Deck 11: Supply Chain Management

Question 1

Quick response (QR)results in frequent small-lot shipments and has the benefit of reduced reliance on forecasts.

Answer 1

True

Question 2

Electronic data interchange (EDI)is rapidly becoming obsolete with increased usage of the internet.

Answer 2

False

Question 3

Distribution requirements planning (DRP)is a pull system based on the same logic of time-phased planning as material requirements planning (MRP).

Answer 3

False

Question 4

Supply chain management is collaboration among,and coordination of all the facilities and activities of companies so that market demand is met as effectively as possible.

Question 5

Delayed differentiation or postponement adds differentiated features to products early in a process to achieve a closer match between supply and demand.

Question 6

As the level of outsourcing increases,the need for supply chain management decreases.

Question 7

The extent of vertical integration and outsourcing decisions are strategic (design)supply chain management activities.

Question 8

Relative to bar-codes,RFID tags have the advantage of providing more detailed information,and being able to be read automatically.

Question 9

Examples of metrics for supply chain performance are logistics costs,percentage of on-time delivery,and item fill rate.

Question 10

One of the major reasons for a company to adopt third party logistics (3PL)is to concentrate on one's core business.

Question 11

In retail,cross-docking minimizes handling and warehousing of products in the supply chain by shipping directly from manufacturers to retail outlets.

Question 12

The role of ERP systems in supply chain management is limited to inventory planning.

Question 13

"Quick response" (QR)involves making sales information available to vendors to allow for JIT replenishment.

Question 14

Supply chains are sometimes called value chains.

Question 15

A company's supply chain involves the flow of materials and information from suppliers,through production,to the final customer.

Question 16

Efficient consumer response (ECR)is an extension of quick response,initially developed in the retail clothing industry.

Question 17

A company's supply chain comprises the internal flow of materials and information from the point of receiving inputs from suppliers,through production,to the point of shipping to final customers.

Question 18

The primary use of radio frequency identification (RFID)in supply chain management is to track the location of delivery trucks.

Question 19

Determining the number,location,and capacity of facilities would be considered one of the tactical/operational activities of supply chain management.

Question 20

EDI is the direct transmission of inter-organizational transactions from computer to computer,including purchase orders,shipping notices,and more.
Discuss three techniques used in supply chain management.

Question 21

The faster the material passes through the supply chain,the higher the inventory costs will be,and the faster the products and services will be delivered to the customer.

Question 22

The purchasing cycle ends when the receiving staff are notified that the supplier has shipped the items.

Question 23

Outsourcing refers to buying goods or services from outside sources instead of making the goods or providing the services in-house.

Question 24

Outsourcing carries the risk of less control over outside suppliers than producing internally.

Question 25

Buyers are more likely to require quotes or use competitive bidding when ordering large quantities of standard items.

Question 26

Item fill rate refers to the time it takes to have inventory replenished from a supplier.

Question 27

Establishing partnerships with suppliers typically leads to depending on more suppliers and shorter term relationships.

Question 28

Inventory turnover refers to the speed at which inventory (material)goes through the supply chain.

Question 29

Delayed differentiation/postponement is a technique to minimize the cost of providing product variety by adding differentiating features late in the supply chain.

Question 30

Value analysis examines the function of purchased parts and materials in an effort to reduce costs.

Question 31

Supply chain visibility refers to the physical flow of material in supply chain management including the design of warehouses to make it easier to locate products.

Question 32

The purchasing department interfaces with the accounting,engineering design,and operations functions,along with several other functional areas.

Question 33

Holding safety stock inventory at multiple retail outlets rather than at a centralized distribution centre is an example of risk pooling.

Question 34

The primary factors of importance to purchasing are the cost of goods purchased,the quality of goods and services,and the timing of deliveries of goods or services.

Question 35

The risks of outsourcing include having less control over supplies and lower expertise internally.

Question 36

The primary goal of purchasing is to negotiate low prices from an organization's suppliers.

Question 37

Bullwhip effect refers to a phenomenon in which the demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain.

Question 38

Typically,Japanese companies rely on short-term contracts with many suppliers in order to be consistent with the frequent deliveries and large lot sizes of JIT systems.

Question 39

An advantage of the use of e-commerce for supply chain management is that companies can collect more detailed information about clients' choices.

Question 40

Cross docking is a technique to reduce the need to store inventory at warehouses and distribution centres.

Question 41

An item with a holding cost of $500 per year can be shipped by air in 1 day,costing $100,or by ground in 4 days,costing $25.Assuming the holding costs of $500 per year are based on an operational year of 365 days,which is cheaper and by how much?

A) Ground is cheaper by $75.00
B) Ground is cheaper by $70.89
C) Ground is cheaper by $72.26
D) Ground and air have the same total cost
E) None of the choices are correct

Question 42

Logistics refers to:
I)the movement of materials within a production facility.
II)incoming and outgoing deliveries.
III)the use of information to control the movement of goods.

A) I only
B) II only
C) III only
D) I and II only
E) I, II, and III

Question 43

Disintermediation involves terminating the relationship with a supplier as a result of repeated failures to meet performance expectations.

Question 44

Price is the primary determining factor in choosing a supplier.

Question 45

Decentralized purchasing can usually offer quicker response than centralized purchasing.

Question 46

Decentralized purchasing means buying the same item from multiple suppliers.

Question 47

Japanese firms tend to use fewer vendors than many of their American counterparts.

Question 48

Supplier analysis is the process that evaluates the source of supply in terms of price,quality,delivery,and service.

Question 49

For small orders of standard products or services,competitive bidding is typically used.

Question 50

An important advantage of decentralized purchasing is the opportunity to obtain lower prices than with centralized purchasing.

Question 51

The purchasing cycle involves collecting,cleansing,and analyzing data regarding expenditures with the purpose of reducing costs,improving efficiency,and monitoring compliance with purchasing policies.

Question 52

Spend analysis involves collecting,cleansing,and analyzing data regarding expenditures with the purpose of reducing costs,improving efficiency,and monitoring compliance with purchasing policies.

Question 53

Overseeing the shipment of incoming and outgoing goods is the function of:

A) traffic management.
B) distribution management.
C) production management.
D) inventory management.
E) purchasing.

Question 54

Which of the following is not a motivation for using electronic data interchange (EDI)?

A) Reduction of paper work
B) Frequent deliveries of smaller shipments
C) Reduction in clerical labour
D) Increased accuracy
E) Increased speed in processing transactions

Question 55

Which of the following is not a factor that has increased the need for business organizations to actively manage their supply chains?

A) Increasing reliance on e-commerce for purchasing and logistics services
B) Increasing globalization
C) Increased competition driving efforts to lower costs
D) The complexity of management information systems
E) The need to manage orders and inventories throughout supply chains

Question 56

For large orders of standard products or services,price negotiation is more common than competitive bidding.

Question 57

An advantage of decentralized purchasing is the attention given to local needs.

Question 58

Long-term contracts imply stronger relationships with fewer suppliers.

Question 59

Some firms use both centralized and decentralized purchasing.

Question 60

The closer an organization is to the final customer,the __________ is the demand side of the supply chain and the __________ is the supply side.

A) shorter; longer
B) shorter; shorter
C) longer; shorter
D) longer; longer
E) slower; faster

Question 61

Which of the following is not true about JIT deliveries?

A) Also referred to as "quick response" (QR) in wholesale sectors
B) Small lot sizes
C) Frequent deliveries
D) Decreased transportation cost per unit
E) All of the choices are true

Question 62

Which of the following is not associated with quick response (QR)replenishment methods?

A) Sales information made available to vendors
B) Regular, periodic orders by retailers
C) Frequent small-lot shipments
D) Reduced dependence on forecasts
E) Closer match between supply and demand

Question 63

Which statement is not a correct match between technologies and their use in supply chain management?

A) EDI; direct computer-to-computer transactions
B) RFID tags; automatically reading tags for multiple items
C) ERP software; coordinating resources and functions from a shared database
D) Bar codes; battery activated for reading with wireless device
E) All of the choices are correctly matched

Question 64

The purchasing cycle begins with:

A) selecting a supplier.
B) placing an order.
C) evaluating potential vendors.
D) conducting a value analysis.
E) receiving a requisition.

Question 65

Which of the following is not one of the steps in the purchasing cycle?

A) Receive a requisition
B) Execute a spend analysis
C) Select a supplier
D) Monitor orders
E) Payment to supplier

Question 66

Which of the following is not typically used as a performance attribute/metric commonly used to measure supply chain performance?

A) Inventory turnover
B) Cost
C) Variety/flexibility (e.g. speed of product changes)
D) Item fill rate
E) Product quality

Question 67

The purchasing cycle ends when the purchasing department is notified that:

A) an order has been placed.
B) potential suppliers have been identified.
C) the supplier has been paid.
D) the supplier has been selected.
E) the order has been received.

Question 68

Which of the following is considered an advantage of e-commerce for supply chain management?

A) Substantial reduction of transaction costs
B) Data concerning customers' choices can be collected and analyzed more readily
C) Supply chain response time is reduced
D) Opportunities to reach customers more directly based on disintermediation
E) All of the choices are advantages

Question 69

Which of the following is not a benefit of "quick response" for retailers?

A) Reduced dependency on forecasts
B) Reduced transportation costs
C) Reduced inventory holding costs
D) Better match between supply and demand
E) All of the choices are benefits

Question 70

The ability for members to connect in real time to any part of the supply chain to access data such as forecasts,shipments,inventory levels,and shortages that could impact the timely flow of products is called:

A) electronic data interchange (EDI).
B) e-commerce.
C) quick response (QR).
D) supply chain visibility.
E) event management.

Question 71

Which of the following is not a duty of purchasing?

A) Set quality standards for purchased products
B) Maintaining databases of suppliers
C) Identify sources of supply
D) Establish partnerships with suppliers
E) Negotiating supply contracts

Question 72

Which of the following is not true about value analysis?

A) It involves an examination of the function of purchased parts or products.
B) Its purpose is to reduce costs and/or improve performance of purchased goods or services.
C) It is usually performed only periodically.
D) Representatives from design and operations may work with purchasing.
E) If improvements are identified, purchasing usually has the authority to implement them.

Question 73

Examination of the function of purchased parts or materials in an effort to reduce costs and/or improve performance is called:

A) vendor analysis.
B) value analysis.
C) negotiated purchasing.
D) vendor relations.
E) vendor assessment.

Question 74

Which technology allows companies to automatically identify,track,monitor,or locate objects within the supply chain?

A) Hand-held barcode readers
B) Radio frequency identification (RFID) tags
C) Electronic data interchange (EDI) systems
D) E-commerce websites
E) The internet

Question 75

Holding safety stock inventory in one central location rather than in multiple locations is called:

A) postponement.
B) outsourcing.
C) risk pooling.
D) cross-docking.
E) vendor-managed inventory.

Question 76

Value analysis has the greatest potential for savings for items which have:

A) low cost per unit.
B) low annual cost-volume.
C) high cost per unit.
D) high annual usage.
E) high annual dollar-volume.

Question 77

Purchasing may interface with:

A) operations.
B) accounting.
C) receiving staff.
D) design engineering.
E) all of the choices.

Question 78

Which of the following would not be considered a requirement for creating an effective supply chain?

A) Close relationships among organizations involved
B) Electronic data interchange (EDI) adopted by all members
C) Effective communication among members
D) Having event management capabilities
E) Supply chain visibility

Question 79

Which one of the following is the interface between the firm and the suppliers?

A) Purchasing
B) Production
C) Distribution
D) All of the choices are interfaces
E) None of the choices are interfaces

Question 80

Which of the following is an advantage of e-commerce?
I)Reduction of transaction costs
II)Shortened supply chain response times
III)Greater customer loyalty

A) I only
B) II only
C) I and II only
D) II and III only
E) I, II, and III