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Operations Management: Processes and Supply Chains, 10e (Krajewski et al.)Chapter 12 Supply Chain Integration

1) Supply chain integration is the effective coordination of supply chain processes through the seamless flow of information to suppliers, but does not include customers, such as distributors and retailers.Answer: FALSEReference: IntroductionDifficulty: EasyKeywords: supply chain integration, supplier, customerLearning Outcome: Compare common approaches to supply chain design.

2) Supply chain integration is the effective coordination of supply chain processes through the seamless flow of information to suppliers, up and down the supply chainAnswer: TRUEReference: IntroductionDifficulty: EasyKeywords: supply chain integration, supplier, customerLearning Outcome: Compare common approaches to supply chain design.

3) A supply chain can be thought of as a river that flows from raw material suppliers to consumers.Answer: TRUEReference: Supply Chain Integration Across The OrganizationDifficulty: EasyKeywords: supply chain, river, raw material supplier, consumer

4) The finished goods of one firm may actually be the raw materials for another firm.Answer: TRUEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: finished goods, raw materials

5) The bullwhip effect says that in any supply chain, the ordering patterns experience increasing variance as you move closer to the end customer.Answer: FALSEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: bullwhip, varianceLearning Outcome: Compare common approaches to supply chain design.

6) A common disruption of the external supply chain is product and service mix changes.Answer: TRUEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: disruption, external supply chain, mix

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7) A common disruption of the external supply chain is engineering changes.Answer: FALSEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: external supply chain, engineering change

8) A common disruption of the supply chain resulting from internal causes is order batching.Answer: TRUEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: disruption, internal supply chain, mix

9) A common disruption of the supply chain resulting from internal causes is demand volume changes.Answer: FALSEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: disruption, internal supply chain, mix

10) SKUs with higher volumes and lower weekly variability may be best served with a make- to-stock supply chain design.Answer: TRUEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: MTS, make to stock, volume, variability

11) SKUs with lower volumes and higher weekly variability may be best served with an assemble-to-order or make-to-order supply chain design.Answer: TRUEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: ATO, MTO, assemble to order, make to order, volume, variability

12) The SCOR model provides guidelines for how materials are to be delivered along a supply chain.Answer: FALSEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR, supply chain

13) The SCOR model focuses on the supply chain processes of planning, making, sourcing, delivering, and returning.Answer: TRUEReference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR, supply chain


14) Concurrent engineering is the term used to describe a firm's development of a new product after it has been discovered that a competitor is engineering a similar product for launch.Answer: FALSEReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: concurrent engineering, product development

15) Concurrent engineering helps firms avoid the costly mismatch between the design of a new offering and the capability of the processes required to produce it.Answer: TRUEReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: concurrent engineering, product development

16) The ramp-up stage of the development process precedes the full launch stage.Answer: FALSEReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: development, stage, launch stage, ramp-up

17) A strain is placed on the supply chain during the ramp-up stage of the development process due to changing volumes, quality issues and last minute design changes.Answer: TRUEReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: development process, ramp-up stage

18) In presourcing, suppliers are selected early in the concept-development stage.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: presourcing, developmentLearning Outcome: Compare common approaches to supply chain design.

19) Once certified, a supplier can be used by the purchasing department without the purchaser having to make background checks.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: certified, supplier, background checksLearning Outcome: Compare common approaches to supply chain design.

20) Value analysis is a systematic effort to reduce the cost or improve the performance of a service or product.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: value analysis, systematic, reduce, improve

21) A buyer has more purchasing power when fewer substitutes are available.Answer: FALSEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: purchasing power, substitutes


22) Electronic Data Interchange enables the transmission of routine, standardized business documents from computer to computer over telephone or direct leased lines.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: EDI, transmission, standardized business documentsLearning Outcome: Compare common approaches to supply chain design.

23) Green purchasing involves identifying, assessing, and managing the flow of environmental waste and finding ways to reduce it and minimize its impact on the environment.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: green purchasing, environmentLearning Outcome: Discuss the role of operations management in corporate social responsibility and sustainability

24) The competitive orientation to supplier relations is that the buyer and supplier are partners.Answer: FALSEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: competitive orientation, supplier, buyer

25) In a competitive orientation to negotiations between buyer and supplier, the buyer does not always possess the power in the relationship–the supplier sometimes holds the power and can exercise this power during negotiations with the buyer.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: competitive orientation, supplier, buyer

26) The most used form of e-purchasing today is electronic data interchange.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: e-purchasing, electronic data interchange


27) A catalog hub is a central distribution point where buyers may purchase items directly from manufacturers before the items are shipped to retailers.Answer: FALSEReference: Supplier Relationship ProcessDifficulty: EasyKeywords: catalog hub, central distribution pointLearning Outcome: Compare common approaches to supply chain design.

28) An electronic market that brings together textbook sellers, office supply companies, apparel vendors, and students is an example of an exchange.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: EasyKeywords: exchange, electronic, buyer, sellerLearning Outcome: Compare common approaches to supply chain design.

29) Reducing the number of suppliers for an item carries an increased risk of interruption in supply.Answer: TRUEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: sourcing, risk, supplyLearning Outcome: Compare common approaches to supply chain design.

30) Early supplier involvement is a program that allows suppliers to fill orders prior to the customer placing them.Answer: FALSEReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: early supplier involvementLearning Outcome: Compare common approaches to supply chain design.

31) The order-fulfillment process involves the activities to deliver a product or service to the customer.Answer: TRUEReference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: order-fulfillment, deliver, customer

32) Vendor-managed inventories are an example of the forward-placement tactic.Answer: TRUEReference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: vendor-managed inventories, forward-placementLearning Outcome: Compare common approaches to supply chain design.


33) Drop shipping occurs when a retailer passes customer orders directly to a wholesaler or manufacturer, which then ships the order directly to the customer with the retailer's label on it.Answer: TRUEReference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: drop-shippingLearning Outcome: Compare common approaches to supply chain design.

34) The cost of equipment, labor, facilities and maintenance must all be considered when a firm decides to use a contract carrier for its distribution.Answer: TRUEReference: The Order Fulfillment ProcessDifficulty: EasyKeywords: contract-carrier, distributionLearning Outcome: Compare common approaches to supply chain design.

35) Using rail to move large quantities of goods is relatively cheap, but transit times are long and often variable.Answer: TRUEReference: The Order Fulfillment ProcessDifficulty: EasyKeywords: rail, large quantities, cheap

36) A cross-docking warehouse holds inventory from manufacturers until retailers are prepared to sell the items.Answer: FALSEReference: The Order Fulfillment ProcessDifficulty: EasyKeywords: cross-docking, warehouse

37) Which of the following is NOT a component of the supply chain?A) order fulfillmentB) materialsC) customer relationshipD) competitorsAnswer: DReference: Supply Chain Integration Across The OrganizationDifficulty: EasyKeywords: supply chain, component


38) The bullwhip effect is characterized by:A) ordering patterns that experience increasing variance as you proceed downstream in the chain.B) ordering patterns that experience increasing variance as you proceed upstream in the chain.C) purchasing patterns that experience increasing variance downstream in the chain.D) purchasing patterns that experience decreasing variance as you proceed upstream in the chain.Answer: BReference: Supply Chain DynamicsDifficulty: ModerateKeywords: bullwhip effect, variation

39) Which of the following changes would decrease the likelihood of the bullwhip effect?A) changing the mix of items in an orderB) sending partial shipments of an orderC) instituting a policy of no discounts or promotionsD) sending late deliveries of an orderAnswer: CReference: Supply Chain DynamicsDifficulty: ModerateKeywords: bullwhip effect, variation

40) Which of the following changes would increase the likelihood of a supply chain experiencing the bullwhip effect?A) engineering changes to the design of a productB) instituting a more accurate materials management information systemC) closely coordinating promotions with the internal marketing department and suppliersD) using a more reliable delivery companyAnswer: AReference: Supply Chain DynamicsDifficulty: EasyKeywords: bullwhip effect, variation

41) Which of the following is NOT an internal cause of supply chain disruptions?A) engineering changesB) batching of ordersC) service or product promotionsD) underfilled shipmentsAnswer: DReference: Supply Chain DynamicsDifficulty: EasyKeywords: internal cause, supply chain disruptions


42) Which of the following is NOT an external cause of supply chain disruptions?A) late deliveriesB) new service or product introductionsC) customer service or product mix changesD) underfilled shipmentsAnswer: BReference: Supply Chain DynamicsDifficulty: EasyKeywords: external cause, supply chain disruptions

43) One source of disruption caused by the internal supply chain is:A) forecast error.B) underfilled shipments.C) volume changes.D) late deliveries.Answer: AReference: Supply Chain DynamicsDifficulty: EasyKeywords: internal supply chain, disruption

44) One source of disruption caused by the external supply chain is:A) product or sales promotions.B) new product or service introduction.C) late deliveries.D) engineering changes.Answer: CReference: Supply Chain DynamicsDifficulty: ModerateKeywords: external supply chain, disruption

45) Possible causes of disruption due to internal supply chain problems are:A) late deliveries.B) machine breakdowns or inexperienced workers.C) product and service mix changes.D) underfilled shipments.Answer: BReference: Supply Chain DynamicsDifficulty: ModerateKeywords: disruption, internal supply chain


46) The SCOR model focuses on the basic supply chain processes of:A) source, control, operate, return.B) plan source, make deliver, return.C) purchase, operate, control, logistics.D) operations, marketing, finance.Answer: BReference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR

47) The SCOR model requires a(n):A) three-tier supply chain.B) point of reference.C) make-to-order or assemble-to-order product.D) process view.Answer: BReference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR

48) Which of the following is NOT a stage in the New Service / Product Development Process?A) developmentB) designC) maintenanceD) analysisAnswer: CReference: New Service or Product Development ProcessDifficulty: EasyKeywords: stage, New Service / Product Development Process

49) The stage of new product or service development that links the creation of new services or products to the corporate strategy of the firm is called:A) design.B) analysis.C) development.D) full launch.Answer: AReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: stage, development, new, corporate strategy


50) The product development team ensures compatibility of the proposed product with corporate strategy and regulatory standards in the:A) design stage.B) analysis stage.C) development stage.D) full launch stage.Answer: BReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: product development team, corporate strategy, regulatory standards

51) The stage of new service or product development at which personnel are trained and some pilot runs can be conducted to look for possible problems in production is called:A) design.B) analysis.C) development.D) full launch.Answer: CReference: New Service or Product Development ProcessDifficulty: ModerateKeywords: development, stage, new, service, product

52) A new product development team that is composed of product and process engineers, marketers, quality specialists, and buyers that work together to make sure the new product can actually be built is engaging in:A) concurrent engineering.B) joint application development.C) reverse logistics.D) core process design.Answer: AReference: New Service or Product Development ProcessDifficulty: EasyKeywords: development, stage, new, service, product

53) Which one of the following statements is TRUE about purchasing?A) Purchasing's primary role is to satisfy the firm's long-term supply needs.B) Purchasing's primary role should be placing and tracking orders.C) Purchasing's primary role is to negotiate lower prices.D) Purchasing's primary role is to negotiate prices and delivery dates.Answer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: purchasing, supply


Use the following to answer the questions below.The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on total annual cost to supply Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a year. The following data are available for two suppliers being considered.

SUPPLIER

SHIPPING QUANTITY PER SHIPMENT

ANNUALSHIPPING COSTS

PRICE / TIRE (p)

INVENTORY HOLD COSTS (H)

LEAD TIME (DAYS)

ADMIN. COSTS

LEXINGTON TIRE 2,000 $18,000 $30 $6.00 6 $15,000IRMO AUTO 1,000 $25,000 $29 $5.80 4 $18,000

54) Refer to the instruction above. What are the annual material costs for Lexington Tire?A) $60,000B) $750,000C) $725,000D) $3,000Answer: BReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

55) Refer to the instruction above. What are the annual material savings available when comparing the two suppliers?A) $25,000B) $150,000C) $725,000D) $3,000Answer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills


56) Refer to the instruction above. How many shipments per year are required if Irmo Auto is the supplier selected?A) 1,000B) 750C) 25D) 100Answer: CReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

57) Refer to the instruction above. What are the annual shipping savings available when comparing the two suppliers?A) $25,000B) $18,000C) $72,500D) $7,000Answer: DReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

58) Refer to the instruction above. What are the annual inventory costs if the lower inventory cost supplier is selected?A) $5,220B) $9,600C) $6,600D) $6,320Answer: AReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

59) Refer to the instruction above. What are the total annual costs if Lexington Tire is the supplier selected?A) $791,600B) $792,600C) $772,320D) $769,320Answer: BReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

60) Refer to the instruction above. What are the total annual costs if Irmo Auto is the supplier selected?A) $791,600B) $792,600C) $773,220D) $769,320Answer: CReference: Supplier Relationship Process


Difficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

61) Refer to the instruction above. Based on your Total Cost Analysis, which supplier should be selected if the lower cost supplier is chosen?A) Lexington TireB) Irmo AutoC) Since the costs are the same, either supplier could be selected.D) More information is needed to answer this question.Answer: BReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selection

62) Refer to the instruction above. What are the total annual savings if the lower cost supplier is selected?A) $1,000B) $19,380C) $3,000D) $6,320Answer: BReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

63) Refer to the instruction above. The high-cost supplier desperately wants the Burdell Company business. They have indicated that if Burdell will select them as their supplier, they will not charge for shipping. How does this change the decision on tire suppliers?A) The high-cost supplier is now lower, and becomes the tire supplier for Burdell.B) The suppliers are now equal cost, and Burdell can select either supplier.C) It doesn't change the decision–they are still the high-cost supplier.D) More information is required to make this decision.Answer: CReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection


Use the following to answer the questions below.The Burdell Wheel and Tire Company has completed a total cost analysis for two suppliers of tires to support their business. They also consider delivery speed, consistent quality and environmental sensitivity in their selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion (1 = poor, 10 = excellent). The data are shown in the following table.

CRITERION WEIGHTLEXINGTON

TIREIRMO AUTO

Total Cost 20 5 6Delivery Speed 25 6 5Consistent Quality 25 8 6Environmental Sensitivity 30 4 7

64) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is Lexington Tire's total weighted score?A) 570B) 100C) 23D) 605Answer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

65) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is Irmo Auto's total weighted score?A) 570B) 100C) 24D) 605Answer: DReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

66) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, which supplier should Burdell select? total weighted score?A) Lexington TireB) Irmo AutoC) Neither is acceptable–their preference matrix scores are not high enough to be selected.D) More information is needed to make this decision.Answer: BReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

Use the following to answer the questions below.The Steele Bike Company assembles bicycles for a major retail toy outlet. The main purchase is bicycle frames for making these bicycles. Dan Steele, the owner, wants to locate a low-cost supplier for the frames used in this assembly operation. The supplier will be selected based on total annual cost to supply Steele's needs. Annual requirements are for 100,000 frames, and the company operates 200 days a year. Two suppliers, Acme and


State, have quoted the same price for the frames, but quantities, lead times and shipping costs are considerably different. The following data are available for the two suppliers.

SUPPLIER


ANNUALSHIPPING COSTS

PRICE / FRAME (p)


LEAD TIME (DAYS)

ADMIN. COSTS

ACME 7,500 $35,000 $39 $7.80 7 $20,000STATE 2,500 $60,000 $39 $7.80 3 $45,000

67) Refer to the instruction above. What are the annual material costs for Acme?A) $550,000B) $750,000C) $3,900,000D) $35,000Answer: CReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

68) Refer to the instruction above. What are the annual material savings available when comparing the two suppliers?A) $7,800B) $390,000C) $750,000D) The materials are the same cost from either supplierAnswer: DReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills


69) Refer to the instruction above. How many shipments per year are required if State is the supplier selected?A) 13.3B) 40C) 200D) 10Answer: BReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

70) Refer to the instruction above. What are the annual shipping savings available when comparing the two suppliers?A) $25,000B) $10,000C) $7,500D) Shipping costs are the same from either supplierAnswer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

71) Refer to the instruction above. What are the annual inventory costs if the lower inventory cost supplier is selected?A) $56,550B) $96,500C) $21,450D) $7,800Answer: CReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

72) Refer to the instruction above. What are the total annual costs if Acme is the supplier selected?A) $4,010,450B) $113,550C) $4,001,050D) $4,011,550Answer: DReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills


73) Refer to the instruction above. What are the total annual costs if State is the supplier selected?A) $4,026,450B) $110,450C) $4,001,050D) $4,016,550Answer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

74) Refer to the instruction above. Based on your Total Cost Analysis, which supplier should be selected if the lower cost supplier is chosen?A) AcmeB) StateC) Since the costs are the same, either supplier could be selected.D) More information is needed to answer this question.Answer: AReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selection

75) Refer to the instruction above. What are the total annual savings if the lower cost supplier is selected?A) $1,000B) $12,500C) $9,400D) $14,900Answer: DReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills

76) Refer to the instruction above. The high-cost supplier has indicated that if Steele will select them as the supplier of choice, they will not charge for shipping. How does this change the decision on bicycle frame suppliers?A) The high-cost supplier is now the low-cost supplier, and becomes the frame supplier for Steele.B) The suppliers are now equal cost, and Steele can select either supplier.C) It doesn't change the decision–they are still the high-cost supplier.D) More information is required to make this decision.Answer: AReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supplier relationship, sourcing, supplier selection


Use the following to answer the questions below.The Steele Bike Company has completed a total cost analysis for two suppliers of bicycle frames to support their business. They also consider on-time speed, top quality and customization in their selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion (1 = poor, 10 = excellent). The data are shown in the following table.

CRITERION WEIGHT ACME STATETotal Cost 15 8 4On-Time Delivery 20 5 7Top Quality 30 7 6Customization 35 4 6

77) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is State's total weighted score?A) 570B) 100C) 23D) 590Answer: DReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

78) Refer to the instruction above. Using the preference matrix approach for selecting suppliers, what is Acme's total weighted score?A) 100B) 570C) 24D) 590Answer: BReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

79) Refer to the instruction above. Using the preference matrix (total weighted score) approach for selecting suppliers, which supplier should Steele select?A) StateB) AcmeC) Either is acceptable–their preference matrix scores are the same.D) More information is needed to make this decision.Answer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrix


80) The practice of selecting suppliers and giving them significant responsibility for the design of certain components or systems of the product is called:A) value analysis.B) locus of control.C) presourcing.D) vendor-managed inventories.Answer: CReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supply chain, design, collaboration, early supplier involvement, presourcingLearning Outcome: Compare common approaches to supply chain design.

81) A systematic effort to reduce the cost or improve the performance of services or products is known as:A) presourcing.B) cooperative orientation.C) supplier certification.D) value analysis.Answer: DReference: Supplier Relationship ProcessDifficulty: EasyKeywords: supply chain, design, collaboration, early supplier involvement, value analysis

82) Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a supplier values identification with a buyer, this is called a(n) ________ source of power.A) expertB) rewardC) referentD) legalAnswer: CReference: Supplier Relationship ProcessDifficulty: HardKeywords: supply chain, negotiation, competitive, orientation, sources, powerLearning Outcome: Compare common approaches to supply chain design.

83) Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a buyer has access to knowledge, information and skills desired by the supplier, this is called a(n) ________ source of power.A) expertB) rewardC) referentD) coerciveAnswer: AReference: Supplier Relationship ProcessDifficulty: HardKeywords: supply chain, negotiation, competitive, orientation, sources, powerLearning Outcome: Compare common approaches to supply chain design.


84) Suppliers can gain power from a number of sources in the buyer / supplier relationship. When a buyer can threaten to cancel future business unless the supplier adheres to the buyer's demands, this is called a ________ source of power.A) legalB) rewardC) referentD) coerciveAnswer: DReference: Supplier Relationship ProcessDifficulty: HardKeywords: supply chain, negotiation, competitive, orientation, sources, power

85) Approaches to e-purchasing include all of the following EXCEPT:A) catalog hubs.B) radio frequency identification (RFID).C) exchanges.D) electronic data interchange (EDI).Answer: BReference: Supplier Relationship ProcessDifficulty: HardKeywords: supply chain, buying, e-purchasingLearning Outcome: Compare common approaches to supply chain design.

86) Examples of radio frequency identification (RFID) could include all of the following EXCEPT:A) tracking the status of engineering changes during development of a new product line.B) tracking cases and pallets of products into and out of warehouse inventories.C) air travel use for baggage tracking.D) tracking the flow of parts through a manufacturing process.Answer: AReference: Supplier Relationship ProcessDifficulty: HardKeywords: supply chain, buying, e-purchasing

87) The practice whereby a manufacturer has inventories of materials on consignment from its suppliers falls under the scope of:A) inventory pooling control.B) virtual distribution.C) electronic inventory control.D) vendor-managed inventories.Answer: DReference: Supplier Relationship ProcessDifficulty: EasyKeywords: virtual, supply chain, traditionalLearning Outcome: Compare common approaches to supply chain design.


88) One of the benefits of a cooperative orientation in supplier relationships is:A) the buyer sometimes suggests ways to improve the supplier's operations.B) the supplier implements its own quality standards.C) the buyer does not have to share much information with the supplier.D) the supplier has complete freedom in choosing the delivery time.Answer: AReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: cooperative orientation, supplier relationshipLearning Outcome: Compare common approaches to supply chain design.

89) Which one of the following statements correctly represents a benefit of centralized buying?A) Local managers have more control over their business.B) Purchases and production schedules are meshed more easily.C) Customization to local preferences is simplified.D) Increased buying power can result in significant savings in purchasing costs.Answer: DReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: centralized buying, purchasingLearning Outcome: Compare common approaches to supply chain design.

90) Which one of the following statements is TRUE about a cooperative orientation in supplier relationships?A) It cannot be implemented in Western countries because competitive bidding is more effective in that culture.B) It cannot be implemented in the Western countries because it always benefits the supplier.C) It requires all parts and subassemblies to be purchased from the same supplier.D) It requires few suppliers for each item or service.Answer: DReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: cooperative orientation, supplierLearning Outcome: Compare common approaches to supply chain design.

91) Which of the following statements about cross-docking is NOT correct?A) Cross-docking is packing products on incoming shipments so they can be easily sorted for outgoing shipments based on their final destination.B) Cross-docking reduces inventory and storage space requirements, but handling costs and lead times tend to increase.C) Items are moved from incoming vehicles to outgoing vehicles without being stored in warehouse inventory.D) Inbound and outbound shipments must be tightly coordinated for cross-docking to work.Answer: BReference: Order Fulfillment ProcessDifficulty: ModerateKeywords: order fulfillment, cross-docking

92) Which of the following is NOT an advantage the Internet provides for a firm's order placement process?A) greater variety and better quality of products availableB) cost reductionC) increase in revenue flowD) pricing flexibility


E) global accessAnswer: AReference: Customer Relationship ProcessDifficulty: EasyKeywords: customer relationship, Internet, order placement

93) Which of the following is NOT an advantage resulting from a firm outsourcing its customer service process?A) specific detailed questions can be answered by the customer service representative.B) the firm gains more control over the customer interface process.C) customer service labor costs are low.D) automated systems are replaced by human contact.Answer: BReference: Customer Relationship ProcessDifficulty: ModerateKeywords: customer relationship, customer service, outsourcingLearning Outcome: Compare common approaches to supply chain design.

94) Which of the following is NOT a lever in an integrated supply chain?A) collaborative activities by supply chain partnersB) reduced replenishment lead timesC) reduced order lot sizesD) elimination of product shortages and backordersAnswer: DReference: Customer Relationship ProcessDifficulty: ModerateKeywords: supply chain, leversLearning Outcome: Compare common approaches to supply chain design.

95) What is the meaning of the acronym 3PL?A) three pofit/loss periodsB) three purchasing locationsC) three partner leverageD) third party logistics providerAnswer: DReference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: 3PL, third-party logisticsLearning Outcome: Compare common approaches to supply chain design.


96) What services are typically offered by a 3PL?A) transportationB) product designC) catalog hubD) auctionAnswer: AReference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: 3PL, third-party logisticsLearning Outcome: Compare common approaches to supply chain design.

97) The ________ is the phenomenon in supply chains whereby ordering patterns experience increasing variance as you proceed upstream in the chain.Answer: bullwhip effectReference: Supply Chain DynamicsDifficulty: ModerateKeywords: bullwhip effect, variance

98) ________ and ________ supply chain designs are well-suited to products with low demand and high variability.Answer: ATO (assemble-to-order), MTO (make-to-order)Reference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR, supply chain operations reference model

99) The bullwhip effect results in greater demand variability at the ________ end of the supply chain and lesser demand variability at the ________ end of the supply chain.Answer: factory or upstream, customer or downstreamReference: Supply Chain DynamicsDifficulty: ModerateKeywords: bullwhip effect

100) The ________ model focuses on the supply chain processes plan, source, make, deliver, and return.Answer: SCOR (supply chain operations reference)Reference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR, supply chain operations reference model

101) ________ brings product engineers, process engineers, marketers, buyers, information specialists, quality specialists and suppliers together to work jointly to design a product and all its processes.Answer: Concurrent engineeringReference: New Service or Product Development ProcessDifficulty: EasyKeywords: concurrent engineering, design, new


102) ________ is the management of the acquisition process, which includes deciding which suppliers to use, negotiating contracts, and deciding whether to buy locally.Answer: PurchasingReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: purchasing, acquisition

103) ________ is a supplier relation in which the buyer and seller are partners, each helping the other as much as possible.Answer: Cooperative orientationReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: cooperative supplier orientationLearning Outcome: Compare common approaches to supply chain design.

104) Steve-O engaged in ________ by using only suppliers that recycled and managed their flow of environmental waste.Answer: green purchasingReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: green purchasing, environmental wasteLearning Outcome: Discuss the role of operations management in corporate social responsibility and sustainability

105) ________ programs verify that potential suppliers have the capability to provide materials or services which the buying firms require.Answer: Supplier certificationReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier, certification

106) ________ is the awarding of a contract for an item or service to only one supplier.Answer: Sole sourcingReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: sole sourcing, source

107) ________ is a systematic effort to reduce the cost or improve the performance of products and services, either purchased or produced.Answer: Value analysisReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: value analysis


108) Knoxville Industries had their supplier design the improved body armor for their new apparel. This level of supplier involvement, known as ________ was sure to result in a pain free season.Answer: presourcingReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: presourcingLearning Outcome: Compare common approaches to supply chain design.

109) ________ are electronic marketplaces where buying and selling firms meet to do business, without protracted contract negotiations.Answer: ExchangesReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: exchangeLearning Outcome: Compare common approaches to supply chain design.

110) ________ is the condition where the buyer has purchasing power when the purchasing volume represents a significant share of the supplier's sales.Answer: Economic dependencyReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: economic dependencyLearning Outcome: Compare common approaches to supply chain design.

111) The ________ process involves the activities required to register the need for a product or service and to confirm the acceptance of the order.Answer: order placementReference: The Customer Relationship ProcessDifficulty: ModerateKeywords: order placement

112) The ________ process involves the activities required to deliver a product or service to a customer.Answer: order fulfillmentReference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: order fulfillment

113) ________ is an extreme application of the forward placement tactic.Answer: Vendor managed inventories (VMI)Reference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: forward placementLearning Outcome: Compare common approaches to supply chain design.


114) Draw a graph illustrating the bullwhip effect and discuss its impact on the measures of supply chain performance.Answer: Sketches will vary slightly, but should illustrate increased variability upstream in the supply chain. The inventory measures of supply chain performance, average aggregate inventory value, weeks of supply, and inventory turnover, will fluctuate as the whip is cracked. At times, the measures may be deceptively strong, but at other times in the bullwhip cycle the measures will be abysmal. Process measures relating to customer relationship, order fulfillment, and supplier relationship will also fluctuate although measures like "customer satisfaction" may deteriorate as customers tire of the rollercoaster performance of the supply chain. Financial measures like ROA, CGS, total revenue, cash flow, and working capital will also behave cyclically but will be weaker than a supply chain operating sans bullwhip effect. At times, members of the supply chain will be caught holding the bag on inventory and forced to dump it at bargain prices and at other times supply chain members will be unable to acquire the inventory they need or will have to pay exorbitant costs to acquire it.Reference: Supply Chain Dynamics/Measures of Supply Chain PerformanceDifficulty: ModerateKeywords: bullwhip effect, inventory measures

115) List and describe typical disruptions to the external supply chains.Answer: Typical disruptions include volume changes, product and service mix changes, late deliveries, and underfilled shipments. Volume changes occur when customers change the quantity of the product or service they have ordered for a specific date or unexpectedly demand more of a standard product or service. Product or service mix changes occur when customers change the mix of items in an order and cause a ripple effect throughout the supply chain. Late deliveries of materials or delays in essential services can force a firm to switch its schedule from production of one product model to another. Finally, suppliers that send partial shipments do so because of disruptions at their own plants.Reference: Supply Chain DynamicsDifficulty: ModerateKeywords: external supply chains, disruptions

116) .List and describe typical disruptions to the internal supply chain.Answer: Typical disruptions include internally generated shortages, engineering changes, new product or service introductions, product or service promotions, and information errors. Internally generated shortages are the shortage of parts that result from machine breakdowns or inexperienced workers. Engineering changes are changes to designs. The introduction of new products or services can cause disruptions. Product or service promotions are a common practice of firms producing standard products or services and can cause a spike in demand. Finally, information errors, such as demand-forecast errors or physical count errors, can cause disruptions.Reference: Supply Chain DynamicsDifficulty: ModerateKeywords: internal supply chains, disruptions

117) .What are the elements of the SCOR model?Answer: The SCOR model focuses on basic supply chain plan, source, make, deliver, and return processes, repeated again and again along the supply chain.Reference: Supply Chain DynamicsDifficulty: ModerateKeywords: SCOR

118) What are some ways that supply chain partners can collaborate on product designs? How do these ways differ?Answer: An approach that many firms are using in their design collaboration process is called early supplier involvement, which is a program that includes suppliers in the


design phase of a service or product. Suppliers provide suggestions for design changes and materials choices that will result in more efficient operations and higher quality. In the automotive industry, an even higher level of early supplier involvement is known as presourcing, whereby suppliers are selected early in a product's concept development stage and are given significant, if not total, responsibility for the design of certain components or systems of the product. Presourced suppliers also take responsibility for the cost, quality, and on-time delivery of the items they produce. Firms can also improve performance by engaging in value analysis, which is a systematic effort to reduce the cost or improve the performance of services or products, either purchased or produced. It is an intensive examination of the services, materials, processes, information systems, and flows of material involved in the production of a service or an item. Benefits include reduced production, materials, and distribution costs; improved profit margins; and increased customer satisfaction.Reference: Supply Chain DynamicsDifficulty: ModerateKeywords: presourcing, value analysis, early supplier involvement


119) The authors present four types of e-purchasing; what are they and how do they work? Which of these could be accomplished by the least IT-savvy supply chain? Why?Answer: The four approaches to e-purchasing presented in the text are: (1) electronic data interchange, (2) catalog hubs, (3) exchanges, and (4) auctions.Electronic data interchange (EDI) is a technology that enables the transmission of routine, standardized business documents from computer to computer over telephone or direct leased lines. Special communications software translates documents into and out of a generic form, allowing organizations to exchange information even if they have different hardware and software components. Invoices, purchase orders, and payments information are some of the routine documents that EDI can handleCatalog hubs can be used to reduce the costs of placing orders to suppliers as well as the costs of the services or goods themselves. Suppliers post their catalog of items on the hub, and buyers select what they need and purchase them electronically. The hub connects the firm to potentially hundreds of suppliers through the Internet, saving the costs of EDI, which requires one-to-one connections to individual suppliers. Moreover, the buying firm can negotiate prices with individual suppliers for items such as office supplies, technical equipment, services, and so forth. The catalog that the buying firm's employees see consists only of the approved items and the prices the buyer has prenegotiated with its suppliers. Employees use their PCs to select the items they need, and the system generates the purchase orders, which are electronically dispatched to the suppliers.An exchange is an electronic marketplace where buying firms and selling firms come together to do business. The exchange maintains relationships with buyers and sellers, making it easy to do business without the aspect of contract negotiations or other types of long-term conditions. Exchanges are often used for "spot" purchases to satisfy an immediate need at the lowest possible cost. Commodity items such as oil, steel, or energy fit this category.An extension of the exchange is the auction, where firms place competitive bids to buy something. For example, a site may be formed for a particular industry, and firms with excess capacity or materials can offer them for sale to the highest bidder. Bids can either be closed or open to the competition.Answers will vary as to the least IT-intensive approach, however EDI would probably not be the best choice for this position piece.Reference: Supplier Relationship ProcessDifficulty: ModerateKeywords: presourcing, value analysis, early supplier involvement

120) Compare and contrast competitive orientation versus cooperative orientation for suppler relations.Answer: Competitive orientation views supplier relations as a negotiation between buyer and seller. It is generally considered a zero-sum game–one side wins, the other loses. In cooperative orientation, the buyer and seller are partners, each one helping the other as much as possible. Generally, a cooperative orientation means long-term commitment, joint work on quality, and support by the buyer of the supplier's managerial, technological, and capacity development. Sharing of information takes place in both directions.Reference: Supplier Relationship ProcessDifficulty: ModerateKeywords: competitive orientation, cooperative orientation, supplier relationsLearning Outcome: Compare common approaches to supply chain design.


121) Define the term logistics and briefly discuss any three important logistics decisions.Answer: Logistics is the process whereby products or services are delivered to the customer. The five important decisions presented in the text are 1) degree of ownership, 2) facility location, 3) mode selection, 4) capacity level, and 5) amount of cross docking.Ownership. The firm has the most control over the logistics process if it owns and operates it, thereby becoming a private carrier. Although this approach may help to better achieve the firm's competitive priorities, the cost of equipment, labor, facilities, and maintenance could be high. The firm could instead leave the distribution to a third-party logistics provider (3PL), negotiating with the carrier for specific services. Those services could involve taking over a major portion of the order fulfillment process. 3PLs typically provide integrated services, from transportation and packaging services to warehousing and inventory management, for corporate clients that need to get their products to market. They can help with the design of a client's supply chain and facilitate the flow of information up and down the supply chain. Facility Location. A critical decision affecting the effectiveness of supply chains is the location of facilities that serve as points of service, storage, or manufacture. Mode Selection. The five basic modes of transportation are (1) truck, (2) train, (3) ship, (4) pipeline, and (5) airplane. The drivers for the selection should be the firm's competitive priorities. Capacity. The performance of a logistics process is directly linked to its capacity. The ownership decision and the modal selection decision are often intertwined because the question of how much capacity is needed must be resolved.Reference: The Order Fulfillment ProcessDifficulty: ModerateKeywords: competitive orientation, cooperative orientation, supplier relationsLearning Outcome: Compare common approaches to supply chain design.

122) The Burdell Wheel and Tire Company assembles tires to wheel rims for use on cars during manufacture of vehicles by the automotive industry. Burdell wants to locate a low-cost supplier for the tires he uses in his assembly operation. The supplier will be selected based on total annual cost to supply Burdell's needs. Burdell's annual requirements are for 25,000 tires, and the company operates 250 days a year. The following data are available for two suppliers being considered.

SUPPLIER


SHIPPING COSTS

PRICE / TIRE (p)


LEAD TIME (DAYS)

ADMIN. COSTS

LEXINGTON TIRE 2,000 $18,000 $30 $6.00 6 $15,000IRMO AUTO 1,000 $25,000 $29 $5.80 4 $18,000

Using the Total Cost Analysis for Supplier Selection, which supplier should Burdell choose? Provide details to justify your answer.Answer: Irmo Auto Total Cost of $773,220 Vs. Lexington's cost of $792,600Reference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills


123) The Burdell Wheel and Tire Company has completed a total cost analysis for two suppliers of tires to support their business. They also consider delivery speed, consistent quality and volume flexibility in their selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion (1 = poor, 10 = excellent). The data are shown in the following table.

CRITERION WEIGHTLEXINGTON

TIRE IRMO AUTOTotal Cost 20 5 6Delivery Speed 25 6 5Consistent Quality 25 8 6Environmental Sensitivity 30 4 7

Using the preference matrix approach for selecting suppliers, which supplier should Burdell select?Answer: Irmo AutoReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

124) The Steele Bike Company assembles bicycles for a major retail toy outlet. The main purchase is bicycle frames for making these bicycles. Dan Steele, the owner, wants to locate a low-cost supplier for the frames used in this assembly operation. The supplier will be selected based on total annual cost to supply Steele's needs. Annual requirements are for 100,000 frames, and the company operates 200 days a year. Two suppliers, Acme and State, have quoted the same price for the frames, but quantities, lead times and shipping costs are considerably different. The following data are available for the two suppliers.

SUPPLIER


SHIPPING COSTS

PRICE / FRAME (p)


LEAD TIME (DAYS)

ADMIN. COSTS

ACME 7,500 $35,000 $39 $7.80 7 $20,000STATE 2,500 $60,000 $39 $7.80 3 $45,000

Based on your Total Cost Analysis, which supplier should be selected if the lower cost supplier is chosen?Answer: AcmeReference: Supplier Relationship ProcessDifficulty: HardKeywords: supplier relationship, sourcing, supplier selectionAACSB: Analytic skills


125) The Steele Bike Company has completed a total cost analysis for two suppliers of bicycle frames to support their business. They also consider on-time speed, top quality and customization in their selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion (1 = poor, 10 = excellent). The data are shown in the following table.

CRITERION WEIGHT ACME STATETotal Cost 15 8 4On-Time Delivery 20 5 7Top Quality 30 7 6Customization 35 4 6

Using the preference matrix (total weighted score) approach for selecting suppliers, which supplier should Steele select? What is the total weighted score?Answer: State, with a total weighted score of 590Reference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills

126) The Bahouth Bike Company has completed an exhaustive analysis for four suppliers of bicycle frames to support their business. They considered on-time speed, top quality and customization in their selection process. Each criterion is given a weight (total = 100 points), and each supplier is scored on each criterion (1 = poor, 10 = excellent). The data are shown in the following table.

CRITERION WEIGHT A B C DSustainability 3 9 2 0 1Cost 6 3 0 3 10Quality 8 4 0 9 4On-time Delivery 4 0 6 1 0

Using the preference matrix (total weighted score) approach for selecting suppliers, which supplier should Bahouth select? What is its total weighted score?Answer: Supplier D has a weighted score of 95 which is 5 higher than Supplier C, 18 higher than A, and 65 higher than BReference: Supplier Relationship ProcessDifficulty: ModerateKeywords: supplier relationship, sourcing, supplier selection, preference matrixAACSB: Analytic skills


127) Jackson Sheds has four different warehouse configurations under study, ranging from four warehouses to seven warehouses (only integer values). Each warehouse has a capacity of 300 units and costs $200 to maintain over the course of a year. Demand can range from 1000 units per year up to 2000 units in increments of 250 units. If the system warehouse capacity is sufficient to handle the year's demand, then the per unit cost is $2 per unit, but if the warehouse capacity is insufficient, the per unit cost for each unit in excess of system capacity is $5 per unit. The likelihood for each possible demand is shown in the table.

Likelihood 0.1 0.2 0.3 0.3 0.1Demand 1000 1250 1500 1750 2000

Which warehouse configuration is best for Jackson Sheds?Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at a six warehouse system.

Reference: The Order Fulfillment ProcessDifficulty: HardKeywords: expected valueAACSB: Analytic skills




Which warehouse configuration is best for Jackson Sheds?Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at a five-warehouse system.





Which warehouse configuration is best for Jackson Sheds?Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at a seven-warehouse system.





Which warehouse configuration is best for Jackson Sheds?Answer: The cost table for four through seven warehouses is shown; the lowest cost occurs at both the four and five warehouse systems.



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