MGT 333 Exam 2 Study Guide
What are the three steps of a JIT production process?
Compliance to quality standards Worker responsibility Build-in quality
True or false: Price changes for parts and components are high and more frequent than raw materials.
False
Small suppliers can offer the benefits of
flexibility. speed of response. product availability.
Inventories are maintained by organizations
to provide and maintain good customer service. to smooth the flow of goods through the production process. to provide protection against the uncertainties of supply and demand. to obtain a reasonable utilization of people and equipment.
Logistics is the management of inventory in motion and at rest.
true
Forecasts are typically _____________, continuous improvement methods can help increase accuracy.
wrong
During an RFI there are signification costs involved, these should be the responsibility of the
requesting organization.
A request for information serves the purpose of
signaling a potential supplier has been identified. allowing a supplier to express interest in a business relationship.
Supplier selection decisions can involve more than information, other considerations are
single vs multiple sourcing. geographical locations. manufacturer vs distributer. supplier size.
Two traditional methods for establishing prices are
the cost approach. the market approach
Reduced cycle times and more responsive acquisition methods are the direct efforts of
the reengineering work of supply processes.
Which of the following statements supports single sourcing:
the use of just-in-time production
Class A Class B Class C
10% of items in inventory 70-80% of total inventory dollars 10-20% of items in inventory 10-15% of total inventory dollars 70-80% of items in inventory 10-20% of total inventory dollars
The supply manager for ABC manufacturing should ensure that a single customer is purchasing no more than ________ to _________ of their product.
20 30
Annual cost for inventory range from __________ of the total value of the inventory.
25-50%
Safety problems should be ________ and are a key element in the transportation and logistics strategy.
Avoided
The supply manager has reached out to manager for the marketing department for information concerning a potential supplier. What form information source was utilized?
Colleagues
The lowest price that ensures a continuous supply of the proper quality where and when needed and allows the supplier to make a reasonable profit, is commonly known as:
a fair price.
Buyers should _________carriers with financial difficulties.
avoid
Canadian pricing legislation applies to
buyers. sellers.
Most service contracts
can contain limitations for cost and time. estimate time required to complete. may quote based on percentage of total job cost.
A cost-plus-fixed-fee is used when future costs_________ be predicted.
cannot
Reciprocity is a "fact of life" in business and should be embraced by all
companies
ABC manufacturing has set the price for a popular component at 10% over direct costs, this is a _________approach for pricing.
cost
When no extra is reimbursed above actual cost, this is a
cost-no-fee.
Bypassing distributors and purchasing from the manufacturer in the supply chain is known as
disintermediation
What are the types of qualitative forecasts?
Delphi technique Market Collective opinion
compressed cycle times and proper material coordination will allow supply managers to place more____________orders.
Efficient
An escalator clause provides for an increase, but not a decrease, in price if costs change.
False
Canceling a contract for a technicality when market prices are falling is considered an acceptable and ethical practice.
False
Marine transport is best suited for products of high value and/or extremely perishable.
False
True or false: Forecasting of services is an easier process than that of tangible goods.
False
What are the implications for JIT managed systems?
Frequent delivery of small orders. Fewer local suppliers. Supplier training and cooperation is required. Suppliers must deliver high and consistent quality.
Which of the following is not typically true of dual sourcing using the "70-30" approach?
Frequently used when time to market is critical
Basic elements for determining carrying cost include
Inventory risk costs inventory service costs Capital costs Stage space costs
Which system is designed to have components, materials, and services arrive at work centers exactly as needed?
JIT
High-volume purchases are typically fulfilled by
Large Suppliers
Forecasts provide managers with a way to make decisions before actual requirements are known, which forecasts should be considered when making purchase decisions?
Lead Times Demand Prices
What are the four basic lot-sizing rules for MRP systems?
Lot-for-lot Least total cost (LTC) Economic order quantity (EOQ) Least Unit Cost
What options do supply managers have to meet organizational needs?
Make the product in house. Purchase the product from a current supplier. Purchase the product from a new supply source.
Basic transportation modes include truck,____ , air,_____ , and pipeline.
Marine Rail
What are the types of qualitative forecasts?
Market Collective Opinion Delphi Technique
All of following are recognized as typical advantages of local buying with the exception of:
Provides the lowest risk of shortages (compare to buying at national level for example)
A key factor in determining how the logistics department will be run is based on the_______ of the organization.
Size
A(n) _________ clause provides for either an increase or decrease in price if costs change.
escalator
Which act restricts conspiracy, collusion, or a combination of in regards to interstate commerce?
The Sherman Antitrust Act
A contract that specifies FOB Destination, freight prepaid means that:
The seller owns the goods while in transit up to the destination point, and will fill any claims in case of lost or damaged freight
True or false: One suppliers finished goods can become the purchaser's raw material.
True
The supply manager for ABC manufacturing has chosen to end the contract with a supplier due to falling market prices, is the justified or unjustified.
Unjustified
What type of inventory that is managed by the supplier and at a minimum means the supplier determines when to replenish and how much to replenish?
VMI
Supply managers must ensure that all required materials or parts meet quality standards and are available when needed by establishing a______ price for purchases.
fair
Contract cancellations normally happen when prices ________
fall
Assurance of supply is an argument that favors single sourcing.
false
Compared to other modes of transportation, motor carriers provide the advantage of:
having the flexibility of delivering point-to-point service.
Capital assets have a_______ dollar value
high
Marine carriers are also referred to as
international deep sea transport.
Advantages of rail services includes
lower variable costs. energy efficiency.
Private fleets are a type of
make-or-buy decision.
The prices for raw materials are driven by______ prices.
market
Small suppliers:
often provide the greatest responsiveness, flexibility and higher loyalty
What five areas can supply manager focus on for reduced complexity and exploitation of economies of scale?
product design order fulfillment procurement manufacturing manufacturing planning
Which of the following is a typical consideration in favor of multiple sourcing?
protection against negative events (natural disasters or strikes)
Traditional MRP systems were designed to support push systems.
push
Supplier evaluations include evaluation criteria to assess
quantity delivery times.
Supplier evaluations include evaluation criteria to assess
quantity delivery times
MRP systems give organizations the ability of
rapid rescheduling. rapid replanning.
Onshoring sources can be
regional. local. national.
Pricing for capital asset purchases can be accomplished by
request for proposals. competitive bidding. negotiation.
Manufacturers typically rely on________ for purchasing parts, components, and packing.
salepeople
There are_______general classes of purchases.
seven
_________can offer advice, expertise, or information to help inexperienced buyers with transportation concerns.
shippers
Inventories often exist
to makeup for problems in the supply chain.
Organizations operating under a just-in-time system, prefer to ship by:
truck
The supply manager uses a just-in-time system and has numerous local suppliers, the preferred mode of transportation is
truck
In the long run, a firm must recover all costs or go out of business. In other words, facilities and machinery must be maintained, modernized, and replaced
true
Logistics costs can be divided into three categories: inventory carrying costs, administrative costs, and transportation (with transportation costs accounting for the bulk of the costs).
true
When price are established using the market approach, prices may not be directly related to costs.
true
The Pareto curve is often called the - rule, or ABC analysis.
80-20 rule
Which is the correct total cost formula?
TC = RC + RS/Q + QKC/2
The supply manager for ABC manufacturing needs to purchase goods where demand is irregular, who should he use to purchase the goods from?
A distributor
The correct statement describing a general condition of economic competition is:
Mopoly is the condition when there is only one provider in the market, and he will be able to charge the price that will best fit his interest
What geographical decisions must supply managers make?
Offshoring of suppliers. Reshoring suppliers. Onshoring of suppliers.
Which supply information source must be carefully vetted for accurate and relevant information?
Online resources
What are some options for price changes?
Price protection clause Escalator clause Guarantee against price decline Most-favored-customer clause
Although deregulation has reshaped the transportation industry, the usual term carriers are categorized under are
Private Common Exempt Contract
The _________or________ assumes that the supplier can meet all specification requirements.
RFQ RFB
The ______________ states that suppliers offer the same item to all customers for the same price.
Robinson-Patman Act
Using air as the main mode of transportation offers the organization the benefit of
Speed
What are two classes of quantitative forecasting?
Time series Causal models
True or false: MRP allows for how much and when to order decisions to be made simultaneously.
True
Transportation and logistics decisions must be made while determining the impact on
Use of capital inventory levels carrying cost
Governments can take an _______role in determining prices.
active
A transportation strategy should include consideration of:
all of the above
If the delivery date is some months or years away and if there is substantial chance of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a:
firm-fixed-price (FFP).
What are two classes of quantitative forecasting?
causal models time series
Transportation service provider categories are
customs house brokers. Brokers freight forwarders.
The market can affect the pricing of commodities on a ______ basis.
daily
Governments typically play no role in establishing prices or regulating how buyers and sellers are allowed to behave in agreeing on prices.
false
Rail is the most flexible mode of transportation and accounts for approximately 80 percent of transportation expenditures by U.S. firms.
false
The use of just-in-time, stockless buying or systems contracting favors the use of multiple sourcing.
false
True or false: Once a fair price is established, that is the price all buyers will pay.
false
Distributors, wholesalers, and retailers:
may provide more valuable services than a manufacturer.
The cost approach to pricing:
means prices are set to cover direct costs, contribute to indirect costs, and provide a profit.
When providing a service, price_______ is more common to determine a price.
negotiation
Serious requests that ask the supplier to specify pricing and terms are called
request for quotation (RFQ).
Transportation costs increase as distance, quantity, and speed increase.
speed
MRP planning is typically mapped out over
the next year.
The selection of the FOB point is important to the purchaser, because it determines:
who pays the carrier, when legal title to goods being shipped passes to the buyer, who is responsible for preparing and pursuing loss or damage claims and who routes the freight.
True or false: Only single source suppliers can be used for procurement.
False
This class of quantitative forecasts uses linear or multiple regression lines from leading indicators.
Causal models
organizations who use intermodal systems gain the benefit of shorter terminal delays
long-haul economics combined with door-to-door trucking ability less handling damage shorter terminal delays
Items for which prices are comparatively low and the cost of price reduction efforts may exceed any price savings realized are:
maintenance, repair, and operating supplies.
A________ -___________-____________ clause is a contractual arrangement between vendor and customer that guarantees the customer the best price the vendor gives to anyone.
most favored customer
Evaluation of suppliers requires a collection of data from the areas of
overall relationship with the supplier. technical/strategic. finance management
True or false: In the event a product cannot be sourced with current or new suppliers and cannot be produced in house, supply managers can seek alternative products to meet requirements.
true
True or false: With every transportation decision there are advantages and disadvantages to take into consideration.
true
World class supply management has to develop a strategic sourcing plan that details how supply management will discover, evaluate, select, develop and manage a viable supplier base.
true
Along with price, analysis of suppliers' costs is also dependent upon the________ of product being sourced.
type