Supply Management Final KEY QUESTIONS

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

Adding safety stock

A win-win (integrative) negotiation approach works best: - when the supplier adds a high level of value to the product or service - when technology, cycle time, quality, and price/cost are important - For services where cost control is crucial

All of the above

Which of the following are reasonable sources of relevant information when planning for a supplier negotiation? - Information derived through the internet - Inquires directly to personnel at the supplier - Others who have experience with the supplier

All of the above

Which of the following statements are true regarding single-sampling plans?

All of the above

According to the textbook, The following are reasons favoring multiple suppliers EXCEPT: - Need capacity - Spread the risk of supply interruption -Create competition

All of thee reasons are favoring multiple suppliers

According to the textbook, which of the following is NOT a Supply Chain Risk Management activity:

All of these are supply chain risk management activities

The ability of a sampling plan to discriminate between lots of high quality and lots of low quality is described by:

An operating characteristic curve

The EOQ is the lowest inventory level at which a new order must be placed to avoid a stockout

False

The EOQ is the lowest inventory level at which a new order must be placed to avoid a stockout.

False

The following is an example of the bullwhip effect

Barkley's incorrectly anticipates customer demand resulting in stockouts at several popular retailers

Making exaggerated or misleading environmental claims for products is called ____

Bullwhipping

The universally accepted definition of supply chain management is "the management and integration of the parties involved in manufacturing the end terms coveted by consumers"

False

The use of power in negotiation is pretty much a negative thing.

False

When making concessions in a negotiation, general concession should be significant and constant to show good faith.

False

____ is a negotiation tactic that involves taking a time out

Causus

________ includes the ability to punish the other party.

Coercive Power

The purpose of safety stock is to:

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

Squeezing suppliers to generate a lower annual purchasing spend may lead to all the following except

Enhanced sustainability performance

When the order size for an item is large, orders have to be placed on a frequent basis, causing high annual order costs. However, the firm then has a low average inventory level for this item, resulting in low annual inventory holding costs

False

A negotiator with____ is recognized as having accumulated and mastered vast knowledge about a particular subject, often with verifiable credentials to document that mastery.

Expert power

A 4PL, commonly referred to as a lead logistics provider, is a trucking company that also provides tracking services

False

A negotiator should always allow his/her BATNA to be revealed to the other party, because the final settlement is unlikely to vary much from that point.

False

A procurement negotiation seldom affects other stakeholders throughout the organization

False

Because it could complicate the process, before engaging in a negotiation, the individual or team conducting the negotiation should avoid sharing details of their negotiation strategy with others in their organization.

False

Breakeven analysis is the only way to determine the answer to the Make or Buy problem

False

By decreasing the involvement of the supplier in the design process, the buyer is free to focus more attention on core competencies.

False

Coercive power is one of the most useful in negotiation when longer-term relationships are desired.

False

Firms engaging in supply chain management emphasize long-term strategic supplier alliances by increasing the variety of volume into one or fewer suppliers, resulting in a smaller supply base

False

In a negotiation, concede early, often, and significantly, compared to the other side.

False

In order to reach a negotiated agreement using principled negotiation, a negotiator should always focus on the other party's positions, not his or her underlying interests

False

It would be a sign of weakness for a negotiator to change positions when there is major concession by the other party- the negotiator should instead push for more

False

One key advantage when using third-party logistics (3PL) providers is a lessened reputational risk with customers.

False

One key advantage when using third-party logistics (3PL) providers is improved communication with customers and suppliers.

False

Ordering costs are easily and precisely measured

False

Performance measures should not be developed to monitor the firm's ongoing risk management capabilities if the firm does not fear any supply disruptions.

False

Since the transportation sector is responsible for approximately 15 percent of greenhouse gas emissions, less companies are looking for their logistics providers to reduce their carbon footprints since 15 percent is not significant.

False

Price fluctuations that are the result of special product promotions, quantity discounts, and other special pricing discounts by suppliers result in:

Forward buying

MRO supplies:

Goods used in the manufacturing process, but do not become parts of the finished goods

An underperforming supply chain is defined as one that exhibits poor service, unproductive assets and...

High variable operating costs

Dependent demand and independent demand items differ in that I. For any product, all components are dependent-demand items II. The need for independent-demand items is forecast III. The need for dependent-demand items is calculated

I, II, III

Which one of the following statements regarding the economic order quantity is true?

If an order quantity is larger than the EOQ, the annual holding cost exceeds the annual ordering costs

Which of the following is FALSE?

In general, the further up the supply chain a company is, there is less distortion of information received from downstream actions

The required safety inventory...

Increases with an increase in the lead time and the standard deviation of demand

Continuous review policies for inventory replenishment require safety inventory to cover demand during

Lead Time

Four areas are highly regulated in industry. Which of the following is NOT one of these areas:

Technology

Assembly or production of finished goods, producing the right amount of product, and ensuring that finished products meet specific quality, cost, and customer service requirements are all important issues that are most closely related to

Operations

Which of the following are not sources of referent power?

Position

Which of the following is NOT a reason to outsource (buy) versus making?

Protect proprietary technology

________ is the money a firm spends on goods and services

Purchase Spend

Which of the following is a reverse logistics activity

Recycling products and components

____ means that one party is able to offer something of perceived value to the other party.

Reward power

_________ negotiators tend to make very extreme initial demands and wait for the foreign negotiator to concede.

Russian

Inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period is

Safety Inventory

Which of the following illustrates Forward Vertical Integration?

Sony buying trucks to deliver their finished goods inventories to their customers' warehouse

Which of the following is not a reason for negotiating with suppliers?

The purchase is for widely available, commodity-like goods

The general idea behind _______ is that one company allows a specialist company to provide it with one or more logistics functions

Third-party logistics

According to the text, which of the following is not an important element of the supply chain

Transportation ***(Supply, logistics and integration are important elements)

A cardinal rule of negotiation is to not give away any concession without getting something of equal or greater value in return.

True

A negotiator must learn to recognize and understand the type of tactics a counterpart is using

True

According to the text, the four important elements of the supply chain are supply, operations, logistics, and integration

True

According to the textbook, studies point to the fact that as more and more firms penetrate new and emerging markets, supply chain risk is increasing

True

According to the textbook, supply chains include raw materials suppliers, intermediate component manufacturers, end-product manufacturers, wholesale distributors and retailers

True

An alternative to acceptance sampling is 100% inspection.

True

Before actual negotiations begin, the parties need to believe they can reach an agreement on their key objectives

True

Buyers and suppliers working together, sharing proprietary design and manufacturing information, establishes a level of trust and cooperation in many future collaborative and potentially successful projects

True

Effective planning means that buyers achieve an agreement that is more creative and valuable than one that might be available to their competitors.

True

If stock out costs are unknown, the safety stock level must be determined statistically

True

In a double-sampling plan, a second sample is taken if the results of the first sample are inconclusive

True

Indirect costs are those that cannot be traced directly to the unit produced and they are synonymous with manufacturing overhead

True

Inventory visibility is quite difficult to achieve along the supply chain

True

Negotiation is an efficient way to convey the buyer's specific sourcing requirements and specifications to its supply base

True

Negotiation is more appropriate when other issues besides price are important or when competitive bidding will not satisfy the buyer's requirements on various issues.

True

Negotiators who interact face-to-face are more likely to reach agreement and avoid impasse than their e-negotiation counterparts.

True

Performance evaluation metrics must be established; and, as alliances show signs of success, strategies can be shared across the various alliance boundaries

True

Proactively seeking and creating strategic supplier alliances have become important objectives of firms looking to manage their supply chains.

True

Probabilistic models tell you the optimal safety stock level to minimize the risk and cost of stockouts

True

Public standards (governance) aim to eliminate the worst offenders

True

Public standards (governance) set minimum standards and create barriers to entry

True

Purchasing the same or similar products from geographically dispersed suppliers could have the effect of spreading and hence reducing the risk of supply disruptions from political upheavals, weather-related disasters and other widespread supply problems.

True

Sampling plans are designed considering both the cost and time required for the inspection.

True

The ABC inventory control system categorizes inventory items into three groups, A, B, and C. A items are given highest priority, while C items have the lowest priority. Prioritization may be based on annual dollar usage, shelf life, or sales volume.

True

The basic EOQ model is a deterministic model

True

The reverse logistics activities are included in the supply chain

True

To deal with challenges associated with improving quality, manufacturing efficiency, customer service and new product design and development, manufacturers have begun purchasing from a select number of certified, high-quality suppliers with excellent service reputations.

True

Uncertain demand or lead time raises the possibility of stockouts, thus requiring safety stock to be held to safeguard against variations in demand or lead time

True

When the demand of a product is constant and the lead time is unknown but can be specified by means of a normal distribution, the safety stock is used to buffer against variations in the lead time

True