Ch 13 Test Bank
19. Experiments with three-dimensional printing have not been successful in industries such as auto parts. a. True b. False
ANSWER: False RATIONALE: Experiments with three-dimensional printing have indeed been successful in certain industries.
13. Water transportation is by far the most expensive mode of transportation, but it is also the most reliable. a. True b. False
ANSWER: False RATIONALE: It is the least expensive and least reliable transportation mode.
1. Supply chain management is completely producer driven. a. True b. False
ANSWER: False RATIONALE: Supply chain management is completely customer driven.
7. The goals of the manufacturing flow management process are centered on generating, filing, delivering, and providing on-the-spot service for customer orders. a. True b. False
ANSWER: False RATIONALE: These activities are associated with the order fulfillment process, not the manufacturing flow management process.
2. Companies that use supply chain management techniques typically also use a push promotional strategy. a. True b. False
ANSWER: False RATIONALE: They typically use a pull strategy.
18. Digital distribution is a distribution technique that includes any kind of product or service that can be distributed electronically. a. True b. False
ANSWER: False RATIONALE: This is known as electronic distribution.
10. Managing inventory from the supplier to the manufacturer is called distribution resource planning (DRP). a. True b. False
ANSWER: False RATIONALE: This is materials requirement planning (MRP).
11. The goal of a materials-handling system is to handle products as infrequently as possible. a. True b. False
ANSWER: True
12. The six criteria important in selecting a transportation mode are relative cost, transit time, reliability, capability, accessibility, and traceability. a. True b. False
ANSWER: True
14. Traceability with respect to transporting modes refers to the relative ease with which a shipment can be located and transferred. a. True b. False
ANSWER: True
15. Both air transportation costs and traceability are high when compared with any other transportation mode. a. True b. False
ANSWER: True
16. Manufacturers who require suppliers to meet certain environmental standards are implementing sustainable supply chain management. a. True b. False
ANSWER: True
17. Another name for outsourcing is contract logistics. a. True b. False
ANSWER: True
20. One of the most critical global supply issues for importers of any size is coping with the legalities of trade in other countries. a. True b. False
ANSWER: True
3. Supply chain management is a key means of differentiation for a firm and a critical component in marketing and corporate strategy. a. True b. False
ANSWER: True
4. Management practices that reflect a highly coordinated effort between supply chain partners are said to be "integrated." a. True b. False
ANSWER: True
8. Smart RFID employs radio-frequency electromagnetic fields to transfer and read product data via an electronic tag. a. True b. False
ANSWER: True
9. EDI is often used to replace paper documents with electronic documents containing the same information. a. True b. False
ANSWER: True
62. Onequarter of Ace's 60,000 SKUs are vendor managed through software called the "Collaboration" program. This software allows certain vendors to go online to get information to build their forecasts. The result of this application is fewer shipments, fuller pallets, increased pallets per truck, and a reduction in freight. Collaboration is part of Ace's: a. logistics information system b. materials requirement plan c. EDI d. RFID chips e. distribution resources strategy
ANSWER: a RATIONALE: A logistical information system provides the technological link connecting all of the logistics components of the supply chain
Whirlpool and Lowe's Every week, Whirlpool and Lowe's have an online conference call to discuss what appliances are selling in the stores and what capacity Whirlpool has to make product. Often, the discussion revolves around a particular model that is selling at a higher than expected rate in Lowe's. This often results in Whirlpool quickly flexing its supply chain to make more of the highselling product and delivering it to Lowe's customers. However, sometimes the answer is that Whirlpool and/or its suppliers do not have the capacity to make more of the product in question. It then becomes a question of demand shaping for Lowe's. What promotions, instore displays, and sales incentives can Lowe's implement to shift demand from the capacityconstrained model to one that the supply chain has more capacity to deliver? In this way, Lowe's, Whirlpool, and their suppliers manage supply and also demand. 98. Refer to Whirlpool and Lowe's. Whirlpool contracts with another firm to manage its order fulfillment process with Lowe's. This contracted firm is referred to as a(n): a. third-party logistics firm (3PL) b. drop shipper c. mediator d. independent agent e. interloper
ANSWER: a RATIONALE: A thirdparty logistics firm (3PL) is contracted to manage part or all of another firm's order fulfillment process.
84. The Canadian lobster harvest requires special handling coupled with rapid transportation to ensure the cargo reaches destinations alive. The favored transportation mode would be: a. air b. water c. truck d. pipeline e. rail
ANSWER: a RATIONALE: Air transportation ensures the speed necessary for lobster delivery. (Air Canada has developed special handling and shipping techniques for the lobsters.)
50. A firm that provides functional logistics services to others is called a(n): a. third-party logistics firm (3PL) b. intermediate distributor c. industrial distributor d. merchant wholesaler e. ABC firm
ANSWER: a RATIONALE: Because many firms do not view order fulfillment as a core competency, they often outsource this function to a third-party logistics firm (3PL) that specializes in the order fulfillment process.
43. Of the eight critical business processes on which supply chain managers must focus, which process allows companies to prioritize their marketing focus on different customer groups according to each group's longterm value to the company or the supply chain? a. Customer relationship management b. Returns management c. Product development and commercialization d. Order fulfillment e. Demand management
ANSWER: a RATIONALE: Customer relationship management is designed to identify and build relationships with good customers.
82. Which of the following transportation modes can most easily determine the location of a package en route between shipper and receiver? a. Air b. Truck c. Rail d. Pipe e. Water
ANSWER: a RATIONALE: In addition to speed, air transport offers an important additional benefit to shippers, that being the ease of tracing shipments.
69. The goal of inventory management is to: a. minimize inventory levels while maintaining an adequate supply of goods to meet customer demands. b. maximize inventory levels to prevent any possibility of stockouts. c. determine order timing and order quantity. d. estimate proper usage rates. e. integrate JIT to reduce risks of obsolescence, theft, and damage.
ANSWER: a RATIONALE: Inventory decisions affect physical distribution costs and service levels. The goal is to balance minimum inventory levels while meeting customer needs for stock.
Whirlpool and Lowe's Every week, Whirlpool and Lowe's have an online conference call to discuss what appliances are selling in the stores and what capacity Whirlpool has to make product. Often, the discussion revolves around a particular model that is selling at a higher than expected rate in Lowe's. This often results in Whirlpool quickly flexing its supply chain to make more of the highselling product and delivering it to Lowe's customers. However, sometimes the answer is that Whirlpool and/or its suppliers do not have the capacity to make more of the product in question. It then becomes a question of demand shaping for Lowe's. What promotions, instore displays, and sales incentives can Lowe's implement to shift demand from the capacityconstrained model to one that the supply chain has more capacity to deliver? In this way, Lowe's, Whirlpool, and their suppliers manage supply and also demand. 96. Refer to Whirlpool and Lowe's. A tremendous amount of ___ exists between Lowe's and Whirlpool, which is evident by the longlasting, valueadded offerings Whirlpool provides to Lowe's. a. channel manipulation b. customer integration c. resources integration d. yield management e. corporate socialization
ANSWER: b RATIONALE: Customer integration is a competency that enables Whirlpool and Lowe's to offer long lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm.
55. Mattel, the world's biggest toymaker, ordered 18 million toys made in China to be recalled because of hazards such as the use of lead paint. Mattel's process allowed it to handle the product recall efficiently. a. order fulfillment b. returns management c. product commercialization d. demand management e. product fulfillment
ANSWER: b RATIONALE: The returns management process enables firms to manage the returned merchandise while minimizing returns-related costs.
78. The relative ease with which a shipment can be located and transferred is: a. dependability b. traceability c. capability d. transit time e. observability
ANSWER: b RATIONALE: This defines traceability.
48. All of the following are activities related to the manufacturing flow process EXCEPT: a. improve manufacturing output in terms of quality, delivery speed, and flexibility b. updating account status following shipment c. leveraging the capabilities held by multiple members of the supply chain d. creating flexible agreements with suppliers and shippers e. producing of goods and service
ANSWER: b RATIONALE: This is not an activity related to the manufacturing flow process.
67. ___ is a method of developing and maintaining an adequate assortment of materials or products to meet a manufacturer's or a customer's demand. a. The materials-handling system b. An inventory control system c. Direct sourcing d. Contract logistics e. Warehousing
ANSWER: b RATIONALE: This is the definition of an inventory control system.
91. When Rick purchased tickets to a concert on the Internet, it was an example of: a. single-sourcing distribution. b. one-way channelization. c. electronic distribution. d. mass customization. e. aggregated marketing.
ANSWER: c RATIONALE: Electronic distribution includes any kind of product or service that can be distributed electronically. Tickets are just one of many types of products and services that can be distributed electronically.
27. For true supplier integration to occur, all of the following must occur EXCEPT: a. firms must choose their suppliers carefully b. supply chain partners must interact in ways that minimize waste and redundancy c. firms need to adopt a "push" system rather than a "pull" system of supply chain management d. firms must monitor each supplier's strategic goals and operational capabilities e. both firms must have a stake in the outcomes of their interactions
ANSWER: c RATIONALE: In earlier days, standardized products were "pushed" down through the supply channel to the consumer, but now the system relies on customers to "pull" the product through the channel.
77. The mode of transportation that provides the most accessibility is: a. pipelines b. air freight c. truck freight d. water transport e. railroad
ANSWER: c RATIONALE: Motor carriers (trucks) can go to more locations than any of the other modes of transportation.
65. In which component of the supply chain will you find electronic data interchange a common feature? a. Production scheduling b. Transportation c. Order processing d. Materials handling e. All of these
ANSWER: c RATIONALE: Order processing is becoming more automated through the use of computer technology known as electronic data interchange (EDI).
73. ___ provides time utility to buyers and sellers and aids manufacturers in managing supply and demand. a. Containerization b. Distribution c. Storage d. Direct sourcing e. Channelization
ANSWER: c RATIONALE: Storage is necessary to match supply with demand and to provide a level of safety stock.
54. Specialty Blades designs precision cutting devices for varied applications. On one recent project, they worked closely with a medical device company, developing a combination scalpel and stapler that slices tissue very neatly close to the staples, which results in less traumatic procedures and quicker patient recoveries. This is an example of which of the eight critical processes performed by supply chain managers? a. Supplier relationship management b. Customer service management c. Product development and commercialization d. Order fulfillment e. Demand management
ANSWER: c RATIONALE: The product development and commercialization process includes the group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partners.
26. All of the following are benefits of supply chain management EXCEPT: a. increased flexibility of supply chain activities. b. improved customer service. c. reduced supply chain costs. d. decreased cash flow. e. decreased inventory.
ANSWER: d RATIONALE: Cash flow would likely be increased due to higher revenues.
Whirlpool and Lowe's Every week, Whirlpool and Lowe's have an online conference call to discuss what appliances are selling in the stores and what capacity Whirlpool has to make product. Often, the discussion revolves around a particular model that is selling at a higher than expected rate in Lowe's. This often results in Whirlpool quickly flexing its supply chain to make more of the highselling product and delivering it to Lowe's customers. However, sometimes the answer is that Whirlpool and/or its suppliers do not have the capacity to make more of the product in question. It then becomes a question of demand shaping for Lowe's. What promotions, instore displays, and sales incentives can Lowe's implement to shift demand from the capacityconstrained model to one that the supply chain has more capacity to deliver? In this way, Lowe's, Whirlpool, and their suppliers manage supply and also demand. 97. Refer to Whirlpool and Lowe's. Which business process is Whirlpool and Lowe's using when they work together to align supply and demand throughout the supply chain? a. Dependent materials handling b. Outsourcing c. Warehousing d. Demand management e. Channel rotation
ANSWER: d RATIONALE: Demand management seeks to anticipate customer requirements at each level and create demandrelated plans of actions such as Lowe's promotions.
75. The goal of any effective materials-handling system is to: a. reduce the time of the order-processing system b. optimize the inventory control system c. increase safety procedures d. move items quickly with minimal handling e. reduce the length of time a product is in the transportation subsystem
ANSWER: d RATIONALE: Each time a product is handled, the cost and risk of damage increase.
81. Which of the following describes a disadvantage associated with water transportation? a. Cannot be used for international trade b. High cost c. Capability d. Lack of speed e. Product weight restrictions
ANSWER: d RATIONALE: Shipping via water is the slowest mode of transportation.
Fishy Business DNA testing has revealed that sushi bar customers are not always getting what they pay for. Scientists at the American Museum of Natural History tested fish from 31 sushi bars and found that the tuna coveted by many diners is often a cheaper substitute, a banned fish, or an endangered species. This could be the result of an honest mistake in the supply chain, or it could be a deliberate attempt to deceive buyers. However, researchers have uncovered a DNA "bar code" that can accurately identify the type of fish. While still a ways off, the scientist who developed the tuna DNA bar code envisions a small device that can provide instantaneous species identification, which will result in restaurants ultimately providing what their customers are demanding and paying for. 92. Refer to Fishy Business. The way a restaurant coordinates and integrates the activities performed by its supply chain members into a collection of seamless end-to-end processes is an example of: a. yield management. b. channel power. c. materials handling. d. supply chain management. e. physical distribution.
ANSWER: d RATIONALE: Supply chain management coordinates and integrates all of the activities performed by channel members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value
63. The supply chain team does all of the following EXCEPT: a. communicating, coordinating, and cooperating extensively. b. embracing all parties who participate in moving the product to market. c. typically cutting across organizational boundaries. d. providing financing for distributors. e. orchestrating the movement of goods, services, and information from the source to the consumer.
ANSWER: d RATIONALE: The supply chain team does all of these, but it does not provide financing for distributors.
68. Which of the following is the inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer? a. Electronic data interchange (EDI) b. Distribution resource planning (DRP) c. Third-party logistics firm (3PL) d. Materials requirement planning (MRP) e. Activity-based costing (ABC)
ANSWER: d RATIONALE: This is the definition of materials requirement planning (MRP), which is also referred to as materials management.
22. ___ coordinates and integrates all of the activities performed by channel members into a seamless process, from the source to the point of consumption, resulting in enhanced customer and economic value. a. Yield management b. Channel power c. Materials handling d. Supply chain management e. Physical distribution
ANSWER: d RATIONALE: This is the definition of supply chain management.
47. The activities that enable the demand management process to work include: a. customer data collection. b. forecasting of future demand. c. sales and operations planning. d. the development of activities that tend to "smooth out" demand. e. All of the above.
ANSWER: e RATIONALE: All of the listed activities are necessary for the demand management process to work properly.
36. Food producers love big boxes because they serve as billboards on store shelves. Walmart wants to change this practice and promises suppliers that their shelf spaces won't shrink even if their boxes do. As a result, some of its vendors have reengineered their packaging. This is an example of ___ integration. a. relationship b. social c. functional d. operational e. material and service supplier
ANSWER: e RATIONALE: Both the retailer and its suppliers have a common vision of the total value creation process.
39. Sobha Developers has begun to develop distinctive value added offerings to its customers—starting with the oldest and most consistent ones. Sobha is working toward stronger ___ integration. a. relationship b. social c. functional d. operational e. customer
ANSWER: e RATIONALE: Customer integration is a competency that enables firms to offer long-lasting, distinctive, value-added offerings to those customers who represent the greatest value to the firm or supply chain.
80. One major advantage of pipelines over other modes of transportation is: a. availability b. points served c. flexibility d. speed e. reliability
ANSWER: e RATIONALE: Pipelines are rarely interrupted by weather, traffic, or labor disputes.
64. Which of the following is a member of a supply chain team that moves just-picked cotton to finished clothing and then to the consumer of that clothing? a. The warehouse in which the cotton was temporarily stored b. The ad agency that develops the promotion for the clothing c. The farmer who picks the cotton d. The trucking company that hauls the cotton to the clothing manufacturer e. All of the choices
ANSWER: e RATIONALE: The supply chain team is composed of everyone who participates in the movement from raw material to consumer, including all external participants like ad agencies and transportation companies.
5. Supplier integration occurs when multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer. a. True b. False
ANSWER: True
6. The demand management process seeks to align supply and demand throughout the supply chain by anticipating customer requirements at each level of creating demand-related plans of action prior to actual customer purchasing behavior. a. True b. False
ANSWER: True
72. All of the following are types of inputs used in both materials requirement planning and distribution resource planning EXCEPT: a. the source of funding. b. lead times. c. the mode of transportation to be used. d. outstanding orders. e. sales forecasts.
ANSWER: a RATIONALE: Both inventory systems use various inputs, such as sales forecasts, available inventory, outstanding orders, lead times, and mode of transportation to be used, to determine what actions must be taken to replenish goods at all points in the supply chain.
76. All of the following are criteria used to choose a mode of transportation EXCEPT: a. diversity b. cost c. transit time d. reliability e. traceability
ANSWER: a RATIONALE: Criteria used include cost, transit time, reliability, capability, accessibility, and traceability.
37. ___ integration holds that performance assessments should be transparent and measurable across the borders of different firms. a. Measurement b. Social c. Functional d. Relationship e. Material and service supplier
ANSWER: a RATIONALE: Measurement integration reflects the idea that performance assessments should be transparent and measurable across the borders of different firms
33. In terms of firm-to-firm social interactions, integration provides important ___ benefits. a. relationship b. measurement c. customer d. production e. technology and planning
ANSWER: a RATIONALE: Relationship integration provides benefits to firms regarding their social interactions with one another.
42. There are eight critical business processes on which supply chain managers must focus. Which of the following is one of those processes? a. Returns management b. Sales promotion activities c. Distribution intensity d. Public relations activities e. Environmental assessments
ANSWER: a RATIONALE: Returns management is one of the eight critical business processes on which supply chain managers must focus.
23. Peachtree Windows does not make a window until an order is received. It can promise delivery in five working days because of the excellent relationships it has established with its suppliers. The partnering relationship that Peachtree Windows has established with its suppliers indicates the use of: a. supply chain management b. yield management c. channel networks d. horizontal marketing channels e. intensive distribution strategy
ANSWER: a RATIONALE: Supply chain management coordinates and integrates all the activities from raw materials to product consumption.
85. Pepisco and Waste Management have developed a plan to improve the reverse supply chain for individual beverage bottles not most commonly thrown in trash cans and not recycled. Together Pepsico and Waste Management have plans to deploy thousands of "Dream Machines" in both permanent and temporary locations that will take in recycled bottles and provide rewards to consumers who participate. These companies are practicing: a. sustainable supply chain management b. contract logistics c. intermediary distribution d. eco-marketing e. environmental mediation
ANSWER: a RATIONALE: Sustainable supply chain management is the integration of environmentally conscious thinking into all phases of key supply chain management processes.
Fishy Business DNA testing has revealed that sushi bar customers are not always getting what they pay for. Scientists at the American Museum of Natural History tested fish from 31 sushi bars and found that the tuna coveted by many diners is often a cheaper substitute, a banned fish, or an endangered species. This could be the result of an honest mistake in the supply chain, or it could be a deliberate attempt to deceive buyers. However, researchers have uncovered a DNA "bar code" that can accurately identify the type of fish. While still a ways off, the scientist who developed the tuna DNA bar code envisions a small device that can provide instantaneous species identification, which will result in restaurants ultimately providing what their customers are demanding and paying for. 95. Refer to Fishy Business. Tsunami, a sushi bar, takes every precaution to make sure it does not purchase any species of fish that have been classified as endangered. It partners with its suppliers to verify—as much as is possible—the species of the fish it purchases. This is an example of: a. sustainable supply chain management b. contract logistics c. intermediary distribution d. eco-marketing e. environmental mediation
ANSWER: a RATIONALE: Sustainable supply chain management is the integration of environmentally conscious thinking into all phases of key supply chain management processes.
61. Which of the following provides the technological link connecting all of the logistics components of the supply chain? a. Logistics information system b. Materials requirement plan c. EDI d. RFID chips e. Distribution resources strategy
ANSWER: a RATIONALE: The components of the system include software for materials acquisition and handling, warehouse-management and enterprise-wide solutions, data storage and integration in data warehouses, and so on.
24. A large automotive after-market business wanted to improve its current situation, which is characterized by excessive inventory, incomplete information, high logistics costs, slow reactions to environmental change, and lost profits at the retail level. Would supply chain management be of any help to the business? a. Yes, supply chain management is designed to coordinate and integrate all the activities from raw materials to product consumption. b. No, supply chain management is only applicable to distribution strategies for products being sold to the consumer market. c. Yes, supply chain management would be very useful because it relies so heavily on benchmarking. d. Yes, supply chain management would alleviate all channel conflict. e. No, supply chain management requires an expensive investment of time and resources to make it worthwhile.
ANSWER: a RATIONALE: The correct answer contains the definition of supply chain management.
60. All of the following are part of a sequence of "source, make, and deliver," EXCEPT: a. trade promotions b. production c. inventory control d. warehousing and materials handling e. order processing
ANSWER: a RATIONALE: The functions that are often described as a sequence of "source, make, and deliver" are: (1) supply management, (2) inventory control, (3) order processing, (4) production, (5) warehousing and materials handling, and (6) transportation.
52. Which business process ensures that firms in the supply chain have the resources they need? a. Manufacturing flow management b. Customer service management c. Product development and commercialization d. Order fulfillment e. Demand management
ANSWER: a RATIONALE: The manufacturing flow management process is concerned with ensuring that firms in the supply chain have the needed resources to manufacture with flexibility and to move products through a multi-stage production process.
53. Which business process supports manufacturing flow by identifying and maintaining relationships with highly valued suppliers? a. Supplier relationship management b. Customer service management c. Product development and commercialization d. Order fulfillment e. Demand management
ANSWER: a RATIONALE: The supplier relationship management process is closely related to the manufacturing flow management process and contains several characteristics that parallel the customer relationship management process.
87. A manufacturer's or supplier's use of an independent third party to manage an entire function of the logistics system, such as transportation, warehousing, or order processing, is called: a. outsourcing. b. mediation. c. intermediary distribution. d. benchmarking. e. disintermediaton.
ANSWER: a RATIONALE: This is the definition of outsourcing, also called contract logistics.
30. ___ integration is the ability of two or more companies to develop social connections that serve to guide their interactions when working together. a. Relationship b. Social c. Customer d. Materials and service supplier e. Technology and planning integration
ANSWER: a RATIONALE: This is the definition of relationship integration.
59. The goal of most supply management activities is to: a. reduce the cost of raw materials and supplies. b. provide satisfying customer service c. make sure the right amount of product is kept on hand d. identify, sort, and label goods e. move products from supplier to producer and from producer to buyer
ANSWER: a RATIONALE: This is the goal of most supply management activities.
89. Volvo, working with FedEx, set up a warehouse in Memphis with a complete stock of truck parts. A dealer needing a part for an emergency phones a toll-free number, and the part is delivered by FedEx within 24 hours. This is an example of how manufacturers are using: a. outsourcing. b. cross-docking. c. disintermediation. d. piggybacking. e. an integrated demand channel.
ANSWER: a RATIONALE: With outsourcing, a company would use an independent third party to operate some or all of its logistics system.
86. All of the following are examples of sustainable supply chain management EXCEPT: a. revising routes taken by delivery drivers to minimize fuel consumption b. buying goods from a supplier located in a developing country in Africa c. limiting excess packaging materials from shipments d. shipping raw materials to point of use rather than point of manufacture e. instructing drivers to limit the amount of time trucks sit idling
ANSWER: b RATIONALE: Buying local goods reduce carbon pollution to the air from fuel. This outcome is not achieved when goods are purchased thousands of miles away.
66. ___ is information technology that replaces the paper documents that usually accompany business transactions. a. Business prioritizing b. Electronic data interchange c. Just-in-time inventory d. Real-time inventory e. Direct sourcing
ANSWER: b RATIONALE: Electronic data interchange (EDI) is information technology that replaces the paper documents that usually accompany business transactions.
Fishy Business DNA testing has revealed that sushi bar customers are not always getting what they pay for. Scientists at the American Museum of Natural History tested fish from 31 sushi bars and found that the tuna coveted by many diners is often a cheaper substitute, a banned fish, or an endangered species. This could be the result of an honest mistake in the supply chain, or it could be a deliberate attempt to deceive buyers. However, researchers have uncovered a DNA "bar code" that can accurately identify the type of fish. While still a ways off, the scientist who developed the tuna DNA bar code envisions a small device that can provide instantaneous species identification, which will result in restaurants ultimately providing what their customers are demanding and paying for. 94. Refer to Fishy Business. In the future, suppliers of fresh fish will be able to use electronic bar codes to verify the fish species for members of the supply chain. This information can be incorporated into the information technology used in the inventory management and control business process. This information technology is called: a. activity-based costing (ABC). b. electronic data interchange (EDI). c. benchmarking. d. a materials-handling system. e. procurement.
ANSWER: b RATIONALE: Electronic data interchange (EDI) is the information technology that replaces the paper documents that usually accompany business transactions, such as purchase orders and invoices, with electronic transmission of the needed information to reduce inventory levels, improve cash flow, streamline operations, and increase the speed and accuracy of information transmission.
Fishy Business DNA testing has revealed that sushi bar customers are not always getting what they pay for. Scientists at the American Museum of Natural History tested fish from 31 sushi bars and found that the tuna coveted by many diners is often a cheaper substitute, a banned fish, or an endangered species. This could be the result of an honest mistake in the supply chain, or it could be a deliberate attempt to deceive buyers. However, researchers have uncovered a DNA "bar code" that can accurately identify the type of fish. While still a ways off, the scientist who developed the tuna DNA bar code envisions a small device that can provide instantaneous species identification, which will result in restaurants ultimately providing what their customers are demanding and paying for. 93. Refer to Fishy Business. In the future, a device will allow each member of the supply chain for fresh fish to verify accountability for providing the species of fish the customer ordered. Which element of supply chain integration is this when each individual firm or business unit is accountable for meeting its own goals regarding providing the fish it says it is providing? a. Benchmark integration b. Measurement integration c. Planning integration d. Management integration e. Leagile integration
ANSWER: b RATIONALE: Measurement integration is the performance assessment of the supply chain as a whole that also holds each individual firm or business unit accountable for meeting is own goals.
79. The growers of Vidalia onions have determined that their chief priority for choosing a transportation mode within the United States is transit time. However, this must be tempered by practical cost considerations. In light of these considerations, Vidalia onion growers should use ___ to ship their onions. a. railroads b. motor carriers (trucks) c. airplanes d. water transportation e. pipelines
ANSWER: b RATIONALE: Motor carriers are not as fast as airplanes, but they are less expensive, particularly when dealing with a bulky product like onions.
45. By working closely with its suppliers and listening to its customers, Target has improved the service encounter to a level that was not thought possible in mass retailing. This is an example of which of the eight critical processes performed by supply managers? a. Manufacturing flow management b. Customer service management c. Product development and commercialization d. Order fulfillment e. Demand management
ANSWER: b RATIONALE: Of the eight critical business processes on which supply chain managers must focus, the customer service management process presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced.
90. A manufacturer of automobile component parts that has turned over all transportation functions to an independent third party in its supply chain has engaged in: a. creating a dependent materials-handling system. b. outsourcing. c. removing entry barriers. d. task deployment. e. channel rotation.
ANSWER: b RATIONALE: Outsourcing (or contract logistics) is a manufacturer's or supplier's use of an independent third party to manage an entire function of the logistics system, such as transportation, warehousing, or order processing.
28. ___ occurs when all the firms and business units participating in the supply chain appear as though they are reading from the same script. a. Strategic channel operation b. Supply chain integration c. Strategic MRP d. Demand management e. Extensive distribution integration
ANSWER: b RATIONALE: Supply chain integration occurs when multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer.
29. When the Boeing Co. announced it would delay the introduction of its new 787, the CEO blamed the problem on the company's supply chain. Airplanes use thousands of individual parts, and in an attempt to relieve the smaller, individual supply chain quandary, Boeing used major suppliers to construct large pieces of the plane. Boeing would have benefited from more ___ integration. a. channel b. supply chain c. MRP d. functional e. tactical distribution
ANSWER: b RATIONALE: Supply chain integration occurs when multiple firms in a supply chain coordinate their activities and processes so that they are seamlessly linked to one another in an effort to satisfy the customer.
44. Of the eight critical business processes on which supply chain managers must focus, the process presents a multi-company, unified response system to the customer whenever complaints, concerns, questions, or comments are voiced. a. manufacturing flow management b. customer service management c. product development and commercialization d. order fulfillment e. demand management
ANSWER: b RATIONALE: The customer service management process is designed to ensure that customer relationships remain strong.
71. ZuTech makes sensitive monitors for measuring exposure to hazardous materials. ZuTech has suffered substantial losses when moving products from the assembly line to the warehouse and shipping docks. ZuTech should consider reducing the number of times an item is moved in the warehouse by installing a(n): a. inventory control system. b. materials-handling system. c. safety procedure to manage SKUs. d. order-processing system. e. outsourcing system.
ANSWER: b RATIONALE: The goal of the materials-handling system is to move items quickly with minimal handling.
88. Papa John's pizza chain uses UPS trucks to carry supplies to its franchises. Papa John's does not own the trucks but has contracted with UPS to have all of the trucks it uses in its deliveries to Papa John's establishments painted with the Papa John's logo and company colors. Papa John's is using: a. a horizontal distribution channel. b. a selective distribution channel. c. outsourcing. d. multisourcing. e. a portable inventory control system.
ANSWER: c RATIONALE: Papa John's supplier is an outsourced, independent third party.
32. Which of the following is an example of one of the six types of integration that are sought by firms interested in providing top-level service to their customers? a. Strategic integration b. Hierarchical integration c. Material and service supplier integration d. Global integration e. All of the above
ANSWER: c RATIONALE: The five types of integration are relationship integration, measurement integration, technology and planning integration, material and service supplier integration, and customer integration.
Whirlpool and Lowe's Every week, Whirlpool and Lowe's have an online conference call to discuss what appliances are selling in the stores and what capacity Whirlpool has to make product. Often, the discussion revolves around a particular model that is selling at a higher than expected rate in Lowe's. This often results in Whirlpool quickly flexing its supply chain to make more of the highselling product and delivering it to Lowe's customers. However, sometimes the answer is that Whirlpool and/or its suppliers do not have the capacity to make more of the product in question. It then becomes a question of demand shaping for Lowe's. What promotions, instore displays, and sales incentives can Lowe's implement to shift demand from the capacityconstrained model to one that the supply chain has more capacity to deliver? In this way, Lowe's, Whirlpool, and their suppliers manage supply and also demand. 99. Refer to Whirlpool and Lowe's. Given that accessibility and reliability are keys to Lowe's marketing strategy, what mode of transportation is most likely used in this relationship? a. Air b. Water c. Truck d. Pipeline e. Rail
ANSWER: c RATIONALE: Trucks excel at providing users with product accessibility and reliability.
35. Through the use of automatic shipping notices, Ace Hardware is effective at removing unnecessary costs from its supply chain. According to a VP of inventory for the retailer, "Information gathering that used to take three or four phone calls now is available immediately." This is an example of the use of ___ integration. a. relationship b. social c. functional d. technology and planning e. internal operations
ANSWER: d RATIONALE: By achieving technology and planning integration across their supply chains, firms can gain the information needed to execute short-term and long-term planning. The process is the creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain, with the goal of supporting supply chain activities that best satisfy customer demands.
83. _____ is an extra allotment of inventory that companies sometimes choose to hold in the event that demand spikes, or if forecasts regarding the amount of demand are too low. a. Cycle stock b. In-transit inventory c. Seasonal Inventory d. Safety stock e. None of these
ANSWER: d RATIONALE: Safety stocks, also called buffer stocks, are extra allotments of inventory that companies sometimes choose to hold in the event that demand spikes, or if forecasts regarding the amount of demand are too low.
34. By achieving integration across their supply chains, firms can use hardware and software systems to gain the information needed to execute short-term and long-term planning, and thereby make better operational decisions. a. relationship b. social c. functional d. technology and planning e. internal operations
ANSWER: d RATIONALE: Technology and planning integration is the creation and maintenance of information technology systems that connect managers across and through the firms in the supply chain, supporting supply chain activities that best satisfy customer demands.
57. New product idea generation and testing are related to which of the following processes? a. Demand management b. Order fulfillment c. Customer service management d. Product development and commercialization e. Customer relationship management
ANSWER: d RATIONALE: The product development and commercialization process includes the group of activities that facilitates the joint development and marketing of new offerings among a group of supply chain partners.
51. ProLog is a firm that specializes in warehousing and fulfilling orders for firms as diverse as those supplying parts for manufacturers of complicated missile defense systems to those manufacturing pet-care products. Firms contract ProLog to manage part or all of their order fulfillment process. ProLog is an example of a: a. merchant wholesaler b. retailer c. distributor d. third-party logistics firm (3PL) e. manufacturing flow process manager
ANSWER: d RATIONALE: Thirdparty logistics firms (3PLs) are contracted to manage part or all of another firm's order fulfillment process.
41. ___ is (are) composed of bundles of interconnected activities that stretch across firms in the supply chain. a. ABC segmentation strategies b. Activity-based costing c. Customer relationship management d. Business processes e. Customer service activities
ANSWER: d RATIONALE: This is the definition of business processes.
56. Companies operating under a demand-supply integration philosophy are better at their business because all of the different divisions within the company . a. work to minimize complexity b. have their own management systems c. compete with each other to earn revenue d. play from the same sheet of music e. operate under a strict hierarchy
ANSWER: d RATIONALE: Under the DSI philosophy, functional areas communicate frequently and are synchronized.
49. The amount of time between order placement, receipt of the customer's payment, and order shipment is known as the: a. 3PL cycle b. product life cycle c. purchase cycle d. order-to-cash cycle e. float
ANSWER: d RATIONALE: When the order fulfillment process is managed diligently, the amount of time between order placement and receipt of the customer's payment after order shipment, (known as the order to-cash cycle), is minimized as much as possible.
21. The connected chain of all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers (the point of origin) to the ultimate customer (the point of consumption) is known as the: a. channel of distribution. b. intermediary link. c. physical distribution integration. d. reseller network. e. supply chain.
ANSWER: e RATIONALE: A company's supply chain includes all of the companies involved in all of the upstream and downstream flows of products, services, finances, and information, from initial suppliers (point of origin) to the ultimate customer (point of consumption).
74. Which of the following moves inventory into, within, and out of a warehouse? a. An inventory control system b. A multichannel system c. An ERP control system d. A freight forwarder e. A materials-handling system
ANSWER: e RATIONALE: A materials-handling system is a method of moving inventory into, within, and out of the warehouse.
70. In which logistical component of the supply chain will you find distribution resource planning (DRP) a common feature? a. Production scheduling b. Transportation c. Order processing d. Materials handling e. Inventory control
ANSWER: e RATIONALE: Distribution resource planning (DRP) is an inventory control system that manages the replenishment of goods from the manufacturer to the final consumer.
40. Highly integrated supply chains (those that are successful in achieving many or all of these types of integration) have been shown to be better at: a. satisfying customers. b. managing costs. c. delivering high-quality products. d. enhancing productivity. e. All of the above
ANSWER: e RATIONALE: Highly integrated supply chains have been shown to be better at satisfying customers, managing costs, delivering high-quality products, and enhancing productivity, all of which translate into greater profitability for the firms and their partners working together in the supply chain.
25. All of the following accurately describe supply chain management EXCEPT: a. physical flow process. b. customer driven. c. provides enhanced customer and economic value. d. plays the role of communicator of customer demand. e. relies on a "push" strategy.
ANSWER: e RATIONALE: In earlier days, standardized products were "pushed" down through the supply channel to the consumer, but now the system relies on customers to "pull" the product through the channel.
38. Nabisco has linked seamlessly with its parts manufacturers and outsourced customer call centers to provide streamlined work processes and a highquality customer experience. This seamless linking of Nabisco's strategic business units toward a common vision is an example of ___ integration. a. relationship b. social c. functional d. hierarchical e. Material and service supplier
ANSWER: e RATIONALE: Material and service supplier integration requires firms to link seamlessly to those outsiders that provide goods and services to them so that they can streamline work processes and thereby provide smooth, high-quality customer experiences.
31. Which type of integration implies the performance assessment of the supply chain should be taken as a whole while also holding each member of the supply chain accountable for meeting its own goals? a. Accountability b. Benchmarking c. Social d. Planning e. Measurement
ANSWER: e RATIONALE: Measurement integration reflects the idea that performance assessments should assess the performance of the supply chain as a whole while holding each individual firm or business unit accountable for meeting its own goals.
46. Which business process is based on the activities involved in customer data collection, forecasting of future demand, synchronization of supply and demand by comparing production capacity to forecasts, and the development of activities to "smooth out" demand? a. Manufacturing flow management b. Customer service management c. Product development and commercialization d. Order fulfillment e. Demand management
ANSWER: e RATIONALE: The demand management process is the alignment of supply and demand throughout the supply chain.