MKT 367 Exam 2

The selection of the FOB point is important to the purchaser, for 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, who routes the freight

JIT requires frequent deliveries of relatively small quantities in compliance with quality standards

True

Supply's role in logistics may include direct functional responsibility and acquisition of logistics services

True

Telecommunications routes are:

practically unlimited because of few land or sea restraints to laying cable.

If there were 400 requests for a particular item in a year and 372 were immediately satisfied, the service coverage would be 372/400 or 93 percent

True

In fixed quantity inventory models, a fixed economic order quantity is ordered when the reorder point is reached

True

The real costs of quality:

rise significantly as defects increase in the finished product

A transportation strategy should include consideration of:

safety on the ground, in the air and on water, environmental factors such as pollution, consolidation of freight, alternative transport modes

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

standard specification

A corporate travel department determines that employees have been staying in 15 different hotel chains. The Director of Corporate Travel mandates that travelers may only stay in four designated hotel chains. This action is an example of:

simplification

In statistical process control (SPC), specially or assignable causes of variation:

are outside, nonrandom problems such as breakdown of machinery, material variation, or human error

Purchasing by specification typically occurs when:

there are multiple sources for an identical requirement

Transportation rates:

are established primarily through negotiation

On an annual requirement of 100 items spread evenly throughout the year, any purchaser has an opportunity of buying all 100 units at a price of $100 each, or buying 10 units at a time at a price of $130. If the inventory carrying cost is 20 percent per year and assuming no ordering costs:

buying 100 at a time will save the company $2,130 per year

A six sigma approach to quality:

focuses on preventing defects by using data to reduce variation and waste

Managing the consumption of services organization wide:

is difficult because multiple contracts may exist at varying prices and terms with the same suppliers

When the carrying cost of inventory is expresses as a percentage:

it is multiplied by the material unit cost to calculate the per unit carrying cost

A supplier certification program:

may enable the buyer and seller to lower costs and improve quality

Deming's 14 points stress the importance of:

minimizing total cost with a single source

"C" items in ABC analysis are:

ordered frequently

a request for quotation that asks for a "brand or equal"

shifts responsibility for establishing equality or superiority to the bidder

Early supply involvement means:

supply considerations are included during need identification and specification

If a process is stable and predictable:

the probability of it meeting customer specifications can be predicted

Anticipation inventories are carried:

to cover a well-defined future need.

Determination of the "best-buy" is based on:

trade-offs among stakeholders (e.g. marketing, operations and supply)

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

truck

Lean thinking focuses on maximizing profitability while minimizing waste in the form of the costs of quality (scrap, rework, and inspection)

False

Third-party logistics service providers are carriers that always own assets (trucks, airplanes, railcars) and act as intermediaries between trading partners, for example, shippers and carriers

False

Demand for buttons and zippers at a sportswear manufacturer is an example of:

Derived demand

Equipment, real estate, construction, and information technology are examples of capital acquisitions

True

MRO stands for Maintenance, Repair, and Operating Supplies

True

Quality function deployment (QFD) is a comprehensive quality system that seeks both spoken and unspoken customer needs

True

Radio frequency (RF) waves are a mode of transportation for information and carriers for RF waves are air, copper wire and fiberoptic cable

True

Reliability is the mathematical probability that a product will function for a stipulated period of time

True

Logistics is the management of inventory in motion and at rest

True

When a commercial janitorial service company predicts demand for janitorial services using commercial building permits issues, office leasing and vacancy rates, this is an example of:

a casual model

Transportation costs decrease as distance, quantity, and speed increase

False

The three main inputs of a material requirements planning (MRP) system are:

a bill of material, a master production schedule, and the inventory record

An advantage of buying by performance or function over other specification methods is that is provides

the opportunity for the potential to establish how to make the most suitable product/service

To assist in determining what represents acceptable value, a buyer is likely to:

identify the function of a good or service

A formal service quality evaluation process:

measures the gap between service expectations and performance perceptions

With deregulation of the transportation industry and the development of intermodal service, the focus for the transport buyer is:

the carrier's ability to handle multiple parts of the logistics process

Supply's growing involvement in the acquisition of services may be explained by:

the high dollars spent on services and the opportunities to reduce costs

Integrated carriers (truck-air) like UPS and Federal Express are able to capture a larger market share because they:

utilize their own aircraft, have extensive ground networks, have accurate, real time tracking systems

Which statement is most accurate when thinking about deciding how much to buy:

Balancing price, volume, carrying cost, and the cost of stockouts is key to successfully determining how much to buy at any point in time.

Total quality management (TQM) is a philosophy and system of management focused on short-term success through statistical process control

False

New Technology:

frequently enables competitive advantage from product/service differentiation at lower cost

Closed-loop MRP:

is a system which closes the loop between the supplier and the purchaser

Internal failure costs include warranty costs and managerial time handling customer complaints

False

Stockout costs are the same whether it is a seller's market or a buyer's market

False

Decreasing logistics costs may be attributed to:

deregulation of the transportation sector, technology advances and e-commerce

Capital items cannot be depreciated, are often bought under a separate budgetary allocation, and may require special financing arrangements

False

Supply chain inventory management involves establishing operational design of the physical flow of goods and services, but does not deal with managing information flows

False

Fuel efficiency and energy consumption considerations:

are a factor in transportation strategy development in many organizations

The price of a semiprocessed material—steel sheets instead of ingots, frozen pork bellies instead of hogs, cocoa butter instead of beans—tends to move in the same direction as the price of the basic raw material

True

Demurrage charges:

may indicate poor delivery scheduling on the part of the buying organization

A mode of transportation is any means of conveyance of people or property, but not information

False

A specification is a loose description of a requirement that leaves room for supplier enhancements and contributions

False

Economic, safety and environmental regulations have been eliminated for the most part for all modes of transportation

False

In Kanban systems large raw material inventories are necessary

False

Quality as a term covers functionality: "Does it do the job we want done?" but not conformance to specification: "Does it fit the specification agreed to?"

False

For repetitive requirements, a system or process of acquisition can be designed

True

For the supply management function, time-based strategies that impact competitive advantage relate to cycle time reductions and greater coordination of materials and information flows

True

Operator action is required when process output exceeds the upper control limit (UCL) or dips below the lower control limit (LCL)

True

Packaging may be a difficult category to buy because it has disposal, environmental, and transportation implications

True

The allocation between buyer and seller of the costs incurred when materials are rejected is affected by the kind of materials rejected, trade customs, the buyer's cost accounting procedures, and the positions of strength of each organization

True

The bill of lading is the key document in the movement of goods

True

Two effective cost reduction strategies are partnering agreements with logistics services provider and long-term contracts

True

Any cost associated with having, as opposed to not having, inventory is included in inventory carrying costs, including (1) capital costs, (2) inventory service costs, (3) storage space costs, and (4) inventory risk costs

True

Buying capital equipment differs from other types of purchases because determination of final cost includes estimates over the life of the equipment

True

The "bullwhip effect" is a term that refers to the buildup of inventory in a supply chain

True

ISO 9001: 2008 provides a tested framework for a systematic approach to consistently delivering product that satisfies customers' expectations by:

providing a set of standardized requirements a quality system must meet

A sampling technique in which every element in the population has an equal chance of being selected is called:

ramdom sampling

ISO 14000 which focuses on global purchasing processes is similar to ISO 9000 in management principles

False

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

False

Standardization, a selective and commercial problem, means a reduction in the number of sizes and designs

False

It is reasonable to expect a supplier to both improve quality and lower costs

True

Kaizen is a Japanese term for continuous improvement

True

MRP II systems link the organization's planning processes with its financial system to produce "what if" scenarios to help achieve sales and profitability projections

True

Capital assets:

are not bought and sold in the regular course of business