SCM Test #3 (Ch. 13, 14, 15)

The role of sourcing planning and analysis is A) to analyze spending across various suppliers and component categories to identify opportunities for decreasing the total cost. B) to analyze spending across various suppliers and component categories to identify opportunities for increasing the total cost. C) to enable orders to be placed and delivered on schedule at the lowest possible overall cost. D) to enable orders to be placed and delivered on schedule regardless of cost.

A

The total amount paid to various carriers for transporting products to customers is A) transportation cost. B) inventory cost. C) facility cost. D) processing cost.

A

In volume-based tailored sourcing A) the predictable part of a product's demand is produced at an efficient facility. B) the uncertain portion is produced at an efficient facility. C) the predictable part of a product's demand is produced at a flexible facility. D) the predictable part of a product's demand is outsourced.

A

Single sourcing for a product is used to A) guarantee the supplier sufficient business when the supplier has to make a significant buyer-specific investment. B) ensure a degree of competition. C) ensure the possibility of a backup should a source fail to deliver. D) all of the above

A

Supplier performance must be rated on many different factors because A) they impact the total supply chain cost. B) they minimize the supply chain involvement. C) they reduce the impact of price. D) they maximize the supply chain price.

A

The ________ is the party that moves or transports the product. A) carrier B) producer C) shipper D) consumer

A

The loss incurred by a firm for each unsold unit at the end of the selling season is A) the cost of overstocking the product. B) the cost of stocking the product. C) the cost of understocking the product. D) the cost of overselling the product.

A

The main risks of moving functions to a third party would not include A) rising fuel costs. B) underestimation of the cost of coordination. C) reduced customer/supplier contact. D) loss of internal capability.

A

The movement of product from one location to another as it makes its way from the beginning of a supply chain to the customer's hands is referred to as A) transportation. B) retailing. C) distribution. D) manufacturing.

A

The process by which companies acquire raw materials, components, products, services, and other resources from suppliers to execute their operations is A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection.

A

The procurement process for direct materials should focus on A) improving coordination and visibility with the supplier. B) decreasing the transaction cost for each order. C) consolidation of orders to take advantage of economies of scale and quantity discounts. D) all of the above

A

There is a cost associated with postponement because the production cost using postponement is typically A) higher than the production cost without it. B) lower than the production cost without it. C) very stable. D) equal to the production cost without it.

A

Using a third party requires a firm to share demand information and in some cases intellectual property. This risk would be described as A) leakage of sensitive data and information. B) underestimation of the cost of coordination. C) reduced customer/supplier contact. D) loss of internal capability.

A

Which mode of transportation is the most expensive? A) Air B) Truck C) Rail D) Water

A

Which of the following uses transportation to minimize the total cost (transportation, inventory, information, and facility) while providing an appropriate level of responsiveness to the customer? A) The shipper B) The supplier C) The manufacturer D) The carrier

A

Which of the following would be a strategy to decrease the margin lost in a stockout? A) Arranging for backup sourcing B) Discarding the unused material C) Selling unsold product to an outlet store D) Reduce the level of cycle inventory

A

Which transportation network design option has the elimination of intermediate warehouses and its simplicity of operation and coordination as its major advantage? A) Direct shipping network B) Direct shipping with milk runs C) All shipments via central DC D) Shipping via DC using milk runs

A

________ carriers offer a very fast and fairly expensive mode of transportation for cargo. A) Air B) Truck C) Rail D) Water

A

Major infrastructure elements for transportation systems would not include A) air. B) rail. C) canals. D) seaports.

A Roads, seaports, airports, rail, and canals are some of the major infrastructural elements

Quick response results in A) the manufacturer making a lower profit in the long term if all else is unchanged. B) the manufacturer making a lower profit in the short term if all else is unchanged. C) the retailer making a lower profit in the short term if all else is unchanged. D) the distributor making a lower profit in the short term if all else is unchanged.

B

Supplier performance should be compared based on A) purchase price alone. B) their impact on total cost. C) the supplier's quality of material. D) the ability of the supplier to coordinate forecasting and planning.

B

Supply chain managers are able to A) increase their forecast accuracy as lead times increase. B) increase their forecast accuracy as lead times decrease. C) decrease their forecast accuracy as lead times decrease. D) decrease their forecast accuracy as lead times increase.

B

The cost of holding inventory incurred by the shipper's supply chain network is A) transportation cost. B) inventory cost. C) facility cost. D) processing cost.

B

The decision to have a third party perform a supply chain function is called A) insourcing. B) outsourcing. C) offshoring. D) onshoring.

B

The entire set of business processes required to purchase goods and services is A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection.

B

The key factors that influence the optimal level of product availability do not include A) the cost of overstocking the product. B) the cost of stocking the product. C) the cost of understocking the product. D) All of the above are key factors.

B

The procurement process for indirect materials should focus on A) improving coordination and visibility with the supplier. B) decreasing the transaction cost for each order. C) consolidation of orders to take advantage of economies of scale and quantity discounts. D) all of the above

B

The selection of suppliers, design of supplier contracts, product design collaboration, procurement of material, and evaluation of supplier performance are a part of A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection.

B

The text states that the effectiveness of carriers is influenced by infrastructure. Which of the following would not fall into this category? A) Ports B) Effective management C) Roads D) Airports

B

The viability of suppliers is especially important for suppliers who A) provide mission-critical products that would be easy to replace. B) provide mission-critical products that would be difficult to replace. C) provide non-critical products that would be difficult to replace. D) provide non-critical products that would be easy to replace.

B

There are various mechanisms that third parties can use to grow the supply chain surplus. Which of the following is not one of these? A) Capacity aggregation B) Warehousing decentralization C) Inventory aggregation D) Warehouse aggregation

B

Transportation plays a key role in every supply chain because A) products are normally produced and consumed in the same location. B) products are rarely produced and consumed in the same location. C) the cost of transportation is inconsequential. D) transportation is not a factor in determining profitability.

B

Under tailored postponement, a firm produces the amount that is very likely to sell using A) the lower cost production method with postponement and produces the portion of demand that is uncertain using postponement. B) the lower cost production method without postponement and produces the portion of demand that is uncertain using postponement. C) the higher cost production method with postponement and produces the portion of demand that is uncertain using postponement. D) the higher cost production method without postponement and produces the portion of demand that is uncertain using postponement.

B

Which mode of transportation is the dominant form of freight transportation? A) Air B) Truck C) Rail D) Water E) Pipeline

B

Which of the following is a traditional logistics driver of sourcing? A) Pricing B) Inventory C) Sourcing D) Information

B

Which of the following is not a benefit of effective sourcing decisions? A) Appropriate supplier contracts can allow for the sharing of risk, resulting in higher profits for both the supplier and the buyer. B) Better economies of scale can be achieved if orders within a firm are disaggregated. C) Design collaboration can result in products that are easier to manufacture and distribute, resulting in lower overall costs. D) Firms can achieve a lower purchase price by increasing competition through the use of auctions.

B

Which of the following is not a factor that must be considered when scoring and assessing suppliers? A) Purchase pricing B) Sales performance C) Design collaboration capability D) Exchange rates, taxes, and duties

B

Which of the following would be a strategy to increase the salvage value of an unsold product? A) Discarding the unused material B) Selling unsold product to an outlet store C) Keeping the product in inventory until it sells D) Reduce the level of cycle inventory

B

________ are the preferred mode of transport for online businesses such as Amazon.com and Dell, as well as for companies such as W.W. Grainger and McMaster-Carr that send small packages to customers. A) Air B) Package carriers C) Rail D) Water

B

________ is the set of actions a supply chain takes to reduce the replenishment lead time. A) Lengthened forecasting window B) Quick response C) Postponement D) Tailored sourcing

B

Good information coordination will not result in A) better replenishment planning. B) a decrease in the inventory carried as well as the sales lost because of lack of availability. C) a decrease in the bullwhip effect. D) a decrease in the sales lost because of lack of availability.

C

If quick response allows multiple orders in the season, A) profits decrease and the overstock quantity decreases. B) profits decrease and the overstock quantity increases. C) profits increase and the overstock quantity decreases. D) profits increase and the overstock quantity increases.

C

Managers should ensure that a firm's transportation strategy A) involves cost minimization. B) involves profit maximization. C) supports its competitive strategy. D) is separate from competitive strategy.

C

Price has traditionally been the only dimension that suppliers have been compared on during the process of A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection.

C

Supplier characteristics such as lead time, reliability, quality, and design capability that impact the total cost of doing business with a supplier should be considered during the process of A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection

C

The ________ is the party that requires the movement of the product between two points in the supply chain. A) carrier B) producer C) shipper D) consumer

C

The cost of various facilities in the shipper's supply chain network is A) transportation cost. B) inventory cost. C) facility cost. D) processing cost.

C

The costs of overstocking and understocking have a direct impact on A) the optimal cycle service level but not profitability. B) profitability but not the optimal cycle service level. C) both the optimal cycle service level and profitability. D) neither the optimal cycle service level or profitability.

C

The decision to move a production facility outside of domestic boundaries and still maintain ownership is called A) insourcing. B) outsourcing. C) offshoring. D) onshoring.

C

The delivery frequency of a supplier can be converted into the cost of holding A) cycle inventory. B) safety inventory. C) both cycle and safety inventory. D) neither cycle nor safety inventory.

C

The goal of procurement is A) to analyze spending across various suppliers and component categories to identify opportunities for decreasing the total cost. B) to analyze spending across various suppliers and component categories to identify opportunities for increasing the total cost. C) to enable orders to be placed and delivered on schedule at the lowest possible overall cost. D) to enable orders to be placed and delivered on schedule regardless of cost.

C

The level of product availability, also referred to as the ________, is one of the primary measures of a supply chain's responsiveness. A) no stock out level B) reliability level C) customer service level D) logistics measure

C

The margin lost by a firm for each lost sale because there is no inventory on hand is A) the cost of overstocking the product. B) the cost of stocking the product. C) the cost of understocking the product. D) the cost of overselling the product.

C

The margin lost from current as well as future sales if the customer does not return should be included in A) the cost of overstocking the product. B) the cost of stocking the product. C) the cost of understocking the product. D) the cost of overselling the product.

C

The process used to rate supplier performance is A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection.

C

The procurement process for both direct and indirect materials should work on A) improving coordination and visibility with the supplier. B) decreasing the transaction cost for each order. C) consolidation of orders to take advantage of economies of scale and quantity discounts. D) all of the above

C

Whether the optimal level of product availability is high or low depends on where a particular company believes they can A) minimize cost. B) maximize revenue. C) maximize profits. D) maximize product availability.

C

Which of the following is a cross-functional driver of sourcing? A) Transportation B) Inventory C) Sourcing D) Faciltities

C

Which of the following is not a benefit of effective sourcing decisions? A) Better economies of scale can be achieved if orders within a firm are aggregated. B) More efficient procurement transactions can significantly reduce the overall cost of purchasing. C) Sequential design results in products that are easier to manufacture and distribute, resulting in lower overall costs. D) Good procurement processes can facilitate coordination with the supplier and improve forecasting and planning.

C

Which of the following is not a contract that will increase overall profits by making the supplier share some of the buyer's demand uncertainty? A) Buyback or returns contracts B) Quantity flexibility contracts C) Renewal contracts D) Revenue-sharing contracts

C

Which of the following is the fastest delivery method of transportation? A) Rail B) Truck C) Air D) Intermodal

C

Which transportation network design option establishes an extra layer between suppliers and retailers to store inventory and to serve as a transfer location? A) Direct shipping network B) Direct shipping with milk runs C) All shipments via central DC D) Shipping via DC using milk runs

C

________ allows a firm to increase profits and better match supply and demand if the firm produces a large variety of products whose demand is unpredictable, not positively correlated, and is of about the same size. A) Shortened forecasting window B) Quick response C) Postponement D) Tailored sourcing

C

________ may reduce overall profits for a firm if a single product contributes the majority of the demand. A) Shortened forecasting window B) Quick response C) Postponement D) Tailored sourcing

C

________ typically move commodities over large distances at lower costs per unit shipped. A) Air B) Truck C) Rail D) Package carriers

C

The fundamental supply chain decision(s) involving the trade-off between transportation and inventory costs is (are) A) choice of transportation mode. B) inventory aggregation. C) level of customer responsiveness. D) both A and B

D

The key players in any transportation that takes place within a supply chain are A) the shipper and the receiver. B) the shipper and the supplier. C) the shipper and the manufacturer. D) the shipper and the carrier.

D

The key themes that must be communicated to suppliers as they take greater responsibility for design are A) design for logistics. B) design for manufacturability. C) design for the future. D) A and B

D

The level of product availability A) is also referred to as the customer service level. B) is an important component of any supply chain's responsiveness. C) increases revenues for the supply chain by increasing sales. D) Only A and B are true.

D

The most important operational decision related to transportation in a supply chain is A) minimizing cost of transportation. B) maximizing profitability of the supply chain. C) reducing the level of cycle inventory. D) the routing and scheduling of deliveries.

D

The purpose of having multiple suppliers for a product is to A) guarantee the supplier sufficient business when the supplier has to make a significant buyer-specific investment. B) ensure a degree of competition. C) ensure the possibility of a backup should a source fail to deliver. D) both B and C

D

There are three basic questions to be considered when designing a transportation network between two stages of a supply chain. Which of the following is not a question to be considered? A) Should transportation be direct or through an intermediate site? B) Should intermediate site stock product or only serve as a cross-docking location? C) Should each delivery route supply a single destination or multiple destinations (milk run)? D) Should transportation costs be minimized?

D

To improve overall profits, the supplier must design a contract that A) encourages the buyer to purchase more. B) increases the level of product availability. C) requires the supplier to share in some of the buyer's demand uncertainty. D) all of the above

D

Using the output from supplier scoring and assessment to identify the appropriate supplier(s) is A) procurement. B) sourcing. C) supplier scoring and assessment. D) supplier selection.

D

What trade-offs do managers need to consider when making transportation decisions? A) Transportation cost versus inventory cost B) Transportation cost versus customer responsiveness C) Inventory cost versus customer responsiveness D) A and B only

D

When a firm uses production with postponement to satisfy a part of its demand with the rest being satisfied without postponement, it is using A) adjustable postponement. B) flexible postponement. C) managed postponement. D) tailored postponement.

D

When designing a sourcing strategy, it is important for a firm to A) develop a process that will procure materials at the lowest possible cost. B) maintain a record of all contracts, receipts, issues and other transactions in the event of lawsuits. C) maximize the profitability of the distributors within the supply chain. D) be clear on the factors that have the greatest influence on performance and target improvement on those areas.

D

Which contract increases the margin for the dealer as sales cross certain levels? A) Buyback or returns contract B) Revenue-sharing contract C) Quantity flexibility contract D) Threshold contracts

D

Which contracts create information distortion that result in excess inventory in the supply chain and a greater mismatch of supply and demand? A) Buyback or returns contract B) Revenue-sharing contract C) Quantity flexibility contract D) A and B only``

D

Which contracts result in the supply chain producing retailer orders rather than actual consumer demand? A) Buyback or returns contract B) Revenue-sharing contract C) Quantity flexibility contract D) A and B

D

Which mode of transportation is the least expensive? A) Air B) Truck C) Rail D) Water

D

Which mode of transportation is used primarily for petroleum and natural gas? A) Air B) Truck C) Water D) Pipeline

D

Which of the following are computational procedures that can be used to make decisions regarding the routing and scheduling of deliveries? A) the savings matrix method B) the generalized assignment method C) the loss prevention method D) A and B only

D

Which of the following is not a consequence of being able to place a second order during the season for a seasonal product? A) The expected total quantity ordered during the season with two orders is less. B) The average overstock to be disposed of at the end of the sales season is less. C) The profits are higher. D) The average inventory level is higher.

D

Which of the following is not a factor that affects carrier decisions? A) Vehicle-related cost B) Fixed operating cost C) Quantity-related cost D) Transportation cost

D

Which of the following is not a factor that must be considered when scoring and assessing suppliers? A) Quoted price B) Replenishment lead time C) On-time performance D) Supply affability

D

Which of the following is not a factor that must be considered when scoring and assessing suppliers? A) Supply flexibility B) Supply quality C) Inbound transportation cost D) Information instigation capability

D

Which of the following is not a key principle used in design for manufacturability? A) Part commonality B) Symmetrical parts C) Using catalog parts rather than designing a new part D) All of the above are principles used in design for manufacturability.

D

Which of the following is not a managerial lever to increase profitability? A) Increasing the salvage value of each unit B) Decreasing the margin lost from a stockout C) Reducing demand uncertainty D) Reducing the level of product availability below optimal

D

Which of the following is not a situation involving the trade-off between the cost of overstocking and the cost of understocking? A) Seasonal products where all leftover items must be disposed of at the end of the season B) Continuously stocked items where demand during stockout is backlogged C) Continuously stocked items where demand during stockout is lost D) Continuously stocked items where demand during stockout is redirected

D

Which transportation network design option uses a combination of other options to reduce the cost and improve responsiveness of the supply chain? A) Direct shipping network B) Direct shipping with milk runs C) Shipping via DC using milk runs D) Tailored network

D

Which type of contract is used when agents act on behalf of a principal and the dealer's margin is set to be the same as the supply chain margin, and the dealer exerts the right amount of effort? A) Buyback or returns contract B) Revenue-sharing contract C) Quantity flexibility contract D) Two-part tariffs

D

With reduced demand uncertainty, a supply chain manager can A) increase both overstocking and understocking. B) increase overstocking and reduce understocking. C) reduce overstocking and increase understocking. D) reduce both overstocking and understocking.

D

A shipper uses transportation to minimize the total cost while providing an appropriate level of responsiveness to the customer. Which of the following is not considered to be a major part of the total cost? A) Sourcing B) Inventory C) Information D) Production

D minimize the total cost (transportation, inventory, information, sourcing, facility)

Which of the following is not a cost the shipper needs to consider when making transportation decisions? A) Transportation cost B) Inventory cost C) Facility cost D) Quantity-related cost

D total cost (transportation, inventory, information, sourcing, facility)

A managerial lever to increase profitability is to increase the salvage value of each unit.

TRUE

A milk run is a route in which a truck either delivers product from a single supplier to multiple retailers or goes from multiple suppliers to a single retailer.

TRUE

A reliable supplier has low variability of lead time, whereas an unreliable supplier has high variability.

TRUE

A supply chain can use a high level of product availability to improve its responsiveness and attract customers, thus increasing revenue for the supply chain.

TRUE

A supply chain can use a high level of product availability to improve its responsiveness and attract customers.

TRUE

As the replenishment lot size grows, the cycle inventory at the firm grows, thus increasing the cost of holding inventory.

TRUE

Buyback contracts counter double marginalization by lowering the cost of overstocking for the retailer.

TRUE

Design collaboration ensures that any design changes are communicated effectively to all parties involved with designing and manufacturing the product.

TRUE

Effective sourcing processes within a firm can improve profits for the firm and total supply chain surplus in a variety of ways.

TRUE

Exchange rates, taxes, and duties can be significant for a firm with a global manufacturing and supply base.

TRUE

For many firms, price has traditionally been the only dimension that suppliers have been compared on.

TRUE

Having multiple sources ensures a degree of competition and also the possibility of a backup should a source fail to deliver.

TRUE

Ignoring inventory costs when making transportation decisions can result in choices that worsen the performance of a supply chain.

TRUE

In product-based tailored sourcing, low-volume products with uncertain demand are obtained from a flexible source, while high-volume products with less demand uncertainty are obtained from an efficient source.

TRUE

Outsourcing results in a supply chain function being performed by a third party.

TRUE

Postponement is valuable for a firm that sells a large variety of products with demand that is independent and comparable in size.

TRUE

Procurement is the process by which companies acquire raw materials, components, products, services, or other resources from suppliers to execute their operations.

TRUE

Quantity discounts can coordinate supply chain costs if the supplier has large fixed costs per lot.

TRUE

Quantity discounts lower the unit cost and tend to increase the required batch size.

TRUE

Quantity flexibility contracts counter double marginalization by giving the retailer the ability to modify the order based on improved forecasts closer to the point of sale.

TRUE

Quick response results in the manufacturer making a lower profit in the short term if all else is unchanged.

TRUE

Sourcing a product overseas may have lower product cost but will generally incur a higher inbound transportation cost.

TRUE

Sourcing processes include the selection of suppliers, design of supplier contracts, product design collaboration, procurement of material, and evaluation of supplier performance.

TRUE

Supplier performance must be rated on several factors other than purchase price because they all impact the total supply chain cost.

TRUE

Supplier performance should be compared based on their impact on total cost.

TRUE

Supply chain managers are able to increase their forecast accuracy as lead times decrease, which allows them to better match supply with demand and increase supply chain profitability.

TRUE

Tailored postponement allows a firm to increase its profitability by only postponing the uncertain part of the demand and producing the predictable part at a lower cost without postponement.

TRUE

Tailored sourcing may be volume-based or product-based depending on the source of uncertainty.

TRUE

Tailored transportation is the use of different transportation networks and modes based on customer and product characteristics.

TRUE

Temporal aggregation decreases a firm's responsiveness because of shipping delay but also decreases transportation costs because of economies of scale that result from larger shipments.

TRUE

The cost of understocking is denoted by Cu and is the margin lost by a firm for each lost sale because there is no inventory on hand.

TRUE

The costs of overstocking and understocking have a direct impact on both the optimal cycle service level and profitability.

TRUE

The goal of procurement is to enable orders to be placed and delivered on schedule at the lowest possible price.

TRUE

The level of product availability is also referred to as the customer service level.

TRUE

The most important operational decision related to transportation in a supply chain is the routing and scheduling of deliveries.

TRUE

The procurement process for indirect materials should focus on decreasing the transaction cost for each order.

TRUE

The role of sourcing planning and analysis is to analyze spending across various suppliers and component categories to identify opportunities for decreasing the total cost.

TRUE

The value of better information coordination will be linked to the amount of variability introduced into the supply chain as a result of the bullwhip effect.

TRUE

The vehicle-related cost is incurred whether the vehicle is operating or not and is considered fixed for short-term operational decisions by the carrier.

TRUE

There are many supplier characteristics other than price, such as lead time, reliability, quality, and design capability that impact the total cost of doing business with a supplier.

TRUE

Transportation cost depends on the prices offered by different carriers and the extent to which the shipper uses inexpensive and slow, or expensive and fast, means of transportation.

TRUE

Transportation is a significant component of the costs incurred by most supply chains.

TRUE

Two-part tariffs and threshold contracts can be used to counter double marginalization and increase agent effort in a supply chain.

TRUE

Unless adding a supplier with a unique and valuable capability clearly adds to total cost, the firm's supply base may be too small.

TRUE

Whether the optimal level of availability is high or low depends on where a particular company believes they can maximize profits.

TRUE

With reduced demand uncertainty, a supply chain manager can better match supply and demand by reducing both overstocking and understocking.

TRUE

In volume-based tailored sourcing, the predictable part of a product's demand is produced at a flexible facility, whereas the uncertain portion is produced at an efficient facility.

FALSE Predictable part of a product's demand is produced at an efficient facility, whereas the uncertain portion is produced at a flexible facility

To improve overall profits, the supplier must design a contract that requires the buyer to share in some of the supplier's demand uncertainty.

FALSE To improve overall profits, the supplier must share risk in a way that encourages the buyer to purchase more and increase the level of product availability Supplier must share in some of the buyer's demand uncertainty

Firms can significantly reduce the safety inventory they require by physically aggregating inventories in one location, which will also decrease transportation cost.

FALSE Transportation cost generally increases when inventory is aggregated

Rail is the dominant mode of freight transportation in the United States and accounts for over 75 percent of the nation's freight bill.

FALSE Truck

Unless each supplier has a somewhat different role, it is very likely that a firm's supply base is too small.

FALSE Unless each supplier has a somewhat different role, the supply base is too large

A firm can meet customer needs by using tailored transportation to provide the appropriate transportation choice based on customer and product characteristics, but at a higher cost.

FALSE at a lower cost

A distributor makes investment decisions regarding the transportation infrastructure and then makes operating decisions to try to maximize the return from these assets.

FALSE carrier

The cost of overselling is denoted by Co and is the loss incurred by a firm for each unsold unit at the end of the selling season.

FALSE cost of overstocking

The cost of underselling is a key factor that influences the optimal level of product availability.

FALSE cost of understocking

Supplier viability can be especially important if the supplier is providing mission-critical products and they would be easy to find a replacement for.

FALSE hard to find a replacement for

There is a cost associated with postponement because the production cost using postponement is typically lower than the production cost without it.

FALSE higher

Milk runs reduce outbound transportation costs by consolidating large shipments.

FALSE milk runs lower transportation cost by consolidating shipments to multiple locations on a single truck

The less flexible a supplier is, the less lead time variability he will display as order quantities change.

FALSE more lead time variability

When designing a sourcing strategy, it is important for a firm to be clear on the factors that have the least influence on performance and target improvement on those areas.

FALSE most influence

Transportation plays a key role in every supply chain because products are usually produced and consumed in the same location.

FALSE products are rarely produced and consumed in the same location

A carrier uses transportation to minimize the total cost (transportation, inventory, information, and facility) while providing an appropriate level of responsiveness to the customer.

FALSE shipper

A supply chain needs to achieve a balance between the level of availability and the cost of inventory that maximizes supply chain revenues.

FALSE supply chain profits

Purchasing, also known as procurement, is the process used to rate supplier performance.

FALSE the process by which companies acquire raw materials, components, products, services, or other resources from suppliers to execute their operations

A company that uses a more expensive short lead time supplier as a backup for a low cost, long lead time supplier is using A) tailored sourcing. B) quick response. C) postponement. D) improved forecasting.

A

A contract that allows a retailer to return unsold inventory up to a specified amount, at an agreed upon price is a A) buyback or returns contract. B) revenue-sharing contract. C) quantity flexibility contract. D) quantity discount contract.

A

A downside to which contract is that it leads to surplus inventory that must be salvaged or disposed? A) buyback or returns contract B) revenue-sharing contract C) quantity flexibility contract D) all of the above

A

A high level of product availability requires A) large inventories and tends to raise costs for the supply chain. B) large inventories and tends to reduce costs for the supply chain. C) small inventories and tends to raise costs for the supply chain. D) small inventories and tends to reduce costs for the supply chain.

A

A high level of product availability requires ________, which raises supply chain costs. A) large inventories B) increased revenues C) reduced costs D) understocking the product

A

A manager can reduce demand uncertainty via the following means EXCEPT A) lengthened forecasting window. B) quick response. C) postponement. D) tailored sourcing.

A

A supply chain can use a high level of product availability to A) improve its responsiveness and attract customers. B) reduce costs for the supply chain by reducing inventories. C) increase revenues for the supply chain by increasing sales. D) Only A and C are true.

A

As lead times decrease, supply chain managers are able to A) better match supply with demand. B) better match demand with supply. C) increase supply chain cost. D) decrease product availability.

A

Effective sourcing processes within a firm can A) improve profits for the firm and total supply chain surplus. B) reduce profits for the firm and total supply chain surplus. C) reduce total supply chain surplus. D) reduce profits for the firm.

A

Good design collaboration for manufacturability and supply chain can A) reduce product cost. B) increase required inventories. C) increase transportation cost. D) decrease manufacturability.

A

If each supplier of a firm does not have a somewhat different role, it is very likely that the firm's supply base is A) too large. B) too small. C) neither too large or too small. D) both too large and too small.

A

In tailored sourcing, firms use a combination of two supply sources, A) one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost. B) one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost. C) one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty at a lower cost. D) one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty at a lower cost.

A

Temporal aggregation A) is the process of combining orders across time. B) increases a firm's responsiveness. C) decreases transportation costs because of economies of scale. D) all of the above

A/C Decreases a firm's responsiveness because of shipping delay, but also decreases transportation costs because of economies of scale that result from larger shipments

A contract where the buyer pays a minimal amount for each unit purchased from the supplier but shares a fraction of the revenue for each unit sold is A) buyback or returns contract. B) revenue-sharing contract. C) quantity flexibility contract. D) quantity discount contract.

B

An increase in forecast accuracy A) decreases both the overstocked and understocked quantity and decreases a firm's profits. B) decreases both the overstocked and understocked quantity and increases a firm's profits. C) increases both the overstocked and understocked quantity and decreases a firm's profits. D) increases both the overstocked and understocked quantity and increases a firm's profits.

B

As the total quantity for the season is broken up into multiple smaller orders, the buyer is better able to A) match supply and demand and increase cost. B) match supply and demand and increase profitability. C) match supply and demand and decrease profitability. D) match supply and demand and decrease product availability.

B

If adding a supplier with a unique and valuable capability does not clearly add to a firm's total cost, the supply base may be A) too large. B) too small. C) neither too large or too small. D) both too large and too small.

B

Ignoring uncertainty in demand encourages a greater use of A) expensive but flexible transportation modes. B) inexpensive and inflexible transportation modes. C) inexpensive and flexible transportation modes. D) expensive and inflexible transportation modes.

B

Postponement is A) not very effective if a large fraction of demand comes from multiple products. B) not very effective if a small fraction of demand comes from a single product. C) only effective if a large fraction of demand comes from a single product. D) effective even if a large fraction of demand comes from a single product.

B

Postponement is valuable for a firm that A) sells a large variety of products with demand that is dependent and comparable in size. B) sells a large variety of products with demand that is independent and comparable in size. C) sells a small variety of products with demand that is dependent and comparable in size. D) sells a small variety of products with demand that is independent and comparable in size.

B

Quantity discounts lower the unit cost A) but tend to increase the required batch size and as a result, reduce the cycle inventory. B) but tend to increase the required batch size and as a result the cycle inventory. C) and tend to reduce the required batch size and as a result the cycle inventory. D) and tend to reduce the required batch size and as a result, increase the cycle inventory.

B

Quick response is clearly advantageous to A) a distributor in the supply chain. B) a retailer in the supply chain. C) a manufacturer in the supply chain. D) every step in the supply chain.

B

Cost of Goods Sold (COGS) represents A) less than 20 percent of sales for most major manufacturers. B) less than 50 percent of sales for most major manufacturers. C) well over 50 percent of sales for most major manufacturers. D) well over 80 percent of sales for most major manufacturers.

C

Inexpensive and inflexible transportation modes tend to A) perform poorly. B) perform very poorly when plans change. C) perform well when everything goes as planned. D) all of the above

B/C perform well when everything goes as planned and perform poorly when plans change

A company with multiple products, that chooses to delay product differentiation until closer to the point of sale, is using A) tailored sourcing. B) quick response. C) postponement. D) improved forecasting.

C

A contract that allows the buyer to modify the order (within limits agreed to by the supplier) as demand visibility increases closer to the point of sale is a A) buyback or returns contract. B) revenue-sharing contract. C) quantity flexibility contract. D) quantity discount contract.

C

A supply chain needs to achieve a balance between the level of availability and the cost of inventory that A) maximizes supply chain revenues. B) minimizes supply chain costs. C) maximizes supply chain profitability. D) maximizes supply chain availability.

C

Considering the factors influencing total cost and supplier performance, which of the following is the LEAST quantifiable factor? A) Supplier price B) Supplier terms C) Support D) Warehousing cost

C

Tailored transportation is the use of different transportation networks and modes based on A) customer density. B) customer distance from warehouse. C) customer size and location. D) all of the above

D

The cost of loading/unloading orders, as well as other processing costs associated with transportation, is considered A) transportation cost. B) inventory cost. C) facility cost. D) processing cost.

D

A contract that decreases overall costs but leads to higher lot sizes and thus higher levels of inventory in the supply chain is a A) buyback or returns contract. B) revenue-sharing contract. C) quantity flexibility contract. D) quantity discount contract.

D

A contract that is used to induce performance improvement from a supplier along dimensions, such as lead time, where the benefit of improvement accrues primarily to the buyer, whereas the effort for improvement comes primarily from the supplier is a A) buyback or returns contract. B) revenue-sharing contract. C) quantity flexibility contract. D) shared savings contract.

D

An intermediary can increase the supply chain surplus by decreasing the number of relationships required between multiple buyers and sellers. This is called A) capacity aggregation. B) inventory aggregation. C) warehouse aggregation. D) relationship aggregation.

D

As the ratio of the cost of overstocking to the cost of understocking gets smaller, A) the optimal level of product availability becomes irrelevant. B) the optimal level of product availability decreases. C) the optimal level of product availability remains stable. D) the optimal level of product availability increases.

D

Cheaper modes of transport typically have A) shorter lead times and smaller minimum shipment quantities. B) shorter lead times and larger minimum shipment quantities. C) longer lead times and smaller minimum shipment quantities. D) longer lead times and larger minimum shipment quantities.

D

Design collaboration is important because A) about 80 percent of the cost of a product is determined during design. B) it ensures that any design changes are communicated effectively to all parties involved with designing and manufacturing the product. C) the supplier sends product in response to orders placed by the buyer. D) A and B

D

In product-based tailored sourcing A) low-volume products with uncertain demand are obtained from a flexible source. B) high-volume products with less demand uncertainty are obtained from an efficient source. C) high-volume products with less demand uncertainty are obtained from a flexible source. D) A and B only

D

Investment decisions regarding the transportation infrastructure (rails, locomotives, trucks, airplanes, etc.) are the primary concern of A) the shipper. B) the supplier. C) the manufacturer. D) the carrier.

D

On-time performance affects the variability of the lead time, because A) a reliable supplier has high variability of lead time. B) a reliable supplier has low variability of lead time. C) an unreliable supplier has high variability of lead time. D) B and C

D

Scoring the performance of suppliers in terms of replenishment lead time thus allows the firm to evaluate the impact each supplier has on A) the cost of holding cycle inventory. B) the cost of holding replacement inventory. C) the purchase price of material. D) the cost of holding safety inventory.

D

Sourcing a product overseas may have A) higher product cost and will generally incur a higher inbound transportation cost. B) higher product cost but will generally incur a lower inbound transportation cost. C) lower product cost and will generally incur a lower inbound transportation cost. D) lower product cost but will generally incur a higher inbound transportation cost.

D

A good supplier scoring and assessment process will primarily track performance along the price dimension when evaluating a supplier.

FALSE

A managerial lever to increase profitability is to decrease the salvage value of each unit.

FALSE

As the replenishment lead time from a supplier grows, the amount of safety inventory that needs to be held by the buyer also grows in direct proportion to the replenishment lead time.

FALSE

Cost of Goods Sold (COGS) represents less than 20 percent of sales for most major manufacturers.

FALSE

Good design collaboration for manufacturability and supply chain can also increase required inventories and transportation cost.

FALSE

Quality has little effect on the lead time taken by the supplier to complete the replenishment order or the variability of this lead time.

FALSE

Revenue-sharing contracts counter double marginalization by decreasing the cost per unit charged to the retailer, thus effectively decreasing the cost of understocking.

FALSE

Single sourcing is used to ensure a degree of competition and guarantee the possibility of a backup should a source fail to deliver.

FALSE

Supplier performance analysis should be used to build a portfolio of suppliers with similar strengths.

FALSE

The mode of transportation that results in the lowest transportation cost will lower total costs for a supply chain.

FALSE

An increase in forecast accuracy increases both the overstocked and understocked quantity and decreases a firm's profits.

FALSE An increase in forecast accuracy decreases both the overstocked and understocked quantity and increases profits

As the ratio of the cost of overstocking to the cost of understocking gets smaller, the optimal level of product availability decreases.

FALSE As this ratio gets smaller, the optimal level of product availability increases

A carrier's decisions are affected by the prices that the market will bear, but not the responsiveness it seeks to provide its target segment.

FALSE Carrier decisions are affected by equipment cost, fixed operating costs, variable operating costs, the responsiveness the carrier seeks to provide its target segment, and the prices that the market will bear

A high level of product availability requires less inventory, which will keep costs down for the supply chain.

FALSE High level of product availability requires large inventories, which raise supply chain costs

If quick response allows multiple orders in the season, profits increase and the overstock quantity increases.

FALSE If quick response allows multiple replenishment orders in the season, profits increase and the overstock and understock quantities decrease