Deck 3: Supply Chain Drivers and Metrics

Question 1

Katz reports total revenue of $375,650, cost of goods sold of $267,400 and net income of $48,325. Their total assets are $784,325 and total liabilities are $387,775. What is their return on equity (ROE)?

A) 33.72%
B) 12.19%
C) 6.16%
D) 21.38%

Answer 1

B

Question 2

The high utilization facility will have difficulty responding to demand fluctuations.

Answer 2

TRUE

Question 3

The major drivers of supply chain performance are customers, facilities, inventory, transportation, and information.

Answer 3

FALSE

Question 4

The components of inventory decisions include capacity, cycle inventory, safety inventory, seasonal inventory, and sourcing.

Question 5

Which of the following would result in lower return on assets for Katz if all other entries in their selected financial data were held constant?

A) A reduction in earnings before interest and taxes
B) An increase in asset turnover
C) A reduction in total assets
D) An increase in profit margin

Question 6

The two major types of facilities are production sites and storage sites.

Question 7

Which of the following would result in an improvement in the C2C cycle for Katz if all other entries in their selected financial data were held constant?

A) An increase in accounts payable turnover
B) An increase weeks payable
C) An increase in weeks receivable
D) An increase in weeks in inventory

Question 8

A facility with little excess capacity will likely be no more or less efficient per unit of product it produces than one with a lot of unused capacity.

Question 9

Seasonal inventory is inventory that is built up to counter predictable variability in demand.

Question 10

Companies using seasonal inventory will build up inventory in periods of low demand and store it for periods of high demand when they will not have the capacity to produce all that is demanded.

Question 11

Katz reports total revenue of $245,600, cost of goods sold of $18,950 and net income of $121,000. Their total assets are $585,000 and total liabilities are $250,000. What is their return on equity (ROE)?

A) 36.12%
B) 48.40%
C) 20.68%
D) 41.98%

Question 12

Stock keeping unit (SKU) storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.

Question 13

Why would anyone in their right mind buy a brand new car in the spring when they know that new car models will appear in late summer and early fall and the dealers will use

A) markdowns to move that old inventory?
B) information systems to move that old inventory?
C) pull systems to move that old inventory?
D) lost sales to move that old inventory?

Question 14

Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.

Question 15

A company's ability to find a balance between responsiveness and efficiency that best matches the needs of the customer it is targeting is the key to achieving strategic fit.

Question 16

Warehouse unit storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.

Question 17

Cycle inventory is inventory that is built up to counter predictable variability in demand.

Question 18

Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain's efficiency and responsiveness.

Question 19

Geoff strolled into his local big box retailer in search of sunflower seeds for the flock of cardinals that graced his property during the cold winter. Much to his (and the cardinals') dismay, the shelf where the 50 pound bags of sunflower seeds were kept was bare. He pirouetted and left the store in disgust, empty-handed and fearing the wrath of an angry flock of cardinals when he returned home. This sad scenario illustrates

A) safety inventory.
B) cycle inventory.
C) a markdown.
D) a lost sale.

Question 20

Companies using seasonal inventory will maintain a level inventory increase rate of production for periods of high demand.

Question 21

Seasonal inventory should be used when

A) a company can rapidly change the rate of its production system at a very low cost.
B) changing the rate of production is expensive (e.g., when workers must be hired or fired).
C) adjusting to a period of low demand without incurring large costs.
D) the world is perfectly predictable.

Question 22

The warehousing methodology that uses a traditional warehouse to store all of one type of product together is

A) warehouse unit storage.
B) stock keeping unit (SKU) storage.
C) job lot storage.
D) cross-docking.

Question 23

The two major types of facilities are

A) distribution sites and storage sites.
B) production sites and distribution sites.
C) production sites and storage sites.
D) retail sites and distribution sites.

Question 24

Which component of the supply chain decision-making framework would be established first?

A) Customer strategy
B) Supply chain strategy
C) Supply chain structure
D) Competitive strategy

Question 25

Which component of the supply chain decision-making framework would be used to reach the performance level dictated by the supply chain strategy?

A) Customer strategy
B) Supply chain strategy
C) Supply chain structure
D) Competitive strategy

Question 26

The inventory held in case demand exceeds expectation in order to counter uncertainty is called

A) cycle inventory.
B) safety inventory.
C) seasonal inventory.
D) sourcing.

Question 27

Which of the following is a characteristic of a facility with excess capacity?

A) Will likely be more efficient per unit of product it produces than one with a lot of unused capacity
B) Would be very flexible and respond to wide swings in the demands placed on it
C) Would be considered a high utilization facility
D) Will have difficulty responding to demand fluctuations

Question 28

The data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain is known as

A) facilities.
B) inventory.
C) transportation.
D) information.

Question 29

The following warehousing methodology is one in which goods are not actually warehoused in a facility. Instead, trucks from suppliers, each carrying a different type of product, deliver goods to a facility. There the inventory is broken into smaller lots and quickly loaded onto store-bound trucks that carry a variety of products, some from each of the supplier trucks.

A) Warehouse unit storage
B) Stock keeping unit (SKU) storage
C) Job lot storage
D) Cross-docking

Question 30

Cycle inventory is used because

A) the world is perfectly predictable.
B) demand is uncertain and may exceed expectations.
C) it involves making a trade-off between the costs of having too much inventory and the costs of losing sales due to not having enough inventory.
D) it focuses on processes that are external to the firm.

Question 31

Which of the following are key components of transportation decisions when designing and operating a supply chain?

A) Software selection
B) Mode of transportation
C) Source selection
D) Warehouse selection

Question 32

The places in the supply chain network where product is stored, assembled, or fabricated are known as

A) facilities.
B) inventory.
C) transportation.
D) information.

Question 33

The inventory that is built up to counter predictable variability in demand is called

A) cycle inventory.
B) safety inventory.
C) seasonal inventory.
D) sourcing.

Question 34

The warehousing methodology in which all the different types of products needed to perform a particular job or satisfy a particular type of customer are stored together is

A) warehouse unit storage.
B) stock keeping unit (SKU) storage.
C) job lot storage.
D) cross-docking.

Question 35

Although faster transportation is more expensive, a firm receives which benefit as a result of the faster transportation?

A) Fewer rejects
B) Higher profit
C) Lower inventories
D) More warehouses

Question 36

The set of business processes required to purchase goods and services is known as

A) cycle inventory.
B) safety inventory.
C) seasonal inventory.
D) sourcing.

Question 37

Moving inventory from point to point in the supply is known as

A) facilities.
B) inventory.
C) transportation.
D) information.

Question 38

The average amount of inventory used to satisfy demand between receipt of supplier shipments is referred to as

A) cycle inventory.
B) safety inventory.
C) seasonal inventory.
D) sourcing.

Question 39

All raw materials, work in process, and finished goods within a supply chain are known as

A) facilities.
B) inventory.
C) transportation.
D) information.

Question 40

Which of the following would be a characteristic of a facility with little excess capacity?

A) Allows a facility to be very flexible and to respond to wide swings in the demands placed on it
B) Costs money and therefore can decrease efficiency
C) Requires proximity to customers and the rest of the network
D) Will likely be more efficient per unit of product it produces

Question 41

Which of the following are key components of information that must be analyzed to increase efficiency and improve effectiveness in a supply chain?

A) Software selection
B) Source selection
C) Warehouse selection
D) Forecasting and aggregate planning

Question 42

Economies of scale are illustrated by

A) a company declaring that they will not have sales, but will maintain very low prices all the time.
B) the price of a taxi ride service increasing after 2 a.m.
C) a supplier using a third party logistics firm.
D) a supplier waiting until enough demand has built up to send a full truckload shipment to their customer.

Question 43

Zara sources basic products such as white t-shirts from low cost countries because demand is predictable. For trendy products for which demand is unpredictable, Zara sources from company-owned higher cost factories in Europe. For the predictable demand, Zara strives for ________ and for the unpredictable demand, Zara hopes to achieve ________.

A) social responsibility, quality
B) flexibility, social responsibility
C) efficiency, flexibility
D) quality, efficiency

Question 44

Which of the following is a technology that shares and analyzes information in the supply chain?

A) Internet
B) Enterprise Data Planning (EDP)
C) Electronic Resource Interchange (ERI)
D) Chain Management (CM) software

Question 45

Transforming forecasts into plans of activity to satisfy the projected demand is known as

A) supply chain coordination.
B) forecasting.
C) aggregate planning.
D) revenue management.

Question 46

________ typically measures the cost of bringing product into a facility as a percentage of sales or cost of goods sold (COGS).

A) Average outbound transportation cost
B) Average inbound transportation cost
C) Average incoming shipment size
D) Average inbound transportation cost per shipment

Question 47

The use of differential pricing over time or customer segments to maximize profits from a limited set of supply chain assets is

A) supply chain coordination.
B) forecasting.
C) aggregate planning.
D) revenue management.

Question 48

A beekeeper sends out crates of honey to a number of customers. The shipping cost is a function of the gasoline prices that day and the size of the truck used for delivery. For any shipment exceeding 3000 pounds, the truck rental is $600 and for a shipment weight less than 3000, the truck rental is $450.
What is the average outbound transportation cost?

A) $4.34 per pound
B) $4.14 per pound
C) $4.24 per pound
D) $4.44 per pound

Question 49

When all the different stages of a supply chain work toward the objective of maximizing total supply chain profitability, rather than each stage devoting itself to its own profitability without considering total supply chain profit, it is known as

A) supply chain coordination.
B) forecasting.
C) aggregate planning.
D) revenue management.

Question 50

Lisa rented her goats out to anyone interested in clearing underbrush the natural way on their acreage. She received a call from her client Mary on June 21 and delivered her herd of goats to the site on June 24. The goats were done on June 30 and Lisa presented Mary with an invoice the same day. Mary wrote Lisa a check on July 18 and Lisa cashed it on July 21. What was Lisa's days payable outstanding for Mary's job?

A) 18 days
B) 24 days
C) 27 days
D) 30 days

Question 51

Blue Nile is an online retailer of diamonds that has used responsive transportation to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. Which is the mode of transportation used with this strategy?

A) Sea
B) Rail
C) Internet
D) Air

Question 52

________ measures the average time between when an order is placed and the product arrives.

A) Supplier reliability
B) Supply lead time
C) Fraction of on-time deliveries
D) Supply quality

Question 53

The ________ strategy results in a peak during the discount week, often followed by a steep drop in demand during the following weeks.

A) Everyday low pricing
B) High-low pricing
C) Fixed price
D) Menu pricing

Question 54

________ measures the incremental costs that are independent of the size of the order.

A) Average sale price
B) Incremental variable cost per unit
C) Incremental fixed cost per order
D) Incremental indirect cost per order

Question 55

________ identifies the difference between the planned production/inventories and the actual values.

A) Supplier reliability
B) Forecast error
C) Variance from plan
D) Supply quality

Question 56

The process by which a firm decides how much to charge customers for its goods and services is

A) supply chain coordination.
B) forecasting.
C) aggregate planning.
D) pricing.

Question 57

The most significant sourcing decision for a firm is

A) whether to locate a plant close to customers or locate a plant close to sources of raw materials or suppliers.
B) whether to use highly automate processes or manual labor.
C) whether to use traditional inventory methods or adopt a just in time approach to stocking.
D) whether to perform a task in-house or outsource it to a third party.

Question 58

In the textbook, it mentions that Walmart has mandated the use of a specific technology by its top 100 suppliers at the level of product cases. What is the technology?

A) RFID
B) ERP
C) SCM
D) EDI

Question 59

The art and science of making projections about what future demand and conditions will be is

A) supply chain coordination.
B) forecasting.
C) aggregate planning.
D) revenue management.

Question 60

Over the past two months, Lisa has received several orders for goat grazing services. The order date, promise date, and delivery dates are shown in the table below.
What is Lisa's percentage of on-time deliveries?

A) 75%
B) 64%
C) 56%
D) 51%

Question 61

On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below:
What is the average sale price of the gasoline?

A) $2.61
B) $2.64
C) $2.67
D) $2.70

Question 62

Explain the supply chain decision-making framework and the role of the four major drivers.

Question 63

Explain the basic trade-off between responsiveness and efficiency for each of the major drivers of supply chain performance.

Question 64

Explain the role of each of the major drivers of supply chain performance.

Question 65

List and define the six major drivers of supply chain performance.

Question 66

On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below:
What is the average order size of the gasoline?

A) 15.00
B) 13.75
C) 14.25
D) 14.75

Question 67

Explain the role of each of the major drivers of supply chain performance in the competitive strategy.

Question 68

On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below:
What is the range of sale price of the gasoline?

A) 7.51
B) 10
C) 0.69
D) 22.54

Question 69

Amazon uses different prices for the products that are purchased from the company - often for the speed of the shipping. What is the name of this pricing scheme?

A) Everyday low pricing
B) High-low pricing
C) Fixed price
D) Menu pricing