Ch. 11 (+s)
The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has reduced the overall level of supply chain risk.
FALSE
The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.
FALSE
The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site
FALSE
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
When using the low-cost strategy for supply chain management, a firm should use buffer stocks to ensure speedy supply.
FALSE
With the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.
FALSE
forward integration:
Forward integration is a strategy in which companies expand their activities to control the direct distribution of their products. This might be required, if companies would potentially benefit from handling e.g. the shipping of own products directly to customers, or the retail selling of own brands in brand stores.
________ is a Japanese term that describes suppliers who become part of a company coalition.
Keiretsu
The ________ is a set of processes, metrics, and best practices developed by the Supply Chain Council
Supply Chain Operations Reference model or SCOR model
Benchmark firms have driven down costs of supply-chain performance
TRUE
Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories.
TRUE
What term is used to describe the outsourcing of logistics? A) e-logistics B) shipper-managed inventory (SMI) C) hollow logistics D) sub-logistics E) third-party logistics (3PL)
e: 3PL
Of the four stages of supplier selection, the stage at which the factor weighting approach would be used is ________.
supplier evaluation
A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one- time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of...?
the bullwhip effect
Drop shipping means...
the supplier will ship directly to the end consumer, rather than to the seller
Drop shipping results in...
time and shipping cost savings.
________ is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor.
vertical integration
Identify the ten major categories of supply chain risk (1) supplier failure to deliver; (2) supplier quality failures; (3) outsoucing; (4) logistics delays or damage; (5) distribution; (6) information loss or distortion; (7) political; (8) economic; (9) natural catastrophes; (10) theft, vandalism, and terrorism
(1) supplier failure to deliver; (2) supplier quality failures; (3) outsoucing; (4) logistics delays or damage; (5) distribution; (6) information loss or distortion; (7) political; (8) economic; (9) natural catastrophes; (10) theft, vandalism, and terrorism
With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)?
1
Backward integration:
Backward integration can involve a purchase of suppliers in order to reduce supplier dependency with regard to e.g. timely deliveries, quality concerns, innovation ability etc
A firm that employs a response strategy should minimize inventory throughout the supply chain
FALSE
As the number of facilities increases, total logistics costs tend to follow a curve that first rises, then declines
FALSE
Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.
FALSE
Cross-sourcing describes the practice of having two suppliers provide every component
FALSE
Designing distribution networks to meet customer expectations suggests three criteria: (1) rapid response, (2) cost, and (3) service.
FALSE
Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation.
FALSE
Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.
FALSE
Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers, and part vertical integration.
FALSE
Once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may decrease compared to the optimal number of facilities based on total logistics costs only
FALSE
When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described as?
a joint venture
Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? A) 12.50 B) 10.00 C) 42.00 D) 4.16 E) 20.00
a: 12.50
What type of negotiating strategy requires the supplier to open its books to the purchasers? A) cost-based price model B) market-based price model C) competitive bidding D) price-based model E) transparent negotiations
a: cost-based price model
Local optimization is a supply-chain complication best described as: A) optimizing one's local area without full knowledge of supply chain needs. B) obtaining very high production efficiency in a decentralized supply chain. C) the prerequisite of global optimization. D) the result of supply chains built on suppliers with compatible corporate cultures. E) the opposite of the bullwhip effect.
a: optimizing one's local area without full knowledge of supply chain needs
What is the practice of keeping a product generic as long as possible before customizing? A) postponement B) keiretsu C) vendor-managed inventory D) forward integration E) backward integration
a: postponement
Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy? A) product development skills B) cost C) capacity D) speed E) flexibility
a: product development skills
Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions? A) purchasing B) postponement C) break-bulk activities D) consolidation point E) cross-docking
a: purchasing
What are the four stages of supplier selection? A) supplier evaluation, supplier development, negotiations, and contracting B) supplier evaluation, negotiations, supplier acquisition, and supplier development C) introduction, growth, maturity, and decline D) supplier evaluation, supplier development, negotiations, and centralized purchasing E) negotiations, contracting, centralized purchasing, and E-procurement
a: supplier evaluation, supplier development, negotiations, contracting
Distribution management focuses on which of the following? A) the outbound flow of products B) incoming materials C) allocation of demand among suppliers D) setting dividend rates E) balancing an assembly line
a: the outbound flow of products
A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) keiretsu
b: forward integration
Which sourcing strategy is particularly common when the products being sourced are commodities? A) few suppliers B) many suppliers C) keiretsu D) vertical integration E) virtual companies
b: many suppliers
Designing distribution networks to meet customer expectations suggests what three criteria? A) rapid response, service, and cost B) rapid response, product choice, and service C) product choice, cost, and service D) cost, process choice, and service E) rapid response, cost, and process choice
b: rapid response product choice service
Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model? A) Make B) Sell C) Plan D) Source E) Return
b: sell
Which of the following is NOT an advantage of a virtual company? A) speed B) total control over every aspect of the organization C) specialized management expertise D) low capital investment E) flexibility
b: total control over every aspect of the organization
A fast-food retailer that acquired a spice manufacturer would be practicing...
backward integration
Which of the following statements is true regarding the leverage of supply chain savings? A) Supply chain leverage is about the same for all industries. B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. C) Supply chain savings exert more leverage as the firm's net profit margin decreases. D) Supply chain leverage depends only upon the percent of sales spent in the supply chain. E) None of the above is true.
c
Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas? A) trucking B) railroads C) airfreight D) waterways E) pipelines
c: airfreight
A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) job expansion
c: backward integration
Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other? A) outsourcing B) dual-sourcing C) cross-sourcing D) backup-sourcing E) parallel-sourcing
c: cross sourcing
What three logistics-related costs are relevant when analyzing the choice of the number of facilities in a distribution network? A) inventory costs, production costs, and transportation costs B) inventory costs, production costs, and facility costs C) inventory costs, transportation costs, and facility costs D) facility costs, production costs, and transportation costs E) facility costs, inventory costs, and marketing costs
c: inventory costs transportation costs facility costs
Which of the following is NOT an advantage of the "few suppliers" sourcing strategy? A) suppliers have a learning curve that yields lower transaction and production costs B) suppliers are more likely to understand the broad objectives of the end customer C) less vulnerable trade secrets D) creation of value by allowing suppliers to have economies of scale E) suppliers' willingness to provide technological expertise
c: less vulnerable trade secrets
Among which of the following industries are purchasing costs the LOWEST percentage of sales? A) automobile B) petroleum C) restaurants D) lumber E) chemical
c: restaurants
What term describes a supply chain that is designed to optimize both forward and reverse flows?
closed-loop supply chain
Logistics management can provide a competitive advantage through improved...
customer service
Outsourcing: A) transfers traditional internal activities to outside vendors. B) utilizes the efficiency that comes with specialization. C) allows the outsourcing firm to focus on its key success factors. D) All of the above are true of outsourcing. E) None of the above is true of outsourcing.
d: all the above
What are the three classic types of negotiation strategies? A) supplier evaluation, supplier development, and supplier selection B) Theory X, Theory Y, and Theory Z C) many suppliers, few suppliers, and keiretsu D) cost-based price model, market-based price model, and competitive bidding E) traditional auctions, reverse auctions, and online exchanges
d: cost-based price model, market-based price model, competitive bidding
Which of the following is NOT an opportunity for effective management in the supply chain? A) accurate "pull" data B) vendor-managed inventory C) postponement D) local optimization E) CPFR
d: local optimization
Which of the following is NOT a typical benefit of centralized purchasing? A) leverage purchase volume for better pricing B) develop specialized staff expertise C) reduce the duplication of tasks D) reduce lead times E) promote standardization
d: reduced lead times
Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels? A) supplier qualification B) product tracking C) independent audits D) refrigeration E) just-in-time delivery
d: refrigeration
Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver? A) use multiple suppliers B) effective contracts with penalties C) subcontractors on retainer D) require overnight delivery E) pre-planning
d: require overnight delivery
Which one of the following is NOT one of the six sourcing strategies? A) negotiation with many suppliers B) vertical integration C) keiretsu D) short-term relationships with few suppliers E) virtual companies
d: short-term relationships with few suppliers
Which of the following is NOT a condition that favors the success of vertical integration? A) availability of capital B) availability of managerial talent C) sufficiently high demand D) small market share E) All of the above favor the success of vertical integration.
d: small market share
Which of the following is NOT true about reverse logistics as compared to forward logistics? A) Inventory management is not consistent. B) Distribution costs are less directly visible. C) Pricing is dependent upon many factors. D) Speed is often very important. E) Forecasting is more uncertain.
d: speed is often very important
While freight rates are often based on very complicated pricing systems, in general, the primary freight price factor is based on which of the following attributes? A) damage record B) on-time delivery C) door-to-door service D) speed of shipment E) consolidation capabilities
d: speed of shipment
A disadvantage of the "few suppliers" sourcing strategy is: A) the risk of not being ready for technological change. B) the lack of cost savings for customers and suppliers. C) possible violations of the Sherman Antitrust Act. D) the high cost of changing partners. E) the suppliers are less likely to understand the broad objectives of the procuring firm and the end
d: the high cost of changing partners
As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why? A) Transportation and inventory costs first decline steeply, then rise, while facility costs always rise. B) Transportation costs always decline, but eventually the rise in facility and inventory costs outweigh the declining transportation costs. C) Facility costs first decline steeply, then rise, while transportation and inventory costs always rise. D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise. E) Inventory costs first decline steeply, then rise, while transportation and facility costs always rise.
d: transportation costs first decline steeply, then rise, while facility and inventory costs always rise
Savings in the supply chain exert more leverage as the firm's net profit margin...
decreases
A blanket order is a long-term purchase commitment to a supplier for items that are to be...
delivered against short-term releases to ship.
Operations managers are finding online auctions a fertile area for...
disposing of discontinued inventory
In what type of auction does a buyer initiate the process by submitting a description of the desired product or service?
dutch auction
Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold? A) 12.50 B) 5.20 C) 2.60 D) 0.08 E) 4.16
e: 4.16
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 the above
The bullwhip effect: A) occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. B) results in increasing fluctuations at each step of the sequence. C) increases the costs associated with inventory in the supply chain. D) occurs because of distortions in information in the supply chain. E) All of the above are true.
e: all 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 the above
Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain? A) suppliers B) distributors C) wholesalers D) retailers E) landscaping contractors
e: contractors
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
Which of the following statements does NOT accurately explain what occurs when the number of facilities in a distribution network increases? A) response time decreases B) profit first increases, then decreases C) total logistics costs first decrease, then increase D) inventory costs increase E) response time first decreases, then increases
e: response time first decreases, then increases
TAL Apparel's management of its supply chain for Stafford shirts sold at JCPenney is an example of which of the following? A) blanket orders B) standardization C) postponement D) lot size reduction E) single-stage control of replenishment
e: single-stage control of replenishment
Which of the following would NOT be subject to negotiation between a buyer and supplier? A) price B) credit and delivery terms C) quality standards D) cooperative advertising agreements E) All of the above could be negotiated.
e: they can all be negotiated
Which of the following best describes Vizio's sourcing strategy? A) few suppliers B) keiretsu C) joint venture D) vertical integration E) virtual company
e: virtual company
Outsourcing is a form of specialization that allows the outsourcing firm to...
focus on its key success factors
Virtual companies are also known as ___________.
hollow corporations or network companies
Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called?
keiretsu
The Japanese concept of a company coalition of suppliers is:
keiretsu
Vertical integration appears particularly advantageous when the organization has a...
large market share
All EXCEPT which of the following are opportunities in managing the integrated supply chain? A) postponement B) drop shipping C) blanket orders D) standardization E) line balancing
line balancing
________ is an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities.
logistics management
For which corporate strategy(ies) should supply chain inventory be minimized?
low cost and differentiation strategies
Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as...
manufacturing partners
what are the six sourcing strategies.
many suppliers few suppliers vertical integration (forward vs backward) joint venture keiretsu virtual companies
While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are...
negotiated
The bullwhip effect refers to the increasing fluctuations in orders that often occur as...
orders move through the supply chain.
The Institute for Supply Management publishes the...
principles and standards for ethical supply management conduct.
describe vertical integration
producing goods or services previously purchased
The objective of the make-or-buy decision is to help identify the...
products and services that can be obtained externally.
In most manufacturing industries, what is likely the largest cost to the firm?
purchasing
E-procurement is...
purchasing facilitated through the Internet
By which distribution system is more than 90 percent of U.S. coal shipped?
railroads
________ is the process of sending returned products back up the supply chain for value recovery or disposal
reverse logistics
Vertical integration is when a company controls more than one __________ of the supply chain.
stage backward vs forward