Supply Chain Exam 1 Practice Questions

All of these

Companies outsource for many reasons. Which of the following is typically a reason for outsourcing

The calculated percentage of time in stock is 45% (assuming perpetual inventory is accurate)

If store perpetual inventory is greater than zero for 45 days of the 100 days checked for a particular item in a category then,

The calculated percentage of items in stock is 70% (assuming perpetual inventory is accurate)

If store perpetual inventory is greater than zero for 70 of the 100 SKUs in a category, then

add up the unit sales for the category and divide by the total inventory level for the category.

If you wanted to asses inventory turns of a category with multiple SKUs, the best way to do that would be to _____

$1.22

Imagine a customer is looking for a giant specialty candy bar in a store but it is not on the shelf. Suppose that the retail margin on the candy bar is $4.50 and that 27% of the customers forgo having the candy bar but the other 73% switch to another brand. Suppose that the margin the retailer makes on this brand is also $4.50 per unit. Then the cost of a stockout per unit of lost sale to the retailer is _____ .

1.20

Imagine you are a small format grocer and that on average you sell 25 cucumbers per day. Some days you sell more and some days you sell less, but on average you sell 25. In fact, you have been doing this for a while and have calculated the probability of selling different quantities of cucumbers, reproduced in the table of discrete probabilities below: Quantity Sold Probability 19 0.10 22 0.20 25 0.40 28 0.20 31 0.10 You have decided to stock fewer cucumbers and instead stock more carrots. You decide to stock 25 cucumbers each day. About how many sales of cucumbers do you expect to lose each day as a result of this decision to stock more carrots?

16,373

Jennifers Bakery bakes donuts for 160 local supermarkets an sells them through the supermarkets on a consignment basis, which means she only gets paid for the donuts that sell. She destroys donuts that don't sell. people in this city love her donuts. She estimates a daily demand of 15,000 donuts with a standard deviation of 1,500 donuts. Suppose she wants to achieve a service level of 82%. How many donuts should she produce? Hint: Use the excel function NORMINV(service level, mean, standard deviation).

86%

Juan's Bakery bakes French bread for 110 local supermarkets and sells them through the supermarkets on a consignment basis, which means he only gets paid for the French bread that sell. He destroys French break that don't sell. People in this city love his French bread. The total delivered cost of French bread is $0.55 per unit an she sells it to retailers for $4.00. Given this information, calculate the optimal service level.

1 & 2

Lead time has a direct effect on profit. If lead time is long, it's going to reduce the profit because ____ 1 one is going to stock out more often 2 there will be more inventory in transit (as it will be moved around) 3 there will be no inventory in front of customers

All of these and more

Logistics costs include which of the following?

from when an order is placed until it's actually received and ready for use or sale

Logistics lead time is the time _____

1 & 2

Methods used to forecast the introduction of a new product normally include: 1. Delphi Method 2. Judgmental method 3. Poll Method

cannot be explained

Noise is random variation in demand that ____

Integration

Supply chain management is the management of the ___ of business processes between functions a firm and with suppliers and customers

All of these are options

When a shopper in a retail store encounters an out-of-stock, there are a number of reactions that are possible. Which of the following are options discussed in this lesson?

a or b

When promotions exist in demand data, forecasters may respond by ______

increases

When the inventory level increases, the fill rate ___

level

When there is too much noise in the data, the only component of demand that can be estimated is the _____ of demand

trend

Which component of demand represents the degree to which the data is increasing or decreasing over time?

Customer's order cycle time

Which is NOT a component of the logistics lead time?

Standard deviation & coefficient of variation

Which of the following are measures of reliability of a logistics process?

All of these will benefits

Which of the following benefits did Walmart achieve from their early network design strategy

units sold in a year/average number of units in inventory

Which of the following formulae calculate annual inventory turns?

C.How logistics and supply chain management can be used to create a competitive advantage

Which of the following is a theme throughout the course? A. supply chain management and logistics are not the same and are not even similar. B. Logistics is just another term for transportation C.How logistics and supply chain management can be used to create a competitive advantage D. Supply chain management in the same thing as logistics, but just a new term

An unexplained decrease in sales of bottled water on the hottest day of the year

Which of the following is an example of noise in demand data?

Product C

Which of the following products would you expect to require the most safety stock? Product A: Standard Deviation of sales = 18 Standard deviation of lead time = 23 Product B: Standard Deviation of sales = 20 Standard deviation of lead time = 20 Product C: Standard Deviation of sales = 30 Standard deviation of lead time = 31 Product D: Standard Deviation of sales = 29 Standard deviation of lead time = 15

The standard deviation

You only need 2 parameters to define a normal distribution; the mean and ____

The cost of not having enough per uni, divided by the sum of the cost of having too much and the cost of not having enough

You want to compute an optimal service level for stocking inventory. The correct formula is:

unit sales ; average inventory

inventory turn is ______ divided by _____

qualitative

judgmental methods are ____ forecasting approaches

$60,000

the inventory holding cost factor is 30% and the average inventory next year is expected to be $200,000. What is the expected inventory holding cost ?

the logistics lead time

the lead time gap is defined as the difference between ____ and the customer's order cycle

independent variables; dependent variables

Casual forecasting models estimate the effects of ____ on ____ to forecast future demand.

Long term; short term

Casual models might best be used for ___ forecasting while time series models are mostly used for ____ forecasting.

1 & 3

By spending less on transportation, one will most likely 1 Increase the lead time 2 Decrease the Lead time 3 Increase the variability of lead time 4 Decrease the variability of lead time

30

A company operates 365 days a year. Annual inventory turn is 12. How many days of supply does that represent?

86

A distribution center has $120,000 pounds of rock salt and the forecast is 1,400 pounds of rock salt per day. What is the estimate of the days of supply

All of these

A leveling of production costs between China, Mexico, and the United States means that U.S. firms will increasingly focus on ____ to be competitive

When the customer wants a product, she wants it to be there at least 95% of the time

A store manager says "I shoot for a 95% service level." What the manager means is that:

increase

As the planning horizon increases, forecast error is expected to ___

40%

Assume an item has a demand of 1 per day and a demand of 6 every 5th day. However, the item is out of stock every 5th day. What would be the item fill rate (IFR)

$1,120,000

Average inventory last year was $160,000 and turns were 7. What was cost of goods sold last year?

judgement capturing

Bob is really good at forecasting demand for televisions, but he couldn't tell you how he does it, exactly. The ____ approach for helping Bob quantify his method

All of these and more

Examples of business processes include which of the following?

none of these

For the normal distribution, about _____ of the observations are within +/- 1 of the standard deviation of the mean, 95% within +/- 2 standard deviations, and about 99% within +/- 3 standard deviations

All of these

GMROI ____

a & b

Globalization of production has led to ____

all of the above

In general, forecasters must consider which of the following

consumption; purchase

In pantry loading, the rate of _____ is the same, but the frequency of ____ is reduced

the same

In pantry loading, the rate of consumption is ____, but the frequency of purchase is reduced

Assets

Inventory is a component of ___ on the balance sheet

The cost of ownership

Is the idea that there are many other costs than just the acquisition cost that should be accounted for in a purchase.

Expected value

One approach to estimating the cost of a stockout per unit of lost sale is to calculate an estimate of the ____

Percentage of item in stock

Perpetual inventory is one of the major ways that _____ and percentage of items in stock are measured

Assets

ROA is profit divided by ___

change logistics and supply chain management activities quickly

Responsiveness in the 4 R's of supply chain competition is defined as being able to ...

The opportunity cost of alternate products

Retail shelf is very expensive because

The expected number of units on hand just before a replenishment is received and available for use or sale

Safety stock is ____

96%

Sarah's Bakery bakes donuts for 30 local supermarkets and sells them through the supermarkets on a consignment basis, which means she only gets paid for the donuts that sell. She destroys donuts that don't sell. People in this city love her donuts she estimates a daily demand of 2,000 donuts with a standard deviation of 200 donuts. Suppose she produces 2,350 donuts. Using Excel formula NORMDIST (level of production, mean, standard deviation, 1), calculate the expected service level or percentage time in stock.

Economies of scale

Suppose a company orders 10 pallets of bottled water, 14 oz. per bottle and $0.05 per bottle. There are 2,000 bottles per pallet. Suppose they use a truckload carrier and it costs a flat rate of $1,000for the transportation. So the purchase cost is $0.05 per bottle X 2,000 bottles per pallet X 10 pallets = $1,000. So the purchase cost plus the transportation cost is $2,000, hence, the total cost per bottle is $2,000 / 20,000 bottles = $0.10 per bottle. In this example, the company only oppressed 10 pallets but a truck load has a capacity of about 20 pallets of bottled water. Instead, suppose they ordered 20 pallets of bottled water, the transportation cost will be the same but the purchase cost will now be $0.05 per bottle X 2,000 bottles per pallet X 20 pallets = $2,000. Hence, the purchase cost plus the transportation cost is $3,000, so the total cost per bottle is $3,000 / 40,000 bottled = $0.08 per bottle (rounded up from $0.075 per bottle) This demonstrates which of the following concepts?

iterative

The Delphi method is a(n) ____ method of forecasting

Transaction

The ____ component of customer service includes common metrics of consumer service such as percentage of items in stock, percentage of time an item is in stock, fill rate, lead time, et cetera

The logistics lead time and the customer's order cycle

The lead time gap is defined as the difference between _____

B.Locate stores close to a DC

The objective of Walmart's early network design strategy was to: A. place stores in "high potential" markets B. Locate stores close to a Distribution Center C. Locate stores close to Bentonville D. Use supply chain savings to drive temporary price reductions E. All of the above

quantitative

Time series forecasting approaches are primarily ____ methods

future; past

Time series methods are quantitative methods based on assumption that ___ demand is reflected in ___ demand patterns