Chapter 11 - Supply Chain Management

Chapter 11 Supply Chain Management

True / False Questions 1. A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users. TRUE

Difficulty: Easy TLO: 1 Taxonomy: Knowledge

2. n supply chain organi!ations, functions must operate independently of each other. FALSE

Difficulty: Easy TLO: 14 Taxonomy: Knowledge

". C#$% is the use of e-mail &etween vendors and purchasing to place orders. FALSE

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

'. (istri&ution re)uirements planning *(%#+ is an e,panded concept of M%# which incorporates multinational inventory management. FALSE

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

-. .very &usiness organi!ation is part of at least one supply chain. TRUE

Difficulty: Medium TLO: 1 Taxonomy: Knowledge

/. 0 1 delivery, i.e. fre)uent deliveries of small shipments, actually results in an increase in the transportation cost per unit. TRUE

Difficulty: Medium TLO: 4 Taxonomy: Knowledge

2. 1he materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the &eginning of the chain. FALSE

Difficulty: Medium TLO: 3 Taxonomy: Knowledge

3. Supply chains are sometimes referred to as value chains &ecause they reflect the concept that value is added as goods and services progress through the chain. TRUE

Difficulty: Medium TLO: 1 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

4. 1he goal of supply chain management is to synchroni!e supply and demand of all of the organi!ations that are part of the chain. TRUE

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

15. 1he need for supply chain management increases as glo&ali!ation increases. TRUE

Difficulty: Medium TLO: Taxonomy: Knowledge

11. 1he design of the supply chain and esta&lishing partnerships with vendors and distri&utors are e,amples of operating issues in a supply chain. FALSE

Difficulty: Medium TLO: ! Taxonomy: Knowledge

12. 1raffic management refers to truc6 movement within our par6ing areas. FALSE

Difficulty: "a#d TLO: 11 Taxonomy: Knowledge

1". 7ne of the ma8or reasons for a company to adopt third party logistics is to concentrate on one's core &usiness. TRUE

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

1'. .-commerce refers to the use of electronic technology to facilitate &usiness transactions. TRUE

$$%&': (T Difficulty: Easy TLO: 4 Taxonomy: Knowledge

1-. .-commerce involves &usiness-to-&usiness *929+ interaction only. FALSE

Difficulty: Easy TLO: 4 Taxonomy: Knowledge

1/. (isintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain. TRUE

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

12. Most people wor6ing for a &usiness organi!ation are somehow involved with the supply chain of that &usiness. TRUE

Difficulty: Easy TLO: 1 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

13. Strategic partnering is encouraged when two or more &usiness organi!ations have complementary products or services that would &enefit the others. TRUE

Difficulty: Easy TLO: ) Taxonomy: Knowledge

14. $orming strategic partnerships is &eneficial for two or more &usiness organi!ations that have the same products or services. FALSE

Difficulty: Medium TLO: ) Taxonomy: Knowledge

25. nventory velocity refers to the average speed *in miles:hour+ of material handling e)uipment in a warehouse. FALSE

Difficulty: Easy TLO: 1* Taxonomy: Knowledge

21. ;lo&al supply chains ma6e purchasing easier &ecause of more options. FALSE

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

22. Centrali!ed or decentrali!ed purchasing is directly related to the si!e of an organi!ation. FALSE

Difficulty: "a#d TLO: 7 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

2". 1he optimi!ation of the supply chain uses a mathematical model to determine the optimal num&er of &usiness organi!ations to &e included in the chain. FALSE

Difficulty: Medium TLO: 3 Taxonomy: Knowledge

2'. nformation technology is the 6ey to success of glo&al supply chains. TRUE

Difficulty: Easy TLO: Taxonomy: Knowledge

2-. 9ullwhip effect refers to a phenomenon that demand variations that e,ist at the customer end of the supply chain are magnified as orders are generated &ac6 through the supply chain. TRUE

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

2/. Starting with the final customer and moving &ac6ward through the supply chain, &atch si!es and the level of safety stoc6 tend to decrease. FALSE

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

22. Scheduling and maintaining e)uipment are operational decisions. TRUE

Difficulty: Easy TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

23. 1o prevent temporary storage in a warehouse, cross doc6ing can &e used. TRUE

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

24. (elayed differentiation is a means of increasing product variety without &uilding the customi!ed product from scratch or 6eeping large inventories of custom products. TRUE

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

"5. %eturned goods are part of reverse logistics. TRUE

Difficulty: Medium TLO: 12 Taxonomy: Knowledge

"1. A "5< reduction in product and service variety won't really affect the efficiency of a supply chain. FALSE

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

"2. 1he service function of purchasing interfaces with many area including legal, accounting, and engineering functions. TRUE

Difficulty: Easy TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

"". ;ate 6eeping manages the cost of shipping returned goods. FALSE

Difficulty: "a#d TLO: 12 Taxonomy: Knowledge

"'. 7utsourcing logistics gives a company less fle,i&ility &ecause it forces them to focus more on core &usinesses. FALSE

Difficulty: Medium TLO: 12 Taxonomy: Knowledge

"-. =endor analysis e,amines the function of purchased parts and materials with a view towards improvement or cost reduction. FALSE

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

"/. >sing third party fulfillment means losing control of fulfillment. TRUE

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

"2. #rice is the primary determining factor in choosing a vendor since most products are essentially the same. FALSE

Difficulty: Easy TLO: 4 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

"3. %$ ( eliminates the need for counting and &ar-code scanning. TRUE

Difficulty: Medium TLO: 4 Taxonomy: Knowledge

"4. 1he importance of purchasing relates only to the cost of parts and materials purchased, which is often /5< or more of the cost of finished goods. FALSE

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

'5. 1he importance of purchasing is the cost of goods purchased, the )uality of goods and services, and the timing of deliveries of goods or services. TRUE

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

'1. =endor analysis is the process that evaluates the source of supply in terms of price, )uality, reputation, and service. TRUE

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

'2. n e-commerce, the front-end design is significantly more important than the &ac6-end design. FALSE

$$%&': (T Difficulty: Medium TLO: + Taxonomy: Knowledge

'". 7ne disadvantage to %$ ('s is that they re)uire a ?line of sight' for reading. FALSE

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

''. (ecentrali!ed purchasing can usually offer )uic6er response than centrali!ed purchasing. TRUE

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

'-. Some firms have structured their procurement function to include &oth centrali!ed and decentrali!ed purchasing. TRUE

Difficulty: Easy TLO: 4 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

'/. Creating an effective supply chain re)uires lin6ing the mar6eting, distri&ution, and supplier channels. TRUE

Difficulty: Medium TLO: 13 Taxonomy: Knowledge

'2. An advantage of decentrali!ed purchasing is the attention given to local needs. TRUE

Difficulty: Medium TLO: 7 Taxonomy: Knowledge

'3. .vent management is the advanced planning re)uired for ma8or performances such as concerts or conferences. FALSE

Difficulty: Medium TLO: ! Taxonomy: Knowledge

'4. Supplier certification is the first step re)uired in a supplier audit program. FALSE

Difficulty: Medium TLO: ) Taxonomy: Knowledge

-5. (esign and purchasing people should wor6 closely &ecause changes in design, specifications, or materials can impact future purchase re)uirements. TRUE

Difficulty: Medium TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

-1. 1he purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items. FALSE

Difficulty: "a#d TLO: ! Taxonomy: Knowledge

-2. #roducing and shipping in large lots may reduce costs &ut increase lead times. TRUE

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

-". =ariations create uncertainty, there&y causing inefficiencies in a supply chain. TRUE

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

-'. (isintermediation is the refusal of one party to use mediators for price negotiation. FALSE

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

Multiple Choice Questions

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Chapter 11 - Supply Chain Management

--. @hich of the following is not a goal of supply chain managementA A. fewer suppliers and long-term relationship 9. small lot si!es C. on time deliveries D lowest possi&le transportation costs .. delivery often to the place of use

Difficulty: Easy TLO: 2 Taxonomy: Knowledge

-/. Bogistics includes all of these e,ceptC A. the movement of materials within a production facility 9. incoming shipments of goods or materials C. outgoing shipments of goods or materials D customer selection .. returned goods processing

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

-2. Small changes in consumer demand can result in large variations in orders placed &ecause of the A. Supply chain 9. Safety stoc6 re)uirement C. Bead time effect D 9ullwhip effect .. $C$S scheduling

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

-3. %$ ( chipsC * + are used to trac6 goods in distri&ution * + are used to trac6 8o& progress in production * + may provide special instructions to operators * =+ can &e used in inventory record 6eeping A. and only 9. and only C. , , and = D , , and = .. = only

Difficulty: Medium TLO: 4 Taxonomy: Knowledge

-4. @hich of the following is not a &enefit of %$ (A A. increased productivity 9. elimination of paper wor6 C fre)uent deliveries of smaller shipments (. reduction in clerical la&or .. increased accuracy

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

/5. A factor that ma6es it desira&le for &usiness organi!ations to actively manage their supply chains isC A. more potential vendors ! increasing glo&ali!ation C. downsi!ing (. the internet .. %$ ('s

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

/1. @hich of the following is not a &enefit of effective supply chain managementA A. lower inventory costs 9. higher productivity C. shorter lead times (. greater customer loyalty E larger num&er of suppliers

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

/2. @hich of the following is not a measure of the relia&ility of the supply chainA A supply chain response time 9. on-time delivery C. fill rate (. lead time varia&ility .. improving e-fulfillment statistics

Difficulty: "a#d TLO: 13 Taxonomy: Knowledge

/". 1he automatic identification of material is part ofC A. holding costs ! %$ ( C. wor6ing capital reduction (. net present value calculations .. vendor analysis

Difficulty: Medium TLO: 4 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

/'. @hich of the following is not an application of .-&usinessA A. internet &uying and selling 9. e-mail C. order and shipment trac6ing (. electronic data interchange *.( + E universal product codes

Difficulty: Medium TLO: + Taxonomy: Knowledge

/-. @hich of the following is an advantage of e-&usinessA * + reduction of transaction costs * + shortened supply chain response time * + greater customer loyalty A. 9. C and (. and .. , , and

Difficulty: Medium TLO: + Taxonomy: Knowledge

//. @hich of the following is a &arrier to integration of separate organi!ations in the supply chainA * + conflicting o&8ectives of the companies in the chain. * + different level of capacity of the companies in the chain. * + reluctance of the organi!ations in the chain to allow other organi!ations access to their data. A. only 9. and C. and D and .. , and

Difficulty: "a#d TLO: 14 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

/2. DDDDDDDDD has helped &usiness concentrate on their core &usiness. A. Supply Chains 9. Scheduling C 7utsourcing (. .%# .. Bean #roduction

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

/3. 7utsourcing followed &y DDDDDDDDDD is not simple. A. ntegration 9. >nioni!ation C 9ac6sourcing (. Computeri!ation .. 0ust-in-time

Difficulty: "a#d TLO: Taxonomy: Knowledge

/4. 1he interface &etween the firm and its suppliers isC A purchasing 9. production C. distri&ution (. engineering .. accounting

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

25. 1he two types of decisions that are relevant to supply chain management areC A. Short, long term 9. (omestic, international C. Bocation, layout (. n-source, out-source E Strategic, operational

Difficulty: "a#d TLO: ! Taxonomy: Knowledge

21. 7ne important o&8ective of purchasing is toC A. set )uality standards for purchased items ! &e 6nowledgea&le a&out new products C. maintain numerous sources of supply (. o&tain the lowest prices on all purchased items .. determine the processes that should &e used

Difficulty: "a#d TLO: ! Taxonomy: Knowledge

22. 1he purchasing cycle &egins withC A. selecting a supplier 9. placing an order C. evaluating potential vendors (. conducting a value analysis E receiving a re)uisition

Difficulty: Easy TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

2". .,amination of the sources of supply for purchased parts or materials in order to improve performance is calledC A vendor analysis 9. value analysis C. negotiated purchasing (. reverse engineering .. disintegration

Difficulty: Medium TLO: ! Taxonomy: Knowledge

2'. =endor analysis has the greatest potential for savings for items which haveC A. low cost per unit 9. low annual cost-volume C. high cost per unit (. high annual usage E high annual cost-volume

Difficulty: "a#d TLO: ! Taxonomy: Knowledge

2-. @hich of the following is not true of vendor analysisA A t involves an e,amination of the function of purchased parts or raw materials. 9. ts purpose is to reduce costs and:or improve performance of purchased goods or services. C. t is usually performed only periodically. (. %epresentatives from design and operations may wor6 with purchasing. .. f improvements are identified, purchasing implements those that purchasing agrees are 8ustified.

Difficulty: "a#d TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

2/. @hich of the following is not a performance driverA A. Euality 9. Cost C Sta&ility (. =elocity .. $le,i&ility

Difficulty: "a#d TLO: 13 Taxonomy: Knowledge

22. @hich of the following would not usually &e a main factor in selecting a vendorA A. location 9. price C. )uality D inventory turnover .. vendor services

Difficulty: Medium TLO: ! Taxonomy: Knowledge

23. @hich of the following is part of the purchasing cycleA * + #urchasing selects a supplier. * + 7rders from vendors are received. * + #urchasing receives a re)uisition. A. and ! , , and C. only (. and .. and

Difficulty: Medium TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

24. @hich of the following is not a 6ey consideration when a company chooses a supplierA A. lead time and on-time delivery 9. reputation and financial sta&ility C value analysis (. )uality and Euality assurance .. fle,i&ility of design change

Difficulty: "a#d TLO: 7 Taxonomy: Knowledge

35. @hich of the following is not a &enefit of centrali!ed purchasingA A. potential for )uantity discounts 9. &etter service from suppliers C )uic6 response to local needs (. potential for use of purchasing specialists .. supplier research

Difficulty: Medium TLO: 7 Taxonomy: Knowledge

31. 1he purchasing perspective of the supplier as a partner is characteri!ed &yC A. an emphasis on low prices ! one or a few suppliers C. low fle,i&ility (. 155< inspection for )uality .. low volume

Difficulty: Medium TLO: 7 Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

32. =endor Analysis is the e,amination of the DDDDDDDDD of purchased materials. A. $unction ! Source C. Euality (. Cycle .. Euantity.

Difficulty: "a#d TLO: ! Taxonomy: Knowledge

3". A system for inventory management involving multi-echelon warehouses is calledC A. M%# 9. .7E C. C%# (. 0 1 E (%#

Difficulty: Medium TLO: 1* Taxonomy: Knowledge

3'. @hich of the following is a principle re)uired for ethical &ehavior in purchasingA A. loyalty to employer. 9. 8ustice to those you deal with. C. faith in your profession. D all of the a&ove. .. none of the a&ove.

$$%&': E, Difficulty: Easy TLO: ! Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

3-. 1he activity which &egins with a re)uest from within the organi!ation isC A. 7utsourcing search ! #urchasing cycle C. Supplier selection (. 7rder receipt .. Supply chain management

Difficulty: Medium TLO: ! Taxonomy: Knowledge

3/. 7ur organi!ation can o&tain visi&ility to potential trading partners on the internet &y usingC A. C2C 9. 92C C 929 (. C29 .. Fone of the a&ove

$$%&': (T Difficulty: Medium TLO: ) Taxonomy: Knowledge

32. %eal time information a&out product movement on store shelves could &enefit from the use ofC A. &atch processing 9. economic order )uantities C. statistical process control D radio fre)uency identification tags .. infrared remote scanners

Difficulty: Medium TLO: + Taxonomy: Knowledge

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Chapter 11 - Supply Chain Management

33. 1he we&site and order fulfillment are essential features ofC A. delayed differentiation ! e-commerce C. internet service providers (. inventory &alancing .. mar6et segmentation

Difficulty: Medium TLO: + Taxonomy: Knowledge

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