MKT 460- exam 2
T/F: MRO supplies are a type of indirect costs
True
T/F: because internationally recognized certifications like ISO 9000 are becoming so common among suppliers, it is becoming more important that purchasing firms develop internal certification programs that are geared toward the specific needs of the purchasing organization
True
T/F: functional products are characterized by low profit margins, relatively stable demands, and high levels of competition
True
T/F: rewarding suppliers for maintaining high levels of performance is an important step used in maintaining a successful strategic alliance program
True
T/F: steering wheels purchased by Ford are an example of depend demand
True
In designing an ethical and sustainable strategy a firm might make use of which of the following?
Use performance measures to address problems quickly
T/F: the inventory turnover ratio shows how efficiently a firm is using its inventory to generate revenue
True
The purchasing department at Big Horn Sheep Corporation decided to intentionally increase purchases from small, underdeveloped nations. This decision can be considered:
Ethical sourcing
_______ considers the public consequences of organizational buying
Ethical sourcing
Which of the following is NOT a step suggested in the Supply Chain Sourcing Strategy Framework?
Certify suppliers as ISO 9001 complaint
Which of the following basic production strategies works best with make-to-order manufacturing firms?
Chase Production Strategy
Promoting diversity by intentionally buying from small firms or ethnic minority businesses is an example of:
Ethical sourcing
T/F: sustainable sourcing practices include promoting diversity by intentionally buying from ethnic minority businesses
False
Which of the following is NOT a typical strategy for firms to obtain benchmarking data about other companies?
Hiring former employees from other companies and assessing their knowledge
The EOQ model with quantity discounts attempts to determine:
How many units should be ordered
The use of environmental supplier certification programs assists companies by which of the following?
Identifying strategic alliance candidates
T/F: when BOTH the demand and lead time of a product are variable, firms must keep a higher safety stock level compared to variations in just demand, to offer the same service level
True
An advantage/benefit of utilizing an ERP system includes which of the following?
ERP systems are designed to take advantage if the internet technology ERP systems enable the firm to automate some of the steps of a manufacturing process Both A&B
T/F: developing a collaborative negotiation infrastructure includes four steps: build a preparation process, develop a negotiation database, design a negotiation launch process, and institute a feedback mechanism
True
T/F: in the economic manufacturing quantity model (EMQ), the annual consumption rate must be less than the annual production rate
True
T/F: two reasons ERP implementations have been known to fail include: lack of top management commitment and lack of communication between the firm and its ERP software provider
True
Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include:
Customer relationship management and human resource management
When demand and delivery lead time are known and constant, the reorder point is the ______
Demand during the delivery lead time
T/F: an MRP system has a subassembly with a lot size of 500 units. In terms of filling future requirements, this would mean that planned order releases for the subassembly would always have to be exactly 500 units
False
T/F: as described in the text, a "fair trade product" refers to selling and purchasing products without a cash transaction
False
T/F: benchmarking is the practice of watching the mistakes other businesses do and trying to avoid the same mistakes
False
T/F: dependent demand must be forecasted to be accurate
False
T/F: distribution requirements plan (DRP) operates in a dependent demand situation
False
T/F: ethical sourcing policies should NOT include determining where all purchased goods come from and how they are made
False
T/F: in general, single integrator ERP solutions are better suited to more intricate workplaces
False
T/F: it is best for firms to learn through their own experiences the methods and tools that work the best, rather than benchmarking
False
T/F: it is considered unethical for a firm to intentionally buy from women-owned businesses
False
T/F: pareto analysis means that 20% of the items get about 80% of the safety stock
False
T/F: reverse logistics has become an important trend in ethical and sustainable sourcing
False
T/F: the (s, S) continuous review policy is to order the same quantity, Q, when physical inventory reaches the reorder point
False
T/F: the EOQ equation is derived by setting the annual purchase cost equal to the annual holding cost
False
T/F: the best-of-breed solution picks all the desired applications for a single vendor for the ERP system
False
T/F: the chase production strategy works well when highly skilled workers are needed, especially in a tight labor market
False
T/F: the four categories of inventory are raw materials, intermediate assemblies, work-in-progress and finished goods
False
T/F: the legacy MRP system was programmed to coordinate with other functional areas in the firm
False
T/F: the optimal order quantity for the quantity discount model is always at one fo the price breakpoints
False
T/F: the three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the aggregate production strategy
False
T/F: the use of ethical and environmental certifications for suppliers is decreasing
False
T/F: there are just a small number of resources available for firms seeking to learn about and implement successful sourcing practices
False
t of f: Radio frequency identification device (RFID) is beginning to replace bar code inventory tracking, however a weakness is that it requires a direct line of sight for RFID tags to be read
False
T/F: an ERP system is generally a multi-module application software for managing an enterprise's internal functional activities, as well as its suppliers and customers
True
T/F: companies outsource to help them reach their sustainability goals
True
T/F: creating strategic supplier alliances benefits firms by increasing the performance and value of suppliers as well as increasing brand awareness
True
T/F: criteria to evaluate a purchasing department's performance should include both qualitative and qualitative assessments
True
T/F: cycle counting means to physically count inventory on a periodic basis
True
T/F: demands by customers for companies to become more ethically and environmentally focused have placed added pressures on firms to improve their performance in supply chain management
True
T/F: environmental supplier certifications can be used to identify rogue suppliers before they can cause problems
True
T/F: firms assess their sourcing capabilities because the sourcing function is one of the most value-enhancing functions in an organization
True
T/F: implementing a best-of-breed solution may cause firms to link databases from multiple software applications of different vendors
True
T/F: it is important for firms to address the impact of ethical and sustainable sourcing on other facets of the organization and its trading partners
True
T/F: lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation
True
T/F: legacy MRP systems typically utilized multiple software packages and databases which caused the same information to be stored in multiple locations
True
T/F: legacy systems were designed to perform a very specific operational function
True
T/F: one of the assumptions of the economic order quantity model (EOQ) is that purchased price must remain constant
True
T/F: sustainable sourcing takes into account the long-term impact on people, profits, and the planet
True
T/F: system nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans
True
T/F: the ABC inventory matrix combines two ABC analyses- one is based on current inventory valuation and the other is based on annual inventory dollar usage
True
T/F: the economic order quantity model (EOQ) is the optimal independent demand order quantity that minimizes total annual inventory costs
True
T/F: the mixed strategy uses overtime and subcontracting to cope with the high demand periods
True
T/F: the statistical reorder point is calculated as the average demand during the delivery lead time plus the desired safety stock
True
T/F: there are two approaches to deciding whether or not an action is ethical. The first approach is utilitarianism. The second approach is rights and duties.
True
Which of the following would refer to the 80/20 rule when applied to the ABC inventory control system?
80% of the total annual $ usage is accounted for, by 20% of the items
A fair trade product refers to one that is manufactured or grown by a disadvantaged producer in a developing country that receives _____ for its goods
A fair price
Which of the following is true deer the Periodic Review System?
A higher level of safety stock is needed to buffer against uncertainty in demand over a longer planning horizon, compared to the EOQ system
What inventory factor may be omitted from the basic EOQ derivation because it is a constant?
Annual purchase cost of goods
Which of the following MRP terms represents the parts demanded by a parent?
Component
For a large company with many strategic supplier alliances, what would be the best way to manage them?
Create an alliance board to oversee alliances
T/F: A Master Production Schedule is an engineering document that shows an inclusive listing of all component parts and subassemblies making up the end item
False
T/F: ERP Implosion is the process of converting a parent item's planned order releases into component gross requirements
False
T/F: Lead Capacity Strategy is a reactive approach that adjusts its capacity in response to demand
False
T/F: MRO supplies are a type of work-in-progress
False
T/F: MRP is the production planning system intended to develop long-range plans (more than a year away) concerning product families manufactured by the organization
False
T/F: The ABC inventory control prioritizes dependent demand inventory items into three gross, A, B, and C. A items receive the smallest amount of safety stock, while C items typically have the most safety stock
False
T/F: when demand and lead time are constant, the reorder point (ROP) is less than the demand during lead time
False
Which of the following describes a global RFID challenge?
Globally, the RFID industry does not have its own UHF spectrum allocation
Which one of the following statements regarding the economic order quantity (EOQ) is true?
If an order quantity is larger than the EOQ, then the annual holding cost will exceed the annual ordering cost
Which of the following is NOT one of the three basic methods used to calculate the available-to-promise quantities?
Indiscrete available-to-promise
The _______ planning horizon is shorter than the aggregate production plan's, but must be longer than a firm's production lead time to ensure the end item can be competed within the planning horizon?
Master production schedule
Which strategy uses overtime and subcontracting to cope with the high demand periods?
Mixed Production Strategy
If an available-to-promise (ATP) for any period is negative, the deficit must be subtracted from the:
Most recent positive ATP
The primary purpose of the basic economic order quantity (EOQ) model is to:
None of the above
Some businesses refer to sustainability in terms of supporting the three P's. This stands for:
People, planet, profit
What is the most important output of the MRP?
Planned order releases
Which of the following is NOT an assumption of the economic order quantity (EOQ) model?
Production and use occur simultaneously
The _______ is used to check feasibility of the Master Production Schedule
Rough-Cut Capacity Plan
Which of the following MRP terms represents a committed order awaiting delivery fr a specific period?
Scheduled receipt
The _______ solution picks all the desired applications from a single vendor for the ERP system
Single integrator
ISO 14000 may play a role in a firm's:
Supplier certification program
Convincing your supplier to cut back on packaging, fuel, or electricity is an example of:
Sustainable sourcing
Which of the following is TRUE regarding the EOQ figure below?
The EOQ is at lot size G, and curve K is the annual holding cost curve
Which strategy allows finished goods inventories to accrue and relies on backlogs to handle the demand?
The Level Production Strategy
Legacy MRP systems had which of the following limitations?
The systems needed continuous modifications The systems were not user-friendly The systems were designed to perform a very specific operational function All of these
Which of the following results from using the chase production strategy?
The workforce fluctuates in response to the demand pattern Finished goods inventories remain constant Both A&B
While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth?
The year 2000 millennium bug
T/F: ERP provides the mechanism for supply chain members to share information so that scare resources can be fully utilized to meet demand, while minimizing the bullwhip effect and supply chain inventories
True
T/F: a practice aimed at ensuring that purchased products or materials meet environmental objectives of the organization is referred to as green purchasing
True
Sustainable sourcing policies should include which of the following?
Use of renewable energy
Which of the following terms refers to an act that creates the greatest good for the greatest number of people:
Utilitarianism
Which of the following is TRUE?
VMI stands for Vendor Managed Inventory
The Ethical Trading Initiative (ETI) does NOT include which of the following:
Workers receive a 30 minute break for an 8 hour shift
Which of the following is considered a disadvantage of utilizing an ERP system?
ERP systems are very complex and have proven difficult to implement
If at the end of the year, the cost of revenue = $2,500, total revenue = $12,000 and inventory value = $2,000, the inventory turnover ratio would be:
1.250
Calculate the final discrete available-to-promise quantity for Week 1:
ATP1= 10 committed customer: 20 MPS: 10
Which of the following keeps the production plan's capacity fixed during the planning horizon?
Aggregate Production Plan
The _______ specifies which end product is to be made, how many are required, and when they need to be completed
Aggregate production plan
Successful strategic supplier alliances can result in which of the following?
All of these
Which of the following can be used as a punishment for suppliers that preform poorly?
All of these
Leading companies practicing sustainable sourcing and seeking to reduce costs would NOT use which of the following strategies?
Backward integration to purchase suppliers
Using the ________ multiple software infrastructures and databases may have to be used to link the multiple applications obtained from different vendors
Best-of-breed solution
Which of the following would be considered a depend demand item?
Bicycle tires used to assemble a bicycle
Independent demand is the:
Demand for a firm's end products
Why are firms migrating to ERP systems?
ERP systems tie together a variety of specialized systems
Which of the following is considered an advantage/benefit of utilizing an ERP system?
Enables the company to utilize a single centralized database system, thus eliminating duplicate data entries
The acronym ERP is short for:
Enterprise Resource Planning
If an item is ordered using its economic order quantity, the annual carrying cost should be:
Equal to the annual ordering cost
In the ABC Inventory Matrix shown, inventory in area Y suggests:
Inventory that matches sales
Which of the following is a disadvantage of carrying too much inventory?
It creates an unnecessary waste of scarce resources
According to the textbook, which of the following is considered a reason that ERP implementations fail?
Lack of communication within an organization
Complete the following MRP record and provide the planned order releases for Week 1. Lead time is 2 weeks. Safety stock is 3. Use LFL lot sizes
29
The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $45 and the annual demand is 1000. What is the economic order quantity (EOQ)?
300
Benchmarking is:
A practice where companies attempt to learn and apply the best practices of other companies
Which of the following is a trend in ethical and sustainable sourcing?
All of these
The main benefit(s) from benchmarking sourcing practices is/are:
Allows firms to leapfrog the experience-gaining stage by trying things that have worked well for other companies
Sustainability reporting is ________ for American companies:
Largely a voluntary effort
All of the following are reasons for the increasing use of ethical and sustainable sourcing practices EXCEPT:
Legislation requiring corporate ethical and sustainable sourcing
In a bill of materials, items at which level are independent demand items?
Level 0
Which of the following should NOT be used as assessment criteria to evaluate the purchasing department's performance?
Lowering inventory turnover rates
Lubricants for production equipment which e not parts of the final products are called:
Maintenance, repair and operating supplies
Which of the following is NOT common module of ERP systems?
Marketing Resource Management
Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to few weeks?
Material requirements plan
Legacy MRP systems typically utilized multiple software packages and databases which caused:
The same information to be stored in multiple locations
One standard which is measured in environmental supplier certification is:
The suppliers' recycled content
Which of the following is true of today's purchasing staff members?
They are viewed They are expected They are expected All the above
Why do firms assess their sourcing capabilities?
They can gauge their success in improving their own value-enhancing contributions to the firm
Which one of the following is NOT a reason for firms to carry inventory?
To increase production change/setup costs
T/F: ERP systems were designed to coordinate the information requirements for purchasing, planning, scheduling and distribution of an organization operating in a complex multi-unit global environment
True
T/F: a level production strategy works well for make-to-stock manufacturing firms, which typically emphasize immediate delivery of off-the-shelf, standard goods at relatively low prices
True
A negotiation where both sides work together to maximize the joint outcome or to create a joint optimal result is referred to as:
Win-win negotiations
If your company had an annual purchase cost of items equal to $2,000,000, an annual holding cost of $150,000 and an annual ordering cost of $50,000 this scenario would reveal that:
Your order lot size was higher than the EOQ
The college bookstore sells a unique calculator to college students. The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day. The lead time for this calculator is 9 days. Compute the statical reorder point that results in a 95% in-stock probability
200 units
The College Bookstore sells a unique calculator to college students. The demand for this calculator is constant at 20 units per day. The lead time for this calculator is variable at an average of 9 days with a standard deviation of 2 days. Compute the statistical reorder point that results in a 95 percent in-stock probability
246
When demand and delivery lead time are known and constant, daily demand = 8, purchase lead time = 5 days, and the purchase price = $20/unit, then the reorder point is:
40
Annual demand for an item is 43,000 units The cost to place an order is $200 The per unit cost of the item is $50.00 The annual holding rate is 35% Number of orders per year using the EOQ?
49
Classify the following inventory items as either A, B, or C items using the ABC inventory control system:
C, A, C, B, C
Which of the following could be an ethical and environmental certification requirement?
All of these
A service where key customers ask suppliers to take on the job of store level replenishment planning is called:
Vendor managed inventory
