Ch11 Supply Chain Mgmt – Test Bank | 10th Global Ed

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Operations Management, 10e, Global Edition (Heizer/Render)

Chapter 11 Supply-Chain Management

1) Operations managers are finding online auctions a fertile area for disposing of discontinued inventory

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

2) The key to effective supply-chain management is to get many suppliers to compete with each other, in order to drive down prices.

Diff: 1

Topic: The supply chain's strategic importance

Objective: LO11-1

3) Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation.

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

4) The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

5) Supply-chain management faces additional challenges, such as those related to quality production and distribution systems, when companies enter growing global markets.

Diff: 2

Topic: Supply-chain economics

AACSB: Multicultural and Diversity

Objective: LO11-1

6) McDonald's was able to utilize existing plants and transportation systems in preparing the supply chain for opening its stores in Moscow.

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

7) When using the low-cost strategy for supply chain-management, the firm should invest aggressively to reduce production lead time.

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

8) Savings in the supply chain exert more leverage as the firm has a lower net profit margin.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

9) A reduction in inventory costs is one reason for making rather than buying.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

10) Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

11) Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

12) Supply-chain decisions are not generally strategic in nature, because purchasing is an ordinary expense to most firms.

Diff: 1

Topic: Supply-chain economics

Objective: LO11-1

13) The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

14) Because service firms do not acquire goods and services externally, their supply-chain management issues are insignificant.

Diff: 1

Topic: Supply-chain economics

Objective: LO11-1

15) Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.

Diff: 1

Topic: Ethics and sustainability

AACSB: Ethical Reasoning

Objective: LO11-1

16) With the many-suppliers strategy, the order usually goes to the supplier that offers the best quality.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

17) Developing long-term, "partnering" relationships with a few suppliers is a long-standing American purchasing strategy.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

18) Vertical integration, whether forward or backward, requires the firm to become more specialized.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

19) A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

20) Keiretsus offer a middle ground between few suppliers and vertical integration.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

21) In several industries, online exchanges have been created by buyers.

True

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

22) The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

23) Vendor-Managed Inventory is a form of outsourcing.

Diff: 1

Topic: Managing the supply chain

Objective: LO11-3

24) In the vendor evaluation phase, most companies will use the same list of criteria and the same criteria weights.

Diff: 2

Topic: Vendor selection

Objective: LO11-4

25) One classic type of negotiation strategy is the market-based price model.

Diff: 2

Topic: Vendor selection

Objective: LO11-4

26) Drop shipping results in time and shipping cost savings.

Diff: 1

Topic: Managing the supply chain

Objective: LO11-3

27) The supply-chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

28) Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

29) Blanket orders are a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

30) Bar code and radio frequency technology, like that used to track UPS or FedEx packages on their global journeys, can also be used to track objects within the boundaries of a warehouse or shop.

Diff: 1

Topic: Logistics management

AACSB: Use of IT

Objective: LO11-5

31) Waterways are an attractive distribution system when speed is more important than shipping cost.

Diff: 2

Topic: Logistics management

Objective: LO11-5

32) Logistics management can provide a competitive advantage through improved customer service.

Diff: 2

Topic: Logistics management

Objective: LO11-5

33) With the growth of just-in-time practices, railroads have made large gains in the share of the nation's transport that they haul.

Diff: 2

Topic: Logistics management

Objective: LO11-5

34) Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.

Diff: 1

Topic: Logistics management

Objective: LO11-5

35) Benchmark firms have driven down costs of supply-chain performance.

Diff: 2

Topic: Measuring supply-chain performance

Objective: LO11-6

36) The three major variations of online catalogs are

A) catalogs by vendors, catalogs by intermediaries, and exchanges provided by buyers

B) EDI, ERP, and ASN

C) cost-based, market-based, and competitive bidding

D) drop shipping, channel assembly, and postponement

E) all auction-based

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

37) Visibility throughout the supply chain is a requirement among supply-chain members for

A) mutual agreement on goals

B) mutual trust

C) compatible organizational cultures

D) local optimization

E) the bullwhip effect

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

38) Which of the following is not a concern of the supply chain?

A) warehousing and inventory levels

B) credit and cash transfers

C) suppliers

D) distributors and banks

E) maintenance scheduling

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

39) Which of the following is an aspect of environmental risk in supply-chain management?

A) political issues

B) management metrics

C) secure financial transactions

D) raw material availability

E) All of the above are environmental risks.

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

40) Toyota's policy of having two suppliers per component after its experience with fire and earthquakes is similar to Hark Rock Café's franchising in societies that have significant cultural or environmental barriers because

A) both companies are coping with environmental supply-chain risks

B) both companies are coping with process supply-chain risks

C) both companies are coping with control supply-chain risks

D) both companies are addressing outsourcing

E) None of the above accurately reflect the main similarity

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

41) McDonald's Russian "food town" is to __________ risk as Hard Rock Café's franchising in diverse political and cultural environments to overcome barriers is to __________ risk.

A) process, environmental

B) control, environmental

C) control, process

D) process, control

E) environmental, control

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

42) What type of negotiating strategy requires the supplier to open its books to the purchasers?

A) cost-based price model

B) market-based price model

C) competitive bidding

D) price-based model

E) none of the above

Diff: 2

Topic: Vendor selection

Objective: LO11-4

43) Which of the following statements is true regarding the leverage of supply-chain savings?

A) Supply chain leverage is about the same for all industries.

B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales.

C) Supply chain savings exert more leverage as the firm has a lower net profit margin.

D) Supply chain leverage depends only upon the percent of sales spent in the supply chain.

E) None of the above is true.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

44) One dollar saved in purchasing is

A) equivalent to a dollar earned in sales revenue

B) worth even more than a dollar earned in sales revenue

C) worth slightly more than a dollar earned because of taxes

D) worth from 35% in the technical instrument industry to 70% in the food products industry

E) only worthwhile if you are in the 50% tax bracket and still have a low profit margin

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

45) Which one of the following statements about purchasing is true?

A) The cost of purchases as a percent of sales is often small.

B) Purchasing provides a major opportunity for price increases.

C) Purchasing is always more efficient than making an item.

D) Purchasing has an impact on the quality of the goods and services sold.

E) Competitive bidding is a major factor in long-term cost reductions.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

46) Outsourcing

A) transfers traditional internal activities to outside vendors

B) utilizes the efficiency which comes with specialization

C) lets the outsourcing firm focus on its key success factors

D) None of the above are true of outsourcing.

E) All of the above are true of outsourcing.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

47) The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is

A) a standard use of the make or buy decision

B) not allowed by the ethics code of the Supply Management Institute

C) offshoring

D) outsourcing

E) keiretsu

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

48) The Institute for Supply Management

A) establishes laws and regulations for supply management

B) is an agency of the United Nations charged with promoting ethical conduct globally

C) publishes the principles and standards for ethical supply management conduct

D) prohibits backward integration into developing economies

E) All of the above are true.

Diff: 2

Topic: The supply chain's strategic importance

AACSB: Ethical Reasoning

Objective: LO11-1

49) In supply-chain management, ethical issues

A) are particularly important because of the enormous opportunities for abuse

B) may be guided by company rules and codes of conduct

C) become more complex the more global is the supply chain

D) may be guided by the principles and standards of the Institute for Supply Management

E) All of the above are true.

Diff: 2

Topic: The supply chain's strategic importance

AACSB: Ethical Reasoning

Objective: LO11-1

50) Keeping a product generic as long as possible before customizing is known as

A) postponement

B) keiretsu

C) channel assembly

D) forward integration

E) backward integration

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

51) Which one of the following is not a supply-chain strategy?

A) negotiation with many suppliers

B) vertical integration

C) keiretsu

D) short-term relationships with few suppliers

E) virtual companies

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

52) A disadvantage of the "few suppliers" strategy is

A) the risk of not being ready for technological change

B) the lack of cost savings for customers and suppliers

C) possible violations of the Sherman Antitrust Act

D) the high cost of changing partners

E) All of the above are disadvantages of the "few suppliers" strategy.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

53) The purchasing approach that holds the suppliers responsible for maintaining the necessary technology, expertise, and forecasting ability plus cost, quality, and delivery competencies is

A) few suppliers

B) many suppliers

C) Keiretsu

D) vertical integration

E) virtual companies

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

54) Which of the following is not an advantage of the "few suppliers" concept?

A) suppliers' willingness to participate in JIT systems

B) trust

C) vulnerability of trade secrets

D) creation of value by allowing suppliers to have economies of scale

E) suppliers' willingness to provide technological expertise

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

55) Which of the following supply-chain strategies creates value by allowing suppliers to have economies of scale?

A) suppliers becoming part of a company coalition

B) vertical integration

C) long-term partnering with a few suppliers

D) negotiating with many suppliers

E) developing virtual companies

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

56) Which of the following is not a condition that favors the success of vertical integration?

A) availability of capital

B) availability of managerial talent

C) required demand

D) small market share

E) All of the above favor the success of vertical integration.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

57) Which of the following best describes vertical integration?

A) to sell products to a supplier or a distributor

B) to develop the ability to produce products which complement the original product

C) to produce goods or services previously purchased

D) to develop the ability to produce the specified good more efficiently than before

E) to build long-term partnerships with a few suppliers

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

58) A fried chicken fast-food chain that acquired feed mills and poultry farms has performed

A) horizontal integration

B) forward integration

C) backward integration

D) current transformation

E) job expansion

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

59) Vertical integration appears particularly advantageous when the organization has

A) a very specialized product

B) a large market share

C) a very common, undifferentiated product

D) little experience operating an acquired vendor

E) purchases that are a relatively small percent of sales

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

60) A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of

A) horizontal integration

B) forward integration

C) backward integration

D) current transformation

E) keiretsu

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

61) Japanese manufacturers often take a middle ground between purchasing from a few suppliers and vertical integration. This approach is

A) kanban

B) keiretsu

C) samurai

D) poka-yoke

E) kaizen

Diff: 2

Topic: Supply-chain strategies

AACSB: Multicultural and Diversity

Objective: LO11-2

62) The Japanese concept of a company coalition of suppliers is

A) poka-yoke

B) kaizen

C) keiretsu

D) dim sum

E) illegal

Diff: 2

Topic: Supply-chain strategies

AACSB: Multicultural and Diversity

Objective: LO11-2

63) Which of the following is not an advantage of a virtual company?

A) speed

B) total control over every aspect of the organization

C) specialized management expertise

D) low capital investment

E) flexibility

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

64) An advantage of a joint venture over vertical integration is

A) reduced risk

B) reduced costs

C) compromised competitive advantages

D) globalization

E) flexibility

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

65) When Daimler and BMW pooled resources to develop standardized auto components the supply-chain strategy could best be described by

A) keiretsu

B) virtual companies

C) joint venture

D) vertical integration

E) few suppliers

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

66) Which of the following best describes Vizio's supply chain

A) few suppliers

B) keiretsu

C) joint venture

D) vertical integration

E) virtual company

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

67) Local optimization is a supply-chain complication best described as

A) optimizing one's local area without full knowledge of organizational needs

B) obtaining very high production efficiency in a decentralized supply chain

C) the prerequisite of global optimization

D) the result of supply chains built on suppliers with compatible corporate cultures

E) the opposite of the bullwhip effect

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

68) The "bullwhip" effect

A) occurs as orders are relayed from retailers to wholesalers

B) results in increasing fluctuations at each step of the sequence

C) increases the costs associated with inventory in the supply chain

D) occurs because of distortions in information in the supply chain

E) all of the above

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

69) A restaurant runs a special promotion on lobster and plans to sell twice as many lobster as usual. When this large order is sent to the distributer the distributer assumes the large size is a trend, not a one-time event. The distributer therefore places an even larger order with the fisherman. This is the result of

A) local optimization

B) the bullwhip effect

C) large Lots

D) incentives

E) A and B

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

70) Giving quantity discounts based on annual volume instead of single order size helps to control which supply-chain issue?

A) local optimization

B) incentives

C) large lot purchasing

D) A and C

E) B and C

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

71) Which of the following is not an opportunity for effective management in the supply chain?

A) accurate "pull" data

B) vendor managed inventory

C) postponement

D) local optimization

E) channel assembly

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

72) Which of the following is an opportunity for effective management in the supply chain?

A) random "pull" data

B) multistage control of replenishment

C) the bullwhip effect

D) customer managed inventory

E) channel assembly

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

73) Drop shipment

A) is equivalent to cross-docking

B) is the opposite of a blanket order

C) means the supplier will ship directly to the end consumer, rather than to the seller

D) is the same thing as keiretsu

E) is a good reason to find a new firm to ship your products

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

74) A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing

A) postponement

B) cross-docking

C) channel assembly

D) drop shipping

E) float reduction

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

75) Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of

A) vendor-managed inventory

B) standardization

C) backward integration

D) postponement

E) timely customization

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

76) All of the following are "opportunities" for supply-chain management except

A) postponement

B) drop shipment

C) blanket orders

D) channel assembly

E) line balancing

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

77) Which of the following is an advantage of the postponement technique?

A) reduction in automation

B) early customization of the product

C) better quality of the product

D) reduction in training costs

E) reduction in inventory investment

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

78) A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing

A) postponement

B) drop shipping

C) channel assembly

D) passing the buck

E) float reduction

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

79) TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of

A) blanket orders

B) standardization

C) postponement

D) lot size reduction

E) single stage control of replenishment

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

80) A grocery store is trying to find a new vendor for carrots. Its three criteria are 1. Freshness, 2. Lot Size, and 3. Cost with factor weights of .6, .1, and .3 respectively. What would a vendor with ratings of 6, 8, and 10 in the three respective categories score as a weighted total?

A) 24

B) 1

C) 7.4

D) 9.8

E) none of the above

Diff: 2

Topic: Vendor selection

AACSB: Analytic Skills

Objective: LO11-4

81) What is the average capacity utilization in the motor carrier (trucking) industry?

A) 25%

B) 50%

C) 75%

D) 95%

E) 99%

Diff: 2

Topic: Logistics management

Objective: LO11-5

82) What term is used to describe the outsourcing of logistics?

A) E-Logistics

B) Shipper Managed Inventory (SMI)

C) Hollow Logistics

D) Sub-Logistics

E) Third-Party Logistics

Diff: 1

Topic: Logistics management

Objective: LO11-5

83) E-procurement

A) works best in long-term contract situations, and is not suited for auctions

B) is the same thing as Internet purchasing

C) represents only the auction and bidding components of Internet purchasing

D) is illegal in all states except Nevada and New Jersey

E) All of the above are true of e-procurement.

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

84) The three classic types of negotiation strategies are

A) vendor evaluation, vendor development, and vendor selection

B) Theory X, Theory Y, and Theory Z

C) many suppliers, few suppliers, and keiretsu

D) cost-based price model, market-based price model, and competitive bidding

E) None of the above is correct.

Diff: 2

Topic: Vendor selection

Objective: LO11-4

85) Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover?

A) 12.50

B) 10.00

C) 42.00

D) 4.16

E) 20.00

Diff: 2

Topic: Measuring supply-chain performance

AACSB: Analytic Skills

Objective: LO11-6

86) The three stages of vendor selection, in order, are

A) vendor evaluation, vendor development, and negotiations

B) vendor development, vendor evaluation, and vendor acquisition

C) introduction, growth, and maturity

D) vendor evaluation, negotiations, and vendor development

E) EDI, ERP, and ASN

Diff: 1

Topic: Vendor selection

Objective: LO11-4

87) Which one of the following distribution systems offers quickness and reliability when emergency supplies are needed overseas?

A) trucking

B) railroads

C) airfreight

D) waterways

E) pipelines

Diff: 1

Topic: Logistics management

Objective: LO11-5

88) With the growth of JIT, which of the following distribution systems has been the biggest loser?

A) trucking

B) railroads

C) airfreight

D) waterways

E) pipelines

Diff: 2

Topic: Logistics management

Objective: LO11-5

89) By which distribution system is 90 percent of the nation's coal shipped?

A) railroads

B) trucks

C) waterways

D) pipelines

E) none of the above

Diff: 1

Topic: Logistics management

Objective: LO11-5

90) Which distribution system is the fastest growing mode of shipping?

A) railroads

B) trucks

C) airfreight

D) waterways

E) pipelines

Diff: 2

Topic: Logistics management

Objective: LO11-5

91) Which of the following devices represents an opportunity for technology to improve security of container shipments?

A) devices that identify truck and container location

B) devices that sense motion

C) devices that measure radiation or temperature

D) devices that can communicate the breaking of a container lock or seal

E) all of the above

Diff: 1

Topic: Logistics management

Objective: LO11-5

92) Which one of the following performance measures is not true of a world class firm?

A) short time placing an order

B) high percentage of accepted material

C) large lead time

D) high percentage of on-time deliveries

E) low number of shortages per year

Diff: 1

Topic: Measuring supply-chain performance

Objective: LO11-6

93) Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold?

A) 12.50

B) 5.20

C) 2.60

D) 0.08

E) 4.16

Diff: 2

Topic: Measuring supply-chain performance

AACSB: Analytic Skills

Objective: LO11-6

94) __________ is the management of activities that procure raw materials, transform those materials into intermediate goods and final products, and deliver the products through a distribution system.

Diff: 1

Topic: The supply chain's strategic importance

Objective: LO11-1

95) The __________ decision involves choosing between producing a component or a service internally and purchasing it externally.

Diff: 1

Topic: Supply-chain economics

Objective: LO11-1

96) Transferring to external vendors a firm's activities that have traditionally been internal is known as __________.

Diff: 1

Topic: Supply-chain economics

Objective: LO11-1

97) The __________ is an organization that has published principles and standards for ethical supply management conduct.

Diff: 1

Topic: Ethics and sustainability

AACSB: Ethical Reasoning

Objective: LO11-1

98) The supply-chain strategy of __________ increases the willingness to participate in JIT.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

99) __________ is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

100) __________ is a Japanese term to describe suppliers who become part of a company coalition.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

101) __________ rely on a variety of supplier relationships to provide services on demand.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

102) Local optimization, incentives, and large lots all contribute to __________ about what is really occurring in the supply chain.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

103) __________ involves delaying any modifications or customization to the product as long as possible in the production process.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

104) __________ postpones final assembly of a product so the distribution channel can assemble it.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

105) __________ involves reducing the number of variations in materials and components as an aid to cost management.

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

106) __________ is a standardized data-transmittal format for computerized communications between organizations.

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

107) __________ is the term describing purchasing facilitated through the internet.

Diff: 1

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

108) Of the three stages of vendor selection, the stage at which criteria, weights, and scores allow a numeric comparison is __________.

Diff: 2

Topic: Vendor selection

Objective: LO11-4

109) __________ is an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities.

Diff: 2

Topic: Logistics management

Objective: LO11-5

110) The fastest growing mode of shipping is __________.

Diff: 1

Topic: Logistics management

Objective: LO11-5

111) What is e-procurement?

Diff: 1

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

112) As the firm strategies vary from low-cost to response to differentiation, how does this impact the criteria used for selection of a supply-chain strategy?

Diff: 2

Topic: The supply chain's strategic importance

Objective: LO11-1

113) What are the three versions of online catalogs?

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

114) What are the special requirements of supply-chain systems in global environments?

Diff: 2

Topic: The supply chain's strategic importance

AACSB: Multicultural and Diversity

Objective: LO11-1

115) Identify the reasons for making in the make-or-buy decision.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

116) Identify the reasons for buying in the make-or-buy decision.

Diff: 2

Topic: Supply-chain economics

Objective: LO11-1

117) How are outsourcing and vertical integration related? Can a single firm successfully do both?

Diff: 3

Topic: Managing the supply chain

AACSB: Reflective Thinking

Objective: LO11-3

118) Of all areas of the organization, why is the supply chain especially vulnerable to ethical lapses?

Diff: 2

Topic: Ethics and sustainability

AACSB: Ethical Reasoning

Objective: LO11-1

119) Identify and describe briefly the five supply-chain strategies.

2. The strategy of few suppliers develops long, "partnering" relationships with a few suppliers who will work with the purchaser in satisfying the end customer.

3. Firms that practice vertical integration may decide to pursue backward integration by actually buying the supplier.

4. Suppliers become part of a company coalition in the keiretsu strategy.

5. With the virtual companies strategy, firms use suppliers on an as-needed basis.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

120) Can an organization's plans for vertical integration be supported by the tools of make-or-buy analysis? Explain; provide an example.

Diff: 2

Topic: Supply-chain strategies

AACSB: Reflective Thinking

Objective: LO11-2

121) Identify the advantages and disadvantages of using the few suppliers approach.

Diff: 2

Topic: Supply-chain strategies

Objective: LO11-2

122) Describe some ways that effective supply-chain partners build and utilize mutual trust.

Diff: 2

Topic: Managing the supply chain

AACSB: Communication

Objective: LO11-3

123) What opportunities exist for reducing the "bullwhip" effect, and improving the supply chain?

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

124) What is a keiretsu?

Diff: 1

Topic: Supply-chain strategies

Objective: LO11-2

125) Describe the state of capacity utilization in the motor carrier (trucking) industry. What, if anything, has been implemented by the industry to address the issue?

Diff: 2

Topic: Logistics management

Objective: LO11-5

126) Describe vendor managed inventory (VMI). How is it related to outsourcing? Cite an example from your experiences as a shopper.

Diff: 1

Topic: Managing the supply chain

AACSB: Reflective Thinking

Objective: LO11-3

127) Name three common things that contribute to distortion of information about the supply chain?

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

128) Why is channel assembly popular in the personal computer industry?

Diff: 2

Topic: Managing the supply chain

Objective: LO11-3

129) Define EDI.

Diff: 2

Topic: E-Procurement

AACSB: Use of IT

Objective: LO11-3

130) What advantages may result from effectively outsourcing the logistics function to a third party?

Diff: 2

Topic: Logistics management

Objective: LO11-5

131) What are the three negotiation strategies? Briefly describe each of them.

Diff: 2

Topic: Vendor selection

Objective: LO11-4

132) Identify three specific measures that indicate how well assets are utilized. What are the formulas for each measure?

Inventory turnover = Cost of goods sold/Inventory investment

Weeks of supply = Inventory investment/(Annual cost of goods sold/52 weeks)

Diff: 2

Topic: Measuring supply-chain performance

Objective: LO11-6

133) What are the advantages of shipping by truck?

Diff: 2

Topic: Logistics management

Objective: LO11-5

134) Identify some technological advances that can serve to improve logistics management and also improve shipping security.

Diff: 2

Topic: Logistics management

AACSB: Use of IT

Objective: LO11-5

135) A regional grocery chain spends 70 percent of its sales in the supply chain, and has a net profit margin of 2 percent. They have just initiated an Internet-based inventory management program that is expected to save the chain $500,000 per year. What is the equivalent increase in sales to this saving? Use Table 11.3, reproduced below.

Diff: 2

Topic: Supply-chain economics

AACSB: Analytic Skills

Objective: LO11-1

136) A shipment of parts valued at $75,000 needs to be shipped from Tampa, FL, to Chicago, IL. They could be shipped by rail, taking 15 days at a cost of $1,575, or by truck, taking 4 days at a cost of $2,640. The annual holding cost rate for this type of item has been estimated at 22%. What option is more economical?

Days saved by using truck is 15-5=11 days

11 days x $45.21 = $497.27

Extra shipping cost = $2,640 - $1,575 = $1,065

The $497.27 savings does not offset the extra shipping cost of $1,065. Send the shipment by rail.

Diff: 2

Topic: Logistics management

AACSB: Analytic Skills

Objective: LO11-5

137) A transportation firm spends 60 percent of its sales in the supply chain, and has a net profit margin of 6 percent. The company is about to invest $100,000 in one of two ventures. One venture is advertising-based, and is expected to increase revenues (sales) by $600,000 (after spending the $100,000). The other venture applies the money in supply-chain efficiencies that are expected to save $200,000 (again, after spending the $100,000). Which of these two ventures offers the larger increase in profit to the firm? Use Table 11.3, reproduced below.

Diff: 2

Topic: Supply-chain economics

AACSB: Analytic Skills

Objective: LO11-1

138) A company is about to select a vendor for the outsourcing of all of its engineering, environmental, and CAD requirements. It has identified four criteria critical to the selection. These criteria, and their importance weights, appear below. Three firms, A, C, and E, have indicated that they are interested in this position. The company has scored each of the three candidates on these criteria, using a 1-10 scale, where 10 is best. Candidate A scored 7, 7, 7, and 5 on the four criteria. Candidate C scored 9, 4, 8, and 6. Candidate E scored 5, 10, 10, and 7. Which vendor has the highest composite score?

Diff: 2

Topic: Vendor selection

AACSB: Analytic Skills

Objective: LO11-4

139) The following data are pulled from a recent Walsh Manufacturing annual report.

Assets

Raw material inventory $120,000

Work-in-process inventory $50,000

Finished goods inventory $300,000

Property, plant & equipment $500,000

Other assets $200,000

Total assets $1,170,000

Condensed Income Statement

Revenue $2,000,000

Cost of goods sold $600,000

Other expenses $1,000,000

Net income $400,000

Calculate: (a) Percent invested in inventory, (b) Inventory turnover, and (c) Weeks of supply.

(b) Inventory turnover = 600,000/(120,000+50,000+300,000) = 1.28

(c) Weeks of supply = (120,000+50,000+300,000)/(600,000/52) = 40.73

Diff: 2

Topic: Measuring supply-chain performance

AACSB: Analytic Skills

Objective: LO11-6

140) A grocery chain is interested in exploring the impact effective supply-chain management would have. Suppose that for every $1 of sales 4% is profit, 50% is spent in the supply chain, and the remaining 46% is evenly divided between fixed and variable costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit? Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (27% profit margin combined now).

*Note- Problem derived from Example 1 in the text, however students are asked to do the derivation instead of simply reading a chart (the derivation process is shown in the example as support for the chart

Diff: 2

Topic: Supply-chain economics

AACSB: Analytic Skills

Objective: LO11-1

141) A company is deciding where to assign its summer intern. The manager estimates that the intern can save $10,000 in the supply chain or increase sales (revenue) by $25,000. If sales (revenue) is divided into the three categories shown in the table where should the manager assign the intern to maximize profits?

*Note- Problem derived from Example 1 in the text, however students are asked to do the derivation instead of simply reading a chart (the derivation process is shown in the example as support for the chart)

Diff: 2

Topic: Supply-chain economics

AACSB: Analytic Skills

Objective: LO11-1

142) A company is deciding where to assign its summer intern. The manager estimates that the intern can save the company $10,000 in supply chain costs. What increase in sales (revenue) by the intern is required to show an equal profit?

*Note- Problem derived from Example 1 in the text, however students are asked to do the derivation instead of simply reading a chart (the derivation process is shown in the example as support for the chart)

Diff: 2

Topic: Supply-chain economics

AACSB: Analytic Skills

Objective: LO11-1

143) A car dealer is trying to reduce the number of days of inventory held at any given time on the lot. Assume that he projects the daily sales rate as the last two months averaged. Assume that the monthly sales rate for August was 12 cars/day, September was 14 cars/day, October was 12 cars/day, and November was 8 cars/day. Given an inventory of 500 cars at the start of November and 400 at the start of December, determine the number of days of inventory on hand at the start of November and December (also assume each month has EXACTLY 30 days of sales).

December sell rate = (Oct+Nov)/2 = (12+8)/2 = 10 cars/day

November on hand = inventory/daily sales rate = 500/13 = 38.5 days

December on hand = inventory/daily sales rate = 400/10 = 40 days

*Note- August data is given despite the fact that it is not required, students must be able to selectively pick the data required.

Diff: 2

Topic: Measuring supply-chain performance

AACSB: Analytic Skills

Objective: LO11-6

144) A manufacturing plant had $.74 of raw materials, $.23 of in-progress inventory, and $1.03 of finished goods inventory at month's end. If monthly sales were $10, what is the turnover? (assume all units are in thousands, i.e. $1 is actually $1000)

Diff: 2

Topic: Measuring supply-chain performance

AACSB: Analytic Skills

Objective: LO11-6

145) A container of ball-bearings valued at $25,000, currently located in Houston, TX, needs to be delivered to the Morton, IL, plant. The standard shipment method takes two days. However, for an additional charge of $500, the container can be sent overnight. The annual holding cost rate for this type of item has been estimated at 28%. What option is more economical?

Diff: 2

Topic: Logistics management

AACSB: Analytic Skills

Objective: LO11-5