Deck 16: Lean Supply Chain Management

Question 1

WIP is incomplete - it has not yet been transformed to a saleable finished good.

Answer 1

True

Question 2

Suppliers seldom offer quantity discounts to encourage larger orders from purchasers.

Answer 2

False

Question 3

The True cost of MRO inventory often goes unnoticed because firms fail to track these items with the same intensity as production inventory.

Answer 3

True

Question 4

When firms produce goods in anticipation of future customer orders, they are operating in a just-in-time environment.

Question 5

It is often difficult to quantify the total costs associated with ordering and carrying physical inventory.

Question 6

Carrying costs do not vary with the level of inventory, which makes these costs fixed.

Question 7

Even in an era of just-in-time production, almost all firms hold some level of preproduction inventory.

Question 8

According to Shook, lean is a philosophy that seeks to shorten the time between when the customer order and the shipment to the customer by eliminating waste.

Question 9

Anything less than perfect quality leads to waste.

Question 10

The most basic and the easiest inventory-related cost to quantify and track is unit cost.

Question 11

Unnecessary inventory usually results from one thing: uncertainty.

Question 12

A higher-than-anticipated finished-goods inventory level may mean that a increase in customer demand is occurring.

Question 13

It is harder to increase a material release by 10 percent or carry safety stock to cover supplier quality problems than to correct the root cause of a problem.

Question 14

Ordering costs are a composite of the costs associated with the release of a material order.

Question 15

In a pull system, an upstream work center or operation will create output regardless whether a downstream center directly requests that output.

Question 16

If WIP builds up at a workstation, a scheduler should not have to reroute the flow of material to another work center.

Question 17

Most cost accounting systems are capable of identifying and assigning the True costs related to maintaining physical inventory. ​

Question 18

Production inventory consumes a minor portion of inventory investment.

Question 19

Supply chains are insensitive to changes in markets, including changes in the availability of material supply as well as price changes.

Question 20

From the financial accounting perspective, inventory has historically been considered a current asset.

Question 21

Specifying customized parts when standardized parts are available adversely affects material inventory because customized parts are usually more expensive.

Question 22

_____ means that supply chains must have perfect quality.

A) DRP
B) Flow
C) Pull
D) Push
E) Striving for excellence

Question 23

A major step toward eliminating delivery uncertainty is a commitment to stable release schedules with realistic (but not overly generous) supplier lead times.

Question 24

Very few organizations use distributors to provide at least some portion of their inventory requirements, particularly maintenance, repair, and operating supplies.

Question 25

Lean is an easy approach to implement.

Question 26

A logical place to begin when managing inventory investment is to make sure there is agreement between physical and electronic inventory.

Question 27

Suppliers that cannot meet delivery schedules create delivery uncertainty.

Question 28

According to JIT, inspection is a waste of both time and personnel caused by defects.

Question 29

The ability to plan material requirements accurately increases as order-cycle time lengthens.

Question 30

_____ means that inventory moves through the supply chain continuously with minimal queueing or non-value-adding activity being performed.

A) Pull
B) WIP
C) MRO
D) Flow
E) Push

Question 31

Using a RFID system, if supplier quality and lead times are reliable, planners can time the arrival of components just before production of the final part number.

Question 32

The advantage of consignment to the buyer is the ability to defer ownership and avoid committing working capital and incurring carrying charges.

Question 33

Record integrity exists when the physical inventory on hand exceeds the electronic record on hand, regardless of the quantity of inventory.

Question 34

The underlying emphases of lean- to eliminate all forms of uncertainty and waste - are relevant to all organizations, regardless of the specific planning and control tools that are used.

Question 35

Shortening the material pipeline in terms of time between suppliers and a buyer can reduce the average amount of inventory in a system.

Question 36

Decisions in lean must be based on the opinions or preferences of influential individuals, as well as on facts and data.

Question 37

Most inventory waste results from underlying problems that blue collar workers have failed to correct.

Question 38

_____ means that customer orders start the work process, which ripples down through the supply chain.

A) Make-to-stock
B) Push
C) MRP
D) DRP
E) Pull

Question 39

Continuous improvement involves small, daily improvements that ensure that the process in moving forward.

Question 40

Purchasers should not accept any of the blame for delivery uncertainty.

Question 41

When firms produce goods in anticipation of future customer orders, they are operating in a/an _____ environment.

A) assemble-to-order
B) make-to-order
C) make-to-stock
D) just-in-time
E) None of the above.

Question 42

All of the following are important barriers to lean supply except _____.

A) large warehouses
B) dispersed supply base
C) historic buyer-supplier relationships
D) number of suppliers
E) supplier quality performance

Question 43

When firms produce goods in response to a customer order, they are operating in a/an _____ environment.

A) make-to-order
B) make-to-stock
C) make-to-forecast
D) WIP
E) None of the above.

Question 44

_____ inventory includes the items purchased from suppliers or produced internally to directly support production requirements.

A) Work-in-process
B) Finished-goods
C) MRO suppliers
D) Pipeline/in-transit
E) Raw material and semifinished items

Question 45

All of the following are considered to be the right reasons for investing in inventory except _____.

A) avoid disruptions in operational performance
B) Unreliable supplier delivery
C) support customer service requirements
D) hedge against marketplace uncertainty
E) take advantage of order quantity discounts

Question 46

_____ inventory includes completed items or products that are available for shipment or future customer orders.

A) WIP
B) Finished-goods
C) MRO
D) Pipeline/in-transit
E) Raw materials and semifinished items

Question 47

_____ inventory includes the items used to support production and operations and are not physically part of a finished product.

A) Raw materials
B) WIP
C) Semifinished items
D) MRO
E) Pipeline/in-transit

Question 48

A _____ system is a production control approach that uses containers, cards, or visual cues to control the production and movement of goods through the supply chain.

A) MRP
B) DRP
C) lean supply
D) JIT kanban
E) lean transportation

Question 49

_____ of inventory refers to the amount of inventory that a firm owns at any given time.

A) Volume
B) Velocity
C) Value
D) Vigor
E) None of the above.

Question 50

Which of the following is an example of WIP inventory?​

A) Waiting to be moved to another process.
B) Currently being worked on at a work center.
C) Lining up at a processing center due to a capacity bottleneck or machine breakdown.
D) All of the above.
E) None of the above.

Question 51

_____ of inventory refers to how quickly raw material and work-in-process inventory transform into finished goods that the customer accepts.

A) Volume
B) Velocity
C) Value
D) Vigor
E) None of the above.

Question 52

Which of the following is a component of carrying cost?

A) Cost of capital.
B) Cost of storage.
C) Cost of obsolescence, deterioration, and loss.
D) All of the above.
E) None of the above.

Question 53

Which of the following is not one of the key principles of the lean concept?

A) Maximize the use of people.
B) Simplify first, and only then apply new technology.
C) Focus on gradual, but continuous, improvement.
D) Minimize waste (including poor quality).
E) All of the above.

Question 54

All of the following are common signaling methods used in a kanban system except _____.

A) single-card system
B) color coding of containers
C) designated storage spaces
D) computerized bar coding systems
E) verbal notification

Question 55

A repeatable lean transportation schedule, also called a _____, moves goods from supplier to purchaser and then from purchaser back to supplier with return material.

A) MRO system
B) pull system
C) push system
D) closed-loop system
E) None of the above.

Question 56

_____ represents the funds committed to operating a business, including the purchase and holding of inventory.

A) Pipeline inventory
B) WIP
C) MRP
D) Working capital
E) None of the above.

Question 57

_____ are calculated as Average Inventory in Units x Unit Price x Carrying Cost per Year.

A) Quality costs
B) Ordering costs
C) Inventory carrying costs
D) MRO costs
E) Cycle counting costs

Question 58

Which of the following is not one of the wrong reasons for investing in inventory?

A) Poor quality and material yield.
B) Extended order-cycle times from global sourcing.
C) Hedge against marketplace uncertainty.
D) Specifying custom items for standard applications.
E) Inefficient manufacturing processes.

Question 59

_____ involves frequent deliveries of smaller quantities directly to the point of use at the purchaser.

A) Lean supply
B) Lean transportation
C) Lean warehousing
D) Lean ordering
E) None of the above.

Question 60

All of the following are categories of inventory except _____.

A) lean inventory
B) raw material and semifinished item inventory
C) work-in-process inventory
D) MRO supplies inventory
E) pipeline/in-transit inventory

Question 61

In _____, demand for an item is not directly dependent upon the demand for any other item that is produced.

A) dependent demand
B) independent demand
C) codependent demand
D) Six Sigma
E) just-in-time

Question 62

The _____ is one that is delivered on time, accurately, and in perfect condition.

A) kanban order
B) MRO order
C) consignment order
D) perfect order
E) MRP order

Question 63

Which of the following is not one of the benefits of simplified designs?

A) Fewer suppliers.
B) Increased number of manual transactions.
C) Reduced transactions to support the inventory.
D) Fewer part numbers.
E) Lower inventory management costs.

Question 64

A _____ details the components or subassemblies and the quantity required to produce a final part number or end item.

A) kanban
B) perfect order
C) bill of material file
D) DRP system
E) RFID system

Question 65

Record integrity is the result of various activities and procedures designed to ensure that the amount of _____ is equal to the computerized record of _____.

A) MRP….kanban
B) DRP….MRP
C) ROH….POH
D) POH….ROH
E) None of the above.

Question 66

According to the APICS Dictionary, _____ is defined as the process of a supplier placing goods at a customer location without receiving payment until after the buyer uses the goods.

A) Kanban
B) Just-in-time
C) Consignment
D) MRO
E) None of the above.

Question 67

All of the following action support reduced order-cycle time with suppliers except _____.

A) expanded global sourcing
B) expanded electronic capability
C) supplier development support
D) order-cycle time measurement
E) focus on second- and third-tier suppliers

Question 68

Which of the following is not one of the policies used to improve design simplification and reduce complexity?

A) Increase the number of suppliers.
B) Establish premium pricing for customization.
C) Establish geographic-specific options and standards.
D) Do not eliminate frequently requested options.
E) Utilize business modeling and TCO tools to support complexity reduction decisions.

Question 69

_____ inventory is in transit to a customer or is located throughout distribution channels.

A) Pipeline/in-transi
B) MRO
C) WIP
D) Raw materials and semifinished items
E) Just-in-time

Question 70

_____ of inventory pertains to the unit cost of the inventory.

A) Volume
B) Velocity
C) Value
D) Virtue
E) None of the above.

Question 71

Which of the following is not one of the functions of a distribution resource planning system?

A) Forecasting finished-goods inventory requirements.
B) Establishing correct inventory levels at each stocking location.
C) Determining the timing and replenishment of finished-goods inventories.
D) Producing a time-phased set of material, component, and subassembly requirements timed to support an expected build schedule.
E) Transportation planning and vehicle load scheduling.

Question 72

A/An _____ system takes a period-by-period set of master production schedule requirements (anticipated or booked customer orders) and produces a time-phased set of material, component, and subassembly requirements timed to support an expected build schedule.

A) kanban
B) DRP
C) just-in-time
D) perfect order
E) MRP

Question 73

The downside of poor forecasting includes all of the following except _____.

A) higher inventory volumes
B) poor customer service as inventory is misallocated across locations and products
C) higher inventory carrying charges
D) excessive safety stock levels
E) decreased customer service costs