Supply Chain Management - Final

True or False: A statement of work begins the purchasing process and is sent from the buyer to the supplier to start the conversation.

False

True or False: Cost of goods sold is a term used to describe the cost of outsourced services to external suppliers.

False

True or False: Effective relationship management programs recognize and reward their internal team for the performance of suppliers.

False

True or False: External suppliers should be engaged if it is more cost efficient to buy the item from the inside.

False

True or False: Implementation risk refers to ongoing quality and financial issues.

False

True or False: Service suppliers should be left to use their own internal IT systems even when they are not compatible with the buying organizations systems.

False

True or False: Strategic sourcing is a strategic process.

False

True or False: Strategic sourcing, performance evaluation, and social contribution index are key elements of the supplier management process.

False

True or False: Supplier bankruptcy is an invalid reason to phase out a supplier.

False

True or False: A back up pool of suppliers is a good risk mitigation strategy for global companies.

True

True or False: A supplier scorecard is typically made up of several Key Performance Measures (KPM).

True

True or False: A well-designed supplier relationship includes well-aligned overall supplier and buyer organization goals and business objectives.

True

True or False: Demand risk focuses on fluctuations in demand inventory.

True

True or False: In large, geographically separated companies, supplier information is often in disconnected systems and hard to maintain up to date information.

True

True or False: Increased supply risk is the result of the need for greater visibility of supplier operations by the sourcing company.

True

True or False: Innovation is organizations is the key approach to address global market economic forces.

True

True or False: It is critical for the buying organization to assess, on an ongoing basis, the stability and financial standing of suppliers.

True

True or False: Over half of a company's operating budget goes toward purchasing.

True

True or False: Phaseout of a current supplier could happen when the supplier risk mitigation plan does not work.

True

True or False: Reduced supplier risk is a benefit of an effective supplier relationship management program.

True

True or False: Reduction of Purchasing order cycle time is a benefit of an effective e-procurement process.

True

True or False: Service contracting takes the place of procurement and purchasing in service-oriented organizations.

True

True or False: Suppliers should be required to report on their own sustainability efforts to support overall supply chain partner profitability.

True

True or False: The business of supplier management is focused on selecting the best suppliers, at the best rates, and managing these resources.

True

True or False: The role of a spend analysis is to determine which products are being purchased and which suppliers are receiving funds for delivery of their product.

True

A garden center is considering placing an order for 1,200 rose bushes for a $48 ordering fee. Having a purchase price per bush of $30, and a holding rate of 5%, what can the garden center expect total ordering and holding costs will be? a. $328 b. $318 c. $432 d. $375

a. $328

Using the variables given, calculate the safety stock needed to have at most a 5% chance of running out of stock. _d = 40 units, _L - 6 days, SDL = 2 days, SDd = 3 units a. 372 b. 374 c. 427 d. 234

a. 372

The system used to categorize inventory according to criteria such as unit cost, usage value, or annual earned revenue is known as the _____. a. ABC classification method. b. Industry classification standard. c. Universal inventory method. d. Standard inventory categories.

a. ABC classification method.

A Firm wants to offer next-day deliveries but has limited capacity for on-site inventory. How does the firm's integrated logistics management program help them achieve reductions in their total costs? a. Additional transportation costs are offset by reduced inventory costs. b. Inventory storage costs are absorbed as the cost of doing business. c. Customer Satisfaction is considered "revenue" on the balance sheet. d. Extra transportation costs are off set against additional profits.

a. Additional transportation costs are offset by reduced inventory costs.

Order quantities that are larger and placed infrequently mean there are fewer production setups necessary per order. What effect does this have on holding costs? a. Carrying costs are higher due to increased inventory levels. b. Setup costs are averaged over the annual order history. c. Supplier costs are inflated by allocation budgeting. d. Order costs increase to adjust for economic scale.

a. Carrying costs are higher due to increased inventory levels.

As ACME Manufacturing begins to export its products, which of the following documents specific to international shipping, is required to be in each shipment? a. Certificate of origin. b. Packing list. c. Bill of lading. d. Allergy information.

a. Certificate of origin.

Choose a reason why lean methods are not adequate for producing customizable products. a. Custom products can create excess waste. b. Custom orders are not included inventory forecasts. c. Safety inventory does not account for custom items. d. Inventory is quickly depleted by custom orders.

a. Custom products can create excess waste.

A customer-focused strategy that delivers products from facilities located closer to the consumer factors an inventory system that is ______. a. Decentralized. b. Just-in-time. c. Centralized. d. Aggregated.

a. Decentralized.

To maintain satisfactory quantity levels in the EPQ model, the production rate must be greater than to equal to ______. a. Demand rate. b. Fill rate. c. Holding rate. d. Sales rate.

a. Demand rate.

Choose which phrase from the following describes the essential purpose of lean thinking as it applies to day-to-day practice. a. Developing habits to prepare and deal with shortages or disruptions. b. Aligning investor and customer satisfaction with product competitiveness. c. Creating efficient strategies for reusing and reconfiguring waste product. d. Assessing value activities to increase demand for products and services.

a. Developing habits to prepare and deal with shortages or disruptions.

Which of the following refers to the placement of warehouses, service centers, and manufacturing plants throughout the supply chain? a. Facilities network design. b. Supply chain management. c. Logistics systems integration. d. Integrated logistics management.

a. Facilities network design.

Long shipping times, customs bureaucracy, and labor disruptions are common reasons that just-in-time inventory management is virtually impossible in _______. a. Global supply chains. b. Agile manufacturing. c. Mixed-model production. d. Leagile strategies.

a. Global supply chains.

The receptionist at a walk-in clinic is the only staff member with enough time to maintain inventory of basic supplies, while the triage nurse is the only staff member authorized to order surgery-specific supplier. What logical change to the inventory process can the clinic make to prevent the risk of not knowing what true quantities and products are available? a. Incorporate a point-of-use stock location system for combined inventory. b. Train the receptionist to have authorization for restricted supplies. c. Require the triage nurse to maintain inventory for all supplies. d. Contract a third-party service to manage and maintain inventory needs.

a. Incorporate a point-of-use stock location system for combined inventory.

Many sources of waste in manufacturing and service activities stem from overproduction or ineffective processes. Of the examples given, identify the waste that is of muri type. a. Inefficient machinery placement requiring unsafe movement. b. Building parts or providing services before they are needed. c. Using an expensive piece of equipment for a simple task. d. Low-quality goods that do not meet consumer demand.

a. Inefficient machinery placement requiring unsafe movement.

Identify the formula for calculating the number of Kanban's from the options below. a. K = (Expected or average demand during the lead time + Safety stock)/ (Container quantity size) b. K = (Expected or average demand during the lead time + Container quantity size)/ (Safety stock) c. K = (Container quantity size/ Safety stock)/ (Expected or average demand during the lead time) d. K = (Expected or average demand during the lead time)/ (Container quantity size + Safety stock)

a. K = (Expected or average demand during the lead time + Safety stock)/ (Container quantity size)

Packaging features for international shipments should account for _________. a. Legal and environmental obligations of the receiving country. b. The importer's credit information and payment method. c. Fluctuating international currency and exchange rates. d. Usefulness of the products being offered by the exporter.

a. Legal and environmental obligations of the receiving country.

What challenges do global supply chains transitioning to lean operations face that differ from those presented to domestic supply chains? a. Longer lead times and higher inventory levels. b. Regulated supplier pool and transportation routes. c. Shipping delays and fewer d. Excess inventory and decentralized storage.

a. Longer lead times and higher inventory levels.

Introducing automation with Six Sigma concepts may lead companies to offer products on demand. What are some benefits of on-demand manufacturing? a. Lower inventory costs, reduced waste, shorter lead times. b. Reduced supply chain overhead, and smaller production volume. c. Rapid turnaround, defined supplier pool, standardized quality control. d. Flexible changeover, state-of-the-art equipment upgrades.

a. Lower inventory costs, reduced waste, shorter lead times.

Companies that make volume purchases can reduce their costs for _____. a. Materials, delivery, and import duties. b. Holding and carrying inventory. c. Maintenance, repair, and operations. d. Large, decentralized warehouses.

a. Materials, delivery, and import duties.

What do the Japanese terms muri, mura, and muda describe as related to lean manufacturing? a. Poorly designed and inconsistent processes impeding production. b. The people, workflow, and processes required for manufacturing. c. The condition of necessary resources and systems on the plant floor. d. Essential steps to balance workforce, equipment, and methods.

a. Poorly designed and inconsistent processes impeding production.

To control buildup of excess inventory, a firm may delay final assembly of a product until more precise demand information is available. This strategy is known as _______. a. Postponement. b. Collaboration. c. Conjunction. d. Gaming.

a. Postponement.

What key IT attributes should an omnichannel logistics strategy have? a. Synchronous inventory and demand forecasting systems. b. Tiered product pricing and customer loyalty programs. c. Automated systems for customer service call centers. d. Inventory replenishment prompts at the point of sale.

a. Synchronous inventory and demand forecasting systems.

Global logistics present more complicated risks to products in transit than domestic logistics. What document establishes liability for damaged cargo? a. Terms of sale. b. Cash-in-advance. c. Possession authority. d. Payment on demand.

a. Terms of sale.

Why should outsourcing of supply chain and logistics tasks be done carefully? a. They are risky and complex. b. They are costly and risky. c. They are complex and costly. d. They are costly and not sustainable.

a. They are risky and complex.

Paradise Landscape is preparing for an annual tree planting campaign and needs to determine how many ornamental trees they should order. The company sells the trees for $240 per tree and buys them for $185 per tree. Demand during the campaign is normally distributed with a mean of 90 trees and a standard deviation of 10 trees. Unsold trees eventually do sell, but at a rate that is discounted by 30%. What is the salvage value for unsold trees? a. $97 b. $168 c. $185 d. $55

b. $168

A gas station's supplier fulfills aspirin orders within 3 days, and the gas station conducts an inventory review every 25 days. Four bottles of aspirin are sold each day with a standard deviation of 1.5 bottles. What is the average safety stock needed to have no more than 3% risk of stockout (Z = 1.88)? a. 127 b. 15 c. 112 d. 97

b. 15

Calculate the reorder point for snow tires assuming EOQ = 700, lead time is 4 days, and inventory is depleted to zero in 15 days. a. 47 b. 187 c. 64 d. 160

b. 187

What aspect of a single-period inventory system requires holding larger quantities of safety stock? a. A lower target inventory level. b. A higher desired service level. c. Uniform lead time rates. d. A constant demand rate.

b. A higher desired service level.

Which metric below will a company use to determine whether there is enough inventory available to meet sales for a prescribed period of time? a. Inventory accuracy rate. b. Days of inventory in stock. c. Industry benchmarking. d. Inventory turnover.

b. Days of inventory in stock.

How is the flow of supplier inventory to production affected by a company's use of just-in-time strategies? a. Production is accelerated to keep up with supplier deliveries. b. Delivery of raw materials or inventory is delayed until it is needed. c. Temporary inventory holding facilities are utilized for pending orders. d. Manufacturing ceases until demand aligns with supplier inventory.

b. Delivery of raw materials or inventory is delayed until it is needed.

What should ACME manufacturing consider when establishing their internal shipping policies when shipping to foreign countries? a. Foreign policies may be well aligned with their policies. b. Domestic policies may not be relevant in foreign countries. c. Foreign politics may prevent them from importing to that location. d. Domestic political climates may not be aligned with that country.

b. Domestic policies may not be relevant in foreign countries.

Services provided by the hospitality and airline industries are inherently intangible but may hold tangible goods as inventory. What are some examples of tangible products these organizations might hold as unused inventory? a. Cancellations and missed flights. b. Empty hotel rooms or empty airplane seats. c. Overbooked rooms or oversold airplane seats. d. Future reservations for rooms or flights.

b. Empty hotel rooms or empty airplane seats.

Operations managers are able to keep inventory costs down and meet customer demand by effectively managing ______. a. What investment and price point margins to set. b. How much and when to produce materials. c. Where to concentrate product manufacturing. d. When to conduct inventory stock counting.

b. How much and when to produce materials.

1. Goals for reduced risks of in-transit damage and lowered field costs can be met by using which logistic management technique? a. Efficient customer centric processes. b. Inbound and outbound supply chains. c. Sustainment and social logistics processes. d. Outbound and sustained logistics supply chains.

b. Inbound and outbound supply chains.

Batch ordering may be a useful strategy to manage anticipatory demand of seasonal items, but it contributes to the bullwhip effect on normal inventory in what way? a. Exerts pressure on the capacity of upstream suppliers. b. Increases the variability of demand in the supply chain. c. Accelerates meeting the ratio limits of safety inventory. d. Distorts the inventory classification methods.

b. Increases the variability of demand in the supply chain.

For an information system that a firm should share with its supply partners, what is the difference between transparent and guarded data? a. A company's customer order history versus industry market projections. b. Manufacturer's inventory stock level versus corporate design patents. c. Supply chain network versus shipping line's service area boundaries. d. A firm's proprietary process plan versus stakeholder earnings reports.

b. Manufacturer's inventory stock level versus corporate design patents.

Why do omnichannel companies that track inventory at brick-and-mortar sites separately from inventory in online retail sites risk disruptions to order fulfillment? a. Online orders use different payment methods. b. No visibility of the total inventory at all sites. c. Suppliers fulfill online inventory first. d. Brick-and-mortar sites are replenished first.

b. No visibility of the total inventory at all sites.

What inventory management process do companies use when controlling stock through various fulfillment methods? a. Single-echelon. b. Omnichannel. c. Multi-echelon. d. Vendor management.

b. Omnichannel.

Which of the following supply chain performance metrics focuses on consistently delivered products measured in time and quantity? a. Flexibility. b. Reliability. c. Capability. d. Capacity.

b. Reliability.

Identify a factor or factors that can contribute to inventory increases for global companies that move inventory holding onto offshore suppliers. a. Mingled tracking and ordering systems. b. Security issues and extended transit times. c. Rigorous manufacturing schedules. d. Increased consumer demand.

b. Security issues and extended transit times.

The idea of jidoka, or quality at the source, empowers workers to act on quality-related problems by _______. a. Notifying management. b. Stopping production. c. Documenting the problem. d. Flagging the product.

b. Stopping production.

Which processes must a large-scale farm move bulk materials through as part of their integrated logistics material handling program? a. Logistics and storage of prepackaged material. b. Storing, handling, and transporting loose products. c. Allocating raw goods that make up the final product. d. Movement of raw goods to the processing location.

b. Storing, handling, and transporting loose products.

Adopting lean initiatives that reduce overprocessing, inventory and movement waste, and yield fewer product defects will lead companies to improve ________. a. Spending. b. Sustainability. c. Investments. d. Expansion.

b. Sustainability.

Reducing wasted raw materials and products and maintaining steady schedules and workflow are results of leveling concept called ______. a. Takt timing. b. Uniform plant loading. c. Value steam mapping. d. Schedule leveling.

b. Uniform plant loading.

Which volume range provides the lowest total annual cost for a fabric store with typical annual demand of 6,000 bolts per year? Their supplier offers a quantity-price discount schedule of $125 each for quantities up to 9 bolts, $105 each for quantities between 10 and 19 bolts, and $75 each for quantities of 20 bolts and over. Ordering costs are $65 per order and holding costs and constant at $18 per bolt per year. a. 19 or less. b. 0-105. c. 20 or more. d. 150-250.

c. 20 or more.

Considering the transitory nature of fashion trends, what type of throughput is appropriate for a nail salon specializing in popular designs? a. Sustained throughput. b. Peak throughput. c. A pull system. d. A push system.

c. A pull system.

When government instability is present in a supplier's region, how can a global company safeguard against inventory shortages? a. Run limited-time buying periods. b. Increase the price of finished goods. c. Accumulate hedge inventory. d. Exercise supplier phaseout.

c. Accumulate hedge inventory.

Global freight forwarders provide intermediary assistance to firm conducting international business to keep fulfillment operating efficiently. Their essential tasks include ________. a. Locating warehousing for product exports into foreign countries. b. Securing domestic routing for transport of imported products. c. Arranging shipment functions and associated documentation. d. Sourcing domestic resources to support supply chain operations.

c. Arranging shipment functions and associated documentation.

Packaging is chiefly designed to protect goods for distribution and storage. What additional purposes are served by effective product packaging? a. No-frills packing and transport solutions. b. Speedy and profitable returns process. c. Brand promotion and information sharing. d. Increases in customer reliability.

c. Brand promotion and information sharing.

Takt time is the rate that products need to be completed to match production rate to product demand. This rate is governed by the _______. a. Inventory. b. Supplier. c. Customer. d. Schedule.

c. Customer.

What are some activities that upstream and downstream partners may coordinate in a channel alignment strategy? a. Capital investments and ROI targets. b. Trends analysis, cash flow, and vendors. c. Inventory planning, pricing, and transit. d. Market studies, and product development.

c. Inventory planning, pricing, and transit.

What is the name of the hybrid methodology companies use to make operational improvements integrated with measuring and eliminating defects? a. Kaizen Process. b. Six Sigma. c. Lean Six Sigma. d. Total Quality Management.

c. Lean Six Sigma.

Ensuring that optimum inventory levels are in place across a firm's supply chain network safeguards against ______. a. Fluctuations in the price of inventory. b. Inflated orders and disproportionate returns. c. Lost revenue and sales, and excess carrying costs. d. Supply chain disruptions to fulfillment.

c. Lost revenue and sales, and excess carrying costs.

As ACME Manufacturing balances their plan for warehousing and storage, what could the result be of lower levels of inventory. a. Decreased demand and increased cost. b. Increased costs and delivery flexibility. c. Lower cost and inability to meet demand. d. Higher supplier attrition and delivery flexibility.

c. Lower cost and inability to meet demand.

Which of the following strategies do organizations use to coordinate and synchronize all inventory, logistics, and distribution? a. Vendor alignment. b. Integrated logistics. c. Omnichannel logistics. d. Multichannel alignment.

c. Omnichannel logistics.

When customers increase quantities to elevate the priority of their orders, manufacturers are unable to ascertain true demand and experience a bullwhip effect called _____. a. Revised demand forecasts. b. Order accumulation. c. Rationing and shortage gaming. d. Price fluctuations.

c. Rationing and shortage gaming.

ACME Manufacturing has established a new cross-docking location to perform which of the following warehouse functions? a. Storage of a mix of different bulk products. b. Forming and finishing assembly of products. c. Sorting and batching supplier shipments. d. Shipping of internationally bound products.

c. Sorting and batching supplier shipments.

Effective inventory systems provide forecast estimates for customer demand and _____. a. Backorders and lost sales. b. Industry standards. c. Variability in lead time. d. Pipeline inventory.

c. Variability in lead time.

Costs related to shortages can result in tangible losses in revenue and profit. What is an intangible stockout cost related to shortages? a. Price discounts. b. Customer rebates. c. Work stoppage. d. Overtime.

c. Work stoppage.

Using an all units quantity discount model and the values provided, solve for the lowest total annual cost. Annual demand = 1,200 units, Ordering cost per order = $50, Holding cost = $18 per unit per year, Purchase price per unit = $35 discounted to $28 on orders greater than 500 units. a. $35,000 b. $40,600 c. $42,000 d. $33,600

d. $33,600

How could inventory be arranged at workstations to reduce movement of workers during fulfillment? a. The production end point could be relocated closer to inventory storage. b. Workstation tools could be relocated to make room for inventory. c. Inventory could be delivered to workstations and shelved at a later time. d. All appropriate parts could be organized into workstation carousels.

d. All appropriate parts could be organized into workstation carousels.

As companies shift to service-oriented strategies of improved technology, communication, and lean manufacturing, inventories proportionally _______. a. Increase. b. Depreciate. c. Inflate. d. Decline.

d. Decline.

Frequent equipment changes on assembly lines producing a variety of products has what effect on a firm's throughput? a. Insufficient inventory holding. b. Inadequate workforce levels. c. Loss of uniformity in products. d. Delayed production and fulfillment.

d. Delayed production and fulfillment.

Greater numbers of firms are demonstrating concern for logistics costs beyond financial profit. What other factors drive modern companies' sustainability decisions? a. Social media presence and customer loyalty. b. Quality, efficiency, and effectiveness. c. Stakeholder return and brand recognition. d. Environmental and social impacts.

d. Environmental and social impacts.

An order management system that is synchronized with fulfillment operations across all channels provides visibility into a company's ______. a. Operations profitability. b. Company revenue targets. c. Product management plan. d. Inventory availability.

d. Inventory availability.

As ACME Manufacturing establishes their ILM plan, which of the following should be a substantial focus when determining transportation efficiency? a. Access to logistics trained and educated employees. b. Global politics, currency exchange, and airports. c. Shareholder relationships in a region. d. Location of highways, rail, and seaports.

d. Location of highways, rail, and seaports.

Restaurants that manage inventory using lean principles are able to control excess buildup. Which of the following is an effect that the absence of sustainability plan would have on consumable inventory? a. Menu options that are ordered infrequently would need to be rationed. b. Imported, high-value specialty ingredients would be eliminated from the menu. c. Bulk dry goods would need to be sourced from multiple supply channels. d. Perishables such as produce would need to be restocked more often.

d. Perishables such as produce would need to be restocked more often.

1. Global companies are impacted by unique international challenges. Which of the following is a political factor affecting logistics operations? a. Currency fluctuations and inadequate ports. b. Prohibited goods and moral restrictions. c. Export fees and shipping quota. d. Piracy and hazardous trade routes.

d. Piracy and hazardous trade routes.

Companies that manage inventory movement efficiently realize quicker profit returns. What cost factors account for this higher inventory turnover ratio? a. Volume purchase discounts. b. Cycle and pipeline inventory costs. c. Smoothing and buffer inventories. d. Reduced holding and carrying costs.

d. Reduced holding and carrying costs.

At the start of the COVID-19 pandemic, lack of adaptable equipment prevented companies from being able to pivot operations to meet supply shortages. What differences would have been realized had more companies been ready with established lean processes? a. Controlled lead times, accumulated inventory holding. b. Reduced carrying costs, avenues into new markets. c. Uniformity of customer orders, ability to influence demand and product type. d. Reduced lead times, ability to meet changes in demand or product type.

d. Reduced lead times, ability to meet changes in demand or product type.

To make appropriate inventory decisions, managers need _______. a. Predictable markup, demand, and capital ratios. b. Supplier pool volume targets, and static transit rates. c. High capital investment plans, limited manufacturer contracts. d. Reliable forecasts, and classification and control procedures.

d. Reliable forecasts, and classification and control procedures.

The risk pooling strategy of aggregating products in fewer distribution sites to serve a larger market has what effect on a company's inventory? a. Demand variability remains constant. b. Increases inventory duplication. c. Holding costs are averaged for all sites. d. Required inventory levels are reduced.

d. Required inventory levels are reduced.

What additional value must be factored into the reorder point calculation to safeguard inventory levels when demand is unknown? a. Average demand. b. Holding cost. c. Order volume. d. Safety stock.

d. Safety stock.

Warehouse management system software can be used to ____________. a. Match materials with the right manufacturing process. b. Align second-tier suppliers with manufacturing. c. Determine fulfillment rank from the order received timestamp. d. Track products, control inventory, and improve fulfillment.

d. Track products, control inventory, and improve fulfillment.

Sparkle Motion is a uniform company specializing in competitive dance costumes. Their most recent order includes silk sashes coming from an overseas supplier and locally sourced leotards with a short, expected arrival date. What inventory type is the company using? a. Anticipated inventory. b. Hedge product supply. c. Additional safety stock. d. Transportation inventories.

d. Transportation inventories.