MIS555 - Midterm Chapters 3-6
It is much easier to return a product to an online retailer than to a traditional bricks and mortar seller.
False
Outbound transportation costs per unit tend to be lower than inbound costs, because inbound lot sizes are typically larger.
False
A company's ability to find a balance between responsiveness and efficiency that best matches the needs of the customer it is targeting is the key to achieving strategic fit
True
A customer does not necessarily want the highest level of performance along all dimensions of customer service, including response time, product variety, product availability, customer experience, order visibility, and returnability.
True
A decrease in the response time customers desire increases the number of facilities required in the network.
True
A distribution network designer needs to consider product characteristics as well as network requirements when deciding on the appropriate delivery network.
True
As long as inbound transportation economies of scale are maintained, increasing the number of facilities decreases total transportation cost.
True
Companies in the same industry often select very different distribution networks, because the choice of the distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness.
True
Companies using seasonal inventory will build up inventory in periods of low demand and store it for periods of high demand when they will not have the capacity to produce all that is demanded.
True
Companies using seasonal inventory will maintain a level inventory increase rate of production for periods of high demand
True
Consumers prefer purchasing commoditized products at a one-stop shop.
True
Distribution occurs between every pair of stages in the supply chain.
True
Distributors add value to a supply chain between a supply stage and a customer stage if there are many small players at the customer stage, each requiring a small amount of the product at a time.
True
For physical products, i.e., products that cannot be downloaded, customer requests take longer to fulfill through online sales than in a retail store setting.
True
Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers
True
Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain's efficiency and responsiveness.
True
It is more common for a manufacturer to not own the distribution network.
True
Only niche companies will end up using a single distribution network.
True
Seasonal inventory is inventory that is built up to counter predictable variability in demand.
True
Stock keeping unit (SKU) storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together
True
The high utilization facility will have difficulty responding to demand fluctuations.
True
The main advantage of a distribution network with local storage is that it can lower the delivery cost and provide a faster response than other networks.
True
The main advantage of in-transit merge over drop-shipping is the somewhat lower transportation cost and improved customer experience.
True
The major disadvantage of a distribution network with local storage is the increased inventory and facility costs.
True
The two major types of facilities are production sites and storage sites
True
Transportation costs are high with drop-shipping because the average outbound distance to the end consumer is large and package carriers are used to shipping the product.
True
On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below: Gallons Total Cost 15 $44.40 16 $36.32 13.5 $34.70 18 $45.90 8 $23.36 12 $30.72 What is the average sale price of the gasoline? A) $2.61 B) $2.64 C) $2.67 D) $2.70
A) $2.61
A beekeeper sends out crates of honey to a number of customers. The shipping cost is a function of the gasoline prices that day and the size of the truck used for delivery. For any shipment exceeding 3000 pounds, the truck rental is $600 and for a shipment weight less than 3000, the truck rental is $450. Units Weight Weight Fee 6 156 $703.56 87 2175 $9,461.25 23 575 $2,265.50 149 3874 $17,084.34 203 5075 $1,9944.75 212 5724 $2,2552.56 90 2340 $10,272.60 28 700 $3,066.00 What is the average outbound transportation cost? A) $4.34 per pound B) $4.14 per pound C) $4.24 per pound D) $4.44 per pound
A) $4.34 per pound
Lisa rented her goats out to anyone interested in clearing underbrush the natural way on their acreage. She received a call from her client Mary on June 21 and delivered her herd of goats to the site on June 24. The goats were done on June 30 and Lisa presented Mary with an invoice the same day. Mary wrote Lisa a check on July 18 and Lisa cashed it on July 21. What was Lisa's days payable outstanding for Mary's job? A) 18 days B) 24 days C) 27 days D) 30 days
A) 18 days
Katz reports total revenue of $245,600, cost of goods sold of $18,950 and net income of $121,000. Their total assets are $585,000 and total liabilities are $250,000. What is their return on equity (ROE)? A) 36.12% B) 48.40% C) 20.68% D) 41.98%
A) 36.12%
Where does distribution occur in the supply chain? A) Between every pair of stages B) Everywhere downstream from production C) Between production and the retailer D) Between suppliers and retailers
A) Between every pair of stages
Which of the following would not be the result of a poor/inappropriate distribution network? A) High profitability B) Low level of customer service C) High cost D) Poor profitability
A) High profitability
Which of the following is a technology that shares and analyzes information in the supply chain? A) Internet B) Enterprise Data Planning (EDP) C) Electronic Resource Interchange (ERI) D) Chain Management (CM) software
A) Internet
In the textbook, it mentions that Walmart has mandated the use of a specific technology by its top 100 suppliers at the level of product cases. What is the technology? A) RFID B) ERP C) SCM D) EDI
A) RFID
Which of the following is a characteristic of a facility with excess capacity? A) Will likely be more efficient per unit of product it produces than one with a lot of unused capacity B) Would be very flexible and respond to wide swings in the demands placed on it C) Would be considered a high utilization facility D) Will have difficulty responding to demand fluctuations
A) Will likely be more efficient per unit of product it produces than one with a lot of unused capacity
Seasonal inventory should be used when A) a company can rapidly change the rate of its production system at a very low cost. B) changing the rate of production is expensive (e.g., when workers must be hired or fired). C) adjusting to a period of low demand without incurring large costs. D) the world is perfectly predictable.
A) a company can rapidly change the rate of its production system at a very low cost.
The ease with which the customer can place and receive their order as well as other aspects of value that the sales staff provides is A) customer experience. B) order visibility. C) product availability. D) response time.
A) customer experience.
The average amount of inventory used to satisfy demand between receipt of supplier shipments is referred to as A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing.
A) cycle inventory.
The places in the supply chain network where product is stored, assembled, or fabricated are known as A) facilities. B) inventory. C) transportation. D) information.
A) facilities.
Why would anyone in their right mind buy a brand new car in the spring when they know that new car models will appear in late summer and early fall and the dealers will use A) markdowns to move that old inventory? B) information systems to move that old inventory? C) pull systems to move that old inventory? D) lost sales to move that old inventory?
A) markdowns to move that old inventory?
When all the different stages of a supply chain work toward the objective of maximizing total supply chain profitability, rather than each stage devoting itself to its own profitability without considering total supply chain profit, it is known as A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management.
A) supply chain coordination.
As the number of facilities in a supply chain increases A) the inventory and resulting inventory costs also increase. B) the inventory and resulting inventory costs decrease. C) the inventory increases and resulting inventory costs decrease. D) the inventory decreases and resulting inventory costs increase.
A) the inventory and resulting inventory costs also increase.
Katz reports total revenue of $375,650, cost of goods sold of $267,400 and net income of $48,325. Their total assets are $784,325 and total liabilities are $387,775. What is their return on equity (ROE)? A) 33.72% B) 12.19% C) 6.16% D) 21.38%
B) 12.19%
The inventory held in case demand exceeds expectation in order to counter uncertainty is called A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing.
B) safety inventory.
On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below: Gallons Total Cost 15 $44.40 16 $36.32 13.5 $34.70 18 $45.90 8 $23.36 12 $30.72 What is the average order size of the gasoline? A) 15.00 B) 13.75 C) 14.25 D) 14.75
B) 13.75
Over the past two months, Lisa has received several orders for goat grazing services. The order date, promise date, and delivery dates are shown in the table below. Order Date Promise Date Delivery Date June 1 June 2 June 3 June 1 June 4 June 4 June 6 June 7 June 7 June 13 June 15 June 15 June 15 June 16 June 18 June 15 June 18 June 20 June 18 June 22 June 22 June 19 June 25 June 25 June 20 June 27 June 27 June 22 June 29 June 29 June 24 June 28 June 30 June 26 July 4 July 4 June 28 July 8 July 7 June 30 July 8 July 9 What is Lisa's percentage of on-time deliveries? A) 75% B) 64% C) 56% D) 51%
B) 64%
Which of the following would result in an improvement in the C2C cycle for Katz if all other entries in their selected financial data were held constant? A) An increase in accounts payable turnover B) An increase weeks payable C) An increase in weeks receivable D) An increase in weeks in inventory
B) An increase weeks payable
________ typically measures the cost of bringing product into a facility as a percentage of sales or cost of goods sold (COGS). A) Average outbound transportation cost B) Average inbound transportation cost C) Average incoming shipment size D) Average inbound transportation cost per shipment
B) Average inbound transportation cost
The ________ strategy results in a peak during the discount week, often followed by a steep drop in demand during the following weeks. A) Everyday low pricing B) High-low pricing C) Fixed price D) Menu pricing
B) High-low pricing
Which of the following are key components of transportation decisions when designing and operating a supply chain? A) Software selection B) Mode of transportation C) Source selection D) Warehouse selection
B) Mode of transportation
________ measures the average time between when an order is placed and the product arrives. A) Supplier reliability B) Supply lead time C) Fraction of on-time deliveries D) Supply quality
B) Supply lead time
Cycle inventory is used because A) the world is perfectly predictable. B) demand is uncertain and may exceed expectations. C) it involves making a trade-off between the costs of having too much inventory and the costs of losing sales due to not having enough inventory. D) it focuses on processes that are external to the firm.
B) demand is uncertain and may exceed expectations.
The art and science of making projections about what future demand and conditions will be is A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management.
B) forecasting.
Outbound transportation costs per unit tend to be A) about the same as inbound costs. B) higher than inbound costs. C) lower than inbound costs. D) neither higher or lower than inbound costs.
B) higher than inbound costs.
As the number of facilities in a supply chain increases, total facility costs A) decrease. B) increase. C) increase to a point and then decrease. D) decrease to a point and then increase.
B) increase.
All raw materials, work in process, and finished goods within a supply chain are known as A) facilities. B) inventory. C) transportation. D) information.
B) inventory.
Distribution is a key driver of the overall profitability of a firm because A) the addition of distributors only adds cost to the supply chain. B) it directly impacts both the supply chain cost and the customer experience. C) it slows down the responsiveness of the supply chain. D) it cannot be developed as a part of supply chain strategy.
B) it directly impacts both the supply chain cost and the customer experience.
The ability of the customer to track their order from placement to delivery is A) customer experience. B) order visibility. C) product availability. D) response time.
B) order visibility.
The costs incurred in sending material out of a facility are A) sourcing transportation costs. B) outbound transportation costs. C) crossbound transportation costs. D) inbound transportation costs.
B) outbound transportation costs
The number of different products/configurations that a customer desires from the distribution network is A) response time. B) product variety. C) product availability. D) customer experience.
B) product variety.
The warehousing methodology that uses a traditional warehouse to store all of one type of product together is A) warehouse unit storage. B) stock keeping unit (SKU) storage. C) job lot storage. D) cross-docking.
B) stock keeping unit (SKU) storage.
On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below: Gallons Total Cost 15 $44.40 16 $36.32 13.5 $34.70 18 $45.90 8 $23.36 12 $30.72 What is the range of sale price of the gasoline? A) 7.51 B) 10 C) 0.69 D) 22.54
C) 0.69
Which of the following would result in lower return on assets for Katz if all other entries in their selected financial data were held constant? A) A reduction in earnings before interest and taxes B) An increase in asset turnover C) A reduction in total assets D) An increase in profit margin
C) A reduction in total assets
________ measures the incremental costs that are independent of the size of the order. A) Average sale price B) Incremental variable cost per unit C) Incremental fixed cost per order D) Incremental indirect cost per order
C) Incremental fixed cost per order
Although faster transportation is more expensive, a firm receives which benefit as a result of the faster transportation? A) Fewer rejects B) Higher profit C) Lower inventories D) More warehouses
C) Lower inventories
Which component of the supply chain decision-making framework would be used to reach the performance level dictated by the supply chain strategy? A) Customer strategy B) Supply chain strategy C) Supply chain structure D) Competitive strategy
C) Supply chain structure
________ identifies the difference between the planned production/inventories and the actual values. A) Supplier reliability B) Forecast error C) Variance from plan D) Supply quality
C) Variance from plan
Transforming forecasts into plans of activity to satisfy the projected demand is known as A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management.
C) aggregate planning.
Companies in the same industry often select very different distribution networks because A) some companies are poorly run. B) different companies try to avoid using the same approach. C) different companies have different objectives for their supply chain. D) all of the above
C) different companies have different objectives for their supply chain.
Zara sources basic products such as white t-shirts from low cost countries because demand is predictable. For trendy products for which demand is unpredictable, Zara sources from company-owned higher cost factories in Europe. For the predictable demand, Zara strives for ________ and for the unpredictable demand, Zara hopes to achieve ________. A) social responsibility, quality B) flexibility, social responsibility C) efficiency, flexibility D) quality, efficiency
C) efficiency, flexibility
As the response time desired by the customer decreases, the required number of facilities in the distribution network A) decreases. B) remains the same. C) increases. D) increases and then decreases.
C) increases.
The warehousing methodology in which all the different types of products needed to perform a particular job or satisfy a particular type of customer are stored together is A) warehouse unit storage. B) stock keeping unit (SKU) storage. C) job lot storage. D) cross-docking.
C) job lot storage.
The probability of having a product in stock when a customer order arrives is A) response time. B) product variety. C) product availability. D) customer experience.
C) product availability.
11) The two major types of facilities are A) distribution sites and storage sites. B) production sites and distribution sites. C) production sites and storage sites. D) retail sites and distribution sites.
C) production sites and storage sites.
The inventory that is built up to counter predictable variability in demand is called A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing.
C) seasonal inventory.
9) Moving inventory from point to point in the supply is known as A) facilities. B) inventory. C) transportation. D) information.
C) transportation.
10) The data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain is known as A) facilities. B) inventory. C) transportation. D) information.
D) information.
Blue Nile is an online retailer of diamonds that has used responsive transportation to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. Which is the mode of transportation used with this strategy? A) Sea B) Rail C) Internet D) Air
D) Air
Which component of the supply chain decision-making framework would be established first? A) Customer strategy B) Supply chain strategy C) Supply chain structure D) Competitive strategy
D) Competitive strategy
The following warehousing methodology is one in which goods are not actually warehoused in a facility. Instead, trucks from suppliers, each carrying a different type of product, deliver goods to a facility. There the inventory is broken into smaller lots and quickly loaded onto store-bound trucks that carry a variety of products, some from each of the supplier trucks. A) Warehouse unit storage B) Stock keeping unit (SKU) storage C) Job lot storage D) Cross-docking
D) Cross-docking
Which of the following are key components of information that must be analyzed to increase efficiency and improve effectiveness in a supply chain? A) Software selection B) Source selection C) Warehouse selection D) Forecasting and aggregate planning
D) Forecasting and aggregate planning
Amazon uses different prices for the products that are purchased from the company — often for the speed of the shipping. What is the name of this pricing scheme? A) Everyday low pricing B) High-low pricing C) Fixed price D) Menu pricing
D) Menu pricing
Which of the following would be a characteristic of a facility with little excess capacity? A) Allows a facility to be very flexible and to respond to wide swings in the demands placed on it B) Costs money and therefore can decrease efficiency C) Requires proximity to customers and the rest of the network D) Will likely be more efficient per unit of product it produces
D) Will likely be more efficient per unit of product it produces
Geoff strolled into his local big box retailer in search of sunflower seeds for the flock of cardinals that graced his property during the cold winter. Much to his (and the cardinals') dismay, the shelf where the 50 pound bags of sunflower seeds were kept was bare. He pirouetted and left the store in disgust, empty-handed and fearing the wrath of an angry flock of cardinals when he returned home. This sad scenario illustrates A) safety inventory. B) cycle inventory. C) a markdown. D) a lost sale.
D) a lost sale.
Economies of scale are illustrated by A) a company declaring that they will not have sales, but will maintain very low prices all the time. B) the price of a taxi ride service increasing after 2 a.m. C) a supplier using a third party logistics firm. D) a supplier waiting until enough demand has built up to send a full truckload shipment to their customer.
D) a supplier waiting until enough demand has built up to send a full truckload shipment to their customer.
The steps taken to move and store a product from the supplier stage to a customer stage in the supply chain are referred to as A) transportation. B) retailing. C) wholesaling. D) distribution.
D) distribution.
The costs incurred in bringing material into a facility are A) sourcing transportation costs. B) outbound transportation costs. C) crossbound transportation costs. D) inbound transportation costs.
D) inbound transportation costs.
Cycle inventory is inventory that is built up to counter predictable variability in demand
False
Total logistics costs for a supply chain network are a sum of A) inventory and facility costs. B) inventory, facility, and distributor costs. C) facility, transportation, and distributor costs. D) inventory, transportation, and facility costs.
D) inventory, transportation, and facility costs.
The process by which a firm decides how much to charge customers for its goods and services is A) supply chain coordination. B) forecasting. C) aggregate planning. D) pricing.
D) pricing.
The use of differential pricing over time or customer segments to maximize profits from a limited set of supply chain assets is A) supply chain coordination. B) forecasting. C) aggregate planning. D) revenue management.
D) revenue management.
The set of business processes required to purchase goods and services is known as A) cycle inventory. B) safety inventory. C) seasonal inventory. D) sourcing.
D) sourcing.
The most significant sourcing decision for a firm is A) whether to locate a plant close to customers or locate a plant close to sources of raw materials or suppliers. B) whether to use highly automate processes or manual labor. C) whether to use traditional inventory methods or adopt a just in time approach to stocking. D) whether to perform a task in-house or outsource it to a third party.
D) whether to perform a task in-house or outsource it to a third party.
A facility with little excess capacity will likely be no more or less efficient per unit of product it produces than one with a lot of unused capacity.
False
Compared to a business with many retail outlets, an online seller with aggregated inventories tends to have lower per unit transportation costs across the entire supply chain.
False
Customers always want the highest level of performance along all the dimensions response time, product variety and returnability.
False
The components of inventory decisions include capacity, cycle inventory, safety inventory, seasonal inventory, and sourcing
False
The major drivers of supply chain performance are customers, facilities, inventory, transportation, and information
False
To extract the maximum benefit from the online channel for physical goods, firms should keep it separate from their existing supply chain networks.
False
Warehouse unit storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together
False