chapter 11

6) With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)?

1

2) Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover?

12.50

3) Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold?

4.16

4) Outsourcing:

All of the above are true of outsourcing.

3) In supply chain management, ethical issues:

All of the above are true.

9) ________ management focuses on the outbound flow of products.

Distribution

11) ________ is the term describing purchasing facilitated through the Internet.

E-Procurement

3) Once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may decrease compared to the optimal number of facilities based on total logistics costs only.

False

3) The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.

False

3) When using the low-cost strategy for supply chain management, a firm should use buffer stocks to ensure speedy supply.

False

6) The ________ is an organization that has developed principles and standards for ethical supply management conduct.

Institute for Supply Management

7) As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why?

Transportation costs first decline steeply, then rise, while facility and inventory costs always rise.

1) Benchmark firms have driven down costs of supply-chain performance.

True

1) Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.

True

1) Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.

True

12) Vertical integration appears particularly advantageous when the organization has:

a large market share

9) ________ postpones final assembly of a product so the distribution channel can assemble it.

channel assembly

5) Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other?

cross-sourcing

17) Local optimization, incentives, and large lots all contribute to ________ about what is really occurring in the supply chain.

distortions of information

11) A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing which of the following?

drop shipping

15) A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing which of the following?

drop shipping

6) Local optimization is a supply-chain complication best described as:

optimizing one's local area without full knowledge of supply chain needs.

12) Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of which of the following?

postponement

5) What is the practice of keeping a product generic as long as possible before customizing?

postponement

6) By which distribution system is more than 90 percent of U.S. coal shipped?

railroads

5) Designing distribution networks to meet customer expectations suggests what three criteria?

rapid response, product choice, and service

9) Which of the following is NOT a typical benefit of centralized purchasing?

reduce lead times

14) Which of the following is an advantage of the postponement technique?

reduction in inventory investment

7) Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver?

require overnight delivery

8) Which of the following statements does NOT accurately explain what occurs when the number of facilities in a distribution network increases?

response time first decreases, then increases

5) Which one of the following is NOT one of the six sourcing strategies?

short-term relationships with few suppliers

16) TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of which of the following?

single-stage control of replenishment

9) Which of the following is NOT a condition that favors the success of vertical integration?

small market share

7) While freight rates are often based on very complicated pricing systems, in general, the primary freight price factor is based on which of the following attributes?

speed of shipment

12) Of the four stages of supplier selection, the stage at which the factor weighting approach would be used is ________.

supplier evaluation

7) What are the four stages of supplier selection?

supplier evaluation, supplier development, negotiations, and contracting

8) A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following?

the bullwhip effect

13) Suppliers are also known as ________.

vendors

20) ________ is a Japanese term that describes suppliers who become part of a company coalition.

Keiretsu

9) Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain?

Landscaping contractors

13) For which corporate strategy(ies) should supply chain inventory be minimized?

Low cost and differentiation

18) ________ involves delaying any modifications or customization to the product as long as possible in the production process.

Postponement

12) Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy?

Product development skills

10) In most manufacturing industries, which of the following would likely represent the largest cost to the firm?

Purchasing

14) What is e-procurement?

Purchasing facilitated through the Internet.

10) In what type of auction does a buyer initiate the process by submitting a description of the desired product or service?

Dutch

2) Designing distribution networks to meet customer expectations suggests three criteria: (1) rapid response, (2) cost, and (3) service.

False

6) Supply chain decisions are not generally strategic in nature, because purchasing is not a large expense for most firms.

False

1) As the number of facilities increases, total logistics costs tend to follow a curve that first rises, then declines.

False

1) Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.

False

1) Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation.

False

1) With the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.

False

2) The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has reduced the overall level of supply chain risk.

False

2) The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.

False

2) Vertical integration, whether forward or backward, requires the firm to become more specialized.

False

2) Waterways are an attractive distribution system when speed is more important than shipping cost.

False

3) Cross-sourcing describes the practice of having two suppliers provide every component.

False

4) Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.

False

4) Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers, and part vertical integration.

False

5) A firm that employs a response strategy should minimize inventory throughout the supply chain.

False

7) Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.

False

8) Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels?

Refrigeration

11) Among which of the following industries are purchasing costs the LOWEST percentage of sales?

Restaurants

7) ________ is the process of sending returned products back up the supply chain for value recovery or disposal.

Reverse logistics

4) Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model?

Sell

5) Which of the following is NOT true about reverse logistics as compared to forward logistics?

Speed is often very important.

19) ________ involves reducing the number of variations in materials and components as an aid to cost management.

Standardization

5) The ________ is a set of processes, metrics, and best practices developed by the Supply Chain Council.

Supply Chain Operations Reference model or SCOR model

15) ________ describes the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer.

Supply chain management

14) Which of the following statements is true regarding the leverage of supply chain savings?

Supply chain savings exert more leverage as the firm's net profit margin decreases.

1) Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories.

True

2) Drop shipping results in time and shipping cost savings.

True

2) One classic type of negotiation strategy is the market-based price model.

True

2) Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

True

3) A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.

True

3) Logistics management can provide a competitive advantage through improved customer service.

True

3) The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.

True

3) While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are negotiated.

True

4) A blanket order is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

True

4) Savings in the supply chain exert more leverage as the firm's net profit margin decreases.

True

5) Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas?

airfreight

8) Which of the following devices represents an opportunity for technology to improve security of container shipments?

all of the above

7) The bullwhip effect:

all of the above are true

8) Which of the following would NOT be subject to negotiation between a buyer and supplier?

all of the above could be negotiated

11) A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following?

backward integration

13) A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following?

forward integration

22) Virtual companies are also known as ________ .

hollow corporations or network companies

6) What three logistics-related costs are relevant when analyzing the choice of number of facilities in a distribution network?

inventory costs, transportation costs, and facility costs

5) E-procurement:

is the same thing as Internet purchasing.

17) When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following?

joint venture

15) The Japanese concept of a company coalition of suppliers is:

keiretsu

14) Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called?

keiretsu

8) Which of the following is NOT an advantage of the "few suppliers" sourcing strategy?

less vulnerable trade secrets

13) All EXCEPT which of the following are "opportunities" in managing the integrated supply chain?

line balancing

9) Which of the following is NOT an opportunity for effective management in the supply chain?

local optimization

10) ________ is an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities.

logistics management

6) The ________ decision involves choosing between producing a component or a service internally and purchasing it externally.

make-or-buy

7) Which sourcing strategy is particularly common when the products being sourced are commodities?

many suppliers

10) Drop shipping:

means the supplier will ship directly to the end consumer, rather than to the seller

5) The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is:

outsourcing

7) Transferring to external vendors a firm's activities that have traditionally been internal is known as ________.

outsourcing

10) Which of the following best describes vertical integration?

produce goods or services previously purchased

2) The Institute for Supply Management:

publishes the principles and standards for ethical supply management conduct.

8) Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions?

purchasing

6) A disadvantage of the "few suppliers" sourcing strategy is:

the high cost of changing partners.

4) Distribution management focuses on which of the following?

the outbound flow of products

4) What term is used to describe the outsourcing of logistics?

third-party logistics (3PL)

16) Which of the following is NOT an advantage of a virtual company?

total control over every aspect of the organization

19) ________ is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor.

vertical integration

21) ________ rely on a variety of supplier relationships to provide services on demand.

virtual companies

18) Which of the following best describes Vizio's sourcing strategy?

virtual company

1) The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.

True

1) Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

True

4) What term describes a supply chain that is designed to optimize both forward and reverse flows?

closed-loop supply chain

4) What type of negotiating strategy requires the supplier to open its books to the purchasers?

cost-based price model

6) What are the three classic types of negotiation strategies?

cost-based price model, market-based price model, and competitive bidding

9) ________ describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.

cross-sourcing