chapter 9
A firm must track three types of costs to determine the correct level of inventory to keep in stock: purchasing costs, inventory carrying costs, and the costs incurred by A. stockouts. B. overruns. C. obsolete inventory. D. distribution. E. customer returns.
a
A push-pull supply chain strategy A. allows the firm to achieve economies of scale in purchasing. B. is the most cost competitive supply chain strategy to use. C. allows the firm to take advantage of manufacturing and transportation economies of scale. D. relieves the firm of having to incur inventory costs. E. does not rely on sales forecasts.
a
After the economic recession, the boating industry suffered from a decline in sales. However, recent sales forecasts indicate that the upcoming season will produce a strong demand for boats and boating equipment. Based on this, Les has decided to ramp up production this winter of both his bass fishing boats and speed boats, keep them in storage until the boating sales season officially resumes, and hope that customers will buy them. This is an example of a A. push strategy. B. supply strategy. C. demand strategy. D. pull strategy. E. push-pull strategy.
a
By leveraging the resources and skills of its various component firms, a supply chain provides the end customer with A. value. B. variety. C. flexibility. D. stability. E. competition.
a
Data management systems that integrate information across all the departments of an organization are called A. enterprise resource planning (ERP) systems. B. electronic data interchange (EDI) systems. C. just-in-time (JIT) inventory systems. D. intermodal data planning (IDP) systems. E. enterprise data planning (EDP) systems.
a
If cost reduction is part of a firm's strategy, which of the following systems will allow it to achieve cost savings through economies of scale in purchasing, manufacturing, and transportation? A. push strategy B. supply strategy C. demand strategy D. push-pull strategy E. pull strategy
a
Keegan is a purchasing manager for a large auto manufacturer. The contract with the company's steel provider is just about to expire, so Keegan is negotiating the terms and condition of a new contract with his supplier. Keegan is satisfied with the negotiations, so he takes the next step of drawing up a legal obligation to buy the negotiated amount of steel at the price and delivery date agreed upon by himself and his supplier. This legal obligation is otherwise known as A. a purchase order. B. a bill of sale. C. an agreement. D. a contract amendment. E. the cost of goods sold.
a
Xin has a business in which she assembles and decorates gift baskets for various occasions such as birthdays, bridal showers, retirement parties and weddings. She makes each basket based on customer orders and gathers the basket components from various stores only when they are needed. This is an example of what type of manufacturing process? A. just-in-time B. cyclical C. pipeline D. anticipative E. seasonal
a
According to your text, a company should consider all of the following when designing its distribution network EXCEPT: A. inventory levels. B. proximity to suppliers. C. operating expenses. D. customer service. E. transportation costs.
b
As noted in your text, managing ________ is one of the most important logistics function for retailers and every other member of the supply chain because it creates place and time utilities that are essential to keeping customers satisfied. A. purchasing activities B. transportation C. inventory costs D. operating expenses E. customer service
b
The costs required to make or buy a product, including risk of obsolescence, taxes, insurance, and warehousing space used to store the goods, are called A. supply chain costs. B. inventory carrying costs. C. marketing channel costs. D. distribution channel costs. E. logistics management costs.
b
Which person is responsible for establishing performance expectations for suppliers and developing ways to measure their performance? A. warehouse manager B. purchasing manager C. salesperson D. distribution channel manager E. plant manager
b
The almost instantaneous transfer of information from one company's computer to another that allows ERP systems to communicate with the information technology systems of other companies is done through A. a radio frequency identification system. B. a just-in-time inventory system. C. an electronic data interchange. D. a computerized identification system. E. an electronic inventory system.
c
Which of the following terms is NOT associated with a pull strategy? A. customization B. responsive C. speculation D. flexibility E. tailored
c
A supply chain strategy in which a company builds goods based on a sales forecast, puts those goods into storage, and waits for a customer to order the product is called a A. pull strategy. B. supply strategy. C. demand strategy. D. push strategy. E. push-pull strategy.
d
Read through the following scenarios and select the one that represents unethical behavior on the part of a purchasing manager. A. A purchasing manager will not buy from a supplier unless the supplier agrees to renegotiate the terms of the contract. B. A purchasing manager requests bids from three different companies before deciding which vendor to buy from. C. A purchasing manager has lunch with one of his suppliers and picks up the tab. D. A purchasing manager gives business to a supplier because the purchasing manager has relatives that work for the company. E. A purchasing manager provides training for his supplier's employees.
d
What is the warehouse activity that involves retrieving materials from storage and bringing them to manufacturing to fulfill a production order, or retrieving finishing goods from storage and preparing them for shipment to fulfill a customer order? A. put-away B. logistics C. stocking D. picking E. movement
d
When the distribution center mixes goods coming from multiple suppliers into outgoing orders so that each order includes a variety of goods rather than just one type of good, this is referred to as product A. accumulation. B. allocation. C. sortation. D. assortment. E. picking.
d
Dividing the inventory on hand by the average daily usage or sales is the calculation for A. days of stock. B. inventory turns. C. stockout. D. inventory supply. E. days of supply.
e
Warehouse activities can be organized into three basic functions: A. storage, shipping, and restocking. B. sorting, allocating, and movement. C. production, assembly, and storage. D. receiving, storing, and movement. E. storage, movement, and production.
e
Which element(s) of the four Ps of the marketing mix is/are affected by logistics? A. product, price, and place B. place only C. product and place D. product only E. product, price, place, and promotion
e
Which of the following is NOT a job function of a purchasing manager as outlined in your text? A. select appropriate suppliers B. negotiate contracts C. monitor supplier performance D. place purchase orders E. manage warehouse inventory
e
The ability of a distribution center to pick available goods down to a single piece allows customers to buy in quantities that make sense for their business. This exemplifies the function of product A. accumulation. B. allocation. C. sortation. D. assortment. E. picking.
b
The part of supply chain management that plans, implements, and controls the flow of goods, services, and information between the point of origin and the final customer is called A. supply chain management. B. logistics. C. warehousing. D. production management. E. value chain optimization.
b
The type of inventory a firm needs to meet average demand is called A. typical. B. cyclical. C. pipeline. D. anticipative. E. standard.
b
What sort of strategies must companies embrace for an integrated supply chain to work? A. customer-based B. relationship-based C. profit-based D. production-based E. supplier-based
b
When a firm selects a small number of carriers as opposed to using a large number of different carriers, it is a type of strategy known as A. contract carrier. B. core carrier. C. common carrier. D. central carrier. E. constrained carrier.
b
Which of the following demonstrates how logistics has an effect on the product element of the marketing mix? A. deciding to reduce the amount of inventory in the warehouse B. providing feedback on product packaging C. deciding which mode of transportation to employ D. utilizing volume discounts E. shipping goods in full rather than partial vehicles
b
Purchasing goods and services from suppliers only if they buy from the purchasing manager's company is an unethical practice called A. personal buying. B. picking. C. reciprocity. D. stockout. E. pulling.
c
Purchasing is an important logistical function for all of the following reasons EXCEPT A. savings in purchase costs can add significantly to a company's profits. B. it is a major factor in good and service quality. C. purchasing contracts protect the company from legal action. D. purchasing can help improve product design and time to market. E. sourcing materials from reliable suppliers ensures that the flow of goods meets demand.
c
Storage and handling expenses and service costs such as property taxes and insurance are what type of inventory costs? A. purchasing costs B. distribution costs C. inventory carrying costs D. production costs E. stockout costs
c
Supply chain management refers to A. the actions a firm takes to manage the costs required to make or buy a product. B. the planning, implementation, and control of the manufacture of a product. C. the actions a firm takes to coordinate the various flows within a supply chain. D. the management of data to integrate information across all departments of an organization. E. the inbound movement and storage of materials in preparation for those materials to enter and flow through the manufacturing process.
c
The main advantage of a push strategy is that A. it allows firms to customize orders. B. it reduces inventory carrying costs. C. it allows firms to achieve economies of scale. D. it eliminates the risk associated with producing an unwanted product. E. it allows firms to respond rapidly to changing market conditions.
c
Which of the following is NOT a form of nonstore retailing? A. mail order retailing B. telemarketing C. direct retailing D. independent retailing E. online retailing
d
Which of the following statements reflects the underlying philosophy behind the concept of supply chain management? A. You get out of it what you put into it. B. Every company for himself. C. Money makes the world go 'round. D. No company is an island. E. Better late than never.
d
According to your text, the primary reason firms rely on inventory management is A. to avoid an abundance of stock sitting in a warehouse. B. so they can predict how much product to manufacture at the lowest cost. C. to facilitate the movement of product from the warehouse to the end-customer. D. to be able to forecast future production runs of a product. E. so that customer service won't suffer from lack of product in any given location.
e
Bob's Custom Millwork is a business that provides custom cabinetry and furniture for both businesses and individual consumers. Bob does not make any products until he receives an order from the customer. What type of marketing strategy does this represent? A. push strategy. B. supply strategy. C. demand strategy. D. forecast strategy. E. pull strategy.
e
Differentiate between the following statements to determine which one is TRUE regarding the design of a distribution network. A. The more facilities in the network, the lower the overall inventory in the system. B. The fewer the facilities in the network, the more operating expense incurred. C. More facilities results in delays in delivery due to network communication issues. D. More facilities lead to lower transportation costs from production sites and suppliers to the warehouses. E. More facilities result in faster delivery to customers since facilities will be closer to markets.
e
If demand is unstable, as it often is in the introductory and growth stages of the product life cycle, it might be best for a firm to use a A. push strategy. B. supply strategy. C. demand strategy. D. forecast strategy. E. pull strategy.
e
Intermediaries through which the flow of products travels are called A. logistics chains. B. core carriers. C. supply chains. D. logistic channels. E. distribution channels.
e
Those activities that focus on delivering the right product, to the right place, to the right customer, at the right time, in the right quantity, in the right condition, and at the right price is referred to as A. transportation management. B. value chain optimization. C. distribution. D. production management. E. logistics.
e
Which of the following statements regarding supply chain management is NOT true? A. The term supply chain management became common in the 1990s. B. Supply chain management seeks to coordinate the various flows within a supply chain. C. Decisions made in one area of the supply chain will affect other areas, sometimes negatively. D. In a supply chain, all companies rely on related companies whose activities add value to the final product. E. Each channel within a supply chain acts independently of the other channels.
e
A British company manufactures specialty teas and sells them to a retailer in Estes Park, Colorado. In order to get the product to the end-user, the teas are shipped via ocean liner to a port in the Gulf of Mexico and then placed on a railway car to Denver, Colorado. From Denver, the tea is placed on a truck and taken to the retailer in Estes Park. This is an example of A. intermodal transportation. B. contract carrier transportation. C. international transportation. D. just-in-time delivery. E. common carrier transportation.
a
At auction, Maria purchased an antique porcelain vase valued at $25,000. The vase must be shipped from California to her home in Florida. What would be the best mode of transportation for this item? A. air transportation B. railroad C. water transportation D. common carrier truck E. contract carrier truck
a
Celeste is a company representative for Tastefully Simple. She holds parties at the homes of her family and friends where she demonstrates various uses for the company's products. Celeste works as a A. direct retailer. B. telemarketer. C. independent retailer. D. broker. E. wholesaler.
a
The distribution center function of product accumulation involves A. gathering goods with similar characteristics in one area of the distribution center to facilitate proper inventory control and effectively provide customer service. B. receiving goods from various suppliers, storing the goods until they're ordered by a customer and consolidating orders to achieve transportation economies of scale. C. picking available goods to fill customer orders whether it is a full pallet, full case, or individual item. D. mixing goods coming from multiple suppliers into outgoing orders so that each order includes a variety of goods rather than just one type of good. E. retrieving materials from storage and bringing them to manufacturing to fulfill a production order.
b
Taylor's toy shop bought a very large inventory of the newest superhero action figure. Because a new movie was supposed to come out featuring the superhero, Taylor didn't anticipate a problem selling the toy. However, production on the movie was halted and now Taylor is having a hard time selling the action figure. This represents what type of inventory? A. cyclical B. pipeline C. obsolete D. seasonal E. anticipative
c
What is intermodal transportation? A. transportation from one warehouse or distribution center to another B. transportation that is performed by a contract carrier C. using several types of transportation for the same shipment D. transportation that crosses state lines E. transportation of goods to overseas destinations
c
What is the term used for the inbound movement and storage of materials in preparation for those materials to enter and flow through the manufacturing process? A. intermodal transportation B. supply chain management C. materials management D. distribution channel management E. warehouse management
c
Alejandro works in a warehouse. His job is to assemble store displays and refurbish goods that have been returned by customers. What warehouse function is Alejandro responsible for? A. production B. logistics C. put-away D. picking E. movement
a
Compare the following statements and select the one that accurately describes a company that is practicing supply chain management. A. It sets up technology to enable the sharing of demand information with suppliers. B. It has an inward focus on the activities and performance of other companies. C. It recognizes the importance of sharing supply and demand information with suppliers and customers. D. It has an outward focus regarding the activities of its own company. E. It does not rely on other members of the supply chain to add value to the final product.
a
Coordinating the supply and demand for materials and ensuring that stored or recently received materials get to the production floor when needed are jobs of the A. materials manager. B. purchasing manager. C. plant manager. D. supply chain manager. E. production manager.
a
Pipeline inventory refers to A. inventory that is in transit between suppliers and customers. B. the inventory a firm needs in its pipeline to meet average demand. C. inventory that is produced or purchased to cover anticipated demand. D. the inventory a firm needs to accommodate seasonal demand. E. inventory that has been over-ordered or that has expired.
a
What is the term for the situation in which a company does not have enough inventory available to fill an order? A. stockout B. overrun C. obsolete inventory D. shortage E. put-away
a
Which type of supply chain strategy is demonstrated by the following sequence: (Step 1) forecast sales, (Step 2) plan production, (Step 3) order materials, (Step 4) customer orders, (Step 5) make product, and (Step 6) ship product? A. a push-pull strategy B. supply strategy C. demand strategy D. push strategy E. pull strategy
a
Compare the following definitions and select the one that accurately describes the term personal buying. A. A purchasing manager develops a relationship with a supplier and buys directly from that supplier and no one else. B. A purchasing manager buys items for the personal use of employees rather than for business use. C. Sales representatives add-on to a supplier order for items that they intend to keep for themselves. D. Employees buy items from the company using their employee discount. E. A purchasing manager buys items from a supplier in return for free items for himself.
b
The number of times a firm's entire inventory is sold and replaced is referred to as A. days of supply. B. inventory turns. C. stockout. D. inventory supply. E. days of stock.
b
A distribution center functions much like a warehouse, but performs additional activities. Which of the following is NOT one of the activities performed by a distribution center? A. product accumulation B. sortation C. product removal D. allocation E. assortment
c
A set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer is referred to as A. logistics. B. distribution management. C. a supply chain. D. a distribution center. E. a value chain.
c
According to your text, the ultimate objective of supply chain management is A. to make each channel as efficient as possible, thus saving the company money. B. to utilize as few channel members as possible in the manufacture of the product. C. to integrate related companies so they function as one organization. D. to accurately predict production levels in order to minimize inventory carrying costs. E. to choose intermediaries that share the same mission as the company.
c
Brenda and Tim went to Carl's Custom Dining to buy a new dining room set. At the store they configured the set to their specifications in terms of size, finish and style. The store sent the order out via the Internet to the manufacturer. The manufacturer, in turn, secured the correct type of wood from its supplier to complete the dining room set. When finished, the manufacturer shipped the product to its local warehouse where Carl's Custom Dining arranged for delivery to its store by a local trucking company. For Carl's Custom Dining, this is an example of A. a push strategy. B. a stockout. C. its supply chain. D. a just-in-time inventory system. E. its inventory management system.
c
Companies can either maintain their own fleet of trucks to transport goods or they can hire carriers. What are the two types of for-hire carriers? A. domestic and international B. union and private C. common and contract D. local and regional E. perishable goods and durable goods
c
A company that forecasts sales, builds an inventory based on the forecast, holds the components in inventory until a customer order is received and then finalizes the product based on the order is using a A. push strategy. B. supply strategy. C. demand strategy. D. push-pull strategy. E. pull strategy.
d
A legal obligation to buy a certain amount of product at a certain price from a supplier to be delivered at a specified date is referred to as A. a contract. B. a bill of sale. C. an agreement. D. a purchase order. E. the cost of goods sold.
d
A management philosophy that guides the actions of company members toward the goal of actively managing the upstream and downstream flows of goods, services, finances, and information across the supply chain is referred to as a A. logistics approach. B. distribution orientation. C. marketing orientation. D. supply chain orientation. E. channel management approach.
d
A supply chain refers to A. the intermediaries (wholesalers, distributors, and retailers) through which the flow of products travels. B. the planning, implementation, and control of the flow of goods, services and information between the point of origin and the final customer. C. The inbound movement and storage of materials in preparation for those materials to enter and flow through the manufacturing process. D. the set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services, finances, and information from a source to a customer. E. the activities involved in delivering the right product, to the right place, to the right customer, at the right time, in the right quantity, in the right condition, and at the right price.
d
According to your text, companies that employ a pull or push-pull strategy typically establish logistics operations based on A. sales forecasts, inventory stockpiles, and volume. B. speculation, forecasting, and chance. C. routine, standardization, and transportation efficiency. D. service quality, innovation, and flexibility. E. inventory levels, customer orders, and flexibility.
d
All along the supply chain, distribution channels add value to the product by A. getting the product closer to the end-consumer. B. reducing the final cost that consumers must pay for the product. C. getting the product to the customer in a timely manner. D. changing the product's form and location. E. listening to customer feedback and reacting accordingly.
d
Intermodal transportation got its start with what transportation innovation developed in the 1950s? A. the pallet B. the corrugated box C. the drum D. the container E. the forklift
d
Outdoor Living is a manufacturer of patio dining sets and outdoor furniture. Typically, customers purchase the company's products as the summer season begins and as such, do not want to wait for the product to be manufactured. Which supply chain strategy would work best for Outdoor Living? A. a forecast strategy B. supply strategy C. demand strategy D. push strategy E. pull strategy
d
A firm that sells mainly to end-user consumers is referred to as a A. wholesaler. B. supplier. C. distributor. D. broker. E. retailer.
e
According to your text, efficient and effective international transportation has, in part, contributed to the rise in A. domestic shipping rates. B. the number of distribution centers worldwide. C. multinational firms. D. tariffs and export fees. E. outsourcing and offshoring.
e
Almost half of the ton-miles moved in the United States are moved by A. air transportation. B. pipelines. C. cyberspace. D. trucks. E. railroads.
e
Which of the following statements is accurate regarding the way a supply chain works? A. In a supply chain, products flow upstream, finances flow downstream, and information flows both upstream and downstream. B. In a supply chain, products flow downstream, finances flow upstream, and information flows both upstream and downstream. C. In a supply chain, products, finances and information flow both upstream and downstream. D. In a supply chain, products flow downstream, while finances and information flow both upstream and downstream. E. In a supply chain, products flow both upstream and downstream, finances flow upstream, and information flows downstream.
b
Lucy works in a distribution center for a vitamin and nutritional supplement company. Part of her job entails gathering all goods with similar characteristics in one area of the distribution center. From there, she can facilitate the proper inventory controls to ensure that no expired vitamins or supplements are shipped to stores for sale. Lucy's job involves product A. accumulation. B. allocation. C. sortation. D. assortment. E. picking.
c