Deck 16: Global Sourcing and Procurement

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False
Explanation: 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 3

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.

Answer 3

True
Explanation: The phenomenon of variability magnification as we move from the customer to the producer in the supply chain is often referred to as the bullwhip effect.

Question 4

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

Question 5

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 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

Strategic sourcing is the development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business.

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

Green sourcing requires incorporating new criteria for evaluating alternatives.

Question 27

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

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

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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

Question 34

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 35

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 36

An important opportunity in green sourcing is waste reduction opportunities.

Question 37

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

Question 38

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

Question 39

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

Question 40

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 41

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 42

When considering outsourcing, what should firms be sure to avoid?

A)Losing control of noncore activities that don't distinguish the firm
B)Allowing outsourcing to develop into a substitute for innovation
C)Giving the outsourcing partner opportunities to become a strong competitor
D)Allowing employees transferred to the outsourcing partner to rejoin the firm
E)Adverse corporate tax implications of asset transfers to the outsourcing partner

Question 43

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 44

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 45

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 46

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 47

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 48

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 49

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 50

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 51

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 52

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 53

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 54

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 55

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 56

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 57

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 58

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 59

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 60

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

Question 61

Name the four types of supply chain in Hau Lee's uncertainty framework for classifying supply chains.(1) ________________________
(2) ________________________
(3) ________________________
(4) ________________________

Question 62

In Hau Lee's uncertainty framework to classify supply chains, which supply chain process should be used for innovative products with low supply uncertainty? ______________________________________

Question 63

In Hau Lee's uncertainty framework to classify supply chains, a supply chain that combines the strengths of a "risk-hedging" and a "responsive" supply chain is called what? ______________________________________

Question 64

What is it called when companies focus on the things they do best and outsource other functions to key partners? ________________________________________

Question 65

What is it called when a firm controls most of the activities in its supply chain? ___________________________________

Question 66

In Hau Lee's uncertainty framework to classify supply chains, which supply chain process should be used for functional products with low supply uncertainty? ______________________________________

Question 67

Having a supply chain that is environmentally responsible is called: _____________________.

Question 68

If the average aggregate inventory value is $4,000 and the cost of goods sold is $104,000, what is the weeks of supply? _______________________

Question 69

The acronym RFP stands for: ________________________

Question 70

If inventory turnover is 20 and cost of goods sold is $100,000, what is the average aggregate inventory value? _______________________

Question 71

When customers allows their supplier to manage an item or group of items for them, it is called ________________________

Question 72

What is the effect of the lack of synchronization among supply chain members called? ________________________

Question 73

Ownership costs include which of the following costs?

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

Question 74

The step in the six-step process for green sourcing where a set of metrics against which the supplier will be measured for the contract's duration is developed is called: _____________________.

Question 75

An estimate of the cost of an item that includes all the costs related to the procurement and use of an item, including any related costs in disposing of the item after it is no longer useful, is called what? _____________________.

Question 76

If the weeks of supply is 10 and the average aggregate inventory value is $1,000,000, what is the cost of goods sold? _______________________

Question 77

The step in the six-step process for green sourcing where quantitative and qualitative criteria to evaluate the sourcing process are developed is called: _____________________.

Question 78

Name the two measures of sourcing efficiency.(1) _______________________
(2) _______________________