Chapter 11 Supply Chain Man PDF

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Chapter 11 Supply Chain Management 1.

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

2.

Supply chain management is collaboration among, and coordination of all the facilities and activities involved in purchasing, producing, and delivering a product or service. True False

3.

Supply chains are sometimes called value chains. True False

4.

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. True False

5.

Forecasting demand would be considered one of the strategic (design) activities of supply chain management. True False

6.

The need for supply chain management increases as globalization increases. True False

7.

EDI is the direct transmission of inter-organization transactions, computer-to-computer, including purchase orders, shipping notices, and more. True False

8.

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

9.

Efficient consumer response (ECR) is an extension of quick response initially developed in the retail clothing industry. True False 1

10. Distribution requirements planning (DRP) is a pull system based on the same logic of time-phased planning as material requirements planning (MRP). True False 11. In retail, cross-docking minimizes handling and warehousing of products in the supply chain by shipping directly from manufacturers to retail outlets. True False 12. Quick response (QR) results in frequent small-lot sized shipments has the benefit of reduced reliance on forecasts. True False 13. Although JIT systems require frequent deliveries of small shipments, it is still necessary to consider all the costs and benefits of using frequent, small deliveries to determine the best lot size. True False 14. One of the major reasons for a company to adopt third party logistics is to concentrate on one's core business. True False 15. The primary use of radio frequency identification (RFID) in supply chain management is to track the location of delivery trucks. True False 16. E-commerce involves business-to-business (B2B) interaction only. True False 17. Two essential features that are the basis of e-commerce businesses are the web site design and inventory management. True False 18. Relative to bar-codes, RFID tags have the advantages of providing more detailed information, and being able to be read automatically. True False

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19. Electronic data interchange (EDI) is rapidly becoming obsolete with increased usage of the internet. True False 20. Examples of metrics for supply chain performance are logistics costs, percentage of on-time delivery, and response time. True False 21. Inventory turnover refers to the speed at which inventory (material) goes through the supply chain. True False 22. The faster material passes through the supply chain, the higher the inventory costs will be, and the faster products and services will be delivered to the customer. True False 23. Supply chain visibility refers to the physical flow of material in supply chain management. True False 24. Fill rate refers to the time it takes for a supplier to make a shipment after receiving an order. True False 25. Bullwhip effect refers to a phenomenon that demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain. True False 26. In supply chain management, two of the primary areas for collaboration in between a manufacturer and a distributor or retailer are forecasting and replenishment. True False 27. One benefit of using a supplier certification program such as ISO 9001 to evaluate suppliers is to reduce the amount of inspection and testing of goods purchased from the supplier in the future. True False 28. Cross docking is a technique to avoid storage at the warehouse. True False

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29. Delayed differentiation/postponement is a technique to minimize the cost of providing product variety by adding differentiating features late in the supply chain. True False 30. Holding safety stock inventory at multiple retail outlets rather than at a centralized distribution centre is an example of risk pooling... True False 31. Short-term contracts with many suppliers is consistent with the frequent deliveries and small lot sizes of JIT systems. True False 32. The purchasing department interfaces with the legal, accounting, and operations functions, along with several others. True False 33. The primary purpose of purchasing is to negotiate low prices from an organization's suppliers. True False 34. The primary factors of importance to purchasing is the cost of goods purchased, the quality of goods and services, and the timing of deliveries of goods or services. True False 35. Design and purchasing people should work closely because changes in design, specifications, or materials can reduce the cost of purchased items. True False 36. The purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items. True False 37. Value analysis examines the function of purchased parts and materials. True False

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38. It is important to perform value analysis each time materials are ordered. True False 39. Outsourcing refers to buying goods or services from outside sources instead of making the goods or providing the services in-house. True False 40. Outsourcing carries the risk of less control over outside suppliers than producing internally. True False 41. Disintermediation involves terminating the relationship with a supplier as a result of repeated failures to meet performance expectations. True False 42. Long-term contracts implies stronger relationships with fewer suppliers. True False 43. For large orders of standard products or services, competitive bidding is often used. True False 44. The main goal in negotiated purchasing is to obtain the lowest possible price. True False 45. For large orders of standard products or services, negotiated purchasing is more common than competitive bidding. True False 46. An important advantage of decentralized purchasing is the opportunity to obtain lower prices than with centralized purchasing. True False 47. Decentralized purchasing can usually offer quicker response than centralized purchasing. True False

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48. Some firms use both centralized and decentralized purchasing. True False 49. An advantage of decentralized purchasing is the attention given to local needs. True False 50. Price is the primary determining factor in choosing a supplier. True False 51. Supplier analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service. True False 52. Supplier certification reduces the need to inspect and test delivered goods. True False 53. Supplier certification is an important first step in a supplier audit program. True False 54. Japanese firms tend to use fewer vendors than many of their American counterparts. True False 55. 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. There is no effect.

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56. 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. the need to improve operations to lower costs D. the complexity of management information systems E. the need to manage inventories 57. Logistics refers to: I) the movement of materials within a production facility II) incoming and outgoing deliveries III) the movement of information within a facility

A. I B. II C. III D. I and II E. I, II and III 58. 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 59. 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. 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

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60. 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 61. 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 62. Which of the following is not true about JIT deliveries?

A. fewer suppliers and long-term relationship B. small lot sizes C. frequent deliveries D. decreased transportation cost per unit E. all of the choices are true 63. Which of the following is an advantage of e-commerce? I. reduction of transaction costs II. shortened supply chain response time III. greater customer loyalty

A. I B. II C. I and II D. II and III E. I, II, and III

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64. Holding safety stock inventory in once central location rather than in multiple locations is called:

A. postponement B. outsourcing C. risk pooling D. cross-docking. E. vendor-managed inventory 65. Which of the following is not a performance driver to measure of the goals of the supply chain?

A. Quality B. Velocity C. Flexibility D. Fill Rate E. Amplitude of variation 66. Which of the following is a challenge associated with delivering supplies for JIT systems? I. Increased traffic for inbound supplies II. Fixed costs of delivery increase per unit costs of supplies III. Increased uncertainty in forecasting requirements

A. I only B. I and II C. II and III D. I and III E. I, II and III 67. 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

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68. 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 69. 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. e-Commmerce; reduced transaction costs D. barcodes; battery activated for reading with wireless device E. all of the choices are correctly matched 70. Which one of the following is the interface between the firm and suppliers?

A. purchasing B. production C. distribution D. all of the choices E. none of the choices 71. Purchasing may interface with:

A. operations B. accounting C. legal department D. design engineering E. all of the choices

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72. Which of the following is not a duty of purchasing?

A. set quality standards for purchased items B. maintaining databases of suppliers C. identify sources of supply D. establish partnerships with suppliers E. negotiating contracts 73. 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 74. The purchasing cycle ends when the purchasing department is notified that:

A. An order has been placed. B. Potential suppliers are identified. C. The supplier has been paid. D. Supplier has been selected. E. The order has been received. 75. 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

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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 77. Which of the following is not true of value analysis?

A. It involves an examination of the function of purchased parts or raw materials. 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. 78. Which of the following is not a reason for outsourcing?

A. economies of scale of supplier result in lower costs B. to focus on core activities and outsource others C. supplier has more knowledge and expertise D. insufficient capacity internally E. All of the choices are reasons for outsourcing. 79. 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 communications among members D. agreement among members on common goals E. supply chain visibility

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80. 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 81. Which of the following is considered a myth about negotiated purchasing? I The main goal is to obtain the lowest price. II Each negotiation is an isolated transaction. III Negotiation must be a win-lose transaction.

A. II and III B. I, II, and III C. I only D. I and II E. I and III 82. Which of the following is not a benefit of centralized purchasing?

A. potential for quantity discounts B. better service from suppliers C. quick response to local needs D. potential for use of purchasing specialists E. All are potential benefits of centralized purchasing. 83. The fill rate is categorized as which type of supply chain performance metric?

A. quality B. cost C. variety D. delivery E. customer service

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84. Which of the following is not a key consideration when a company chooses a supplier?

A. lead time and on-time delivery B. reputation and financial stability C. value analysis D. quality and quality assurance E. flexibility 85. Which of the following is included in the Purchasing Management Association of Canada's norms of ethical behaviour and code of conduct?

A. denounce all forms of improper business practice. B. buy without prejudice, seeking maximum value with each expenditure. C. subscribe to and work for honesty in buying and selling D. accord a prompt and courteous reception to all who call on a legitimate business mission E. all of the choices. 86. The perspective of business organizations viewing suppliers as partners is characterized by: I. price based competitive bidding II. reliance on fewer suppliers III. long-term contracts

A. I and II B. II only C. II and III D. I and III E. I, II and III 87. The benefits of establishing partnerships with suppliers include: I higher quality. II increased delivery speed. III lower inventories.

A. I and II B. II only C. II and III D. I and III E. I, II and III 14

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Chapter 11 Supply Chain Management Key 1.

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

Difficulty: Easy Learning Objective: 1 Stevenson - Chapter 11 #1

2.

Supply chain management is collaboration among, and coordination of all the facilities and activities involved in purchasing, producing, and delivering a product or service. TRUE

Difficulty: Easy Learning Objective: 1 Stevenson - Chapter 11 #2

3.

Supply chains are sometimes called value chains. TRUE

Difficulty: Easy Learning Objective: 1 Stevenson - Chapter 11 #3

4.

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. FALSE

Difficulty: Medium Learning Objective: 1 Stevenson - Chapter 11 #4

5.

Forecasting demand would be considered one of the strategic (design) activities of supply chain management. FALSE

Difficulty: Medium Learning Objective: 1 Stevenson - Chapter 11 #5

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6.

The need for supply chain management increases as globalization increases. TRUE

Difficulty: Medium Learning Objective: 1 Stevenson - Chapter 11 #6

7.

EDI is the direct transmission of inter-organization transactions, computer-to-computer, including purchase orders, shipping notices, and more. TRUE

Difficulty: Easy Learning Objective: 3 Stevenson - Chapter 11 #7

8.

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

Difficulty: Easy Learning Objective: 2 Stevenson - Chapter 11 #8

9.

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

Difficulty: Medium Learning Objective: 2 Stevenson - Chapter 11 #9

10.

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

Difficulty: Hard Learning Objective: 2 Stevenson - Chapter 11 #10

11.

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

Difficulty: Medium Learning Objective: 2 Stevenson - Chapter 11 #11

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12.

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

Difficulty: Medium Learning Objective: 2 Stevenson - Chapter 11 #12

13.

Although JIT systems require frequent deliveries of small shipments, it is still necessary to consider all the costs and benefits of using frequent, small deliveries to determine the best lot size. TRUE

Difficulty: Medium Learning Objective: 2 Stevenson - Chapter 11 #13

14.

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

Difficulty: Medium Learning Objective: 2 Stevenson - Chapter 11 #14

15.

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