MGT 333 Exam 2 Study Guide

What are the three steps of a JIT production process?

Compliance to quality standards Worker responsibility Build-in quality

True or false: Price changes for parts and components are high and more frequent than raw materials.

False

Small suppliers can offer the benefits of

flexibility. speed of response. product availability.

Inventories are maintained by organizations

to provide and maintain good customer service. to smooth the flow of goods through the production process. to provide protection against the uncertainties of supply and demand. to obtain a reasonable utilization of people and equipment.

Logistics is the management of inventory in motion and at rest.

true

Forecasts are typically _____________, continuous improvement methods can help increase accuracy.

wrong

During an RFI there are signification costs involved, these should be the responsibility of the

requesting organization.

A request for information serves the purpose of

signaling a potential supplier has been identified. allowing a supplier to express interest in a business relationship.

Supplier selection decisions can involve more than information, other considerations are

single vs multiple sourcing. geographical locations. manufacturer vs distributer. supplier size.

Two traditional methods for establishing prices are

the cost approach. the market approach

Reduced cycle times and more responsive acquisition methods are the direct efforts of

the reengineering work of supply processes.

Which of the following statements supports single sourcing:

the use of just-in-time production

Class A Class B Class C

10% of items in inventory 70-80% of total inventory dollars 10-20% of items in inventory 10-15% of total inventory dollars 70-80% of items in inventory 10-20% of total inventory dollars

The supply manager for ABC manufacturing should ensure that a single customer is purchasing no more than ________ to _________ of their product.

20 30

Annual cost for inventory range from __________ of the total value of the inventory.

25-50%

Safety problems should be ________ and are a key element in the transportation and logistics strategy.

Avoided

The supply manager has reached out to manager for the marketing department for information concerning a potential supplier. What form information source was utilized?

Colleagues

The lowest price that ensures a continuous supply of the proper quality where and when needed and allows the supplier to make a reasonable profit, is commonly known as:

a fair price.

Buyers should _________carriers with financial difficulties.

avoid

Canadian pricing legislation applies to

buyers. sellers.

Most service contracts

can contain limitations for cost and time. estimate time required to complete. may quote based on percentage of total job cost.

A cost-plus-fixed-fee is used when future costs_________ be predicted.

cannot

Reciprocity is a "fact of life" in business and should be embraced by all

companies

ABC manufacturing has set the price for a popular component at 10% over direct costs, this is a _________approach for pricing.

cost

When no extra is reimbursed above actual cost, this is a

cost-no-fee.

Bypassing distributors and purchasing from the manufacturer in the supply chain is known as

disintermediation

What are the types of qualitative forecasts?

Delphi technique Market Collective opinion

compressed cycle times and proper material coordination will allow supply managers to place more____________orders.

Efficient

An escalator clause provides for an increase, but not a decrease, in price if costs change.

False

Canceling a contract for a technicality when market prices are falling is considered an acceptable and ethical practice.

False

Marine transport is best suited for products of high value and/or extremely perishable.

False

True or false: Forecasting of services is an easier process than that of tangible goods.

False

What are the implications for JIT managed systems?

Frequent delivery of small orders. Fewer local suppliers. Supplier training and cooperation is required. Suppliers must deliver high and consistent quality.

Which of the following is not typically true of dual sourcing using the "70-30" approach?

Frequently used when time to market is critical

Basic elements for determining carrying cost include

Inventory risk costs inventory service costs Capital costs Stage space costs

Which system is designed to have components, materials, and services arrive at work centers exactly as needed?

JIT

High-volume purchases are typically fulfilled by

Large Suppliers

Forecasts provide managers with a way to make decisions before actual requirements are known, which forecasts should be considered when making purchase decisions?

Lead Times Demand Prices

What are the four basic lot-sizing rules for MRP systems?

Lot-for-lot Least total cost (LTC) Economic order quantity (EOQ) Least Unit Cost

What options do supply managers have to meet organizational needs?

Make the product in house. Purchase the product from a current supplier. Purchase the product from a new supply source.

Basic transportation modes include truck,____ , air,_____ , and pipeline.

Marine Rail

What are the types of qualitative forecasts?

Market Collective Opinion Delphi Technique

All of following are recognized as typical advantages of local buying with the exception of:

Provides the lowest risk of shortages (compare to buying at national level for example)

A key factor in determining how the logistics department will be run is based on the_______ of the organization.

Size

A(n) _________ clause provides for either an increase or decrease in price if costs change.

escalator

Which act restricts conspiracy, collusion, or a combination of in regards to interstate commerce?

The Sherman Antitrust Act

A contract that specifies FOB Destination, freight prepaid means that:

The seller owns the goods while in transit up to the destination point, and will fill any claims in case of lost or damaged freight

True or false: One suppliers finished goods can become the purchaser's raw material.

True

The supply manager for ABC manufacturing has chosen to end the contract with a supplier due to falling market prices, is the justified or unjustified.

Unjustified

What type of inventory that is managed by the supplier and at a minimum means the supplier determines when to replenish and how much to replenish?

VMI

Supply managers must ensure that all required materials or parts meet quality standards and are available when needed by establishing a______ price for purchases.

fair

Contract cancellations normally happen when prices ________

fall

Assurance of supply is an argument that favors single sourcing.

false

Compared to other modes of transportation, motor carriers provide the advantage of:

having the flexibility of delivering point-to-point service.

Capital assets have a_______ dollar value

high

Marine carriers are also referred to as

international deep sea transport.

Advantages of rail services includes

lower variable costs. energy efficiency.

Private fleets are a type of

make-or-buy decision.

The prices for raw materials are driven by______ prices.

market

Small suppliers:

often provide the greatest responsiveness, flexibility and higher loyalty

What five areas can supply manager focus on for reduced complexity and exploitation of economies of scale?

product design order fulfillment procurement manufacturing manufacturing planning

Which of the following is a typical consideration in favor of multiple sourcing?

protection against negative events (natural disasters or strikes)

Traditional MRP systems were designed to support push systems.

push

Supplier evaluations include evaluation criteria to assess

quantity delivery times.

Supplier evaluations include evaluation criteria to assess

quantity delivery times

MRP systems give organizations the ability of

rapid rescheduling. rapid replanning.

Onshoring sources can be

regional. local. national.

Pricing for capital asset purchases can be accomplished by

request for proposals. competitive bidding. negotiation.

Manufacturers typically rely on________ for purchasing parts, components, and packing.

salepeople

There are_______general classes of purchases.

seven

_________can offer advice, expertise, or information to help inexperienced buyers with transportation concerns.

shippers

Inventories often exist

to makeup for problems in the supply chain.

Organizations operating under a just-in-time system, prefer to ship by:

truck

The supply manager uses a just-in-time system and has numerous local suppliers, the preferred mode of transportation is

truck

In the long run, a firm must recover all costs or go out of business. In other words, facilities and machinery must be maintained, modernized, and replaced

true

Logistics costs can be divided into three categories: inventory carrying costs, administrative costs, and transportation (with transportation costs accounting for the bulk of the costs).

true

When price are established using the market approach, prices may not be directly related to costs.

true

The Pareto curve is often called the - rule, or ABC analysis.

80-20 rule

Which is the correct total cost formula?

TC = RC + RS/Q + QKC/2

The supply manager for ABC manufacturing needs to purchase goods where demand is irregular, who should he use to purchase the goods from?

A distributor

The correct statement describing a general condition of economic competition is:

Mopoly is the condition when there is only one provider in the market, and he will be able to charge the price that will best fit his interest

What geographical decisions must supply managers make?

Offshoring of suppliers. Reshoring suppliers. Onshoring of suppliers.

Which supply information source must be carefully vetted for accurate and relevant information?

Online resources

What are some options for price changes?

Price protection clause Escalator clause Guarantee against price decline Most-favored-customer clause

Although deregulation has reshaped the transportation industry, the usual term carriers are categorized under are

Private Common Exempt Contract

The _________or________ assumes that the supplier can meet all specification requirements.

RFQ RFB

The ______________ states that suppliers offer the same item to all customers for the same price.

Robinson-Patman Act

Using air as the main mode of transportation offers the organization the benefit of

Speed

What are two classes of quantitative forecasting?

Time series Causal models

True or false: MRP allows for how much and when to order decisions to be made simultaneously.

True

Transportation and logistics decisions must be made while determining the impact on

Use of capital inventory levels carrying cost

Governments can take an _______role in determining prices.

active

A transportation strategy should include consideration of:

all of the above

If the delivery date is some months or years away and if there is substantial chance of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a:

firm-fixed-price (FFP).

What are two classes of quantitative forecasting?

causal models time series

Transportation service provider categories are

customs house brokers. Brokers freight forwarders.

The market can affect the pricing of commodities on a ______ basis.

daily

Governments typically play no role in establishing prices or regulating how buyers and sellers are allowed to behave in agreeing on prices.

false

Rail is the most flexible mode of transportation and accounts for approximately 80 percent of transportation expenditures by U.S. firms.

false

The use of just-in-time, stockless buying or systems contracting favors the use of multiple sourcing.

false

True or false: Once a fair price is established, that is the price all buyers will pay.

false

Distributors, wholesalers, and retailers:

may provide more valuable services than a manufacturer.

The cost approach to pricing:

means prices are set to cover direct costs, contribute to indirect costs, and provide a profit.

When providing a service, price_______ is more common to determine a price.

negotiation

Serious requests that ask the supplier to specify pricing and terms are called

request for quotation (RFQ).

Transportation costs increase as distance, quantity, and speed increase.

speed

MRP planning is typically mapped out over

the next year.

The selection of the FOB point is important to the purchaser, because it determines:

who pays the carrier, when legal title to goods being shipped passes to the buyer, who is responsible for preparing and pursuing loss or damage claims and who routes the freight.

True or false: Only single source suppliers can be used for procurement.

False

This class of quantitative forecasts uses linear or multiple regression lines from leading indicators.

Causal models

organizations who use intermodal systems gain the benefit of shorter terminal delays

long-haul economics combined with door-to-door trucking ability less handling damage shorter terminal delays

Items for which prices are comparatively low and the cost of price reduction efforts may exceed any price savings realized are:

maintenance, repair, and operating supplies.

A________ -___________-____________ clause is a contractual arrangement between vendor and customer that guarantees the customer the best price the vendor gives to anyone.

most favored customer

Evaluation of suppliers requires a collection of data from the areas of

overall relationship with the supplier. technical/strategic. finance management

True or false: In the event a product cannot be sourced with current or new suppliers and cannot be produced in house, supply managers can seek alternative products to meet requirements.

true

True or false: With every transportation decision there are advantages and disadvantages to take into consideration.

true

World class supply management has to develop a strategic sourcing plan that details how supply management will discover, evaluate, select, develop and manage a viable supplier base.

true

Along with price, analysis of suppliers' costs is also dependent upon the________ of product being sourced.

type