Question 1

If the cost of manufacturing (direct labor and materials) is 50% of sales and profit is 15% of sales, what would the profit percentage be if the direct costs of manufacturing was reduced from 50% to 47%?

Accepted Answer

A)  3% 
B)  6% 
C)  12% 
D)  15% 
E)  18%

Question 2

Savings in the supply chain mostly are the result of:

Accepted Answer

A)  Members in the chain sharing information 
B)  Being able to ship in larger quantities 
C)  Members having clout with suppliers 
D)  Sticking with local competition 
E)  Cutting cost after the design phase

Question 3

Postponement is best used with items that:

Accepted Answer

A)  Have a long lead time and many product configurations 
B)  Are standardized and have short lead times 
C)  Experience a yield that you won't know until the product is complete 
D)  Suppliers with poor delivery performance

Question 4

Which of the following statements is best?

Accepted Answer

A)  the supply chain includes all activities and processes to provide a product or service to a customer. 
B)  material in the supply chain usually flows from producer to customer. 
C)  the supply chain contains only one supplier. 
D)  all of the above are true. 
E)  a and b only are true.

Question 5

The purpose of the materials management concept is:
I. To manage materials in a production operation.
II. To have purchasing support the needs of production.
III. To have production support the needs of purchasing.

Accepted Answer

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

Question 6

Making a pizza at a fast-food restaurant would be considered a form of:

Accepted Answer

A)  Engineer to order 
B)  Assemble to order 
C)  Make to stock 
D)  Make to order

Question 7

If the manufacturing lead time of an item is reduced by 50% the work in process inventory:

Accepted Answer

A)  Does not change 
B)  Is reduced by approximately 70% 
C)  Is reduced by approximately 50% 
D)  More information is needed for this problem

Question 8

Which of the following statements is best?
I. The conflict between marketing, finance and production centers on customer service, disruption to production, and inventory levels.
II. Marketing's objectives can be met with higher inventories.
III. Finance's objectives can be met with higher inventories.
IV. Production's objectives can be met with higher inventories.

Accepted Answer

A)  all of the above are true 
B)  I and II only are true 
C)  I, II and III only are true 
D)  I, II and IV only are true 
E)  II, III and IV only are true

Question 9

Which of the following are generally considered overall objectives of an organization?
I. Providing good customer service.
II. Maintaining low levels of inventory investment.
III. Optimizing use of resources.
IV. Providing sufficient return on investment.

Accepted Answer

A)  I and II only 
B)  I, II and III only 
C)  I, III and IV only 
D)  all the above

Question 10

Which of the following strategies has the shortest delivery lead time and the least customer input?

Accepted Answer

A)  make-to-order 
B)  configure-to-order 
C)  assemble-to-order 
D)  make-to-stock

Exam 1: Introduction to Materials Management