SCM 6216 Final Exam (CH 6, 8, 9, 10, 12, 13, 14)

Batching economies or cycle stocks usually arise from three sources. Which of these is not a source? a. Demand b. Procurement c. Production d. Transportation

Demand

Four major categories that provide a useful way to examine logistics and supply chain performance are time, quality, cost, and inventory.

False

Inventory management is not as important as it once was due to other factors that have come into play.

False

It is not difficult to find and train high-quality personnel for DC operations.

False

JIT was developed in the U.S. and copied by the Japanese.

False

MRPII will not allow an organization to integrate financial planning with operations and logistics.

False

Once a 3PL provider is chosen, it is not necessary for an organization to seek continuous improvements as the 3PL will handle that function.

False

Order accuracy and order completeness are the same.

False

Purchase economies and transportation economies are not complementary.

False

Reserve Inventory and Determine Delivery Date has traditionally been referred to as order processing.

False

The "IT gap" refers to the difference between the internal IT capabilities of 3PL users and the IT expertise of the 3PL providers.

False

The focus on performance measurement is a recent event in industry.

False

The range of relationships with 3PLs ranges from being a vendor to being a vertical supplier.

False

The reorder point depends on the orders in-house at that time.

False

Vertical relationships more than horizontal relationships have been identified as highly useful to the achievement of long-term supply chain objectives.

False

Which of the following is not a supply chain decision area regarding ROA improvement?

Information Management

A DRP system is usually coupled with a _____ system in an attempt to manage the flow and timing of both inbound materials and outbound finished goods.

MRP

The term replenishment cycle refers to:

The acquisition of additional inventory

A push-based strategy works well for supply chains that focus on?

The immediate deliveryof off-the-shelf, low-cost, standardized goods

From a marketing perspective, logistics customer service can be thought of as a feature of the augmented product that adds value for the customer.

True

In comparison with the basic EOQ approach, the fixed interval model does not require close surveillance of inventory levels. t/f

True

JIT, MRP, MRP II, and DRP all incorporate some version of the basic EOQ model into their philosophies. t/f

True

Managers should resist sub-optimization of their particular function unless it benefits the organization as a whole.

True

One of the primary tradeoffs at the facility level is space versus equipment.

True

Order cycle time (OCT) is another very important logistics services metric. OCT influences product availability, customer inventories, and seller's cash flow and profit.

True

Outsourcing and contract logistics are terms sometimes used to describe third-party logistics.

True

Processes that can produce a range of products are said to have economies of scope.

True

Product handling functions include both receiving and shipping.

True

Scorecards and key performance indicators (KPIs) are the same thing.

True

Slotting is defined as the placement of product in a facility for the purpose of optimizing materials handling and space efficiency.

True

Supply chain management involves the control of raw materials, in-process, and finished goods inventories.

True

The ABC analysis is based on Pareto's law.

True

The drawback of centralized inventory is the long distance to customers, which typically extends lead times and results in higher transportation costs.

True

The first facility consideration is to determine the size of each operation within the network.

True

WMS is more simple database that provides stock location information.

True

When establishing a distribution strategy, the first and most obvious consideration is the product.

True

With the proper information on how a customer's interaction with the shipper drives the firm's costs, the firm can then segment its customers by profitability.

True

WIP inventories:

are associated with manufacturing

The roles of distribution center include ______.

balancing supply and demand, protecting against uncertainty, and promoting transportation economies

Full collaboration is dynamic combination of:

both vertical and horizontal collaboration

Horizontal collaboration refers to a relationship that is and/or ______.

buyer to buyer; seller to seller

Order management system represents the principal means by which:

buyers and sellers communicate information relating to individual orders of product

Activity Based Costing (ABC) a. is too sophisticated for many applications. b. is useful for distributions centers but not customers. c. is a very new management science. d. can be applied to customer segmentation.

can be applied to customer segmentation

Activity Based Costing:

can be combined with customer segmentation

A downside of direct shipping is:

can create higher transportation charges

Vertical collaboration refers to:

collaboration among buyers and sellers in the supply chain

Many organizations are working more closely with:

customers, suppliers, and various types of logistics suppliers

As Q decreases for EOQ, the cost per order:

decreases

As the number of pics per order picker decreases on a given tour, his/her total time out ______ and the time per pick ______.

decreases, increases

In the event of a "stockout" one of the things that could happen is:

extra shipping cost may be incurred

Traditional customer profitability analyses would start with ____ less returns and allowances (net sales) and subtracts the cost of goods sold. a. gross margin b. back orders c. gross sales d. the forecast

gross sales

As the level of substitutability for a product increases, its stockout costs to the manufacturer:

increase

There are two parts to the order management process. The first is ______ and the second is ______.

influencing how the customer orders; managing the order after it is received

There are two parts to the order management process. The first is _______ and the second is _______.

influencing how the customer orders; managing the order after it is received

Capital cost focuses on the cost of capital tied up in ______ and the resulting lost opportunity from investing that capital elsewhere.

inventory

There are four major categories that provide a useful way of examining logistics and supply chain performance. They are time, _______, cost, and supporting metrics.

quality

In the SCOR model there are five major categories of metrics that need to be used to measure the performance of Process D1: reliability, ____________, agility, costs, and asset management.

responsiveness

Approximately two -thirds of 3PL customers think their providers supply:

tactical or operational services

The drawback of centralized inventory is:

that it extends lead times and results in higher transportation costs

If demand INCREASES by 13% and the value of each unit INCREASES by 13%, what will happen to the EOQ? (Assume that everything else remains the same).

the EOQ will remain the same

The term replenishment cycle refers to a. orders for raw material. b. inventory and material management. c. the acquisition of additional inventory. d. material management.

the acquisition of additional inventory

Those customers who are in the "Danger Zone" segment are:

the least profitable

The first facility consideration is to determine:

the size of each operation within the network

Inventory as an asset on the balance sheet and a ______ on the income statement.

variable expense

Whether the relationship may or may not be with a provider of logistics services, today's supply chain relationships are most effective when collaboration occurs among the ______ who are involved.

participants

The traditional role of customer service at the interface between marketing and logistics manifests itself through the ______ dimension of the marketing mix.

place

Made-to-stock, build to order, and assemble to order are examples of __________ methods

production

JIT is a ______ system.

pull

Using Wilson's EOQ formula, what will happen to the average inventory level (Q*/2) if unit cost is INCREASED by 4.1% and annual demand is DECREASED by 4.1% at the same time?

(Q*/2) will decrease

Using Wilson's EOQ formula, what will happen to the average inventory level (Q*/2) if unit cost DECREASED by 4.1% and annual demand is INCREASED by 4.1% at the same time?

(Q*/2) will increase

Which of the following order cycle lengths would require the buyer to hold the most total inventory during lead time?

10 days, +/- 4 days

The product remains in place for the durationof production.

A project layout is a fixed location where

The finished product is generally a combination of common components and a limited number of options or accessories made available to the customer

Assemble-to-order production

Evaluating current or potential supply chain performance metrics is not important to a sound logistics program.

False

Which of these is not a production method?

Create to order

Financial based 3PL is a firm that takes a financial interest in an organization in order to underwrite the outsourcing of that firm's logistics.

False

Seasonal stocks are not influenced by: EOQ. weather. transportation. holidays.

EOQ

3PL's are asset-based logistics providers that physically move product through the supply chain

False

A Third Party Logistics firm is defined as a company that owns trucks and warehouses so as to offer integrated services.

False

A financial based 3PL is a firm that takes a financial interest in an organization in order to underwrite the outsourcing of that firm's logistics.

False

A horizontal relationship refers to firms on the same level in the supply chain.

False

A metric and a measure are the same.

False

A stockout always results in a back order.

False

Activity Based Costing (ABC) allocates costs to activities based on a fixed predetermined measure (e.g., cases).

False

Activity-based costing works well in warehouse-type environments but does not work for customer service applications.

False

Activity-based costing works well in warehouse-type environments but does not work for customer-service applications.

False

After the layout of the operations is determined, attention shifts to the facility size of the operations within the distribution operation.

False

An index combines two or more metrics into a single indictor.

False

Contract warehousing is different than 3PL warehousing.

False

Cross-docks typically increase transportation costs.

False

Drivers and facilitators are internal issues that an organization must address before seeking a 3PL.

False

EOQ can only be used for "push" inventory. t/f

False

Efficiency of distribution and networks is not nearly as critical as their speed.

False

Which of these is not a support function?

Movement and storage

Which is the following NOT an element of Order Management?

Optimizing mode mix

If you were to "manage" Wilson's EOQ as a means of reducing your company inventories, which variable of Wilson's EOQ would make the most sense to change.

Ordering Cost

"Batching economies" and "cycle stocks" are the same.

True

"Order to cash" and "order cycle" are the same.

True

4PL providers not only provide a broader scope of services to their clients and customers, but typically may be more strategically involved.

True

A common productivity is measured as the ratio of real output to real input.

True

A driving force behind the attention to OTC cycle variability is safety stock. The absolute length of the order cycle will influence demand inventory.

True

A reason to hold inventory arises when an organization anticipates than an unusual event might occur that will negatively impact its source of supply.

True

Another metric classification scheme that has been receiving increased attention is that developed by the Supply Chain Council and contained in the Supply Chain Operations and Reference (SCOR) model.

True

Collaboration is usually defined as a "business practice that encourages individual organizations to share information and resources for the benefit of all."

True

Customers and suppliers should be included in the development of metrics.

True

EOQ models exist that include adjustments for volume transportation rates and for quantity discounts.

True

Firms today are beginning to use techniques such as activity-based costing to more accurately allocate costs to customers based on the specific costs of servicing a customer's order relative to how, how much, what, and when a customer orders.

True

Firms today are beginning to use techniques such as activity-based costing to more accurately allocate costs to customers. It's based on the specific costs of servicing a customer's orders relative to how, how much, what, and when a customer orders.

True

A project layout is: a. a floor plan of the production facility. b. a fixed location layout where the product remains in place for the duration of production. c. a product-focused layout in which machines and workers are arranged according to the progressive sequence of operations. d. a process-focused layout that groups together similar equipment or functions.

a fixed location layout where the product remains in place for the duration of production

An "executive dashboard" is:

a small number (usually less than five) of KPIs

The SCOR model provides suggested metrics:

across multiple dimensions for each of the five Level One processes

A newly launched twenty-first century addition to production strategy which leverages lean manufacturing strategies, Six Sigma best practices, and real-time actionable intelligence from the factory floor is called: a. just-in-time inventory. b. adaptive manufacturing. c. machine flexibility. d. capacity requirements planning.

adaptive manufacturing

The primary tradeoffs and relationships between resources include the following:

all of these answers

A third-party logistics firm may be defined as:

an external supplier that performs or manages all or part of a company's logistics functions

The decision to alter the supply chain process is essentially _______ issue.

an optimization

Customer service can be defined as:

anything that touches the customer

An index:

combines two or more metrics into a single indicator

Another driving influence for supply chain reexamination has been the desire of organizations to change their supply chain focus from a _______ to an "investment" center.

cost center

Dependent demand relates to

demand for another inventory item or product

Dependent demand relates to: a. demand for another inventory item or product. b. VMI inventories. c. the cost of capital for the firm. d. the spare parts needed to fill the order.

demand for another inventory item or product

Processes that can produce a range of products are said to have: a. economies of scale. b. economies of scope. c. routing flexibility. d. work centers.

economies of scope

The least-frequently used IT-based services by customers of 3PLs are:

strategic and customer-related