supply chain multiple choice answers

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

A) cost-based price model

76) The main trait of a single-period model is that A) inventory has limited value after a certain period of time. B) it has the largest EOQ sizes. C) the order quantity should usually equal the expected value of demand. D) supply is limited. E) inventory has substantial value after a certain period of time.

A) inventory has limited value after a certain period of time

50) Keeping a product generic as long as possible before customizing is known as A) postponement. B) keiretsu. C) vendor-managed inventory. D) forward integration. E) backward integration.

A) postponement.

64) An advantage of a joint venture over vertical integration is A) reduced risk. B) reduced costs. C) compromised competitive advantages. D) globalization. E) flexibility.

A) reduced risk.

61) Japanese manufacturers often take a middle ground between purchasing from a few suppliers and vertical integration. This approach is A) kanban. B) keiretsu. C) samurai. D) poka-yoke. E) kaizen.

B) keiretsu.

37) Visibility throughout the supply chain is a requirement among supply-chain members for A) mutual agreement on goals. B) mutual trust. C) compatible organizational cultures. D) local optimization. E) the bullwhip effect.

B) mutual trust.

44) One dollar saved in purchasing is A) equivalent to a dollar earned in sales revenue. B) worth even more than a dollar earned in sales revenue. C) worth slightly more than a dollar earned because of taxes. D) worth from 35% in the technical instrument industry to 70% in the food products industry. E) only worthwhile if you are in the 50% tax bracket and still have a low profit margin.

B) worth even more than a dollar earned in sales revenue.

29) Which of the following statements is most accurate? A) Nearly all outsourcing relationships do not last beyond two years. B) Nearly all U.S. firms that outsourced processes to India have backsourced them. C) Approximately half of all outsourcing agreements fail. D) Outsourcing is a relatively risk-free activity. E) More than 90% of outsourcing agreements succeed.

C) Approximately half of all outsourcing agreements fail.

87) Which one of the following distribution systems offers quickness and reliability when emergency supplies are needed overseas? A) trucking B) railroads C) airfreight D) waterways E) pipelines

C) airfreight

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

C) backward integration.

65) When Daimler and BMW pooled resources to develop standardized auto components the supply-chain strategy could best be described by A) keiretsu. B) virtual companies. C) joint venture. D) vertical integration. E) few suppliers.

C) joint venture.

35) The practice of choosing an external provider in the home country or in a nearby country is referred to as A) homeshoring. B) homesourcing. C) nearshoring. D) nearsourcing. E) backsourcing.

C) nearshoring.

23) What is the practice of moving a business process to a foreign country but retaining control of it? A) exporting B) farshoring C) offshoring D) outsourcing E) backsourcing

C) offshoring

48) The Institute for Supply Management A) establishes laws and regulations for supply management. B) is an agency of the United Nations charged with promoting ethical conduct globally. C) publishes the principles and standards for ethical supply management conduct. D) prohibits backward integration into developing economies. E) is an agency of NAFTA's Ethics Bureau.

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

27) What theory states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can? A) theory of competitive advantage B) theory of core competencies C) theory of comparative advantage D) theory of outsourcing E) theory of offshoring

C) theory of comparative advantage

54) Which of the following is not an advantage of the "few suppliers" concept? A) suppliers' willingness to participate in JIT systems B) trust C) vulnerability of trade secrets D) creation of value by allowing suppliers to have economies of scale E) suppliers' willingness to provide technological expertise

C) vulnerability of trade secrets

30) According to research, which of the following is the most common reason cited for outsourcing failure? A) core competencies identified as non-core B) erratic power grids in foreign countries C) unable to control product development, schedules, and quality D) decisions made without sufficient understanding of the options through analysis E) political and exchange rate uncertainty

D) decisions made without sufficient understanding of the options through analysis

74) A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing A) postponement. B) cross-docking. C) channel assembly. D) drop shipping. E) float reduction.

D) drop shipping.

71) Which of the following is not an opportunity for effective management in the supply chain? A) accurate "pull" data B) vendor-managed inventory C) postponement D) local optimization E) channel assembly

D) local optimization

38) Which of the following is not an advantage of outsourcing? A) cost savings B) gaining outside expertise C) improving operations and service D) outsourcing core competencies E) gaining outside technology

D) outsourcing core competencies

51) Which one of the following is not a supply-chain strategy? A) negotiation with many suppliers B) vertical integration C) keiretsu D) short-term relationships with few suppliers E) virtual companies

D) short-term relationships with few suppliers

46) Outsourcing A) transfers traditional internal activities to outside vendors. B) utilizes the efficiency which comes with specialization. C) lets the outsourcing firm focus on its key success factors. D) None of the above are true of outsourcing. E) All of the above are true of outsourcing.

E) All of the above are true of outsourcing.

82) What term is used to describe the outsourcing of logistics? A) E-Logistics B) Shipper Managed Inventory (SMI) C) Hollow Logistics D) Sub-Logistics E) Third-Party Logistics

E) Third-Party Logistics

91) Which of the following devices represents an opportunity for technology to improve security of container shipments? A) devices that identify truck and container location B) devices that sense motion C) devices that measure radiation or temperature D) devices that can communicate the breaking of a container lock or seal E) all of the above

E) all of the above

68) The "bullwhip" effect A) occurs as orders are relayed from retailers to wholesalers. B) results in increasing fluctuations at each step of the sequence. C) increases the costs associated with inventory in the supply chain. D) occurs because of distortions in information in the supply chain. E) all of the above.

E) all of the above.

25) Outsourcing manufacturing is also known as A) licence manufacturing. B) sublease manufacturing. C) concurrent manufacturing. D) hollow manufacturing. E) contract manufacturing.

E) contract manufacturing.

40) Advantages of outsourcing do not include A) cost savings. B) outside expertise. C) renewed focus on core competencies. D) gaining outside technologies. E) creating future competition.

E) creating future competition.

58. Which of the following statements regarding the production order quantity model is true? a. It applies only to items produced in the firm's own production departments. b. It relaxes the assumption that all the order quantity is received at one time. c. It relaxes the assumption that the demand rate is constant. d. It minimizes the total production costs. e. It minimizes inventory

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

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

b. increased by less than 50%

36. Cycle counting a. is a process by which inventory records are verified once a year b. provides a measure of inventory accuracy c. provides a measure of inventory turnover d. assumes that all inventory records must be verified with the same frequency e. assumes that the most frequently used items must be counted more frequently

b. provides a measure of inventory accuracy

34. ABC analysis is based upon the principle that a. all items in inventory must be monitored very closely b. there are usually a few critical items, and many items which are less critical c. an item is critical if its usage is high d. more time should be spent on class "C" items because there are more of them e. an item is critical if its unit price is high

b. there are usually a few critical items, and many items which are less critical

86) An advantage of the fixed-period inventory system is that A) safety stock will be lower than it would be under a fixed-quantity inventory system. B) there is no physical count of inventory items when an item is withdrawn. C) no inventory records are required. D) orders usually are for smaller order quantities. E) the average inventory level is reduced.

b. there is no physical count of inventory items when an item is withdrawn

44. A certain type of computer costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? a. 16 b. 70 c. 110 d. 183 e. 600

c. 110

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

c. timing and quantity of orders

32) Which of the following statements about ABC analysis is false? A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. B) In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers. C) In ABC analysis, "C" Items have minimal records, periodic review, and simple controls. D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. E) In ABC analysis, "B" items are not as tightly controlled as "A" items.

d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.---

70) If demand is not uniform and constant, then stockout risks can be controlled by A) increasing the EOQ. B) placing an extra order. C) raising the selling price to reduce demand. D) adding safety stock. E) reducing the reorder point.

d. adding safety stock

31. Which of the following is not one of the four main types of inventory? a. raw material inventory b. work-in-process inventory c. maintenance/repair/operating supply inventory d. safety stock inventory e. All of these are main types of inventory.

d. safety stock inventory

81) A disadvantage of the fixed-period inventory system is that A) it involves higher ordering costs than the fixed quantity inventory system. B) additional inventory records are required. C) the average inventory level is decreased. D) since there is no count of inventory during the review period, a stockout is possible. E) orders usually are for larger quantities.

d. since there is no count of inventory during the review period, a stockout is possibleb. there is no physical count of inventory items when an item is withdrawn

40) Which of the following is not an element of inventory holding costs? A) housing costs B) material handling costs C) investment costs D) pilferage, scrap, and obsolescence E) advertising costs

e. All of the above are elements of inventory holding cost.

67) Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? A) about 18 B) about 24 C) about 32 D) about 38 E) more than 40

e. more than 40

62) Which category of inventory holding costs is much higher than average for rapid-change industries such as PCs and cell phones? A) housing costs B) material handling costs C) labour cost D) parts cost E) pilferage, scrap, and obsolescence

e. pilferage, scrap, and obsolescence