Supply Chain Logistics Management 5th Edition

Type:

Solution Manual

Resource:

Supply Chain Logistics Management

Edition:

5th Edition

Author(s):

Donald Bowersox David Closs M. Bixby Cooper

Student name:__________ 1)

A unique feature of integrated logistics is:

A) B) C) D)

2)

The newness of the concept Its fundamental similar to military operations Complexity and scope of operations The fact that it employees many people.

What is the primary reason that responsiveness has decreased over the past two decades:

A) Improvement in Federal Highways B) Better Sea Ports C) Development of Double Stack Containers D) Information Technology

3)

A Supply Chain is best described by which of the following:

A) B) C) D)

4)

A group of cooperative carriers A group of collaborative companies A formal association of competitive companies Two firms who create a strategic alliance

Which of the following best describes an integrative supply chain process:

A) B) C) D)

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Something that links together independent parts A concept that identifies independent parts A conglomeration of functions The link of critical parts of a supply chain

1

5)

The concept of postponement:

A) Involves two organizations working together to delay delivery B) Involves strategic delay of the delivery C) Seeks to reduce the risk of delivery D) Seeks to reduce the risk of anticipation

6)

Collaboration is the act of:

A) B) C) D)

7)

An integrated service supplier (ISP) seeks to:

A) B) C) D)

8)

Sharing secret information Working with competitors Integrating components of a supply chain Legal in selected supply chain arrangements

Provide critical operational functionality in a supply chain Specializes in providing a specialized service Bring together two otherwise separate functions None of the above

The lowest total process cost is:

A) B) C) D)

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Always the sum of the lowest cost for each involved function isalways the lowest cost for each involved function may be the lowest cost for each involved function a product of careful cost integration

2

9)

The Anticipatory Business Model is best described by which statement:

A) Driven by forecast B) Driven by information technology C) Builds on the principles of time-based competition D) Is a low risk strategy

10)

The internet has increased business-to-business connectivity ⊚ ⊚

true false

11) Supply Chain Management promotes a network of highly efficient interdependent businesses ⊚ ⊚

12)

There are eight critical supply chain processes ⊚ ⊚

13)

true false

Collaboration is a fundamental part of Supply Chain Management ⊚ ⊚

14)

true false

true false

A third party service supplier is also a public warehouse

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⊚ ⊚

15)

Process specialization involves the same concepts as vertical integration ⊚ ⊚

16)

true false

Enterprise extension is a diversification strategy ⊚ ⊚

19)

true false

Increased operational responsiveness is directly related to information technology ⊚ ⊚

18)

true false

The principle of postponement is new to the discipline of logistics ⊚ ⊚

17)

true false

true false

Vertical integration and supply chain extension are essentially the same concepts ⊚ ⊚

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true false

4

Answer Key Test name: Chapter 01 - Sample Test Bank 1) C 2) D 3) B 4) D 5) D 6) C 7) A 8) C 9) A 10) FALSE 11) TRUE 12) TRUE 13) TRUE 14) FALSE 15) FALSE 16) FALSE 17) TRUE 18) FALSE 19) FALSE

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Student name:__________ 1)

Transaction systems are characterized by all of the following EXCEPT

A) B) C) D)

2)

Formalized rules, procedures, and standardized communications A low volume of transactions A large volume of transactions An operational, day-to-day focus

The foundation of the Supply Chain Information Functionality pyramid is

A) Formalized rules, procedures, and standardized communications B) Complex strategic planning C) A strong transaction system D) Informed decision analyses

3)

Most SCIS development and implementation is now focused on

A) B) C) D)

4)

Formalized rules, procedures, and standardized communications A low volume of transactions A large volume of transactions Enhanced supply chain system integration and improved decision-making

____ is sometimes also referred to as a "data warehouse".

A) B) C) D)

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ERP An integrated corporatewide database A legacy system The general ledger

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5)

The human resources module of the ERP systems tracks

A) B) C) D)

Personnel profiles and their activity levels The functions for invoice collection The supply chain’s ability to measure, monitor and report cost The timing and location of supply chain value-added processes

6) ____ systems are applications designed to facilitate information sharing between customers, sales force, and operations management.

A) B) C) D)

ERP (Enterprise resource planning) TMS (Transportation management system) Samp;OP (Sales and operations planning) CRM (Customer relationship management)

7) ____ is the hardware and technical software that facilitates information exchange between the systems and physical infrastructures within the firm and between supply chain partners.

A) B) C) D)

Communication technology Blockchain Consumer connectivity Reverse logistics

8) The pharmaceutical industry is highly affected by counterfeiting because of the ____ value of products and ______ of falsifying raw material.

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A) B) C) D)

9)

High; ease High; difficulty Low; ease Low; difficulty

All of the following are benefits of blockchain EXCEPT

A) B) C) D)

Better security Increased innovation Decreased scalability Enhanced transparency

10) The ____ manages, and in many cases initiates the transactions that receive, store, retrieve and ship product from the warehouse.

A) B) C) D)

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CMS TMS YMS WMS

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Answer Key Test name: Chapter 02 - Sample Test Bank 1) B 2) C 3) D 4) B 5) A 6) D 7) A 8) A 9) C 10) D

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Student name:__________ 1)

Dwell time is:

A) B) C) D)

2)

A unique feature of integrated logistics is:

A) B) C) D)

3)

The newness of the concept Its fundamental similarity to military operations Its complexity and scope of operations The fact that it employees many people.

Basic logistics service is a concept that:

A) B) C) D)

4)

A key component of system design The ratio of asset idle time to total time required to complete a mission The total time inventory is waiting to be processed.

A key concept in manufacturing efficiency

Describes the level of service provided all established customers Is involved in designing a network Only involves availability None of the above

A logistics performance cycle is:

A) B) C) D)

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A format for improved measurement of cost and service.

The basic unit of supply chain design and operational control An important form of transportation measurement Typically echeloned

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5)

A flow through facility is:

A) B) C) D)

6)

The “Pareto Principle” is:

A) B) C) D)

7)

Unique to logistical performance measurement A concept developed in manufacturing to integrate logistics and procurement Used in logistics to develop fine line inventory classification Seldom the result of logistics system design

Service reliability is best described as:

A) B) C) D)

8)

Typically found in the beverage industry Also often called a cross-dock facility A specialized warehouse that performs value-added services Dedicated to the support of an integrated service provider.

The measure of availability that is most critical in system design Dealing with speed and consistency of order cycle performance.

The quality dimension of logistics performance The key attribute of transportation integration

The primary reason that total logistics cost has reduced as a percentage of GDP is:

A) Inventory has increased as a percent of total cost B) Inventory has decreased as a percent of total cost C) Transportation has decreased as a percent of total cost D) Nominal GDP has increased

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9)

The work of logistics involves:

A) B) C) D)

Order processing, inventory, and manufacturing Inventory, transportation, manufacturing and procurement Manufacturing, customer accommodation, and purchasing Transportation, inventory, order processing, warehousing, and facility network

design

10)

Logistics cost has declined as a percent of GDP over the past 25 years ⊚ ⊚

11)

Service reliability involves logistical quality. ⊚ ⊚

12)

true false

Total cost was not typically the way managers viewed logistics prior to the 1960’s ⊚ ⊚

13)

true false

true false

The logistics value proposition is based solely on cost minimization ⊚ ⊚

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true false

3

14)

The work of logistics is all about transportation planning and execution ⊚ ⊚

true false

15) Logistical system design is driven by careful integration of all operational components to minimize total cost ⊚ ⊚

16)

Transportation cost drives a firm’s focus on speed and consistency ⊚ ⊚

17)

true false

Procurement and manufacturing are an integral part of integrated logistics. ⊚ ⊚

19)

true false

Facility network design is the function of total cost minimization ⊚ ⊚

18)

true false

true false

Echeloned distribution structure facilitates direct delivery ⊚ ⊚

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true false

4

20)

Efficiency as contrasted to effectiveness is the primary goal of logistics ⊚ ⊚

21)

Performance cycle uncertainty is a key concern in logistical operations ⊚ ⊚

22)

true false

The goal of cycle synchronization is achievement of planned time performance ⊚ ⊚

23)

true false

true false

Performance Cycle variance is a prime determinant of safety stock ⊚ ⊚

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true false

5

Answer Key Test name: Chapter 03 - Sample Test Bank 1) B 2) C 3) A 4) B 5) B 6) C 7) C 8) B 9) D 10) TRUE 11) TRUE 12) TRUE 13) FALSE 14) FALSE 15) FALSE 16) FALSE 17) FALSE 18) FALSE 19) FALSE 20) FALSE 21) TRUE 22) TRUE 23) TRUE

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Student name:__________ 1) In providing service outputs to consumers, a disadvantage of Internet retailers compared to store-based retailers arises in:

A) B) C) D)

product variety and assortment lot size price waiting time

2) In general, offering consumers higher levels of service output in terms of greater spatial convenience or product variety:

A) B) C) D)

3)

The most exacting measure of logistics performance regarding availability is:

A) B) C) D)

4)

has little impact on logistics and distribution cost results in lower logistics and distribution cost results in higher logistics and distribution cost does not impact configuration of a supply chain

Stockout frequency orders shipped complete fill rate average number of items on hand

Which of the following is not one of the “service outputs” of a supply chain:

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A) B) C) D)

lot size waiting time price spatial convenience

5) Numerous studies have been performed concerning retail stockouts. While results vary, generally the studies find that stockouts:

A) B) C) D)

are extremely rare average about 8% are less frequent for items that are being specifically promoted by a retailer average about 20%

6) Jones Company promised a customer that the customer would receive at least 98% of all items ordered. In fact, the customer received 95% of the items. This is an example of which “gap” in the customer satisfaction model?

A) B) C) D)

performance gap knowledge gap standards gap communication gap

7) The difference between a “customer success” focus” and a “customer satisfaction” focus is that:

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A) customer satisfaction is more difficult to achieve B) customer success deals with expectations of customers, satisfaction deals with their requirements C) customer satisfaction deals with expectations, customer success deals with requirements.

D) there really isn’t any difference

8) Providing perfect orders to a customer would be a key aspect of which customer accommodation focus?

A) B) C) D)

customer service customer satisfaction customer success customer happiness

9) Jones Company makes every effort to consistently meet the expectations of all of its customers. It is clear that Jones company is focused on:

A) B) C) D)

10)

customer service customer satisfaction customer happiness customer success

Providing value-added services is a critical aspect of:

A) B) C) D)

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customer service customer satisfaction customer happiness customer success

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11)

From a strategic perspective, companies should strive to:

A) provide customer success to all customers B) realize different customer accommodation approaches may be appropriate for different customers C) decern/be aware that all customers desire close customer success types of relationships D) never refuse to do business with a customer

12) Alpha Company has a performance standard of 97% fill rate. Last month it achieved a 94% fill rate. This is an example of:

A) B) C) D)

13)

a knowledge gap a standards gap a performance gap a perception gap

On-time delivery is an aspect of a company’s performance in:

A) B) C) D)

availability operational performance malfunction recovery speed

14) Since Walmart* and Target are both mass merchandisers it is likely that they both have the same logistical service requirements from suppliers. ⊚ ⊚

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true false

4

15) Providing greater spatial convenience to customers typically requires greater logistics expense. ⊚ ⊚

16)

true false

Companies should strive to offer the same fill rate performance on all items they stock. ⊚ ⊚

true false

17) Good logistics practice involves developing operations in which malfunctions never occur. ⊚ ⊚

true false

18) A company has identified that there are 5 critical components of a “perfect order” It establishes a 97% standard on each of these components. Assuming it achieves this standard, it can expect that its overall perfect order performance is 97%. ⊚ ⊚

true false

19) Achieving customer satisfaction with logistical performance does not mean that customers will be loyal. ⊚ ⊚

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true false

5

20) Customers may be dissatisfied with a company even if that company consistently provides perfect order performance. ⊚ ⊚

true false

21) A customer success program in a company should focus on every customer the company serves. ⊚ ⊚

true false

22) In developing strategy for customer accommodation, low-profitability customers should never be candidates for a customer success relationship. ⊚ ⊚

true false

23) A firm which provides logistics service that is superior to its competitors can be sure that customers are satisfied. ⊚ ⊚

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true false

6

Answer Key Test name: Chapter 04 - Sample Test Bank 1) D 2) C 3) B 4) C 5) B 6) D 7) C 8) A 9) B 10) D 11) B 12) C 13) B 14) FALSE 15) TRUE 16) FALSE 17) FALSE 18) FALSE 19) TRUE 20) TRUE 21) FALSE 22) FALSE 23) FALSE

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Student name:__________ 1)

Knowing the location and status of inventory and resources is referred to as:

A) B) C) D)

intelligence visibility knowledge integration

2) Which of the following illustrates a typical conflict in objectives between sales and operations?

A) B) C) D)

3)

When a company implements its monthly S&OP process, the process should begin with:

A) B) C) D)

4)

operations prefers many product variation, sales prefers few product variations operations prefers long lead times, sales prefers short lead times. operations prefers maximized revenue, sales prefers maximized production operations prefers responsive schedules, sales prefers stable schedules

Developing and specifying the constraints related to manufacturing capabilities Determining the business planning vs financial objectives Looking at existing orders from major customers Gathering information from sales and marketing

Which of the following is NOT a benefit of S&OP?

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A) B) C) D)

5)

the S&OP process eliminates the need to have finished goods inventory the S&OP process results in better customer service the S&OP process provides better visibility into future capacity problems the S&OP process provides a single set of numbers to run the business.

Which of the following is NOT a key to making S&OP work in an organization.

A) B) C) D)

S&OP should be executed monthly S&OP should have a clear leader S&OP should focus 12-18 months into the future None of the above

6) In recent years some companies have begun to work closely with their customers and/or suppliers by sharing information to develop forecasts of demand. The procedure they are following is known as:

A) B) C) D)

Coordinated Forecasting of requirements Joint planning of Demand Forecasts Collaborative Planning, Forecasting, and Replenishment Conjoint Analysis and Forecasting

7) If Dell computer is making a forecast for the next year, which of the following forecasts would most likely have the largest forecast error (as measure by the percentage error)?

A) Total number of computers (laptops and desktops) to be sold next year in US B) Total number of laptops to be sold next year in US C) Total number of desktop to be sold next year in US D) Total number of laptops with 2 Gigabyte RAM, 80 Gigabyte hard drive and 16x DVD drive to be sold next year in US

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8) Which function typically needs the most detailed forecasts and therefore typically deals with the highest forecast error?

A) B) C) D)

9)

Accurate forecasting is most critical;

A) B) C) D)

10)

when lead times are long when there are high economies of scale in manufacturing when there are high economies of scale in transportation all of the above

The component of a forecast that is impossible to predict is:

A) B) C) D)

11)

logistics production finance marketing

base demand trend promotional irregular

Which of the following is not a time series technique of forecasting?

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A) B) C) D)

12)

simulation exponential smoothing moving average adaptive smoothing

As a forecasting technique, moving average:

A) is useful when only base and irregular demand components exist B) is never useful C) is useful when demand patterns repeat with cyclic, trend, or seasonal components D) is useful when there is a strong relationship between demand and certain independent variables

13)

[The following information applies to the questions displayed below.]

Period 1 2

Actual Demand 800 1200

Forecast Demand 1100 1000

(300 ) 200

Absolute Value 300 200

3

1400

1500

(100 )

100

13.1)

A) B) C) D)

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Error

What is the Mean Absolute Deviation (MAD)?

200 225 -66.67 1200

4

13.2)

A) B) C) D)

The Mean Absolute Percentage Error (MAPE) is approximately:

200% -27.98% 20.44% 53.93%

14) It has been clearly demonstrated that quantitative techniques of forecasting always result in less forecast error than qualitative techniques. ⊚ ⊚

true false

15) To effectively implement Sales and Operations Planning, sales and marketing people should develop marketing plans based on their forecast of demand while operations should develop the production plan based on their own forecast of demand. ⊚ ⊚

16)

true false

S&OP is a process that applies only to manufacturing organizations. ⊚ ⊚

true false

17) Good supply chain visibility is achieved when a firm is able to identify its shipments and its inventory. ⊚ ⊚

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true false

5

18) S&OP is primarily concerned with implementation of advanced planning information technology. ⊚ ⊚

true false

19) To insure that S&OP is most effectively implemented, a company should establish a specific department charged with S&OP responsibility. ⊚ ⊚

20)

true false

CPFR involves joint planning of forecasts between customers and suppliers. ⊚ ⊚

true false

21) A company that has a responsive supply chain capability is less reliant on forecasting than a company that has an anticipatory supply chain. ⊚ ⊚

true false

22) Of the various components of a forecast, the most controllable is the promotional component. ⊚ ⊚

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true false

6

23) Use of statistical forecasting techniques removes the need for managerial judgment in forecasting. ⊚ ⊚

true false

24) It is generally easier to provide an accurate forecast of SKU level demand than it is to provide an accurate forecast of total demand. ⊚ ⊚

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true false

7

Answer Key Test name: Chapter 05 - Sample Test Bank 1) B 2) B 3) B 4) A 5) C 6) C 7) D 8) A 9) D 10) D 11) A 12) A 13) Section Break 13.1) A 13.2) C 14) FALSE 15) FALSE 16) FALSE 17) FALSE 18) FALSE 19) FALSE 20) TRUE 21) TRUE 22) TRUE 23) FALSE 24) FALSE Version 1

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Student name:__________ 1) A company has decided that it no longer needs to extensively count and inspect the products it receives from a particular supplier. This suggests that the company has begun:

A) B) C) D)

volume consolidation supplier operational integration value management analysis of total cost of ownership

2) Generally speaking, procurement can have a greater impact on the net income of a company than most other departments. This is due to the fact that:

A) B) C) D)

3)

Which of the following reflects does not reflect a strategic focus on procurement?

A) B) C) D)

4)

manufacturing relies on purchasing to identify high quality suppliers suppliers want to reduce their prices to their customers marketers don’t care about net income purchased materials and supplies frequently represent the largest costs in a company

focus on total cost of ownership. supply base reduction. focus on purchase price. win-win negotiation.

Supply base reduction (volume consolidation)

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A) B) C) D)

5)

has potential benefits for suppliers as well as for buyers. involves early supplier involvement in product design. puts the buyer at a negotiating disadvantage. has little potential for savings for buyers.

In procurement, Total Cost of Ownership includes all of the following except:

A) field failures of purchased items B) consideration of the impact of supplier quantity discounts C) cost of order placement D) In fact, total cost of ownership includes all of the above.

6) In the promotional material for its GG2330 portable bar code scanner, the Yanda Company states that the mean time between failures for the scanner is 400 operating hours.

Which of the following dimensions of quality does this indicate?

A) B) C) D)

functionality. durability. performance reliability.

7) John Jones has a VCR which a friend described as being of poor quality since it doesn't have a remote control. The friend is focusing on what aspect of quality?

A) B) C) D)

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conformance aesthetics features durability

2

8) John Jones told his friend that his VCR is over 20 years old while most VCRs only last about 10 years. He is focusing on which aspect of quality?

A) B) C) D)

features reliability performance durability

9) Which of the following manufacturing approaches would describe most consumer products, such as food, razor blades, over the counter drug, etc?

A) B) C) D)

PTO (Procure to order) MTO (Make to order) ATO (Assemble to order) MTS (Make to stock)

10) Which of the following approaches would typically have the longest customer experienced lead time?

A) B) C) D)

11)

MTO (Make to order) PTO (Procure to order) MTS (Make to stock) ATO (Assemble to order)

Which of the following process structures can produce highest volume?

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A) B) C) D)

Job shop Line flow Continuous flow Batch operation

12) Which manufacturing process can produce many different product varieties but has a long customer experienced lead time?

A) B) C) D)

Line flow Repetitive flow Continuous flow Batch operation

13) In this manufacturing approach, typically many different end items are made by combining standard components in inventory into many different products.

A) B) C) D)

14)

MTS (Make to Stock) ATO (Assemble to Order) ETO (Engineer to Order) JIT (Just in Time)

In MTS (Make-to-Stock), customer orders are satisfied from?

A) B) C) D)

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Raw material inventory Work in process inventory Finished goods inventory Supplier inventory

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15) Which of the following statements would be true regarding the customer experienced lead time in a make-to-order company?

A) It would be shorter than make-to-stock company B) It would be the same as a make-to-stock company C) It would be longer than assemble-to-order company D) It would be shorter than an assemble-to-order company

16) Early Supplier Involvement (ESI) is an important part of the “Volume Consolidation” stage of procurement strategy evolution. ⊚ ⊚

true false

17) Good purchasing strategy is based on standardized set of procedures for dealing with every supplier in a firm’s supply base. ⊚ ⊚

true false

18) The most important objective in procurement strategy is to insure that the lowest purchase price is obtained from suppliers. ⊚ ⊚

true false

19) It is very possible that the supplier which offers the lowest purchase price does not have the lowest total cost of ownership for the buying firm.

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⊚ ⊚

true false

20) A job shop manufacturing process allows products to be customized for specific customers. ⊚ ⊚

true false

21) The customer accommodation cycle for make-to-plan items is typically longer than the cycle for assemble-to-order items. ⊚ ⊚

true false

22) Make-to-order strategies typically have lower inventory and warehousing cost than maketo plan strategies. ⊚ ⊚

true false

23) A six-sigma quality program suggests that the acceptable level of defects or failures is one-half that of a traditional three sigma approach ⊚ ⊚

true false

24) Performance based logistics has been found to both improve quality as well as reduce cost for the buying organization. ⊚ ⊚

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true false

6

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Answer Key Test name: Chapter 06 - Sample Test Bank 1) B 2) D 3) C 4) A 5) D 6) D 7) C 8) D 9) D 10) A 11) C 12) D 13) B 14) C 15) C 16) FALSE 17) FALSE 18) FALSE 19) TRUE 20) TRUE 21) FALSE 22) TRUE 23) FALSE 24) TRUE

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Student name:__________ 1) Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Alpha’s order cost has been determined to be $50 per order. Alpha carries no safety stock at all. What is Alpha’s annual inventory carrying cost?

A) B) C) D)

cannot be determined without further information $50 $250 $500

2) Jones Company has calculated that the EOQ for a particular item is 1,000 units.

However, Jones does not have enough capital to order that many units each time, so it only orders 250 units at a time. This will result in:

A) B) C) D)

3)

Safety stock exists for which of the following reasons?

A) B) C) D)

4)

Higher annual inventory carrying cost than ordering the EOQ quantity Lower annual inventory carrying cost than ordering the EOQ quantity Lower annual ordering cost than ordering the EOQ quantity Cannot be determined

To allow less expensive purchases by buying more To allow for transportation time To provide protection against the uncertainties of supply and demand None of the above

which of the following IS NOT an example of CC?

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A) B) C) D)

Cost of obsolescence and loss Taxes Insurance All of the above

5) Suppose demand is 25 units a month and average inventory is 30 units and unit cost is $10. What is the annual inventory turnover?

A) B) C) D)

100 10 .83333 83.333

6) What happens to the EOQ when the unit cost increases (assuming all other variables remain the same)?

A) B) C) D)

EOQ increases EOQ decreases EOQ remains the same None of the above (need more information)

7) When calculating a Reorder Point (ROP), which of the following factors WOULD NOT affect the calculation?

A) Item's EOQ B) Delivery lead time.

C) Demand during the delivery lead time.

D) Standard deviation of demand during delivery lead time.

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8) A batch of Raisin Bran that has been made at Kellogg's, but not yet packaged in its final cereal box would be an example of ______ inventory.

A) B) C) D)

Raw Material Work-in-process Finished Goods Maintenance, repair and operating supplies (MRO)

9) A company recently lowered its service performance from 99% product availability to 97% product availability. The change saved the company exactly $1million per year in inventory carrying cost. Senior management now wants to lower the service level to 95% from 97%. Such a further change is likely to save:

A) less than $1 million B) about another $1 million C) more than $1 million

10) Rajesh Indian Market (RIM) is open 12 months out of the year. At RIM, the demand for rice is very consistent 200 pounds per month. RIM orders the rice from a distributor in India at an ordering cost of $50 per order. Rice costs $5 per pound, and annual carrying charge is 15%.

Answer question 7-11 based on this information.

10.1)

A) B) C) D)

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The EOQ is? (Round up to the nearest whole number.)

566 pounds 164 pounds 163 pounds 26667 pounds

3

10.2) How many orders will RIM place in a year? (Round up to the nearest whole number.)

A) B) C) D)

10.3)

A) B) C) D)

10.4)

A) B) C) D)

10.5)

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2 orders 3 orders 4 orders 5 orders

What is the average inventory? (Round up to the nearest whole number.)

1200 units 283 units 250 units 275 units

What is the inventory turnover?

8.48 times 0.7 times 10.49 times 10.5 times

What is the annual ordering cost (based on the rounded up number of orders)?

4

A) B) C) D)

$150 $175 $200 $250

11) Cooper Company has average demand of 50 units per day. Lead time from the supplier averages 20 days. The combined standard deviation of demand during lead time is 20 units. The item costs $75 and inventory carrying cost is 24%. Answers to the next two questions are based on this information.1 standard deviation covers 84.13%1.04 standard deviations covers 85%1.28 standard deviations covers 90%1.65 standard deviations covers 95%1.96 standard deviations covers 97.5%2 standard deviations covers 97.72%2.33 standard deviations covers 99%3 standard deviations covers 99.86%6 standard deviations covers 99.99966%

11.1) Suppose management decides it wants to offer a 95% service level. That is, Cooper Company is willing to experience a stock-out probability of 5% during the order cycle. How much safety stock should be carried?

A) B) C) D)

33 units 35 units 46 units 25 units

11.2) How much is the annual inventory carrying cost of the safety stock because of this decision?

A) B) C) D)

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$755 $610 $594 $351

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11.3) Suppose you tell management at Cooper Company (in the above two questions) it should raise safety stock to the six sigma level. If Cooper decides to do this, it will incur an additional inventory carrying cost of approximately how much?

A) B) C) D)

$2,160 $234 cannot be determined $1,566

12) RAJ Company and LEE Company each annually order the exact same amount of an item from the same supplier (They each have the exact same annual demand from their customers for this item and the lead time from the supplier is the same for both companies). There is no variation at all for either company in either daily demand or lead time from the supplier. They pay the exact same price to the supplier for the item. They both figure that their ordering cost is $50 per order. However, RAJ has determined its annual inventory carrying cost is 20%, whereas LEE figures it is only 10%.

12.1)

Which of the following is true?

A) RAJs EOQ is higher than Lee’s EOQ B) LEE’s EOQ is higher than RAJ’s EOQ C) both have the same EOQ

12.2)

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Given the information above about RAJ and LEE, which of the following is true?

6

A) B) C) D)

both will have the same annual ordering cost both will have the same reorder point both will have the same inventory turnover all of the above are true

13) RajDee Furniture Company (RFC) buys and sells office furniture. The company buys chairs from a manufacturer for $40 per unit. Order costs are $200 per order and there is a lead time of 10 days for each order to arrive from the manufacturer to RFC warehouse. Inventory carrying cost for RFC is 10%. Average yearly demand for the chairs is 40,000 units. Answer the following questions, assuming there is no uncertainty at all about the demand or the lead time.

13.1)

A) B) C) D)

13.2)

A) B) C) D)

13.3)

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How many units should RFC order each time?

2000 200 100 400

What would average inventory be if RFC orders this quantity every time?

100 200 1000 50

If average lead time went up from 10 to 15 days, what will happen to EOQ?

7

A) Increase of 200 units B) Decrease of 200 units.

C) No change in EOQ D) Increase of 100 units

13.4)

A) B) C) D)

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Which of the following is included in the cost of carrying inventory?

Heating and lighting a warehouse inventory obsolescence material handling all of the above

8

Answer Key Test name: Chapter 07 - Sample Test Bank 1) D 2) B 3) C 4) D 5) B 6) B 7) A 8) B 9) A 10) Section Break 10.1) A 10.2) D 10.3) B 10.4) A 10.5) D 11) Section Break 11.1) A 11.2) C 11.3) D 12) Section Break 12.1) B 12.2) B 13) Section Break 13.1) A 13.2) C 13.3) C Version 1

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13.4) D

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Student name:__________ 1)

Which combination of transportation operating service characteristics is not correct?

A) B) C) D)

2) is:

Speed: air is best; pipeline is worst Availability: motor is best; pipeline is worst Capability: air is best; truck is worst Dependability: pipeline is best; air is worst

Generally the least costly method of moving product that is not gaseous, liquid, or slurry

A) B) C) D)

Air Water Truck Rail

3) If a transportation vehicle has completed a delivery and is returned empty, the situation is called a:

A) B) C) D)

4)

Backhaul Piggy-back Freight absorption Deadhead

Among the following choices which is typically the most expensive transportation mode:

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A) B) C) D)

5)

The transportation economic principle that deals with economy of distance is:

A) B) C) D)

6)

Air Water Truck Rail

Consolidation Load–off Tapering Spanning

Since 1995 the use of intermodal transportation has:

A) Remained about the same B) Increase significantly C) Decreased D) Increased slightly

7)

The mode of transportation hauling the most tonnage is:

A) B) C) D)

8)

Truck Rail Air Water

Which of the following is a non-operating transportation intermediary:

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A) B) C) D)

9)

Bonded Warehouse UPS Freight Forwarder None of the above

The document that lists and details the contents and conditions of a shipment is called:

A) B) C) D)

The Tariff Proof of Delivery The Invoice The Bill of Lading

10) Jones Company decided it would only deliver to each geographic market it serves once each week. This strategy is called:

A) B) C) D)

Market area consolidation Scheduled delivery consolidation Pooled Delivery Phantom freight

11) If you need to find the cost to ship 10,000 pounds from Lansing to Orlando you should look at the:

A) B) C) D)

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Tariff Uniform Freight Classification Bill of Lading FOB content description

3

12)

Which of the following is a product's characteristic that directly influences transport cost:

A) B) C) D)

The product's market share.

The product's density The product's technical complexity All of the above

13) If you want the consignee to be responsible for goods while they are intransit you should ship products:

A) B) C) D)

14)

FOB Destination FOB Origin Using Delivered Pricing Using Single Zone Pricing

Declining transport rates as the quantity shipped increases represents:

A) B) C) D)

The Tapering Principle Economy of Distance Economy of Energy Economy of Scale

15) When a carrier’s transportation vehicle is used for temporary product storage a firm typically has to pay:

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A) B) C) D)

Freight Absorption Demurrage Phantom Storage Vehicular Stoppage

16) The Jones Company learned that several other shippers located in its hometown had customers located in the same markets it serves. With this information Jones could find it advantage to investigate the potential of:

A) B) C) D)

Market Area Consolidation Scheduled Delivery Consolidation Pooled Delivery Consolidation A Phantom Freight Program

17) To facilitate classification of a large variety of different items being shipped on a single invoice a Traffic Manager may want to consider:

A) B) C) D)

18)

Motor carriers are the most used mode of transportation ⊚ ⊚

19)

Commodity Rates Class Rates Volume Rates FAK Rates

true false

The transportation mode having the fastest point to point transit time is truck

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⊚ ⊚

20)

The transportation mode having the best overall operating characteristics is truck ⊚ ⊚

21)

true false

true false

Pipeline has the highest dependability and frequency among alternative modes ⊚ ⊚

true false

22) The fact that most traditional carriers require a minimum charge helped create the market for package services. ⊚ ⊚

23)

Intermodal transportation typically consists of using three modes to complete a shipment ⊚ ⊚

24)

true false

A freight forwarder is an example of a nonoperating intermediary ⊚ ⊚

25)

true false

true false

The land bridge combines sea and rail transport

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⊚ ⊚

26)

The main advantage of air transport is safety ⊚ ⊚

27)

true false

Trucking has superior operating characteristics in all categories except availability ⊚ ⊚

31)

true false

The main disadvantage of pipelines is that they can only transport liquids. ⊚ ⊚

30)

true false

Water transport has the highest fixed cost ⊚ ⊚

29)

true false

Under transportation regulation the government established rates ⊚ ⊚

28)

true false

true false

Air transport is characterized by low fixed and high variable cost

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⊚ ⊚

32)

true false

Railroad mileage has declined over the past several decades. ⊚ ⊚

true false

33) If your company does not want responsibility for freight damageon the products they ship they should negotiate FOB Destination rates ⊚ ⊚

true false

34) If you want to find freight rates charged by a transportation company to deliver different size shipments between two cities you should check the bill of lading. ⊚ ⊚

35)

As a general rule the greater the density the lower the freight rate. ⊚ ⊚

36)

true false

true false

The rating reflects the cost of shipment from one location to another ⊚ ⊚

Version 1

true false

8

37) The significant difference between a class rate and a commodity rate is the type of freight being shipped. ⊚ ⊚

38)

Freight classification is a method to simplify the locations being serviced by a carrier ⊚ ⊚

39)

true false

true false

A minimum charge represents the lowest cost per hundred weight a carrier offers. ⊚ ⊚

true false

40) A joint rate is applicable when two or more carriers participate in a specific transportation movement ⊚ ⊚

true false

41) When the release of railroad equipment is detained by a shipper a detention charge may apply ⊚ ⊚

true false

42) When shippers provide Advanced Shipment Notification (ASN) their objective is to collect freight bills faster.

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⊚ ⊚

true false

43) The legislation that determines how many hours a locative operator can work is called Hours of Service (HOS) ⊚ ⊚

true false

44) A pickup allowance reflects a discount given to a customer when they provide transportation on a shipment that otherwise would involve delivery ⊚ ⊚

true false

45) The primary purpose of a pickup allowance is to reduce the miles a shipment must be transported. ⊚ ⊚

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true false

10

Answer Key Test name: Chapter 08 - Sample Test Bank 1) C 2) B 3) D 4) A 5) C 6) B 7) A 8) C 9) D 10) A 11) A 12) B 13) B 14) D 15) B 16) C 17) D 18) TRUE 19) FALSE 20) TRUE 21) TRUE 22) TRUE 23) FALSE 24) TRUE 25) TRUE 26) FALSE Version 1

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27) FALSE 28) FALSE 29) FALSE 30) FALSE 31) TRUE 32) TRUE 33) TRUE 34) FALSE 35) TRUE 36) FALSE 37) FALSE 38) FALSE 39) FALSE 40) TRUE 41) FALSE 42) FALSE 43) FALSE 44) TRUE 45) FALSE

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Student name:__________ 1) One function of a distribution warehouse is consolidation, which means the facility is being used to

A) B) C) D)

Group small inbound shipments into one large outbound shipment Collect products/packaging materials or disposal Hold safety stock inventory None of the above

2) A company which has limited experience in warehousing who has a need to establish temporary warehouse facilities in multiple cities would most likely use:

A) B) C) D)

3)

Private warehouses Public warehouses Contract Warehouses Common Warehouses

When a firm uses cross-docking, inventory:

A) Must be staged for shipping B) Moves directly from receiving to shipping C) Always is tagged for shipping D) Is considered short movement freight

4)

The four economic benefits of warehousing are:

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A) B) C) D)

Receiving, shipping, handling, and storage Shipping, receiving, assortment, and value added Consolidation, sorting, seasonal storage, and reverse logistics None of the above benefit combinations

5) A firm that supports an automotive assembly plant by providing just-in time inventory is engaged in:

A) B) C) D)

6)

Cross Docking Order Assembly Mixing Sequencing

When a firm “spot stocks” inventory they are engaged in:

A) B) C) D)

Placing inventory in an exact location in the warehouse Placing inventory in consignment Marking inventory for ease of identification Placing inventory in a local warehouse in anticipation of future need

7) The Jones firm decides to assemble specific products in their distribution warehouse to meet customer requests. They are:

A) B) C) D)

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Performing custom distribution Performing selective marketing Performing value added services All of the above.

2

8)

When a firm engages in extended storage they normally are:

A) B) C) D)

9)

Holding inventory in excess of typical replenishment requirements Speculating that inventory cost will decrease Engaged in customization Performing value added services.

“Slotting” a warehouse means:

A) B) C) D)

Products are positioned for value added services Products are assigned a specific warehouse location Products are placed in a pick line location None of the above.

10) When engaged in warehouse picking and a combination of customer order requirements are selected simultaneously the method being employed is called:

A) B) C) D)

Combination discrete selection Combined selection Discrete selection Wave selection

11) The use of a Warehouse Management System(WMS) to route fork trucks on-demand is called:

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A) B) C) D)

12) days

When a company cross-docks products, the products are generally in storage for several ⊚ ⊚

13)

Simultaneous routing Variable routing Directed routing Task Interleaving

true false

A disadvantage of RFID tags versus UPC codes is that RFID is more expensive ⊚ ⊚

true false

14) The modern concept of a distribution center means that products are never placed in storage ⊚ ⊚

true false

15) The warehouse functionality of sorting means that products are being assembled in custom assortments to meet the needs of specific orders. ⊚ ⊚

16)

true false

Cross docking is a form of sorting.

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⊚ ⊚

17)

Assembly is a primary service expected to be performed by lead suppliers. ⊚ ⊚

18)

true false

true false

Recycling is a major part of reverse logistics. ⊚ ⊚

true false

19) Value Added Services (VAS) are seldom performed by Integrated Service Providers (ISP) ⊚ ⊚

20)

true false

Order assembly is important to both manufacturers and retailers. ⊚ ⊚

true false

21) When a firm locates a temporary inventory in a specific location it is called Spot Stocking ⊚ ⊚

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true false

5

22)

A slot is the location where an over-the-road truck is parked. ⊚ ⊚

23)

true false

Distribution warehouses that are dedicated to a specific firm are called public warehouses ⊚ ⊚

true false

24) The best approach to developing a distribution warehouse is to locate a vacant building and then design a material handling system that will work in that structure. ⊚ ⊚

25)

true false

Wave selection means that multiple orders are being picked simultaneously ⊚ ⊚

true false

26) Pallets and slip-sheets basically perform the same functionality in a material handling system. ⊚ ⊚

Version 1

true false

6

Answer Key Test name: Chapter 09 - Sample Test Bank 1) A 2) B 3) B 4) C 5) D 6) D 7) C 8) A 9) B 10) D 11) D 12) FALSE 13) TRUE 14) FALSE 15) TRUE 16) TRUE 17) TRUE 18) TRUE 19) FALSE 20) TRUE 21) TRUE 22) FALSE 23) FALSE 24) FALSE 25) TRUE 26) TRUE Version 1

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Student name:__________ 1)

Firms are globalizing their operations today for all of the following reasons except

A) B) C) D)

2)

Take advantage of lower labor rates Obtain reductions in value-added taxes Source product from locations that involve less transportation uncertainty Simplify product variations

The characteristics of an export/import perspective are all of the following except

A) Sourcing and resource choices may be influenced by artificial constraints B) Operations are strongly driven by local presence C) Increased planning complexity D) Extended domestic logistics systems and operating practices to global origins and destinations

3) Which of the following describes the supply chain strategy for the "International Operations: local presence" stage of global development?

A) Agents and third party logistics service providers B) Subsidiaries and local distributors with specific business charters and visible local presence C) Worldwide flow of key resources to leverage global sourcing and marketing advantages D) None of the above

4) Which of the following describes the product focus for the "Export/Import" stage of global development?

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A) B) C) D)

Unique production and distribution for each country served Local market customization supported by postponement or local production Global brands None of the above

5) Which of the following is not a reason for extended performance cycle times for globalized supply chains?

A) B) C) D)

6)

The major justification for Cabotage laws was

A) B) C) D)

7)

Longer production run times Longer transit times Customs delays Finance requirements

Reduce transportation uncertainty Reduce transportation cost Protect domestic shipping capacity Protect domestic infrastructure

All of the following are examples of international logistics documentation except

A) B) C) D)

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Export irrevocable commercial letter of credit Certificate of origin Commercial invoice Shipping invoice

2

8)

Which of the following does not represent challenges for low-cost country sourcing?

A) Identification of sources capable of producing the materials in the quality and quantity required B) Protection of the firm’s intellectual property C) Identifying low cost production sources D) Inventory and obsolescence risk associated with longer lead times

9)

All other things being equal, domestic sourcing would be suggested for

A) B) C) D)

10)

Products with high value Products with high labor content Products with long life cycles Products with low transportation uncertainty

All other things being equal, low cost country sourcing would be suggested for

A) B) C) D)

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Products with many varieties Products with high security or import constraints Products with low intellectual property content Products with low labor content

3

Answer Key Test name: Chapter 10 - Sample Test Bank 1) D 2) B 3) B 4) D 5) A 6) C 7) D 8) C 9) A 10) C

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Student name:__________ 1)

The threshold service level is:

A) B) C) D)

2)

A trade-off is best described by which of the following:

A) B) C) D)

3)

The relationship between two variables The sum of two variables One variable minus the other variable One variable plus the other variable

Local Presence is considered an obsolete paradigm because:

A) B) C) D)

4)

The level of service associated with the least cost system design The level of service only associated with an optimum system design The level of service existing in a system prior to redesign None of the above

Local presence was replaced by regional warehousing Having inventory immediately available is no longer required Customers are willing to wait for delivery The advent of timely and consistent transportation

In terms of warehouse justification which of the following statements is true?

A) B) C) D)

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A warehouse is justified if it offers a way to achieve competitively superior service.

A warehouse is justified if it offers a way to provide service at lowest cost A warehouse is justified if it offers lowest total cost assembly support.

All of the above

1

5)

Market based Assembly To Order (ATO) is a form of:

A) B) C) D)

Manufacturing justified warehousing Procurement justified warehousing Customer justified warehousing None of the above.

6) When designing a warehouse network, if the overall safety stock increases as the number of warehouses increase then:

A) B) C) D)

7)

In system design the lowest total cost configuration is typically;

A) B) C) D)

8)

Network uncertainty is decreasing Network uncertainty is increasing Network uncertainty in constant Safety stock is appropriately linked to average stock

Not the lowest cost of either transportation or inventory the lowest cost of either transportation or inventory Not related to transportation or inventory Difficult to generalize

Threshold service level is:

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A) B) C) D)

Limited to measures of availability Limited to measures of capability Unique to each location situation The result of service sensitivity analysis

9) Which of the following is not a component of the feasibility assessment of the Planning Methodology?

A) B) C) D)

10)

Situation analysis Statement of objectives Cost/benefit estimate Supporting logic

The internal review topics should focus on all of the following except:

A) Customer service B) Suppliers C) Warehousing D) Inventory

11)

Cost prevention benefits:

A) Represent a one-time reduction in financial or managerial resources required to operate the logistics system B) Represent reduced out-of-pocket or variable expenses C) Represent initiatives to reduce sales volumes D) Represent initiatives to reduce activities in areas where cost drivers are increasing

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12)

Business assumptions focus on all of the following except

A) B) C) D)

13)

Resource availability Competitive actions Mode utilization Consumer trends

Supply chain design decisions focus on?

A) B) C) D) E)

How much inventory is necessary to meet service requirements?

How many warehouses should the firm use and where should they be located?

How should the firm route trucks for deliveries?

Which channels of distribution should the firm use?

B and D above

14) Which of the following is the best method to determine inventory parameters such as safety stock and order quantity?

A) Inventory simulation B) Supply chain design optimization C) Analytic inventory formulation D) Transportation analysis tool

15)

Which of the following problems is not appropriate for a transportation analysis tool?

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A) B) C) D)

16)

Each unique location analysis has a unique threshold service level ⊚ ⊚

17)

true false

The threshold service level is the starting point for cost revenue sensitivity analysis ⊚ ⊚

18)

Which routes should be assigned to which vehicle types?

How should deliveries be grouped together to form routes?

What delivery sequence should be used to accommodate customer time restrictions?

How many distribution centers should there be to best serve customers?

true false

The relationship between uncertainty and inventory is called the square root rule. ⊚ ⊚

true false

19) In a typical static location analysis customer service fill rate and delivery time is calculated based on distance. ⊚ ⊚

20)

true false

Transit stock inventory can be available to promise. ⊚ ⊚

Version 1

true false

5

21) The local presence paradigm is increasingly obsolete because of improved inventory control. ⊚ ⊚

true false

22) Warehouses can be justified on the basis of cost, specific service objective or generalized local presence ⊚ ⊚

23)

true false

A supply facing warehouse is one that is focused on supplying key customers ⊚ ⊚

true false

24) The manufacturing strategy of a firm will determine to a large degree the appropriate supporting warehouse structure. ⊚ ⊚

true false

25) Mathematical modeling supported by computer analysis has rendered the optimization of warehouse networks a relatively easy analysis. ⊚ ⊚

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true false

6

26)

Service sensitivity analysis is a form of cost-revenue analysis ⊚ ⊚

true false

27) Transit time to customer is typically estimated on the basis of highway route miles when performing a static warehouse analysis. ⊚ ⊚

Version 1

true false

7

Answer Key Test name: Chapter 11 - Sample Test Bank 1) A 2) A 3) D 4) D 5) C 6) B 7) B 8) C 9) B 10) B 11) D 12) C 13) E 14) C 15) D 16) TRUE 17) TRUE 18) FALSE 19) FALSE 20) TRUE 21) FALSE 22) TRUE 23) FALSE 24) TRUE 25) FALSE 26) TRUE Version 1

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27) FALSE

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Student name:__________ 1)

The idea of structuring logistics as an integrated organization:

A) B) C) D)

2)

has been a concern since the beginning of the industrial revolution first appeared in the 1950s became necessary because of advanced information systems is more important for manufacturers than it is for retailers

Which of the following is not considered a barrier to achieving process integration?

A) B) C) D)

measurement and reward systems organization structure knowledge hoarding financial resources

3) The text makes reference to a situation it calls "The Great Divide". While this divide has many different possible forms, it is most frequently observed in:

A) B) C) D)

4)

a divide between procurement and manufacturing a divide between distribution and marketing a divide between finance and accounting none of the above

Over the last several decades, power in supply chains has increasingly been shifting to:

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A) B) C) D)

5)

manufacturers third party logistics providers retailers wholesalers

The most elementary form of collaboration in supply chains is seen in the form of:

A) B) C) D)

contracting and outsourcing targeted systems alliances administered systems

6) Initial implementation of successful supply chain collaborative relationships seems to require:

A) B) C) D)

compatible information systems identical organizational cultures common organizational vision all of the above

7) Jones Company consistently delivers on-time as promised to customers. This type of performance is critical to:

A) B) C) D)

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developing character based trust developing reliability based trust developing power in a supply chain none of the above

2

8) The majority of information shared among supply chain members is operational vs. strategic. ⊚ ⊚

true false

9) Until the 1950s, logistics functions were generally viewed in companies as facilitating or support work. ⊚ ⊚

true false

10) Grouping transportation, warehousing and other activities related to logistics into a single logistical function was motivated by the belief that this would help optimize the performance of each of these individual activities. ⊚ ⊚

true false

11) An organization structure in which all logistical functions and operations report to a single senior manager or executive is very common today. ⊚ ⊚

true false

12) The shift from functional to process integration decreases the pressure to aggregate functions into specific organizational units. ⊚ ⊚

Version 1

true false

3

13) Most firms today have successfully overcome the situation that the text describes as "The Great Divide". ⊚ ⊚

true false

14) Centralization of logistics organization is critical to achieving lowest total cost logistics performance. ⊚ ⊚

true false

15) Decentralization of logistics organization is critical to achieving customer service, satisfaction, and success. ⊚ ⊚

true false

16) In many firms, collaboration with customers or suppliers has been found to be easier to accomplish than has collaboration within internal functions. ⊚ ⊚

true false

17) Most successful initiatives to improve supply chain competitiveness include third- party or integrated service providers in the collaboration. ⊚ ⊚

Version 1

true false

4

18) As a general rule powerful firms prefer to link with less powerful firms in supply chain collaboration so that it can use power to obtain advantage over those less powerful firms. ⊚ ⊚

true false

19) Contracting as a form of supply chain collaborative relationship generally involves greater information sharing and dependency than administered relationships. ⊚ ⊚

true false

20) Most supply chain relationships that are characterized as alliances have been initiated by the customer rather than the supplier. ⊚ ⊚

true false

21) The text use of the term "Great Divide" describes the difficulties firms have had in establishing relationships with customers and suppliers. ⊚ ⊚

true false

22) Jones Company has done an excellent job in meeting its promises concerning logistical performance to customers. This level of performance is distinguishing factor in reliability-based trust. ⊚ ⊚

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true false

5

23) Before implementing a supply chain alliance, investments in compatible information technology are essential. ⊚ ⊚

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true false

6

Answer Key Test name: Chapter 12 - Sample Test Bank 1) B 2) D 3) D 4) C 5) A 6) C 7) B 8) TRUE 9) TRUE 10) FALSE 11) FALSE 12) TRUE 13) FALSE 14) FALSE 15) FALSE 16) TRUE 17) TRUE 18) FALSE 19) FALSE 20) TRUE 21) FALSE 22) TRUE 23) FALSE

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Student name:__________ 1) Joe Jones has put in place a new set of performance metrics for the Logistics Department at his firm. He is convinced that these will give him better information about the department’s performance, but is concerned that he doesn’t know what type of behavior the new measurement system will encourage in his employees. Joe seems to be concerned about which objective of performance measurement?

A) B) C) D)

monitoring directing controlling measuring

2) Jingle Corporation received an order from a customer for 100 units of bells, 200 units of whistles, and 200 units of dingers. The customer received from Jingle Corporation 90 units of bells, 190 units of whistles, and 200 units of dingers. Jingle’s item fill rate was:

A) B) C) D)

3)

90% 95% 33.33% 96%

In the above question, Jingle’s line fill rate was:

A) B) C) D)

90% 95% 33.33% 96%

4) Which of the following metrics would be part of the "internal operations perspective" in the Balanced Scorecard?

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A) B) C) D)

return on investment fill rate number of credit claims units shipped per employee

5) Suppose your company receives trade credit from your suppliers which allows you 10 days to pay for the goods you buy. You flow your inventory through your company every 30 days. You allow your customers 30 days to pay you. Your cash-to-cash cycle time is:

A) B) C) D)

10 days 50 days 70 days none of the above

6) Last year, Able Company had Sales of $10 million, Cost of Goods Sold of $6 million, Gross Profit of $4 million and Net Profit of $1 million. Average inventory at cost was $2 million.

Able’s inventory turn rate was:

A) B) C) D)

5 times 3 times 2 times 5 times

7) Which of the following supply chain comprehensive metrics is likely the most difficult to actually quantify?

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2

A) B) C) D)

supply chain response time inventory days of supply dwell time cash-to-cash conversion

8) People who support the use of the contribution approach to segmental profitability feel that the net profit approach is wrong because it allocates costs:

A) B) C) D)

arbitrarily on a predetermined basis equally among the products or customers all of the above

9) Suppose two companies have identical profit margins. However, Company A has a higher gross margin than company B. Which one of the following would best explain how company B ends up with the same profit margin?

A) B) C) D)

Company A has a more efficient supply chain.

Company A has a higher asset turnover rate.

Company B has a more efficient supply chain.

Company B has a higher asset turnover.

10) A firm has an asset turnover of 3 times and a net profit margin of 4%. In the next year its margin decreases to 2%. This is not necessarily bad if

A) B) C) D)

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asset turnover increases to at least 6 times asset turnover decreases to 1.5 times asset turnover doesn’t change gross margin increases enough to offset the decrease in net profit margin

3

11)

What is dwell time:

A) B) C) D)

12)

A key component of system design The ratio of asset idle time to total time required to complete a mission The total time inventory is waiting to be processed.

A key concept in manufacturing efficiency

[The following information applies to the questions displayed below.]

12.1) In the above "Strategic Profit Model" what is the hypothetical firm’s net profit margin?

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4

A) B) C) D)

12.2)

A) B) C) D)

8% 16% 40% none of the above

In the above Strategic Profit Model what is the hypothetical firm’s ROA?

8% 0.8 32% 2

13) [The following information applies to the questions displayed below.]Suppose the firm in the above Strategic Profit Model undertakes a supply chain improvement project. It improves its service level to customers by opening more warehouses which means it will be able to delivery more quickly to customers. The result is a 10% increase in sales. Assume cost of goods sold increases by 6%.. The new warehouse requires additional new asset investment of $40,000.

Fixed expenses increase by $1,000 because of the expense of operating the warehouses. Assume other variables do not change. Answer the following three questions based on this information.

13.1)

A) B) C) D)

13.2) Version 1

What is the firm’s new net profit margin?

22% 16% 20% 5%

The firm’s new asset turnover is closest to?

5

A) B) C) D)

13.3)

A) B) C) D)

1.67 times 2.5 times 1.52 times 0.6 times

What is the firm’s new return on assets (choose the closest answer)?

33.33% 28% 33.44% 12%

14) Measuring transportation cost per order would be appropriate for the Operations Perspective of the Balanced Scorecard. ⊚ ⊚

true false

15) A firm performs at a level of 90% on each individual dimension of its logistics service performance. This suggests that the firm is providing 90% perfect order performance. ⊚ ⊚

true false

16) Recent research suggests that most firms currently are unable to actually measure the profitability of serving specific customers. ⊚ ⊚

Version 1

true false

6

17) It is more difficult to achieve a high percentage order fill rate than a high percentage item fill rate. ⊚ ⊚

true false

18) Customer satisfaction with logistics performance can be determined by measuring perfect order performance. ⊚ ⊚

19)

On-shelf in-stock percentage is the retailer’s sole responsibility. ⊚ ⊚

20)

true false

true false

Benchmarking processes is less common than benchmarking performance metrics. ⊚ ⊚

true false

21) Activity-based costing is a methodology for avoiding allocation of expenses to customer or product segments. ⊚ ⊚

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true false

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22) A product’s direct costs should not be considered when determining the profitability of that product. ⊚ ⊚

true false

23) A product with low gross margin can provide a higher return on its direct investment than a product with a high gross margin. ⊚ ⊚

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true false

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Answer Key Test name: Chapter 13 - Sample Test Bank 1) B 2) D 3) C 4) D 5) B 6) B 7) A 8) A 9) C 10) A 11) B 12) Section Break 12.1) B 12.2) C 13) Section Break 13.1) C 13.2) A 13.3) A 14) TRUE 15) FALSE 16) TRUE 17) TRUE 18) FALSE 19) FALSE 20) TRUE 21) FALSE Version 1

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22) FALSE 23) TRUE

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Student name:__________ 1)

The primary benefits of low product complexity include all of the following except:

A) Increased revenue B) Improved product quality and reliability C) Improved product development D) Decreased sales support cost

2) Which of the following are not environmental initiatives being used by firms in their supply chains

A) B) C) D)

Reduced packaging Product recycling after useful life Waste electrical and electronic equipment Supply chain redesign to minimize carbon

3) When searching for a supply chain management professional, hiring executives should expect that candidates meet all the desired criteria. ⊚ ⊚

true false

4) Employees who are being groomed for supply chain managerial positions should not be in rotation programs that are developed and controlled by a single leader. ⊚ ⊚

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true false

1

Answer Key Test name: Chapter 14 - Sample Test Bank 1) A 2) C 3) FALSE 4) TRUE

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