SCM 344
Bada Bing Bada Boom Candy, Inc. supplies the milk chocolate to candy makers throughout the mid-western states. After tracking your customers' behaviors, you find that 43% of these companies like your chocolate enough that they will wait until you can fill the order--even if it means a delay. Twenty-nine percent need the chocolate for immediate production and will make a one-time buy somewhere else. They realize that your product is superior and will come back. However, 28% of your customers get put off by not having the product and will permanently switch to another supplier. • The added processes and delivery fees to get late deliveries out run around $500 per incident.• An average chocolate order is about 200 lbs. You charge $22 per pound. Your profit margin is 13%.• The lifetime stream of profits for a customer who permanently defects is estimated to be $254,096. Given the information above, what is the expected cost for a customer who decides to make a one-time buy eleswhere? $215 $400 $165.88 $193.37 None of the above
$165.88
Bada Bing Bada Boom Candy, Inc. supplies the milk chocolate to candy makers throughout the mid-western states. After tracking your customers' behaviors, you find that 43% of these companies like your chocolate enough that they will wait until you can fill the order--even if it means a delay. Twenty-nine percent need the chocolate for immediate production and will make a one-time buy somewhere else. They realize that your product is superior and will come back. However, 28% of your customers get put off by not having the product and will permanently switch to another supplier. • The added processes and delivery fees to get late deliveries out run around $500 per incident.• An average chocolate order is about 200 lbs. You charge $22 per pound. Your profit margin is 13%.• The lifetime stream of profits for a customer who permanently defects is estimated to be $254,096. If Bada Bing Bada Boom Candy, Inc. stocks out of milk chocolate seven times a year, how much can you justify investing to eliminate stockouts through improved logistics, rounded to the nearest dollar? $782,950 $467,890 $753,440 $500,696 None of the above
$467,890
Calculate the expected cost per stockout with the following information: Probability of a back order is 67%, lost sale is 22%, and the probability of a lost customer is 11%. The cost per incident of a back order is $50, lost customer is $65,000. The sales price of the item is $12 with a 20% profit margin. The average order is 50. $13,187.00 $10,351.50 $12,212.00 $7,209.90 None of the above
$7,209.90
Bada Bing Bada Boom Candy, Inc. supplies the milk chocolate to candy makers throughout the mid-western states. After tracking your customers' behaviors, you find that 43% of these companies like your chocolate enough that they will wait until you can fill the order--even if it means a delay. Twenty-nine percent need the chocolate for immediate production and will make a one-time buy somewhere else. They realize that your product is superior and will come back. However, 28% of your customers get put off by not having the product and will permanently switch to another supplier. • The added processes and delivery fees to get late deliveries out run around $500 per incident.• An average chocolate order is about 200 lbs. You charge $22 per pound. Your profit margin is 13%.• The lifetime stream of profits for a customer who permanently defects is estimated to be $254,096. What is the expected cost per stockout, rounded to the nearest dollar? $71,528 $78,768 $75,344 $66,997 None of the above
$71,528
Which type of product is most likely to use a leagile supply chain? A standard product that does not vary across customers A product that is unique from the ground up A product that customers insist be in-stock and immediately available A product that has small, yet important differences on the surface A product the customers regard as "commodity" and purchase is based on low cost
A product that has small yet important differences on the surface
Kanbans provide which of the following? A visual signal of consumption and the need to replenish supply Support for economies of scale in procurement Salespeople with insights on the most profitable products to sell Less time for suppliers to react to demand changes Financial incentives for customers to reduce inventory
A visual signal of consumption and the need to replenish supply
Which of the following is a key tool for performing customer profitability analysis? Automatic data processing Return on investment After receipt of order Activity-based costing
Activity-based costing
Customer alliances are built upon which of the following? Long-term focus Senior leadership involvement Cross-organizational teams are widely employed Shared risks and rewards Open communication and linked information systems All of the above
All of the above
Good customer service leads to customer satisfaction and loyalty. What are the operational targets your logistics system needs to provide? Product availability Timely delivery Transparency Protection against disruption All of the above
All of the above
Tradeoffs . . .? a. Are everywhere. b. Should be identified and evaluated. c. Should be balanced to meet the right customer service/cost equation. d. All of the above e. Only b and c
All of the above
What do we know about service failures? Statistics show that out-of-stock occurrences have reduced retailer's overall sales by four percent Costs of stockouts are not shared equally among members of the supply chain Calculating the true cost of a stockout is very difficult All of the above
All of the above
Which of the following are potential causes of logistics disruptions? Natural Disasters Transporation Strikes Border Delays Piracy All of the above
All of the above
Which of the following is true about transactional relationships? They are cost driven and arm's length They are vital to profitability They need and expect efficient service They do not have resources to waste with inefficient transactions, processes, processes, or partners All of the above
All of the above
Why would your company pursue a selective distribution strategy? Resource limitations Market constraints Product is only popular in specific geographic areas All of the above
All of the above
What is a Kaizen event? An event you hold to introduce lean principles in order to improve processes A specific methodology used to introduce the idea of the eight wastes An important method for improving organizational sustainability All of the above
An event you hold to introduce lean principles in order to improve processes
When considering product fragility, which of the following is not true? As fragility increases, so does transportation costs As fragility increases, so does packaging cost As fragility increases, so does warehousing cost As fragility increases, so does pilferage cost
As fragility increases, so does pilferage cost
Which of the following is true regarding the tradeoff between transportation costs and service? Companies should use whatever transportation is required to achieve the customer's desired service level. Companies should make the customer pay for transportation costs. As the money we spend on transportation goes up, the companies cost of lost sales generally goes down. It is always a good investment to spend more money on transport to achieve higher service levels.
As the money we spend on transportation goes up, the companies cost of lost sales generally goes down
What does activity-based costing do for organizations? a. Gives accurate view of the costs of service b. Enables companies to build individual customer P&L statements c. Creates a synergy between customers and suppliers d. Develops a history of transactions for the customer e. Both a and b
Both a and b
Which of the following are steps in ABC classification (i.e., applying Pareto's Law)? a. Classify companies by sales b. Provide stewardship for each customer c. Modify classifications based on strategic issues d. Restructure companies based on size e. Both a and c
Both a and c
How does an agile supply chain seek to out-compete rivals that use other supply chain strategies? Through low cost Through speed to market By providing a limited assortment of supply with minimal inventory investment By producing products on a regional basis to meet local needs By accommodating customers' specific preferences in product characteristics
By accommodating customer's specific preferences in product characteristics
In the 5 S approach, sweep refers to: Clean and put things away as you use them Continuously follow the 5 S approach and implement in throughout your organization Standardizing processes and procedures Sorting and combining like items Have a place for everything and put everything in its place when done using it
Clean and put things away as you use them
Which business strategy tends to drive (influence) all others? Logistics Production New product development Corporate Marketing
Corporate
Over time, companies' reliance on long-term forecasting to drive replenishment has . . .? a. Increased b. Decreased c. Stayed the same d. Significantly reduced inventories e. Only a and d
Decreased
What is the key to fulfilling current customer needs while maximizing long-term value co-creation? Defining the appropriate relationship intensity Avoiding companies such as military equipment manufacturers and firms that harm the environment Launching hostile takeovers of companies with undervalued assets Reduce unit costs that arise from an increase in production
Defining the appropriate relationship intensity
Which of the following is NOT one of the core deliverables of a logistics system? Timely Delivery Excess capacity Protection against disruption Product availability Transparency
Excess capacity
Which of the following does not describe transportation waste? a. Moving things by a more expensive mode than the customer needs. b. Excess movement done by people c. Transshipping orders d. Buying things from distant locations instead of locally e. All of the above f. Only a, c, and d
Excess movement done by people
A tool commonly used to identify, evaluate, and prioritize mistakes and problems that can occur in a business is called: Failure mode & effects analysis Hotspot identification Radar mapping Risk projection analysis 5S analysis
Failure mode and effects analysis
Event logistics is another name for service logistics. True False
False
Most consumer goods companies seek to achieve market share advantages over their competition. In pursuit of this objective, they are most likely to employ a selective distribution strategy. True False
False
The logistics system design is likely to have little or no effect on a company's risk mitigation strategy True False
False
The saying that "The customer is always right" implies that it is impossible to offer too much service to a customer. True False
False
What are service logistics? The basis for customer service, which is the heart of logistics Focused on all the people, facilities, and supplies in place to effectively deliver services to customers The resources (facilities, people, and infrastructures) used to organized, deliver, and execute an event from initial schedule through teardown and clean-up All of the above
Focused on all the people, facilities, and supplies in place to effectively deliver services to customers
What does quantity utility focus on? a. Having the product arrive when it is needed b. Getting customers the right amount of product c. Having zero inventory according to lean principles d. Having the inventory where it is needed e. All of the above f. Only a and b
Getting customers the right amount of product
In considering the eight wastes, which of the following is an example of overproduction? Giving the customer more product than ordered Holding excess inventory Cleaning more frequently than needed None of the above
Giving the customer more product than ordered
The amount of money that is spent on logistics in the U.S. economy in dollar terms is which of the following? Is flat Has increased over time Has decreased over time Not enough information to answer this question
Has increased over time
Which distribution strategy puts the greatest stress on logistics by requiring that products are found in ready supply across a very broad geographic area? Niche distribution Exclusive distribution Selective distribution Channel-centric distribution Intensive distribution
Intensive distribution
Which distribution strategy seeks to achieve the greatest reach in the market such that the product could be accessed by the most people possible? Exclusive distribution Exhaustive distribution Central distribution Intensive distribution Selective distribution
Intensive distribution
In the 1980s, what was the largest category of logistics spending? Inventory carrying cost Trucking cost Air freight cost Administrative costs
Inventory Carrying Cost
Which of the following is true regarding how a product's value influences logistics costs? Warehousing cost is unaffected by the value as warehousing depends on the space something takes up Transportation is unaffected by value as it is based on space and weight Inventory costs go up because more valuable products tie up more cash All of the above
Inventory costs go up because more valuable products tie up more cash
Which of the following is not one of the eight wastes? Not utilizing staff talents Kaizen events Inventory Defects
Kaizen events
Events that have no history, yet they are considered possible and, with some speculation, can be assessed in terms of likelihood and potential impact might be called: Known-known Known-unknown Unknown-unknown Unknown-known "Freak events"
Known-unknown
Because of government regulations, a standardized trailer can weigh up to no more than 40,000 lbs. What type of tradeoff does this regulation affect? Logistics vs. the value of an item Logistics vs. Weight Density Logistics vs. Susceptibility to loss and damage All of the above
Logistics vs. Weight density
Which business functions combine to form a company's supply chain strategy? Marketing, production, and sales Logistics, operations and supply management Finance, accounting, and marketing Sales, logistics, and marketing New product development, forecasting, and logistics
Logistics, operations, and supply management
When thinking about the various types of logistics, which of the following is true? There is very little in common from one type to the other They are all virtually identical--only the names are changed The book focuses on service logistics Many of the key logistics principles discussed are applicable to all of the various types of logistics
Many of the key logistics principles discussed are applicable to all of the various types of logistics
Moving groups of people and suppliers, setting up camps, replenishing supplies and people, breaking camp and moving out describes which type of logistics? Event logistics Passenger logistics Military logistics Service logistics Humanitarian logistics
Military logistics
What is the waste of motion? Movement of materials or information that does not add value Paying for a more expensive mode of transport than your customer needs Moving goods multiple times Movement of people that does not add value All of the above
Movement of people that does not add value
What are the key activities in logistics? Movement, storage and processing Returns, reuse and recycling Managing customer payments, returns, and credits All of the above are equally important None of the above apply
Movement, storage, and processing
The definition of logistics provided by CSCMP includes which of the following? a. Forward flow of goods b. Storage of goods c. Control of financial flows d. All of the above e. Only a & b
Only a & b
Leagile supply chains . . .? a. May rely on 3PLs to perform value-added services b. May postpone final product form until the product is physically closer to the customer c. Have few practical examples in the real-world d. All of the above e. Only a and b
Only a and b
Segmentation involves classifying customers based on their importance. Which tools are used to classify customers? a. ABC classification (Pareto's Law) b. Customer profitability analysis c. Balanced investment strategy d. Customer loyalty program e. None of the above f. Only a and b
Only a and b
Which of the following best describe the systems you should put in place to support transaction relationships? a. Fair b. Super Responsive c. Efficient d. Bend-over-backwards Service e. All of the above f. Only a and c
Only a and c
Once a company knows that a customer is no longer profitable, which of the folloiwng are appropriate options? a. Collaborate to reduce costs of service b. Raise prices c. Fire the customer d. Keep the status quo e. All of the above f. Only a, b, and c
Only a, b, and c
What are some data management tools to assure product availability? a. Point of sales information b. Integrated business planning c. Predictive analytics d. ERP systems e. All of the above f. Only a, b, and c
Only a, b, and c
What are the possible costs of a service failure? a. Back orders b. Lost suppliers c. Lost sales d. Lost customers e. All of the above f. Only a, c, and d
Only a, c, and d
When you use ABC costing and find out that a customer is not profitable, which of the following are legitimate options? a. Stop selling to the unprofitable customer b. Increase sales to grow the business c. Raise prices d. Collaborate with the customer to reduce the costs of doing business e. All of the above f. Only a, c, and d
Only a, c, and d
What are your options when you use activity-based costing and discover that an important customer is not profitable? a. Keep the customer no matter what. b. Collaborate to reduce the costs of service. c. Raise prices. d. Fire the customer. e. All of the above f. Only b, c, and d
Only b, c, and d
What does humanitarian logistics involves? Moving groups of people and supplies, setting up camps, replenishing supplies and people, breaking camp down again, and moving it out Focusing on B2B issues Planning the effective flow and storage of goods as well as the exchange of information to alleviate the suffering of people All of the above
Planning the effective flow and storage of goods as well as the exchange of information to alleviate the suffering of people
What does order transparency improve? Planning, evaluation, and disregard Execution, planning, and neglect Planning, execution, and evaluation Evaluation, disregard, and neglect None of the above
Planning, execution, and evaluation
An agile supply chain seeks to . . .? Live long and prosper Wipe out lean supply chains as we know them React first, ask questions later Quickly provide a standard product to customers Produce to individual preferences
Produce to individual preferences
What are the Four "P's" of marketing? Product, price, promotion, and place People, promotion, products, and profit Promotion, paper, press, and prestige Product, promotion, profit, and payment Places, people, promotion, and passion
Product, price, place, promotion
What has improved logistics done for India? Raised the standard of living for rural farmers Virtually eliminated poverty Eliminated hunger All of the above
Raised the standard of living for rural farmers
Which of the following characterizes a lean supply chain? a. Suppliers usually determine demand b. Logistics plays a very small role, because companies rely on suppliers and customers for delivery c. Reliable transportation is essential d. All of the above e. Only a and c
Reliable transportation is essential
With respect to timely delivery, how do you achieve a dependability capability? Remove process variability Use control with functionality Understand business terms that may not be well defined Promise longer than needed lead times All of the above
Remove process variability
What is the most efficient way a company can grow top-line profitably? Acquire new customers Retain and increase sales to existing customers Create new products Assess whether the economy is actually growing All of the above
Retain and increase sales to existing customers
Which of the following is not one of the seven rights of logistics? Right transportation Right place Right cost Right time None of the above; that is, they are all part of the seven rights
Right transportation
Which step in the risk management process involves actions taken to reduce or eliminate the risk factor? Risk identification Risk assessment Risk prioritization Risk mitigation Risk extension
Risk mitigation
What information drives supply chain execution in a planning-based supply chain? Customer orders Supplier capacity Sales forecasts Cost advantages Promotional strategies
Sales forecasts
Some companies resolve service failures so successfully that customer satisfaction actually increases following a disruption. What is this known as? Service recovery paradox Emergency relief system Customer satisfaction paradigm Efficiency planning
Service recovery paradox
Which of the following is not one of the 5 S's? Sustain Source Sort Sweep
Source
Which of the following describes more developed economies? Rely on rail as a primary means of freight transportion Spend more on logistics because their products tend to be imported and shipped greater distance Spend less on logistics costs because their logistics systems are more efficient Logistics costs are unrelated to an economy's stage of development
Spend less on logistics costs because their logistics systems are more efficient
The waste of "waiting" refers to which of the following? Having excess inventory that is waiting to be processed. Staging orders to be shipped in advance of when they are needed. An order that is received early by the customer and has to wait to be used. Unloading and reloading the same shipment to improve the cube utilization instead of planning in advance.
Staging orders to be shipped in advance of when they are needed
Which of the following is NOT regarded as a major supply chain risk factor? Extreme weather Supplier default Political unrest Natural disasters Terrorism
Supplier Default
Listening to employee suggestions for improvement is an example of which 5S methodology for eliminating waste? Sort Simplify Sweep Standardize Sustain
Sustain
"Supermarket supply" refers to which of the following? The inventory of grocery items stocked at a distribution center Discounts that salespeople issue to buyers of merchandise The assortment of goods that are pre-positioned in a supply chain The incentives used in supply chains to balance demand over the course of the year The weekly replenishment perishables in durable goods supply chains
The assortment of goods that are pre-positioned in a supply chain
As you get close to 100% customer service level in logistics, which of the following occurs? a. The costs of service improvements rise quickly. b. Increased sales nearly always offset the additional costs. c. You will make more money. d. All of the above e. Only b and e
The costs of service improvements rise quickly
Which of the following is true regarding the manufacturing and distribution of Toyota cars to a dealer? The delivery of cars to dealers is a pure make-to-stock approach The delivery of cars to dealers is a pure make-to-order approach The delivery of cars to dealers combines the make-to-stock and make-to -order approaches
The delivery of cars to dealers is a pure make-to-order approach combines the make-to-stock and make-to-order approaches
Value can only be assessed from the standpoint of _______________? The eyes of the customer Shareholder value A company's stock price None of the above
The eyes of the customer
In logistics, processing deals primarily with which of the following? The flow of information and the visibility of shipments during movement and storage The processing of payments quickly to improve cash flow Reducing waste Managing paperwork None of the above
The flow of information and the visibility of shipments during movement and storage
Referring to timely delivery, what does "speed" refer to? How fast the trucks get from one destination to the other It is the acronym for self-programmed electronic equation delineator The length of the order cycle The rapidity of the operation All of the above
The length of the order cycle
Which of the following describes event logistics? The management of logistics to deliver relief after a disaster Focused on all the people, facilities, and supplies in place to effectively deliver services to customers The resources (facilities, people, and infrastructures) used to organize, deliver and execute an event from initial schedule through teardown and clean-up Very predictable because every event is vastly different
The resources (facilities, people, and infrastructures) used to organize, deliver and execute an event from initial schedule through teardown and clean-up
In the 5 S's, which of the following is another way to say simplify? There is a place for everything, and everything in its place Eliminate the things that are not being used Standardize and develop repeatable processes Eliminate unnecessary movement waste
There is a place for everything, and everything in its place
What is true about the 5 S's? They are an independent system to organize tools They tell us there is no such thing as being too lean They were invented by Subaru as part of the Subaru philosophy They remind us that resiliency matters All of the above
They remind us that resiliency matters
Which company served as the inspiration of lean principles ? Procter & Gamble Toyota IBM Samsung Motorola
Toyota
What is the largest category of spending within logistics costs in the U.S. today? Inventory cost Trucking cost Air freight cost Administrative costs
Trucking Cost
As a supply chain manager, you should care about stock outs because they drive up costs and disappoint customers, potentially causing them to defect (i.e., buy elsewhere). True False
True
It is possible for a company to employ multiple distribution strategies to accommodate the marketing strategies for different products. True False
True
It is possible for the risk priority number (RPN) of risk event to change over time as more is known about the event True False
True
Not all customers are created equal. Nor is every transaction equally important. True False
True
Order transparency improves planning, execution, and evaluation. True False
True
Regarding ecommerce, since you don't actually visit the store and see an empty shelf, online retailers can "hide" stockouts by transshipping a product from a distant DC or drop shipping the product from the supplier. True False
True
Strategy is often called "vision with a plan" True False
True
While inventory is essential, it can also be one of the eight wastes. True False
True
While logistics costs as a percentage of GDP have declined in the US, total logistics costs are increasing. True False
True
Because product returns are typically much higher with online sales than with in-store sales, online retailers should: Understand why customers return products and develop strategies for reducing the number of returns. Limit returns for online items or charge hefty restocking fees. Find ways to drive customers into shopping at bricks-and-mortar stores. All of the above
Understand why customers return products and develop strategies for reducing the number of returns
In a risk classification matrix, risks are mapped according to likelihood and impact, Where are the risks that need immediate attention positioned on the matrix? Lower right corner In the center Lower left corner Upper right corner Upper left corner
Upper right corner
When considering logistics tradeoffs and what type of service level to emphasize, your company should consider which of the following? What are the most important service characteristics to its customers How to be competitive based on price There are really no such thing as tradeoffs None of the above
What are the most important service characteristics to its customers
Which of the following is a major step in risk management? Risk identification Assessment Prioritization Mitigation All of the above
all of the above
What is the term that applies to the distant parts of a company's supply chain that may be loaded with potential risk factors? risk sponges risk bubbles fringe factors isolated spaces dark corners
dark corners
__________ creates possession utility. Marketing Getting things where they are needed Logistics Supply chain management
marketing
A company's risk-mitigation plan should be ________________________________. done by distribution channels performed on a location-by-location basis left up to each part of your supply chain based on industry standards
performed on a location-by-location basis
