Operations Management Ch 13

Which statement is true of order amplification?

Order amplification in the supply chain leads to the bullwhip effect.

_____ inventory is inventory that has been ordered but is in transit.

Pipeline

What is one tactic to mitigate the risk involved with capacity risks?

Schedule overtime.

Domestically, most consumer items are shipped by all of the following methods except _____.

pipelines

Chronic inventory and capacity shortages are examples of _____ risks.

product

Technology upgrades and backup systems and sites can help mitigate security risks.

True

Inventory turnover (IT) =____/_____

cost of goods sold; average inventory value

A(n) _____ is any entity—real or virtual—that coordinates and shares information between buyers and sellers.

intermediary

All of the following are true about supply chains in e-commerce except _____.

B2B commerce focuses on selling between buyers of goods

What is one tactic to mitigate the risk involved with product risks?

Better strategic planning and demand forecasting capability

Which of the following is a security risk to supply chains?

E-commerce system downtime

Which of the following is a responsibility of logistics managers?

Filing claims for damaged goods

Josh Smith, the materials manager at a retail store, has determined that a particular product experienced 5 turns last year, with an annual sales volume of $15 million. What was the average inventory value for this product last year?

$3 million

ProShopper, a sportswear store, held an average sportswear inventory of $10 million last year and reported an inventory turnover of 5 times per year. What was its cost of goods sold?

$50 million

All of the following are one of the five basic functions of the SCOR model, except ____.

operate

Inventory days' supply (IDS) is calculated as Average total inventory / _____.

Cost of goods sold per day

What is a disadvantage of vendor-managed inventory (VMI)?

VMI often results in higher customer inventories than necessary.

_____ inventory outsources the inventory management function in supply chains to suppliers.

Vendor-managed

What is one tactic to mitigate the risk involved with global economic risks?

Virtual versus direct sales channel mix

A backhaul occurs when

a truck delivers its load and also carries freight on the return journey.

Supply chain management is the management of:

all activities that facilitate the fulfillment of a customer order for a manufactured good to achieve customer satisfaction at reasonable cost.

Research has found that upward of 60 to 70 percent of a company's carbon footprint is found _____.

along their supply chain

All of the following are activities include in reverse logistics except _____.

assembly of raw materials

Managing orders, transportation, and distribution to provide goods and services is part of the _____ function of the Supply Chain Operations Reference (SCOR) model.

deliver

Managing supplier relationships involves:

establishing trust, openness, and honesty with the supplier

Warehouse stockouts are examples of _____ risks.

inventory

In the context of measuring supply chain performance, _____ is a category of supply chain metrics that is measured by perfect order fulfillment.

delivery reliability

Import tariffs help in preventing the dumping of low-cost products in the domestic economy.

True

Bragg Johnson, materials manager at Johnson & Sons, has determined that a certain product experienced 3.4 turns last year, with an annual sales volume (at cost) of $972,000. What was the average inventory value for this product last year? Round your answer to the nearest dollar.

$ 285,882

If an online retail store has cost of goods sold equal to $2 million, has 200 operating days in a year, and has a total average on-hand inventory of $500,000, what is the cost of goods sold per day?

$10,000.

Speedex, an automobile company, has an annual sales volume of $3 million, cost of goods sold equal to $2 million, total average on-hand inventory of $600,000, and 150 operating days in a year. What is the daily revenue earned by the company?

$20,000

Bragg Johnson, materials manager at Johnson & Sons, has determined that a certain product experienced 3.9 turns last year, with an annual sales volume (at cost) of $987,000. What was the average inventory value for this product last year? Round your answer to the nearest dollar.

253,077

In your company, the inventory holding period is 46 days, the average collection period is 35 days, and the average accounts payable payment period is 31 days. What is the cash to cash conversion cycle in days based on this information?

50 days

In your company, the inventory holding period is 16 days, the average collection period is 5 days, and the average accounts payable payment period is 15 days. What is the cash to cash conversion cycle in days based on this information?

6 days

TekSupply, Inc., an automobile parts supplier, held an average automobile parts inventory of $4 million last year. Its cost of goods sold was $25 million. Therefore, the automobile parts experienced an inventory turnover of _____ turns last year.

6.25

Andrew Manufacturing held an average inventory of $1.2 million (raw materials, work-in-process, finished goods) last year. Its sales were $8.0 million, and its cost of goods sold was $5.2 million. The firm operates 270 days a year. What is the inventory days supply? Do not round intermediate calculations. Round your answer to one decimal place.

62.3

Inventory days' supply (IDS) is calculated as _____ / Cost of goods sold per day.

Average total inventory

Logistics involves what primary responsibilities?

Buying transportation services, managing the transportation of goods through the supply chain.

A high average inventory value reduces the chances of inventory obsolescence.

False

Air shipments have the lowest transportation cost and can carry unlimited weight.

False

Electronic data interchange and Internet links decrease the velocity of supply chains.

False

Which statement best defines inventory turnover?

Inventory turnover is a measure of how quickly goods are moving through the supply chain.

Which of the following is true of inventory turnover?

It can be computed over any time period such as months, quarters, or years.

Which of the following is a disadvantage of vendor-managed inventory (VMI)?

It does not account for substitutable products from competing manufacturers.

In the context of the Supply Chain Operations Reference (SCOR) model, which of the following is true of planning?

It involves developing a strategy that balances resources with requirements.

Which of the following is true of responsiveness?

It is measured by order fulfillment lead time or by perfect delivery fulfillment.

In the context of transportation, which of the following is true of rail transport?

It provides a good balance between costs, delivery speed, tonnage capacity, and environmental sustainability.

Which of the following is true of the Supply Chain Operations Reference (SCOR) model?

It requires a clear understanding of the interactions among all parts of the supply chain management system.

_____ refers to managing the flow of finished goods, materials, or components that may be unusable or discarded through the supply chain from customers toward either suppliers, distributors, or manufacturers for the purpose of reuse, resale, or disposal.

Reverse logistics

Which of the following is NOT true about returns of sold goods?

The cost of returns averages between 7 to 10 percent of the cost of goods sold, but it is decreasing.

What is the supply chain operations reference model?

The supply chain operations reference model is a framework for understanding the scope of supply chain management (SCM) that is based on five basic functions involved in managing a supply chain: plan, source, make, deliver, and return.

Cash-to-cash conversion cycle is the average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished good.

True

Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 30,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?

Xiajing Supplier, 30000

All of the following are true about order amplification except _____.

a distributor might order extra raw materials or parts

Equipment shortage is an example of a(n) _____ risk. Poor transportation infrastructure by country is an example of a(n) _____ risk.

capacity; logistics and scheduling

The Pharmaceutical Manufacturers Association defines a _____ as one that, after extensive investigation, is found to provide material of such quality that routine testing on each lot received is unnecessary.

certified supplier

In supply chains such as B2C and G2C, C stands for _____ and G stands for _____.

customer; government

In the context of measuring supply chain performance, the goal of sustainability measures is to:

have a carbon-neutral supply chain.

All of the following are true about the impact of returns, except: ______.

in many situations, moving new products forward in the supply chain is more costly than moving an item backwards in the supply chain

_____ is how quickly goods are moving through the supply chain. The _____ is the average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished good.

inventory turnover; cash-to-cash conversion cycle

The _____ function of a supply chain is responsible for selecting transportation carriers and managing company-owned fleets of vehicles.

logistics

Global economic risks can be mitigated through:

multicountry sourcing of suppliers.

_____ integration is the process of coordinating the physical flow of materials. ______ is the process of managing information, physical goods, and services.

supply chain; value chain

The principal goal of the purchasing department is to:

support its key internal customers.

In the context of risk management in supply chains, _____ risks are those risks that influence the day-to-day management of operations.

tactical

As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $23.0 million, cost of goods sold of $20.4 million, 40 operating weeks a year, total average on hand inventory of $2,100,000, accounts receivable equal to $2,480,000, and accounts payable of $3,580,000. Assume the operating manager reduces total average inventory on-hand by 25 percent by using better operations and supply chain methods. What is the revised cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.

1.2

As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $22.9 million, cost of goods sold of $19.7 million, 32 operating weeks a year, total average on hand inventory of $2,150,000, accounts receivable equal to $2,445,000, and accounts payable of $3,755,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.

1.7

As an operations management consultant, you have been asked to evaluate a furniture manufacturer's cash-to-cash conversion cycle under the following assumptions: sales of $24.1 million, cost of goods sold of $19.8 million, 32 operating weeks a year, total average on hand inventory of $2,250,000, accounts receivable equal to $2,430,000, and accounts payable of $3,715,000. What is the cash-to-cash conversion cycle in weeks? Do not round intermediate calculations. Round your answer to one decimal place.

1.9

Andrew Manufacturing held an average inventory of $1.5 million (raw materials, work-in-process, finished goods) last year. Its sales were $8.1 million, and its cost of goods sold was $5.6 million. The firm operates 265 days a year. What is the inventory days supply? Do not round intermediate calculations. Round your answer to one decimal place.

71.0

Based on the following information, how many days of supply of inventory is the firm holding (assume 260 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Inventory days' supply?

89.7

Based on the following information, how many days of supply of inventory is the firm holding (assume 230 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Inventory days' supply?

91.2

Based on the following information, how many days of supply of inventory is the firm holding (assume 270 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Inventory days' supply?

91.2

Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 20,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?

Boston Medical Supplier, 10000

Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 30,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?

Boston Medical Supplier, 15000

Alpha Medical Manufacturing (AMM), located in Punta Gorda, Florida, produces medical devices for orthopedic surgery including replacement parts for human knees, hips, and elbows, and surgical tools. One product they assemble in their factory is a special aluminum-alloy surgical screw used to anchor human tissue to the bone. The screw consists of four component parts, one being the aluminum alloy while the other three parts are made of medical grade plastics. AMM is evaluating three Tier 1 suppliers to manufacture the aluminum part of the orthopedic screw. Annual demand for this item is 40,000 units per year, with 365 days in a year. Other information is shown in the table below. What supplier and order quantity do you recommend based on these total costs?

Boston Medical Supplier, 20000

What is one tactic to mitigate the risk involved with logistics and scheduling risks?

Increase quality control inspections

Which of the following is NOT an advantage of import tariffs?

Less competitive pressure on domestic firms to improve.

_____ is the discipline of managing the flow of materials and transportation activities to ensure adequate customer service at reasonable cost.

Logistics

What is logistics?

Logistics is the management of transportation activities and the flow of materials within a supply chain to ensure adequate customer service at reasonable cost.

Which of the following is a disadvantage of import tariffs?

More expensive goods and services

_____ is the supply chain function responsible for acquiring raw materials, component parts, tools, services, and other items required from external suppliers.

Procurement

Which statement is true of purchasing?

Purchasing can have a significant impact on total supply chain costs.

What is one tactic to mitigate the risk involved with inventory risks?

Reduce lead times

_____ specialize in handling all aspects of customers giving back a manufactured good or delivered service and requesting their money back, repairing the manufactured good and giving it to the customer, and/or invoking the service guarantee.

Return facilitators

Logistics play a key role both externally, by _____ , and internally, by _____.

satisfying customers' needs and expectations; leading to efficiency in supply chain performance

E-commerce system downtime is an example of a(n) _____ risk. Goods and service obsolescence is an example of a(n) _____ risk.

security; product

_____ and ______ are both examples of the responsibilities of a logistics manager regarding purchasing transportation services.

selecting appropriate modes of shipment and mix of specific carriers; negotiating transportation rates, and shipping, insurance, and liability contracts

In the context of the metrics used to identify improvements to the operation of supply chains, financial measures

show how supply chain performance affects the bottom line.