Download - Chap011 Exam Operation Management
Chapter 11 - Supply Chain Management
Chapter 11 Supply Chain Management
True / False Questions 1. A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users. TRUE
Difficulty: Easy TLO: 1 Taxonomy: Knowledge
2. In supply chain organizations, functions must operate independently of each other. FALSE
Difficulty: Easy TLO: 14 Taxonomy: Knowledge
3. CPFR is the use of e-mail between vendors and purchasing to place orders. FALSE
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
4. Distribution requirements planning (DRP) is an expanded concept of MRP which incorporates multinational inventory management. FALSE
Difficulty: Medium TLO: 11 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
5. Every business organization is part of at least one supply chain. TRUE
Difficulty: Medium TLO: 1 Taxonomy: Knowledge
6. JIT delivery, i.e. frequent deliveries of small shipments, actually results in an increase in the transportation cost per unit. TRUE
Difficulty: Medium TLO: 4 Taxonomy: Knowledge
7. The materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the beginning of the chain. FALSE
Difficulty: Medium TLO: 3 Taxonomy: Knowledge
8. Supply chains are sometimes referred to as value chains because they reflect the concept that value is added as goods and services progress through the chain. TRUE
Difficulty: Medium TLO: 1 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
9. The goal of supply chain management is to synchronize supply and demand of all of the organizations that are part of the chain. TRUE
Difficulty: Medium TLO: 2 Taxonomy: Knowledge
10. The need for supply chain management increases as globalization increases. TRUE
Difficulty: Medium TLO: 5 Taxonomy: Knowledge
11. The design of the supply chain and establishing partnerships with vendors and distributors are examples of operating issues in a supply chain. FALSE
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
12. Traffic management refers to truck movement within our parking areas. FALSE
Difficulty: Hard TLO: 11 Taxonomy: Knowledge
13. One of the major reasons for a company to adopt third party logistics is to concentrate on one's core business. TRUE
Difficulty: Medium TLO: 11 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
14. E-commerce refers to the use of electronic technology to facilitate business transactions. TRUE
AACSB: IT Difficulty: Easy TLO: 4 Taxonomy: Knowledge
15. E-commerce involves business-to-business (B2B) interaction only. FALSE
Difficulty: Easy TLO: 4 Taxonomy: Knowledge
16. Disintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain. TRUE
Difficulty: Medium TLO: 14 Taxonomy: Knowledge
17. Most people working for a business organization are somehow involved with the supply chain of that business. TRUE
Difficulty: Easy TLO: 1 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
18. Strategic partnering is encouraged when two or more business organizations have complementary products or services that would benefit the others. TRUE
Difficulty: Easy TLO: 9 Taxonomy: Knowledge
19. Forming strategic partnerships is beneficial for two or more business organizations that have the same products or services. FALSE
Difficulty: Medium TLO: 9 Taxonomy: Knowledge
20. Inventory velocity refers to the average speed (in miles/hour) of material handling equipment in a warehouse. FALSE
Difficulty: Easy TLO: 10 Taxonomy: Knowledge
21. Global supply chains make purchasing easier because of more options. FALSE
Difficulty: Hard TLO: 4 Taxonomy: Knowledge
22. Centralized or decentralized purchasing is directly related to the size of an organization. FALSE
Difficulty: Hard TLO: 7 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
23. The optimization of the supply chain uses a mathematical model to determine the optimal number of business organizations to be included in the chain. FALSE
Difficulty: Medium TLO: 3 Taxonomy: Knowledge
24. Information technology is the key to success of global supply chains. TRUE
Difficulty: Easy TLO: 5 Taxonomy: Knowledge
25. Bullwhip effect refers to a phenomenon that demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain. TRUE
Difficulty: Medium TLO: 2 Taxonomy: Knowledge
26. Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease. FALSE
Difficulty: Medium TLO: 2 Taxonomy: Knowledge
27. Scheduling and maintaining equipment are operational decisions. TRUE
Difficulty: Easy TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
28. To prevent temporary storage in a warehouse, cross docking can be used. TRUE
Difficulty: Medium TLO: 11 Taxonomy: Knowledge
29. Delayed differentiation is a means of increasing product variety without building the customized product from scratch or keeping large inventories of custom products. TRUE
Difficulty: Hard TLO: 4 Taxonomy: Knowledge
30. Returned goods are part of reverse logistics. TRUE
Difficulty: Medium TLO: 12 Taxonomy: Knowledge
31. A 30% reduction in product and service variety won't really affect the efficiency of a supply chain. FALSE
Difficulty: Medium TLO: 14 Taxonomy: Knowledge
32. The service function of purchasing interfaces with many area including legal, accounting, and engineering functions. TRUE
Difficulty: Easy TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
33. Gate keeping manages the cost of shipping returned goods. FALSE
Difficulty: Hard TLO: 12 Taxonomy: Knowledge
34. Outsourcing logistics gives a company less flexibility because it forces them to focus more on core businesses. FALSE
Difficulty: Medium TLO: 12 Taxonomy: Knowledge
35. Vendor analysis examines the function of purchased parts and materials with a view towards improvement or cost reduction. FALSE
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
36. Using third party fulfillment means losing control of fulfillment. TRUE
Difficulty: Medium TLO: 11 Taxonomy: Knowledge
37. Price is the primary determining factor in choosing a vendor since most products are essentially the same. FALSE
Difficulty: Easy TLO: 4 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
38. RFID eliminates the need for counting and bar-code scanning. TRUE
Difficulty: Medium TLO: 4 Taxonomy: Knowledge
39. The importance of purchasing relates only to the cost of parts and materials purchased, which is often 60% or more of the cost of finished goods. FALSE
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
40. The importance of purchasing is the cost of goods purchased, the quality of goods and services, and the timing of deliveries of goods or services. TRUE
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
41. Vendor analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service. TRUE
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
42. In e-commerce, the front-end design is significantly more important than the back-end design. FALSE
AACSB: IT Difficulty: Medium TLO: 8 Taxonomy: Knowledge
43. One disadvantage to RFID's is that they require a line of sight' for reading. FALSE
Difficulty: Hard TLO: 4 Taxonomy: Knowledge
44. Decentralized purchasing can usually offer quicker response than centralized purchasing. TRUE
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
45. Some firms have structured their procurement function to include both centralized and decentralized purchasing. TRUE
Difficulty: Easy TLO: 4 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
46. Creating an effective supply chain requires linking the marketing, distribution, and supplier channels. TRUE
Difficulty: Medium TLO: 13 Taxonomy: Knowledge
47. An advantage of decentralized purchasing is the attention given to local needs. TRUE
Difficulty: Medium TLO: 7 Taxonomy: Knowledge
48. Event management is the advanced planning required for major performances such as concerts or conferences. FALSE
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
49. Supplier certification is the first step required in a supplier audit program. FALSE
Difficulty: Medium TLO: 9 Taxonomy: Knowledge
50. Design and purchasing people should work closely because changes in design, specifications, or materials can impact future purchase requirements. TRUE
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
51. The purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items. FALSE
Difficulty: Hard TLO: 6 Taxonomy: Knowledge
52. Producing and shipping in large lots may reduce costs but increase lead times. TRUE
Difficulty: Medium TLO: 14 Taxonomy: Knowledge
53. Variations create uncertainty, thereby causing inefficiencies in a supply chain. TRUE
Difficulty: Medium TLO: 14 Taxonomy: Knowledge
54. Disintermediation is the refusal of one party to use mediators for price negotiation. FALSE
Difficulty: Medium TLO: 14 Taxonomy: Knowledge
Multiple Choice Questions
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Chapter 11 - Supply Chain Management
55. Which of the following is not a goal of supply chain management? A. fewer suppliers and long-term relationship B. small lot sizes C. on time deliveries D. lowest possible transportation costs E. delivery often to the place of use
Difficulty: Easy TLO: 2 Taxonomy: Knowledge
56. Logistics includes all of these except: A. the movement of materials within a production facility B. incoming shipments of goods or materials C. outgoing shipments of goods or materials D. customer selection E. returned goods processing
Difficulty: Medium TLO: 11 Taxonomy: Knowledge
57. Small changes in consumer demand can result in large variations in orders placed because of the A. Supply chain B. Safety stock requirement C. Lead time effect D. Bullwhip effect E. FCFS scheduling
Difficulty: Medium TLO: 14 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
58. RFID chips: (I) are used to track goods in distribution (II) are used to track job progress in production (III) may provide special instructions to operators (IV) can be used in inventory record keeping A. II and III only B. I and II only C. II, III, and IV D. I, II, and IV E. IV only
Difficulty: Medium TLO: 4 Taxonomy: Knowledge
59. Which of the following is not a benefit of RFID? A. increased productivity B. elimination of paper work C. frequent deliveries of smaller shipments D. reduction in clerical labor E. increased accuracy
Difficulty: Hard TLO: 4 Taxonomy: Knowledge
60. A factor that makes it desirable for business organizations to actively manage their supply chains is: A. more potential vendors B. increasing globalization C. downsizing D. the internet E. RFID's
Difficulty: Hard TLO: 4 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
61. Which of the following is not a benefit of effective supply chain management? A. lower inventory costs B. higher productivity C. shorter lead times D. greater customer loyalty E. larger number of suppliers
Difficulty: Medium TLO: 2 Taxonomy: Knowledge
62. Which of the following is not a measure of the reliability of the supply chain? A. supply chain response time B. on-time delivery C. fill rate D. lead time variability E. improving e-fulfillment statistics
Difficulty: Hard TLO: 13 Taxonomy: Knowledge
63. The automatic identification of material is part of: A. holding costs B. RFID C. working capital reduction D. net present value calculations E. vendor analysis
Difficulty: Medium TLO: 4 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
64. Which of the following is not an application of E-business? A. internet buying and selling B. e-mail C. order and shipment tracking D. electronic data interchange (EDI) E. universal product codes
Difficulty: Medium TLO: 8 Taxonomy: Knowledge
65. Which of the following is an advantage of e-business? (I) reduction of transaction costs (II) shortened supply chain response time (III) greater customer loyalty A. I B. II C. I and II D. II and III E. I, II, and III
Difficulty: Medium TLO: 8 Taxonomy: Knowledge
66. Which of the following is a barrier to integration of separate organizations in the supply chain? (I) conflicting objectives of the companies in the chain. (II) different level of capacity of the companies in the chain. (III) reluctance of the organizations in the chain to allow other organizations access to their data. A. I only B. I and II C. II and III D. I and III E. I, II and III
Difficulty: Hard TLO: 14 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
67. _________ has helped business concentrate on their core business. A. Supply Chains B. Scheduling C. Outsourcing D. ERP E. Lean Production
Difficulty: Hard TLO: 4 Taxonomy: Knowledge
68. Outsourcing followed by __________ is not simple. A. Integration B. Unionization C. Backsourcing D. Computerization E. Just-in-time
Difficulty: Hard TLO: 5 Taxonomy: Knowledge
69. The interface between the firm and its suppliers is: A. purchasing B. production C. distribution D. engineering E. accounting
Difficulty: Easy TLO: 7 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
70. The two types of decisions that are relevant to supply chain management are: A. Short, long term B. Domestic, international C. Location, layout D. In-source, out-source E. Strategic, operational
Difficulty: Hard TLO: 6 Taxonomy: Knowledge
71. One important objective of purchasing is to: A. set quality standards for purchased items B. be knowledgeable about new products C. maintain numerous sources of supply D. obtain the lowest prices on all purchased items E. determine the processes that should be used
Difficulty: Hard TLO: 6 Taxonomy: Knowledge
72. The purchasing cycle begins with: A. selecting a supplier B. placing an order C. evaluating potential vendors D. conducting a value analysis E. receiving a requisition
Difficulty: Easy TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
73. Examination of the sources of supply for purchased parts or materials in order to improve performance is called: A. vendor analysis B. value analysis C. negotiated purchasing D. reverse engineering E. disintegration
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
74. Vendor analysis has the greatest potential for savings for items which have: A. low cost per unit B. low annual cost-volume C. high cost per unit D. high annual usage E. high annual cost-volume
Difficulty: Hard TLO: 6 Taxonomy: Knowledge
75. Which of the following is not true of vendor analysis? A. It involves an examination of the function of purchased parts or raw materials. B. Its purpose is to reduce costs and/or improve performance of purchased goods or services. C. It is usually performed only periodically. D. Representatives from design and operations may work with purchasing. E. If improvements are identified, purchasing implements those that purchasing agrees are justified.
Difficulty: Hard TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
76. Which of the following is not a performance driver? A. Quality B. Cost C. Stability D. Velocity E. Flexibility
Difficulty: Hard TLO: 13 Taxonomy: Knowledge
77. Which of the following would not usually be a main factor in selecting a vendor? A. location B. price C. quality D. inventory turnover E. vendor services
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
78. Which of the following is part of the purchasing cycle? (I) Purchasing selects a supplier. (II) Orders from vendors are received. (III) Purchasing receives a requisition. A. II and III B. I, II, and III C. I only D. I and II E. I and III
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
79. Which of the following is not a key consideration when a company chooses a supplier? A. lead time and on-time delivery B. reputation and financial stability C. value analysis D. quality and Quality assurance E. flexibility of design change
Difficulty: Hard TLO: 7 Taxonomy: Knowledge
80. Which of the following is not a benefit of centralized purchasing? A. potential for quantity discounts B. better service from suppliers C. quick response to local needs D. potential for use of purchasing specialists E. supplier research
Difficulty: Medium TLO: 7 Taxonomy: Knowledge
81. The purchasing perspective of the supplier as a partner is characterized by: A. an emphasis on low prices B. one or a few suppliers C. low flexibility D. 100% inspection for quality E. low volume
Difficulty: Medium TLO: 7 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
82. Vendor Analysis is the examination of the _________ of purchased materials. A. Function B. Source C. Quality D. Cycle E. Quantity.
Difficulty: Hard TLO: 6 Taxonomy: Knowledge
83. A system for inventory management involving multi-echelon warehouses is called: A. MRP B. EOQ C. CRP D. JIT E. DRP
Difficulty: Medium TLO: 10 Taxonomy: Knowledge
84. Which of the following is a principle required for ethical behavior in purchasing? A. loyalty to employer. B. justice to those you deal with. C. faith in your profession. D. all of the above. E. none of the above.
AACSB: EU Difficulty: Easy TLO: 6 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
85. The activity which begins with a request from within the organization is: A. Outsourcing search B. Purchasing cycle C. Supplier selection D. Order receipt E. Supply chain management
Difficulty: Medium TLO: 6 Taxonomy: Knowledge
86. Our organization can obtain visibility to potential trading partners on the internet by using: A. C2C B. B2C C. B2B D. C2B E. None of the above
AACSB: IT Difficulty: Medium TLO: 9 Taxonomy: Knowledge
87. Real time information about product movement on store shelves could benefit from the use of: A. batch processing B. economic order quantities C. statistical process control D. radio frequency identification tags E. infrared remote scanners
Difficulty: Medium TLO: 8 Taxonomy: Knowledge
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Chapter 11 - Supply Chain Management
88. The website and order fulfillment are essential features of: A. delayed differentiation B. e-commerce C. internet service providers D. inventory balancing E. market segmentation
Difficulty: Medium TLO: 8 Taxonomy: Knowledge
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