Logistics Management Exam 2
Which approach represents a strategy in which the entire organization is focused on the examination of process variability and continuous improvement? a. Total Quality Management b. Six Sigma c. Lean Enterprise Management d. Theory of Constraints e. None of these answers
a
A newly launched twenty-first century addition to production strategy which leverages lean manufacturing strategies, Six Sigma best practices, and real-time actionable intelligence from the factory floor is called: a. just-in-time inventory. b. adaptive manufacturing. c. machine flexibility. d. capacity requirements planning.
b
A project layout is: a. a floor plan of the production facility. b. a fixed location layout where the product remains in place for the duration of production. c. a product-focused layout in which machines and workers are arranged according to the progressive sequence of operations. d. a process-focused layout that groups together similar equipment or functions.
b
Activity Based Costing: a. is useful for distributions centers but not customers. b. can be combined with customer segmentation. c. is too sophisticated for many applications. d. is a very new management science.
b
Four types of forecast error measures can be used. Which one of the following is not one of the four types? a. Cumulative sum of forecast errors b. Exponential smoothing for trends c. Mean squared error d. Mean absolute deviation
b
In the Execute Sourcing Strategy step, the most important thing is to: a. appoint the sourcing committee members from the affected groups. b. choose a supplier or suppliers, depending on the objectives of the sourcing decision. c. verify which vendors are either TQM or ISO 9000. d. determine which vendors have the lowest prices.
b
Order management system represents the principal means by which: a. price and lead time add value. b. buyers and sellers communicate information relating to individual orders of product. c. orders are handled inside the company. d. customers are segmented by profitability.
b
Processes that can produce a range of products are said to have: a. economies of scale. b. economies of scope. c. routing flexibility. d. work centers.
b
The internal balancing method deals with: a. price and lead time. b. inventory and production flexibility. c. functional silos. d. channel selection.
b
The time that elapses from when a company receives an order until it gets paid for delivering the order is called the: a. product life cycle. b. order to cash cycle. c. order management process. d. replenishment process.
b
The traditional role of customer service at the interface between marketing and logistics manifests itself through the _____ dimension of the marketing mix. a. price b. place c. product d. promotion
b
This type of forecast error measure is the only one to show if a stock out or overage occurred: a. MAD. b. CFE (bias). c. MAPE. d. MSE. e. none of these answers.
b
What vendor selection criteria are described by price and financial stability? a. Capability b. Financial c. Quality d. Reliability
b
Which of the following order cycle lengths would require the buyer to hold the most total inventory during lead time? a. 10 days, +/- 2 days b. 10 days, +/- 4 days c. 8 days, +/- 5 days d. 9 days, +/- 3 days
b
Which of these is not a production method? a. Make-to-stock b. Create-to-order c. Build-to-order d. Assemble-to-order
b
In the Assess Supply Market step, the firm: a. determines which are the least cost vendors. b. decides which vendors are located closest to the firm's plant to insure timely delivery. c. identifies all possible suppliers that might be able to satisfy the user's needs. d. defines the parameters of the sourcing strategy process.
c
In the Item Procurement Importance Matrix, what is described as high risk, high value? a. Generics b. Commodities c. Criticals d. Distinctives
c
One type of demand fluctuation is caused by random variation. What is random variation? a. Errors in inventory management b. Errors not caught by using exponential smoothing c. A development that cannot normally be anticipated d. Failure to properly execute the SO&P process plan
c
The essence of demand management is to estimate and manage _____ and use this information to make operating decisions. a. channel orders b. vendors and suppliers c. customer demand d. SO&P processes
c
The term replenishment cycle refers to: a. orders for raw material. b. material management. c. the acquisition of additional inventory. d. inventory and material management.
c
There are two parts to the order management process. The first is _____ and the second is _____. a. managing the order after it is received; influencing how the customer orders b. shipping the order; taking the order c. influencing how the customer orders; managing the order after it is received d. the Internet model; the traditional model
c
Those customers who are in the "Danger Zone" segment are: a. likely to switch to a competitor. b. have been a customer for less than a year. c. the least profitable. d. are using ABC to drive down the price.
c
Which of the following does a forecast always assume? a. Base demand always moves in a positive direction b. Business cycles do not exist c. The past always repeats itself d. Every forecast is seasonal
c
Which of the following is not a reactive capability strategy? a. Machine flexibility b. Routing flexibility c. Resource requirements planning d. Offshoring
c
Which of the following types of production processes use tools and equipment that are generalized in nature? a. Assembly line b. Batch c. Continuous process d. Job shop
c
Which of these is not a form of purchasing? a. Purchasing b. Procurement c. Process improvement d. Sourcing
c
A push-based strategy works well for supply chains that focus on: a. lean production. b. the anticipation of demand or without knowledge of customer orders. c. work centers and offshore sourcing. d. the immediate delivery of off-the-shelf, low-cost, standardized goods.
d
Capacity is: a. determined by lean manufacturing. b. the maximum amount of square footage available for inventory storage in a facility. c. determined by raw materials flows. d. the maximum amount of work that an organization is capable of completing in a given period of time.
d
Customer service can be defined as: a. a philosophy. b. order fulfillment. c. the SCOR model. d. anything that touches the customer.
d
Demand management includes: a. flows of products. b. flows of services. c. flows of capital. d. all of these answers.
d
In an MRP system, this document identifies all of the components required to assemble an independent demand item. a. Inventory status file b. Bill of materials c. Master production schedule d. None of these answers
d
In the Item Procurement Importance Matrix, what describes high risk, low value? a. Generics b. Commodities c. Criticals d. Distinctives
d
The concept that represents the sum of all costs associated with making and delivering products to the point where they are needed is called: a. purchase/acquisition cost. b. strategic sourcing costs. c. life cycle costs. d. total landed cost.
d
The term functional silos refers to: a. product storage for physical supply. b. the noncommunication between customers and vendors. c. a technique to secure corporate marketing strategies. d. lack of coordination between departments.
d
The weighted moving average method assigns: a. a value in each period being averaged. b. a weight greater than 1. c. information based on a simple average. d. a weight to each previous period.
d
There are four steps in the Managing Sourcing and Procurement Processes. Which of the following is not one of them? a. Determine the type of purchase b. Determine the necessary levels of investment c. Evaluate the effectiveness of the strategic sourcing process d. Examine off shore and e-procurement suppliers
d
There are four strategies that firms can use to balance supply and demand; price, lead time, inventory, and _____. a. transportation b. warehousing c. customer service d. production flexibility e. none of these answers
d
To help guide the strategic sourcing process, five core principles are recognized as key drivers to achieve the desired levels of value, which one is not one of those core principles? a. Access the total value b. Develop individual sourcing strategies c. Evaluate internal requirements d. Drive continuous savings
d
What are the steps in the CRM process? a. Segment customer base, then measure service, and improve b. Segment customer base, then identify service/package c. Measure service, then improve d. Segment customer base, identify service/package, then measure service, and improve
d
What vendor selection criteria are described by vendor attitude, cultural compatibility, training aids, packaging, and repair service? a. Quality b. Financial considerations c. Reliability d. Desirable capabilities
d
Which e-commerce business model used in procurement and sourcing has a seller-operated service that consists of a number of electronic catalogs from suppliers within a market? a. Sell-side system b. Electronic marketplace c. Buy-side systems d. Online trading community e. None of these answers
d
Which is NOT part of dependability? a. Cycle time b. Safe delivery c. Correct orders d. Consistent pricing
d
In assemble-to-order production: a. customer orders are filled from finished goods inventories, and production orders are used to replenish finished goods inventories. b. the finished product is a combination of standard and custom-designed components that meet unique needs of a specific customer. c. the finished product is generally a combination of common components and a limited number of options or accessories made available to the customer. d. highly tailored products are created for the customer whose specifications require unique engineering design or significant customization.
c
World-class organizations can improve performance along multiple dimensions without making extensive performance tradeoffs or sacrifices.
True
e-Sourcing and e-procurement are the same.
True
As the level of substitutability for a product increases, its stockout costs to the manufacturer: a. increase. b. decrease. c. stay the same. d. can't be determined.
a
Exponential smoothing: a. is one of the most commonly used techniques. b. uses primarily weighted averages to compensate for errors. c. is used to determine random variations. d. is used to reduce channel fluctuations.
a
In the Item Procurement Importance Matrix, what item is described as low risk, low value? a. Generics b. Commodities c. Criticals d. Distinctives
a
Lean production relies on: a. pull-based systems. b. push-based systems. c. the Toyota production system (TPS). d. just-in-time systems.
a
Packaging is: a. critical to logistics. b. critical to manufacturing. c. critical to product differential. d. a factor in outsourcing.
a
Resource requirements planning (RRP): a. is a long-run, macro-level planning tool. b. checks the feasibility of the master production schedule. c. checks the feasibility of the materials requirement plan. d. is a long-range materials plan that translates annual business plans.
a
Strategic sourcing as a process is far more broad and comprehensive than procurement. Overall, the process starts with the formation of a: a. steering committee. b. list of vendors. c. decision as whether to make or buy. d. list of criticals.
a
The SCOR model provides suggested metrics: a. across multiple dimensions for each of the five Level One processes. b. for segmenting customers. c. for proving a base for ABC costing. d. that allow marketing to evaluate channel selection.
a
Traditional customer profitability analyses would start with _____ less returns and allowances (net sales) and subtract the cost of goods sold. a. gross sales b. back orders c. the forecast d. gross margin
a
What is an amalgam of catalogs from vendors within a market that is available via the Internet called? a. Electronic marketplace b. Buy-side system c. Sell-side system d. On-line trading community
a
What vendor selection criteria are described by production capability, labor relations, and operating controls? a. Capability b. Quality c. Reliability d. Financial
a
Packaging is very important in the manufacturing operation.
False
Routing flexibility is a term used in connection with how spare parts move through the supply chain.
False
Some firms are moving towards increasing their number of suppliers in order to encourage competition and lower procurement costs.
False
Strategic sourcing is almost the same as procurement.
False
The buyer and seller look at order time from the same perspective.
False
The essence of demand management is to estimate and manage customer demand so that demand and supply are balanced to the point where there are zero stockouts and zero safety stocks.
False
The materials requirement plan (MRP) is a long-range materials plan that converts information regarding end-items in the MPS into a set of time-phased component and part requirements.
False
The most important factor in vendor selection is usually financial health.
False
There are ten principal activities to the OTC model.
False
With the proper information on how a customer's interaction with the shipper drives the firm's costs, the firm can then segment its customers by profitability.
True
Customer service is anything that touches the customer.
True
Customer service is of equal importance to both logistics and marketing.
True
Demand management might be defined as focused efforts to estimate and manage customers' demand, with the intention of using this information to shape operating decisions.
True
Dependent demand is directly influenced by independent demand.
True
Firms today are beginning to use techniques such as activity-based costing to more accurately allocate costs to customers based on the specific costs of servicing a customer's orders relative to how, how much, what, and when a customer orders.
True
From a marketing perspective, logistics customer service can be thought of as a feature of the augmented product that adds value for the customer.
True
Machine flexibility provides the ability to produce different types of products as well as change the order of operations executed on a product.
True
Manufacturing and production operations create form utility.
True
Offshoring is a term that means relocating an activity to a contract manufacturer in another country.
True
Outbound-to-customer logistics systems are also referred to as physical distribution.
True
Phantom demand is created by over-ordering during peak demand.
True
Processes that can produce a range of products are said to have economies of scope.
True
Procurement serves as a critical link between members of the supply chain.
True
Reserve Inventory and Determine Delivery Date has traditionally been referred to as order processing.
True
Resource requirements planning (RRP) is a long-run, macro-level planning tool.
True
The "bullwhip" effect occurs when forecast errors are magnified and demand variability increases as orders move upstream from retailers to distributors to producers.
True
The first step in managing sourcing and procurement is to determine the type of purchase.
True
There are seven steps in the Strategic Sourcing Methodology.
True
Vendors may offer varying levels of discounts from their published prices.
True
When a firm makes a "make" decision when analyzing whether to "make or buy," they may still have to purchase some types of inputs from outside suppliers.
True
While there are four types of forecast error measures that can be used, none are foolproof.
True
Materials management and physical supply are terms that cannot be used interchangeably.
False
Mean Absolute Deviation (MAD) is a good metric of forecast accuracy because it shows whether a forecast is above or below actual demand.
False
Most processes are basically organized the same.
False
A stockout always results in a back order.
False
A workcenter is a fixed layout where the product remains in place for the duration of production.
False
Activity Based Costing (ABC) allocates costs to activities based on a fixed predetermined measure (e.g., cases).
False
Activity-based costing works well in warehouse-type environments but does not work for customer service applications.
False
An advantage of e-sourcing and e-procurement is that there is little risk involved.
False
Capacity planning and materials planning are the same.
False
Collaborative planning, forecasting, and replenishment (CPFR) has not been considered to be a good process, as it excludes transportation.
False
Companies now use strategies that are lean, flexible, or adaptive; they wait for customers to push products to the market.
False
Customer relationship management is a new concept only recently receiving attention.
False
Distinctives are low-risk, high-value items that are fundamental to the company's finished product.
False
Exponential smoothing can use constants higher than 1, but not more than 5.
False
External balancing methods involve managing production and inventory flexibility to help offset the imbalance of supply and demand.
False
Forecasting has become extremely accurate, especially since the development of the S&OP process.
False
Landed costs are independent of sales/FOB terms.
False
MRP is most effective at managing independent demand items.
False
"Order to cash" and "order cycle" are the same.
True
A driving force behind the attention to OTC cycle variability is safety stock. The absolute length of the order cycle will influence demand inventory.
True
A sales and operations planning process (S&OP) can produce a forecast internally that all functional areas agree upon and can execute.
True
A weighted moving average assigns higher weights to more recent periods.
True
Adjusting a forecast for seasons basically uses a combination of seasonal factors and average demand to arrive at an adjusted forecast.
True
Bias measures how accurate the forecast is compared to actual demand.
True
Capacity requirements planning is used to check the feasibility of the materials requirement plan.
True
Commodities are items or services that are low in risk but high in value.
True
