Deck 11: Supply-Chain Management

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

A firm that employs a "response strategy" should minimize inventory throughout the supply chain.

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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.

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

Drop shipping results in time and shipping cost savings.

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

Vendor-Managed Inventory is a form of outsourcing.

Question 29

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

Question 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.

Question 31

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

Question 32

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.

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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) both companies are addressing inventory level optimization.

Question 38

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

Question 39

The three major variations of online catalogues are

A) catalogues by vendors, catalogues 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.

Question 40

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) logistics planning

Question 41

A wheat mill in southern Saskatchewan 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.

Question 42

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

Question 43

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) fair value price model

Question 44

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.

Question 45

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) is an agency of USMCA's Ethics Bureau.

Question 46

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.

Question 47

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.

Question 48

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

Question 49

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

Question 50

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

Question 51

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) Supply chain savings have no impact on net margin.

Question 52

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.

Question 53

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.

Question 54

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) allowing suppliers to have economies of scale.

Question 55

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.

Question 56

Which of the following is not a condition that favours the success of vertical integration?

A) availability of capital
B) availability of managerial talent
C) required demand
D) small market share
E) the ability to operate an acquired vendor

Question 57

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

A) postponement.
B) keiretsu.
C) vendor-managed inventory.
D) forward integration.
E) backward integration.

Question 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.

Question 59

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.

Question 60

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

Question 61

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.

Question 62

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.

Question 63

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

Question 64

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.

Question 65

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.

Question 66

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.

Question 67

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.

Question 68

An advantage of a joint venture over vertical integration is

A) reduced risk.
B) reduced costs.
C) compromised competitive advantages.
D) globalization.
E) flexibility.

Question 69

Walmart's management of its supply chain for Proctor and Gamble's Pampers Baby-Dry diapers is an example of

A) blanket orders.
B) standardization.
C) postponement.
D) lot size reduction.
E) single stage control of replenishment.

Question 70

Which of the following best describes Vizio's supply chain

A) few suppliers.
B) keiretsu.
C) joint venture.
D) vertical integration.
E) virtual company.

Question 71

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

Question 72

A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters 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 lobsterman. This is the result of

A) double marginalization.
B) the bullwhip effect.
C) CPFR.
D) a pass-through facility.
E) vendor-managed inventory.

Question 73

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.

Question 74

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

Question 75

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

Question 76

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

Question 77

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.

Question 78

The Japanese concept of a company coalition of suppliers is

A) poka-yoke.
B) kaizen.
C) keiretsu.
D) dim sum.
E) illegal.

Question 79

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

A) control risk
B) environmental risk
C) the bullwhip effect
D) unethical supplier behaviour
E) vendor-managed inventory

Question 80

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.