MGMT 330 Ch 8 - 12

FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee. True or False

False

For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion. T/F

False

Location greatly affects fixed cost, but not variable cost. T/F

False

The center-of-gravity method finds the location of a centralized facility, such as a distribution center, that will maximize the organization's revenue. T/F

False

Waterways are an attractive distribution system when speed is more important than shipping cost. True False

False

An employee produces 10 parts during a shift in which he made $90. What is the labor content of the product? A) $0.111 B) $900 C) $6 D) $5 E) $9

$9

TAL Apparel's management of its supply chain for Stafford shirts sold at JCPenney is an example of which of the following? A) single-stage control of replenishment B) postponement C) standardization D) blanket orders E) lot size reduction

A single-stage control of replenishment

Which of the following is NOT one of the four main types of inventory? Question options: A) safety stock inventory B) work-in-process inventory C) finished-goods inventory D) raw material inventory E) maintenance/repair/operating supply inventory

A) Safety stock inventory

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? A) backward integration B) current transformation C) horizontal integration D) forward integration E) job expansion

A) backward integration

Which of the following is an approach to location analysis that includes both qualitative and quantitative considerations? A) factor-rating method B) locational cost-volume analysis C) center-of-gravity method D) make-or-buy analysis E) transportation model

A) factor-rating method

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? A) forward integration B) keiretsu C) horizontal integration D) backward integration E) current transformation

A) forward integration

What type of negotiating strategy requires the supplier to open its books to the purchasers? A) market-based price model B) transparent negotiations C) price-based model D) cost-based price model E) competitive bidding

A) market-based price model

If a business adopts a low-cost strategy, it should build a supply chain with ________. A) minimized inventory B) buffer stock C) product development skills D) modular design in products E) fast transportation

A) minimized inventory

A product whose EOQ is 40 units experiences an increase in ordering cost from $10 per order to $90 per order. The revised EOQ is: Question options: A) one-third as large. B) three times as large. C) nine times as large. D) one-ninth as large. E) cannot be determined

A) one-third as large

What is the primary purpose of the basic economic order quantity model shown below?Q* = Question options: A) to minimize the sum of setup cost and holding cost B) to minimize the sum of carrying cost and holding cost C) to calculate the reorder point, so that replenishments take place at the proper time D) to calculate the optimum safety stock E) to maximize the customer service level

A) to minimize the sum of setup cost and holding cost

E-procurement: A) has many benefits but requires a lot of paperwork. B) is purchasing facilitated through the Internet. C) is illegal in all states except Nevada and New Jersey. D) works best in long-term contract situations but is not suited for auctions. E) All of these are true of e-procurement.

B is purchasing facilitated through the Internet.

Which of the following statements regarding work-in-process (WIP) inventory is FALSE? Question options: A) WIP exists because of flow time. B) Actual "run" time is usually a significant portion of the material flow time. C) WIP inventory describes products or components that are no longer raw materials but have yet to become finished products. D) Reducing flow time reduces WIP inventory. E) During most of the time a product is "being made," it is in fact sitting idle.

B) Actual "run" time is usually a significant portion of the material flow time.

Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods? A) center-of-gravity method B) factor-rating method C) simulation D) transportation method E) locational cost-volume analysis

B) factor-rating method

Which sourcing strategy is particularly common when the products being sourced are commodities? A) keiretsu B) many suppliers C) few suppliers D) virtual companies E) vertical integration

B) many suppliers

The transportation model, when applied to location analysis: A) maximizes revenues. B) minimizes total production and transportation costs. C) minimizes total transportation costs. D) minimizes the movement of goods. E) minimizes total fixed costs.

B) minimizes total production and transportation costs

In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $10 per unit per month, what is the economic order quantity? Question options: A) 24 B) 346 C) 141 D) 100 E) 600

C

Consider the all-units quantity discount schedule below. Which of the following CANNOT be the optimal ordering quantity?Quantity OrderedPrice Per UnitEOQ at that Price1−499$300891500−999$2809221000−1499$2609571500-1999$23010172000 and over$2001091 Question options: A) 1000 B) 922 C) 891 D) 1500 E) 2000

C) 891

An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE? Question options: A) One hundred is the reorder point, and 14 is the order quantity. B) Fourteen is the safety stock, and 100 is the reorder point. C) Fourteen is the reorder point, and 100 is the order quantity. D) The number 100 is a function of demand during lead time. E) None of these is true.

C) Fourteen is the reorder point, and 100 is the order quantity.

Which of the following statements is TRUE regarding the leverage of supply chain savings? A) Supply chain leverage depends only upon the percent of sales spent in the supply chain. B) Supply chain leverage is about the same for all industries. C) Supply chain savings exert more leverage as the firm's net profit margin decreases. D) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. E) None of these is true.

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

A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is: Question options: A) increased by more than 50%. B) increased by 50%. C) increased by less than 50%. D) unchanged. E) cannot be determined

C) increased by less than 50%

The Institute for Supply Management: A) is an agency of the United Nations charged with promoting ethical conduct globally. B) establishes laws and regulations for supply management. C) publishes the principles and standards for ethical supply management conduct. D) prohibits backward integration into developing economies. E) grants Ph.D. degrees in purchasing.

C) publishes the principles and standards for ethical supply management conduct.

Which of the following is NOT a condition that favors the success of vertical integration? A) sufficiently high demand B) availability of capital C) small market share D) availability of managerial talent E) All of these favor the success of vertical integration.

C) small market share

Which of the following best describes backward integration? A) build long-term partnerships with a few suppliers B) develop the ability to produce products that complement the original product C) develop the ability to produce the specified good more efficiently than before D) produce goods or services previously purchased E) sell products to a supplier or a distributor

D produce goods or services previously purchased

A full-service restaurant is considering opening a new facility in a specific city. The table below shows its ratings of four factors at each of two potential sites. Factor Weight Gary Mall Belt Line Affluence of local population. 20 30 30 Traffic flow. 40 20 20 Parking availability. 20 30 20 Growth potential.20 10 30 The score for Gary Mall is ________ and the score for Belt Line is ________. A) 90; 100 B) 18; 120 C) 34; 28 D) 22; 24 E) none of these

D) 22; 24

Which of these statements about the production order quantity model is FALSE? Question options: A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. B) Average inventory is more than one-half of the production order quantity. C) Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. D) All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity. E) None of these is false.

D) All else equal, the smaller the ratio of demand rate to production rate, the smaller is the production order quantity.

Which of the following statements regarding FedEx is TRUE? Question options: A) FedEx uses a hub system in the United States, but a city-to-city network in other countries. B) Memphis is FedEx's only hub airport in the United States. C) Memphis, Tennessee, is the only hub in the company's global flight network. D) FedEx believes the hub system helps reduce mishandling and delays due to better controls. E) Its hub in Memphis, Tennessee, was selected because of its low cost.

D) FedEx believes the hub system helps reduce mishandling and delays due to better controls.

The Japanese concept of a company coalition of suppliers is: A) illegal. B) kaizen. C) dim sum. D) keiretsu. E) poka-yoke.

D) keiretsu

What tracks both receipts and subtractions from inventory on a continuing basis? Question options: A) ABC analysis B) cycle counting C) periodic system D) perpetual inventory E) shrinkage

D) perpetual inventory

When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following? A) vertical integration B) few suppliers C) virtual companies D) keiretsu E) joint venture

E joint venture

Which of the following is an advantage of the postponement technique? A) early customization of the product B) reduction in automation C) reduction in training costs D) better quality of the product E) reduction in inventory investment

E reduction in inventory investment

Major retailers lose ________ of overall profits due to poor or inaccurate inventory records. Question options: A) 1% to 3% B) 3% to 5% C) 5% to 10% D) 50% E) 10% to 25%

E) 10% to 25%

Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor? A) Patients will travel very long distances to have their hernia surgeries performed at Shouldice Hospital. B) Metal refiners (smelters) locate near mines to accomplish significant weight reduction near the metal's source. C) Furniture makers choose to locate near the source of good hardwoods, even though it means locating near other furniture manufacturers. D) Soft drinks are bottled in many local plants, where carbonated water is added to proprietary syrups that may have been shipped long distances. E) Few people will travel out of state for a routine haircut.

E) Few people will travel out of state for a routine haircut.

Which of the following is NOT true about reverse logistics as compared to forward logistics? A) Speed is often not a priority. B) Forecasting is more uncertain. C) Distribution costs are less directly visible. D) Pricing is dependent upon many factors. E) Inventory management is consistent.

E) Inventory management is consistent

Which of the following statements regarding the production order quantity model is TRUE? Question options: A) It minimizes inventory. B) It applies only to items produced in the firm's own production departments. C) It relaxes the assumption that the demand rate is constant. D) It minimizes the total production costs. E) It relaxes the assumption that all the order quantity is received at one time.

E) It relaxes the assumption that all the order quantity is received at one time.

Globalization of the location decision is the result of all EXCEPT which of the following? A) market economics B) more rapid, reliable travel and shipping C) higher quality of labor overseas D) high differences in labor costs E) ease of capital flow between countries

E) higher quality of labor overseas

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? A) door-to-door service B) damage record C) on-time delivery D) consolidation capabilities E) speed of shipment

E) speed of shipment

The two most basic inventory questions answered by the typical inventory model are: Question options: A) ordering cost and carrying cost. B) order quantity and service level. C) timing of orders and cost of orders. D) order quantity and cost of orders. E) timing of orders and order quantity.

E) timing of orders and order quantity.

According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations. T/F

False

An example of an intangible cost, as it relates to location decisions, is depreciation. T/F

False

At the economic order quantity, holding costs are equal to product costs.

False

Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant. T/F

False

Cycle counting is an inventory control technique exclusively used for cyclical items. T/F

False

Which of the following statements regarding the center-of-gravity method is FALSE? A) The weights used are the quantity of goods moved to or from each location. B) The optimal solution is unconstrained, so it could suggest a location in the middle of a body of water. C) The optimal x- and y-coordinates are calculated separately. D) The origin of the coordinate system and the scale used are arbitrary, just as long as the relative distances are correctly represented. E) It is designed to minimize the maximum possible travel distance to any of the locations.

It is designed to minimize the maximum possible travel distance to any of the locations.

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

True

In the production order quantity model, the cost of acquiring goods (product cost) is a factor in determining lot size. T/F

True

Manufacturers may want to locate close to their customers if the transportation of finished goods is expensive or difficult. T/F

True

One reason for a firm locating near its competitors is the presence of a major resource it needs. T/F

True

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

True

Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage. T/F

True

Unfavorable exchange rates can offset other savings in a location decision. T/F

True

A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus? A) revenue focus B) cost focus C) education focus D) environmental focus E) labor focus

revenue focus