SCM 460 Exam 2

A company buys 10,000 unique items and has a total annual purchase volume of $10 million. A part with a unit cost of one dollar ($1.00) and an annual volume of 1,000,000 units would be classified as: A) A item B) B item C) C item D) Not enough information

A

Given the following data, what is the reorder point (ROP) quantity? (Assume 5 days in a work week) Safety stock = 40 units Fixed order quantity = 500 units Replenishment lead time = 10 days Demand = 100 units per week A) 240 B) 50 C) 40 D) 500 E) 140

A

In international buying, the type of entity that normally assists in locating suppliers and handling documentation is a(n): A) import broker. B) sales agent. C) import merchant. D) trading company. E) export agent.

A

In terms of corporate social responsibility, the role of supply managers is: A) broadly defined as actions at home and offshore. B) limited because few supply decisions impact issues of social responsibility. C) manipulate the perceptions of consumers. D) limited to supplier selection decisions. E) narrowly defined as actions within the home country, but not offshore.

A

Standardization: A) means agreement on definite sizes, design, and quality. B) is essentially a marketing and sales concept. C) is a reduction in the number of sizes and designs. D) is a selective and commercial problem. E) is an attempt to concentrate production on the most important sizes.

A

TQM and Deming's 14 points stress the importance of: A) focusing on the needs and wants of the end customer and minimizing process variation. B) incoming inspection in quality assurance. C) top management in quality control. D) annual rating or merit systems. E) specialized education for high potential employees.

A

The Foreign Corrupt Practices Act (FCPA): A) allows payment to facilitate the performance of normal duties. B) attempts to persuade other nations to adopt U.S. rules regarding payments to officials. C) allows U.S. firms to prosecute foreign nationals on bribery charges. D) allows U.S. firms to make payments to facilitate normal duties and to make payments to obtain special advantages. E) allows foreign nationals to offer payments to U.S. government officials to expedite trade agreements.

A

The United Nation's Convention for the International Sale of Goods (CISG): A) is an attempt to apply a set of uniform commercial laws to global trade in goods. B) gives legal advantages to less economically developed countries. C) gives legal advantages to more economically developed countries. D) allows multinational companies to circumvent long-standing trade practices. E) replaces most regional trade treaties with a common body of law.

A

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a: A) standard specification. B) performance specification. C) individual specification. D) market grade specification. E) customized specification.

A

When selecting freight carriers, buyers are most concerned with: A) best overall value. B) intermodal capabilities. C) supply chain and delivery speed. D) geographic coverage. E) shipment security.

A

"A" items in ABC analysis are: A) reviewed infrequently. B) particularly critical in financial terms. C) normally carried in large quantities. D) ordered infrequently. E) commonly managed by carrying inventory.

B

A document which is drawn by the buyer's bank at the buyer's request, and guarantees that the bank will pay the agreed-on amount when all prescribed conditions, such as satisfactory delivery, have been completed, is called a: A) bill of material. B) letter of credit. C) bill of exchange. D) a sight draft. E) letter of exchange.

B

A manufacturing process drills holes in a metal component. Engineering has defined the upper specification and the lower specification limits for drilling the hole. The drilling process is a three sigma capable process. What is the long term yield? A) 85.7% B) 93.32% C) 99.38% D) 99.9997%

B

A mode of transportation is: A) a transportation provider that moves goods and/or passengers. B) the means by which people, freight or information gain mobility. C) the means by which tangible goods gain mobility. D) a private business that trucks goods from point A to B. E) Burlington Northern Santa Fe Railway (BNSF).

B

A six sigma (6σ) approach to quality: A) focuses on preventing defects by using customer feedback. B) means there are no more than 6 defects per million opportunities. C) was developed by Japanese companies in the 1950s. D) is very close to zero defects. E) has soft goals such as happier customers and employees.

B

A third party logistics (3PL) services provider: A) is a separate entity that provides management of solely inbound and outbound transportation. B) is a company that is separate from the buyer's and supplier's organizations. C) a subcontractor working with a prime logistics services provider. D) handles only administrative tasks such as auditing and billing. E) handles physical movement of goods, but does not perform administrative tasks.

B

For a bike manufacturer (which sells no service parts), three (3) purchased parts (rim, tire, nuts) put together as a "wheel assembly" is an example of what type of inventory? A) RM B) WIP C) FGI D) MRO

B

Nuts and bolts (hardware) procured from a local JIT vendor, and stored in point-of-use Kanbans on the factory floor, are an example of what type of inventory? A) WIP B) RM C) FGI D) MRO

B

Quality control in services is: A) relatively simple for all types of services. B) especially difficult if the service is highly intangible. C) performed exactly the same for small, medium, and large service providers. D) especially difficult if the service is highly tangible. E) is most easily done on the buyer's premises.

B

Repetitive requirements should be purchased by: A) an ad hoc purchasing process. B) an acquisition process or system. C) a permanent project team representing supply, finance, and operations. D) the user with a purchasing card. E) a commodity management team.

B

When sourcing offshore, a buyer: A) will always state the price in U.S. dollars. B) must have extensive knowledge and analysis of the country. C) normally will let domestic suppliers counter the global supplier's offer. D) may assume that quality control systems and processes are universal. E) will account for unknown risks by adding 10 percent to total cost assessments.

B

When using the EOQ model, increasing the cost of placing an individual order and decreasing the cost of carrying inventory(eg. 12% to 10%), will generally result in: A) Smaller order quantities B) Larger order quantities C) Inaccurate order quantities

B

Which of the following would be a situation that discouraged countertrade? A) shortage of foreign exchange B) well-developed domestic economy. C) shortage of available credit. D) desire to promote labor-intensive exports. E) need to develop export markets for new products.

B

About 70 percent of the opportunity for value improvement lies in: A) need identification. B) specification. C) need identification and specification. D) specification and supplier selection. E) supplier selection and performance evaluation.

C

Capital assets are long-term assets that: A) are bought and sold in the regular course of business. B) have an expected use of less than one year. C) have an ongoing effect on the organization's operations. D) are generally expensed. E) are acquired for fairly small sums of money.

C

Description by brand: A) may be a preference of an internal user, but it is never a necessity. B) is the least risky and lowest cost approach to attaining "best value." C) may be a necessity because the manufacturing process is secret. D) should always be discouraged by the buyer. E) indicates a supplier has unduly influenced someone in the buyer's organization.

C

ISO 9001:2008: A) provides common quality standards across all sectors of the United States economy. B) was established by the International Supply Organization to focus quality efforts on supplier relationships. C) provides guidance for continuous improvement of quality management systems to achieve sustained customer satisfaction. D) was developed and first issued in the United States and later adopted worldwide. E) was designed to recognize U.S. organizations that excel in quality achievements and quality management.

C

In FOB Origin: A) the seller has the responsibility for selecting the carrier. B) the seller has the responsibility for filing any damage claims during transit. C) the buyer gains title of the goods when the carrier signs at point of origin. D) the carrier holds title of the goods during transit. E) the buyer gains title of the goods when the carrier signs at point of destination.

C

In a 2 bin kanban system, the demand is 10 per day, lead time is 8 days, and you want to build in a 3 day safety stock. What is the kanban quantity? (How much will each bin hold?) A) 50 B) 80 C) 110 D) 30

C

One of the advantages of integrated carriers (truck-air) like UPS and Federal Express is that they: A) utilize commercial airlines for air service. B) outsource much of their air network.. C) own their own aircraft. D) rely more on air than ground transportation. E) outsource much of their ground network.

C

The current view of the quality-cost trade-off is best described as: A) There is a high cost associated with high quality. B) There is an optimum level of quality that balances the cost of quality and the number of defects. C) High quality results in the lowest cost to a corporation D) There is no correlation between cost and quality

C

When a specification is formulated by the buying organization, often on the basis of standards set by governmental or technical societies, it is called a(n): A) standard specification. B) performance specification. C) individual specification. D) market grade specification. E) customized specification.

C

You are the purchasing manager and you buy a raw material having the following information: Annual demand = 2000 units Fixed order quantity = 200 units Order cost = $100 / order Inventory carrying cost = 25% Per unit purchase cost = $10 / unit Safety stock = 20 On average, what is the dollar value of inventory that you will have for this material? A) $1,000 B) $1,100 C) $1,200 D) $2,000 E) $2,200

C

A sampling technique that is based on the cumulative effect of information that every additional item in the sample adds as it is inspected is called: A) random sampling. B) sequential sampling. C) 100 percent testing. D) cumulative sampling. E) additive testing.

D

An internal failure cost is: A) warranty costs. B) cost of returns. C) cost of prequalifying suppliers. D) scrap and rework costs. E) all of the above

D

Given the following data: Revenues = $200MM; COGS = 60% of revenues; Cost of carrying inventory = $2.4MM; carrying cost percentage = 20%. What is the value of the inventory turns for this company? [Some helpful info: Cost of carrying inventory = Inventory $ * carrying cost percentage] A) 83.3 B) 50 C) 16.67 D) 10

D

Organizations operating under a just-in-time system, prefer to ship by: A) rail. B) same day air. C) next-day air. D) truck. E) intermodal carriers.

D

The dimension of quality that is most difficult to achieve as complexity increases. A) suitability B) quality C) best buy D) reliability E) functionality

D

What type of inventory is held to account for seasonal demand variations? A) Safety stock B) Cycle stock C) Transit / pipeline D) Anticipation

D

When software is delivered to users by an application service provider (ASP) where the software is housed in one location from which multiple users access it, this is known as: A) On-premise delivery. B) On-command delivery. C) On-need delivery. D) On-demand delivery (through an ASP). E) On-call delivery.

D

Which of the following would encourage counter trade? A) excess foreign exchange. B) readily available credit. C) a strong base of suppliers. D) the need to develop export markets for new products. E) a well-developed domestic economy.

D

A transportation strategy should include consideration of: A) safety on the ground, in the air and on water. B) environmental factors such pollution. C) consolidation of freight. D) alternative transport modes. E) all of the above.

E

Compared to domestic sourcing, when sourcing offshore more lead time may be needed because of: A) inland transportation delays in the supplier's country. B) time needed to procure payment documentation. C) delays in domestic customs. D) delays due to heightened security requirements. E) all of the above.

E

Determination of the "best buy" is based on: A) technical considerations. B) quality issues. C) a balance between price and quality. D) an individual buyer's perceptions. E) a balance of requirements of marketing, engineering, operations, and supply

E

Integrated carriers (truck-air) like UPS and Federal Express are able to capture a larger market share because they: A) utilize their own aircraft. B) have extensive ground networks. C) have accurate, real-time tracking systems. D) b and c. E) a, b and c.

E

Supply chain risks include: A) interruptions to the flow of goods or services. B) actions that lower the company's attractiveness to the investment community. C) lack of regulatory compliance. D) a and c E) a, b, and c

E

The governing convention on shipping terms and responsibilities involved in international transportation is called: A) FOB (Free on Board) terms. B) EXQ (Ex Quay) terms. C) FCA (Free Carrier named place) terms. D) ITAPS (International Transport and Payment Specifications) terms. E) INCOTERMS (International Commercial Terms).

E

The selection of the FOB point is important to the purchaser, for it determines: A) who pays the carrier. B) when legal title to goods being shipped passes to the buyer. C) who is responsible for preparing and pursuing loss or damage claims. D) who routes the freight. E) all of the above.

E

When dealing with an international supplier, a knowledgeable buyer: A) normally will attempt to negotiate a cost-plus-incentive-fee contract. B) will attempt to price in Euro Dollars. C) will normally price in the currency of the seller's country. D) will always state the price in U.S. dollars. E) may decide to deal in international currency options.

E

A requirement typically is considered strategic if: A) revenue enhancement. B) risk reduction. C) access to new technology. D) a and b E) a, b, and c.

E