Pretest
Which of the following is the best example of employing metrics for supply chain reliability?
A worker starts double-checking quantities after receiving automated feedback indicating that shipment quantity accuracy is below the standard. Metrics are useful only if they provide feedback for system correction and improvement. Automated feedback in this situation results in immediate measures to correct the problem. In the incorrect answers, the feedback either doesn't deal with reliability or is unnecessarily delayed or not used to correct the root cause of the problem.
What should be included for each risk during identification if it is applicable and known?
Assumed root cause When identifying risks, one thing to specify is the root cause of the risk, if applicable and known. Responses and probability are analyzed for risks at a different step in the risk management process.
Which of the following components of demand is generally forecast by economists?
Cycle Forecasting of cycles, which tracks demand over a span of years or even decades, is a job generally performed by economists.
Which level of SCOR is differentiated for operational strategy metrics such as make-to-stock?
Level 2 Level 2 SCOR metrics are the operational strategy metrics. Examples of operational strategies include make-to-stock and make-to-order.
In general, the largest portion of a product's final cost can be attributed to which of the following?
Product design As much as 70% of a product's delivery cost is attributable to its design.
When product design features postponement, which is the supply chain strategy being used?
Push-pull strategy Postponement, or delayed differentiation in product design, is an excellent example of a push-pull strategy. Prior to product differentiation, a push-based strategy is used, where a generic product is built based on aggregate forecasts. Later, at the time of differentiation, a pull-based strategy is implemented in response to customer demand for a specific product.
Which of the following is another name for the "one size fits all" type of design?
Standardization Standardization, also called universality, is the strategy of designing a product to work in multiple markets rather than in only one. Modular design and mass customization may reach multiple market segments, but they do so by product differentiation, not standardization.
Which of the following statements concerning the reorder point system is true?
The order point equals the demand during lead time plus safety stock. The definition of a reorder point is demand during lead time plus safety stock.
The make-or-buy decision typically would include considerations about:
total ownership costs. The APICS Dictionary, 16th edition, defines a make-or-buy decision as follows: "The act of deciding whether to produce an item internally or buy it from an outside supplier. Factors to consider in the decision include costs, capacity availability, proprietary and/or specialized knowledge, quality considerations, skill requirements, volume, and timing."
The antiterrorism measures developed by the Customs-Trade Partnership against Terrorism (C-TPAT) apply to which of the following entities?
C-TPAT corporate participants only Participation in the Customs-Trade Partnership Against Terrorism is voluntary, and compliance with its regulations is required only of participants.
An importer will often give which one of the following independent operators power of attorney to pay import duties on its behalf?
Customs house broker The customs house broker specializes in moving imported goods through customs, expediting paperwork (which now takes place electronically), and paying the import duties under a power of attorney from the importer.
What is the mostimportant factor in choosing suppliers for multiple supply chains?
It varies based on the product line needs. Remember, you need to develop multiple supply chains that are appropriate to each product line. Choose suppliers that give you what each product line needs—speed to market, quality at a higher price, or ability to change direction rapidly.
Which of the following is an input to rough-cut capacity planning (RCCP)?
Master production schedule RCCP determines if resources are available (or can be made available) in the network to achieve the goals in master scheduling.
When communicating with stakeholders, what can be both an asset and a liability and so needs to be directed toward a predefined purpose before being used?
Abundance of data The ability to communicate quickly, succinctly, and accurately is facilitated by the abundance and diversity of available information, data, and knowledge and by the vast array of technology and media. But equally important is the capability of knowing what information to communicate for a given purpose.
Which of the following could best relieve some of the pressure from the bottlenecks that exist in different parts of each of an organization's multiple production facilities?
Advanced planning and scheduling (APS) APS systems remove pressure from bottlenecks in systems as they occur or in simulations. In a multi-plant environment, when the same item can be manufactured at different facilities, APS optimizes and accelerates the use of available materials, labor, and plant capacity.
Which of the following could appear in a planning (modular) bill of material?
All common components used in all of the organization's board games A planning or modular bill of material (BOM) is used to manage product options in master scheduling. The master scheduling process is used to forecast the number of planning BOM items needed in total for the period's production.
The firststep in setting strategy for moving toward greater collaboration in regard to the firm's enterprise resources planning (ERP) system is to do which of the following?
Analyze the current ERP system and understand its limitations. Before determining a strategy for greater collaboration, the firm must know what it can and cannot do with its current system, such as by performing a technology audit. Then the firm can set a strategy for where it wants to be and test the strategy's validity.
Organizations that have high sales volume and serve markets with more volatile demand and uncertain forecasting tend to focus on what type of manufacturing strategy?
Assemble-to-order Organizations that serve markets with more volatile demand and uncertain forecasting need to focus on responsiveness so they can adapt quickly to changes. These organizations tend toward assemble-to-order manufacturing strategies (product components or modules are produced based on forecasts and are assembled when customer orders are placed) if sales volume is high. If sales volume is low, a make-to-order strategy is more appropriate.
Which of the following is a primary method of ensuring data accuracy?
Automating and transferring real-time data only when feasible Automating data capture and collecting and transferring data in real time are good ways to ensure data accuracy when these are feasible (cost-effective), but when this is not feasible, data entry at the time and place of the event is the best alternative. Acquiring new software without improving the quality of the data will lead to poor ROI for the software.
A health-care provider in the Midwest revamps the procedures in its endoscopy clinic by borrowing from a car manufacturer's lean production system. Which of the following describes this?
Best-in-class benchmarking A Midwest health-care provider that revamps the procedures in its endoscopy clinic by borrowing from a car manufacturer's lean production system is an example of best-in-class benchmarking.
Which of the following is a benefit associated with customer segmentation?
Better ROI (return on investment) on promotion budgets Customer segmentation allows businesses to learn customer desires and habits and design more effective promotional programs, resulting in a better ROI on promotional budgets.
If a product has been determined to be defective in the reverse logistics returns disposition process, what is the next question to ask about this product if the product cannot be repaired?
Can you reuse the parts? If the whole product cannot be repaired, the next question to ask is if you can reuse the parts. If so some of the parts will be recovered. If not, then the final disposition occurs, such as return to manufacturer or disposal.
Obsolescence or theft risks are included in which inventory cost category?
Carrying costs Carrying costs include all the expenses involved in housing the inventory, including risk costs.
Piggyback service refers to which of the following types of cargo transport?
Combined truck and train transport In piggyback service, either a truck trailer or a container is placed on a railroad flatcar. All the other intermodal methods mentioned in the options are available, and intermodal transport is an important option for the logistics manager to consider when navigating long logistics supply chains.
For which of the following companies would customer relationship management (CRM) probably be a priority?
Company with a customer base with diverse needs and interests CRM focuses on learning more about one's customers and using this knowledge to enhance product, increase customer satisfaction, and improve revenue and profit. The company with the diverse customer base can potentially benefit greatly from being able to gather and use more information about its customers.
Which two core lean principles are at the center of the House of Toyota?
Continuous improvement culture, respect for people At the center of the House of Toyota are two core lean principles: a continuous improvement culture and respect for people. In order for lean to be successful, the continuous improvement mindset starts at the top, and everyone in the organization is involved. Showing respect for people includes customers, local communities, and employees. Safety is ensured, the wider community is served, and employee morale is boosted. Organizations give back and protect the wider community through green practices and other environmental initiatives. Employees are empowered and take ownership of their work. Teams facilitate creativity, effectiveness, and efficiencies. The supporting columns in the House of Toyota are Just-in-Time and jidoka.
Which of the following is the next step in an intraenterprise strategy development process after the first step of determining goals and the desired end state of the supply chain?
Creating cross-functional and cross-business teams to guide the transformation Cross-functional and cross-business teams must be formed to involve all parties in the other steps.
Which of the following is true of contracts for partnerships?
Cultural differences in contracts and problem resolution styles should be a primary consideration when arranging formal contracts Contracts, policies and procedures, and informal conflict resolution must be sensitive to cultural differences. While courts can become involved in conflicts in the United States without long-term detriment, the opposite is true in most Asian countries.
What is an aspect of data privacy laws that creates issues for using clouds for data storage?
Data residency laws Data residency laws are laws requiring that certain types of data need to reside within the physical borders of the country that passed the law. Germany's Data Protection Act, for example, requires data residency for the accounting data of German organizations and individuals filing taxes in Germany. Such laws have led to national clouds, where the cloud guarantees data residency within the jurisdiction.
A supply chain has a large variety of SKUs that sell quickly but at different rates at each retail location. The distribution centers are independent and have knowledge of local demand that is hard to quantify. Which of the following inventory planning strategies is best for this supply chain?
Decentralized inventory planning with break-bulk warehouses Centralized planning can minimize overall inventory levels but may respond slowly to local demand. Decentralized inventory planning involves each supply chain stage determining its own inventory requirements and placing orders independently, so there is no coordination expense. Due the large variety of SKUs, it should use break-bulk warehouses to receive large shipments while shipping out individual orders so that no individual distribution center need receive a large supply of the same SKUs. Consolidation warehouses are for receiving items from multiple suppliers for consolidated bulk shipments to later supply chain partners (the opposite of break-bulking).
Which of the following forecast techniques relies upon an expert panel that responds to questionnaires and never meets face to face?
Delphi method The Delphi method uses information from a panel of experts who respond anonymously to questionnaires. After several rounds of responses and critiques, a moderator produces a report expressing the collective opinion of the group.
What demand-side activity is an input into strategic planning?
Demand management Demand management feeds into the strategic planning process. All the other options are developed in steps following strategic planning.
If design for the environment results in a higher-cost refrigerator for the manufacturer, which of the following could help sustain demand for this product?
Design the product to meet energy efficiency tax rebate requirements. Providing a product that qualifies for an energy efficiency tax rebate will offset the higher price that many products designed for the environment will have due to higher manufacturing expenses.
What can an organization do if a need exists for a service for customers, the organization does not have it as a core competency, and it does not want to outsource the activity?
Develop it as a competency. If an organization identifies a need that is not currently a competency and does not wish to outsource the activity, it can develop the activity as a core competency.
When developing a partnership with a customer service supplier, an effective customer service management strategy would include which of the following?
Developing an annualized contract or trading partner agreement Once the decision to develop a strategic supplier relationship has been made, the management strategy must be developed and implemented throughout the partnership. Development of the annualized contract or trading partner agreement, procedures to handle all customer interactions, infrastructure (people and information) to perform the procedures, and metrics to measure success are all parts of a successful customer service management strategy. Annualized contracts or trading partner agreements can formalize more in-depth relationships with suppliers. Customer interaction scenarios are determined by customer needs, not by existing infrastructure. Specific responses should be developed and followed. Service levels may be customized for different customer segments.
Which is the best definition of strategic sourcing?
Developing and managing ongoing supplier relationships to ensure meeting the organization's needs The APICS Dictionary, 16th edition, partially defines strategic sourcing as "a comprehensive approach for locating and sourcing key material suppliers, which often includes the business process of analyzing total-spend-for-material spend categories. There is a focus on the development of long-term relationships with trading partners who can help the purchaser meet profitability and customer satisfaction goals."
Which of the following best describes profit margin?
Difference between sales and cost of goods sold The profit margin measures the degree of financial success for a business and is "the difference between the sales and cost of goods sold for an organization, sometimes expressed as a percentage of sales" (APICS Dictionary, 15th edition).
Which of the following is most likely to be the main reason why the total warehouse inventory count of a key raw material would understate the organization's actual investment in that raw material?
Doesn't include in-transit inventory In-transit inventory is frequently overlooked but is often a significant portion of overall inventory.
In general, which area of supply chain risk is the least developed at most organizations because it is a new area with many rapidly changing regulations?
Environmental risk Environmental risk features low maturity and is a relatively new area for risk management. Regulations are rapidly changing, and processes and tools may have trouble keeping up.
If a government is providing incentives to encourage organizations to use higher forms of the waste hierarchy over lower forms, which action would capture the highest incentive benefits?
Finding ways to reduce the amount of hazardous materials in new products While all of the answers could be beneficial and rewarded, the correct answer is at the top of the waste hierarchy.
A manufacturer has a particularly productive work center that has started to generate outputs at a higher level than the packaging work center that follows it is able to handle. What risk does the manufacturer face as a result?
High inventories on hand or the waste of labor hours If an organization builds a quantity at one work center that is not able to be processed at the subsequent work center, supply exceeds demand. If full capacity is used anyway, this results in high inventories. If capacity is reduced to actual demand levels, available labor hours, work centers, and warehouse space are wasted. Stockouts and broken orders are the result of too little capacity.
Which of the following would be best for showing frequency distribution?
Histogram A histogram is a bar graph that displays the frequency distribution of measurement data such as dimensions, temperature, weight, etc., for a process. It shows the amount of variation and the range of variation within a process.
What is one way that an organization could improve its risk management maturity level for process risks such as those related to supply chain strategy and implementation?
Incorporate risk inputs into inventory planning and scheduling models. Many organizations have lower risk management maturity levels for process risks than for supply or demand risks. One reason for this is that many supply chain inventory planning and scheduling models exist, but most do not contain methods to account for risk.
Two red flags are (1) separate forecasts causing the bullwhip effect and (2) a general attitude that forecasts should remain trade secrets. What subcategory of risks do these red flags relate to?
Inter-organizational communications risks Both of these red flags relate to the risk that supply chain partners will fail to communicate information on demand to one another.
Which of the following is a primary benefit of risk categorization?
It may be possible to address several risks with one action. Each organization will define categories of risks in such a way that it helps the organization cluster planned risk responses, perhaps finding actions that can address more than one risk simultaneously.
A company creates a bar chart showing the causes of customer returns on its new dinner plates. What key message does the following illustrate?
It shows that the vast majority of customer returns (80%) are due to one of four reasons—plate finish problems. This Pareto diagram shows that 80% of customer returns are due to plate finish problems and that the related processes should be improved. Money and improvement efforts should be focused on improving the finishing process where the biggest gains will be seen.
What is a benefit of visualizing prior sales data in chart form when trying to determine future sales?
It will indicate how the data need to be prepared. Visualizing data can help show seasonality and trend and help forecasters determine how to prepare the data properly and which type of forecasting method to use.
When mandatory compliance program gaps have been discovered, what should supply chain managers do if the issue can be resolved fairly quickly?
Keep relevant regulatory authorities updated on remediation plans. Supply chain managers or other designated parties need to keep relevant regulatory authorities appraised with all necessary information on compliance gaps and remediation plans and status.
When deciding whether to acquire a component from a domestic or foreign source, which of the following comparisons provides the most accurate assessment of their relative value?
Landed cost of each source Landed cost includes the product cost plus the cost of logistics, such as warehousing, transportation, and handling fees.
A culture that values thrift and perseverance, orders relationships by status and values, and seeks a balance between work and family life, especially in time, is exhibiting which of Hofstede's dimensions of culture?
Long-term orientation and feminine traits The question defines a long-term orientation (thrift and perseverance, relationships ordered by status and values) and a feminine dimension (balance between work and family life, especially in time).
Which of the following factors distinguishes total quality management (TQM) from other approaches?
Management's ongoing support of all process improvements related to a product Part of what distinguishes TQM from other approaches is that it is based on the premise that management will support the ongoing improvement of every process involved in the development and distribution of a product. This implies continuous improvement of all processes over time.
When conducting network modeling and operations research, what is an important input because it can show where demand for particular products is the strongest and thus may influence where to put assembly facilities?
Market plan When designing a supply chain, one must carefully consider the market plan. For example, if the market plan shows that Europe will be the primary source of demand for product X, it may make sense to assemble that product in Germany instead of China, despite comparatively higher labor costs.
Which of the following is at the center of operations in enterprise resources planning (ERP) systems because it was among the first systems to be automated?
Material requirements planning Which of the following is at the center of operations in enterprise resources planning (ERP) systems because it was among the first systems to be automated?
Pharmaceutical companies primarily design their reverse logistics systems to exhibit which of the following qualities?
Maximum control Reverse logistics needs to maintain maximum control when a potential health liability exists, such as a contaminated or defective product, as well as to meet regulation requirements.
A project charter specifies the project manager and a high-level budget and states that the project's intent is to reduce inventory levels before the year-end financial statement deadline. What else needs to be defined before getting started?
Measurable objectives A charter is a document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. A project needs measurable objectives. For example,this project to reduce inventory needs to know how much inventory reduction will be considered a success. This may take the form of targets for various inventory-related financial ratios.
What should supply plans do?
Measure costs and benefits over a base period plus costs to grow capacity over a long horizon. A supply plan is a long-term plan, so it must incorporate the flexibility to grow to meet continuous improvement goals, additional demand, and/or new products and services. A benefit-cost analysis for each alternative supply plan should consider the plan over a base period plus the costs involved in growing these capabilities over an extended forecast horizon.
Suppliers are folded into the purchasing entity, business goals are shared, and competition has been eliminated. This bestexemplifies which of the following types of business relationships?
Mergers and acquisitions In mergers and acquisitions, suppliers are folded into the purchasing entity. Business goals are shared; business areas participate in setting strategy and planning integration of capabilities, processes, and information. Competition has been eliminated.
Which warehouse function typically benefits from a full load discount and more efficient use of storage space in the warehouse?
Mixing Mixing typically benefits from a full load discount and more efficient use of storage space in the warehouse. In a typical mixing setup, the warehouse receives full-vehicle shipments of different products from manufacturers in diverse locations, with each shipment receiving the full-load discount.
Which of the following is required for successful implementation of customer relationship management (CRM) and/or supplier relationship management (SRM) strategies?
New job definitions Organizations implementing CRM and SRM must move toward greater collaboration and away from more hierarchical structures defined by task-focused responsibility centers and top-down decision making. CRM and SRM call for a new attitude and new skills in the existing workforce.
A shipper whose exports are carried from a foreign port to the importer's dock by trucks that return empty to the port might hire which of the following types of firms to find goods to carry on the backhaul route?
Non-vessel operating common carrier (NVOCC) An NVOCC's scope of work can vary based on the customer; therefore, it could cover the work outlined in the question. A consolidator combines small shipments into larger ones to qualify for full-vehicle discounts. Generally this service is provided to fill containers for intermodal shipment, such as turnarounds carrying cargo between an inland warehouse and a port. However, NVOCCs are better able to provide space to the client.
What supplier performance rating systems source indicates if a supplier-caused discrepancy is found after a part is shipped to stores or has been installed in an assembly?
Number of floor failure events The number of floor failure events indicates if a supplier-caused discrepancy is found after a part is shipped to stores or has been installed in an assembly. If this occurs, the organization needs to adjust the performance index accordingly.
What is often an unintended consequence of expediting supply or manufacturing?
One customer is happy, but several others are upset. Expediting of supply is something that should be very rare in a well-managed system, because it often reduces profitability and causes other unintended side effects such as harming customer service for customers being bumped.
Which is often a criteria used to determine which supplier in an overcrowded supply market to retain?
Ones with a full range of products and services When consolidating to fewer, more preferred suppliers, one criteria is often suppliers who provide a full-range of products or services.
Which of the following could be a key performance indicator (KPI) for replenishment?
Order fill rate Order fill rate provides a measure of the success of the key process of replenishment. A high fill rate indicates good performance.
In the implementation phase of the ISO 31000 process framework for risk management, what step comes before assessing risks?
Place risks in appropriate context. Before assessing risks, organizations should place risks in the appropriate context. All of the incorrect answers are actually part of the assess risks phase.
Which of the following constitutes a major, direct output of material requirements planning?
Planned production/purchase orders Material requirements planning produces a make/buy action plan indicating what should be ordered, produced, expedited, or de-expedited.
What is an internal risk to the supply chain?
Poor labor relations Poor labor relations, work slowdowns, and strikes are examples of internal risks to the supply chain. Customs risks, transportation delays due to weather, and political instability are examples of external risks to the supply chain.
Which of the following activities is an aspect of demand management?
Prioritizing demand when supply is constrained Demand management is the process of recognizing all demand and prioritizing the demand if supply is constrained. Adjusting resources is a function of capacity management. Gross requirements are not calculated. CRM systems are tools but are not the actual activity.
Which of the 4 Ps of marketing strategy can be described as design to increase customer value, potential for added value, competitive differentiation, and increased profit?
Product The product component refers to all those actions taken to craft products and services that relate to customer needs, opportunities to add value in the supply chain and enhance competitive position, and still meet profit objectives.
Which of the following statements about the role of purchasing in a supplier relationship management (SRM) model is correct?
Purchasing roles have become more layered between strategic management and buying. Purchasing has, in fact, become more complex with the use of strategic sourcing. Roles have become more stratified, with senior-level managers focusing on strategic decisions and lower-level managers focusing on procurement and monitoring. They are aided by SRM technology, which has automated and supported many of their new tasks, such as partner research and contracting and invoice development.
Why might a supply chain planner choose to use a contract carrier?
Rates are usually lower than with common carriers, and the contract carrier can better respond to customer needs. Contract carriers offer several advantages to logistics managers. Their rates are generally lower than those of common carriers, and because they aren't required to serve the general shipping public, they can adapt their business to a customer's specific needs by, for example, scheduling special deliveries or using specialized equipment. They rival private carriage in that regard while providing added flexibility.
An organization has decided it has too much inventory already but cannot risk lowering customer service levels at this time. Which would help the organization lower inventory levels while harming customer service the least?
Reduce variability in quality, amount, and timing of supply deliveries. Since using inventory to protect against variability costs money and consumes space, management may consider alternatives to carrying more inventory than desired. One example is to reduce the variability in the quality, amount, and timing of supply deliveries, which will reduce the needed levels of raw materials or components.
Which of the following actions ismost likely to mitigate the consequences of the bullwhip effect?
Reducing lead times by simplifying processes Reducing lead times improves forecasting because forecasts can be for shorter periods. Forecasting accuracy is higher for shorter periods versus longer periods. Automation or process justification and simplification to just those steps customers perceive as value-added can reduce manufacturing lead times or demand lead times (from order placement until the item reaches the customer), with an added benefit of reducing labor costs.
Which of the following are customer-focused metrics?
Response accuracy, backorders, flexibility Customer-focused metrics include response accuracy, backorders, and flexibility. Safety stock, employee turnover, and the percentage of customers willing to provide testimonials may provide customer information but are not considered metrics.
When an organization cross-references the impact of potential risk situations to the possibility of their occurring, what have they created?
Risk rating Qualitative risk analysis is an analysis of the various qualities that make up each risk. The analysis can take into account many factors and thus can be nuanced while being cost-effective. The primary factors are probability and impact, but other factors such as urgency are accounted for. The various factors are weighed, and the result is a risk rating that can be used to rank the risks in order of importance.
Which of the following sources of customer information best provides insight into what customers are asking for and what they're not interested in?
Sales representatives Sales representatives can relay information about what customers are asking for, what they're not interested in, what concerns they have in making the purchase, and why they may or may not be considering the competition.
When contracting logistics to a third-party provider (3PL), what should the contract specify, especially for the first six to 12 months of the relationship?
Specific relationship-building efforts by each party Many 3PL or 4PL (fourth-party logistics provider) relationships have poor initial start-up periods that can cause the relationship to fail or reduce benefits and harm the long-term relationship, so an important contract consideration is to specify what each party will do to ensure that the first six to 12 months of the relationship go smoothly. This difficult period will require commitments of time and energy from both parties as well as formal specification of shared risks and rewards.
An organization wants to consolidate its purchasing efforts. What supplier relationship management (SRM) analytics function would be of most help to the organization?
Spend analysis Spend analysis allows the organization to identify who it is buying from, what it is purchasing from each supplier, and when and how the items were purchased. These comparative data can assist in sourcing and developing strategic relationships and consolidating purchasing.
An organization is seeking a loan to expand its facility. The lender asks the organization to demonstrate that it is financially capable of paying debts and bills before approving the loan. What statement does the organization need to provide?
Statement of cash flows The purpose of a statement of cash flows is to show lenders, investors, and creditors whether the organization has sufficient cash to pay debts, bills, and dividends to owners, because cash, not net income, is needed to make these payments.
Given the legal, security, and regulatory requirements imposed by countries and trading blocs and their tax, environmental, and security agencies, what aspect of supply chain management has become a new major focus for supply chain managers?
Supply chain risk management Navigating the legal, security, and regulatory requirements of multiple countries and trading blocs requires a renewed focus on supply chain risk management. Internal compliance and internal audit functions are their own functional areas and are not part of supply chain management per se.
Which of the following is the best example of risk mitigation in a strategic alliance?
Surmounting limited availability of component suppliers From a purely reactive stance, companies with certain types of supply situations may be able to manage risk better in a strategic alliance. Purchasers must consider the strategic importance of the component, the complexity of the component-product interface, the number of component suppliers available, and the uncertainty of the supplier relationship.
The triple bottom line refers to which of the following?
The collective measure of the economic, social, and environmental consequences of one company's activities at a point in time The triple bottom line refers to the collective measure of the economic, social, and environmental consequences of one company's activities at a point in time.
Which is the most important criterion for making the decision to contract out a business function to a third party?
The function is a core competency for the third party. Organizational leaders are increasingly focused on core competencies as the most reliable way to deliver shareholder value and capture market share. Because of this, cost is a reason for contracting out, but it is not the only reason. Contracting with companies whose core competencies are in the specified area means that the supplier may have substantial investments in related infrastructure, equipment, technology, and hiring/training. The result may or may not be lowest total cost. It could be better value or more reliable service than the organization could provide.
Which of the following describes the typical situation in regard to payment of import duties?
The importer pays the duty. The importer, exporter, or broker may classify the goods by reference to the harmonized code; however, the importer of record will pay the duties, regardless who classifies the goods.
Which of the following statements about the elements of a marketing strategy is true?
The starting point for product design is customer need. Successful product designs begin with knowledge of the customers' needs and buying habits. Promotional activities are greatly supported and enhanced by customer relationship management abilities, but promotion decisions, goals, and activities are, for the most part, unchanged from the traditional marketing model. Price is primarily a strategic decision, as is placement.
A supplier is not making investments in sustainability as the organization requested and shows little interest in even discussing the issue. Which is likely true of this scenario?
The supplier considers you to be a nuisance customer. The organization likely has insufficient market share with the supplier and may not be buying the core thing the supplier sells and wants to keep selling in the future.
Which of the following is a benefit of using a third-party trading exchange that spends time preparing for its auctions?
The third party performs traditional procurement activities for many consumers, creating economies of scale. Although auction preparation costs a bit more for the involved parties, the cost may be lower than in traditional procurement because the third-party exchange can perform these services for multiple consumers and generate economies of scale.
Which of the following could improve the perceived reliability of the master scheduling process if previous last-minute changes approved by salespersons have created schedule havoc?
Time fences Time fences can help balance the need for a production system to maintain schedules and control costs against the need for it to be flexible. Rescheduling, additional setups, rerouting, expediting, overtime, and disrupted schedules for other items can all be direct costs of late changes, not to mention the toll it takes on the perceived reliability of the master production schedule and on customer service.
Which of the following statements most accurately identifies the effect of increasing order sizes on inventory carrying and ordering costs in the economic order quantity calculation?
Total costs drop up to a point and then rise steadily. The larger the order, the higher the carrying costs, because there is more inventory to hold. Ordering costs tend to go down as orders grow larger because of economies of scale. Larger orders can be placed less frequently than smaller orders, thus reducing the number of orders or setups.
Which of the following (assuming work center- and period-specific data) would provide the number of units that can be produced at a work center during a single period of time?
Total time available divided by lead time Dividing the total time available during a scheduled period at the work center by the lead time tells you how many units can be produced at the work center in the period.
A small organization in the United States is purchasing goods from an organization in Japan. What should the organization do to protect against operating exposure caused by currency exchange?
Use a broker to assist with currency hedging. If you aren't dealing in the same currency as your counterparty in an import-export transaction, you have to find ways of making or collecting a payment with minimal risk. One technique is currency hedging, which is used to offset the risks associated with the changing value of currency. While most large corporations now have entire departments devoted solely to hedging and risk management, small companies often lack the resources necessary to engage in currency hedging. A broker
Moving average forecasts are generally superior to naive forecasts in correcting for which of the following sources of variability?
Very short-term fluctuations in demand attributable to no known cause Moving averages are intended to even out random variations, but they don't react quickly enough to account for cycles and trends.
If supply chain partners agree to make information technology upgrades but a specific vendor cannot be agreed upon, which of the following standards could allow for both diversity and low-cost compatibility?
Web services and service-oriented architecture The use of interface devices and data communications methods can resolve complex differences between software, but if an organization or extended supply chain is planning to invest in new technology, it can coordinate this effort to make the systems natively compatible. Newer systems using web services and service-oriented architecture may be compatible even when from different vendors.
Which of the following types of waste is considered most serious?
When production is ahead of demand Of the eight deadly wastes, overproduction (when production is ahead of demand) is considered the most serious.
To win back customers after they have discontinued service, when should the initial communication be made?
Within 1 week Rapid communication, within the first week of a customer discontinuing service, is essential in securing win-back customers.
Cost-effective and efficient collaboration between supply chain partners requires:
a conflict resolution model specified within the buyer-supplier contract. Forging supplier relationships represents an investment that must be protected by developing ways to identify potential and actual conflicts, resolve them without endangering the relationship, and learning from the conflict. Specifying the conflict resolution model in the contract protects both parties from excessive costs and sets expectations.
In organizations in Stage 4 of supply chain evolution, a supply chain function would likely:
build a direct link between the manufacturer and a component supplier or retailer and a supplier of finished goods. In Stage 4, the extended enterprise or strategic driver supply chain, there is an initial, exploratory collaboration between a channel master and one or several partners in the chain—often a manufacturer and a component supplier or retailer and a supplier of finished goods. This stage also entails synchronizing ERP systems with supply chain partners and providing real-time tracking of customer shipments.
The economics of liability refers to:
how the cost of transportation varies along with the protection level of the cargo. The economics of liability refers to how the cost of transportation varies along with the need to protect the cargo against various sorts of dangers. If carriers are required to insure the cargo or cover any claims on their own, they will pass the costs along. Liability concerns include damage, perishability, susceptibility to theft, value per pound, and susceptibility to spontaneous combustion or explosion.
The goal of the relationship diagram used in continuous improvement is to
identify the major cause of an issue as well as pinpoint the most interrelated one. The goal of the relationship diagram used in continuous improvement is to identify the major cause of an issue as well as pinpoint the most interrelated one.
A proven method of estimating the amount of a risk budget to devote to a particular risk response is:
multiplying the expected cost of the risk by its likelihood. A best-cost analysis of risk is performed by multiplying the anticipated cost of the business disruption by the likelihood of its occurrence.
