Supply Chain Management A Global Perspective Test Bank

Type:

Test Bank

Supply Chain Management A Resource: Global Perspective Edition:

1st Edition

Author(s):

Nada R. Sanders

File: ch01, Chapter 1: Introduction to Supply Chain Management

Multiple Choice

1. a) b) c) d) e)

SCM involves the design and management of three primary flows: Products, information, funds Suppliers, customers, manufacturers Distributors, retailers, customers Logistics, operations, marketing Responsiveness, reliability, relationship management

Ans: a Response: page 3 Level: Easy

2. a) b) c) d) e)

Stages of supply chain management include suppliers, producers, distributors, retailers, and: Financial flows Customers Reverse logistics Sustainability None of the above

Ans: b Response: page 4 Level: Medium

3. a) b) c) d) e)

Three overriding SCM activities within and between firms include: Marketing, sourcing, logistics Suppliers, customers, manufacturers Products, information, funds Coordination, information sharing, collaboration Responsiveness, reliability, relationship management

Ans: d Response: page 6-7 Level: Medium

4. The growing number and acceptance of customer returns has created an area of SCM called:

a) b) c) d) e)

Order fulfillment Distribution management Reverse logistics Sustainability None of the above

Ans: c Response: page 7 Level: Easy

5. a) b) c) d) e)

A result of effective information flow through the supply chain is: Improved coordination and collaboration between supply chain partners Reduction in the amount of inventory across the supply chain Reduction of the bullwhip effect Compression of the supply chain from a time standpoint All of the above

Ans: e Response: page 7 Level: Medium

6. Distortion and inaccurate information as it moves from the retailer back through the supply chain is known as: a) Early supplier involvement b) Bullwhip effect c) Supply chain compression d) Reverse logistics e) None of the above Ans: b Response: page 8 Level: Easy

7. a) b) c) d) e)

Factors driving the growth of SCM include: Better intra-organizational coordination Customer sophistication Early supplier involvement Reverse logistics capabilities Improved relationship management between firms

Ans: b Response: page 9

Level: Medium

8. An example of intra-organizational integration is: a) Marketing sharing promotion plans with operations b) Operations informing logistics of production plans c) Independent retailer sharing point-of-sale data with manufacturer d) Supplier informing manufacturer of a component defect e) a and b Ans: e Response: page 12 Level: Easy

9. a) b) c) d) e)

The primary role of marketing in an organization is to link the organization to its: Suppliers Operations Customers Finance None of the above

Ans: c Response: page 13 Level: Easy

10. Challenges to developing a systems thinking viewpoint in an organization include: a) Competing goals and incentives b) Segmented organizational structure c) Lack of information sharing d) ‘Siloed’ decision-making e) All of the above Ans: e Response: page 13 Level: Medium

11. Why have partnerships and alliances across enterprises become so important to SCM? a) Technology is expensive b) Companies want external supply chain partners to hold more risk c) “Early supplier involvement” is simple to implement d) Collaboration enables long-term viability and success in a competitive global environment

e) a and c Ans: d Response: page 14 Level: Medium

12. How has greater customer affluence increased the importance of SCM? a) Customers demand higher quality and better service b) The internet empowered consumers with information c) Customers wanted more standardized, mass-produced products d) Customers wanted fewer product choices e) a and b Ans: d Response: page 17 Level: Medium

13. Characteristics of a competitive supply chain include: a) Outsourcing, reliability, technology b) Globalization, innovation, reliability c) Relationship management, finance, early supplier involvement d) Affluent customers, technology, transportation e) Reliability, relationship management, responsiveness Ans: e Response: page 18-19 Level: Medium

14. Supply chain visibility increases supply chain reliability through: a) Shared understanding of real-time demand data by all supply chain partners b) Increasing variability across the supply chain c) Improved relationship management d) Understanding customer needs more quickly e) Putting more pressure on suppliers Ans: a Response: page 18 Level: Medium

15. The globalization trend presents numerous benefits to SCM including:

a) b) c) d) e)

Removes distance barrier between markets/consumers Consumers have greater product choices More supplier choices Cost savings All of the above

Ans: e Response: page 20 Level: Easy

16. Examples of ‘upstream’ players in a supply chain include: a) Suppliers b) Customers c) Retailers d) Distribution centers e) Outbound transportation providers Ans: a Response: page 4-5 Level: Easy

17. Postponement is an effective strategy for some firms because it: a) Is relatively simple and inexpensive to implement b) Allows for local product customization c) Increases supplier involvement d) Decreases the need for relationship management e) Requires little technology Ans: b Response: page 23 Level: Difficult

18. Necessary efforts to improve supply chain security present new challenges to firms including: a) Regulation/compliance requirements b) Increased transport time and costs c) Shorter lead times d) Decreased need for relationship management e) a and b Ans: e Response: page 24 Level: Medium

19. Sustainable/green initiatives can be beneficial to firms in the following ways: a) Enhance supplier relationships/supply availability b) Increased regulation/compliance requirements c) Create efficiencies and cost savings d) Decreases need for relationship management e) a and c Ans: e Response: page 25 Level: Medium

20. The primary difference between logistics and SCM is: a) SCM is a more popular term b) Logistics is more strategic in nature c) There is no difference d) SCM takes a more strategic and managerial focus e) Logistics is more complex Ans: d Response: page 15 Level: Medium

21. An accelerated flow of funds through the supply chain can improve a firm’s profitability by: a) Increasing interest rates b) Customers cannot be invoiced more quickly c) Creating a positive cash flow provides financial opportunity d) Increasing working capital needs e) None of the above Ans: c Response: page 7 Level: Medium

22. Examples of ‘downstream’ players in a supply chain include: a) Suppliers b) Manufacturers c) Retailers d) Inbound transportation providers e) Accountants Ans: c

Response: page 4-5 Level: Easy

23. A demand-driven supply chain is focused on which SCM characteristic: a) Relationship management b) Collaboration c) Coordination d) Responsiveness e) Risk management Ans: d Response: page 18 Level: Difficult

24. When a firm is focusing on its core competencies, it is engaging in which trend: a) Sustainability b) Financial supply chain c) Lean initiatives d) Risk management e) Outsourcing Ans: e Response: page 20 Level: Easy

25. Key trends in SCM include: a) Sustainability b) Risk management c) Reverse logistics d) Early supplier involvement e) a and b Ans: e Response: page 20-27 Level: Easy

True/False

1. A supply chain is defined as all the activities that occur within a firm to produce a product or service.

Ans: False Response: page 3 Level: Medium

2. The flows of products, information, and funds, are all important in an effective supply chain.

Ans: True Response: page 3-4 Level: Easy

3. The best way to think about supply chains is as a linear chain of players from suppliers to customers Ans: False Response: page 5 Level: Medium

4. An example of an ‘upstream’ part of the supply chain is distribution of finished goods to the retailer.

Ans: False Response: page 4 Level: Medium

5. An example of an ‘upstream’ part of the supply chain is transportation of raw materials to the manufacturer.

Ans: True Response: page 4 Level: Easy

6. First tier suppliers are always more important to a manufacturer than second tier suppliers.

Ans: False Response: page 5 Level: Difficult

7. Coordination involves the effective movement of goods and services through the supply chain; collaboration involves the effective relationships between supply chain members.

Ans: True Response: page 6-7 Level: Easy

8. It could be argued that, of the three overriding SCM activities, information sharing is the enabler of the other two activities.

Ans: True Response: page 6 Level: Medium

9. One of the most effective ways to combat the bullwhip effect is for firms to share point-of-sale data from retailers throughout the supply chain Ans: True Response: page 8 Level: Easy

10. The only objective of a supply chain is to deliver a product or service at the lowest cost possible.

Ans: False Response: page 9 Level: Medium

11. SCM has grown rapidly as a business focus since the 1990s primarily because of globalization.

Ans: True Response: page 15-16 Level: Medium

12. Outsourcing is a required strategy and is a characteristic of all competitive supply chains.

Ans: False Response: page 20-21 Level: Medium

13. Becoming a demand-driven supply chain means that the company is focused on responsiveness.

Ans: True Response: 18 Level: Medium

14. Outsourcing is a trend that is only suitable for manufacturing businesses.

Ans: False Response: page 20-21 Level: Medium

15. A core competency is an activity within a firm that provides value or competitive advantage.

Ans: True Response: page 20-21 Level: Easy

16. It could be argued that information technology has been the most impactful trend in the advancement of SCM. Ans: True Response: page 21-22 Level: Medium

17. There is no effective strategy developed yet for global companies is to control costs while catering to local market tastes.

Ans: False Response: page 23 Level: Medium

18. Global supply chains have reduced most companies’ exposure to risk.

Ans: False Response: page 24-25

Level: Medium

19. A requirement to achieving ever-leaner supply chains is collaboration with supply chain partners.

Ans: True Response: page 23-24 Level: Easy

20. Pursuing a lean supply chain strategy reduces a firm’s supply chain risk.

Ans: False Response: page 23-24 Level: Difficult

21. “Green” supply chain strategies need to be embraced across firms in the supply chain in order to be most effective.

Ans: True Response: page 25 Level: Easy

22. Suppliers are not overly important in a firm’s innovation initiatives.

Ans: False Response: page 25-26 Level: Medium

23. The only benefit to firms of ‘green’ supply chain initiatives is lower costs.

Ans: False Response: page 25 Level: Medium

24. In an effective supply chain, every activity should contribute to the total value of the firm’s cost or service position.

Ans: True Response: page 4 Level: Medium

25. The end customer plays a greater role in the manufacturing supply chain than in a service supply chain.

Ans: False Response: page 10-11 Level: Medium

Essay

1. Provide an example of the end-to-end supply chain flow of a product of your choice.

Ans: Student should describe a sequential flow that includes the core stages of a supply chain: suppliers, producers, distributors, retailers, and customers.

Response: page 3-6 Level: Medium

2. Explain the concept of a value chain and why the concept is important to SCM. Ans: A firm’s competitive advantage is derived from each activity that a firm performs, and these activities must provide value to the end customer and/or to the firm, typically through greater service or lower costs. Activities performed along the supply chain that do not meet these criteria should be eliminated or improved.

Response: page 4 Level: Difficult

3. How can an accelerated flow of funds throughout the supply chain improve firm profitability?

Ans: As customers’ orders are fulfilled more quickly, firms are able to invoice customers and receive payment sooner than the firm is required to pay its suppliers. The resulting positive cash flow provides significant financial opportunity/benefit for firms.

Response: page 7 Level: Difficult

4. Why is the role of the customer even greater in driving the service supply chain than it is in a manufacturing supply chain?

Ans: In a service industry such as healthcare or banking, the customer interacts directly with the provider. Individual customer behavior can be highly variable and thus impact the resulting ‘delivery’ of the service in aspects such as quality, timeliness, accuracy, etc.

Response: page 10-11 Level: Difficult

5. Describe the difference between SCM and logistics.

Ans: SCM is strategic and managerial, focusing on relationships and processes across firms; logistics is tactical and specifically involves moving and positioning inventory throughout the supply chain. Logistics is vital to SCM as it is a key supporting function.

Response: page 15 Level: Easy

File: ch02, Chapter 2: Supply Chain Strategy

Multiple Choice

1. a) b) c) d) e)

SCM competitive advantage can be derived from two primary areas: Cost and value Suppliers and customers Productivity and sustainability Logistics and marketing Responsiveness and relationship management

Ans: a Response: page 37 Level: Easy

2. a) b) c) d) e)

A product’s cost advantage may include the following: High service Customization Reputation Sustainability None of the above

Ans: e Response: page 37 Level: Medium

3. Ways that companies can gain a value advantage include: a) Value-segmenting b) Supplier relationship management c) Service and support d) Lowest cost e) a and c g Ans: a Response: page 38 Level: Medium

4. a) b) c) d)

The experience curve describes the relationship between: Value and experience Volume and experience Service levels and experience Costs and experience

e) Innovation and experience Ans: d Response: page 37 Level: Medium

5. a) b) c) d) e)

Building blocks of SCM strategy include: Operations Distribution Sourcing Customer service All of the above

Ans: e Response: page 41 Level: Easy

6. a) b) c) d) e)

Operations strategy focuses primarily on: Improved coordination between supply chain partners Reducing inventory across the supply chain How goods and services will be produced Segmenting customers/markets All of the above

Ans: c Response: page 41 Level: Difficult

7. a) b) c) d) e)

Customers’ ability to customize products reflects which operations strategy Make-to-order Assemble-to-order Make-to-stock Reverse logistics None of the above

Ans: a Response: page 42 Level: Medium

8. The most effective strategy for companies that produce standardized, commodity products is: a) Make-to-order

b) c) d) e)

Assemble-to-order Make-to-stock Reverse logistics Customer service

Ans: c Response: page 42 Level: Medium

9. a) b) c) d) e)

The most effective strategy when there are many variations of the end product is: Make-to-order Assemble-to-order Make-to-stock Adaptability None of the above

Ans: b Response: page 42 Level: Medium 10. Distribution strategy involves decisions about: a) Supplier selection b) Product development c) Transportation modes d) How to get products to customers e) a and b Ans: d Response: page 44 Level: Medium

11. In defining a distribution strategy, a company must consider the importance of channel intermediaries including: a) Suppliers and manufacturers b) Suppliers and customers c) Retailers and distributors d) Distributors and suppliers e) None of the above Ans: c Response: page 44 Level: Difficult

12. The outsourcing decision relates to which building block of SCM strategy: a) Operations b) Distribution c) Sourcing d) Logistics e) Customer service Ans: c Response: page 45 Level: Easy

13. An outsourcing strategy can result in the following: a) Ability to respond quickly to demand changes b) Gain a competitive advantage c) Eliminate risk d) Loss of flexibility e) a and b Ans: e Response: page 45-46 Level: Medium

14. Risks to a company that can result from outsourcing include: a) Customers demanding higher quality and better service b) Loss of control over a product or process c) Increasing technological capabilities d) Lower costs e) a and b Ans: b Response: page 47 Level: Easy

15. Benefits to a company that can result from outsourcing include: a) Accessing new markets/customers b) Lower costs c) Decreased flexibility d) Decreased demand e) a and b Ans: e

Response: page 46 Level: Easy

16. When defining a customer service strategy, companies should first: a) Outsource non-core competencies b) Define the sales volume and profits in each market segment c) Improve relationship management processes d) Pressure suppliers for lower costs and better service e) None of the above Ans: b Response: page 48 Level: Difficult

17. How a company competes in the marketplace is defined as: a) Operations strategy b) Market segmentation c) Competitive priority d) Alliance development e) All of the above Ans: c Response: page 50 Level: Medium

18. Of the five priorities by which companies compete in the marketplace, which relates to having efficient, integrated operations: a) Cost b) Time c) Logistics d) Service e) Market segmentation Ans: a Response: page 50 Level: Easy

19. Companies that compete primarily on innovation typically focus on two attributes: a) Operations and logistics b) Sourcing and operations

c) Quality and time d) Speed and product design e) Cost and time Ans: d Response: page 52 Level: Medium

20. Investing in and utilizing RFID tag technology typically fits with which competitive priority: a) Time b) Quality c) Cost d) Segmentation e) a and b Ans: b Response: page 53 Level: Medium

21. Two concepts that companies must continually monitor when evaluating strategy are: a) Regulation and compliance requirements b) Inventory levels and costs c) Time and quality d) Order winners and order qualifiers e) Innovation and quality Ans: d Response: page 54 Level: Easy

22. Adaptability, in terms of defining SCM strategy, relates to a company’s ability to: a) Continually locate the lowest cost supplier b) Evolve and adapt as market conditions change c) Increase capacity as demand increases d) Outsource production e) None of the above Ans: b Response: page 55 Level: Easy

23. Factors in today’s business environment that require companies to have adaptable supply chains include: a) Development of new technologies b) Frequent changing to a company’s business scope c) Increase in outsourcing d) Increasing working capital needs e) a and b Ans: e Response: page 56 Level: Easy

24. A worker can produce 1000 units during an 8 hour shift, thus the productivity of that worker is: a) 100 units/hour b) 80 units/hour c) 800 units/hour d) 125 units/hour e) None of the above Ans: d Response: page 57 Level: Easy

25. One of the key aspects that must be considered when interpreting productivity measures is: a) Benchmarking b) Collaboration c) Coordination d) Responsiveness e) None of the above Ans: a Response: page 58 Level: Medium

True/False

1. A business strategy is a company plan that defines short term goals and core competencies.

Ans: False Response: page 35 Level: Easy

2. Supply chain strategy should closely link with and support a company’s business strategy.

Ans: True Response: page 35 Level: Easy

3. Competitive advantage, derived from supply chain management practices, can be the result of two primary areas: cost AND productivity.

Ans: False Response: page 37 Level: Medium

4. Commodity products are typically bought by consumers because of the product’s value.

Ans: False Response: page 38 Level: Medium

5. A key area where companies are adding value to products is by focusing on service.

Ans: True Response: page 38 Level: Easy

6. One building block of SCM strategy is alliance development.

Ans: False Response: page 41 Level: Medium

7. Operations strategy involves decisions about which suppliers to utilize.

Ans: False Response: page 41 Level: Medium

8. A made to stock operations strategy offers customers the ability to customize products.

Ans: False Response: page 42 Level: Medium

9. An assemble to order operations strategy allows firms to lower inventory costs.

Ans: True Response: page 42 Level: Medium

10. The make to order operations strategy typically requires longer customer lead times.

Ans: True Response: page 42 Level: Difficult

11. All industries should strive to implement a make to order strategy because this strategy provides the highest level of customer service.

Ans: False Response: page 43 Level: Difficult

12. Understanding a product’s life cycle is important to defining an operations strategy.

Ans: True Response: page 44 Level: Medium

13. Distribution strategy involves the decision to sell products directly to consumers or through channel intermediaries.

Ans: True Response: page 44 Level: Medium

14. The same distribution strategy should be deployed to all markets because of cost savings.

Ans: False Response: page 44 Level: Difficult

15. Sourcing strategy involves decisions about outsourcing.

Ans: True Response: page 45 Level: Easy

16. Processes that are strategic differentiators for a company should be outsourced because they are typically the most expensive processes to manage.

Ans: False Response: page 45 Level: Medium

17. Outsourcing can allow companies to respond to demand changes more quickly.

Ans: True Response: page 45 Level: Easy

18. Outsourcing can provide many benefits but it also carries numerous risks that must be evaluated and managed.

Ans: True Response: page 47 Level:Easy

19. As a company increases the scope of an outsourced process, the risk to the company decreases.

Ans: False Response: page 47 Level: Difficult: Medium

20. Giving one supplier too much control creates a dependency risk for a company.

Ans: True Response: page 47 Level: Easy

21. Customer service strategies should be developed based on market segmentation.

Ans: True Response: page 48 Level: Easy

22. When designing a SCM strategy, mimicking a market leader always leads to success.

Ans: False Response: page 50 Level: Easy

23. Successful companies are able to compete on all competitive priorities.

Ans: False Response: page 54 Level: Easy

24. An order qualifier is an attribute that is a must-have for a company to compete in the marketplace.

Ans: True Response: page 54 Level: Medium

25. Without substantial market influence, there are very few strategies for small firms to compete.

Ans: False Response: page 55 Level: Medium

26. The ability to adapt strategies to a changing environment is the same for all industries.

Ans: False Response: page 56 Level: Difficult

27. Evaluating SCM strategy is best done on an annual or bi-annual basis.

Ans: False Response: page 56 Level: Easy

28. Productivity measures the utilizations of a company’s resources.

Ans: True Response: page 56 Level: Medium

29. For the month of August, the values of a company’s outputs and inputs were $100,000 and $40,000 respectively, thus he total productivity measure would be 2.0 Ans: False Response: page 57 Level: Easy

30. Productivity must be measured over time in order to provide a valuable measure of performance.

Ans: True Response: page 58 Level: Easy

Essay

1. A company’s SCM strategy should align with its business strategy. Provide an example of a business strategy and the SCM strategy that would support it.

Ans: Student should describe a business strategy such as low cost , fast delivery, innovation and provide examples of associated SCM strategies that would accompany that strategy.

Response: page 36 Level: Medium

2. Describe how SCM can provide both a cost and value advantage over competitors.

Ans: Cost advantages include reduced costs through product, distribution, coordination costs, and increased sales volume. Value advantages include identifying value segments in the market, quality, variety, and improvements in service.

Response: page 37-40 Level: Easy

3. List the five primary SCM competitive priorities and select one to describe in depth, including an example of how that priority is executed.

Ans: 1.) Cost – focuses on meeting efficiency-based metrics, product and process standardization – WalMart; 2.)Time – deliver products in a short time; eliminate or combine processes to save time – FedEx; 3.) Innovation – develop ‘must have’ products, superior marketing, speed and product design – Nike; 4.)

Quality – products and services are premium; known for consistency and reliability; TQM in all SCM processes – Mercedes; 5.) Service – tailor products and services to meet individual customer needs; generate strong customer loyalty; exceptional order fulfillment – Zappos.

Response: page 50-54 Level: Medium

File: ch03, Chapter 3: Network and System Design Multiple Choice

1. a) b) c) d) e)

A supply chain can be viewed as a system of processes that: Focus on costs Are vertically integrated Cuts across organizations to deliver value Are separate within an organization Eliminate bottlenecks

Ans: c Response: page 65 Level: Easy

2. a) b) c) d) e)

A key element that supports supply chain strategy is: Supply chain network design Customization Vertical integration Sustainability None of the above

Ans: a Response: page 65 Level: Medium

3. a) b) c) d) e)

Information technology design enables: Value-segmenting Data sharing and communication Theory of Constraints ERP implementation a and c

Ans: b Response: page 65 Level: Medium

4. a) b) c) d) e)

A process is a set of activities designed to create: An output for the customer Integration Reduced costs Constraints Innovation and experience

Ans: a Response: page 67 Level: Easy

5. a) b) c) d) e)

In managing processes, the view that focuses on efficiency is: Operations Distribution Transactional Relationship None of the above

Ans: c Response: page 68 Level: Medium

6. a) b) c) d) e)

The relationship view of process management seeks to: Enable/enhance coordination between supply chain partners Reduce costs across the supply chain Define how goods and services will be produced Utilize defined cost metrics All of the above

Ans: a Response: page 68 Level: Medium

7. a) b) c) d) e)

From TOC, “exploiting the constraint” means to: Define the constraint Eliminate the constraint Find ways to best utilize the constraint Reduce variation None of the above

Ans: c Response: page 72 Level: Medium 8. a) b) c) d)

Variation is a challenge because it adds ________ and _______ to a process: Demand and supply Uncertainty and visibility Flexibility and visibility Complexity and uncertainty

e) None of the above Ans: d Response: page 73 Level: Medium

9. a) b) c) d) e)

One approach to help manage variation is: Eliminate constraints Reduce buffers Reduce capacity Increase complexity Increase process flexibility

Ans: e Response: page 73 Level: Medium 10. __________ refers to the maximum amount of output that can be achieved by a process. a) Flexibility b) Variability c) Network d) Capacity e) Reliability Ans: d Response: page 73 Level: Easy

11. Capacity available under normal conditions is called: a) Design capacity b) Effective capacity c) Overtime capacity d) Outsourcing capacity e) None of the above Ans: b Response: page 74 Level: Medium

12. A motorcycle factory can produce 500 units of product in one day under normal conditions and 800 maximum units with overtime labor. In December, the factory produced 700 units. What was the factory’s design capacity utilization in December?

a) b) c) d) e)

87.5% 95% 160% 100% None of the above

Ans: a Response: page 74-75 Level: Medium

13. A motorcycle factory can produce 500 units of product in one day under normal conditions and 800 maximum units with overtime labor. In December, the factory produced 700 units. What was the factory’s effective capacity utilization in December? a) 87.5% b) 95% c) 160% d) 100% e) None of the above Ans: e Response: page 74-75 Level: Medium

14. Firm ownership of upstream suppliers is known as: a) Capacity management b) Vertical integration c) Core competencies d) Outsourcing e) a and b Ans: b Response: page 76 Level: Easy

15. Two key aspects of the supply chain network include: a) Physical structure and management b) Vertical integration and outsourcing c) Flexibility and responsiveness d) IT and suppliers e) None of the above Ans: a

Response: page 77 Level: Medium

16. One element of supply chain network structure includes: a) Number of companies in the supply chain b) Structural dimensions c) Vertical integration d) Supplier management e) a and b Ans: e Response: page 78 Level: Easy

17. Designing a competitive supply chain network is increasingly challenging because of: a) Increasing complexity and product proliferation b) Vertical integration c) Outsourcing d) Alliance development e) All of the above Ans: a Response: page 79 Level: Medium: Difficult

18. __________ is a strategy for managing increased supply chain complexity. a) Outsourcing b) Segmentation c) ERP systems d) Alliance development e) All of the above Ans: b Response: page 80 Level: Medium

19. A high-volume, low variability demand business requires which type of supply chain structure: a) Flexibility b) Cost-efficient c) Segmented

d) Responsive e) a and b Ans: b Response: page 81 Level: Difficult

20. One example of a strategy to manage increased variation is: a) Inventory buffers b) Reducing flexibility c) IT systems d) Outsourcing e) a and b Ans: a Response: page 73 Level: Medium

21. One of the most important benefits of integrated IT systems is improved _________ across the supply chain: a) Relationships b) Sourcing c) Quality d) Visibility e) Cost Ans: d Response: page 82 Level: Medium

22. Modules that are offered as part of an ERP system include: a) Manufacturing b) Finance c) Human resources d) Supply chain management e) All of the above Ans: e Response: page 84 Level: Easy

True/False

1. An effective supply chain should be viewed as a series of separate organizations and functions.

Ans: False Response: page 65 Level: Easy

2. The most effective supply chains cut across organizations to deliver customer value.

Ans: True Response: page 65 Level: Easy

3. Network design is a key element of supply chain strategy.

Ans: True Response: page 65 Level: Easy

4. Information technology (IT) design enables businesses to manage processes.

Ans: True Response: page 65-66 Level: Medium

5. Business processes are an unstructured collection of activities.

Ans: False Response: page 66 Level: Medium

6. The goal of a process is to create a specific output.

Ans: True

Response: page 67 Level: Medium

7. Process outputs can be easily improved only by substituting new inputs.

Ans: False Response: page 67 Level: Medium

8. If a process is managed well it can produce unlimited outputs.

Ans: False Response: page 67 Level: Difficult

9. Logistical and resource constraints limit process outputs.

Ans: False Response: page 67 Level: Difficult

10. For maximum efficiency, it is enough for companies to coordinate internal functions.

Ans: False Response: page 68 Level: Medium

11. The transactional view of SCM processes focuses on making those processes more efficient.

Ans: True Response: page 68 Level: Easy

12. The transactional view of SCM processes are based on qualitative metrics.

Ans: False

Response: page 68 Level: Medium: Difficult

13. Relationship-focused SCM processes put significant emphasis on the interactions of people and organizations.

Ans: True Response: page 68 Level: Easy

14. A fundamental principle of the Theory of Constraints (TOC) is that every process has at least one constraint that always must be eliminated entirely from the process.

Ans: False Response: page 70 Level: Difficult

15. A system cannot produce any more than the output of its bottleneck.

Ans: True Response: page 70 Level: Easy

16. Variability exists in every process but it is not a problem for supply chains.

Ans: False Response: page 72 Level: Easy

17. Creating buffers in the supply chain is one way to manage variation.

Ans: True Response: page 73 Level: Easy

18. The maximum amount of output that can be delivered by a process is its complexity.

Ans: False Response: page 73 Level: Medium

19. Design capacity is the maximum process output that can be produced when using temporary measures to alter the normal state of the process.

Ans: True Response: page 74 Level: Medium

20. Vertical integration is the preferred strategy for most companies.

Ans: False Response: page 77 Level: Medium

21. The type of product is not overly important in designing a SCM network structure.

Ans: False Response: page 78 Level: Easy

22. It is possible for companies to have multiple, different supply chains.

Ans: True Response: page 79 Level: Medium

23. A company can gain cost and value advantages by segmenting its supply chains.

Ans: True Response: page 80 Level: Difficult

24. Information technology is considered a critical enabler of effective supply chains.

Ans: True Response: page 82 Level: Easy

25. ERP systems are effective because the separate various business processes from each other.

Ans: False Response: page 83 Level: Medium

Essay

1. Describe the premise behind Theory of Constraints (TOC) and how companies would apply TOC to a supply chain.

Ans: The premise behind TOC is that every system has one or more constraints that prevent it from achieving greater output than the constrained process. One must find a way to increase the capacity of the constraint in order to increase the output of the process, and ultimately the supply chain.

Response: page 70-72 Level: Medium

2. Describe how the variation in processes creates challenges for supply chains and provide an example.

Ans: Variation consumes resources and adds complexity and uncertainty to the supply chain. Students should provide an example, such as the Gap example cited in the chapter, to describe how an example of variation such as demand, lead time, weather, promotions, can create SCM challenges.

Response: page 73 Level: Difficult

3. Describe the three stages of integration within an organization.

Ans: Stage 1: complete functional independence within the organization; Stage 2: internal functional cooperation and coordination; Stage 3: linkages across all supply chain partners/organizations Response: page 75-76 Level: Easy

File: ch04, Chapter 4: Marketing

Multiple Choice

1. a) b) c) d) e)

Marketing focuses on the __________ area of the supply chain: Cost Downstream Productivity Logistics Upstream

Ans: b Response: page 93 Level: Easy

2. a) b) c) d) e)

Marketing plays a critical role in driving the actions of a company’s supply chain because it: Defines how to create customer value Customizes products Defines a brand Works with operations None of the above

Ans: a Response: page 93 Level: Medium

3. a) b) c) d) e)

Distinguishing one market/customer from another is known as: Distribution channels Supplier relationship management Market segmentation Bullwhip effect Customer relationship management

Ans: c Response: page 94 Level: Easy

4. a) b) c) d)

____________ looks at an entire market as having the same characteristics: Value marketing Segment marketing Service marketing One-on-one marketing

e) Mass marketing Ans: e Response: page 94 Level: Easy

5. a) b) c) d) e)

Target marketing recognizes customer: Operations Diversity Service Homogeneity All of the above

Ans: b Response: page 94 Level: Medium

6. a) b) c) d) e)

In the evolution of marketing, the selling concept emerged because of: Improved coordination between supply chain partners Reducing inventory across the supply chain Increased competition in the marketplace Segmenting customers/markets All of the above

Ans: c Response: page 95 Level: Difficult

7. a) b) c) d) e)

The history of marketing involves three major perspectives, including: Production Selling Marketing All of the above None of the above

Ans: d Response: page 95 Level: Easy

8. In the evolution of marketing, the marketing concept focuses on:

a) b) c) d) e)

Standardization Selling Relationships with customers Costs None of the above

Ans: c Response: page 95 Level: Medium

9. a) b) c) d) e)

Creating successful and multiple exchanges with customers is termed: Transactional marketing Relational marketing Selling concept Marketing concept None of the above

Ans: a Response: page 95 Level: Medium

10. The most important factor that contributed to empowering customers was: a) Customer relationship management b) Internet c) Globalization d) Standardization e) a and b Ans: b Response: page 96 Level: Easy

11. The category in the marketing mix that relates most to quality and packaging is: a) Product b) Place c) Price d) Promotion e) None of the above Ans: a Response: page 98 Level: Medium

12. The place category in the marketing mix relates to: a) Quality and packaging b) Market coverage c) Pricing d) Sourcing e) Product visibility Ans: b Response: page 98 Level: Medium

13. A company’s supply chain contributes to its success because it can provide more ______ to a customer than a competing supply chain: a) Risk b) Value c) Products d) Transactions e) a and b Ans: b Response: page 99 Level: Difficult

14. An individual who purchases a product for individual needs is known as: a) Supplier b) Retailer c) End customer/consumer d) Wholesaler e) Manufacturer Ans: c Response: page 99 Level: Easy

15. From a total SCM perspective, a __________ can be at any step of the supply chain. a) Supplier b) Retailer c) Channel partner d) Wholesaler

e) Customer Ans: e Response: page 99 Level: Medium

16. A __________ customer strategy focuses on minimal product customization: a) Customized b) Niche c) Standardized d) One-to-one e) None of the above Ans: c Response: page 101 Level: Easy

17. The advantages from customized customer strategy are derived from: a) Standardization b) Market segmentation c) Outsourcing d) Cost reduction e) All of the above Ans: b Response: page 102 Level: Difficult

18. The _______ customer strategy should be used when meeting very specific customer needs: a) Standardization b) Customization c) Niche d) Outsourcing e) Market segmentation Ans: c Response: page 102 Level: Medium

19. Customer Relationship Management (CRM) can be an effective tool because it:

a) b) c) d) e)

Captures detailed customer information Customizes communications Aids/Contributes to market segmentation Can be added to larger ERP systems All of the above

Ans: e Response: page 103 Level: Easy

20. ___________ is the process by which companies capture customer needs and preferences: a) Value to the customer b) Quality function deployment c) Voice of the customer d) Customer relationship management e) a and b Ans: c Response: page 104 Level: Medium

21. Translating data about customer needs and preferences into technical specifications is known as: a) Value to the customer b) Quality function deployment c) Voice of the customer d) Customer relationship management e) a and b Ans: b Response: page 104 Level: Easy

22. Viewing customer service as an activity relates to : a) Meeting basic customer needs b) Utilizing performance metrics c) Quality management practices d) A competitive strategy e) None of the above Ans: a Response: page 106 Level: Medium

23. Viewing customer service as _____________ might include utilizing quality management practices. a) A philosophy b) A set of performance metrics c) An activity d) Billing and invoicing e) None of the above Ans: a Response: page 106 Level: Medium

24. Customer service strategy impacts the supply chain on four primary dimensions, including: a) Time, dependability, standardization, transactions b) Dependability, quality, channels, transactions c) Communication, convenience, dependability, time d) Convenience, time, customization, cost e) None of the above Ans: c Response: page 107-108 Level: Medium

25. The customer service dimension of time is enabled by effective: a) Benchmarking b) Supplier management c) Manufacturing d) Marketing e) Logistics Ans: e Response: page 107 Level: Medium

26. Effective IT systems enable which customer service dimension. a) Time b) Dependability c) Transactions d) Communication e) Quality

Ans: d Response: page 108 Level: Difficult

27. The channel structure that delivers a product immediately to the end customer is knows as: a) Indirect channel b) Retailer channel c) Direct channel d) Marketing channel e) Logistics channel Ans: c Response: page 110 Level: Easy

28. Procter and Gamble selling Tide to customers at Walmart is known as which channel: a) Indirect channel b) Retailer channel c) Direct channel d) Marketing channel e) Logistics channel Ans: a Response: page 111 Level: Difficult

29. One factor that influences a company’s distribution channel structure is: a) Market coverage objectives b) Customer relationship management c) Product characteristics d) Suppliers e) a and c Ans: e Response: page 112 Level: Difficult

30. In terms of market coverage, ___________ distribution should be used for products with high value, exclusive branding:

a) b) c) d) e)

Intensive Selective Indirect Direct None of the above

Ans: b Response: page 112 Level: Difficult

31. A segment of a logistics channel might include: a) Wholesalers b) Retailers c) Manufacturers d) Warehouses e) Suppliers Ans: d Response: page 113 Level: Easy

32. E-commerce has impacted distribution channels in a variety of ways, including: a) Cost structures b) Customer service requirements c) Shipping quantities d) Asset utilization e) All of the above Ans: e Response: page 115 Level: Medium: Difficult

True/False

1. Marketing is the function that links a business to its customers.

Ans: True Response: page 93 Level: Easy

2. The marketing function focuses on the “upstream” part of the supply chain.

Ans: False Response: page 93 Level: Easy

3. Marketing is an important function, but it is not the function that drives a firm’s supply chain.

Ans: False Response: page 93 Level: Medium

4. To compete in a global market, a firm must be better than its competitors in meeting customer needs.

Ans: True Response: page 93 Level: Easy

5. Customers are only driven by basic product and service needs.

Ans: False Response: page 93 Level: Medium

6. Individual customer needs should be met in all situations and will have no impact on the supply chain.

Ans: False Response: page 93 Level: Medium

7. Market segmentation relates to a mass marketing strategy.

Ans: False Response: page 94

Level: Medium

8. Mass marketing reduces costs by selling more products to fewer customers.

Ans: False Response: page 94 Level: Medium

9. Target marketing is not the most cost-efficient but it fits a segmentation strategy.

Ans: True Response: page 94 Level: Easy

10. In the evolution of marketing, the production concept met unfulfilled demand for basic consumer needs.

Ans: True Response: page 95 Level: Easy

11. In the evolution of marketing, the selling concept evolved because of increased competition between firms for customers.

Ans: True Response: page 95 Level: Easy

12. Relational marketing recognizes the importance of individual customer needs and wants .

Ans: True Response: page 95 Level: Medium

13. Transactional marketing strategies fit with a “one size fits all” product strategy.

Ans: True Response: page 95 Level: Medium

14. Supply chain management had a significant influence on the development of relational marketing strategies.

Ans: True Response: page 96 Level: Medium

15. The most important factor in driving relational marketing strategies was the outsourcing trend.

Ans: False Response: page 96 Level: Medium

16. The ‘product’ category in the 4 Ps of marketing is not overly relevant to SCM. Ans: False Response: page 98 Level: Easy: Difficult

17. Today’s economy has seen a shift in power from customers to companies.

Ans: False Response: page 98 Level: Medium

18. Supply chain management requires a sophisticated understanding of the term, “customer.”

Ans: True Response: page 99 Level: Easy

19. The end customer is typically an individual or household.

Ans: True Response: page 99 Level: Difficult

20. From a SCM perspective, a customer can be at any step of the supply chain.

Ans: True Response: page 99 Level: Easy

21. Customized customer marketing strategies focus on viewing all customers as having the same product and service needs.

Ans: False Response: page 101 Level: Medium

22. Standardized customer marketing strategies should never be utilized such strategies are not effective.

Ans: False Response: page 101-102 Level: Medium

23. Customized customer marketing strategies are enabled through market segmentation.

Ans: True Response: page 102 Level: Medium

24. Niche customer marketing strategies typically correspond to higher product prices.

Ans: True Response: page 102 Level: Medium

25. All customers would prefer a customized marketing strategy if possible.

Ans: False Response: page 102 Level: Medium

26. Customer Relationship Management (CRM) is an effective tool for managing diverse customer needs and relationships.

Ans: True Response: page 103 Level: Easy

27. The advantage of CRM is that it facilitates customer standardization.

Ans: False Response: page 103 Level: Difficult

28. Companies can create a competitive advantage through customer service even when its products are easily copied by competitors.

Ans: True Response: page 106 Level: Easy

29. Supply chains must work to achieve the highest level of customer service with cost as a secondary consideration.

Ans: False Response: page 107 Level: Medium

30. Channels of distribution define the path by which a product gets to the final customer.

Ans: True Response: page 110 Level: Easy

31. The logistics channel includes distributors and retailers.

Ans: False Response: page 113 Level: Medium

32. E-commerce had added complexity to distribution channels primarily because of shipping costs and transportation.

Ans: True Response: page 115 Level: Medium

Essay

1. Describe the implications on a firm and its customers if the marketing function is NOT well integrated into a firm’s supply chain management strategies and processes.

Ans: Student should describe how marketing defines consumer preferences; its linkage to operations to ensure product production; to suppliers that provide parts to build the product; to logistics that delivers products to meet customer expectations; to finance that must provide funding. If this coordination does not occur or is ineffective, customers may be unsatisfied, the firm could lose sales/revenue, costs may increase due to obsolete inventory, delays, etc.

Response: page 96 Level: Medium

2. Describe the four categories/Ps of marketing and how each category directly relates to SCM. Ans: Product: product characteristics, packaging, quality – relates to supplier standards and logistics/packaging; Price: pricing strategy developed for a product – relates to SCM costs; Place: having product where and when needed – relates to distribution channels, logistics, inventory, transportation; Promotion: increasing product visibility and desirability – relates to production, demand planning, sourcing to ensure product availability Response: page 98 Level: Medium

3. Describe the evolution of customer-driven supply chain management.

Ans: Student should describe how factors such as the Internet, globalization, global competition have made customers powerful in defining product, service, and price, resulting in a proliferation of product and value choices. Effective supply chain management is critical to competing in this environment and meeting a complex and diverse mix of product and service requirements.

Response: page 99 Level: Medium: Difficult

File: ch05, Chapter 5: Operations Management

Multiple Choice

1. Operations management (OM) is responsible for producing products in a cost-effective and __________ way. a) Complex b) Efficient c) Expensive d) Outsourced e) Cellular Ans: b Response: page 123 Level: Easy

2. a) b) c) d) e)

OM plays a critical role in a company’s supply chain because it: Produces/delivers the product or service Customizes products Defines location of facilities Works with marketing None of the above

Ans: a Response: page 123 Level: Medium

3. a) b) c) d) e)

An example of an OM decision would be: Which distribution channels to utilize Where to locate a factory How to schedule workers Market segmentation strategy b and c

Ans: e Response: page 125 Level: Easy

4. a) b) c) d) e)

The OM decision about ____________ relates to how the product or service will be produced: Product design Facility layout Process design Scheduling Inventory management

Ans: c Response: page 125 Level: Medium

5. a) b) c) d) e)

A consumer who purchases a Dell computer would be a customer of which type of operation: Cellular Service Manufacturing Intermittent All of the above

Ans: c Response: page 125 Level: Difficult

6. a) b) c) d) e)

Which factor helped create a greater and critical focus on the OM function: Reduced product cycle times Global competition Supply chain management Early supplier involvement b and c

Ans: e Response: page 126 Level: Medium

7. a) b) c) d) e)

Product and process design together can impact: Quality Cost Customer satisfaction All of the above None of the above

Ans: d Response: page 128

Level: Easy

8. a) b) c) d) e)

The __________ nature of a service makes product design more complex: Standardized Intangible Intermittent Costly None of the above

Ans: b Response: page 129 Level: Difficult

9. a) b) c) d) e)

The design of service processes should include the following elements: Physical, psychological, relational Psychological, relational, marketing Physical, sensual, psychological Sensual, relational, operations None of the above

Ans: c Response: page 129 Level: Easy

10. An effective product design process should encompass four steps, including: a) Customer relationship management b) Product screening c) Psychological benefit analysis d) Standardization e) a and b Ans: b Response: page 130 Level: Easy

11. The _________ stage of the product design process may include early supplier involvement: a) Idea development b) Preliminary design c) Final design d) Break even analysis

e) None of the above Ans: a Response: page 130 Level: Difficult

12. The variable cost of a new computer keyboard is $25 per unit, and the fixed costs to produce the keyboard are $20,000 per year. If the selling price of the keyboard is $45, how many units must the company sell to break even? a) 800 units b) 445 units c) 2000 units d) 1000 units e) None of the above Ans: d Response: page 133 Level: Medium

13. Design for manufacturing (DFM) guidelines focus on ________ and ________: a) Risk and return b) Features and benefits c) Cost and service d) Simplification and standardization e) None of the above Ans: d Response: page 133 Level: Easy

14. Understanding a the evolution of a product, from introduction to maturity, is known as: a) Cycle time management b) Concurrent engineering c) Remanufacturing d) Design for manufacturing e) Product life cycle management Ans: e Response: page 134 Level: Easy

15. Features of a repetitive process include: a) High work in process inventory b) Early stage of product life cycle c) Large product variety d) Capital–intensive resources e) Long throughput time Ans: d Response: page 136 Level: Difficult

16. A __________ process focuses on providing product customization: a) Intermittent b) Repetitive c) Standardized d) Late stage e) None of the above Ans: a Response: page 135 Level: Medium

17. _________ processes produce small quantities of products in groups based on particular specifications or customers: a) Project b) Line c) Continuous d) Batch e) None of the above Ans: d Response: page 136 Level: Easy

18. The _______ process type should be used when producing to very specific customer needs: a) Standardization b) Customization c) Line d) Continuous e) Project

Ans: e Response: page 136 Level: Difficult

19. When designing facility layout, the _______ layout fits best with intermittent processes: a) Product b) Fixed position c) Cellular d) Process e) None of the above Ans: d Response: page 140 Level: Difficult

20. ___________ is the facility layout that would best fit with the production of a jumbo jetliner. a) Product b) Fixed position c) Cellular d) Process e) None of the above Ans: b Response: page 139 Level: Difficult

21. Defining logical sequence and speed of the production process relates to: a) Early supplier involvement b) Market segmentation c) Line balancing d) Cellular manufacturing e) Process design Ans: c Response: page 142 Level: Difficult

22. The maximum amount of time each station on an assembly line has to complete a task is known as: a) Line balancing b) Process design

c) Intermittent processes d) Product design e) Cycle time Ans: e Response: page 142 Level: Medium

23. An initial disadvantage of automation for companies is: a) Cost b) Improved quality c) Replacing workers d) Security e) None of the above Ans: a Response: page 147 Level: Easy

24. A primary advantage of automation for a variety of reasons is: a) Replaces workers with machines b) Economic improvements c) Product quality and consistency d) Improved worker security e) All of the above Ans: e Response: page 146 Level: Easy

25. When automating processes in a service business, a strategic consideration should be: a) Customer expectations and markets b) Costs c) Suppliers d) Product design e) Process design Ans: a Response: page 148 Level: Medium

True/False

1. Operations management (OM) is the function that is responsible for producing goods and services.

Ans: True Response: page 123 Level: Easy

2. The OM function manages a company’s resources, including labor and materials.

Ans: True Response: page 123 Level: Easy

3. Not all companies have an OM function.

Ans: False Response: page 123 Level: Easy

4. OM plays a transformative role in an organization because it is independent of other functions.

Ans: False Response: page 124 Level: Medium

5. In OM decisions, an example of a product design decision is defining an inventory strategy.

Ans: False Response: page 125 Level: Medium

6. Decisions about the best location for a factory or warehouse relate to OM.

Ans: True Response: page 125 Level: Medium

7. The degree of customer contact is a key differentiator between manufacturing and service operations.

Ans: True Response: page 125 Level: Difficult

8. Service organizations produce products that can be made prior to customer purchase.

Ans: False Response: page 125 Level: Medium

9. With globalization, OM has become a way for companies to gain a competitive advantage.

Ans: True Response: page 125 Level: Easy

10. In the evolution of OM, quality and competitiveness became crucial in the 1950s.

Ans: False Response: page 126 Level: Medium

11. In the evolution of OM, its “back office” role was partially a result of firms’ extensive focus on marketing and developing new markets.

Ans: True Response: page 126 Level: Medium

12. The role of product design in the OM function is to define the features and marketing tactics for a company’s product.

Ans: False Response: page 128 Level: Difficult

13. Product design decisions will impact almost every other decision the company must make in terms of producing and delivering the product to the customer.

Ans: True Response: page 128 Level: Easy

14. Process design is distinct from product design in the OM function.

Ans: False Response: page 128 Level: Difficult

15. Service design has three elements including the physical, psychological, and sensual.

Ans: True Response: page 129 Level: Easy

16. Early supplier involvement (ESI) is the process by which suppliers negotiate early contractual terms with customers.

Ans: False Response: page 130 Level: Medium

17. During product screening, the finance department would primarily be concerned with whether sources of supply are available.

Ans: False Response: page 130

Level: Medium

18. At the breakeven point, total costs of the product equal the revenue generated from sales of the product.

Ans: True Response: page 131 Level: Easy

19. Design for manufacturing (DFM) considers the ease at which a product can be produced.

Ans: True Response: page 133 Level: Medium

20. Design simplification seeks to utilize fewer parts that are required to produce a product.

Ans: True Response: page 133 Level: Easy

21. Standardizing design seeks to utilize a common set of parts to produce a product.

Ans: True Response: page 134 Level: Medium :Easy

22. Remanufacturing has become an effective tool in designing sustainable operations.

Ans: True Response: page 134 Level: Medium

23. Process design is important because it ultimately defines the production process.

Ans: True

Response: page 134 Level: Medium

24. Intermittent processes produce high volumes of standardized products.

Ans: False Response: page 135 Level: Medium

25. Repetitive processes typically occur in the early stages of a product’s life cycle.

Ans: False Response: page 136 Level: Medium

26. Project processes produce products exactly to a particular customer’s expectations.

Ans: True Response: page 136 Level: Medium

27. Batch and line processes are similar.

Ans: False Response: page 137 Level: Medium

28. There are four types of facility layout: fixed position, process, product, cellular.

Ans: True Response: page 139 Level: Easy

29. The best facility layout for producing an automobile would be a product layout.

Ans: True Response: page 140

Level: Medium

30. Understanding cycle time is critical to the process of line balancing.

Ans: True Response: page 142 Level: Difficult

Essay

1. Describe the transformational role of operations in an organization and provide an example.

Ans: Student should describe how operations converts inputs (materials, workers, facilities, information, etc.) into outputs (goods and services). Student should cite an example of how specific inputs to a product (ie: chapter examples such as denim into jeans; plastic into toys; patients into healthy individuals) are transformed into a desired finished product.

Response: page 124 Level: Easy

2. Describe the evolution of the operations management (OM) function.

Ans: Students should describe three stages of evolution: the production and “back office” role in the 1950s; the quality/competitive focus in response to global competition in the 1980s; currently globalization and SCM making OM crucial to competitiveness and the coordination of SCM partners and the gaining cost and value benefits.

Response: page 126 Level: Medium

3. Describe the sequential steps of the product design process.

Ans: 1.) Idea development – marketing, suppliers, customers define new ideas, mention early supplier involvement program (ESI); 2.) Product screening – ideas are evaluated both from the customer and operations perspectives; 3). Preliminary design and testing – engineers translate general specifications into specific technical specifications; 4.) Final design – specific instructions are created to manufacture the product including materials, equipment, quality, etc.

Response: page 129-130 Level: Difficult

File: ch06, Chapter 6: Sourcing

Multiple Choice

1. a) b) c) d) e)

__________ is responsible for all activities related to purchasing goods and services.

Manufacturing Marketing Sourcing Logistics Finance

Ans: c Response: page 153 Level: Easy

2. a) b) c) d) e)

Sourcing addresses the __________ part of the supply chain: Channels of distribution Market segmentation Upstream Downstream None of the above

Ans: c Response: page 153 Level: Easy

3. a) b) c) d) e)

__________ sourcing focuses on more than just price when selecting suppliers.

Innovative Supply side Tactical Functional Strategic

Ans: e Response: page 153 Level: Medium

4. Factors in the marketplace that elevated sourcing from a clerical-oriented function include:

a) b) c) d) e)

Internet technology Global competition Growth of consumer sourcing Multiple distribution channels a and b

Ans: e Response: page 154 Level: Easy

5. a) b) c) d) e)

Purchasing laundry detergent at a retail store is an example of: Commercial sourcing Consumer sourcing Retail sourcing Mass customization None of the above

Ans: b Response: page 155 Level: Medium

6. a) b) c) d) e)

Attributes of a commercial sourcing include: Multiple suppliers of common products Buyers are final consumers of products Buyer does not negotiate purchase price Buyers have specialized purchasing needs All of the above

Ans: d Response: page 155 Level: Difficult

7. a) b) c) d) e)

The sourcing function impacts an organization in many ways including: Operational Financial Strategic All of the above None of the above

Ans: d Response: page 156 Level: Easy

8. The fact that an organization invests significant amounts of cash in the sourcing function relates to which impact of the sourcing function: a) Risk mitigation b) Strategic c) Finance d) Operational e) Information Ans: c Response: page 156 Level: Easy

9. Keeping the organization at the forefront of new technologies and suppliers relates to which impact of the sourcing function: a) Risk mitigation b) Strategic c) Finance d) Operational e) Information Ans: e Response: page 156 Level: Easy

10. Utilizing a request for quotation (RFQ) is part of the ___________ process: a) Supplier evaluation b) Risk mitigation c) Request for proposal d) Supplier selection e) a and b Ans: d Response: page 157 Level: Medium

11. The best way to evaluate price in the sourcing process is: a) Fair price b) Purchase price c) Cost

d) Break even analysis e) Total cost of ownership Ans: e Response: page 159 Level: Difficult

12. Criteria for utilizing competitive bidding practices include: a) Purchasing high volumes b) Clear specifications for product purchased c) Standardized products to be purchased d) None of the above e) All of the above Ans: e Response: page 160 Level: Difficult

13. Building longer term supplier relationships is more effective through ________ practices: a) Negotiation b) Early supplier involvement c) Competitive bidding d) Mass customization e) E-auctions Ans: a Response: page 160 Level: Medium

14. Attributes of functional product sourcing include: a) Unstable demand b) Complex products c) Customized products d) Predictable demand e) Short life-cycles Ans: d Response: page 161 Level: Difficult

15. __________ products have short life-cycles and unpredictable demand: a) Innovative b) Standardized c) Functional d) End of life e) Predictable Ans: a Response: page 161 Level: Easy

16. An example of a product with a stable supply process would be: a) Tablet computer b) Electric car c) Solar panels d) Diapers e) None of the above Ans: d Response: page 162 Level: Easy

17. A tablet computer would have a ________ type of supply process. a) Project b) Continuous c) Stable d) Innovative e) Evolving Ans: e Response: page 162 Level: Medium

18. A strategy utilized when delaying product differentiation until later in the supply chain is: a) Standardization b) Customization c) Postponement d) Early supplier involvement e) None of the above Ans: c Response: page 162

Level: Easy

19. __________ supply chains are best utilized for products that are innovative and have a stable supply base: a) Risk-hedging b) Efficiency-focused c) Agile d) Responsive e) Stable Ans: d Response: page 162 Level: Difficult

20. __________ supply chains are best utilized for products that have both high demand and supply uncertainty: a) Risk-hedging b) Efficiency-focused c) Agile d) Responsive e) Stable Ans: c Response: page 162 Level: Difficult

21. Which sourcing strategy strikes a balance between economies of scale and risk mitigation: a) Early supplier involvement b) Single sourcing c) Multiple sourcing d) Supplier “portfolio” e) Outsourcing Ans: d Response: page 164 Level: Medium: Difficult

22. ______ and _______ are key dimensions for the sourcing function to consider when evaluating an outsourcing or off-shoring strategy: a) Cost and channels

b) c) d) e)

Innovative and functional Standardization and customization Scope and criticality None of the above

Ans: d Response: page 165 Level: Easy

23. Benefits to buyers from utilizing e-auctions include: a) Market transparency b) Increased error rate c) Complex supplier comparisons d) Increased cycle time e) Fewer suppliers in the decision set Ans: a Response: page 166 Level: Medium

24. A weeks of supply measure that is high relative to industry standards may indicate: a) Too much inventory is being held b) Too much cash invested in inventory c) Greater chance of a stock-out d) a and b e) All of the above Ans: d Response: page 169-70 Level: Difficult

25. Industries/Products that typically need a high inventory turn measure include: a) Commodities b) Stable demand c) Short life-cycle d) Functional e) Machinery Ans: c Response: page 170 Level: Medium

True/False

1. Sourcing is the function that is responsible for activities related to purchasing goods and services.

Ans: True Response: page 153 Level: Easy

2. The supply side of an organization is related to the marketing function.

Ans: False Response: page 153 Level: Easy

3. Sourcing is responsible for the “downstream” part of an organization.

Ans: False Response: page 153 Level: Easy

4. Purchasing is a strategic function within an organization.

Ans: False Response: page 153 Level: Medium

5. The goal of strategic sourcing is to provide a competitive advantage to an organization and create short-term relationships with suppliers.

Ans: False Response: page 154 Level: Medium

6. The importance of sourcing has grown as companies seek to develop a global supply base.

Ans: True Response: page 154 Level: Easy

7. A consumer purchasing a t-shirt at a retail store is an example of commercial sourcing.

Ans: False Response: page 155 Level: Difficult

8. In consumer purchasing, there are many suppliers of common goods and services.

Ans: True Response: page 155 Level: Medium

9. Sourcing has a significant financial impact on an organization because large amounts of cash are spent on materials and services.

Ans: True Response: page 156 Level: Easy

10. The risk mitigation role that sourcing plays in an organization relates to evaluating suppliers’ ethical standards.

Ans: True Response: page 156 Level: Medium

11. The sourcing function plays a key educational/knowledge role within an organization.

Ans: True Response: page 156 Level: Medium

12. Supplier selection typically begins with an organization soliciting a request for quotation (RFQ).

Ans: True Response: page 157 Level: Easy

13. Typically an organization should look to its existing supply base before soliciting a new supplier.

Ans: True Response: page 157 Level: Difficult

14. To reduce errors and complexity, sourcing is the only function that should interact with suppliers.

Ans: False Response: page 158 Level: Difficult

15. A key concept for sourcing managers to understand is the difference between cost and price.

Ans: True Response: page 158 Level: Easy

16. Total cost of ownership (TCO) is the purchase price plus transportation.

Ans: False Response: page 159 Level: Medium

17. When selecting a new supplier, competitive bidding is an effective way to develop a longer-term business relationships.

Ans: False Response: page 160 Level: Medium

18. The negotiations approach to supplier selection typically involves multiple criteria in order to select the best supplier.

Ans: True Response: page 160 Level: Easy

19. Competitive bidding is most effective when there are multiple suppliers in the marketplace.

Ans: True Response: page 160 Level: Medium

20. The sourcing process for functional products is easier to manage because of unpredictable demands.

Ans: False Response: page 161 Level: Medium

21. Innovative products have higher profit margins but they are more difficult for the sourcing function to manage.

Ans: True Response: page 161 Level: Easy

22. Chicken soup would be an example of a stable supply process with an efficiency-focused supply chain.

Ans: True Response: page 162 Level: Easy: Medium

23. Electric car technology would be an example of an evolving supply process.

Ans: True

Response: page 162 Level: Easy

24. A biotechnology/medical product would be an example of a risk-hedging supply chain with significant focus on supplier stability.

Ans: True Response: page 162 Level: Difficult

25. Agile supply chains are the most difficult to manage due to supply and demand uncertainty.

Ans: True Response: page 163 Level: Easy

26. Achieving greater economies of scale is one advantage of single sourcing.

Ans: True Response: page 164 Level: Easy

27. Single sourcing is no longer a risky strategy due to technological advances in purchasing.

Ans: False Response: page 164 Level: Difficult

28. Scope and criticality are important when considering an outsourcing or off-shoring strategy.

Ans: True Response: page 165 Level: Easy

29. E-auctions have allowed organizations to develop longer-term relationships with suppliers.

Ans: False

Response: page 167 Level: Medium

30. Understanding inventory turnover is critical to evaluating the effectiveness of the sourcing function.

Ans: True Response: page 169 Level: Easy

Essay

1. Briefly describe the five critical roles that sourcing provides in an organization.

Ans: 1.) Operational impact – sourcing ensures that materials are available in the right quantities and places exactly when needed while balancing inventory needs; 2.) Financial impact – large amounts of a firm’s cash are tied up in materials and services; 3.) Strategic impact – sourcing identifies suppliers that support the firm’s competitive priorities; 4.) Risk mitigation – sourcing monitors and mitigates risks around supply disruptions and quality and ensures suppliers meet performance standards; 5.)

Information impact – sourcing must continually gather information about suppliers of goods, prices, skills, and technology and thus brings new knowledge to the supply chain.

Response: page 155-156 Level: Medium

2. Provide three criteria for why an organization would use competitive bidding and three reasons for negotiation in supplier selection.

Ans: Competitive bidding – performance specifications are clearly defined; high purchase volume; products being purchases are standardized products; many qualified suppliers in marketplace; available time for bid evaluation. Negotiations – performance specifications not clearly defined; many criteria exist for supplier selection (quality, service, expertise, etc.); product being purchased is complex; few qualified suppliers in marketplace; suppliers customize product Response: page 160 Level: Medium

3. Briefly describe the advantages and disadvantages to a single sourcing strategy.

Ans: Advantages – lower purchasing costs/economies of scale from bulk purchase, lower transportation costs from bulk shipping and scheduling, consistent quality, greater cooperation/partnership with

supplier, access to expertise. Disadvantages – no backup source of supply, dependency on one supplier, risk of supply disruption, no competition to gauge fair pricing Response: page 164 Level: Easy

File: ch07, Chapter 7: Logistics

Multiple Choice

1. __________ is responsible for all activities related to delivering products at the right place and right time. a) Manufacturing b) Marketing c) Sourcing d) Logistics e) Finance Ans: d Response: page 179 Level: Easy

2. a) b) c) d) e)

Logistics addresses the __________ part of the supply chain: Channels of distribution Upstream and downstream Upstream Downstream None of the above

Ans: b Response: page 179 Level: Medium

3. a) b) c) d) e)

Infrastructure investment is a primary reason why many firms _________ the logistics function.

Manage Eliminate Outsource Insource Control

Ans: c Response: page 180 Level: Easy

4. Factors in the marketplace that elevated logistics away from primarily a physical distribution focus include: a) Growth of supply chain management b) Global supply chains c) Cost d) Multiple distribution channels e) a and b Ans: e Response: page 182 Level: Easy: Medium

5. a) b) c) d) e)

The outbound side of logistics works primarily with which function: Manufacturing Sourcing Operations Marketing Finance

Ans: d Response: page 179 Level: Medium

6. a) b) c) d) e)

The inbound side of logistics works primarily with which function: Manufacturing Sourcing Operations Marketing Finance

Ans: b Response: page: 179 Level: Medium

7. a) b) c) d) e)

The logistics function significantly impacts operations in the area of : Inventory positioning Financial management Operations scheduling Distribution channels a and c

Ans: e

Response: page 182 Level: Difficult

8. a) b) c) d) e)

The _______ demand system is responsive to actual customer demand and is unpredictable: Push Pull Stable Innovative Functional

Ans: b Response: page 183 Level: Difficult

9. a) b) c) d) e)

The _______ demand system is based upon anticipated demand and is more predictable: Push Pull Stable Innovative Functional

Ans: a Response: page 183 Level: Difficult

10. Managing the logistics function in a service industry requires ________ focus compared to a manufacturing industry : a) Less b) More c) Equal Ans: c Response: page 183 Level: Medium

11. The outbound side of logistics focuses significantly on: a) Operations b) Sourcing c) Order fulfillment d) Demand planning

e) Total cost of ownership Ans: c Response: page 183 Level: Difficult

12. Logistics decisions related to ________ emphasize maintaining product integrity: a) Marketing b) Finance c) Operations d) Order fulfillment e) Packaging Ans: e Response: page 184 Level: Easy: Medium

13. A firm’s finances are impacted significantly by the logistics function because logistics: a) Is asset intense b) Can impact on financial measures c) Involves capital expenditures d) Is responsible for inventory e) All of the above Ans: e Response: page 184 Level: Easy

14. Ensuring that logistics delivers products at the right quantities to customers relates to: a) Customer service b) Order fulfillment c) Quantity utility d) Place utility e) Time utility Ans: c Response: page 185 Level: Easy

15. __________ logistics is the process of moving products upstream from the customer to the manufacturer or supplier: a) Military b) Business c) Event d) Reverse e) None of the above Ans: d Response: page 185 Level: Easy

16. The ability of customers to easily return goods has become a(n) ___________ for most retail and Internet businesses: a) Order fulfillment b) Order qualifier c) Challenge d) Value add e) b and c Ans: b Response: page 186 Level: Medium

17. It is believed that the most important task of logistics is: a) Storage b) Material handling c) Packaging d) Inventory control e) Transportation Ans: e Response: page 187 Level: Medium

18. Achieving cost efficiencies through maximizing freight and miles travelled is known as: a) Economies of scale b) Less-than-truckload c) Place utility d) Economies of distance e) None of the above

Ans: d Response: page 189-190 Level: Medium

19. The most effective mode for transporting grain or gravel would likely be: a) Truck b) Air c) Pipeline d) Rail e) None of the above Ans: d Response: page 191 Level: Easy

20. ________ transportation might be best utilized for products with a short product life cycle and unpredictable demand: a) Truck b) Air c) Water d) Rail e) None of the above Ans: b Response: page 191 Level: Easy

21. Transportation modes with high fixed costs include: a) Truck b) Air c) Water d) Rail e) b and d Ans: e Response: page 192 Level: Difficult

22. Transportation modes with high variable costs include: a) Truck

b) c) d) e)

Air Water Rail b and d

Ans: b Response: page 192 Level: Difficult

23. Functions of a warehouse or distribution center might include storage and: a) Mixing inventory assortments b) Demand planning c) Repair or assembly of products d) Supplier management e) a and c Ans: e Response: page 193-194 Level: Medium

24. Reconfiguring batches of products into smaller quantities or local delivery is known as: a) Break-bulk b) Just-in-time c) Cross-docking d) Inventory management e) All of the above Ans: c Response: page 194 Level: Medium

25. Companies that strategically coordinate their customers’ supply chains are known as: a) Suppliers b) 3PL providers c) Distributors d) Manufacturers e) None of the above Ans: b Response: page 197 Level: Easy

True/False

1. Logistics is the function responsible for getting products to the right place at the right time.

Ans: True Response: page 170 Level: Easy

2. Logistics focuses primarily on the “downstream” part of the supply chain.

Ans: False Response: page 179 Level: Medium

3. Significant investment in assets and infrastructure is a requirement of logistics.

Ans: True Response: page 180 Level: Easy

4. Logistics has evolved from being primarily inbound focused to reaching across the supply chain.

Ans: True Response: page 181 Level: Easy

5. Three types of logistics functions include military, business, and global.

Ans: False Response: page 182 Level: Medium

6. The inbound side of the logistics function works with marketing.

Ans: False Response: page 179 Level: Medium

7. The outbound side of the logistics function works with sourcing.

Ans: False Response: page 179 Level: Medium

8. Logistics has a significant financial impact on an organization because of the amount of capital expenditures required.

Ans: True Response: page 184 Level: Easy

9. A significant area of impact that logistics has on operations is inventory management.

Ans: True Response: page 182 Level: Medium

10. A “pull” system of demand is more unpredictable and requires logistics to be responsive to customers.

Ans: True Response: page 183 Level: Difficult

11. A “push” system of demand creates a more predictable environment the logistics function.

Ans: True Response: page 183 Level: Difficult

12. Logistics delivers the product to a customer location, so it does not have a close connection to marketing or customers.

Ans: False Response: page 183 Level: Medium

13. Product packaging is a decision that must be made between logistics, marketing, and operations.

Ans: True Response: page 184 Level: Easy

14. Logistics provides supply chain management with time, place, and packaging utility.

Ans: False Response: page 185 Level: Medium

15. Reverse logistics directly adds value to a company because returns are an “order qualifier” for customers.

Ans: False Response: page 186 Level: Difficult

16. Storage is typically viewed as the most important task of the logistics function.

Ans: False Response: page 187 Level: Medium

17. Selecting the best mode of transportation for a product requires an understanding of the product being transported and customer service strategy.

Ans: True Response: page 187 Level: Medium

18. Storage decisions require a firm to balance costs and responsiveness to customers.

Ans: True Response: page 187 Level: Easy

19. Order fulfillment is a responsibility of logistics that involves working directly with a customer.

Ans: True Response: page 189 Level: Medium

20. The concept of “place utility” is only focused on delivering products to the right location for the customer with little regard to cost.

Ans: False Response: page 189 Level: Difficult

21. When seeking to maximize economies of distance, logistics should utilize less-than-truckload shipments.

Ans: False Response: page 189 Level: Medium

22. Water and rail transportation modes are best utilized for shipping bulky, heavy shipments over long distances.

Ans: True Response: page 191 Level: Easy

23. Shipping by air transportation mode would be most ideal for pharmaceutical or high-tech products.

Ans: True Response: page 191 Level: Medium

24. In a cross-docking operation, products are never put into storage at the warehouse.

Ans: True Response: page 194 Level: Medium

25. Firms often outsource logistics functions to third-party logistics providers (3PL) because of their expertise and ability to provide cost savings to the firm.

Ans: True Response: page 197 Level: Easy

Essay

1. Briefly describe the four key areas of impact that logistics has on an organization.

Ans: 1.) Operational impact – logistics ensures that products are in the right quantities and places exactly when needed while balancing inventory needs, particularly challenging in JIT operations; 2.)

Financial impact – large amounts of capital expenditures are required (facilities, inventory, equipment, vehicles) Explain logistics performance in terms of ROA and ROI, how to increase ROA, etc.; 3.)

Marketing impact – logistics must understand customer requirements in terms or storage, delivery, and service needs; 4.) Packaging – logistics moves and handles the products and must understand requirements to ensure product integrity.

Response: page 182-184 Level: Medium

2. Briefly describe the reverse logistics process and its impact on a firm’s supply chain.

Ans: Reverse logistics is the process of moving products upstream from the customer back to manufacturers or suppliers, for reasons such as damage, obsolescence, overstock, or customer preference. Reverse logistics adds significant challenges and complexity to supply chains, but returning products has become an “order qualifier” for many customers. A firm must establish a reverse flow including transportation, storage, receiving, sorting, cash flows, etc. and must have different paths for

different types of returns. Firms must also comply with environmental laws for disposal/returns of certain products.

Response: page 185-187 Level: Medium

3. Select three distinct modes of transportation and describe the advantages and disadvantages of each mode, and provide an example of a product that would best fit each mode.

Ans: Truck – Advantages: most flexible and accessible mode; Disadvantages: high labor regulations and shortage of skilled drivers. Utilized in nearly every logistics movement and for any product. Water – Advantages: ability to transport large, heaving shipments at low cost. Disadvantage: very slow. Utilized for bulky items such as coal, large machinery, containers. Air – Advantages: speed; Disadvantages – high cost and restricted routes/airports. Utilized for light, small, high value, perishable products. Rail – Advantages: ability to transport large, heavy shipments at low cost. Disadvantages: slow and limited/inflexible infrastructure. Utilized for large, bulky products such as coal, grain. Pipeline – Advantages: effective for liquids and gas; Disadvantages – limited to small scope of products and requires special infrastructure Response: page 191 Level: Easy

File: ch08, Chapter 8: Forecasting and Demand Planning

Multiple Choice

1. a) b) c) d) e)

__________ is the process of predicting future events.

Planning Sales and Operations Planning Sourcing Forecasting Finance

Ans: d Response: page 205 Level: Easy

2. a) b) c) d) e)

The process of preparing for future events is__________: Planning Sales and Operations Planning Sourcing Forecasting Finance

Ans: a Response: page 205 Level: Easy

3. a) b) c) d) e)

Planning decisions include: Resource scheduling Acquiring new resources Whether to outsource Sales plans a and b

Ans: e Response: page 206 Level: Medium

4. When determining future resource needs, factors that should be considered include:

a) b) c) d) e)

Growth of supply chain management Impact of new technologies Competitor actions Existing distribution channels b and c

Ans: e Response: page 206 Level: Medium

5. a) b) c) d) e)

The process of influencing demand is called: Sales and Operations Planning CPFR Demand management Forecasting Planning

Ans: c Response: page 206 Level: Easy

6. a) b) c) d) e)

Forecasting impacts the operations function in the following ways: Inventory levels Sources of supply Advertising and promotions Asset acquisition None of the above

Ans: a Response: page: 208 Level: Medium

7. a) b) c) d) e)

An outcome of supply chain partners creating independent forecasts could be: Improved inventory management Improved coordination Bullwhip effect Increased sales a and c

Ans: c Response: page 209 Level: Difficult

8. a) b) c) d) e)

Ways to mitigate the bullwhip effect include: Data sharing Collaborative forecasting Supplier management Independent forecasting a and b

Ans: e Response: page 209 Level: Difficult

9. a) b) c) d) e)

__________ forecasts are more accurate than individual forecasts.

Qualitative Quantitative Stable Aggregate Causal

Ans: d Response: page 210, 234 Level: Difficult

10. Forecasts are critical to predicting future events, but they are rarely _______ : a) Useful b) Accurate c) Perfect d) Quantitative e) Qualitative Ans: c Response: page 210 Level: Easy

11. Forecasts are more accurate for _________ time horizons: a) Short b) Medium c) Long d) Annual e) None of the above

Ans: a Response: page 211 Level: Medium

12. Examples of data patterns that must be considered when forecasting include: a) Cluster b) Horizontal c) Cycle d) Qualitative e) b and c Ans: e Response: page 211 Level: Medium

13. A ________ data pattern is commonly seen an utilized for commodity products: a) Trend b) Seasonal c) Cycle d) Horizontal e) Cluster Ans: d Response: page 211 Level: Difficult

14. The type of data pattern that emerges in times of economic fluctuations is: a) Trend b) Seasonal c) Cycle d) Horizontal e) Level Ans: c Response: page 211 Level: Medium

15. Sophisticated and costly forecasting models would be most appropriate for which product: a) Paper clips

b) c) d) e)

Pencils Smartphones Diapers None of the above

Ans: c Response: page 212 Level: Medium

16. Advantages of quantitative forecasting methods include: a) Objectivity b) Responsiveness c) Includes ‘inside’ information d) Expensive e) b and c Ans: a Response: page 215 Level: Medium

17. Market research is an example of ___________ forecasting method: a) Quantitative b) Seasonal c) Jury of executive opinion d) Causal e) Qualitative Ans: e Response: page 215 Level: Medium

18. Examples of quantitative forecasting models include: a) Time series b) Delphi c) Causal d) Mean e) a and c Ans: e Response: page 216-217 Level: Medium

19. The mean and moving average forecasting models are typically best for _________ products: a) Innovative b) Mature c) New d) Functional e) None of the above Ans: b Response: page 217-218 Level: Difficult

20. __________ analysis measures the relationship between two or more variables on the forecast: a) Qualitative b) Quantitative c) Time series d) Linear Regression e) Delphi Ans: d Response: page 224 Level: Medium

21. Two measures of forecast accuracy include: a) Mean deviation b) Mean absolute deviation c) Mean square error d) a and c e) b and c Ans: e Response: page 228 Level: Easy

22. Joint forecasting between supply chain partners is known as: a) Vendor managed inventory b) Collaborative planning, forecasting, and replenishment c) Early supplier involvement d) Sales and operations planning e) None of the above

Ans: b Response: page 230 Level: Easy

23. Benefits of joint forecasting between supply chain partners include: a) Risk sharing b) Improve customer value c) Higher sales d) Decrease inventory e) All of the above Ans: e Response: page 230 Level: Medium

24. ______________ is a process by which supply chain functions within an organization collaborate to match supply and demand: a) Vendor managed inventory b) Collaborative planning, forecasting, and replenishment c) Early supplier involvement d) Sales and operations planning e) None of the above Ans: d Response: page 232 Level: Easy

25. Benefits of sales and operations planning include: a) Understanding of trade-offs in an organization b) Balanced metrics c) Collaboration d) All of the above e) None of the above Ans: d Response: page 233 Level: Easy

True/False

1. Forecasting is the process of predicting future events.

Ans: True Response: page 205 Level: Easy

2. The planning process allows a business to be prepared for future events.

Ans: True Response: page 205 Level: Easy

3. Forecasting and planning are especially important given customers’ increasing demands for responsiveness.

Ans: True Response: page 206 Level: Medium

4. Understanding how new market opportunities and competitors could impact a firm are part of the planning decision process.

Ans: True Response: page 206 Level: Medium

5. Advertising and promotions are examples of demand management.

Ans: True Response: page 206 Level: Easy

6. The forecasting process cam impact long range and tactical plans.

Ans: True Response: page 208

Level: Easy

7. An example of the impact of forecasting on marketing is the decision to enter a new market.

Ans: True Response: page 208 Level: Easy

8. An example of the impact of forecasting on finance is scheduling capacity in the plant.

Ans: False Response: page 208 Level: Medium

9. It is important for all members of a supply chain to develop independent forecasts.

Ans: False Response: page 208 Level: Difficult

10. The bullwhip effect is a result of collaborative forecasting and planning.

Ans: False Response: page 209 Level: Difficult

11. Sharing demand and forecast data with supply chain partners can help mitigate the bullwhip effect.

Ans: True Response: page 209 Level: Medium

12. A principle of forecasting is that uncertainty cannot be tolerated.

Ans: False Response: page 210

Level: Medium

13. Aggregate forecasts are more accurate than individual forecasts.

Ans: True Response: page 210 Level: Medium

14. Longer term forecasts are more accurate because a business has more time to adjust the forecast.

Ans: False Response: page 211 Level: Difficult

15. Seasonality and cycles are examples of forecasting data types.

Ans: True Response: page 211 Level: Easy

16. A horizontal data pattern typically occurs with demand patterns for a new product.

Ans: False Response: page 211 Level: Difficult

17. When selecting a forecasting model, a key consideration relates to the type of data available.

Ans: True Response: page 212 Level: Easy

18. When forecasting ‘functional’ products, it is typically best to invest in a sophisticated model.

Ans: False Response: page 212

Level: Difficult

19. Qualitative forecasting methods rely heavily on data sets.

Ans: False Response: page 214 Level: Easy

20. Quantitative forecasting methods tend to be more accurate than qualitative methods.

Ans: True Response: page 214 Level: Easy

21. Qualitative forecasting methods have the advantage of being objective and consistent.

Ans: False Response: page 215 Level: Medium

22. Responsiveness to changes in the environment is an advantage of qualitative forecasting methods.

Ans: True Response: page 215 Level: Medium

23. The Delphi method is an example of a qualitative forecasting method.

Ans: True Response: page 216 Level: Easy

24. A time series forecasting model evaluates data points over a period of time.

Ans: True Response: page 216

Level: Easy

25. Utilizing the mean forecasting model is best for mature, stable products.

Ans: True Response: page 217 Level: Medium

26. Exponential smoothing allows a forecast to put greater or less weight on certain data points.

Ans: True Response: page 220 Level: Medium

27. The key idea of regression analysis is the ability to measure the relationship between two or more variables on the forecast.

Ans: True Response: page 224 Level: Medium

28. Determining the accuracy of a forecast is as important as the forecast itself.

Ans: True Response: page 227 Level: Medium

29. CPFR is a five step process by which supply chain partners generate joint forecasts.

Ans: True Response: page 230 Level: Medium

30. Sales and Operations Planning is a process by which supply chain functions within an organization collaborate to match supply and demand.

Ans: True Response: page 232 Level: Medium Essay

1. The ABC Company sells computers. Monthly sales for a six-month period are as follows: Month Jan Feb Mar April May June

Sales 18,000 22,000 16,000 18,000 20,000 24,000

Compute the sales forecast for July using the following approaches: a. Mean b. Four month simple moving average c. Exponential smoothing with an alpha smoothing constant = .70 and a June forecast of 22,000 Ans: 1a.) Mean: 18,000 + 22,000 + 16,000 + 18,000 + 20,000 + 24,000/6 = 19,667 1b.) Four month simple moving average: 16,000 + 18,000 + 20,000 + 24,000/4 = 19,500 1c.) Exponential smoothing: .7(24,000) + .3(22,000) = 23,400 Response: page 217-220 Level: Medium

2. The owner of the Chocolate Outlet store wants to forecast chocolate demand. Demand for the preceding six weeks is shown in the following table: Week 1 2 3 4 5

Demand (pounds) 68,800 71,000 75,500 71,200 65,000

6

60,000

a) Compute the demand (pounds) forecast for week 7 using the following approaches: a. Mean b. Three week weighted moving average using .40 for week 6; .40 for week 5; and .20 for week 4 c. Exponential smoothing with an alpha smoothing constant = .60 and a week 6 forecast of 70,000 1a.) Mean: 68,800 + 71,000 + 75,500 + 71,200 + 65,000 + 60,000/6 = 68,550 1b.) Three week weighted moving average = 60,000(.4) + 65,000(.4) + 71,200(.2) = 64,240 1c.) Exponential smoothing: .6(60,000) + .4(70,000) = 64,000 Response: page 217-220 Level: Difficult

File: ch09, Chapter 9: Inventory Management

Multiple Choice

1. a) b) c) d) e)

The quantities of all products or materials in stock are known as ___________.

Finished goods Raw materials Inventory Components Buffer

Ans: c Response: page 243 Level: Easy

2. ________ inventory represents all activities carried out in advance of a customer’s arrival. a) Finished goods b) Raw materials c) Buffer d) Components e) Service Ans: e Response: page 244 Level: Medium

3. a) b) c) d) e)

A form of manufacturing inventory is: Skills Office space Work-in-process Raw materials c and d

Ans: e Response: page 243 Level: Medium: Difficult

4. Inventory policy addresses the basic questions of _____ and _____ to order: a) Where and how much

b) c) d) e)

Which supplier and how much How many suppliers and how much When to order and how much None of the above

Ans: d Response: page 244 Level: Easy

5. a) b) c) d) e)

Reasons to carry inventory include: Balance supply and demand Cover lead time demand Operational independence Buffer uncertainty All of the above

Ans: e Response: page 245-246 Level: Easy

6. a) b) c) d) e)

The inventory utilized during a production cycle is known as: Cycle stock Anticipation inventory Pipeline inventory MRO None of the above

Ans: a Response: page: 247 Level: Easy

7. a) b) c) d) e)

In order to cushion against uncertainties in demand companies carry _______ inventory: Cycle stock Anticipation inventory MRO Safety stock Pipeline inventory

Ans: d Response: page 247 Level: Easy

8. a) b) c) d) e)

When marketing is planning a large promotion, a company might stock _______ inventory: Cycle stock Anticipation inventory Pipeline inventory MRO None of the above

Ans: b Response: page 247 Level: Easy

9. a) b) c) d) e)

__________ inventory must be accounted for even though it might not be in transit and not in stock.

Cycle stock Anticipation inventory MRO Safety stock Pipeline inventory

Ans: e Response: page 247 Level: Easy

10. Products that are used indirectly are known as ____________ inventory: a) Cycle stock b) Anticipation inventory c) MRO d) Safety stock e) Pipeline inventory Ans: c Response: page 247 Level: Medium/Easy

11. Costs that vary depending on the amount of inventory in stock are known as: a) Ordering b) Holding c) Shortage d) Interest e) None of the above

Ans: b Response: page 248 Level: Medium

12. Taxes and opportunity costs of capital are examples of: a) Fixed costs b) Ordering costs c) Holding costs d) Shortage costs e) None of the above Ans: c Response: page 248 Level: Medium

13. _________ costs are generally fixed and include all aspects of procuring an item. a) Variable costs b) Ordering costs c) Holding costs d) Shortage costs e) None of the above Ans: b Response: page 248 Level: Medium

14. The costs of being out of stock and lost customer goodwill are known as: a) Fixed costs b) Ordering costs c) Holding costs d) Shortage costs e) None of the above Ans: d Response: page 249 Level: Medium

15. The fixed-order quantity inventory system assumes a ___________ demand rate. a) Variable b) Constant

c) Accelerated d) Intermittent e) Lagging Ans: b Response: page 250 Level: Medium

16. A distinction of the _____________ inventory system is that inventory is monitored on a continual basis. a) Fixed-time period b) EOQ c) Periodic d) Fixed-order quantity e) None of the above Ans: d Response: page 251 Level: Difficult

17. In a _____________ inventory system, the order quantities vary during each period. a) Fixed-time period b) EOQ c) Periodic d) Fixed-order quantity e) None of the above Ans: a Response: page 251 Level: Medium

18. The fixed-order quantity inventory system is optimal for ____________ products: a) Commodity b) Functional c) High-value d) End of life e) All of the above Ans: c Response: page 252 Level: Medium

19. The fixed-period inventory system requires holding more __________ inventory: a) Cycle b) Safety stock c) Pipeline d) Anticipation e) MRO Ans: b Response: page 253 Level: Difficult

20. When seeking a responsive inventory system, the optimal choice would be: a) Fixed-time period b) EOQ c) Periodic d) Fixed-order quantity e) None of the above Ans: d Response: page 252 Level: Difficult

21. ___________ demand refers to the demand for components or subassemblies. a) Independent b) Variable c) Manufacturing d) Dependent e) None of the above Ans: d Response: page 263 Level: Easy

22. An example of an item at an automobile manufacturer that would call for independent demand analysis is: a) Automobile b) Engine c) Windshield d) Tires e) Steel

Ans: a Response: page 263 Level: Medium

23. The relationship between independent and dependent demand for a product is typically outlined in: a) EOQ model b) Bill of materials c) Sales and operations plan d) MRP e) None of the above Ans: b Response: page 264 Level: Easy

24. The _______ inventory classification model allows a company to classify inventory based on degree of importance. a) VMI b) EOQ c) ABC d) MRP e) ROP Ans: c Response: page 265 Level: Easy

25. A significant advantage of vendor managed inventory (VMI) is: a) More control for the vendor b) Less financial investment for the customer c) Collaboration between vendor and customer d) All of the above e) None of the above Ans: d Response: page 269 Level: Easy

True/False

1. Inventory refers to the quantities of products or materials in stock.

Ans: True Response: page 243 Level: Easy

2. Inventory represents cash that cannot be utilized for other investments.

Ans: True Response: page 243 Level: Medium

3. Only manufacturing organizations carry inventory.

Ans: False Response: page 243 Level: Easy

4. Work-in-process is a form of manufacturing inventory.

Ans: True Response: page 243 Level: Difficult

5. In service organizations, people can be considered inventory.

Ans: True Response: page 244 Level: Medium

6. An organization’s inventory policy relates to where and how much to order.

Ans: False

Response: page 244 Level: Medium

7. Inventory is costly, so the best policy is to carry little to no inventory.

Ans: False Response: page 245 Level: Difficult

8. It is necessary to carry inventory to cover the time between order of product and delivery.

Ans: True Response: page 245 Level: Medium

9. It may make sense for companies to hold larger quantities of inventory because of the benefits of economic purchase orders.

Ans: True Response: page 246 Level: Medium

10. Cycle stock inventory serves the purpose of providing a cushion for uncertainties in demand.

Ans: False Response: page 247 Level: Difficult

11. Companies may invest in anticipation inventory in preparation for a promotion or event.

Ans: True Response: page 247 Level: Easy

12. Holding costs of inventory are fixed depending on the amount of inventory in stock.

Ans: False Response: page 248 Level: Medium

13. The expenses of insuring product and product obsolescence are examples of holding costs.

Ans: True Response: page 248 Level: Easy

14. Ordering costs are typically fixed and can be reduced by ordering less frequently.

Ans: True Response: page 248 Level: Medium

15. The cost of a stock out could be greater than holding and ordering costs combined.

Ans: True Response: page 250 Level: Difficult

16. The fundamental questions for an inventory system include how much and when to order.

Ans: True Response: page 250 Level: Medium

17. A key aspect of the fixed-order quantity inventory system is defining a reorder point.

Ans: True Response: page 250 Level: Medium

18. The fixed-order quantity inventory system is also known as the EOQ model.

Ans: True Response: page 251 Level: Easy

19. Order quantities are fixed in the fixed-time period inventory system.

Ans: False Response: page 251 Level: Difficult

20. The optimal inventory system for high value items is the fixed-time period system.

Ans: False Response: page 252 Level: Difficult

21. When responsiveness is important, the optimal inventory system is the fixed-order quantity system.

Ans: True Response: page 252 Level: Difficult

22. The fixed-period inventory system typically requires holding greater safety stock.

Ans: True Response: page 253 Level: Difficult

23. The EOQ should minimize the sum of ordering and shortage costs.

Ans: False Response: page 254 Level: Medium

24. The reorder point (ROP) should be established to cover demand during lead time plus safety stock.

Ans: True Response: page 256 Level: Medium

25. Demand for a finished product is known as dependent demand.

Ans: False Response: page 263 Level: Easy

26. Dependent demand in a manufacturing organization relates to the demand for components or subassemblies.

Ans: True Response: page 263 Level: Easy

27. Companies utilize the EOQ model to derive quantities for dependent demand items.

Ans: False Response: page 264 Level: Difficult

28. In ABC inventory analysis, “C” items do not typically require managerial involvement.

Ans: True Response: page 266 Level: Easy

29. ABC analysis is useful to different varying service levels to different products.

Ans: True Response: page 266 Level: Medium

30. One advantage of vendor managed inventory is that the vendor has more control over its products.

Ans: True Response: page 269 Level: Easy

Essay

1. Briefly define holding costs and inventory costs, and explain the relationship between the two when defining an inventory policy Ans: Holding costs are variable and include all costs that are applied to inventory held in stock, such as storage/warehouse, handling, insurance, obsolescence, depreciation, taxes, opportunity costs. Ordering costs are generally fixed and include costs of placing an order, such as clerical costs, order tracking, order receiving. Reducing one cost will result in an increase in the other. A company must find the optimal balance between the costs, typically by computing the economic order quantity (EOQ).

Response: page 248; 253 Level: Medium

2. Briefly describe the concept of the ABC inventory classification model.

Ans: The ABC classification model classifies inventory based on degree of importance, allowing a company to give priority to and closely manage high value (A) items, while spending less managerial time and expense on mid value (B) and low value(C) items. ABC analysis helps determine optimal order policies, where the most sophisticated inventory systems are used for A items.

Response: page 265-266 Level: Easy

File: ch10, Chapter 10: Lean Systems and Six-Sigma Quality

Multiple Choice

1. a) b) c) d) e)

______ is a management approach that seeks to utilize resources as efficiently as possible.

Lean Sales and Operations Planning Six Sigma CPFR a and c

Ans: e Response: page 275 Level: Easy

2. a) b) c) d) e)

Outcomes of implementing a lean philosophy in an organization include: Cost reductions Improved customer satisfaction Improved quality All of the above None of the above

Ans: d Response: page 275 Level: Easy

3. a) b) c) d) e)

Core tenets of the lean philosophy include: Complexity Waste reduction Functional view Statistical process control a and b

Ans: b Response: page 276 Level: Medium

4. In a lean philosophy, all process are driven by the goal to:

a) b) c) d) e)

Reduce costs Develop new products Improve profits Serve the customer b and c

Ans: d Response: page 276 Level: Medium

5. a) b) c) d) e)

Lean emphasizes __________ solutions to supply chain problems: Complex Expensive Simple Managing Functional

Ans: c Response: page 277 Level: Medium

6. a) b) c) d) e)

The tenet that waste can only be eliminated when it can be clearly identified is: Simplicity Visibility Flexibility Continuous improvement None of the above

Ans: b Response: page: 277 Level: Easy

7. a) b) c) d) e)

Of the three elements of lean, lean production focuses on: Just-in-time systems Pull production systems Operations systems Delivery systems All of the above

Ans: e Response: page 278-279 Level: Medium

8. a) b) c) d) e)

Lean production utilizes a __________ production system: Push Quality Pull Complex a and d

Ans: c Response: page 279 Level: Medium

9. a) b) c) d) e)

In a ________ production system, products are made in anticipation of demand.

Push Pull Stable Variable Lean

Ans: a Response: page 279 Level: Difficult

10. Small lot size production must be balanced with the costs of ___________: a) Inventory b) Labor c) Setup time d) Variation e) Transportation Ans: c Response: page 282 Level: Difficult

11. The role of management in an organization that practices a lean philosophy is: a) Disciplining employee b) Enforcing TQM guidelines c) Ensuring quality processes are followed d) Facilitating cultural change e) None of the above

Ans: d Response: page 284 Level: Easy

12. Meeting and exceeding customer expectations is the definition of: a) Operations b) Quality c) Marketing d) Kaizan e) a and b Ans: b Response: page 285 Level: Medium

13. Costs of quality incurred when testing and evaluating products is known as: a) Prevention costs b) Appraisal costs c) Internal failure costs d) External failure costs e) None of the above Ans: b Response: page 286 Level: Medium

14. Costs of quality incurred when a customer returns a defective product is known as: a) Prevention costs b) Appraisal costs c) Internal failure costs d) External failure costs e) None of the above Ans: d Response: page 286 Level: Medium

15. The ________ quality tool is used to identify causes of a problem: a) Fishbone diagram

b) c) d) e)

Flowchart Checklist Control chart Scatter diagram

Ans: a Response: page 286 Level: Easy

16. _________ is a quality tool that shows the relationship to two variables: a) Fishbone diagram b) Flowchart c) Checklist d) Control chart e) Scatter diagram Ans: e Response: page 288 Level: Medium

17. One of the most simple, yet highly effective quality tools is a: a) Fishbone diagram b) Flowchart c) Checklist d) Control chart e) Scatter diagram Ans: c Response: page 288 Level: Medium

18. ISO 9000 quality standards were developed in response to: a) Increasing international trade b) Excessive product failures c) Government intervention d) The need for universal standards e) a and d Ans: e Response: page 288 Level: Medium

19. in Statistical Quality Control (SQC), ________ determines whether a batch of goods should be accepted or rejected: a) Descriptive statistics b) Statistical Process Control (SPC) c) Acceptance sampling d) TQM e) None of the above Ans: c Response: page 290 Level: Difficult

20. The mean, standard deviation, and range are examples of: a) Descriptive statistics b) SPC c) Acceptance sampling d) TQM e) None of the above Ans: a Response: page 290 Level: Easy

21. Variation that can be identified and changed is known as: a) Random b) Assignable c) Common d) Visible e) Capable Ans: b Response: page 291 Level: Easy

22. Evaluating a process to determine if it meets established quality standards is known as: a) SPC b) Value stream mapping c) Pareto analysis d) Sales and operations planning e) Process capability

Ans: e Response: page 291 Level: Medium

23. A range of acceptable quality that has been tested and established is known as: a) Value stream mapping b) Histogram c) Product specifications d) Tolerances e) c and d Ans: e Response: page 292 Level: Easy

24. Once a process is ‘in control,’ the tool used to continuously monitor the process is a: a) Pareto diagram b) Histogram c) Flowchart d) Control chart e) None of the above Ans: d Response: page 296 Level: Easy

25. The tool used to measure a process whose characteristics consist of attributes is knows as: a) t-chart b) Histogram c) p-chart d) Checklist e) None of the above Ans: c Response: page 297 Level: Medium

26. A Six Sigma philosophy includes the following: a) Zero defects

b) c) d) e)

Rigorous measurement Involves every aspect of the organization Extensive training All of the above

Ans: e Response: page 298-300 Level: Easy

27. Two fundamental aspects of Six Sigma methodology include: a) People and processes b) Data and charts c) SQC and SPC d) Technical tools and people e) None of the above Ans: d Response: page 299-300 Level: Medium

28. A valuable tool in Six Sigma supply chains used to identify system improvements is knows as: a) Value stream mapping b) Histogram c) Pareto analysis d) Flowcharts e) Checklists Ans: a Response: page 302 Level: Medium

29. The operations function can be impacted by Six Sigma in the following ways: a) Pull production systems b) Cycle time reductions c) Increased inventory turns d) All of the above e) None of the above Ans: d Response: page 303 Level: Medium

30. ____ ____is a critical tool needed for supply chain partners to achieve the benefits of Six Sigma. a) Pull production systems b) Value stream mapping c) SPC d) Information technology e) Kaizan Ans: d Response: page 302 Level: Difficult

True/False

1. The lean management approach seeks to utilize resources as efficiently as possible.

Ans: True Response: page 275 Level: Easy

2. A benefit of lean implementation is increased customer service.

Ans: True Response: page 275 Level: Easy

3. Lean is primarily a production/manufacturing process.

Ans: False Response: page 275 Level: Medium

4. Eliminating waste is at the core of the lean philosophy, which includes anything that does not add value to the customer.

Ans: True Response: page 275

Level: Easy

5. In the lean philosophy, all processes are driven by the overriding goal to reduce costs.

Ans: False Response: page 276 Level: Difficult

6. While beneficial to an organization, lean solutions are typically complex and expensive.

Ans: False Response: page 277 Level: Medium

7. An emphasis on continuous improvement is known as kaizen Ans: True Response: page 277 Level: Easy

8. Utilizing multiple machines for different functions is an example of lean flexibility.

Ans: False Response: page 277 Level: Medium

9. The ‘lean production’ element of lean is responsible for a company’s operations and delivery system.

Ans: True Response: page 278 Level: Medium

10. Lean production utilizes a “push” production system.

Ans: False

Response: page 279 Level: Medium

11. Total Quality Management (TQM) allows for an acceptable number of defects in a product or process.

Ans: False Response: page 285 Level: Difficult

12. Respect for people is a key element of lean and typically only applies to the internal operations of a company.

Ans: False Response: page 279 Level: Difficult

13. In “push” production systems, goods are produced based on a forecast.

Ans: True Response: page 279 Level: Medium

14. Visual signals used in lean production systems are known as kanbans.

Ans: True Response: page 281 Level: Easy

15. Small lot productions decrease flexibility because of the risk of insufficient stock on hand.

Ans: False Response: page 282 Level: Difficult

16. In order to effectively achieve small lot production, companies must reduce production time.

Ans: False Response: page 282 Level: Difficult

17. “Leveling” the production schedule reduces variation in the production process.

Ans: True Response: page 283 Level: Difficult

18. Lean organizations typically have strict hierarchical management structures.

Ans: False Response: page 283 Level: Medium

19. A key requirement of lean implementation is that workers are trained to have cross-functional skill sets.

Ans: True Response: page 283 Level: Easy

20. The primary role of management in a lean organization is to ensure quality processes are strictly followed.

Ans: False Response: page 284 Level: Easy

21. The lean philosophy emphasizes using multiple supplier sources to reduce risk.

Ans: False Response: page 284 Level: Difficult

22. Meeting and exceeding customer expectations is today’s definition of quality.

Ans: True Response: page 285 Level: Easy

23. Scrap and rework are examples of appraisal costs of quality.

Ans: False Response: page 286 Level: Medium

24. A pareto analysis is a quality tool used to prioritize problems.

Ans: True Response: page 288 Level: Easy

25. The mean and standard deviation are tools used to describe characteristics of a distribution.

Ans: True Response: page 290 Level: Medium

26. Variation that can be identified and managed is knows as common variation.

Ans: False Response: page 291 Level: Medium

27. If a process is not ‘capable’ then quality standards are useless.

Ans: True Response: page 291-292 Level: Medium

28. Processes are known to be in a state of control when data points exceed the normal range of variation.

Ans: False Response: page 296 Level: Difficult

29. The goal of Six Sigma is to achieve “zero defects.”

Ans: True Response: page 299 Level: Easy

30. Cycle time and inventory are key aspects of operations that can be improved with Six Sigma methodologies.

Ans: True Response: page 303 Level: Medium

Essay

1. Describe the two fundamental aspects of Six Sigma methodology.

Ans: 1.) The use of technical tools to identify and eliminate causes of quality problems; Six Sigma is heavily reliant on quantitative and data-driven analysis. 2.) People involvement at all levels of the organization is required; all employees receive Six Sigma training and must be engaged in the philosophy.

Response: 299-300 Level: Easy

2. Describe the five step plan around which a Six Sigma approach is organized.

Ans: 1. Define the quality problem in the process; 2. Measure the current performance of the process; 3.) Analyze the process to identify the root cause of the problem; 4.) Improve the process by eliminating the root causes of the problem; 5.) Control the process to ensure the improvements continue

Response: page 300 Level: Medium

3. Briefly describe the steps involved in developing a lean Six Sigma supply chain.

Ans: 1.) Jointly define value: cross-functional team of supply chain partners creates a joint vision of the critical attributes to product and delivery process, along with key customer value propositions; 2.)

Conduct supply chain capability analysis: establish how well current supply chain structure meets customer requirements; analyze entire supply chain as a system and identify constraints; 3.) Develop key financial and operating metrics: understand which metrics are the most important barometers of supply chain efficiency and ensure an understanding of the relationships between metrics; 4.) Identify and implement system improvements: all supply chain partners work together to identify and eliminate waste and reduce costs. It should be noted that transparency, information sharing, and information technology are critical for success.

Response: page 301-302 Level: Medium

File: ch11, Chapter 11: Supply Chain Relationship Management

Multiple Choice

1. Because of its overlay across all supply chain functions____________ is the most important aspect of SCM. a) Operations b) Relationship management c) Marketing d) CPFR e) Six Sigma Ans: b Response: page 313 Level: Easy

2. a) b) c) d) e)

SCM relationships that do not require significant management are: Alliances Partnerships Non-strategic Transactions Strategic None of the above

Ans: c Response: page 314, 316-317 Level: Medium

3. a) b) c) d) e)

______________ is the degree of responsibility assigned to a supplier.

Criticality Visibility Dependency Scope a and b

Ans: d Response: page 314 Level: Medium

4. If a company outsources all of its manufacturing to a supplier, that relationship would have a ______ level of scope. a) Low b) Medium c) High Ans: c Response: page 315 Level: Easy

5. a) b) c) d) e)

A factor that typically determines the scope of a buyer-supplier relationship is: Cost Quality Degree of customization Lead time Profitability

Ans: c Response: page 315 Level: Difficult

6. A large cope of tasks provided by a SCM partner can be beneficial because it allows a company to focus on its ___________: a) Profitability b) Customers c) Suppliers d) Core competencies e) None of the above Ans: d Response: page: 315 Level: Difficult

7. When a supplier is the only source of a component or service, it would have a high level of ________ to the buyer. a) Scope b) Profitability c) Criticality d) Proximity e) All of the above Ans: c

Response: page 315 Level: Medium

8. a) b) c) d) e)

As the level of criticality increases, the relationship between buyer and supplier becomes more: Transactional Contractual Unbalanced Relational a and d

Ans: d Response: page 316 Level: Easy

9. a) b) c) d) e)

When scope and criticality are low, the type of relationship would be: Non-strategic transactional Partnership Alliance Contractual None of the above

Ans: a Response: page 316 Level: Easy

10. In a relationship where scope is high but criticality is low, the relationship would be categorized as: a) Non-strategic transactional b) Partnership c) Alliance d) Contractual e) None of the above Ans: d Response: page 317 Level: Easy

11. When the component being supplied is low in scope yet critical to the manufacturing of a product, the relationship would be categorized as: a) Non-strategic transactional b) Partnership

c) Alliance d) Contractual e) None of the above Ans: b Response: page 317 Level: Easy

12. An _______________ is the most comprehensive and customized buyer-supplier relationship. a) Non-strategic transactional b) Partnership c) Alliance d) Contractual e) None of the above Ans: c Response: page 318 Level: Easy

13. Trust-based relationships can improve performance for the following reasons: a) Sharing joint objectives b) Coordination is easier to implement c) Elimination of duplicate efforts d) All of the above e) None of the above Ans: d Response: page 320 Level: Easy

14. Power-based relationships between buyer and supplier can result in: a) Shared objectives b) Information sharing c) Decreased profitability d) Greater coordination e) None of the above Ans: c Response: page 320 Level: Easy

15. When building trust between supply chain partners, typically the initial step is to establish a: a) Relationship b) Partnership c) Contractual agreement d) Alliance e) None of the above Ans: c Response: page 321 Level: Medium

16. The first step in developing a trust-based relationship between buyer and supplier is: a) Identify operational roles b) Create a contract c) Design a conflict resolution process d) Assess the relationship e) None of the above Ans: d Response: page 322 Level: Medium

17. CPFR is an example of __________ interdependence in a relationship. a) Sequential b) Mutual c) Reciprocal d) Transactional e) Contractual Ans: c Response: page 322 Level: Difficult

18. __________ interdependence in a trust-based relationship is more likely to result in greater profitability for all SCM partners. a) Sequential b) Mutual c) Reciprocal d) Transactional e) Contractual

Ans: c Response: page 323 Level: Difficult

19. The following attributes are important to the success of a trust-based relationship between parties: a) Low visibility b) Equity c) Commitment d) Limited information sharing e) b and c Ans: e Response: page 324 Level: Easy

20. One of the biggest problems that arises in SCM relationship management is: a) Profit sharing b) Visibility c) Coordination d) Conflict management e) Contract management Ans: d Response: page 326 Level: Medium

21. The global nature of SCM relationships, with different cultures, can create _______ conflict between SCM partners. a) Relational b) Data c) Interest d) Structural e) Value Ans: e Response: page 326 Level: Medium

22. Unequal power and authority in SCM relationships can be a source of _________ conflict. a) Relational

b) c) d) e)

Data Interest Structural Value

Ans: d Response: page 326 Level: Medium

23. The most informal and inexpensive dispute resolution procedure is: a) Litigation b) Arbitration c) Mediation d) Negotiation e) Segmentation Ans: d Response: page 327, 329 Level: Easy

24. _______ is an example of an adversarial negotiating tactic. a) Listening b) Inventing c) Anchoring d) Asking e) b and c Ans: c Response: page 333-335 Level: Difficult

25. An example of a problem solving tactic used in negotiations is: a) Inventing b) Referencing c) Anchoring d) Recipricity e) a and b Ans: e Response: page 335-337 Level: Medium

True/False

1. The need to coordinate and collaborate across global supply chains makes relationship management one of the most important aspects of SCM. Ans: True Response: page 313 Level: Easy

2. Poor communication has the potential to cause failure in a supply chain.

Ans: True Response: page 313 Level: Easy

3. SCM is primarily about the management of suppliers across complex networks of companies.

Ans: False Response: page 314 Level: Medium

4. All SCM relationships should be treated in a similar manner.

Ans: False Response: page 314 Level: Medium

5. Transactional relationships require significant relationship management.

Ans: False Response: page 316 Level: Medium

6. Companies should segment relationships across the supply chain to determine necessary levels of management.

Ans: True Response: page 314 Level: Easy

7. Scope and criticality are the two defining dimensions of supply chain relationships.

Ans: True Response: page 314 Level: Medium

8. Criticality refers to the degree of responsibility assigned to a supplier.

Ans: False Response: page 314 Level: Medium

9. Scope refers to the degree of responsibility assigned to a supplier.

Ans: False Response: page 314 Level: Medium

10. When a supply chain member encompasses small scope, the risks of that relationship are small.

Ans: True Response: page 315 Level: Medium

11. The greater the criticality of a supplier relationship, the smaller the risk.

Ans: False Response: page 315 Level: Easy

12. For a supplier that provides a commodity product, relationship management can be minimal.

Ans: True Response: page 315 Level: Difficult

13. As criticality of the supplier relationship increases, the relationship becomes more contractual.

Ans: False Response: page 316 Level: Difficult

14. In a contractual relationship, scope is high and criticality is low.

Ans: True Response: page 317 Level: Difficult

15. Just-in-time relationships are often characterized as partnerships.

Ans: True Response: page 317 Level: Difficult

16. The most comprehensive buyer-supplier relationship is a partnership.

Ans: False Response: page 318 Level: Medium

17. Alliances typically involve products that are highly customized and processes that require flexibility to business needs of the client/customer.

Ans: True Response: page 318 Level: Easy

18. Companies should strive to establish multiple alliances because close relationships are always beneficial.

Ans: False Response: page 318 Level: Difficult

19. In trust-based relationships, competition between companies typically exists.

Ans: False Response: page 319 Level: Easy

20. The development of joint objectives is a benefit of power-based relationships.

Ans: False Response: page 320 Level: Medium

21. When designing and assessing a trust-based relationship, equity is a key component.

Ans: True Response: page 324 Level: Easy

22. A CPFR program is a good example of sequential operational roles and processes.

Ans: False Response: page 322 Level: Medium

23. For companies in an alliance relationship, it is not necessary to have dispute resolution procedures in place.

Ans: False Response: page 327

Level: Medium

24. When resolving a conflict through mediation, the parties involved retain significant control of the resolution process.

Ans: True Response: page 329 Level: Medium

25. Litigation is the most inexpensive, quick, and amicable conflict resolution strategy.

Ans: False Response: page 328-329 Level: Medium

26. Leverage refers to the amount of bargaining power in a negotiation strategy.

Ans: True Response: page 331 Level: Easy

27. When considering the negotiator’s dilemma, distributive opportunities are mutually beneficial.

Ans: False Response: page 332 Level: Difficult

28. In effective negotiations, both adversarial and problem-solving tactics may be appropriate and effective.

Ans: True Response: page 333-337 Level: Easy

29. The keiretsu concept is a strategy to diffuse power differentials in a relationship and allows all parties to grow and prosper.

Ans: True Response: page 337-338 Level: Medium

30. In SCM relationships, the most effective and fair division of power is an equal 50-50 split.

Ans: False Response: page 339 Level: Easy

Essay

1. Describe and provide an example of the two key dimensions that differentiate and define how supply chain relationships are managed.

Ans: 1.) Scope and criticality. Scope refers to the degree of responsibility assigned to a supplier. A small or narrow scope could be a supplier that provides a limited number of non-critical items; a broad scope could be outsourcing the entire manufacturing or logistics functions. As scope increases, the degree of customization provided by a supplier typically increases, as does the risk to the buyer. Criticality is the extent to which the sourced item impacts the ability of the organization to perform its core competencies. A supplier providing commodity items that are widely available would have a low criticality; a supplier that is the only source of a critical item would have a high criticality. As criticality increases, there is higher risk to the buying organization.

Response: 314-316 Level: Medium

2. List and describe the six steps in developing a Keiretsu supplier partnering model.

Ans: 1. Understand how suppliers work: learn about their business and respect capabilities 2. Turn supplier rivalry into opportunity: source from 2-3 suppliers and create compatible production philosophies and systems; 3.) Supervise suppliers: provide constant and immediate performance feedback; 4.) Develop supplier capabilities: build suppliers’ problem solving skills and a common lexicon; 5.) Share information: insist on accurate data collection and share information in a structured method; 6.) Joint improvement: exchange best practices and initiate kaizen projects at supplier facilities.

Response: page 338 Level: Difficult

File: ch12, Chapter 12: Global Supply Chain Management

Multiple Choice

1. a) b) c) d) e)

The rapid growth of globalization and global trade are a result of: Information technology Transportation Rising global incomes All of the above None of the above

Ans: d Response: page 346 Level: Easy

2. a) b) c) d) e)

For supply chain management, globalization trends have resulted in: Less competition Greater competition Greater coordination Fewer markets b and c

Ans: e Response: page 346 Level: Easy

3. a) b) c) d) e)

Environmental factors that must be considered in a global supply chain strategy include: Lead time Supplier quality Political Demographic c and d

Ans: e Response: page 347 Level: Medium

4. Supply chain benefits that can be achieved through a global strategy include:

a) b) c) d) e)

Economies of scale Product complexity Political risk Total cost reduction Variable lead times

Ans: a Response: page 348 Level: Medium

5. a) b) c) d) e)

Barriers to implementing an effective global strategy include: Management of overall costs Risk of political instability Exchange rate risks Longer lead times All of the above

Ans: e Response: page 348 Level: Easy

6. a) b) c) d) e)

Unexpected costs that can arise from trade at a global level include: Border delays Increased transit times Tariffs Higher inventory All of the above

Ans: e Response: page: 349 Level: Easy

7. a) b) c) d) e)

A well-functioning _________________ is critical for transporting products into global markets.

Technology system Culture Infrastructure Political system All of the above

Ans: c Response: page 350 Level: Difficult

8. a) b) c) d) e)

Environmental regulations are an example of a ________ factor impacting global supply chains.

Cultural Political Technological Economical Financial

Ans: b Response: page 350 Level: Difficult

9. a) b) c) d) e)

Work ethic and gender roles are examples of a ____________ factor impacting global supply chains.

Cultural Political Technological Economical Financial

Ans: a Response: page 350 Level: Easy

10. The profile of the global consumer has changed to put greater emphasis on __________. a) Standardized products b) Individualism c) Customized products d) Technology e) b and c Ans: e Response: page 351 Level: Medium

11. A _________ marketing approach focuses on bringing standardization to the global market. a) Local b) Strategic c) Tactical d) Global e) Segmented

Ans: d Response: page 351 Level: Medium

12. A ____________marketing approach focuses on bringing customization to global consumers. a) Local b) Strategic c) Tactical d) Global e) Segmented Ans: a Response: page 351 Level: Medium

13. Challenges to implementing a standardized product across the globe include: a) Uniformity in distribution b) More balanced supply and demand c) Achieving consistency across global operations d) Low variability in operations e) None of the above Ans: c Response: page 352 Level: Medium

14. _____________ is a strategy that delays customization until demand is more clearly known. a) CPFR b) Vendor managed inventory c) Postponement d) RFID e) None of the above Ans: c Response: page 352 Level: Easy

15. When people relate to each other more as equals, the culture is characterized as having: a) Large power distance

b) c) d) e)

Individualism Small power distance Masculinity High context

Ans: c Response: page 354 Level: Medium

16. Countries that rely greatly on explicit contracts and communication are known as: a) Collectivism cultures b) Weak uncertainty avoidance cultures c) Large power distance cultures d) Low context cultures e) None of the above Ans: d Response: page 355 Level: Medium

17. A weak transportation infrastructure in a developing country can result in: a) Low shipping time variability b) High lead time variability c) Lower distribution costs d) All of the above e) None of the above Ans: b Response: page 356 Level: Medium

18. Multiple types of technology are required for a global supply chain to function including: a) Information b) Manufacturing c) Equipment d) All of the above e) None of the above Ans: d Response: page 357-358 Level: Easy

19. Manufacturing in a country primarily because of low cost labor is not always the best strategy because: a) Labor can be a small percentage of cost b) Labor costs can change over time c) Workers could be unskilled d) Other costs outweigh labor cost advantage e) All of the above Ans: e Response: page 359 Level: Easy

20. _______ is an example of a non-cost consideration on which companies are increasingly focused. a) Labor b) Facilities c) Capital d) Poor product design e) Transportation Ans: d Response: page 360 Level: Medium

21. NAFTA is an example of a: a) Tariff b) Quota c) Regional trade agreement d) Trade protection mechanism e) Trigger price mechanism Ans: c Response: page 361 Level: Medium

22. _______ is an example of a trade protection mechanism. a) NAFTA b) Regional trade agreement c) Trigger price mechanism d) GATT e) WTO

Ans: c Response: page 361 Level: Medium

23. It is possible for companies to minimize exchange rate risk through: a) Global sourcing networks b) Diversifying production locations c) Single sourcing d) Tariffs e) a and b Ans: e Response: page 362 Level: Easy

24. A quantitative restriction on the volume of imports is known as a/an: a) Trigger price mechanism b) Tariff c) Import quota d) Export duty e) Local content requirement Ans: c Response: page 363 Level: Easy

25. A non-tariff barrier that requires part of the product be manufactured inside the country is known as a/an: a) Technical standards b) Health regulations c) Tariff d) Local content requirement e) Import quota Ans: d Response: page 364 Level: Easy

True/False

1. Most, if not all companies now operate in a global environment.

Ans: True Response: page 345 Level: Easy

2. Reasons for the advances in global trade include advanced transportation methods and information technology.

Ans: True Response: page 346 Level: Easy

3. Consumers across the globe have more money to spend, which has fueled globalization.

Ans: True Response: page 346 Level: Medium

4. Globalization has resulted in less competitive prices for consumers.

Ans: False Response: page 346 Level: Medium

5. Globalization has accelerated and changed the nature of competition.

Ans: True Response: page 346 Level: Easy

6. Globalization and new markets creates many opportunities for companies but few risks.

Ans: False Response: page 346

Level: Easy

7. It is possible for a global strategy to fail because of cultural differences or misunderstandings.

Ans: True Response: page 347 Level: Easy

8. Firms with primarily a domestic focus are typically more profitable than multinational firms.

Ans: False Response: page 348 Level: Medium

9. One advantage of a global supply chain network is the ability to specifically target local markets.

Ans: True Response: page 348 Level: Medium

10. Customer preferences in emerging markets are typically homogenous, making global supply chains easier to manage than mature markets.

Ans: False Response: page 350-351 Level: Difficult

11. The biggest global challenge for companies is dealing with political instability and economic factors such as currency stability.

Ans: False Response: page 350 Level: Difficult

12. A global marketing approach that brings standardized products to consumers is not an effective strategy.

Ans: False Response: page 351 Level: Difficult

13. The local marketing approach is becoming less widely used as companies move into global markets.

Ans: False Response: page 351 Level: Easy

14. A global marketing approach has the benefit of making supply and demand easier to balance.

Ans: True Response: page 352 Level: Difficult

15. An effective way to implement a merged global and local marketing approach is to utilize a postponement strategy.

Ans: True Response: page 352 Level: Medium

16. In countries with a small power distance culture, people treat each other more as equals.

Ans: True Response: page 354 Level: Medium

17. Cultures with weak uncertainty avoidance are less tolerant of risk.

Ans: False Response: page 355 Level: Medium

18. Access to a developed and robust infrastructure is often a challenge for companies setting up global supply chains.

Ans: True Response: page 356 Level: Easy

19. The cost of wages is the most important factor for companies to consider when evaluating the labor infrastructure in a global environment.

Ans: False Response: page 356 Level: Difficult

20. For high-technology products with short life-cycles, establishing a global supply chain based on low cost labor generally makes sense.

Ans: True Response: page 358 Level: Difficult

21. Non-cost considerations have become less of a determining factor used when companies decide where to locate global facilities.

Ans: False Response: page 359 Level: Medium

22. Regional trade agreements and trade protection policies can potentially to make global trade both easier and more difficult for companies.

Ans: True Response: page 361 Level: Medium

23. A strategy to reduce exchange rate risk is to build flexibility into manufacturing operations and diversify supplier networks.

Ans: True Response: page 362 Level: Medium

24. The World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT) have made global trade more difficult because of the added bureaucracy.

Ans: False Response: page 363 Level: Difficult

25. When countries establish local content requirements for an industry, the manufacturing firm must produce a certain percentage of the product within the country.

Ans: True Response: page 364 Level: Easy

Essay

1. List and provide an example of the four environmental factors that must be considered when designing a global supply chain.

Ans: 1.) Economic factors: natural resources, labor, infrastructure, technology, capital; 2.) Cultural factors: social structure, work ethic, gender roles, religion, language; 3.) Political factors: instability, ideology, institutions, international links; 4.) Demographic factors: population growth, age structure and health, urbanization, income Response: 347 Level: Easy

2. Outsourcing strategies are often pursued with the primary objective to lower costs through cheap labor. Describe the challenges to this strategy and the reasons why it is not as successful as anticipated.

Ans: Primary reasons for failure: 1.) Companies do not understand their cost structures and often labor

constitutes a small percentage of overall cost; 2.) Locations of low cost labor change over time and the cost advantage can be short lived; 3.) Numerous unexpected costs of going global including longer lead times, higher inventory levels, transportation/energy costs, and facilities, can negate the benefits from low cost labor; 4.) Competitive priorities other than cost are becoming more important including quality, customization, product design, responsiveness.

Response: page 358-360 Level: Medium

File: ch13, Chapter 13: Sustainable Supply Chain Management

Multiple Choice

1. a) b) c) d) e)

Supply chains can have adverse environmental and business consequences including: Monetary costs Health risks Safety risks Environmental costs All of the above

Ans: e Response: page 377 Level: Easy

2. When evaluating the sustainability of a supply chain, mangers must focus on both ________ and _______ of each supply chain stage. a) Logistics and transportation b) Marketing and customers c) Packaging and suppliers d) Inputs and outputs e) None of the above Ans: d Response: page 379 Level: Easy

3. a) b) c) d) e)

Reduced operating costs and lower capital costs are a _______ payoff of sustainable SCM. Financial Customer Operational Organizational Societal

Ans: a Response: page 379 Level: Easy

4. a) b) c) d) e)

Employee satisfaction and reduced risk are examples of _______ payoffs of sustainable SCM: Financial Customer Operational Organizational Societal

Ans: d Response: page 379 Level: Easy

5. a) b) c) d) e)

_________ sustainability refers to the preservation of biological systems over time.

Social Environmental Market Operational Organizational

Ans: b Response: page 379 Level: Easy

6. a) b) c) d) e)

The two types of sustainable practices that are mediated by supply chain networks are: Social and customer Packaging and marketing Sourcing and logistics Environmental and social None of the above

Ans: d Response: page: 379 Level: Easy

7. ________ is the sustainability principle related most directly to the fair treatment of suppliers, distributors and other partners is: a) Ethics b) Governance c) Transparency d) Business relationships e) Financial return Ans: d

Response: page 382 Level: Medium

8. Investment in or developing neighborhoods where a key supplier is located relates to the sustainability principle of: a) Ethics b) Governance c) Community involvement d) Business relationships e) Financial return Ans: c Response: page 383 Level: Medium

9. a) b) c) d) e)

Reasons for implementing sustainable measures in SCM include: Compliance with regulations Positive community relations Increasing revenues Moral/Ethical obligations All of the above

Ans: e Response: page 384 Level: Easy

10. Designing a sustainability framework that seeks only to avoid liability is a known as a/an_________ ethic. a) Reasonable care b) Good works c) Compliance d) Minimalist e) Avoidance Ans: d Response: page 386 Level: Medium

11. In the Supply Chain Sustainability Model, _________ context refers to inputs that pertain to government and market-based influences.

a) b) c) d) e)

Local Strategic External Internal Business

Ans: c Response: page 387 Level: Medium

12. Consumers’ tolerance for pollution and their desire for environmentally friendly products relates to ________ influences on a company’s sustainability strategy. a) Internal b) Market c) Regulatory d) Global e) Financial Ans: b Response: page 388 Level: Difficult

13. Attributes of companies with the greatest potential for gain or loss from sustainability initiatives include: a) Functional products b) High-profile brands c) Low reliance on natural resources d) Limited regulatory exposure e) b and c Ans: b Response: page 388 Level: Difficult

14. The aspect of the Supply Chain Sustainability Model that focuses on establishing management systems that align incentives and rewards is known as: a) Sustainability performance b) Processes c) Leadership d) Financial performance e) None of the above

Ans: b Response: page 389 Level: Difficult

15. Of the three drivers of sustainable initiatives, ________ relates to laws and government regulation. a) Innovation b) Compliance c) Enforcement d) Certification e) None of the above Ans: c Response: page 390-391 Level: Medium

16. Industry-initiated certification programs are known as _______ drivers of sustainable initiatives. a) Innovation b) Compliance c) Enforcement d) Certification e) None of the above Ans: b Response: page 391 Level: Medium

17. Measuring the effectiveness of sustainability initiatives by estimating the sum of all costs of a product is known as: a) Life-cycle assessment b) Ecological footprint c) Carbon footprint d) Food mile e) Total cost of ownership Ans: e Response: page 392 Level: Easy

18. The sustainability metric that measures the carbon dioxide emitted by manufacturing or logistics processes is known as:

a) b) c) d) e)

Life-cycle assessment Ecological footprint Carbon footprint Food mile Total cost of ownership

Ans: c Response: page 393 Level: Easy

19. When determining the value of a natural resource, _____ value relates to the benefit derived from consuming the resources: a) Option b) Existence c) Market d) Use e) Profit Ans: d Response: page 393-394 Level: Medium

20. When monetizing the environmental and social impacts of a supply chain, ______ relates to the costs of avoiding damages before they occur. a) Damage costing b) Total cost of ownership c) Life-cycle assessment d) Cost-of-control e) Activity-based costing Ans: d Response: page 394 Level: Medium

21. In the ______ costing system, present and future costs and benefits of SCM activities are monetized. a) Damage costing b) Activity-based costing c) Life-cycle costing d) Cost of control e) Total cost of ownership Ans: c

Response: page 395 Level: Difficult

22. Sustainability problems may occur infrequently and take years to manifest, but responsible companies include these possibilities in their ___________ assessment activities. a) Market b) Financial c) Operational d) Risk e) Business Ans: d Response: page 396 Level: Easy

23. _________ is the area of SCM that can greatly impact sustainability initiatives through evaluating the use of materials, sourcing, and disposal. a) Logistics b) Sourcing c) Packaging d) Product design e) Marketing Ans: d Response: page 399 Level: Medium

24. Methods for companies to monitor and improve their suppliers’ compliance with sustainability practices include: a) Inspections b) Contracts c) Third-party audits d) Training programs e) All of the above Ans: e Response: page 401-402 Level: Medium

25. Ensuring consumers are accurately informed about a product’s sustainable features is primarily the responsibility of the _________ function. a) Operations b) Risk management c) Marketing d) Sourcing e) Logistics Ans: c Response: page 402-403 Level: Easy

True/False

1. Sustainability is important but it is a minor theme in supply chain management.

Ans: False Response: page 377 Level: Easy

2. Supply chains have few environmental and social impacts.

Ans: False Response: page 377 Level: Easy

3. Sustainability practices impact SCM in the areas of product design and manufacturing.

Ans: True Response: page 377 Level: Medium

4. Sustainable supply chains must focus on inputs and outputs of operations.

Ans: True Response: page 378 Level: Medium

5. Sustainable supply chains can offer financial benefits to a firm, including lower costs of capital.

Ans: True Response: page 379 Level: Medium

6. Sustainable supply chain practices can result in financial payoffs including improved relationships with stakeholders and employees.

Ans: False Response: page 379 Level: Medium

7. Supply chain networks can mediate the differences between environmental and social sustainability practices.

Ans: True Response: page 379 Level: Easy

8. When evaluating supply chain decisions, an organization with a sustainability strategy would focus only on the economic factors of sustainable operations.

Ans: False Response: page 381 Level: Difficult

9. Of the nine sustainability principles, governance relates to promoting a truthful and fair corporate culture.

Ans: False Response: page 382 Level: Medium

10. A company that discloses all relevant financial or operating information to stakeholders would be following a principle of transparency.

Ans: True Response: page 382 Level: Medium

11. To have environmental integrity in the market place, a company need only to comply with the bare minimum of environmental laws.

Ans: False Response: page 383 Level: Easy

12. For companies to comply with legal aspects of sustainability, they typically must conform to established design and performance standards.

Ans: True Response: page 384 Level: Difficult

13. The “cost-oriented” approach to environmental management relates to protecting and enhancing business performance and increasing profits.

Ans: False Response: page 384 Level: Medium

14. Community relations are a minor aspect of sustainability practices, as they have a smaller impact on supply chains than cost and revenue.

Ans: False Response: page 385 Level: Difficult

15. A sustainability framework that seeks to avoid liability is known as a reasonable care ethic.

Ans: False Response: page 386 Level: Medium

16. The inclusion or absence of sustainability practices in SCM can have significant financial consequences.

Ans: True Response: page 386-387 Level: Easy

17. In the Supply Chain Sustainability Model, SCM processes and structures create both environmental and social impacts.

Ans: True Response: page 387 Level: Easy

18. The external context of SCM includes government and market-based influences.

Ans: True Response: page 387 Level: Easy

19. When developing a sustainable SCM strategy, it’s important to remember that all industries operate under very similar contexts when it comes to sustainable practices and impacts.

Ans: False Response: page 388 Level: Difficult

20. A key component of an effective SCM sustainability strategy is having effective metrics to evaluate performance.

Ans: True Response: page 389 Level: Medium

21. Of the three drivers of sustainability initiatives, innovation is internally motivated.

Ans: True Response: page 391 Level: Medium

22. The life-cycle assessment measure of sustainability considers the potential impacts associated with a product, process, or service.

Ans: True Response: page 392 Level: Medium

23. The ecological footprint measure of sustainability focuses on the producer, not the consumer.

Ans: False Response: page 393 Level: Difficult

24. Option and existence values of sustainability are considered “non-use” values.

Ans: True Response: page 394 Level: Easy

25. When assessing the cost of sustainability initiatives, the cost-of-control measure considers the costs of preventative measures to avoid damages.

Ans: True Response: page 394 Level: Medium

26. Effective decisions about SCM sustainability should monetize and consider social, political, and environmental risks.

Ans: True Response: page 398 Level: Easy

27. Product design decisions can improve sustainability performance by ensuring that materials and disposal are environmentally friendly.

Ans: True Response: page 399 Level: Easy

28. Utilizing environmentally responsible suppliers can impact SCM sustainability, and compliance should be monitored by the supplier.

Ans: False Response: page 401 Level: Difficult

29. The disposal of equipment or products is a key area for sustainability improvement opportunities in a company’s organizational processes.

Ans: True Response: page 402 Level: Medium

30. It is not necessary for the marketing function to be involved in sustainability strategy development, because marketing does not directly implement the strategy.

Ans: False Response: page 403 Level: Medium

Essay

1. Describe the three stages companies typically move through when implementing a sustainability SCM strategy.

Ans: Stage 1: incorporating common sense measures such as recycling, reducing travel, facilities management, telecommuting ; overall goal is to reduce carbon footprint; Stage 2: Sustainable principles

are integrated into and across operations/functions; actions might include lean principles, rationalizing sourcing, evaluating product design, optimizing distribution, and conducting internal audits/assessments; Stage 3: Sustainability is viewed as a practical science; third-party audits, benchmarking, and standards set by industry groups are followed as a means to evaluate performance and force compliance.

Response: 391-392 Level: Medium

2. Select three functions/areas of SCM and describe how sustainability can be implemented in those functions.

Ans: Functions/areas described in the chapter include: 1.) Logistics – optimization of transportation, modes, fuel efficiency, routes, etc.; 2.)Product design – use of sustainable components/materials, sourcing, disposal of product at end-of-life; 3.) Packaging – eliminate waste, unnecessary packaging, labeling, 4.) Sourcing – utilize suppliers with sustainable practices, source components/materials that are produced sustainably, monitoring supplier performance to sustainability practices; 5.) Process design – involving employees in sustainability initiatives, management systems to support sustainability initiatives, aligning incentives, design processes for disposal; 6.) Marketing – ensure consumers receive accurate information about a product’s sustainability features; marketing/advertising integrity; no “green washing.”

Response: page 398-403 Level: Easy