SCMT 3613 Final
Given that the fixed costs for the Make and Buy are $75,000 and $1,500, respectively, and the variable costs are $4 and $9, respectively, what would be the break-even point?
14,700 units
Assuming actual demand for period 5 is 16000, what would be the forecast for period 6 using the exponential smoothing method? Assume the forecast for period 5 is 14000. Use a smoothing constant of α = 0.4 (Choose the closest answer)
14,800
The annual demand of a manufacturing component used in company EZ Tech is 42,000 units. The cost of the component is $63 and holding costs (which includes storage, insurance, and cost of capital) are 39% of the unit cost. Each time an order is placed the company expects to incur costs, such as administrative and receiving, of $270. The supplier lead time is 10 days and the company operates with even production 365 days a year. Calculate the total annual cost (TAC) for this component based on the EOQ calculation (TAC = total purchase, holding and order costs). Before calculating total order cost, round the number of orders up to the closest whole number. Choose the closest answer from the list below
2,669,686
Hiam, your boss, believes that advertising spend and household income are driving demand for the company's products, and have done so consistently over time. She modeled a regression that produced an equation Y = 2470 + 130(advertising spend) + 15(household income) with an r-square of 0.27. What fraction of the variability in demand is explained by household income and advertising spend?
27%
In the absence of demand and delivery lead time variation, if demand is eight per day and purchase lead time is four days, the reorder point is:
32
The annual demand of a manufacturing component used in company Bent Safetywear Ltd is 32,000 units. The cost of the component is $38, and holding costs (which includes storage, insurance, and cost of capital) are 35% of the unit cost. Each time an order is placed, the company expects to incur costs, such as administrative and receiving, of $30. The supplier lead time is 5 days. Calculate the economic order quantity.
380
If a company is effectively focusing on its core competencies, its level of outsourcing is likely to increase.
True
If companies cannot show some financial benefit from sustainable sourcing policies, then ultimately these efforts will fail
True
If stock-out costs are unknown, the safety stock level must be determined statistically
True
If the break-even point in a typical make-buy scenario is 10,000 units and 15,000 units are required, then the firm should choose to make.
True
In modern supply chain management, a firm in a supply chain focuses its activities in its area of specialization, entering into voluntary and trust-based relationships with supplier and customer firms to maximize customer value.
True
In order for supply chain integration to be successful, suppliers must be able to accurately forecast demand.
True
In the product view, quality is determined objectively.
True
In the user view, quality is viewed as a quantifiable or measurable characteristic or attribute.
True
Increasingly, certifications are being deployed to encourage businesses to provide for the public good, even while deriving private benefit.
True
Independent demand is the demand for a firm's end products and has a demand pattern affected by trends, seasonal patterns and general market conditions
True
It is difficult to clearly distinguish where purchasing activities end and the supply management function begins.
True
Lois is a sleazy procurement agent who is out to manipulate and trick suppliers. According to the virtue ethics point of view, even when Lois's actions do not harm people, she is still unethical.
True
Many alliances and partnerships have failed because objectives are not well aligned or are overly optimistic.
True
Markets for functional products are characterized by high levels of competition, markets for innovative products are characterized by a relatively low level of competition.
True
Military actions is a supply base political risk
True
Multiple suppliers usually have more information about market conditions, new product developments and new process technologies. This is particularly important if the product has a short product life cycle.
True
Payment bonds protect the buyer against any third-party liens not fulfilled by the bidder.
True
Purchasing departments can be seen as a primary designer and facilitator of important inward- and outward-facing sourcing policies.
True
Purchasing is the crucial link between the sources of supply and the organization itself, with support coming from overlapping activities to enhance manufacturability for both the customer and the supplier.
True
Quality costs are real and estimated at 25% of costs in manufacturing.
True
Since a forecast is a prediction of the future, factors that influence demand, the impact of these factors, and whether they will continue to influence future demand, must be considered in developing an accurate forecast.
True
Strategic suppliers are trusted partners and become an integral part of the firm's design and production efforts.
True
Successful partners are committed to continuously looking for opportunities to grow their businesses together.
True
Supplier codes of conduct usually address worker age requirements and hours of work.
True
Suppliers must be sufficiently flexible to respond quickly to changing customer requirements.
True
Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.
True
The Acceptable quality level (AQL) is associated with a producer's risk.
True
The Make or Buy decision is a strategic decision for a firm.
True
The TQM view of manufacturing quality finds the lowest total cost of quality at the point of "zero defects."
True
The UN Global Compact states that businesses should uphold the elimination of discrimination in employment and occupation.
True
The amplified levels of demand caused by the bullwhip effect cause problems with capacity planning, inventory control, workforce and production scheduling and ultimately result in lower levels of customer service, greater overall levels of safety stock and higher total supply chain costs.
True
The number of suppliers to use for one type of purchase has changed from the traditional multiple suppliers to the use of fewer reliable suppliers and even to the extent of using single supplier.
True
The total annual inventory cost is the sum of the annual purchase cost, the annual holding cost and the annual order cost
True
Third-party intermediary is a contingency management tool
True
To determine which forecasting technique is best for a set of data, the forecast error must be measured.
True
Under the decentralized system, when different units purchase the same material, a situation may be created in which units are competing among themselves, especially when scarce materials are purchased from the same supplier
True
When demand and lead time are constant, reorder point is the demand during lead time.
True
When the order size for an item is large, orders are placed less frequently, causing lower annual order costs. However, that causes the average inventory level for this item to be high, resulting in higher annual expenses to hold the inventory
True
In the United States, if a businessperson brought an elaborately wrapped gift to a prospective client on their first meeting, it might be viewed as
Appropriate Expected A bribe*** A gift Normal
Building a sustainable environment includes:
Developing a green supply chain Omitting hazardous emissions Both developing a green supply chain and omitting hazardous emissions*** Writing a code of ethics
Some key disadvantages when using third-party logistics (3PL) providers include all of the following EXCEPT:
Diminished control over the logistics process Loss of communication with customers and suppliers The potential spread of confidential information to customers and suppliers Lessened reputational risk with customers***
______________ are those that are directly traceable to the unit produced, such as the amount of materials and labor used to produce a unit of the finished good
Direct costs
Firms engaging in supply chain management emphasize long-term strategic supplier alliances by increasing the variety of purchased items and spreading volume over larger numbers of suppliers.
False
Independent demand is the internal demand for parts based on the demand of the final product in which the parts are used
False
Industrial buyers generally work in wholesale and retail firms and primarily purchase for resale purposes.
False
MTBF stands for Measured Time Based on Factories.
False
Morals are the standards by which behaviors are evaluated for their rightness or wrongness
False
Pareto Analysis is an inventory model used to determine the optimal order size that minimizes total annual inventory costs.
False
Quality costs are real and estimated at 55% of costs in manufacturing.
False
Suppliers that remain following a customer's supply rationalization program benefit from less pressure to conform to quality standards.
False
The WTO is a trade organization seeking to establish trade barriers that will protect member countries by excluding nations that pose an economic threat.
False
The degree to which a product or service satisfies its intended purpose is determined by design, conformance to design, cost, and reputation of the producer.
False
Which of the following statements about the basic EOQ model is false?
If annual demand were to double, the EOQ would also double. If annual demand were to increase, the EOQ would increase. If the setup cost were to decrease, the EOQ would fall. If the ordering cost were to increase, the EOQ would rise.
Which of the following statements is false?
If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a weighted moving average over the conventional simple moving average. *When using the weighted moving average, the forecaster may wish to apply the largest weight to the most recent data such that the forecast would be less affected by abrupt changes in recent data.*** The simple moving average approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time. The simple moving average method does not accommodate seasonal, trend, or business cycle influences. An underlying assumption of time-series forecasting is that future demand is solely dependent on past demand.
Which of the following is NOT an example of appraisal costs:
Inspection and testing Test equipment costs Operator costs Scrap costs*** All of these are examples of appraisal costs
The following are all common qualitative forecasting models EXCEPT:
Jury of Executive Opinion Trend Variation*** Delphi Method Sales Force Composite
According to the textbook, advantages of decentralization include all of the following EXCEPT:
Less bureaucracy Common supply base*** Local sourcing Closer knowledge of requirements
According to the textbook, the following are reasons favoring a single supplier EXCEPT:
Less quality variability Transportation economies Spread the risk of supply interruption*** All of these are reasons favoring a single supplier
The costs associated with prediction error can be substantial and include costs. Which of the following is not one of these costs:
Lost sales Safety stock Unsatisfied customers All of these are costs included***
Hard-bargaining sourcing departments focused on decreasing purchasing spend may experience which of the following from their suppliers?
Lower levels of quality from their suppliers Lower levels of service from their suppliers Deteriorating buyer-supplier relationships All of these***
Supply base rationalization programs have benefits. Which of the following is one of these benefits:
Lower overall levels of quality and delivery reliability Fewer supplier management problems*** Fewer interactions between buyer and supplier Increased purchase prices due to quantity discounts
The newsvendor problem is an example of the single period inventory model because inventory is:
Ordered only one time Used only one time May have little value after the period is over All of the above*** None of the above
According to the text, which of the following is not an important element of the supply chain.
Supply Correct Bullwhip*** Logistics Operation
According to the text, which of the following is not an important element of the supply chain:
Supply Suppliers*** Logistics Operations
Improving the capabilities of key trading partners is known as:
Supply base rationalization Supplier selection Strategic alliance development*** Supplier production involvement
Acme Metals decides to reduce its purchases from poorly performing raw materials suppliers and focus future orders with suppliers that have been top-performing in the past. This is an example of:
Supply base rationalization*** Supplier development Top-tier supplier selection Selective sourcing
Harold's Fish Shop decides to reduce its purchases from poorly performing fish suppliers and focus future orders with suppliers that have been top-performing in the past. This is an example of:
Supply base rationalization*** Supplier development Top-tier supplier selection Selective sourcing
Which of the following statements is FALSE:
Time Series forecasting is based on the assumption that the future is an extension of the past *Time Series forecasting assumes that one or more factors are related to demand and, therefore, can be used to predict future demand*** All quantitative methods become less accurate as the forecast's time horizon increases It is generally recommended to use a combination of both quantitative and qualitative methods
A code of conduct is a set of rules that define acceptable and unacceptable behavior for organizations
True
A responsible bid is one that is capable and willing to perform the work as specified.
True
A supply chain risk management position should be created to oversee and coordinate the firm's risk management efforts.
True
A weakness of the simple moving average method is its inability to respond to trend changes quickly.
True
Acceptance sampling is most useful when the cost consequences of passing defectives are low.
True
According to the ISM ethical standards, it is unethical for a purchasing team member to have a personal or financial relationship with a supplier or an employee of a supplier.
True
According to the textbook, 'integration' is one of the four supply chain elements.
True
Blank check purchase orders, corporate purchasing cards, Petty cash, and Open-end purchase orders are all possible alternatives to dealing with small value purchases such as those for office supplies.
True
Breakeven analysis is NOT the only way to determine the answer to the Make or Buy problem.
True
Costs associated with poor quality are also referred to as the cost of nonconformance, or failure costs.
True
Geographical location is an important factor in supplier selection, as it impacts delivery lead-time, transportation and logistical costs.
True
The ability of a sampling plan to discriminate between lots of high quality and lots of low quality is described by:
an operating characteristic curve
Warranty service, processing of complaints, and costs of litigation are examples of ___.
external failure costs
Sales returns and allowances due to a quality deficiency is an example of:
external failure costs.
Which of the following is not a disadvantage of cycle counting?
fails to identify obsolete stocks
Good supplier relations can provide many benefits, except:
flexibility in terms of delivery better quality better information better material flows between buyers and suppliers. all of these are benefits***
As the uncertainty of supply or demand grows, the required level of safety inventories
increases
The trade-off that a supply chain manager must consider when planning safety inventory is
increasing product availability versus increasing inventory holding costs.
The measure of forecast error where the absolute amount of error of each forecast is averaged is
mean absolute deviation (MAD).
The measure of forecast error where the amount of error of each forecast is squared and then an average is calculated is
mean squared error (MSE).
Acceptance sampling plans might call for selection of:
one or more samples
The inventory position is defined as
the total of the on-hand inventory plus the on-order inventory less your customer's backorders.
Making sure a product's size meets established specifications is an example of a quality dimension known as:
Conformance
The degree to which a product's design and operating characteristics meet established standards is known as:
Conformance
Which of the following are considered outcomes of implementing a supplier evaluation and selection criteria?
Allows firm to screen out poor performing suppliers in its present supplier base. Allows firm to screen out undesirable suppliers that they may be considering for future purchases. Allows firm and its suppliers to develop a better corporate relationship All of these***
Benefits derived from implementing an e-procurement system include all of the following except:
Benefits to the supplier Trackability Liability*** Time savings
Which of the following is NOT a reason to make versus outsource (buy)?
Better Quality control More control of lead-time transportation Lack of in-house expertise*** Protect proprietary technology
Match this statement to the ISM Ethical Standards: Champion social responsibility and sustainability practices in supply management.
CONFIDENTIAL AND PROPRIETARY INFORMATION SUPPLIER AND CUSTOMER RELATIONSHIPS SUSTAINABILITY AND SOCIAL RESPONSIBILITY*** APPLICABLE LAWS, REGULATIONS AND TRADE AGREEMENTS
A supplier of a component part has offered Karen's family a free two-week cruise if his firm gets a very large order from Karen's company, this is an ethical issue related to:
CONFLICT OF INTEREST CONFIDENTIAL AND PROPRIETARY INFORMATION INFLUENCE*** IMPROPRIETY
A follow-up is considered a reactive approach that is used to speed up an overdue shipment, whereas expediting is considered a proactive approach to prevent late delivery.
False
According to the ISM ethical standards, it is ethical for the purchasing team to use a supplier selection criteria that is different than the criteria noted to the suppliers.
False
According to the textbook, probably the biggest supporter and enabler of sustainable supply chains is Walgreens.
False
Activities aimed at fostering buyer-supplier partnerships and increasing the performance and value of suppliers are simply easier with a large supply base.
False
Deterministic models require a probability distribution of demand and/or lead time
False
Direct costs are those that cannot be traced directly to the unit produced and they are synonymous with manufacturing overhead
False
Disaggregate forecasts are usually more accurate than aggregate forecasts, as they tend to have a smaller standard deviation of error relative to the mean.
False
Trends in supply chain management include increasing inventory levels and considering the elimination of logistics-intensive online retailing.
False
When firms develop their own formal certification programs, they have to include ISO 14000 environmental certification
False
The Montreal Protocol sets standards limiting emissions of CFCs. This is an example of what kind of standard?
Global and Public/Mandatory*** Global and Private/Voluntary Regional and Public/Mandatory Regional and Private/Voluntary
Making exaggerated or misleading environmental claims for products is called ______________.
Greenwashing
Dependent demand and independent demand items differ in that I. For any product, all components are dependent-demand items II. The need for independent-demand items is forecast III. The need for dependent-demand items is calculated
I, II & III
Match this statement to the ISM Ethical Standards: Ensure that any personal, business and other activities do not conflict with the lawful interests of your employer.
IMPROPRIETY CONFLICT OF INTEREST*** INFLUENCE RECIPROCITY
According to the textbook, which of the following is NOT a Supply Chain Risk Management activity:
Identify backup suppliers and logistics services Use a supply base in which the suppliers are all from the same region*** Utilize a supply chain IT system All of these are Supply Chain Risk Management activities
According to the textbook, which of the following is NOT a Supply Chain Risk Management activity:
Identify backup suppliers and logistics services Use a supply base in which the suppliers are all from the same region*** Utilize a supply chain IT system All of these are Supply Chain Risk Management activities
A certain supply chain is made up, in this order, of a Raw Materials Supplier, a Components Manufacturer, a firm that manufactures Sub-assemblies, an End Item Manufacturer, a Wholesale Distributor, and a Local Retail Chain Warehouse. Which firm is considered the third tier supplier of the Local Retail Chain Warehouse?
Raw Materials Supplier Wholesale Distributor End Item Manufacturer Components Manufacturer Manufacturer of Sub-assemblies***
A certain supply chain is made up, in this order, of a Raw Materials Supplier, a Components Manufacturer, a firm that manufactures Sub-assemblies, an End Item Manufacturer, a Wholesale Distributor, and a Local Retail Chain Warehouse. Which firm is considered the second tier supplier of the End Item Manufacturer?
Raw Materials Supplier Wholesale Distributor The final end item consumer Components Manufacturer*** Local Retail Chain Warehouse
According to the textbook, which of the following is considered the focal firm:
Raw material suppliers Intermediate component manufacturers Correct Wholesale distributors Retailers End-product manufacturers***
___________ is an internal document initiated by the material user to request materials from the warehouse or purchasing department.
Recyclable requisition Material requisition*** Request for proposal Open requisition
As described by leading company managers in the chapter opening Supply Chain Management in Action feature, which benefits of collaboration and information sharing between trading partners can be significant?
Reduce supply chain costs Fewer process problems Better utilization of resources All of these***
One common Cause-and-Effect Model used is:
Regression analysis*** Linear Trend Forecast Moving Average Forecast Mean Absolute Deviation
The ___________ is a financial ratio of a firm's net income in relation to its total assets.
Return on Assets
The practice of business ethics is also referred to as:
Rights and duties Corporate social responsibility*** Utilitarianism Social sustainability
According to the text book, which of the following is NOT an activity causing the bullwhip effect?
Using varying customer orders to create and update forecasts, production schedules and purchase requirements Making large orders for goods from suppliers on an infrequent basis to reduce order and transportation costs Offering price discounts to buyers, causing erratic buying patterns All of these are activities causing the bullwhip effect***
Which of the following is not one of David Garvin's 5 approaches:
Value-based Transcendental Service-based*** Product-based
In many cases, buyers allow some of their suppliers to observe actual demand, create a forecast and determine their resupply schedules—a practice known as:
Vendor managed inventory
A Type I (alpha) error occurs when:
a good lot is rejected.
The appraisal costs means:
costs of activities designed to ensure quality or uncover defects
Four types of forecast error measures can be used. Which one of the following is not one of the four types?
cumulative sum of forecast errors exponential smoothing for trends*** mean squared error mean absolute deviation
The simple exponential smoothing forecast method is appropriate when
demand has no observable trend or seasonality.
Ruth, your boss, believes that advertising spend and household income are driving demand for the company's products, and have done so consistently over time. You decide to model this relationship in a regression equation where demand is the _________ variable, advertising spend is the __________variable, and household income is the _____________ variable.
dependent, independent, independent
