Chapter 15 Answers

Chapter 11 - Supply Chain Management
Chapter 11 Supply Chain Management
True / False Questions 1. A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users. TRUE
Difficulty: Easy TLO: 1 Taxonomy: Knowledge
2. n supply chain organi!ations, functions must operate independently of each other. FALSE
". C#$% is the use of e-mail &etween vendors and purchasing to place orders. FALSE
'. (istri&ution re)uirements planning *(%#+ is an e,panded concept of M%# which incorporates multinational inventory management. FALSE
Difficulty: Medium TLO: 11 Taxonomy: Knowledge
11-1
-. .very &usiness organi!ation is part of at least one supply chain. TRUE
/. 0 1 delivery, i.e. fre)uent deliveries of small shipments, actually results in an increase in the transportation cost per unit. TRUE
2. 1he materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the &eginning of the chain. FALSE
3. Supply chains are sometimes referred to as value chains &ecause they reflect the concept that value is added as goods and services progress through the chain. TRUE
11-2
4. 1he goal of supply chain management is to synchroni!e supply and demand of all of the organi!ations that are part of the chain. TRUE
15. 1he need for supply chain management increases as glo&ali!ation increases. TRUE
Difficulty: Medium TLO: Taxonomy: Knowledge
11. 1he design of the supply chain and esta&lishing partnerships with vendors and distri&utors are e,amples of operating issues in a supply chain. FALSE
Difficulty: Medium TLO: ! Taxonomy: Knowledge
12. 1raffic management refers to truc6 movement within our par6ing areas. FALSE
Difficulty: "a#d TLO: 11 Taxonomy: Knowledge
1". 7ne of the ma8or reasons for a company to adopt third party logistics is to concentrate on one's core &usiness. TRUE
11-"
1'. .-commerce refers to the use of electronic technology to facilitate &usiness transactions. TRUE
$$%&': (T Difficulty: Easy TLO: 4 Taxonomy: Knowledge
1-. .-commerce involves &usiness-to-&usiness *929+ interaction only. FALSE
1/. (isintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain. TRUE
12. Most people wor6ing for a &usiness organi!ation are somehow involved with the supply chain of that &usiness. TRUE
11-'
13. Strategic partnering is encouraged when two or more &usiness organi!ations have complementary products or services that would &enefit the others. TRUE
Difficulty: Easy TLO: ) Taxonomy: Knowledge
14. $orming strategic partnerships is &eneficial for two or more &usiness organi!ations that have the same products or services. FALSE
Difficulty: Medium TLO: ) Taxonomy: Knowledge
25. nventory velocity refers to the average speed *in miles:hour+ of material handling e)uipment in a warehouse. FALSE
Difficulty: Easy TLO: 1* Taxonomy: Knowledge
21. ;lo&al supply chains ma6e purchasing easier &ecause of more options. FALSE
22. Centrali!ed or decentrali!ed purchasing is directly related to the si!e of an organi!ation. FALSE
11--
2". 1he optimi!ation of the supply chain uses a mathematical model to determine the optimal num&er of &usiness organi!ations to &e included in the chain. FALSE
2'. nformation technology is the 6ey to success of glo&al supply chains. TRUE
Difficulty: Easy TLO: Taxonomy: Knowledge
2-. 9ullwhip effect refers to a phenomenon that demand variations that e,ist at the customer end of the supply chain are magnified as orders are generated &ac6 through the supply chain. TRUE
2/. Starting with the final customer and moving &ac6ward through the supply chain, &atch si!es and the level of safety stoc6 tend to decrease. FALSE
22. Scheduling and maintaining e)uipment are operational decisions. TRUE
Difficulty: Easy TLO: ! Taxonomy: Knowledge
11-/
23. 1o prevent temporary storage in a warehouse, cross doc6ing can &e used. TRUE
24. (elayed differentiation is a means of increasing product variety without &uilding the customi!ed product from scratch or 6eeping large inventories of custom products. TRUE
"5. %eturned goods are part of reverse logistics. TRUE
"1. A "5< reduction in product and service variety won't really affect the efficiency of a supply chain. FALSE
"2. 1he service function of purchasing interfaces with many area including legal, accounting, and engineering functions. TRUE
11-2
"". ;ate 6eeping manages the cost of shipping returned goods. FALSE
"'. 7utsourcing logistics gives a company less fle,i&ility &ecause it forces them to focus more on core &usinesses. FALSE
"-. =endor analysis e,amines the function of purchased parts and materials with a view towards improvement or cost reduction. FALSE
"/. >sing third party fulfillment means losing control of fulfillment. TRUE
"2. #rice is the primary determining factor in choosing a vendor since most products are essentially the same. FALSE
11-3
"3. %$ ( eliminates the need for counting and &ar-code scanning. TRUE
"4. 1he importance of purchasing relates only to the cost of parts and materials purchased, which is often /5< or more of the cost of finished goods. FALSE
'5. 1he importance of purchasing is the cost of goods purchased, the )uality of goods and services, and the timing of deliveries of goods or services. TRUE
'1. =endor analysis is the process that evaluates the source of supply in terms of price, )uality, reputation, and service. TRUE
11-4
'2. n e-commerce, the front-end design is significantly more important than the &ac6-end design. FALSE
$$%&': (T Difficulty: Medium TLO: + Taxonomy: Knowledge
'". 7ne disadvantage to %$ ('s is that they re)uire a ?line of sight' for reading. FALSE
''. (ecentrali!ed purchasing can usually offer )uic6er response than centrali!ed purchasing. TRUE
'-. Some firms have structured their procurement function to include &oth centrali!ed and decentrali!ed purchasing. TRUE
11-15
'/. Creating an effective supply chain re)uires lin6ing the mar6eting, distri&ution, and supplier channels. TRUE
'2. An advantage of decentrali!ed purchasing is the attention given to local needs. TRUE
'3. .vent management is the advanced planning re)uired for ma8or performances such as concerts or conferences. FALSE
'4. Supplier certification is the first step re)uired in a supplier audit program. FALSE
Difficulty: Medium TLO: ) Taxonomy: Knowledge
-5. (esign and purchasing people should wor6 closely &ecause changes in design, specifications, or materials can impact future purchase re)uirements. TRUE
11-11
-1. 1he purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items. FALSE
Difficulty: "a#d TLO: ! Taxonomy: Knowledge
-2. #roducing and shipping in large lots may reduce costs &ut increase lead times. TRUE
-". =ariations create uncertainty, there&y causing inefficiencies in a supply chain. TRUE
-'. (isintermediation is the refusal of one party to use mediators for price negotiation. FALSE
Multiple Choice Questions
11-12
--. @hich of the following is not a goal of supply chain managementA A. fewer suppliers and long-term relationship 9. small lot si!es C. on time deliveries D lowest possi&le transportation costs .. delivery often to the place of use
-/. Bogistics includes all of these e,ceptC A. the movement of materials within a production facility 9. incoming shipments of goods or materials C. outgoing shipments of goods or materials D customer selection .. returned goods processing
-2. Small changes in consumer demand can result in large variations in orders placed &ecause of the A. Supply chain 9. Safety stoc6 re)uirement C. Bead time effect D 9ullwhip effect .. $C$S scheduling
11-1"
-3. %$ ( chipsC * + are used to trac6 goods in distri&ution * + are used to trac6 8o& progress in production * + may provide special instructions to operators * =+ can &e used in inventory record 6eeping A. and only 9. and only C. , , and = D , , and = .. = only
-4. @hich of the following is not a &enefit of %$ (A A. increased productivity 9. elimination of paper wor6 C fre)uent deliveries of smaller shipments (. reduction in clerical la&or .. increased accuracy
/5. A factor that ma6es it desira&le for &usiness organi!ations to actively manage their supply chains isC A. more potential vendors ! increasing glo&ali!ation C. downsi!ing (. the internet .. %$ ('s
11-1'
/1. @hich of the following is not a &enefit of effective supply chain managementA A. lower inventory costs 9. higher productivity C. shorter lead times (. greater customer loyalty E larger num&er of suppliers
/2. @hich of the following is not a measure of the relia&ility of the supply chainA A supply chain response time 9. on-time delivery C. fill rate (. lead time varia&ility .. improving e-fulfillment statistics
/". 1he automatic identification of material is part ofC A. holding costs ! %$ ( C. wor6ing capital reduction (. net present value calculations .. vendor analysis
11-1-
/'. @hich of the following is not an application of .-&usinessA A. internet &uying and selling 9. e-mail C. order and shipment trac6ing (. electronic data interchange *.( + E universal product codes
Difficulty: Medium TLO: + Taxonomy: Knowledge
/-. @hich of the following is an advantage of e-&usinessA * + reduction of transaction costs * + shortened supply chain response time * + greater customer loyalty A. 9. C and (. and .. , , and
//. @hich of the following is a &arrier to integration of separate organi!ations in the supply chainA * + conflicting o&8ectives of the companies in the chain. * + different level of capacity of the companies in the chain. * + reluctance of the organi!ations in the chain to allow other organi!ations access to their data. A. only 9. and C. and D and .. , and
11-1/
/2. DDDDDDDDD has helped &usiness concentrate on their core &usiness. A. Supply Chains 9. Scheduling C 7utsourcing (. .%# .. Bean #roduction
/3. 7utsourcing followed &y DDDDDDDDDD is not simple. A. ntegration 9. >nioni!ation C 9ac6sourcing (. Computeri!ation .. 0ust-in-time
Difficulty: "a#d TLO: Taxonomy: Knowledge
/4. 1he interface &etween the firm and its suppliers isC A purchasing 9. production C. distri&ution (. engineering .. accounting
11-12
25. 1he two types of decisions that are relevant to supply chain management areC A. Short, long term 9. (omestic, international C. Bocation, layout (. n-source, out-source E Strategic, operational
21. 7ne important o&8ective of purchasing is toC A. set )uality standards for purchased items ! &e 6nowledgea&le a&out new products C. maintain numerous sources of supply (. o&tain the lowest prices on all purchased items .. determine the processes that should &e used
22. 1he purchasing cycle &egins withC A. selecting a supplier 9. placing an order C. evaluating potential vendors (. conducting a value analysis E receiving a re)uisition
11-13
2". .,amination of the sources of supply for purchased parts or materials in order to improve performance is calledC A vendor analysis 9. value analysis C. negotiated purchasing (. reverse engineering .. disintegration
2'. =endor analysis has the greatest potential for savings for items which haveC A. low cost per unit 9. low annual cost-volume C. high cost per unit (. high annual usage E high annual cost-volume
2-. @hich of the following is not true of vendor analysisA A t involves an e,amination of the function of purchased parts or raw materials. 9. ts purpose is to reduce costs and:or improve performance of purchased goods or services. C. t is usually performed only periodically. (. %epresentatives from design and operations may wor6 with purchasing. .. f improvements are identified, purchasing implements those that purchasing agrees are 8ustified.
11-14
2/. @hich of the following is not a performance driverA A. Euality 9. Cost C Sta&ility (. =elocity .. $le,i&ility
22. @hich of the following would not usually &e a main factor in selecting a vendorA A. location 9. price C. )uality D inventory turnover .. vendor services
23. @hich of the following is part of the purchasing cycleA * + #urchasing selects a supplier. * + 7rders from vendors are received. * + #urchasing receives a re)uisition. A. and ! , , and C. only (. and .. and
11-25
24. @hich of the following is not a 6ey consideration when a company chooses a supplierA A. lead time and on-time delivery 9. reputation and financial sta&ility C value analysis (. )uality and Euality assurance .. fle,i&ility of design change
35. @hich of the following is not a &enefit of centrali!ed purchasingA A. potential for )uantity discounts 9. &etter service from suppliers C )uic6 response to local needs (. potential for use of purchasing specialists .. supplier research
31. 1he purchasing perspective of the supplier as a partner is characteri!ed &yC A. an emphasis on low prices ! one or a few suppliers C. low fle,i&ility (. 155< inspection for )uality .. low volume
11-21
32. =endor Analysis is the e,amination of the DDDDDDDDD of purchased materials. A. $unction ! Source C. Euality (. Cycle .. Euantity.
3". A system for inventory management involving multi-echelon warehouses is calledC A. M%# 9. .7E C. C%# (. 0 1 E (%#
Difficulty: Medium TLO: 1* Taxonomy: Knowledge
3'. @hich of the following is a principle re)uired for ethical &ehavior in purchasingA A. loyalty to employer. 9. 8ustice to those you deal with. C. faith in your profession. D all of the a&ove. .. none of the a&ove.
$$%&': E, Difficulty: Easy TLO: ! Taxonomy: Knowledge
11-22
3-. 1he activity which &egins with a re)uest from within the organi!ation isC A. 7utsourcing search ! #urchasing cycle C. Supplier selection (. 7rder receipt .. Supply chain management
3/. 7ur organi!ation can o&tain visi&ility to potential trading partners on the internet &y usingC A. C2C 9. 92C C 929 (. C29 .. Fone of the a&ove
$$%&': (T Difficulty: Medium TLO: ) Taxonomy: Knowledge
32. %eal time information a&out product movement on store shelves could &enefit from the use ofC A. &atch processing 9. economic order )uantities C. statistical process control D radio fre)uency identification tags .. infrared remote scanners
11-2"
33. 1he we&site and order fulfillment are essential features ofC A. delayed differentiation ! e-commerce C. internet service providers (. inventory &alancing .. mar6et segmentation
11-2'

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Chapter 11 - Supply Chain Management

Chapter 11 Supply Chain Management

Difficulty: Easy TLO: 1 Taxonomy: Knowledge

Difficulty: Easy TLO: 14 Taxonomy: Knowledge

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

-. .very &usiness organi!ation is part of at least one supply chain. TRUE

Difficulty: Medium TLO: 1 Taxonomy: Knowledge

Difficulty: Medium TLO: 4 Taxonomy: Knowledge

Difficulty: Medium TLO: 3 Taxonomy: Knowledge

Difficulty: Medium TLO: 1 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

Difficulty: Medium TLO: Taxonomy: Knowledge

Difficulty: Medium TLO: ! Taxonomy: Knowledge

Difficulty: "a#d TLO: 11 Taxonomy: Knowledge

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

$$%&': (T Difficulty: Easy TLO: 4 Taxonomy: Knowledge

1-. .-commerce involves &usiness-to-&usiness *929+ interaction only. FALSE

Difficulty: Easy TLO: 4 Taxonomy: Knowledge

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

Difficulty: Easy TLO: 1 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: Easy TLO: ) Taxonomy: Knowledge

Difficulty: Medium TLO: ) Taxonomy: Knowledge

Difficulty: Easy TLO: 1* Taxonomy: Knowledge

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

Difficulty: "a#d TLO: 7 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: Medium TLO: 3 Taxonomy: Knowledge

Difficulty: Easy TLO: Taxonomy: Knowledge

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

Difficulty: Medium TLO: 2 Taxonomy: Knowledge

22. Scheduling and maintaining e)uipment are operational decisions. TRUE

Difficulty: Easy TLO: ! Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

"5. %eturned goods are part of reverse logistics. TRUE

Difficulty: Medium TLO: 12 Taxonomy: Knowledge

Difficulty: Medium TLO: 14 Taxonomy: Knowledge

Difficulty: Easy TLO: ! Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: "a#d TLO: 12 Taxonomy: Knowledge

Difficulty: Medium TLO: 12 Taxonomy: Knowledge

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

Difficulty: Medium TLO: 11 Taxonomy: Knowledge

Difficulty: Easy TLO: 4 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: Medium TLO: 4 Taxonomy: Knowledge

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

$$%&': (T Difficulty: Medium TLO: + Taxonomy: Knowledge

Difficulty: "a#d TLO: 4 Taxonomy: Knowledge

Difficulty: Easy TLO: 7 Taxonomy: Knowledge

Difficulty: Easy TLO: 4 Taxonomy: Knowledge

Chapter 11 - Supply Chain Management

Difficulty: Medium TLO: 13 Taxonomy: Knowledge

Difficulty: Medium TLO: 7 Taxonomy: Knowledge

Difficulty: Medium TLO: ! Taxonomy: Knowledge