Question 1

Describe the impact of trade promotions on cycle inventory.

Accepted Answer

Manufacturers use trade promotions to of

Question 2

The costs considered in lot sizing decisions include material cost, fixed ordering cost, and manufacturing cost.

Accepted Answer

A) True 
 B)False

Question 3

For products where the firm has market power, coordination in the supply chain can be achieved and supply chain profits maximized through the use of

Accepted Answer

A)  two-part tariffs or volume based quantity discounts. 
B)  marginal unit quantity discounts. 
C)  all unit quantity discounts. 
D)  basic quantity discounts. 
A)  two-part tariffs or volume based quantity discounts. 
B)  marginal unit quantity discounts. 
C)  all unit quantity discounts. 
D)  basic quantity discounts.

Question 4

Quantity discounts lead to

Accepted Answer

A)  a significant buildup of cycle inventory in the supply chain. 
B)  a slight buildup of cycle inventory in the supply chain. 
C)  a decrease in cycle inventory in the supply chain. 
D)  minor fluctuations of cycle inventory in the supply chain. 
A)  a significant buildup of cycle inventory in the supply chain. 
B)  a slight buildup of cycle inventory in the supply chain. 
C)  a decrease in cycle inventory in the supply chain. 
D)  minor fluctuations of cycle inventory in the supply chain.

Question 5

The supply chain profit is higher if each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 11.1 - Bubble and Squeak
The rising popularity of bubble and squeak as a breakfast item on the menu has resulted in a steady demand for peas. Over the course of the past week, 457 patrons have ordered the hearty breakfast and each serving contains a half cup of English peas. It costs two cents to hold a half cup of peas in inventory for a year and $3 to place an order (remember they come all the way from England!). It takes two weeks to ship a container from England loaded with peas.
-What is the average flow time of a half cup of peas if the diner orders at the economic order quantity?

Accepted Answer

A)  8.76 weeks 
B)  5.84 weeks 
C)  2.92 weeks 
D)  11.68 weeks 
A)  8.76 weeks 
B)  5.84 weeks 
C)  2.92 weeks 
D)  11.68 weeks

Question 7

Total ordering and holding costs

Accepted Answer

A)  are relatively stable. 
B)  are relatively stable around the economic order quantity. 
C)  are relatively unstable around the economic order quantity. 
D)  are unstable. 
A)  are relatively stable. 
B)  are relatively stable around the economic order quantity. 
C)  are relatively unstable around the economic order quantity. 
D)  are unstable.

Question 8

A key to reducing cycle inventory is

Accepted Answer

A)  the reduction of holding cost. 
B)  the reduction of manufacturing cost. 
C)  the reduction of lot size. 
D)  the reduction of warehouse space. 
A)  the reduction of holding cost. 
B)  the reduction of manufacturing cost. 
C)  the reduction of lot size. 
D)  the reduction of warehouse space.

Question 9

Aggregating across products, retailers, or suppliers in a single order allows for

Accepted Answer

A)  an increase in lot size for individual products. 
B)  an increase in customer demand. 
C)  a reduction in holding cost per unit. 
D)  a reduction in lot size for individual products. 
A)  an increase in lot size for individual products. 
B)  an increase in customer demand. 
C)  a reduction in holding cost per unit. 
D)  a reduction in lot size for individual products.

Question 10

The practice where a firm charges differential prices to maximize profits is

Accepted Answer

A)  lot pricing. 
B)  marginal pricing. 
C)  price incrimination. 
D)  price discrimination. 
A)  lot pricing. 
B)  marginal pricing. 
C)  price incrimination. 
D)  price discrimination.

Question 11

Lot sizes and cycle inventory do not affect the flow time of material within the supply chain.

Accepted Answer

A) True 
 B)False

Question 12

In a supply chain where each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit,

Accepted Answer

A)  supply chain profit is lower than a coordinated solution. 
B)  supply chain profit is higher than a coordinated solution. 
C)  supply chain profit is about the same as a coordinated solution. 
D)  supply chain profit will be maximized. 
A)  supply chain profit is lower than a coordinated solution. 
B)  supply chain profit is higher than a coordinated solution. 
C)  supply chain profit is about the same as a coordinated solution. 
D)  supply chain profit will be maximized.

Question 13

A price discount where the discount is based on the total quantity purchased over a given period, regardless of the number of lots purchased over that period, is

Accepted Answer

A)  customer based. 
B)  lot size based. 
C)  supplier based. 
D)  volume based. 
A)  customer based. 
B)  lot size based. 
C)  supplier based. 
D)  volume based.

Question 14

Scenario 11.2 - S&H Mercantile
The S&H Mercantile in Luther is the only game in town for a number of items, and tries valiantly to use only the storage space needed to display items since there is no stock room in the back of the store. One popular item, a 16-ounce can of dehydrated water, takes up 20 square inches of shelf space. The shelf space available for this item measures five feet by four feet. The store manager would like to order a quantity that can fill the shelf space without stacking and without needing to store cans elsewhere in the store. The amount ordered should all be on display once the S&H runs out and ideally would arrive just as the last can is purchased.
-Drought conditions spike demand during the summer to an annualized rate of 27,000 cans per year and the price rises to $12 per can with a holding cost of 20%. What is the required order cost per lot?

Accepted Answer

A)  9.2 cents 
B)  92 cents 
C)  $9.20 
D)  $92.00 
A)  9.2 cents 
B)  92 cents 
C)  $9.20 
D)  $92.00

Question 15

The primary role of cycle inventory is to allow different stages in the supply chain to

Accepted Answer

A)  purchase product in lot sizes that maximize the sum of the material, ordering, and holding cost. 
B)  purchase product in lot sizes that minimize the sum of the material, ordering, and holding cost. 
C)  sell product in lot sizes that maximize the sum of the material, ordering, and holding cost. 
D)  sell product in lot sizes that minimize the sum of the material, ordering, and holding cost. 
A)  purchase product in lot sizes that maximize the sum of the material, ordering, and holding cost. 
B)  purchase product in lot sizes that minimize the sum of the material, ordering, and holding cost. 
C)  sell product in lot sizes that maximize the sum of the material, ordering, and holding cost. 
D)  sell product in lot sizes that minimize the sum of the material, ordering, and holding cost.

Describe the impact of trade promotions on cycle inventory.

The costs considered in lot sizing decisions include material cost, fixed ordering cost, and manufacturing cost.

For products where the firm has market power, coordination in the supply chain can be achieved and supply chain profits maximized through the use of

Quantity discounts lead to

The supply chain profit is higher if each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit.

Total ordering and holding costs

A key to reducing cycle inventory is

Aggregating across products, retailers, or suppliers in a single order allows for

The practice where a firm charges differential prices to maximize profits is

Lot sizes and cycle inventory do not affect the flow time of material within the supply chain.

In a supply chain where each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit,

A price discount where the discount is based on the total quantity purchased over a given period, regardless of the number of lots purchased over that period, is

The primary role of cycle inventory is to allow different stages in the supply chain to

Understanding the Supply Chain

Supply Chain Performance: Achieving Strategic Fit and Scope

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to e-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Coordination in a Supply Chain

Managing Uncertainty in a Supply Chain: Safety Inventory

Determining the Optimal Level of Product Availability

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Pricing and Revenue Management in a Supply Chain

Sustainability and the Supply Chain

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Exam 11: Managing Economies of Scale in the Supply Chain: Cycle Inventory

Describe the impact of trade promotions on cycle inventory.

The costs considered in lot sizing decisions include material cost, fixed ordering cost, and manufacturing cost.

For products where the firm has market power, coordination in the supply chain can be achieved and supply chain profits maximized through the use of

Quantity discounts lead to

The supply chain profit is higher if each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit.

Total ordering and holding costs

A key to reducing cycle inventory is

Aggregating across products, retailers, or suppliers in a single order allows for

The practice where a firm charges differential prices to maximize profits is

Lot sizes and cycle inventory do not affect the flow time of material within the supply chain.

In a supply chain where each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit,

A price discount where the discount is based on the total quantity purchased over a given period, regardless of the number of lots purchased over that period, is

The primary role of cycle inventory is to allow different stages in the supply chain to

Understanding the Supply Chain

Supply Chain Performance: Achieving Strategic Fit and Scope

Supply Chain Drivers and Metrics

Designing Distribution Networks and Applications to e-Business

Network Design in the Supply Chain

Designing Global Supply Chain Networks

Demand Forecasting in a Supply Chain

Aggregate Planning in a Supply Chain

Sales and Operations Planning: Planning Supply and Demand in a Supply Chain

Coordination in a Supply Chain

Managing Uncertainty in a Supply Chain: Safety Inventory

Determining the Optimal Level of Product Availability

Transportation in a Supply Chain

Sourcing Decisions in a Supply Chain

Pricing and Revenue Management in a Supply Chain

Sustainability and the Supply Chain

Filters