ISDS 3115 Chapter 11 Concept Questions
Which of the following statements is NOT true? A) An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting. B) The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain's competitive advantage and benefits to the ultimate consumer. C) A supply chain includes suppliers; manufacturers and/or service providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer. D) Supply chain management describes the coordination of all supply chain activities, starting with raw materials, and ending with a satisfied customer.
A) An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.
The do-it-yourselfer plucked a gallon can of base paint from the shelf of the local hardware store and handed it to Keith, the cheerful clerk at the paint counter. Their eyes met briefly and the do-it-yourselfer silently handed over sample 150C-1, Musical Mist, to the clerk. It was impractical to keep several gallons of every possible color on the shelves at the hardware store, so the paint manufacturer had created clever workaround. The workaround was a computer-based system that added predetermined quantities of pigments to a gallon can of base paint depending on the desired shade, in this case, Musical Mist. The hardware store now needed to stock only the base paint, this machine, and a small supply of paint pigments in order to create the thousands of colors in its catalog. This scenario is a prime example of: A) postponement B) vendor-managed inventory C) drop shipping D) the bullwhip effect
A) postponement
Airfreight A) is the best way to transport natural gas B) is a fast-growing mode of shipping C) represents about 10% of the tonnage shipping in the U.S. D) is the oldest means of freight transportation
B) is a fast-growing mode of shipping
Which of the following statements is NOT generally an implication stemming from an increase in the number of facilities? A) quicker response B) increased customer satisfaction C) decreased total logistics cost D) increased facility costs
C) decreased total logistics cost
When determining the optimal number of facilities, logistic-related costs do NOT usually include which of the following costs? A) inventory B) transportation C) purchasing D) facility
C) purchasing
Which of the following is NOT true about reverse logistics as compared to forward logistics? A) pricing is dependent on many factors B) distribution costs are less directly visible C) speed is often very important D) forecasting is more uncertain
C) speed is often very important
What is developing the ability to produce goods or services previously purchased or actually buying a supplier/distributor? A) outsourcing B) horizontal integration C) vertical integration D) virtual companies
C) vertical integration
Which organization has developed principle and standards to be used as guidelines for ethical behavior? A) Institute for Vendor Management B) Institute for Purchasing Management C) Institute for Procurement Management D) Institute for Supply Management
D) Institute for Supply Management
Which negotiation strategy bases price on a published, auction, or index price? A) cost-based price model B) supply-based price model C) competitive bidding D) market-based price model
D) market-based price model
What is transferring a firm's activities that have traditionally been internal to external suppliers? A) vertical integration B) keiretsu network C) make-or-buy D) outsourcing
D) outsourcing
Prior to embarking on supply chain design, operations managers must first consider: A) what kind of distribution to have B) "make-or-buy" and outsourcing designs C) how to manage supply chain inventory D) how to select suppliers
B) "make-or-buy" and outsourcing designs
The advantage of having a few suppliers is to: A) form a long-term relationship B) look for short-term attributes C) take advantage of diseconomies of scale D) pursue low cost
A) form a long-term relationship
Which of the following industries has the highest supply chain cost as a percentage of sales? A) Restaurants B) Petroleum C) Automobile D) Metals
B) Petroleum
Which of the following mitigation tactics could reduce economic risk? A) subcontractors on retainer B) multiple transportation modes and warehouses C) purchasing contracts that address price fluctuations D) franchising and licensing
C) purchasing contracts that address price fluctuations
Which of the following statements is NOT one of the *differentiation strategy* decisions? A) Use buffer stocks to ensure speedy supply B) Minimize inventory to avoid obsolescence C) Gather and communicate market research data D) Modular design to aid product differentiation
A) Use buffer stocks to ensure speedy supply
A *response strategy* requires suppliers be selected based primarily on: A) capacity, speed, and flexibility B) being willing to share information C) product development skills D) cost
A) capacity, speed, and flexibility
Which of the following could reduce distribution risk? A) careful selection, monitoring and effective contracts with penalties B) use multiple suppliers C) secure IT systems D) cross-country diversification
A) careful selection, monitoring and effective contracts with penalties
Which of the following statements is NOT one of the *response strategy* decisions? A) gather and communicate market research data B) use buffer stocks to ensure speedy supply C) low setup time D) fast transportation
A) gather and communicate market research data
Which of the following is NOT one of the benefits accrued from a centralized purchasing function? A) increase the duplication of tasks B) maintain professional control over the purchasing process C) devote more resources to the supplier selection and negotiation process D) leverage purchase volume for better pricing
A) increase the duplication of tasks
Trucking: A) is increasingly using computers to manage its operations B) is the least used transportation mode for purchasing goods C) does not play a role in multimodal shipping D) is one of the least flexible transportation modes
A) is increasingly using computers to manage its operations
The advantage of having many suppliers is their willingness to: A) offer lower prices in the short-term B) participate in JIT C) provide technical expertise D) provide innovations
A) offer lower prices in the short-term
The cost to produce the goods or services sold for a given period is referred to as: A) inventory investment B) cost of goods sold C) weeks of supply D) inventory turnover
B) cost of goods sold
Which of the following statements is true regarding cross-sourcing? A) cross-sourcing develops the ability to produce goods or services previously purchased or actually buying a supplier or distributor B) cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other C) cross-sourcing enhances technological skills D) cross-sourcing describes suppliers who become part of a company coalition.
B) cross-sourcing uses one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.
Which of the following strategies is part collaboration, part purchasing from few suppliers, and part vertical integration? A) joint ventures B) keiretsu networks C) virtual companies D) horizontal integration
B) keiretsu networks
Three common measures of supply chain performance are: A) percentage invested in inventory, debt/equity ratio, and weeks of supply B) percentage invested in inventory, inventory turnover, and weeks of supply C) percentage invested in inventory, inventory turnover, and debt/equity ratio D) debt/equity ratio, inventory turnover, and weeks of supply
B) percentage invested in inventory, inventory turnover, and weeks of supply
Which of the following is the first stage of supplier selection? A) negotiations B) supplier evaluation C) supplier development D) contracting
B) supplier evaluation
A lawnmower assembly plant uses a variety of nuts, bolts, screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of: A) e-procurement B) vendor-managed inventory C) postponement D) single-stage control of replenishment
B) vendor-managed inventory
Which of the following statements is NOT true regarding the bullwhip effect? A) Bullwhip fluctuations in the supply chain increase the costs associated with inventory, transportation, shipping and receiving. B) Inaccurate information results in distortions and fluctuations, causing what is known as the bullwhip effect. C) The bullwhip effect occurs as orders are relayed from retails, to distributors, to wholesalers, to manufacturers, with fluctuations decreasing at each step in the sequence. D) Bullwhip fluctuations in the supply chain decrease customer service and profitability.
C) The bullwhip effect occurs as orders are relayed from retails, to distributors, to wholesalers, to manufacturers, with fluctuations decreasing at each step in the sequence.
What is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship? A) advanced shipping notice B) postponement C) blanket order D) drop shipping
C) blanket order
Supply chain managers outsource logistics to meet three goals: A) drive down inventory investment, improve delivery reliability and speed, and provide better market response. B) drive down inventory investment, lower delivery costs, and provide better market response C) drive down inventory investment, lower delivery costs, and improve delivery reliability and speed D) lower delivery costs, improve delivery reliability and speed, and provide better market response
C) drive down inventory investment, lower delivery costs, and improve delivery reliability and speed
With regard to the cost-based price model negotiation strategy, which of the following is true? A) potential suppliers each submit quotes as to price, delivery, etc. B) prices are based in some way upon market standards agreed to by both supplier and purchaser C) prices are based upon supplier costs D) prices float based on what the customer is willing to pay
C) prices are based upon supplier costs
A supply chain ends with: A) Distributors B) Suppliers C) Manufacturers D) A satisfied customer
D) A satisfied customer
Which of the following statements is NOT true? A) a closed-loop supply chain prepares for returns prior to product introduction B) reverse logistics involves the processes of sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal C) "closed-loop supply chain" is sometimes used as a synonym for "reverse logistics" D) a closed-loop supply chain is designed to optimize only reverse flows
D) a closed-loop supply chain is designed to optimize only reverse flows
Which of the following mitigation tactics is NOT designed to reduce the risk of information loss or distortion? A) redundant databases B) secure IT systems C) training of supply chain partners on the proper interpretations and use of information D) alternate sourcing
D) alternate sourcing
Which of the following statements is NOT true regarding channel assembly? A) channel assembly treats distributors more as manufacturing partners than as distributors B) channel assembly represents one way to implement postponement C) channel assembly postpones final assembly of a product so the distribution channel can assemble it D) channel assembly sends individual components, modules, and finished products, to the distributor.
D) channel assembly sends individual components, modules, and finished products, to the distributor
What is a supply chain designed to optimize both forward and reverse flows? A) open-loop supply chain B) reverse-loop supply chain C) bullwhip-loop supply chain D) closed-loop supply chain
D) closed-loop supply chain
Which of the following statements is NOT true? A) an effective supplier management program and an effective distribution management program may make a difference between supply chain success and failure B) top-notch supply chain performance requires good downstream management, just as it does good upstream management C) packaging and logistics are important distribution decisions, because the manufacturer is usually held responsible for breakages and serviceability D) finding the optimal number of facilities represents a critical and static decision
D) finding the optimal number of facilities represents a critical and static decision
Three criteria for designing distribution networks to meet customer expectations are: A) low cost, rapid response and product choice B) rapid response, low cost, and service C) low cost, product choice and service D) rapid response, product choice, and service
D) rapid response, product choice, and service
