing occur when a company reverses previous make or buy decisions

True

When a commercial janitorial service company predicts demand for its services using commercial building permits issued, office leasing and vacancy rates, this is an example of:

a causal model

Decoupling inventories are used to:

accommodate different rates or patterns of demand.

A strategy is:

an action plan to achieve specific long-term goals and objectives.

Supply may contribute to the containment of the costs of poor quality by addressing:

appraisal costs, internal costs, external costs, and prevention costs

Capital assets:

are not bought and sold in the regular course of business

Insourcing should be considered when:

assurance of supply is a problem and there is an opportunity to reduce costs significantly

Which statement is most accurate when deciding how much and when to buy?

balancing price, volume, carrying cost, and the cost of stock-outs.

When a team has decided that a task or function currently performed by company employees is not a core competency, the team will probably recommend:

continuing to make

A six sigma approach to quality:

focuses on preventing defects by using data to reduce variation and waste.

Corporate purchasing cards are issued to:

internal customers to purchase low-dollar, high-volume goods and services.

Outsourcing

may reduce operating costs, improve focus on core competencies, and gain access to world-class capabilities

Strategies for managing "A" items in ABC analysis are:

minimizing inventories and review inventory levels frequently.

Quality control in services is:

more difficult for customized services delivered by highly skilled workers.

Direct spend is:

of greater importance in manufacturing companies than in service companies.

Supply managers believe they can add the most value to the outsourcing decision by:

providing a comprehensive, competitive process

Electronic Data Interchange (EDI) provides:

secure transmission, greater accuracy and shorter process cycle time for all data.

A sampling technique that is based on the cumulative effect of information that every additional item in the sample adds as it is inspected is called:

sequential sampling

A corporate travel department determines that employees have been staying in 15 different hotel chains. The director of corporate travel mandates the travelers may only stay in four designated hotel chains. This action is an example of:

simplification

The disadvantages of buying with specifications include:

specifications can add costs and the potential for disqualifying or discouraging potential suppliers

The question: "How can supply and the supply chain contribute effectively to organizational objectives and strategy?" is a key question in:

strategic supply management

The design and management of seamless, value-added processes across organizational boundaries to meet the needs of the end customer is called:

supply chain management

Early supply involvement means:

supply considerations are included during need identification and specification

The ratio of purchased material and services costs compared to total costs or total income has a major influence on:

supply's reporting level in the organization

Normally, most organizational objectives can be summarized as:

survival, growth, financial, and sustainability

When developing strategies related to "how to buy." decisions must be made about:

systems and processes

Online reverse auctions have been most effective when:

technological, logistical, and commercial specifications are clear

An advantage of buying by performance or function over other specification methods is that it provides:

the opportunity for potential supplier to establish how to make the most suitable product/service

The degree of purchasing centralization is reflected by:

the percentage of spend managed or controlled by corporate supply

When developing supply strategies, the supply manager must determine:

what to make or buy, when to buy, how much to buy, and how it should be ordered

In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues?

50 to 80

For an organization with revenue of $100 million, purchases of $60 million, and profit of $8 million before tax, a 10 percent reduction in purchase spend would result in an increase in profit of:

75 percent

On an annual requirement of 100 items spread evenly throughout the year, a purchaser has an opportunity of buying all 100 units at a price of $100 each, or buying 10 units at a time at a price of $130. If the inventory carrying cost is 20 percent per year and assuming no ordering costs:

Actual Purchase 100 units * $100 = $10,000 ; Average Inventory = 100/2 = 50 ; Carry Cost = .20 50 * $100 * .20 = $1,000 ; $10,000 + $1,000 = $11,000 Actual Purchase 100 units * $130 = $13,000 ; Average Inventory = 10/2 = 5 ; Carry Cost = .20 5 * $130 * .20 = $130 ; $13,000 + $130 = $13,300 $13,130 - $11,000 = $2,130 buying 100 at a time will save the company $2,130 per year.

Operator action is not required when process output exceeds the upper control limit (UCL) or dips below the lower control limit (LCL).

False

Quality as a term covers functionality :" Does it do the job we want done?" but not conformance to specification:" Does it fit the specification agreed to?"

False