Supply Chain Practice Questions
What are the two basic Supply Chain Capability Models? A. Efficient Model and Resilient Model B. Efficient Model and Responsive Model C. Effective Model and Resilient Model D. Effective Model and Responsive Model
B
T or F: The Economic Order Quantity (EOQ) is the optimal order size because it maximizes the annual total inventory cost.
F
T or F: Collaborative Planning, Forecasting, and Replenishment (CPFR) creates the bullwhip effect through the sharing of plans, forecasts, and delivery schedules in an effort to ensure a smooth flow of goods and services across a supply chain.
F, it alleviates the bullwhip effect
To calculate the Economic Order Quantity, you need all of the following elements, EXCEPT? A. Reorder Point B. Order Cost C. Annual Demand Volume D. Carrying Cost
A
What is the name of the engineering document that shows all component parts and materials which make up the final product? A. Bill of Material (BOM) B. Bill of Goods (BOG) C. Bill of Lading (BOL) D. Bill of Resources (BOR)
A
What technology stores information on a small electronic device which can be attached to an object and read from up to several feet away, without the need for direct line-of-site? A. Radio Frequency Identification B. Debundling C. Synchronization D. 2D Barcode
A
Which of the following terms used in MRP represents the parts demanded by a parent? A. Component B. Net requirement C. Gross requirement D. Scheduled receipt
A
Which one of the following is NOT one of the four Foundations of Supply Chain Management? A. Demand Management B. Operations Management C. Supply Management D. Logistics Management E. Integration
A
Which one of the following would be considered an inventory ordering cost? A. Transportation costs B. Insurance costs C. Storage Costs D. Cost of capital
A
When creating a quantitative forecast, if you detect a pattern of demand data that shows a movement of a variable over time. This is known as what type of variation? A. Season Variation B. Cyclical Variation C. Trend Variation D. Random Variation
C
If a supply chain is made up of the following companies, who is considered the second-tier supplier of the Manufacturer? Raw Material Supplier —> Intermediate Supplier —> Manufacturer —> Wholesale Customer —> Retail Customer
Raw Material Supplier
As the supply chain continues to evolve, it's critical for companies to...? A. Outsource their non-core competencies to trading partner they can trust B. Outsource their core competencies to trading partners they can trust C. Increase inventory levels throughout the supply chain
A
The medium-range capacity planning technique used to check the feasibility of the Master Production Schedule (MPS) is called? A. Rough-cut Capacity Planning (RCCP) B. Resource Requirement Planning (RRP) C. Capacity Requirement Planning (CRP) D. None of the other answer choices are correct
A
What is regression?
A cause and effect forecasting technique which attempts to model the relationship between one or more independent variables and a dependent variable by fitting a linear equation to the observed data.
Organizations that choose to implement one single system with all of the desired applications from a single vendor is said to have chosen a? A. Premier Application Solution B. Elite Integrator Solution C. Single Integrator Solution D. Best-of-Breed Solution
C
Successful modern supply chain management typically includes the practice of? A. Issuing ultimatums to your supply chain partner B. Always purchasing materials with the lowest per unit cost C. Collaborating and sharing information between supply chain partners D. Keeping high inventories throughout the supply chain
C
The Supply Chain Operations Research (SCOR) Model is? A. Plan, Supply, Make, Distribute, and Enable B. Plan, Source, Deliver, Return, and Enable C. Plan, Source, Make, Deliver/Return, and Enable D. Produce, Source, Make, Deliver, Return, and Enable
C
The goals of Supply Chain Management are to? A. Increase customer satisfaction while increasing inventory and operating expenses B. Increase customer satisfaction through increased inventory and reduced operating expenses C. Increase customer satisfaction while reducing inventory and operating expenses
C
Why would a company want to use ABC analysis when managing their inventory? A. Because it's the only technique that works B. Because all ERP systems require it C. So they can focus their limited resources on items that have the highest inventory value D. Because it's the best way to determine the Economic Order Quantity (EOQ)
C.
T or F: Dependent demand items are generally forecasted based on market conditions and/or historical sales and usage data.
F
T or F: Independent demand items are not forecasted because the demand quantity can be directly calculated based on the demand for the finished end product.
F
T or F: Logistics is another name for transportation.
F
What is the purpose of Materials Requirements Planning (MRP)?
calculates the exact quantities, need dates, and planned order releases for all the component parts and materials required to manufacture a product.
Inventory costs which are independent of the output quantity are called? A. Fixed Costs B. Carrying Costs C. Direct Costs D. Variable Costs
A
Material Requirements Planning (MRP) is used to? A. Determine what materials you need to make the finished product and when to order them B. Identify if you need to purchase new equipment to make your product C. Determine the exact end items (i.e., finished products) to be produced in a specific time frame. D. Look long term and determine if you need a bigger factory
A
The following are ALL common quantitative forecasting models EXCEPT? A. Delphi Method B. Naive Forecasting C. Exponential Smoothing D. Simple Linear Regression
A
Which basic production strategy would you use if the required skill level of the production workers is low, the training requirements are low, and the cost of hiring people and terminating them is also low? A. Level Production Strategy B. Chase Production Strategy C. Hybrid Production Strategy
B
Which term used in Material Requirements Planning is defined as the number/quantity of each component or material needed to produce a single unit of the parent item? A. Net Requirement B. Planning Factor C. Safety Stock D. Lot Size
B
What is the term used to relate the requirements for a component part back to its parent item? It can be thought of as determining where a component item is used. A. Time Bucket B. Pegging C. Net Requirement D. Lot Size E. Planning Factor
B
Which of the following is NOT one of the basic types of forecasting? A. Time Series B. Force Field Analysis C. Qualitative D. Cause and Effect
B
Which type of forecast variation involves a pattern of variation within one year that can be repeated from year-to-year? Typically has some period of considerably higher demand. A. Trend Variation B. Seasonal Variation C. Cyclical Variation D. Random Variation
B
Which of the following forecasting methodologies is considered a Time Series forecasting technique? A. Exponential Averaging B. Simulation C. Weighted Moving Average D. Simple Moving Smoothing E. Delphi Method
C
Which of the following is a Long-Range Supply Chain plan? A. Materials Requirements Plan B. Master Capacity Plan C. Aggregate Production Plan D. Capacity Requirements Plan
C
What does the acronym CPFR represent?
Collaborative Planning, Forecasting, and Replenishment
Maintaining a constant production rate while allowing finished goods inventory and backlogs to fluctuate up and down to meet demand, is using which basic production strategy? A. Minimal Production B. Chase Production C. Hybrid Production D. Level Production E. Full Capacity Production
D
Which inventory stock level is carried above and beyond what is actually needed to meet anticipated demand? It represents a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. A. Pipeline Stock B. Strategic Stock C. Cycle Stock D. Safety Stock
D
Which one of the following is NOT a benefit of Supply Chain Management? A. Lower costs B. Increased revenue C. Better asset utilization D. Increased inventory E. Improved customer service
D
Which one of the following is NOT a function of inventory? (Not a reason to hold inventory) A. To meet customer demand B. To decouple dependencies in the supply chain C. To buffer against uncertainty in demand and/or supply D. To decouple supply from demand E. To increase cash flow
E
T or F: Master Production Scheduling is a process that brings all the demand and supply plans for the business (sales, marketing, development, production, sourcing, and finance) together to provide management with the ability to strategically direct the business to achieve a competitive advantage.
F
T or F: Service firms offer intangible products (meaning products that cannot be physically touched), therefore, they do not have a supply chain.
F
T or F: The term "Logistics" refers to a network of independent companies that work together and coordinate their actions to deliver product(s) or service(s) to the market for the benefit of all companies in the network.
F
T or F: The Inventory Turnover Ratio shows how many times a firm turns over its inventory in an accounting period, and higher inventory turnover is generally viewed as negative.
F, higher inventory turnover is a good thing!
T or F: Cause and Effect Forecast models use the historical relationship between an independent variable(s) and a dependent variable to predict the future values of the dependent variable.
T
T or F: Dependent Demand is demand for an item that is directly related to other items or finished products, such as a component or material used in making a finished product.
T
T or F: Independent Demand is demand for an item that is unrelated to the demand for other items, such as a finished product, a spare part, or a service part.
T
T or F: It was intense global competition that led manufacturers to adopt Supply Chain Management (SCM) and other practices such as Just-in-Time (JIT).
T
T or F: The four broad categories of inventory are raw materials, work-in-process, MRO, and finished goods
T
T or F: The goal of Supply Chain Management is to increase customer service while decreasing inventory and reducing costs.
T
T or F: The key disadvantages of the Material Requirements Planning (MRP) system include; loss of visibility, and the fact that MRP ignores capacity and shop floor conditions.
T
T or F: The top two primary functions of inventory are to meet customer demand, and to buffer against uncertainty in demand and/or supply.
T
T or F: Time Series forecasting models make predictions about the future based on analysis of past data.
T
T or F: To determine the Reorder Point, calculate the demand during lead time.
T
What is the purpose of Master Production Schedule (MPS)?
represent what the company plans to produce expressed in specific product configurations, quantities, and dates.
What is the purpose of Aggregate Production Planning (APP)?
to establish production rates that will achieve management's objective of satisfying customer demand by maintaining, raising, or lowering inventories, while attempting to keep the workforce relatively stable.
What is the purpose of Sales & Operations Planning (S&OP)?
to strategically direct the business to achieve a competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain.
Which type of demand is forecasted? A. Conditional Demand B. Dependent Demand C. Independent Demand D. Tentative Demand
C
T or F: The four broad categories of inventory are raw materials, work-in process, semi-finished goods, and finished goods.
F
Which of the following is described as an information system connecting all the functional areas and operations of an organization via common software infrastructure and database? A. Distribution Requirements Planning System B. Enterprise Requirement Planning System C. Resource Requirements Planning System D. Advanced Planning and Scheduling System
B
T or F: Supply Chain Planning is the element of Supply Chain Management responsible for determining how best to satisfy the requirements created by the Demand Plan.
T
Which inventory stock level is generally used for a very specific purpose or future event, and for a defined period of time? A. Safety stock B. Pipeline stock C. Cycle stock D. Strategic stock
D
Which of the following is NOT one of the Fundamentals of Forecasting? A. Technology is not the solution to better forecasting B. All trends with eventually end C. A correct forecast does not prove your method is correct D. The more "granular" the forecast is, the more accurate it is
D
Which of the following is NOT one of the ways that carrying too much inventory can become a significant liability? A. Too much inventory ties up capital B. Holding inventory too long may cause it to be unusable due to expiration, obsolescence, damage, or spoilage C. More inventory means more space is needed to hold it, and space costs money D. Holding more inventory usually means that a company can provide a higher level of customer service
D
What is the time it takes to process and prepare material, produce the product, and transport it to the customer known as?
Lead time
T or F: Inventory is an asset that allows a company to support manufacturing operations and fill customer orders immediately, but too much inventory ties up capital and can become a significant liability.
T
T or F: The Master Production Schedule (MPS) is the plan that drives the business. Even small changes in the MPS can cause major changes in the detailed production schedule and the material plan, creating nervousness and instability throughout the organization.
T