SCM 303 Final Exam
A zero defects quality strategy emphasizes: -"it is the process, not the people." -"quality is free." -"conformance to specification." -"do it right the first time." -"six sigma."
"do it right the first time."
Which of the following would be considered a direct holding cost? (choose all that apply) -Refrigeration costs -Disposal cost after the unit is removed from inventory -Purchasing cost of a new forklift for the warehouse -Weekly inventory quality checks for every unit in inventory
-Refrigeration costs -Weekly inventory quality checks for every unit in inventory
Which of the following is true about forecasting errors? (Select all that apply) -The accuracy of forecasting has improved over time. -Forecasting becomes easier when the specifications are more detailed. -Forecasting becomes more difficult at a reduced level of aggregation.
-The accuracy of forecasting has improved over time. -Forecasting becomes easier when the specifications are more detailed.
For an organization with revenue of $100 million, purchases of $60 million, and profit of $8 million before tax, a 10 percent reduction in purchase spend would result in an increase in profit of: 10 percent. 36 percent. 57 percent. 60 percent. 75 percent.
75 percent
Which of the following is not a purpose of APS planning charts? -Assist planners with evaluating cost procurement. -Identify various stages within the supply chain. -Aid employees in understanding production purposes. -Facilitate decision making for optimal results.
Aid employees in understanding production purposes.
Which of the following is not a theoretical factor of forecasting? -Amount. -Trend. -Cyclical. -Seasonal.
Amount
When planning for an increase in production, APS helps to ______. -determine what is best for the customer -identify and calculate the cost of strategic options -determine what is best for suppliers -Both determine what is best for the customer and identify and calculate the cost of strategic options are correct
Both determine what is best for the customer and identify and calculate the cost of strategic options are correct
When small changes generated by a customer produce progressively larger changes at each stage upstream in the supply chain, this is known as: -Buffering. -Bullwhip effect. -Pareto effect. -Supplier-managed inventory.
Bullwhip effect
Taxes and insurance costs are an example of which of the following costs? Ordering cost. Governmental costs. Carrying (or holding) costs. None of these selections.
Carrying (or holding) costs.
Which of the following is not a stage in the S&OP maturity model? Reacting. Anticipating. Competing. Orchestrating.
Competing
Which of the following is not a key component of forecast accuracy? -Technique. -Support system. -Knowledge. -Competition.
Competition
What is another name for the "Q-system" of inventory? -Qualified Inventory Order System -Controlled Inventory Ordering System -Continuous Review Inventory System -Quick Response Inventory System
Continuous Review Inventory System
Promotions such as "buy one get one free" are somewhat risky in terms of forecasting. Why? -Increases likelihood of competition. -Could decrease future sales. -Decreases perceived value of regular-price items. -Gives the impression of a struggling company.
Could decrease future sales
Which of the following is NOT often associated with supplier-managed inventory (SMI) arrangements? -Long-term commitments from both parties. -Supplier representative located at the customer site. -Customers recommend to suppliers how they should schedule production. -Supplier places replenishment orders. -All of these are typically associated with SMI.
Customers recommend to suppliers how they should schedule production.
The critical fraction gives us a probability because: -Demand is exact -Demand is unknown -Demand is only for one period -The costs could be equal
Demand is unknown
What is typically the first planning stage of the APS technology tool? -Supply planning. -Demand planning. -Financial planning. -Factory planning and demand fulfillment.
Demand planning
Evaluation of the supply function's contribution to organizational goals and strategies can be viewed in the context of: A. operational and strategic. B. strategic and transactional. C. direct and indirect. D. both A and B above. E. both A and C above.
E. both A and C above
An offered discount makes no change to determining optimal order quantity. True or False
False
Ordering cost only consists of the shipping cost from supplier to customer. True or False
False
The P-system of inventory submits inventory orders at random times. True or False
False
The critical fraction formula output is the optimal quantity to order in a newsvendor model. True or False
False
The standard deviation of demand during lead time is the same whether or not lead time is variable. True or False
False
The time value of money, opportunity cost, is not part of the calculation of EOQ holding cost (T/F)
False
The trend is to decentralize risk management, and allow each function to assess its risk exposure and develop strategies to best manage functional risks. True or False
False
Which of the following is not an APS application issue? -Reliable, consistent forecast. -Data integrity. -Supply chain and application education. -Financial flow.
Financial flow
___________ inventory is the costliest form of inventory one can hold. Finished goods Raw materials Components Work-in-process
Finished goods
Holding cost is which type of cost? -Fixed -Variable -Overhead
Fixed
Which of the following is not a demand planning requirement? -Provide reporting analysis and other metrics. -Allow exception alerts and resolution. -Handle time fences. -Track promotion activity.
Handle time fences
Which of the following is not a benefit that is offered by advanced planning and scheduling (APS)? -Improved customer service with lower inventory. -Improved forecast accuracy. -Better utilization of existing capacity. -Better relationships with suppliers.
Improved forecast accuracy
Which of the following is NOT a role of inventory? -Increasing quality of finished goods -Balancing supply and demand -Buffering uncertainty in supply or demand -Enabling geographical specialization
Increasing quality of finished goods
Which of the following is not true about CPFR? -It can make products more consistent. -It is time consuming. -It aids in forecasting accuracy. -It is good for low-volume items.
It is good for low-volume items.
The basic calculation in the newsvendor model will result in a calculation of: -Minimum order quantity -Optimal probability of running out -Exact profit that will be earned -The probability that next year's styles will be more popular than this year's.
Optimal probability of running out
If I calculate the EOQ with the new, discounted material cost and the resulting quantity is enough to get the discount, what should I do? -Order the discounted EOQ amount -Order the regular EOQ amount -Average the discounted and undiscounted EOQ amounts and order that -Compare total costs of the two EOQ amounts
Order the discounted EOQ amount
The ABC analysis used for analyzing inventory is an example of: -Safety stock calculation. -Regression analysis. -Pareto's law. -Inventory carrying cost.
Pareto's law
Which of the following is not input needed for an APS? -Current inventories. -Past inventories. -Work already in progress. -Time-phased demand plan.
Past inventories
What is another name for the "P-system" of inventory? -Partial Request Inventory Order System -Poorly Routed Inventory Ordering System -Particularly Responsive Complicated Ordering System -Periodic Review Inventory System
Periodic Review Inventory System
In the end, the point of using the EOQ formula is to: -Properly enter the values we have calculated -Identify the number that is best under any condition -Point us toward the possible lowest cost option -Keep people who create math models employed
Point us toward the possible lowest cost option
Which of the following is not a reason for increased importance of S&OP? -Increased capacity. -Lesser variance of products. -Strategies are simplified. -Precise demands by key customers.
Precise demands by key customers
What does the R stand for in CPFR? Repeat. Replenish. Re-evaluate. Re-design.
Replenish
What is the great benefit of the Q-system? -Complicated mathematical calculations -Responsiveness -Hiding inventory from customers -Ordering at fixed times
Responsiveness
What is the great benefit of the P-system? -A name that is easy to remember -Customer satisfaction is guaranteed -Simplicity in managing the system -Complicated mathematical requirements
Simplicity in managing the system
Finding average demand during lead time involves doing which of the following? -Squaring average demand per day and summing -Summing the square root of average demand per day and summing -Summing the daily average demand per day
Summing the daily average demand per day
Which of the following is not a benefit of sales and operations planning? -The S&OP process eliminates the need to have finished goods inventory. -The S&OP process results in better customer service. -The S&OP process provides better visibility into future capacity problems. -The S&OP process provides a single set of numbers to run the business.
The S&OP process eliminates the need to have finished goods inventory.
Which of the following statements is true when comparing the total cost curve for a product without discounting and the total cost curve with discounting? -The discounted curve is always below the undiscounted curve -The undiscounted curve is always below the discounted curve -The discounted curve is always below the undiscounted curve but does not really exist for values less than the minimum order amount to receive the discount. -The undiscounted curve is always below the discounted curve but does not really exist for values less than the minimum order amount to receive the discount.
The discounted curve is always below the undiscounted curve but does not really exist for values less than the minimum order amount to receive the discount.
The "right" amount of safety stock is often a function of Service Level. Service Level is: -The probability of making the right product -The probability of delay -The probability of meeting demand during a delay -The probability of delay causing more demand
The probability of meeting demand during a delay
Safety stock exists for which of the following reasons? -To allow less expensive purchases by buying more. -To allow for transportation time. -To provide protection against the uncertainties of supply and demand. -None of these selections.
To provide protection against the uncertainties of supply and demand.
Which of the following optimizes resources to move materials and goods within supply chains to minimize cost while meeting deadline constraints? Supply chain planning. Factory planning. Distribution planning. Transportation planning.
Transportation planning
Safety stock is inventory held to guard against uncertainty True False
True
Supply chain sustainability performance must comply with legal obligations and meet the values and standards of the organization's stakeholders, including employees, shareholders, and customers. True or False
True
The Q-system of inventory submits inventory orders at random times. True or False
True
The key decisions and plans in corporate strategy address: What business are we in and how will we allocate resources among these businesses? True or False
True
The newsvendor model works well for perishable products True or False
True
The true test of supply's contribution is when the chief executive officer and the senior management team recognize that supply and suppliers are critical to organizational success and competitive advantage. True or False
True
There is not one best way for all organizations to organize and manage the supply function, conduct activities, and effectively integrate suppliers. True or False
True
Ordering cost is which type of cost? Fixed Variable Overhead
Variable
Since standard deviations don't sum, we have to sum which thing instead? Average Median Kurtosis Variance
Variance
A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory? Raw material Work in process Finished goods Maintenance, repair, and operating supplies (MRO)
Work in process
A strategy is: -an action plan to maximize rewards in the current period in return for big risks. -a procedure for allocating resources among functions in the organization. -an action plan to achieve specific long-term goals and objectives. -an action plan to achieve specific operational and tactical goals. -a vision of the future of an organization.
an action plan to achieve specific long-term goals and objectives.
Strategic planning can be defined as: -how each functional area will achieve its specific goals and objectives. -an action plan to achieve specific operational and tactical goals. -a procedure for allocating resources to appropriate functions in the organization. -taking big risks to maximize current period benefits. -an action plan to achieve specific long-term goals and objectives.
an action plan to achieve specific long-term goals and objectives.
Linking current and future needs with current and future markets is the primary focus of: -internal users of purchased goods and services. -each individual buyer. -an effective supply strategy. -an effective marketing strategy. -an effective organizational strategy.
an effective supply strategy
Supply strategies that are based on changes in demand and supply are known as: assurance-of-supply strategies. risk-management strategies. cost-reduction strategies. environmental-change strategies. supply chain support strategies.
assurance-of-supply strategies
Supply strategies that are designed to exploit market opportunities and organizational strengths to give the buying organization an advantage in the marketplace are known as: risk-management strategies. competitive-edge strategies. assurance-of-supply strategies. cost-reduction strategies. supply chain support strategies.
competitive-edge strategies
Organizational objectives and supply objectives typically are expressed: -differently, providing the supply manager multiple opportunities to tap into organizational resources. -the same (survival, growth, financial, and environmental), making it easy to translate organizational objectives into supply objectives. -differently, making it difficult to translate organizational objectives into supply objectives. -the same factors (quality, quantity, price, delivery and service), but long-term at the organizational level and short-term at the supply level. -in ways that are very specific to the organization, making it difficult to convey objectives to suppliers.
differently, making it difficult to translate organizational objectives into supply objectives.
Interest in the supply function as a managerial activity began: -before 1900 when railroads recognized it as an important function. -during World Wars I and II because of global materials shortages. -in the 1970s during a period of high inflation. -in the early 1980s with high interest rates and the costs of financing inventory. -more recently with the rise of e-commerce.
during World Wars I and II because of global materials shortages.
Supply strategies that are designed to anticipate and recognize shifts in the economy, organization, people, legal, government regulations and controls, and technologies are: -environmental change strategies. -change management strategies. -total cost strategies. -internal management strategies. -supply assurance strategies.
environmental change strategies.
Supply can influence risk management in which area(s)? -financial -operational -reputation -financial and operational -financial, operational and reputation
financial, operational and reputation
On average, the dollars spent with suppliers as a percent of revenues: -is greater in manufacturing organizations than in service organizations. -is about equal in service and manufacturing organizations. -is greater in service organizations than in manufacturing organizations. -depends on the type of manufacturing process. -depends on the type of service delivery system.
is greater in manufacturing organizations than in service organizations.
The optimization module of an advanced planning and scheduling (APS) system ______. -develops the requirement projections for the planning horizon -defines and coordinates supply chain system resources and constraints -is the computational engine of the supply chain planning system -specifies the resource assignments and communicates them to the ERP system
is the computational engine of the supply chain planning system
If organizational objectives and supply objectives are incongruent: -it will be easy to translate organizational objectives into supply objectives. -it will be difficult to translate organizational objectives into supply objectives. -it is likely that many organizational resources will be made available to supply. -it will be easy to define quality, quantity, price, delivery, and service goals. -it will be easy to convey objectives to suppliers.
it will be difficult to translate organizational objectives into supply objectives.
What are the three main challenges of the Q-system? (select three) -Inventory monitoring system -Unhappy customers -Having enough when you order -Figuring out how much to order -Orders getting lost in the system
-Inventory monitoring system -Having enough when you order -Figuring out how much to order
What are the two main challenges of the P-system? (select two) -Unhappy customers -Length of review period -Figuring out when to order -Computers -Amount of inventory to have
-Length of review period -Amount of inventory to have
Which of the following would be considered part of Ordering Cost? (choose all that apply) -Minimum shipping charge -Postage to mail the order to a supplier (who still lives in the early 20th century) -Renting a truck to haul the order (and only this order, no other business is used for this truck's one time rental) -Cost of the office building housing your employees.
-Minimum shipping charge -Renting a truck to haul the order (and only this order, no other business is used for this truck's one time rental)
The supply area is a good training ground for managers because it provides exposure to: -accounting systems. -pressure of decision making under uncertainty. -various levels and functions in the organization. -accounting systems, pressure of decision making under uncertainty, and various levels and functions in the organization. -pressure of decision making under uncertainty and various levels and functions in the organization.
pressure of decision making under uncertainty and various levels and functions in the organization.
A successful supply chain management strategy integrates: -processes and systems within and across organizations. -processes and systems within the organization. -the flow of materials within an organization. -the flow of information within the buying organization. -the flow of information with first tier suppliers.
processes and systems within and across organizations.
In a situation where there are low economies of scale and a long response time, the supply chain strategy should focus on ______. -an accurate short-term forecast with strong tactics and less consideration of history -production flexibility since detailed and accurate forecasting is not of critical importance -responsiveness at the expense of forecast accuracy -both forecast accuracy and responsiveness because they are equally important
production flexibility since detailed and accurate forecasting is not of critical importance
Supply has the potential to contribute to: -financial performance. -financial performance and competitive position. -profitability, competitive position and sustainability performance. -competitive position and sustainability performance. -financial performance, competitive position and sustainability performance.
profitability, competitive position and sustainability performance.
Advanced planning and scheduling (APS) facilitates improvements in customer service by ______. -reducing the time to make accurate commitments to customers -reducing inventory levels -improving resource utilization -None of the above
reducing the time to make accurate commitments to customers
The impact of supply management actions on the balance sheet is measured by the: -return on investment effect. -return on inventory effect. -inventory turnover effect. -return on assets effect. -profit leverage effect.
return on assets effect
The question: "How can supply and the supply chain contribute effectively to organizational objectives and strategy?" is a key question in: -supplier relationship management. -strategic sourcing. -supplier network management. -supply chain management. -strategic supply management.
strategic supply management.
A systems approach to managing the flow of information, materials, and services from tiers of suppliers through the buying organization to tiers of customers is: -strategic sourcing. -materials management. -supply chain management. -procurement management. -inventory management.
supply chain management
The design and management of seamless, value-added processes across organizational boundaries to meet the needs of the end customer is called: -supply chain management. -strategic sourcing. -value management. -customer relationship management. -strategic process management.
supply chain management
Strategies designed to make available the knowledge and capabilities of supply chain members to others in the buying organization are called: environmental-change strategies. assurance-of-supply strategies. risk-management strategies. cost-reduction strategies. supply-chain-support strategies.
supply-chain-support strategies
Normally, most organizational objectives can be summarized as: -marketing, management, finance, and operations. -leadership, market share, earnings per share, and return on investment. -survival, growth, financial, and sustainability. -profitability, return on investment, liquidity, and shareholder value. -growth, maintenance, new products, and asset management.
survival, growth, financial, and sustainability.
Normally, most organizational objectives can be summarized under four categories: -marketing, management, financial, and operations. -survival, market share, earnings per share, and return on investment. -profitability, return on investment, liquidity, and earnings per share. -survival, growth, financial, and sustainability. -growth, maintenance, new product development, and asset management.
survival, growth, financial, and sustainability.
When developing strategies related to "how to buy," decisions must be made about: -make or buy. -size of inventories. -insource or outsource. -systems and processes. -level of quality.
systems and processes
The return on assets effect (ROA) quantifies and measures: -the indirect contribution of supply management to profitability. -any increase in sales that occurs at a greater rate than the cost of assets. -reduction in the allocations to the operating budget of the supply department. -the impact of supply actions on inventory and the balance sheet. -the effect on profitability of reduced spend compared to a sales increase.
the impact of supply actions on inventory and the balance sheet.
Supply decisions can affect: -the balance sheet. -the income statement. -the income statement and the balance sheet. -neither the income statement nor the balance sheet. -none of the financial metrics.
the income statement and the balance sheet.
The use of the concepts of purchasing, procurement, supply, and supply chain management will vary from organization to organization depending on: -the organization's stage of development and/or sophistication. -the industry in which they operate. -the organization's competitive position. -the organization's stage of development and/or sophistication, the industry in which they operate and the organization's competitive position. -the organization's stage of development and/or sophistication and the industry in which they operate.
the organization's stage of development and/or sophistication, the industry in which they operate and the organization's competitive position.
Company image may be directly influenced by: -treating suppliers in a fair and equitable manner. -complying with regulatory requirements. -sustainability practices of suppliers. -treating suppliers in a fair and equitable manner, complying with regulatory requirements and sustainability practices of suppliers. -complying with regulatory requirements and sustainability practices of suppliers.
treating suppliers in a fair and equitable manner, complying with regulatory requirements and sustainability practices of suppliers.
When developing supply strategies, the supply manager must determine: -what to make or buy. -when to buy. -how much to buy. -how it should be ordered. -what to make or buy, when to buy, how much to buy and how it should be ordered.
what to make or buy, when to buy, how much to buy and how it should be ordered.
Three major challenges facing supply executives when setting supply strategies and objectives are: (1) How can we simultaneously provide uninterrupted supply and minimize inventory? (2) How can we improve quality while reducing our supply base? and, (3) How can we increase our involvement in outsourcing decisions? (1) What is the effective interpretation of corporate objectives and supply objectives? (2) What is the appropriate action plan or strategy to achieve the desired objectives? and, (3) How can supply issues be identified and integrated into organizational objectives and strategies? (1) Should we have a centralized or decentralized purchasing structure? (2) Should we hire managers trained in supply management or in technical fields? and, (3) Should we outsource any or all of the purchasing function?
(1) What is the effective interpretation of corporate objectives and supply objectives? (2) What is the appropriate action plan or strategy to achieve the desired objectives? and, (3) How can supply issues be identified and integrated into organizational objectives and strategies?
The newsvendor model balances which two costs (choose all that apply)? -Fixed cost of ordering -Cost of ordering too many -Variable cost of shelving items -Overhead of facility operations -Running out and losing profits
-Cost of ordering too many -Running out and losing profits
The Critical Fraction formula balances which two costs (choose all that apply)? -Fixed cost of ordering (submitting an order) -Cost of over stock (ordering too many) -Variable cost of shelving items (stocking items) items (stocking items) -Overhead of facility operations -Cost of ordering too few (under stock)
-Cost of over stock (ordering too many) -Cost of ordering too few (under stock)
When lead time and demand are both variable, the formula we use consists of which two parts? (select two) -Demand variability -Lead time variability -Order period variability -Accounting irregularities
-Demand variability -Lead time variability
Which two things drive the need for safety stock? (choose two)? -Demand variability -Warehouse space -Delays -Manufacturing speed -Customer choice
-Demand variability -Delays
HighLife Corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15 percent The business year is 300 days. Standard deviation of demand during lead time = 90 Desired service level = 95 percent What is the safety stock that HighLife Corporation should carry for its desired service level of 95 percent? 1.28 standard deviations cover 90 percent 1.65 standard deviations cover 95 percent 1.96 standard deviations cover 97.5 percent -149 -90 -86 -112
149
In manufacturing organizations, the dollars spent with suppliers fall into what range as a percent of revenues? 25 to 35 30 to 60 45 to 75 50 to 80 65 to 75
50 to 80
For an organization with annual sales of $500 million, purchases of $300 million and profit of $50 million, a 10 percent reduction in the cost of purchases would result in a profit-leverage effect of: -10 percent (sales increase of 10 percent would be required to achieve the same percentage increase in profit). -15 percent (sales increase of 15 percent would be required to achieve the same percentage increase in profit). -10 percent (sales increase of 50 percent would be required to achieve the same percentage increase in profit). -60 percent (sales increase of 60 percent would be required to achieve the same percentage increase in profit).
60 percent (sales increase of 60 percent would be required to achieve the same percentage increase in profit).
When a supply-related risk exists, the supply management team should: -identify and classify risks, assess possible impact, develop a mitigation strategy, inform the chief supply officer, await instructions, and implement the directive. -seek input from other functional areas, compile the ideas, and submit them to senior management. -review the existing risk mitigation plan, suggest revisions, and await instructions. -confer with relevant parties, provide requested data, and implement senior management's mitigation strategy.
identify and classify risks, assess possible impact, develop a mitigation strategy, inform the chief supply officer, await instructions, and implement the directive.
Evidence of the growth and influence of supply management in an organization includes: -fewer activities under the management or span of control of supply. -meaningful involvement at the operational level. -involvement in strategic planning. -executive status of the chief supply officer. -involvement in strategic planning and executive status of the chief supply officer.
involvement in strategic planning and executive status of the chief supply officer.