14 Supply Chain Integration

Operations Management: Processes and Supply Chains, 10e (Krajewski et al.
)
Chapter 14 Supply Chain Integration
1) Supply chain integration is the effective coordination of supply chain processes through the seamless
flow of information to suppliers, but does not include customers, such as distributors and retailers.
Answer: FALSE
Reference: Introduction
Difficulty: Easy
Keywords: supply chain integration, supplier, customer
Learning Outcome: Compare common approaches to supply chain design.
2) Supply chain integration is the effective coordination of supply chain processes through the seamless
flow of information to suppliers, up and down the supply chain
Answer: TRUE
Reference: Introduction
Difficulty: Easy
Keywords: supply chain integration, supplier, customer
3) A supply chain can be thought of as a river that flows from raw material suppliers to consumers.
Answer: TRUE
Reference: Supply Chain Integration Across The Organization
Difficulty: Easy
Keywords: supply chain, river, raw material supplier, consumer
4) The finished goods of one firm may actually be the raw materials for another firm.
Answer: TRUE
Reference: Supply Chain Dynamics
Difficulty: Moderate
Keywords: finished goods, raw materials
5) The bullwhip effect says that in any supply chain, the ordering patterns experience increasing variance
as you move closer to the end customer.
Answer: FALSE
Keywords: bullwhip, variance
6) A common disruption of the external supply chain is product and service mix changes.
Answer: TRUE
Keywords: disruption, external supply chain, mix
12-1
7) A common disruption of the external supply chain is engineering changes.
Answer: FALSE
Keywords: external supply chain, engineering change
8) A common disruption of the supply chain resulting from internal causes is order batching.
Answer: TRUE
Keywords: disruption, internal supply chain, mix
9) A common disruption of the supply chain resulting from internal causes is demand volume changes.
Answer: FALSE
Keywords: disruption, internal supply chain, mix
10) SKUs with higher volumes and lower weekly variability may be best served with a make- to-stock
supply chain design.
Answer: TRUE
Keywords: MTS, make to stock, volume, variability
11) SKUs with lower volumes and higher weekly variability may be best served with an assemble-to-
order or make-to-order supply chain design.
Answer: TRUE
Keywords: ATO, MTO, assemble to order, make to order, volume, variability
12) The SCOR model provides guidelines for how materials are to be delivered along a supply chain.
Answer: FALSE
Keywords: SCOR, supply chain
13) The SCOR model focuses on the supply chain processes of planning, making, sourcing, delivering,
and returning.
Answer: TRUE
Keywords: SCOR, supply chain
12-2
14) Concurrent engineering is the term used to describe a firm's development of a new product after it
has been discovered that a competitor is engineering a similar product for launch.
Answer: FALSE
Reference: New Service or Product Development Process
Keywords: concurrent engineering, product development
15) Concurrent engineering helps firms avoid the costly mismatch between the design of a new offering
and the capability of the processes required to produce it.
Answer: TRUE
Keywords: concurrent engineering, product development
16) The ramp-up stage of the development process precedes the full launch stage.
Answer: FALSE
Keywords: development, stage, launch stage, ramp-up
17) A strain is placed on the supply chain during the ramp-up stage of the development process due to
changing volumes, quality issues and last minute design changes.
Answer: TRUE
Keywords: development process, ramp-up stage
18) In presourcing, suppliers are selected early in the concept-development stage.

Answer: TRUE
Reference: Supplier Relationship Process
Keywords: presourcing, development
19) Once certified, a supplier can be used by the purchasing department without the purchaser having to
make background checks.
Answer: TRUE
Keywords: certified, supplier, background checks
20) Value analysis is a systematic effort to reduce the cost or improve the performance of a service or
product.
Answer: TRUE
Keywords: value analysis, systematic, reduce, improve
12-3
21) A buyer has more purchasing power when fewer substitutes are available.
Answer: FALSE
Keywords: purchasing power, substitutes
22) Electronic Data Interchange enables the transmission of routine, standardized business documents
from computer to computer over telephone or direct leased lines.
Answer: TRUE
Keywords: EDI, transmission, standardized business documents
23) Green purchasing involves identifying, assessing, and managing the flow of environmental waste and
finding ways to reduce it and minimize its impact on the environment.
Answer: TRUE
Keywords: green purchasing, environment
Learning Outcome: Discuss the role of operations management in corporate social responsibility and
sustainability
24) The competitive orientation to supplier relations is that the buyer and supplier are partners.
Answer: FALSE
Keywords: competitive orientation, supplier, buyer
25) In a competitive orientation to negotiations between buyer and supplier, the buyer does not always
possess the power in the relationship–the supplier sometimes holds the power and can exercise this
power during negotiations with the buyer.
Answer: TRUE
Keywords: competitive orientation, supplier, buyer
26) The most used form of e-purchasing today is electronic data interchange.
Answer: TRUE
Keywords: e-purchasing, electronic data interchange
12-4
27) A catalog hub is a central distribution point where buyers may purchase items directly from
manufacturers before the items are shipped to retailers.
Answer: FALSE
Difficulty: Easy
Keywords: catalog hub, central distribution point
28) An electronic market that brings together textbook sellers, office supply companies, apparel vendors,
and students is an example of an exchange.
Answer: TRUE
Difficulty: Easy
Keywords: exchange, electronic, buyer, seller
29) Reducing the number of suppliers for an item carries an increased risk of interruption in supply.
Answer: TRUE
Keywords: sourcing, risk, supply
30) Early supplier involvement is a program that allows suppliers to fill orders prior to the customer
placing them.
Answer: FALSE
Keywords: early supplier involvement
31) The order-fulfillment process involves the activities to deliver a product or service to the customer.
Answer: TRUE
Reference: The Order Fulfillment Process
Keywords: order-fulfillment, deliver, customer
32) Vendor-managed inventories are an example of the forward-placement tactic.

Answer: TRUE
Keywords: vendor-managed inventories, forward-placement
12-5
33) Drop shipping occurs when a retailer passes customer orders directly to a wholesaler or
manufacturer, which then ships the order directly to the customer with the retailer's label on it.
Answer: TRUE
Keywords: drop-shipping
34) The cost of equipment, labor, facilities and maintenance must all be considered when a firm decides to
use a contract carrier for its distribution.
Answer: TRUE
Difficulty: Easy
Keywords: contract-carrier, distribution
35) Using rail to move large quantities of goods is relatively cheap, but transit times are long and often
variable.
Answer: TRUE
Difficulty: Easy
Keywords: rail, large quantities, cheap
36) A cross-docking warehouse holds inventory from manufacturers until retailers are prepared to sell
the items.
Answer: FALSE
Difficulty: Easy
Keywords: cross-docking, warehouse
37) Which of the following is NOT a component of the supply chain?

A) order fulfillment
B) materials
C) customer relationship
D) competitors
Answer: D
Reference: Supply Chain Integration Across The Organization
Difficulty: Easy
Keywords: supply chain, component
12-6
38) The bullwhip effect is characterized by:
A) ordering patterns that experience increasing variance as you proceed downstream in the chain.
B) ordering patterns that experience increasing variance as you proceed upstream in the chain.
C) purchasing patterns that experience increasing variance downstream in the chain.
D) purchasing patterns that experience decreasing variance as you proceed upstream in the chain.
Answer: B
Keywords: bullwhip effect, variation
39) Which of the following changes would decrease the likelihood of the bullwhip effect?
A) changing the mix of items in an order
B) sending partial shipments of an order
C) instituting a policy of no discounts or promotions
D) sending late deliveries of an order
Answer: C
40) Which of the following changes would increase the likelihood of a supply chain experiencing the
bullwhip effect?
A) engineering changes to the design of a product
B) instituting a more accurate materials management information system
C) closely coordinating promotions with the internal marketing department and suppliers
D) using a more reliable delivery company
Answer: A
Difficulty: Easy
41) Which of the following is NOT an internal cause of supply chain disruptions?
A) engineering changes
B) batching of orders
C) service or product promotions
D) underfilled shipments
Answer: D
Difficulty: Easy
Keywords: internal cause, supply chain disruptions
12-7
42) Which of the following is NOT an external cause of supply chain disruptions?
A) late deliveries
B) new service or product introductions
C) customer service or product mix changes
D) underfilled shipments
Answer: B
Difficulty: Easy
Keywords: external cause, supply chain disruptions
43) One source of disruption caused by the internal supply chain is:
A) forecast error.
B) underfilled shipments.
C) volume changes.
D) late deliveries.
Answer: A
Difficulty: Easy
Keywords: internal supply chain, disruption
44) One source of disruption caused by the external supply chain is:
A) product or sales promotions.
B) new product or service introduction.
C) late deliveries.
D) engineering changes.
Answer: C
Keywords: external supply chain, disruption
45) Possible causes of disruption due to internal supply chain problems are:
A) late deliveries.
B) machine breakdowns or inexperienced workers.
C) product and service mix changes.
D) underfilled shipments.
Answer: B
Keywords: disruption, internal supply chain
12-8
46) The SCOR model focuses on the basic supply chain processes of:
A) source, control, operate, return.
B) plan source, make deliver, return.
C) purchase, operate, control, logistics.
D) operations, marketing, finance.
Answer: B
Keywords: SCOR
47) The SCOR model requires a(n):

A) three-tier supply chain.
B) point of reference.
C) make-to-order or assemble-to-order product.
D) process view.
Answer: B
Keywords: SCOR
48) Which of the following is NOT a stage in the New Service / Product Development Process?
A) development
B) design
C) maintenance
D) analysis
Answer: C
Difficulty: Easy
Keywords: stage, New Service / Product Development Process
49) The stage of new product or service development that links the creation of new services or products
to the corporate strategy of the firm is called:
A) design.
B) analysis.
C) development.
D) full launch.
Answer: A
Keywords: stage, development, new, corporate strategy
12-9
50) The product development team ensures compatibility of the proposed product with corporate
strategy and regulatory standards in the:
A) design stage.
B) analysis stage.
C) development stage.
D) full launch stage.
Answer: B
Keywords: product development team, corporate strategy, regulatory standards
51) The stage of new service or product development at which personnel are trained and some pilot runs
can be conducted to look for possible problems in production is called:
A) design.
B) analysis.
C) development.
D) full launch.
Answer: C
Keywords: development, stage, new, service, product
52) A new product development team that is composed of product and process engineers, marketers,
quality specialists, and buyers that work together to make sure the new product can actually be built is
engaging in:
A) concurrent engineering.
B) joint application development.
C) reverse logistics.
D) core process design.
Answer: A
Difficulty: Easy
Keywords: development, stage, new, service, product
53) Which one of the following statements is TRUE about purchasing?

A) Purchasing's primary role is to satisfy the firm's long-term supply needs.
B) Purchasing's primary role should be placing and tracking orders.
C) Purchasing's primary role is to negotiate lower prices.
D) Purchasing's primary role is to negotiate prices and delivery dates.
Answer: A
Keywords: purchasing, supply
12-10
Use the following to answer the questions below.
The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture
of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the tires he uses in
his assembly operation. The supplier will be selected based on total annual cost to supply Burdell's needs.
Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a year. The
following data are available for two suppliers being considered.
SHIPPING
QUANTITY ANNUAL PRICE / INVENTORY LEAD
PER SHIPPING TIRE HOLD COSTS TIME ADMIN.
SUPPLIER SHIPMENT COSTS (p) (H) (DAYS) COSTS
LEXINGTON
TIRE 2,000 $18,000 $30 $6.00 6 $15,000
IRMO
AUTO 1,000 $25,000 $29 $5.80 4 $18,000
54) Refer to the instruction above. What are the annual material costs for Lexington Tire?
A) $60,000
B) $750,000
C) $725,000
D) $3,000
Answer: B
Difficulty: Easy
Keywords: supplier relationship, sourcing, supplier selection
AACSB: Analytic skills
55) Refer to the instruction above. What are the annual material savings available when comparing the
two suppliers?
A) $25,000
B) $150,000
C) $725,000
D) $3,000
Answer: A
12-11
56) Refer to the instruction above. How many shipments per year are required if Irmo Auto is the
supplier selected?
A) 1,000
B) 750
C) 25
D) 100
Answer: C
Difficulty: Easy
57) Refer to the instruction above. What are the annual shipping savings available when comparing the
two suppliers?
A) $25,000
B) $18,000
C) $72,500
D) $7,000
Answer: D
58) Refer to the instruction above. What are the annual inventory costs if the lower inventory cost
supplier is selected?
A) $5,220
B) $9,600
C) $6,600
D) $6,320
Answer: A
Difficulty: Hard
59) Refer to the instruction above. What are the total annual costs if Lexington Tire is the supplier
selected?
A) $791,600
B) $792,600
C) $772,320
D) $769,320
Answer: B
12-12
60) Refer to the instruction above. What are the total annual costs if Irmo Auto is the supplier selected?
A) $791,600
B) $792,600
C) $773,220
D) $769,320
Answer: C
61) Refer to the instruction above. Based on your Total Cost Analysis, which supplier should be selected if
the lower cost supplier is chosen?
A) Lexington Tire
B) Irmo Auto
C) Since the costs are the same, either supplier could be selected.
D) More information is needed to answer this question.
Answer: B
Difficulty: Hard
62) Refer to the instruction above. What are the total annual savings if the lower cost supplier is selected?
A) $1,000
B) $19,380
C) $3,000
D) $6,320
Answer: B
Difficulty: Hard
63) Refer to the instruction above. The high-cost supplier desperately wants the Burdell Company
business. They have indicated that if Burdell will select them as their supplier, they will not charge for
shipping. How does this change the decision on tire suppliers?
A) The high-cost supplier is now lower, and becomes the tire supplier for Burdell.
B) The suppliers are now equal cost, and Burdell can select either supplier.
C) It doesn't change the decision–they are still the high-cost supplier.
D) More information is required to make this decision.
Answer: C
12-13
The Burdell Wheel and Tire Company has completed a total cost analysis for two suppliers of tires to
support their business. They also consider delivery speed, consistent quality and environmental
sensitivity in their selection process. Each criterion is given a weight (total = 100 points), and each
supplier is scored on each criterion (1 = poor, 10 = excellent). The data are shown in the following table.
LEXINGTON IRMO
CRITERION WEIGHT TIRE AUTO
Total Cost 20 5 6
Delivery Speed 25 6 5
Consistent Quality 25 8 6
Environmental Sensitivity 30 4 7
64) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is
Lexington Tire's total weighted score?
A) 570
B) 100
C) 23
D) 605
Answer: A
Keywords: supplier relationship, sourcing, supplier selection, preference matrix
Irmo Auto's total weighted score?
A) 570
B) 100
C) 24
D) 605
Answer: D
66) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, which
supplier should Burdell select? total weighted score?
A) Lexington Tire
B) Irmo Auto
C) Neither is acceptable–their preference matrix scores are not high enough to be selected.
D) More information is needed to make this decision.
Answer: B
12-14
The Steele Bike Company assembles bicycles for a major retail toy outlet. The main purchase is bicycle
frames for making these bicycles. Dan Steele, the owner, wants to locate a low-cost supplier for the
frames used in this assembly operation. The supplier will be selected based on total annual cost to supply
Steele's needs. Annual requirements are for 100,000 frames, and the company operates 200 days a year.
Two suppliers, Acme and State, have quoted the same price for the frames, but quantities, lead times and
shipping costs are considerably different. The following data are available for the two suppliers.
SHIPPING
QUANTITY ANNUAL INVENTORY LEAD
PER SHIPPING PRICE / HOLD COSTS TIME ADMIN.
SUPPLIER SHIPMENT COSTS FRAME (p) (H) (DAYS) COSTS
ACME 7,500 $35,000 $39 $7.80 7 $20,000
STATE 2,500 $60,000 $39 $7.80 3 $45,000
67) Refer to the instruction above. What are the annual material costs for Acme?
A) $550,000
B) $750,000
C) $3,900,000
D) $35,000
Answer: C
Difficulty: Easy
68) Refer to the instruction above. What are the annual material savings available when comparing the
two suppliers?
A) $7,800
B) $390,000
C) $750,000
D) The materials are the same cost from either supplier
Answer: D
Difficulty: Easy
12-15
69) Refer to the instruction above. How many shipments per year are required if State is the supplier
selected?
A) 13.3
B) 40
C) 200
D) 10
Answer: B
Difficulty: Easy
70) Refer to the instruction above. What are the annual shipping savings available when comparing the
two suppliers?
A) $25,000
B) $10,000
C) $7,500
D) Shipping costs are the same from either supplier
Answer: A
71) Refer to the instruction above. What are the annual inventory costs if the lower inventory cost
supplier is selected?
A) $56,550
B) $96,500
C) $21,450
D) $7,800
Answer: C
Difficulty: Hard
72) Refer to the instruction above. What are the total annual costs if Acme is the supplier selected?
A) $4,010,450
B) $113,550
C) $4,001,050
D) $4,011,550
Answer: D
12-16
73) Refer to the instruction above. What are the total annual costs if State is the supplier selected?
A) $4,026,450
B) $110,450
C) $4,001,050
D) $4,016,550
Answer: A
74) Refer to the instruction above. Based on your Total Cost Analysis, which supplier should be selected if
the lower cost supplier is chosen?
A) Acme
B) State
C) Since the costs are the same, either supplier could be selected.
D) More information is needed to answer this question.
Answer: A
Difficulty: Hard
75) Refer to the instruction above. What are the total annual savings if the lower cost supplier is selected?
A) $1,000
B) $12,500
C) $9,400
D) $14,900
Answer: D
Difficulty: Hard
76) Refer to the instruction above. The high-cost supplier has indicated that if Steele will select them as
the supplier of choice, they will not charge for shipping. How does this change the decision on bicycle
frame suppliers?
A) The high-cost supplier is now the low-cost supplier, and becomes the frame supplier for Steele.
B) The suppliers are now equal cost, and Steele can select either supplier.
C) It doesn't change the decision–they are still the high-cost supplier.
D) More information is required to make this decision.
Answer: A
Difficulty: Easy
12-17
The Steele Bike Company has completed a total cost analysis for two suppliers of bicycle frames to
support their business. They also consider on-time speed, top quality and customization in their selection
process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion
(1 = poor, 10 = excellent). The data are shown in the following table.
CRITERION WEIGHT ACME STATE

Total Cost 15 8 4
On-Time Delivery 20 5 7
Top Quality 30 7 6
Customization 35 4 6
State's total weighted score?
A) 570
B) 100
C) 23
D) 590
Answer: D
Acme's total weighted score?
A) 100
B) 570
C) 24
D) 590
Answer: B
79) Refer to the instruction above. Using the preference matrix (total weighted score) approach for
selecting suppliers, which supplier should Steele select?
A) State
B) Acme
C) Either is acceptable–their preference matrix scores are the same.
D) More information is needed to make this decision.
Answer: A
12-18
80) The practice of selecting suppliers and giving them significant responsibility for the design of certain
components or systems of the product is called:
A) value analysis.
B) locus of control.
C) presourcing.
D) vendor-managed inventories.
Answer: C
Keywords: supply chain, design, collaboration, early supplier involvement, presourcing
81) A systematic effort to reduce the cost or improve the performance of services or products is known as:
A) presourcing.
B) cooperative orientation.
C) supplier certification.
D) value analysis.
Answer: D
Difficulty: Easy
Keywords: supply chain, design, collaboration, early supplier involvement, value analysis
82) Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a
supplier values identification with a buyer, this is called a(n) ________ source of power.
A) expert
B) reward
C) referent
D) legal
Answer: C
Difficulty: Hard
Keywords: supply chain, negotiation, competitive, orientation, sources, power
buyer has access to knowledge, information and skills desired by the supplier, this is called a(n) ________
source of power.
A) expert
B) reward
C) referent
D) coercive
Answer: A
Difficulty: Hard
12-19
buyer can threaten to cancel future business unless the supplier adheres to the buyer's demands, this is
called a ________ source of power.
A) legal
B) reward
C) referent
D) coercive
Answer: D
Difficulty: Hard
85) Approaches to e-purchasing include all of the following EXCEPT:

A) catalog hubs.
B) radio frequency identification (RFID).
C) exchanges.
D) electronic data interchange (EDI).
Answer: B
Difficulty: Hard
Keywords: supply chain, buying, e-purchasing
86) Examples of radio frequency identification (RFID) could include all of the following EXCEPT:
A) tracking the status of engineering changes during development of a new product line.
B) tracking cases and pallets of products into and out of warehouse inventories.
C) air travel use for baggage tracking.
D) tracking the flow of parts through a manufacturing process.
Answer: A
Difficulty: Hard
Keywords: supply chain, buying, e-purchasing
87) The practice whereby a manufacturer has inventories of materials on consignment from its suppliers
falls under the scope of:
A) inventory pooling control.
B) virtual distribution.
C) electronic inventory control.
D) vendor-managed inventories.
Answer: D
Difficulty: Easy
Keywords: virtual, supply chain, traditional
12-20
88) One of the benefits of a cooperative orientation in supplier relationships is:
A) the buyer sometimes suggests ways to improve the supplier's operations.
B) the supplier implements its own quality standards.
C) the buyer does not have to share much information with the supplier.
D) the supplier has complete freedom in choosing the delivery time.
Answer: A
Keywords: cooperative orientation, supplier relationship
89) Which one of the following statements correctly represents a benefit of centralized buying?
A) Local managers have more control over their business.
B) Purchases and production schedules are meshed more easily.
C) Customization to local preferences is simplified.
D) Increased buying power can result in significant savings in purchasing costs.
Answer: D
Keywords: centralized buying, purchasing
90) Which one of the following statements is TRUE about a cooperative orientation in supplier
relationships?
A) It cannot be implemented in Western countries because competitive bidding is more effective in that
culture.
B) It cannot be implemented in the Western countries because it always benefits the supplier.
C) It requires all parts and subassemblies to be purchased from the same supplier.
D) It requires few suppliers for each item or service.
Answer: D
Keywords: cooperative orientation, supplier
91) Which of the following statements about cross-docking is NOT correct?

A) Cross-docking is packing products on incoming shipments so they can be easily sorted for outgoing
shipments based on their final destination.
B) Cross-docking reduces inventory and storage space requirements, but handling costs and lead times
tend to increase.
C) Items are moved from incoming vehicles to outgoing vehicles without being stored in warehouse
inventory.
D) Inbound and outbound shipments must be tightly coordinated for cross-docking to work.
Answer: B
Reference: Order Fulfillment Process
Keywords: order fulfillment, cross-docking
12-21
92) Which of the following is NOT an advantage the Internet provides for a firm's order placement
process?
A) greater variety and better quality of products available
B) cost reduction
C) increase in revenue flow
D) pricing flexibility
E) global access
Answer: A
Reference: Customer Relationship Process
Difficulty: Easy
Keywords: customer relationship, Internet, order placement
93) Which of the following is NOT an advantage resulting from a firm outsourcing its customer service
process?
A) specific detailed questions can be answered by the customer service representative.
B) the firm gains more control over the customer interface process.
C) customer service labor costs are low.
D) automated systems are replaced by human contact.
Answer: B
Keywords: customer relationship, customer service, outsourcing
94) Which of the following is NOT a lever in an integrated supply chain?

A) collaborative activities by supply chain partners
B) reduced replenishment lead times
C) reduced order lot sizes
D) elimination of product shortages and backorders
Answer: D
Keywords: supply chain, levers
95) What is the meaning of the acronym 3PL?

A) three pofit/loss periods
B) three purchasing locations
C) three partner leverage
D) third party logistics provider
Answer: D
Keywords: 3PL, third-party logistics
12-22
96) What services are typically offered by a 3PL?
A) transportation
B) product design
C) catalog hub
D) auction
Answer: A
Keywords: 3PL, third-party logistics
97) The ________ is the phenomenon in supply chains whereby ordering patterns experience increasing
variance as you proceed upstream in the chain.
Answer: bullwhip effect
Keywords: bullwhip effect, variance
98) ________ and ________ supply chain designs are well-suited to products with low demand and high
variability.
Answer: ATO (assemble-to-order), MTO (make-to-order)
Keywords: SCOR, supply chain operations reference model
99) The bullwhip effect results in greater demand variability at the ________ end of the supply chain and
lesser demand variability at the ________ end of the supply chain.
Answer: factory or upstream, customer or downstream
Keywords: bullwhip effect
100) The ________ model focuses on the supply chain processes plan, source, make, deliver, and return.
Answer: SCOR (supply chain operations reference)
Keywords: SCOR, supply chain operations reference model
101) ________ brings product engineers, process engineers, marketers, buyers, information specialists,
quality specialists and suppliers together to work jointly to design a product and all its processes.
Answer: Concurrent engineering
Difficulty: Easy
Keywords: concurrent engineering, design, new
12-23
102) ________ is the management of the acquisition process, which includes deciding which suppliers to
use, negotiating contracts, and deciding whether to buy locally.
Answer: Purchasing
Keywords: purchasing, acquisition
103) ________ is a supplier relation in which the buyer and seller are partners, each helping the other as
much as possible.
Answer: Cooperative orientation
Keywords: cooperative supplier orientation
104) Steve-O engaged in ________ by using only suppliers that recycled and managed their flow of
environmental waste.
Answer: green purchasing
Keywords: green purchasing, environmental waste
Learning Outcome: Discuss the role of operations management in corporate social responsibility and
sustainability
105) ________ programs verify that potential suppliers have the capability to provide materials or services
which the buying firms require.
Answer: Supplier certification
Keywords: supplier, certification
106) ________ is the awarding of a contract for an item or service to only one supplier.
Answer: Sole sourcing
Keywords: sole sourcing, source
107) ________ is a systematic effort to reduce the cost or improve the performance of products and
services, either purchased or produced.
Answer: Value analysis
Keywords: value analysis
12-24
108) Knoxville Industries had their supplier design the improved body armor for their new apparel. This
level of supplier involvement, known as ________ was sure to result in a pain free season.
Answer: presourcing
Keywords: presourcing
109) ________ are electronic marketplaces where buying and selling firms meet to do business, without
protracted contract negotiations.
Answer: Exchanges
Keywords: exchange
110) ________ is the condition where the buyer has purchasing power when the purchasing volume
represents a significant share of the supplier's sales.
Answer: Economic dependency
Keywords: economic dependency
111) The ________ process involves the activities required to register the need for a product or service and
to confirm the acceptance of the order.
Answer: order placement
Reference: The Customer Relationship Process
Keywords: order placement
112) The ________ process involves the activities required to deliver a product or service to a customer.
Answer: order fulfillment
Keywords: order fulfillment
113) ________ is an extreme application of the forward placement tactic.

Answer: Vendor managed inventories (VMI)
Keywords: forward placement
12-25
114) Draw a graph illustrating the bullwhip effect and discuss its impact on the measures of supply chain
performance.
Answer: Sketches will vary slightly, but should illustrate increased variability upstream in the supply
chain. The inventory measures of supply chain performance, average aggregate inventory value, weeks
of supply, and inventory turnover, will fluctuate as the whip is cracked. At times, the measures may be
deceptively strong, but at other times in the bullwhip cycle the measures will be abysmal. Process
measures relating to customer relationship, order fulfillment, and supplier relationship will also fluctuate
although measures like "customer satisfaction" may deteriorate as customers tire of the rollercoaster
performance of the supply chain. Financial measures like ROA, CGS, total revenue, cash flow, and
working capital will also behave cyclically but will be weaker than a supply chain operating sans
bullwhip effect. At times, members of the supply chain will be caught holding the bag on inventory and
forced to dump it at bargain prices and at other times supply chain members will be unable to acquire the
inventory they need or will have to pay exorbitant costs to acquire it.
Reference: Supply Chain Dynamics/Measures of Supply Chain Performance
Keywords: bullwhip effect, inventory measures
115) List and describe typical disruptions to the external supply chains.
Answer: Typical disruptions include volume changes, product and service mix changes, late deliveries,
and underfilled shipments. Volume changes occur when customers change the quantity of the product or
service they have ordered for a specific date or unexpectedly demand more of a standard product or
service. Product or service mix changes occur when customers change the mix of items in an order and
cause a ripple effect throughout the supply chain. Late deliveries of materials or delays in essential
services can force a firm to switch its schedule from production of one product model to another. Finally,
suppliers that send partial shipments do so because of disruptions at their own plants.
Keywords: external supply chains, disruptions
116) .List and describe typical disruptions to the internal supply chain.
Answer: Typical disruptions include internally generated shortages, engineering changes, new product
or service introductions, product or service promotions, and information errors. Internally generated
shortages are the shortage of parts that result from machine breakdowns or inexperienced workers.
Engineering changes are changes to designs. The introduction of new products or services can cause
disruptions. Product or service promotions are a common practice of firms producing standard products
or services and can cause a spike in demand. Finally, information errors, such as demand-forecast errors
or physical count errors, can cause disruptions.
Keywords: internal supply chains, disruptions
117) .What are the elements of the SCOR model?

Answer: The SCOR model focuses on basic supply chain plan, source, make, deliver, and return
processes, repeated again and again along the supply chain.
Keywords: SCOR
12-26
118) What are some ways that supply chain partners can collaborate on product designs? How do these
ways differ?
Answer: An approach that many firms are using in their design collaboration process is called early
supplier involvement, which is a program that includes suppliers in the design phase of a service or
product. Suppliers provide suggestions for design changes and materials choices that will result in more
efficient operations and higher quality. In the automotive industry, an even higher level of early supplier
involvement is known as presourcing, whereby suppliers are selected early in a product's concept
development stage and are given significant, if not total, responsibility for the design of certain
components or systems of the product. Presourced suppliers also take responsibility for the cost, quality,
and on-time delivery of the items they produce. Firms can also improve performance by engaging in
value analysis, which is a systematic effort to reduce the cost or improve the performance of services or
products, either purchased or produced. It is an intensive examination of the services, materials,
processes, information systems, and flows of material involved in the production of a service or an item.
Benefits include reduced production, materials, and distribution costs; improved profit margins; and
increased customer satisfaction.
Keywords: presourcing, value analysis, early supplier involvement
12-27
119) The authors present four types of e-purchasing; what are they and how do they work? Which of
these could be accomplished by the least IT-savvy supply chain? Why?
Answer: The four approaches to e-purchasing presented in the text are: (1) electronic data interchange,
(2) catalog hubs, (3) exchanges, and (4) auctions.
Electronic data interchange (EDI) is a technology that enables the transmission of routine, standardized
business documents from computer to computer over telephone or direct leased lines. Special
communications software translates documents into and out of a generic form, allowing organizations to
exchange information even if they have different hardware and software components. Invoices, purchase
orders, and payments information are some of the routine documents that EDI can handle
Catalog hubs can be used to reduce the costs of placing orders to suppliers as well as the costs of the
services or goods themselves. Suppliers post their catalog of items on the hub, and buyers select what
they need and purchase them electronically. The hub connects the firm to potentially hundreds of
suppliers through the Internet, saving the costs of EDI, which requires one-to-one connections to
individual suppliers. Moreover, the buying firm can negotiate prices with individual suppliers for items
such as office supplies, technical equipment, services, and so forth. The catalog that the buying firm's
employees see consists only of the approved items and the prices the buyer has prenegotiated with its
suppliers. Employees use their PCs to select the items they need, and the system generates the purchase
orders, which are electronically dispatched to the suppliers.
An exchange is an electronic marketplace where buying firms and selling firms come together to do
business. The exchange maintains relationships with buyers and sellers, making it easy to do business
without the aspect of contract negotiations or other types of long-term conditions. Exchanges are often
used for "spot" purchases to satisfy an immediate need at the lowest possible cost. Commodity items such
as oil, steel, or energy fit this category.
An extension of the exchange is the auction, where firms place competitive bids to buy something. For
example, a site may be formed for a particular industry, and firms with excess capacity or materials can
offer them for sale to the highest bidder. Bids can either be closed or open to the competition.
Answers will vary as to the least IT-intensive approach, however EDI would probably not be the best
choice for this position piece.
Keywords: presourcing, value analysis, early supplier involvement
120) Compare and contrast competitive orientation versus cooperative orientation for suppler relations.
Answer: Competitive orientation views supplier relations as a negotiation between buyer and seller. It is
generally considered a zero-sum game–one side wins, the other loses. In cooperative orientation, the
buyer and seller are partners, each one helping the other as much as possible. Generally, a cooperative
orientation means long-term commitment, joint work on quality, and support by the buyer of the
supplier's managerial, technological, and capacity development. Sharing of information takes place in
both directions.
Keywords: competitive orientation, cooperative orientation, supplier relations
12-28
121) Define the term logistics and briefly discuss any three important logistics decisions.
Answer: Logistics is the process whereby products or services are delivered to the customer. The five
important decisions presented in the text are 1) degree of ownership, 2) facility location, 3) mode
selection, 4) capacity level, and 5) amount of cross docking.
Ownership. The firm has the most control over the logistics process if it owns and operates it, thereby
becoming a private carrier. Although this approach may help to better achieve the firm's competitive
priorities, the cost of equipment, labor, facilities, and maintenance could be high. The firm could instead
leave the distribution to a third-party logistics provider (3PL), negotiating with the carrier for specific
services. Those services could involve taking over a major portion of the order fulfillment process. 3PLs
typically provide integrated services, from transportation and packaging services to warehousing and
inventory management, for corporate clients that need to get their products to market. They can help
with the design of a client's supply chain and facilitate the flow of information up and down the supply
chain. Facility Location. A critical decision affecting the effectiveness of supply chains is the location of
facilities that serve as points of service, storage, or manufacture. Mode Selection. The five basic modes of
transportation are (1) truck, (2) train, (3) ship, (4) pipeline, and (5) airplane. The drivers for the selection
should be the firm's competitive priorities. Capacity. The performance of a logistics process is directly
linked to its capacity. The ownership decision and the modal selection decision are often intertwined
because the question of how much capacity is needed must be resolved.
Keywords: competitive orientation, cooperative orientation, supplier relations
122) The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during
manufacture of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the
tires he uses in his assembly operation. The supplier will be selected based on total annual cost to supply
Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a
year. The following data are available for two suppliers being considered.
SHIPPING
QUANTITY PRICE / INVENTORY LEAD
PER SHIPPING TIRE HOLD COSTS TIME ADMIN.
LEXINGTO
N TIRE 2,000 $18,000 $30 $6.00 6 $15,000
IRMO
AUTO 1,000 $25,000 $29 $5.80 4 $18,000
Using the Total Cost Analysis for Supplier Selection, which supplier should Burdell choose? Provide
details to justify your answer.
Answer: Irmo Auto Total Cost of $773,220 Vs. Lexington's cost of $792,600
Difficulty: Hard
12-29
123) The Burdell Wheel and Tire Company has completed a total cost analysis for two suppliers of tires to
support their business. They also consider delivery speed, consistent quality and volume flexibility in
their selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on
each criterion (1 = poor, 10 = excellent). The data are shown in the following table.
LEXINGTON
CRITERION WEIGHT TIRE IRMO AUTO
Total Cost 20 5 6
Delivery Speed 25 6 5
Consistent Quality 25 8 6
Environmental
Sensitivity 30 4 7
Using the preference matrix approach for selecting suppliers, which supplier should Burdell select?
Answer: Irmo Auto
124) The Steele Bike Company assembles bicycles for a major retail toy outlet. The main purchase is
bicycle frames for making these bicycles. Dan Steele, the owner, wants to locate a low-cost supplier for
the frames used in this assembly operation. The supplier will be selected based on total annual cost to
supply Steele's needs. Annual requirements are for 100,000 frames, and the company operates 200 days a
year. Two suppliers, Acme and State, have quoted the same price for the frames, but quantities, lead
times and shipping costs are considerably different. The following data are available for the two
suppliers.
SHIPPING
QUANTITY PRICE / INVENTORY LEAD
PER SHIPPING FRAME HOLD COSTS TIME ADMIN.
ACME 7,500 $35,000 $39 $7.80 7 $20,000
STATE 2,500 $60,000 $39 $7.80 3 $45,000
Based on your Total Cost Analysis, which supplier should be selected if the lower cost supplier is chosen?
Answer: Acme
Difficulty: Hard
12-30
125) The Steele Bike Company has completed a total cost analysis for two suppliers of bicycle frames to
support their business. They also consider on-time speed, top quality and customization in their selection
process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion
(1 = poor, 10 = excellent). The data are shown in the following table.
CRITERION WEIGHT ACME STATE

Total Cost 15 8 4
On-Time Delivery 20 5 7
Top Quality 30 7 6
Customization 35 4 6
Using the preference matrix (total weighted score) approach for selecting suppliers, which supplier
should Steele select? What is the total weighted score?
Answer: State, with a total weighted score of 590
126) The Bahouth Bike Company has completed an exhaustive analysis for four suppliers of bicycle
frames to support their business. They considered on-time speed, top quality and customization in their
selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each
criterion (1 = poor, 10 = excellent). The data are shown in the following table.
CRITERION WEIGHT A B C D
Sustainability 3 9 2 0 1
Cost 6 3 0 3 10
Quality 8 4 0 9 4
On-time Delivery 4 0 6 1 0
Using the preference matrix (total weighted score) approach for selecting suppliers, which supplier
should Bahouth select? What is its total weighted score?
Answer: Supplier D has a weighted score of 95 which is 5 higher than Supplier C, 18 higher than A, and
65 higher than B
12-31
127) Jackson Sheds has four different warehouse configurations under study, ranging from four
warehouses to seven warehouses (only integer values). Each warehouse has a capacity of 300 units and
costs $200 to maintain over the course of a year. Demand can range from 1000 units per year up to 2000
units in increments of 250 units. If the system warehouse capacity is sufficient to handle the year's
demand, then the per unit cost is $2 per unit, but if the warehouse capacity is insufficient, the per unit
cost for each unit in excess of system capacity is $5 per unit. The likelihood for each possible demand is
shown in the table.
Likelihood 0.1 0.2 0.3 0.3 0.1

Demand 1000 1250 1500 1750 2000
Which warehouse configuration is best for Jackson Sheds?

Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at a six
warehouse system.

Difficulty: Hard
Keywords: expected value
12-32
shown in the table.
Likelihood 0.1 0.2 0.3 0.3 0.1

Demand 1000 1250 1500 1750 2000

Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at a five-
warehouse system.

Difficulty: Hard
12-33
shown in the table.
Likelihood 0.1 0.2 0.3 0.3 0.1

Demand 1000 1250 1500 1750 2000

Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at a seven-
warehouse system.

Difficulty: Hard
12-34
shown in the table.
Likelihood 0.1 0.2 0.3 0.3 0.1

Demand 1000 1250 1500 1750 2000

Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at both the
four and five warehouse systems.

Difficulty: Hard
12-35

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Operations Management: Processes and Supply Chains, 10e (Krajewski et al.

18) In presourcing, suppliers are selected early in the concept-development stage.

32) Vendor-managed inventories are an example of the forward-placement tactic.

37) Which of the following is NOT a component of the supply chain?

47) The SCOR model requires a(n):

53) Which one of the following statements is TRUE about purchasing?

CRITERION WEIGHT ACME STATE

85) Approaches to e-purchasing include all of the following EXCEPT:

91) Which of the following statements about cross-docking is NOT correct?

94) Which of the following is NOT a lever in an integrated supply chain?

95) What is the meaning of the acronym 3PL?

113) ________ is an extreme application of the forward placement tactic.

117) .What are the elements of the SCOR model?

CRITERION WEIGHT ACME STATE

Likelihood 0.1 0.2 0.3 0.3 0.1

Which warehouse configuration is best for Jackson Sheds?

Reference: The Order Fulfillment Process

Likelihood 0.1 0.2 0.3 0.3 0.1

Which warehouse configuration is best for Jackson Sheds?

Reference: The Order Fulfillment Process

Likelihood 0.1 0.2 0.3 0.3 0.1

Which warehouse configuration is best for Jackson Sheds?

Reference: The Order Fulfillment Process

Likelihood 0.1 0.2 0.3 0.3 0.1

Which warehouse configuration is best for Jackson Sheds?

Reference: The Order Fulfillment Process

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