Ch10 – Supply Chain Management Strategy And | Full Test Bank - Operations Management Canadian 1e Complete Test Bank by Roberta S. Russell. DOCX document preview.
CHAPTER 10
SUPPLY CHAIN MANAGEMENT: STRATEGY AND DESIGN
CHAPTER LEARNING OBJECTIVES
1. Define supply chains with respect to both manufacturing and services. A supply chain is a network of suppliers, manufacturers, warehouses, distributors, and retailers who, through coordinated plans and activities, develop products by converting raw materials to finished goods inventory. It encompasses all the activities associated with the flow of materials and information in the transformation of goods and services from raw materials to end consumers.
2. Explain characteristics and management strategies of the modern supply chain. Supply chains require close collaboration, cooperation, and communication among members to be effective. The responsiveness of supply chains to changing market requirements and their overall efficiency are important issues in supply chain design and management. Build-to-order (BTO) systems are successful business strategies in managing market-responsive supply chains. Build-to-stock (BTS) or make-to-stock (MTS) supply chains fill customer orders from stocks of inventory of finished products that are kept at various points in the network. Supply chain members carry buffer (or extra) inventory at various stages of the supply chain to minimize the negative effects of uncertainty and to keep goods and services flowing smoothly from suppliers to customers. The bullwhip effect occurs when slight to Medium demand variability becomes magnified as demand information is transmitted back upstream in the supply chain.
3. Discuss sustainable supply chain practices and how they relate to quality management. Sustainability has become one of the most visible recent trends in operations and supply chain management. The impetus for, and commitment to, sustainability generally comes from downstream in the supply chain and moves back upstream to include suppliers. Companies have found that suppliers can account for as much as 80% of the resources consumed in a product’s supply chain, and so many must work with and guide suppliers to reduce the inefficient use of resources, reduce the use of raw materials, reduce waste, and recycle; for example, improving fuel efficiency in a distribution fleet, having employees telecommute, using eco-friendly packaging materials, and building energy-efficient facilities.
4. Discuss information technologies currently available for supply chain management. Information technology has become the most important enabler of effective supply chain management. Some IT supply chain enablers include:
Electronic data interchange (EDI): a computer-to-computer exchange of business documents; links supply chain members
Barcodes: an instantaneous computer record of the sale of a product; creates point-of-sale data
Radio frequency identification (RFID): sends product data from an item to a reader via radio waves
Internet: allows a business to communicate with customers and other businesses within its supply chain anywhere in the world in real time; it eliminates geographic barriers, enabling companies to access markets and suppliers around the world
5. Provide an overview of the four areas where information technology assists with supply chain integration. Information technology is the key element in achieving supply chain integration through four areas—information sharing, collaborative planning, workflow coordination, and the adoption of new models and technologies.
Information sharing: reduces bullwhip effect, enables early problem detection, enables faster response, and increases trust and confidence
Collaborative planning: reduces bullwhip effect, lowers costs, enables higher capacity utilization, improves customer service levels
Coordinated workflow: enables production efficiencies, enables faster response, improves service, enables products to get to market quicker
Adoption of new business models and technologies: enables penetration of new markets, enables creation of new products, improves efficiency, allows for mass customization
6. Discuss tools for monitoring supply chain performance and calculate key performance indicators. Three of the more widely used key performance indicators are:
Inventory turnover: computed by dividing the cost of goods sold (i.e., the cost of annual sales) by the average aggregate inventory value
Inventory days of supply: the number of days that cash is tied up as inventory
Fill rate: the fraction of orders filled by a distribution centre within a specific time period
TRUE-FALSE STATEMENTS
1. Globalization and advances in information technology are primary reasons why supply chain management has become a competitive priority for companies.
Difficulty: Easy
Learning Objective: Define supply chains with respect to both manufacturing and services.
Section Reference: 10.1 Supply Chains
2. Supply chains for services are easier to define than supply chains for manufactured goods.
Difficulty: Easy
Learning Objective: Define supply chains with respect to both manufacturing and services.
Section Reference: 10.1 Supply Chains
3. The supply chain for a service tends to be more compacted and less extended than a supply chain for a manufactured good.
Difficulty: Medium
Learning Objective: Define supply chains with respect to both manufacturing and services.
Section Reference: 10.1 Supply Chains
4. Because value chain and supply chain have similar meanings they are often used interchangeably.
Difficulty: Medium
Learning Objective: Define supply chains with respect to both manufacturing and services.
Section Reference: 10.1 Supply Chains
5. A supply chain encompasses only the activities associated with the flow of goods and services.
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
6. Suppliers are upstream members of a supply chain.
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
7. Final end-use customers are upstream members of a supply chain.
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
8. Traditionally, each supply chain member was viewed as a separate, stand-alone entity focused on its own goals.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
9. Supply chain uncertainty and variability may result in incomplete and late orders.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
10. Companies address uncertainty in their supply chains by holding extra inventory.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
11. The bullwhip effect occurs when slight to moderate demand variability becomes magnified as demand information is transmitted back upstream.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
12. Increasing supply chain transparency only magnifies the bullwhip effect.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
13. One way to cope with the bullwhip effect is for supply chain members to share demand information.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
14. Collaborative planning, forecasting, and replenishment (CPFR) is a useful tool supporting supply chain integration.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
15. Supply chain management focuses on integrating and managing the flow of manufactured goods, services and related information.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
16. Suppliers and customers rarely participate in the design of a supply chain.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
17. Information is the essential link for coordination among all supply chain members.
Difficulty: Easy
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
18. E-business replaces physical exchange processes with electronic ones.
Difficulty: Easy
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
19. A computer-to-computer exchange of business documents in a standard format is known as electronic data interchange (EDI).
Difficulty: Easy
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
20. Use of radio frequency identification (RFID) technology makes it possible for a customer to determine production schedules.
Difficulty: Medium
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
21. Enterprise Resource Planning (ERP) is software that helps integrate many of the supply chain components by sharing and organizing information and data among supply chain members.
Difficulty: Medium
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
22. A supply chain consists of an integrated group of processes to source, make, and store products.
Difficulty: Easy
Learning Objective: Provide an overview of the four areas where information technology assists with supply chain integration.
Section Reference: 10.5 Supply Chain Integration
23. Fill rate is one of the three key performance indicators in measuring supply chain performance.
Difficulty: Medium
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
24. The supply chain operations reference (SCOR) model reports the fraction of orders filled by a distribution centre in a specific time period.
Difficulty: Easy
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
MULTIPLE CHOICE QUESTIONS
25. Supply chain processes include
a) procurement.
b) production.
c) distribution.
d) all of the above.
Difficulty: Medium
Learning Objective: Define supply chains with respect to both manufacturing and services.
Section Reference: 10.1 Supply Chains
26. The suppliers in a supply chain are referred to as ___ supply chain members.
a) downstream
b) midstream
c) upstream
d) none of the above
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
27. Distributors, warehouses, and retailers are referred to as ___ supply chain members.
a) downstream
b) upstream
c) procurement
d) none of the above
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
28. Which of the following is not a key to effective supply chain management?
a) communication among members
b) independence among members
c) collaboration among members
d) trust among members
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
29. Information sharing among supply chain members will typically result in all of the following except
a) faster response times.
b) early problem detection.
c) an increased bullwhip effect.
d) greater trust and confidence among supply chain members.
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
30. Which of the following is not one of the three key performance indicators (KPI) used to measure supply chain performance?
a) inventory turnover
b) postponement rate
c) inventory days of supply
d) fill rate
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
31. Supply chain management focuses on integrating and managing the flow of
a) services.
b) information.
c) goods.
d) all the above.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
32. The bullwhip effect can
a) increase inventories.
b) increase demand.
c) increase customer service levels.
d) increase capacity.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
33. All the following are approaches used in risk pooling within a supply chain except
a) reducing the number and variety of parts.
b) creating flexible capacity.
c) encouraging large orders.
d) combining inventories from multiple locations into one location.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
34. Companies resist establishing green supply chains for all the following reasons except that
a) the market is soft for products with green attributes.
b) green manufacturing requires costly new equipment and practice.
c) green initiatives lower costs because fewer resources are consumed.
d) green practices face additional government, societal and social pressures.
Difficulty: Medium
Learning Objective: Discuss sustainable supply chain practices and how they relate to quality management.
Section Reference: 10.3 “Green” Supply Chains
35. A computer-to-computer exchange of business documents in a standard format is known as
a) e-business.
b) electronic data interchange (EDI).
c) radio frequency identification (RFID).
d) point-of-sale data.
Difficulty: Easy
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
36. All the following are enablers of efficient supply chain management except
a) bar codes.
b) price tags.
c) RFID tags.
d) the Internet.
Difficulty: Medium
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
37. ___ is not a perceived advantage of radio frequency identification (RFID) technology.
a) Loss of personal privacy
b) Reduced stock-outs
c) Prevention of fraud or theft
d) Lower distribution costs
Difficulty: Medium
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
38. Supply chain integration does not involve ___ among supply chain members.
a) providing information
b) collaborating on replenishment
c) reducing competition
d) coordinating work flows
Difficulty: Medium
Learning Objective: Provide an overview of the four areas where information technology assists with supply chain integration.
Section Reference: 10.5 Supply Chain Integration
39. All of the following are performance metrics in the SCOR system, except
a) perfect order fulfillment.
b) production flexibility.
c) value-added productivity.
d) asset fulfillment.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
40. Increased uncertainty and variability in a supply chain typically results in
a) faster deliveries.
b) more accurate order fulfillment.
c) larger inventories.
d) lower costs.
Difficulty: Medium
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
41. One way to reduce the bullwhip effect is for supply chain members to
a) make ordering decisions independently of each other.
b) create demand forecasts independently of other supply chain members.
c) share demand forecasts with other supply chain members.
d) restrict information flows between supply chain members.
Difficulty: Medium
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
42. Inventory turnover is computed by
a) dividing the cost of goods sold by the average aggregate inventory value.
b) dividing the average aggregate inventory value by costs of goods sold.
c) multiplying the average aggregate inventory value by cost of goods sold.
d) subtracting cost of goods sold from the average aggregate inventory value.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
43. A company that produces small electric motors for treadmills had cost of goods sold last year of $241,000,000. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below:
$12,379,000 | |
Work-In-Process | $7,631,000 |
Finished Goods | $9,275,000 |
If the company operates 365 days a year, the days of supply being held in inventory is
a) 44.35.
b) 27.39.
c) 8.23.
d) 0.1215.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
44. A company that produces specialized video equipment had cost of goods sold last year of $127,000,000. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below:
$6,189,000 | |
Work-In-Process | $2,541,000 |
Finished Goods | $3,710,000 |
If the company operates 50 weeks per year, then the number of inventory turns would be
a) 0.0979.
b) 4.3795.
c) 8.9784.
d) 10.2090.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
45. A company that produces specialized video equipment had cost of goods sold last year of $127,000,000. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below:
Raw Materials | $6,189,000 |
Work-In-Process | $2,541,000 |
Finished Goods | $3,710,000 |
If the company operates 50 weeks per year, then the weeks of supply in inventory would be
a) 4.898.
b) 0.098.
c) 10.209.
d) 35.75.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
46. A company that produces printer cartridges had cost of goods sold last year of $629,462,423. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below:
Raw Materials | $7,367,528 |
Work-In-Process | $22,893,232 |
Finished Goods | $16,523,451 |
If the company operates 50 weeks per year, then the number of inventory turns would be
a) 3.720.
b) 2.493.
c) 13.4546.
d) 28.33.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
47. A company that produces printer cartridges had cost of goods sold last year of $629,462,423. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below:
Raw Materials | $7,367,528 |
Work-In-Process | $22,893,232 |
Finished Goods | $16,523,451 |
If the company operates 50 weeks per year, then the weeks of supply in inventory would be
a) 3.716.
b) 2.493.
c) 13.4546.
d) 28.33.
Difficulty: Hard
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
48. The fraction of orders filled by a distribution centre or warehouse within a specific time period is referred to as the
a) inventory turnover.
b) inventory supply time.
c) fill rate.
d) aggregate orders processed.
Difficulty: Medium
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
49. Which of the following is not a key performance indicator used in supply chain management?
a) fill rate
b) days of supply
c) cost of goods
d) inventory turns.
Difficulty: Medium
Learning Objective: Discuss tools for monitoring supply chain performance and calculate key performance indicators.
Section Reference: 10.6 Measuring Supply Chain Performance
SHORT-ANSWER ESSAY QUESTIONS
50. What is a supply chain?
Difficulty: Easy
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
51. Who are the upstream and downstream supply chain members?
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
52. What processes comprise the supply chain and how are the processes integrated?
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
53. What is the bullwhip effect and how does it occur?
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
54. List and define four information technology supply chain enablers.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
55. List and explain the three key supply chain performance indicators.
Difficulty: Medium
Learning Objective: Explain characteristics and management strategies of the modern supply chain.
Section Reference: 10.2 The Management of Supply Chains
56. What is the role of information and information technology in managing the supply chain?
Difficulty: Medium
Learning Objective: Discuss information technologies currently available for supply chain management.
Section Reference: 10.4 Information Technology: A Supply Chain Enabler
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Operations Management Canadian 1e Complete Test Bank
By Roberta S. Russell