Deck 16: Global Sourcing and Procurement

Question 1

Logistics is a term indicating transportation choices for goods produced internationally but consumed domestically.

Answer 1

False

Question 2

A financially driven reason for outsourcing is that it can reduce costs through a lower cost structure.

Answer 2

True

Question 3

The optimal strategy for functional products is to use a responsive supply chain.

Answer 3

False

Question 4

A financially driven reason for outsourcing is that it can shorten cycle time.

Question 5

The optimal strategy for innovative products is to use an efficient supply chain.

Question 6

An improvement-driven reason for outsourcing is that it can increase product and service value, customer satisfaction, and shareholder value.

Question 7

An organizationally driven reason for outsourcing is that it can transform the organization.

Question 8

Outsourcing is the act of moving some of a firm's internal activities and decision responsibility to outside providers.

Question 9

Retailer behavior when stocking up during promotion periods (where the prices of goods are reduced) is called backward buying.

Question 10

Theonly optimal strategy for functional products is to use an efficient supply chain.

Question 11

A financially driven reason for outsourcing is that it can turn fixed costs into variable costs.

Question 12

Outsourcing allows a firm to achieve an improved focus on its core competencies.

Question 13

Inventory turn values that are considered good differ by industry and the type of products being handled.

Question 14

Logistics is a term that refers to the management functions that support the complete cycle of material flow, from the purchase and internal control of production materials; to the planning and control of work-in-process; to the purchasing, shipping, and distribution of the finished product.

Question 15

Two common measures to evaluate supply chain efficiency are the Consumer Price Index and the beta flow system.

Question 16

The phenomenon that magnifies the variability in order quantities for goods as orders move through the supply chain from the customer to the producer is called the bullwhip effect.

Question 17

Two common measures to evaluate supply chain efficiency are the inventory turnover and weeks-of-supply ratios.

Question 18

The best strategy for innovative products is to use either a responsive or an agile supply chain.

Question 19

Functional products include staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations.

Question 20

An organizationally driven reason for outsourcing is that it can improve effectiveness by focusing on what the firm does best.

Question 21

A stable supply process is one where the manufacturing process and the underlying technology are mature and the supply base is well established.

Question 22

Green sourcing requires incorporating new criteria for evaluating alternatives.

Question 23

A financially driven reason for outsourcing is that it can help gain access to new markets, especially in developing countries.

Question 24

Commonality refers to how common the item is and, in a relative sense, how many substitutes might be available.

Question 25

These are supply chains that utilize strategies aimed at being flexible in the face of the changing and diverse needs of the customers.

A) Efficient supply chains
B) Risk-hedging supply chains
C) Responsive supply chains
D) Agile supply chains
E) Vendor-managed supply chains

Question 26

Inventory turnover and weeks of supply are mathematically the inverse of one another.

Question 27

Firms producing functional products are forced to introduce a steady stream of innovations in order to survive.

Question 28

The total cost of ownership (TCO) is an estimate of the cost of an item that includes all the costs related to the procurement and use of an item, but it does not include any of the costs related to disposing of the item after it is no longer useful.

Question 29

An important opportunity in green sourcing is waste reduction opportunities.

Question 30

Green sourcing is only about finding new environmentally friendly technologies and increasing the use of recyclable materials.

Question 31

Vendor-managed inventory is a program for automatically supplying groups of items to a customer on a regular basis.

Question 32

In conducting a total cost of ownership analysis, it is probably best to use a team representing the key functional areas.

Question 33

These are supply chains that utilize strategies aimed at pooling and sharing resources in a supply chain.

A) Efficient supply chains
B) Risk-hedging supply chains
C) Responsive supply chains
D) Agile supply chains
E) Vendor-managed supply chains

Question 34

These are supply chains that try to share the chances of a supply chain disruption.

A) Efficient supply chains
B) Risk-hedging supply chains
C) Responsive supply chains
D) Agile supply chains
E) Vendor-managed supply chains

Question 35

Capability sourcing refers to outsourcing the functions that a company does best to trusted key partners.

Question 36

A firm that controls most of the activities in its supply chain is said to be vertically integrated.

Question 37

Overemphasis on purchase price frequently results in failure to address other significant costs.

Question 38

These are supply chains that utilize strategies aimed at creating the lowest cost.

A) Efficient supply chains
B) Risk-hedging supply chains
C) Responsive supply chains
D) Agile supply chains
E) Vendor-managed supply chains

Question 39

A stable supply process is one where product volumes are high, demand is predictable, and there is a long product life.

Question 40

The total cost of ownership (TCO) can be categorized into three areas: acquisition costs, ownership costs, and post-ownership costs.

Question 41

Which of the following is not an improvement-driven reason for outsourcing?

A) Improve quality and productivity.
B) Enhance effectiveness by focusing on what you do best.
C) Improve risk management.
D) Obtain expertise, skills, and technologies not otherwise available.
E) Improve credibility and image by associating with superior providers.

Question 42

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for innovative products with an evolving supply process is called which of the following?

A) Efficient
B) Forward looking
C) Agile
D) Risk hedging
E) Responsive

Question 43

If the average aggregate inventory value is $1,200,000 and the cost of goods sold is $600,000, which of the following is inventory turnover?

A) 60
B) 10.4
C) 2
D) 0.5
E) None of these choices are correct

Question 44

Which of the following is not an organizationally driven reason for outsourcing?

A) Improve effectiveness by focusing on what the firm does best.
B) Improve flexibility to meet changing demand for products and services.
C) Increase product and service value by improving response to customer needs.
D) Improve credibility and image by associating with superior providers.
E) All of these are organizationally driven reasons for outsourcing.

Question 45

Which is the most challenging kind of supply chain to manage according to Hau Lee?

A) Agile supply chain
B) Efficient supply chain
C) Risk-hedging supply chain
D) Erratic supply chain
E) Responsive supply chain

Question 46

In outsourcing, which of the following internal activities and decision responsibilities cannot be transferred to outside contractors?

A) Activities involving people
B) Activities involving facilities
C) Activities involving equipment
D) Activities involving shareholders
E) Activities involving technology

Question 47

If the average aggregate inventory value is $100,000 and the cost of goods sold is $450,000, which of the following is inventory turnover?

A) 19.23
B) 4.5
C) 0.8654
D) 0.2222
E) None of these choices are correct

Question 48

Which of the following is an organizationally driven reason for outsourcing?

A) Improve effectiveness by focusing on what the firm does best.
B) Turn fixed costs into variable costs.
C) Reduce costs through lowered cost structure and increased flexibility.
D) Improve risk management.
E) Improve credibility and image by associating with superior providers.

Question 49

The total value of all items held in inventory for the firm valued at cost is which of the following?

A) Cost of goods to be sold
B) Average aggregate inventory value
C) Weeks supply of goods
D) Inventory turnover
E) None of these choices are correct

Question 50

The effect of the lack of synchronization among supply chain members is referred to as which of the following?

A) Forward buying
B) Continuous replenishment
C) Bullwhip effect
D) Metcalf's law
E) Being out of step

Question 51

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for innovative products with a stable supply process is called which of the following?

A) Efficient
B) Forward looking
C) Agile
D) Risk hedging
E) Responsive

Question 52

A type of inventory where a customer actually allows the supplier to manage the inventory policy of an item or group of items for them.

A) Vendor-directed inventory
B) Subcontracted inventory
C) Remote inventory
D) Vendor-managed inventory
E) Outsourced inventory

Question 53

This is commonly used for purchasing items that are more complex or expensive and where there may be a number of potential vendors.

A) Request for purchase
B) Purchase order
C) Petty cash
D) Purchase directive
E) Request for proposal

Question 54

If the average aggregate inventory value is $1,200,000 and the cost of goods sold is $600,000, which of the following is weeks of supply?

A) 1,040
B) 606
C) 104
D) 60.6
E) 2.0

Question 55

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for functional products with an evolving supply process is called which of the following?

A) Efficient
B) Forward looking
C) Agile
D) Risk hedging
E) Responsive

Question 56

In Hau Lee's uncertainty framework to classify supply chains, a supply chain for functional products with a stable supply process is called which of the following?

A) Efficient
B) Forward looking
C) Agile
D) Risk hedging
E) Responsive

Question 57

Which of the following is an improvement-driven reason for outsourcing?

A) Shorten cycle time.
B) Improve effectiveness by focusing on what the firm does best.
C) Increase product and service value by improving response to customer needs.
D) Turn fixed costs into variable costs.
E) Reduce costs through a lower cost structure.

Question 58

If the average aggregate inventory value is $45,000 and the cost of goods sold is $10,000, which of the following is weeks of supply?

A) 45,000
B) 234
C) 120
D) 23.4
E) 4.5

Question 59

The inventory turnover ratio used in measuring supply chain efficiency is found by the ratio of which of the following?

A) Cost of goods sold/Average aggregate inventory value
B) Fixed costs/Variable costs
C) Sales costs/Marketing costs
D) Cost of goods sold/Cost to sell goods
E) Operations flow costs/Supplier flow costs

Question 60

These are supply chains where the risks of supply shortages or disruptions are hedged by pooling inventory and other capacity resources.

A) Efficient supply chains
B) Risk-hedging supply chains
C) Responsive supply chains
D) Agile supply chains
E) Vendor-managed supply chains

Question 61

First Among Best Solar Inc. announces that they will take back, free of cost, all of their solar panels that are no longer useful. Until now, the cost of disposal was significant. This action reduces which of the following for the customers?

A) Acquisition cost
B) Ownership costs
C) Post-ownership costs
D) None of these choices are correct

Question 62

Which of the following is one of the strategic characteristics to consider when deciding how supplier relationships should be structured on the continuum between vertical integration (do not outsource) and arm's length relationships (outsource)?

A) Cost
B) Location
C) Investment
D) Coordination
E) Control

Question 63

Which of the following is not an improvement-driven reason to outsource?

A) Improve risk management.
B) Increase commitment in a noncore area.
C) Shorten cycle time.
D) Improve quality and productivity.
E) Obtain expertise, skills, and technologies that are otherwise not available.

Question 64

The six-step process for green sourcing does not include which of the following?

A) Assess the opportunity.
B) Assess the supply base.
C) Confer with environmental groups.
D) Engage sourcing agents.
E) Institutionalize the sourcing strategy.

Question 65

Other things remaining the same, if the cost of goods sold decreases, then

A) inventory turnover ratio and weeks of supply will both go up.
B) inventory turnover ratio will go down, but the weeks of supply will go up.
C) inventory turnover ratio and weeks of supply will both go down.
D) inventory turnover ratio will go up, but weeks of supply will go down.
E) inventory turnover ratio will stay the same, but weeks of supply will go down.

Question 66

Ownership costs include which of the following costs?

A) Environmental costs
B) Warranty costs
C) Supply chain costs
D) Quality costs
E) Taxes

Question 67

Acquisition costs include which of the following costs?

A) Quality costs
B) Maintenance and repair costs
C) Environmental costs
D) Supply chain costs
E) Customer dissatisfaction costs

Question 68

In the sourcing/purchasing design matrix, there are three variables: contract duration, transaction costs, and specificity. Assume levels as short, medium and long for contract duration and for the rest, low, medium, and high. Vendor managed inventory belongs to

A) long contract duration, high transaction costs and low specificity.
B) short contract duration, high transaction costs and low specificity.
C) long contract duration, low transaction costs and low specificity.
D) long contract duration, high transaction costs and high specificity.
E) long contract duration, low transaction costs and high specificity.

Question 69

Which of the following of Fisher's product categories includes fashionable clothing, personal computers, and other products that typically have a very brief life cycle?

A) Functional products
B) Dysfunctional products
C) Innovative products
D) Bullwhip products
E) Value density products

Question 70

The six-step process for green sourcing includes which of the following?

A) Provide a press release to local (and perhaps national) media.
B) Include members of environmental groups in the decision.
C) Notify the state and federal environmental agencies of your plans.
D) Perform an environmental impact study.
E) Develop the sourcing strategy.

Question 71

Ownership costs are incurred after the initial purchase and are associated with the ongoing use of the product or material. Which of the following is not an ownership cost listed in the text?

A) Financing costs
B) Energy costs
C) Taxes
D) Maintenance and repair costs
E) Supply network costs

Question 72

Warranty costs are part of

A) Acquisition cost
B) Ownership costs
C) Post-ownership costs
D) None of these choices are correct

Question 73

Other things remaining the same, if the average aggregate inventory value goes down, then

A) inventory turnover ratio and weeks of supply will both go down.
B) inventory turnover ratio will go down, but the weeks of supply will stay the same.
C) inventory turnover ratio and weeks of supply will both go up.
D) inventory turnover ratio will go up, but weeks of supply will go down.
E) inventory turnover ratiowill stay the same, but weeks of supply will go down.