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SCM Exam 2

Terms in this set (148)

Safety stock exists for which of the following reasons?
To allow less expensive purchases by buying more.

To allow for transportation time.

To provide protection against the uncertainties of supply and demand.

None of these selections.
To provide protection against the uncertainties of supply and demand.
Which of the following is NOT a role of inventory?

Increasing quality of finished goods

Balancing supply and demand

Buffering uncertainty in supply or demand

Enabling geographical specialization
Increasing quality of finished goods
A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal boxwould be an example of what type of inventory?

Raw material

Work in process

Finished goods

Maintenance, repair, and operating supplies (MRO)
Work in process
Ball Corporation sells aluminum cans to Anheuser-Busch to use in making six-packs of Budweiser.Anheuser-Busch has a warehouse located at its plant in St. Louis that contains boxes of empty cansreceived from Ball. From Anheuser-Busch's perspective, the cans in this warehouse represent:

Raw materials and components inventory.

Work in process inventory.

Finished goods inventory.

MRO inventory.
Raw materials and components inventory.
Taxes and insurance costs are an example of which of the following costs?

Ordering cost.

Governmental costs.

Carrying (or holding) costs.

None of these selections.
Carrying (or holding) costs.
John Jones of Jones Corporation determined that the cost related to processing an invoice from asupplier was approximately $100 per invoice. This cost is an example of:

Inventory holding (or carrying) cost.

Inventory investment.

Wasted expense.

Order cost.
Order cost
John Jones of Jones Corporation determined that the cost related to processing an invoice from asupplier was approximately $100 per invoice. This cost is an example of:

Inventory holding (or carrying) cost.

Inventory investment.

Wasted expense.

Order cost.
Order cost
Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000.Johnson has determined inventory carrying cost to be 25 percent. Johnson's inventory carrying costwas:

$250,000.

$275,000.

$300,000.

$500,000.
$275,000
Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20. What is theannual inventory turnover?

10

9

0.75

15
9
If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, andanticipated sales are $50,000 per day, what is the days of supply?

28 days

70 days

60 days

32 days
28 days
Natalie's Cabinets makes cabinets at an average cost of $2,000. Last year, Natalie sold 5,000 units ofthe cabinets and had an annual turnover rate of four times. Natalie has estimated her inventory carryingcost to be 25 percent. What was Natalie's annual inventory carrying cost?

$625,000

$250,000

$312,500

$125,000
$625,000
Next year a tire company wants to have an inventory turnover rate of 22 times per year. To achieve thisturnover rate, what should be the average number of days of supply?

16.6 days

36 days

0.6 days

22 days
16.6 days
Independent demand inventory models can be used to determine:

When to buy and how much to buy.

Safety stock levels.

Stock levels for regular and one-time buys.

All of these selections.
All of these selections
Alpha Company places 10 orders per year with its supplier. Each order is for an amount exactly equal tothe EOQ. Alpha's order cost has been determined to be $50 per order. Alpha carries no safety stock atall. What is Alpha's annual inventory carrying cost?

Cannot be determined without further information

$50

$250

$500
$500
Jones Company has calculated that the EOQ for a particular item is 1,000 units. However, Jones doesnot have enough capital to order that many units each time, so it only orders 250 units at a time. Thiswill result in:

Higher annual inventory carrying cost than ordering the EOQ quantity.

Lower annual inventory carrying cost than ordering the EOQ quantity.

Lower annual ordering cost than ordering the EOQ quantity.

Cannot be determined.
Lower annual inventory carrying cost than ordering the EOQ quantity.
When calculating a reorder point (ROP), which of the following factors WOULD NOT affect thecalculation?

Item's EOQ.

Delivery lead time.

Demand during the delivery lead time.

Standard deviation of demand during delivery lead time.

All of these would affect the ROP.
Item's EOQ
Which of the following statements is true regarding a periodic review inventory system?

Safety stock is not needed when periodic review systems are used.

The same quantity of inventory is ordered each time an order is placed.

Inventory replenishment orders are placed in equal increments of time.

None of the selections are true.
None of the selections are true
What might a company do to reduce the amount of cycle stock it holds?

Attempt to reduce supplier lead time.

Always take advantage of supplier quantity discounts.

Attempt to reduce demand variation.

Attempt to reduce order costs.
Attempt to reduce order costs
Which of the following might a company try to do to reduce the total amount of safety stock it holds?

Implement and use ABC analysis of inventory items.

Attempt to reduce variation in supplier lead times.

Implement demand management approaches.

All of these selections.
All of these selections
The ABC analysis used for analyzing inventory is an example of:

Safety stock calculation.

Regression analysis.

Pareto's law.

Inventory carrying cost.
Pareto's law
___________ inventory is the costliest form of inventory one can hold.

Finished goods

Raw materials

Components

Work-in-process
Finished goods
When small changes generated by a customer produce progressively larger changes at each stageupstream in the supply chain, this is known as:

Buffering.

Bullwhip effect.

Pareto effect.

Supplier-managed inventory.
Bullwhip effect
Which of the following is NOT often associated with supplier-managed inventory (SMI) arrangements?

Long-term commitments from both parties.

Supplier representative located at the customer site.

Customers recommend to suppliers how they should schedule production.

Supplier places replenishment orders.

All of these are typically associated with SMI.
Customers recommend to suppliers how they should schedule production.
A difference between periodic review and continuous review inventory systems is:

Periodic review is more expensive than continuous review

Continuous review usually requires more safety stock than periodic review

In one system, time triggers orders; in the other, quantity triggers orders

Periodic review requires real-time monitoring systems
In one system, time triggers orders; in the other, quantity triggers orders
Suppose a chief supply chain officer takes the total of all purchasing managers' annual salaries anddivides this number by the number of purchase orders placed in a year. This calculation would provideinsight into what kind of inventory cost?

Purchasing costs

Ordering costs

Holding costs

System management costs
Ordering costs
The main advantage of blockchain over conventional ways to manage transactions across supply chainpartners is:

Unnecessary transactions are blocked from occurring.

There is no need for a central authority to validate transactions.

Blockchains are easy to construct.

Legal documents are no longer required.
There is no need for a central authority to validate transactions.
In the lean systems approach, as a system improves, it should have ____________ inventory on hand.

More

The same amount of

Less

Twice the amount of
Less
As lean systems thinking is implemented, the amount of training that employees receive:

Tends to be about the same as with other manufacturing philosophies.

Tends to increase.

Tends to be reduced dramatically, replaced instead by continuous improvement.

Is focused exclusively on statistical process control.
Teds to increase
When lean systems are implemented:

Variable costs tend to increase, while fixed costs tend to decrease.

Fixed costs tend to increase, while variable costs tend to decrease.

Fixed and variable costs both tend to decrease.

Contribution margin tends to decrease.
Fixed and variable costs both tend to decrease.
In a lean system, waste is any action that

Costs money.

Could be done by an outside supplier.

Does not generate value.

Must be performed manually.
Does not generate value
John Jones is a plant manager. He believes his plant is guilty of "waste of overproduction." Which of thefollowing symptoms might he have observed that led to this belief?

Idle equipment.

Excess inventory.

High customer returns of products.

All of these.
Excess Inventory
We observe a man working on a setup. During the process of setting up, the man positions the die at afirst position. He then runs through a few pieces to check whether or not they are acceptable. He thenrepositions the die and repeats the process. What we have observed is which of the following forms ofwaste?

Processing waste

Waste from product defects

Inventory waste

Waste of motion
Processing waste
Most of the tools and techniques used in lean systems seek to:

Reduce variability from the system.

Reduce the operator's discretion.

Improve product quality.

None of these.
Reduce variability from the system.
In our accounting department, one of the actions taken by a clerk has been to identify the mostfrequently used forms and to put them in an area where they can be easily accessed. The other lessfrequently used forms have been tagged and put in their own separate area. This action likely occurredfrom the use of which lean tool?

A 5-S program

Kanban scheduling

Jidoka

Poka-yoke
A 5-S program
Lean systems applications have found the most acceptance and adoption in:

Service firms.

Entire supply chains.

Design activities.

Manufacturing firms.
Manufacturing firms.
Applying lean systems to supply chain relationships has which of the following risks?

It encourages companies to buy at the lowest unit price.

It encourages firms in the supply chain to hold extra inventory to protect themselves fromfailure.

It makes the supply chain more vulnerable to performance breakdowns.

All of these.
It makes the supply chain more vulnerable to performance breakdowns.
Which two of the following areas does lean/just-in-time production focus its attention on?
I. Cost
II. Quality
III. Variance
IV. Waste

I and III

II and IV

I and II

III and IV
III and IV
Misuse of automation is a root cause of which of the following types of waste?

Overproduction

Process

Motion

Rework
Overproduction
Which of the following most accurately describes the role of quality in a lean/just-in-time manufacturingenvironment?

High quality is an important waste reduction tool. Reducing defects reduces wasted materialand capacity, and reduces the need for safety stocks.

Quality has little to do with JIT. JIT is primarily a scheduling and inventory control tool.

The important thing is to screen the defects out of incoming components and raw materials. Ifthis is done, the production process can carry on without much concern for quality.

Because everything is being done just in time, there is no time to worry about quality duringthe production process. Instead, we rely on screening out defects during finished goodsinspection.
High quality is an important waste reduction tool. Reducing defects reduces wasted materialand capacity, and reduces the need for safety stocks.
Which of the following would you NOT expect to find in a company attempting to implement lean/just-in-time production?

Emphasis on flexible, cross-trained workers

Inspections after each piece is produced

Frequent changeovers from one product to another

Emphasis on preventive maintenance for equipment
Inspections after each piece is produced
McGreen Burger Shop sells about two burgers per minute. Although the cook can cook up to 10burgers per minute, he starts to cook another burger only after the salesperson removes a burger fromthe ramp. The ramp is large enough to hold only five burgers and keep them warm until a sale is made.This is an example of a:

Pull system.

Push system.

Group technology.

Poka-yoke.
Pull system.
Which of the following is NOT associated with quality at the source?

Total productive maintenance

Jidoka

Stop-and-fix systems

Andons (trouble lights)
Total productive maintenance
Which of the following is NOT one of the principles associated with lean/just-in-time production?

Encourage use of unique components.

Specify value for each specific product.

Pursue perfection.

Let the customer pull value from the producer.
Encourage use of unique components
Which of the following lean principles best communicates the notion of demand synchronization?

Produce only the products that the customer wants.

Build with perfect quality.

Build only as quickly as customers want them.

Build only with features that the customers want and no others.
Build only as quickly as customers want them.
Which of the following is an important belief found in lean cultures?

Inventory is to be reduced.

Cost must be reduced.

Management must be done through the use of appropriate tools and procedures.

Waste is a symptom.
Waste is a symptom
In which operational setting has lean/just-in-time experienced the lowest levels ofacceptance/implementation?

Manufacturing

Services

Across the supply chain

Turbulent business settings
Turbulent business settings
The use of Lean and Lean Systems is most supportive of which of the following competitive priorities,as described in Chapter 2?

Quality

Cost

Timeliness

Innovation
Cost
Lean design strives to achieve which of the following objectives?

Design products at the lowest cost

Design products that can be built with existing equipment

Design products that exactly meet customers' needs

Design products with the fewest number of options
Design products that exactly meet customers' needs
What is the possible impact of lean systems, if taken to its extreme, on supply chain risk?

No impact - they are not related

Positive impact - lean reduces risk

Negative impact - lean increases risk

Yet to be determined - the data is not yet in
Negative impact - lean increases risk
Which phrase/word best captures what lean is?

A set of effective, well defined tools designed to reduce waste

A quantitative methodology for attacking variance

A procedure to be used within operation management and supply chain systems

A corporate philosophy
A corporate philosophy
An initial step in implementing lean is:

Lower the break-even point so smaller quantities can be economically produced.

Outsource any non-core activity that can be done more efficiently by a supplier than by the firm.

Increase the contribution margin of product being sold.

Empower Kaizen teams to improve specific processes/activities.
Outsource any non-core activity that can be done more efficiently by a supplier than by thefirm.
A lean systems culture is one that:

Focuses on maximizing output while minimizing input.

Produces mass-market products with wide appeal or applicability.

Places high value on respect for the people in the system.

Values accountability for errors and requires conformance.
Places high value on respect for the people in the system.
What is the defining objective of lean?

Eliminating waste and its causes

Reducing process variance

Producing a product that a customer will want

Reducing cost
Eliminating waste and its causes
From an operations perspective, companies should strive to:

Provide customer success to all customers.

Realize different customer management approaches may be appropriate for differentcustomers.

Realize that all customers desire close customer success types of relationships.

Never refuse to do business with a customer.
Realize different customer management approaches may be appropriate for differentcustomers.
Johnson Company has the following data about customer orders for the month of June:

Orders Received: 5,000 orders
Total Units Ordered: 40,000 units
Total Units Delivered: 37,800
Total Orders Delivered Complete: 4,600

What was Johnson's unit fill rate?

92 percent

94.5 percent

12.5 percent

91 percent
94.5 percent
Refer to the following information. What is the unit fill rate? Orders Units Ordered# ofOrderLines Units DeliveredLines DeliveredCompleteOrder DeliveredComplete2,000 30,000 6,000 28,500 5,600 1,82095 percent98 percent92 percent99 percent
USE THE PDF
Order-to-delivery lead time generally would be longest for which type of product?

One that is engineered to order

One that is assembled to order

One that is made to stock

One that is made to order
One that is engineered to order
Which measure of basic service will most likely show poorest performance for a firm?

Unit fill rate

Order fill rate

Line fill rate

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

Customer service.

Customer satisfaction.

Customer happiness.

Customer success.
Customer satisfaction
Jones Company promised a customer that the customer would receive at least 98 percent of all itemsordered. In fact, the customer received 95 percent of the items. This is an example of which "gap" inthe customer satisfaction model?

Performance gap

Knowledge gap

Standards gap

Communications gap
Communications gap
Alpha Company has a performance standard of 97 percent fill rate. Last month it achieved a 94 percentfill rate. This is an example of:

A knowledge gap.

A standards gap.

A performance gap.

A perception gap.
A performance gap
A company surveyed both its customers and its senior management about customer expectations.Senior management's perceptions of customer expectations did not match customers' actualexpectations. This is an example of:

A knowledge gap.

A standards gap.

A performance gap.

A perception gap.
A knowledge gap
Senior management thought customers expected a rate of at least 96 percent for on-time delivery.However, senior management established a standard of 94 percent. The difference is the:

Satisfaction gap.

Performance gap.

Standards gap.

Knowledge gap.
Standards gap
If a company has some customers who express that they are satisfied with the company's performance,the company can count on the fact that:

Those customers are happy.

Those customers will continue to buy and be loyal.

The company meets requirements of those customers.

None of these selections.
None of these selections
The difference between a "customer success" focus and a "customer satisfaction" focus is that:

Customer satisfaction is more difficult to achieve.

Customer success deals with expectations of customers, while customer satisfaction dealswith their requirements.

Customer satisfaction deals with expectations, while customer success deals withrequirements.

There really isn't any difference.
Customer satisfaction deals with expectations, while customer success deals with requirements.
Which customer management approach requires a comprehensive supply chain perspective on thepart of operations executives?

Customer success

Customer satisfaction

Customer service

Customer happiness
Customer success
Customer relationship management attempts to:

Ensure the development of customer success for customers.

Ensure the development of strategically appropriate relationships with customers.

Meet the expectations of customers.

Use technology to replace human interaction with customers.
Ensure the development of strategically appropriate relationships with customers.
The use of technology to collect and analyze data concerning customers' buying behavior is animportant aspect of:

Basic customer service.

Customer satisfaction.

Customer relationship management.

Customer success.
Customer relationship management
Commitment to "customer success" is likely the best approach for a firm to use with:

All of its customers.

Customers who represent a small source of revenue for the firm.

Customers who have high expectations.

None of these selections.
None of these selections
Customers who are both low revenue generators and low profit generators for a firm should be:

Terminated as customers.

Provided with a minimum level of customer service.

Reviewed for possible termination or continuation.

Treated with customer success relationships to improve revenue and profit.
Reviewed for possible termination or continuation.
Anthony Company has analyzed its customer base and realizes that it has a few customers whoprovide both high revenue and high profitability. This suggests that the appropriate commitment tothose customers would be:

Customer success.

Review reason for doing business.

Good basic customer service.

Customer satisfaction.
Customer success
Lead-time performance is an element of:

Minimal importance to most industrial customers.

Basic service.

Customer satisfaction.

Customer success.
Basic service
A service strategy that allows customers many different options for ordering and fulfillment ofpurchases is known as:

Customer success.

Omni-channel.

Flexible purchasing.

Customer convenience.
Omni-channel
If shorter lead times are also typically the most reliable, then which market orientation is likely toprovide more reliable order fulfillment?

Engineer to order

Assemble to order

Make to order

Make to stock
Make to stock
An example of a major shift in customer expectations driven by the actions of a leading competitor is:

Amazon effect.

Google gambit.

Omni-channel.

Customer relationship management.
Amazon effect
Using a service like Uber to deliver orders is broadly known as:

Uberizing

Amazon Prime

Third-party distribution

Crowdsourcing
Crowdsourcing
All of the following are supply management goals EXCEPT:

Ensure timely availability of resources.

Purchase at the lowest price.

Enhance quality.

Assess technology and innovation.
Purchase at the lowest price
Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided tocontinue to outsource but bring the production back to a company located in the United States. Thisdecision was likely made after Zanda:

Conducted a spend analysis.

Conducted a make or buy analysis.

Examined total cost of ownership.

Developed supplier certification processes.
Examined total cost of ownership
If you are evaluating whether a supplier's workforce is receiving fair wages, you are most likely doinga(n):

Spend analysis.

Assessment of sustainability.

ISO 9000 assessment.

Total cost of ownership assessment.
Assessment of sustainability
Which of the following would NOT be a step in conducting an insourcing/outsourcing analysis?

Assessing quantitative costs of outsourcing

Evaluating new suppliers who could make the SKU

Assessing the relationship of the product to the firm's core competencies

Conducting a detailed internal audit of purchasing practices
Conducting a detailed internal audit of purchasing practices
Outsourcing is often a good choice when:

There are only a few suppliers.

A product is in the mature phase of the life cycle.

Technology is new.

The product is critical to a firm's competitiveness.
A product is in the mature phase of the life cycle.
Qualitative factors that should be assessed when making an insourcing/outsourcing decision include allof the following EXCEPT:

Compatibility of the supplier's organizational culture and values with your company

The importance assigned to the supplier's location

The skills and knowledge of the supplier's management team

The costs incurred at the start of the contract
The costs incurred at the start of the contract
Which of the following is NOT a benefit of outsourcing?

Greater flexibility to change technology

Better access to market information

Lower supply management costs

Less capital needed for investment
Lower supply management costs
The process of understanding how a firm is spending its money and with which suppliers is called:

Strategic sourcing.

Make or buy analysis.

Market analysis.

Spend analysis.
Spend analysis
Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item, hasbought 20 different models of that item, and total expenditures last year for the item were $100,000.Aspen most likely is conducting:

Supplier audits.

Spend analysis.

Supplier certification.

Make or buy analysis.
Spend analysis
Jones Company has identified an item for which the supply risk is high and the value of the purchase tothe firm is low. A recommended sourcing strategy for Jones is to:

Use multiple sourcing.

Increase efficiencies.

Build partnerships.

Consolidate purchases.
Use multiple sourcing
Moderate- to high-risk purchases with low to moderate levels of spend are categorized as:

Noncritical.

Leverage.

Bottleneck.

Strategic.
Bottleneck
Benefits of single sourcing include all of the following EXCEPT:

Quantity discounts.

More consistent quality.

Better supplier relationships.

Less supply risk.
Less supply risk
A primary reason for using global suppliers is to:

Improve sustainability.

Reduce transportation costs.

Take advantage of free trade agreements.

Work with the same suppliers in many different regions of the world.
Work with the same suppliers in many different regions of the world.
A global food products company makes soups that are specifically tailored to the tastes of consumersin individual countries. What sourcing strategy is the company likely to use for its fresh ingredients suchas vegetables?

Local, close to its production plant when possible.

National, using suppliers within each country.

Global, using the same suppliers across the world.

Low-cost country sourcing.
Local, close to its production plant when possible.
A relationship with a supplier that is characterized by high levels of distrust, little communication, andshort-term transactions is called a(n):

Adversarial relationship.

Arm's-length relationship.

Acceptance of mutual goals.

Full partnership.
Adversarial relationship
Which of the following is NOT true with respect to an RFQ or RFP?

It describes the purchase requirements.

It is the first step in competitive bidding.

It is often communicated to suppliers electronically.

It is used to determine weights in supplier scorecards.
It is used to determine weights in supplier scorecards.
Which of the following is true about the use of weighted scoring models for supplier selection?

Once developed, the model weights should never change.

The supply management department should determine the weights.

The highest-scoring supplier should always be selected to receive the business.

There is a good deal of subjectivity in developing and using the model.
There is a good deal of subjectivity in developing and using the model.
Negotiation is typically used when:

Price is the most important factor.

There are many equally qualified suppliers who are willing to compete.

Early supplier involvement is needed in new product development.

There are standard product specifications that are clear and complete.
Early supplier involvement is needed in new product development.
A company has decided that it no longer needs to extensively count and inspect the products itreceives from a particular supplier. This suggests that the purchasing company has begun:

Spend analysis.

Supplier certification.

Process simplification.

Time reduction analysis.
Supplier certification.
Williams Inc. has acquired software to help manage interactions with its supply base. This suggests thatWilliams Inc. is involved in:

Vendor-managed inventory.

Supplier relationship management.

Online reverse auctions.

Supplier auditing.
Supplier relationship management.
Supply management:

Only focuses on direct materials that are used in a company's products.

Is essential for an organization to attain its strategic objectives.

Is only involved with supplier selection.

Should always strive for the lowest purchase price.
Is essential for an organization to attain its strategic objectives.
The identification, evaluation, selection, and management of suppliers is:

Sourcing.

Supply management.

Supply chain management.

Spend analysis.
Sourcing
A company that had been using single sourcing decided to add a second supplier for one of its key rawmaterials. Which supply management goal does this BEST accomplish?

Fostering sustainability.

Reducing total costs.

Identifying, assessing, and mitigating supply chain risk.

Accessing technology and innovation.
Identifying, assessing, and mitigating supply chain risk.
A company requires its suppliers to make its products in at least three different locations around theworld. Which supply management goal does this BEST accomplish?

Fostering sustainability.

Reducing total costs.

Identifying, assessing, and mitigating supply chain risk.

Accessing technology and innovation.
Identifying, assessing, and mitigating supply chain risk.
A company's supplier for a critical part was selected based on the lowest purchase price. Six months later, the company's warranty costs began to rise because of defective parts. The company hasexperienced:

Reduced sustainability.

Higher total costs of ownership.

Problems with availability of resources.

Higher levels of spend analysis.
Higher total costs of ownership.
All of the following can increase supply chain risk except:

Using a supplier that is having financial difficulty.

Holding higher levels of inventory of critical materials.

A company in Canada using suppliers in Thailand.

Single sourcing.
Holding higher levels of inventory of critical materials.
Sustainability:

Focuses primarily on increasing environmental compliance.

Can lower a company's total cost.

Does not include worker safety.

Focuses only on social issues.
Can lower a company's total cost.
Outsourcing:

Should be used for an organization's core activities.

Always uses suppliers from developing countries.

Can reduce a company's capital requirements

Is only done for services.
Can reduce a company's capital requirements
Which activity is most likely to be outsourced by an automotive company such as Ford Motor Co.?

The concept design for future cars.

Final car assembly.

Design of the engine.

Production of tires.
Production of tires
Stainless steel is an important raw material for an appliance company. Steel accounts for a high level ofspend and is critical to customer satisfaction. Further, only three suppliers worldwide can produce steelto meet the company's quality standards. Which is appropriate in this situation?

Using electronic catalogs for steel.

Finding substitute materials.

Using competition to select suppliers.

Building collaborative partnerships with suppliers.
Building collaborative partnerships with suppliers.
Determining the right number of suppliers that a company should use is:

Spend analysis.

Strategic sourcing.

Supply base optimization.

Supply chain resilience.
Supply base optimization
Local sourcing:

Reduces delivery costs.

Is called "nearshoring."

Is used when cost is the primary objective.

Takes advantage of lower trade barriers from trade agreements.
Reduces delivery costs
Competitive bidding should be used when:

There is only one qualified supplier.

Product innovation is more important than price.

The spend is small.

Product specifications are known and clear.
Product specifications are known and clear.
A comprehensive system, facilitated by software, that manages the firm's interactions with its supplybase is:

Supplier certification.

Supplier scorecard.

Supplier relationship management.

Collaborative planning, forecasting, and replenishment.
Supplier relationship management.
Which of the following is NOT a role of logistics management?

Planning the forward flow of materials.

Controlling the storage of goods.

Designing the reverse flow of goods.

Selecting suppliers for parts and components.
Selecting suppliers for parts and components.
Which of the following is NOT an activity of integrated logistics management?

Transportation management.

Selecting raw material suppliers.

Order processing.

Determining the number and locations of warehouses.
Selecting raw material suppliers.
Logistics is responsible for all of the following EXCEPT:

Determining how much inventory to hold.

Setting product quality standards.

Determining where to hold inventory in the supply chain.

Selecting the mode of transportation used to ship products.
Setting product quality standards.
Logistics management is important to an organization because:

Typically, 50 percent to 75 percent of an organization's costs are attributed to logistics.

Logistics affects customer service.

Offshoring of services is increasing.

Its primary role is managing inbound logistics.
Logistics affects customer service.
All of the following can improve order processing EXCEPT:

Increasing the number of orders entered manually.

Redesigning the website so it is easier for customers to use.

Integrating internal information systems.

Automating order entry using robotic process automation.
Increasing the number of orders entered manually.
Jones Company decided to limit deliveries to selected areas to specific days of the week to savemoney on transportation. This is an example of:

Market consolidation.

Pooled delivery consolidation.

Scheduled delivery consolidation.

Transportation consolidation.
Scheduled delivery consolidation.
Smith Company learned that several other shippers in its hometown had customers located in thesame markets that it serves. With this information, Jones should investigate the possibility of:

Market area consolidation.

Scheduled delivery consolidation.

Pooled delivery consolidation.

Traffic consolidation.
Pooled delivery consolidation
The Williams Co. combines all of its orders going to Tokyo, Japan, during the month into a singleshipment. This is an example of:

Market area consolidation.

Pooled delivery consolidation.

Economies of distance.

Scheduled delivery consolidation.
Market area consolidation.
With respect to transportation regulation today in the United States:

There is no economic regulation of transportation.

There is more economic regulation than ever before.

There is very little safety/social regulation.

There is more safety/social regulation than ever before.
There is more safety/social regulation than ever before.
Which of the following is an example of economic regulation?

Restrictions on shipping hazardous materials.

C-TPAT.

Restrictions on truck driver hours.

Restrictions on the type of logistics services a provider can offer.
Restrictions on the type of logistics services a provider can offer.
All of the following are safety and security regulations EXCEPT:

C-TPAT.

Restrictions on truck driver hours.

Restrictions on who can form a logistics company.

Controls on hazardous materials transportation.
Restrictions on who can form a logistics company.
With respect to the following operating service characteristics of the modes of transportation, whichcombination is INCORRECTLY specified?

Speed:air is best; pipeline is worst.

Availability: truck is best; pipeline is worst.

Capability: pipeline is best; water is worst.

Dependability: pipeline is best; air is worst.
Capability: pipeline is best; water is worst.
With respect to the following operating service characteristics of the modes of transportation, whichcombination is CORRECTLY specified?

Speed: air is best; pipeline is worst.

Availability: air is best; pipeline is worst.

Capability: rail is best; air is worst.

Dependability: pipeline is best; truck is worst.
Speed: air is best; pipeline is worst.
Generally, the most expensive transportation mode (from among the following choices) is:

Air.

Water.

Truck.

Rail.
Air
In the United States, most freight is shipped by:

Pipeline.

Air.

Rail.

Truck.
Truck.
Your company needs to ship 10 heart pacemakers that cost $10,000 each from Indianapolis, Indiana, toMiami, Florida. Which transportation mode should you use?

Water.

Air.

Rail.

Truck.
Air.
Which of the following transportation modes has relatively low fixed costs but high variable costs?

Pipeline.

Air.

Rail.

Truck.
Truck.
Intermodal transportation:

Is only used for international shipments.

Achieves economies of distance.

Achieves economies of scale and service availability.

Always combines transportation by truck and rail.
Achieves economies of scale and service availability.
The Smith Company has decided to change its shipping mode from truck to rail. Its inventory levels will:

Increase.

Decrease.

Not change.

More information is needed to determine the change in inventory levels.
Increase.
The increasing size of container ships is being driven by:

Economies of scale

.Total cost of ownership.

Market consolidation.

Economies of distance.
Economies of scale
Which transportation mode has the highest level of greenhouse gas emissions per ton?

Air.

Rail.

Long-haul truck.

Light duty delivery truck.
Air.
One function of distribution centers (DC) is "consolidation." This means that the warehouse/distributioncenter is used to:

Group small inbound loads into larger outbound loads.

Collect products/packaging materials that are sent back for disassembly, reclamation, ordisposal.

Hold inventory to buffer the system from variability in either supply or demand.

Hold inventory needed because of seasonal requirements.
Group small inbound loads into larger outbound loads.
Products are received, sorted, sequenced, and selected into loads at a:

Stockpiling center.

Product support warehouse.

Transshipment point.

Reverse logistics center.
Transshipment point.
Splitting shipments into individual orders and arranging them for local delivery to customers is:

Stockpiling.

Cross-docking.

Break-bulk.

Reverse logistics.
Break-bulk
Returned products are generally handled at a warehouse that provides:

Stockpiling.

Cross-docking.

Production support.

Reverse logistics support.
Reverse logistics support.
The process of removing products from storage and assembling them into appropriate quantities andassortments to fill customer orders is:

Consolidation.

Order picking.

In-storage handling.

Staging.
Order picking
Computer-controlled systems that use robots for materials handling activities are:

RFID.

AS/RS.

Unitization.

Value-added systems.
AS/RS.
The benefits of automated storage and retrieval systems (AS/RS) include all of the following EXCEPT:

Fewer errors in order picking.

Increased facility utilization.

Lower direct labor costs.

Lower fixed costs.
Lower fixed costs.
Zanda Corporation's CEO watched in amazement and frustration as workers handled and loadedindividual products onto trucks. She felt handling the individual items was very cumbersome. Sheshould investigate the possibility of:

Using RFID.

Containerization.

AS/RS.

Private transportation.
Containerization.
Zanda Corp. decided to use a more expensive mode of transportation to deliver orders to customers.This decision was likely made after an examination of:

Cost-to-cost trade-offs.

Consolidation strategies.

Product availability problems.

Cost-to-service trade-offs.
Cost-to-service trade-offs.
Which of the following best describes the concept of total landed cost?

The sum of all logistics costs related to a product.

The lowest logistics cost for a product.

The sum of all product-related and logistics-related costs.

The difference between product-related and logistics-related costs.
The sum of all product-related and logistics-related costs.
Zanda Corp. had established a production plant in Thailand. Recently it decided to close the plant andmove production to Mexico. This decision was likely made after Zanda:

Conducted a spend analysis.

Conducted a make-or-buy analysis.

Examined total landed cost.

Evaluated consolidation strategies.
Examined total landed cost.
Stockouts are very costly for a medical device company. The logistics manager has decided to holdmore inventory to reduce stockouts. This is an example of:

Cost-to-cost trade-offs.

Market consolidation strategy.

Value density.

Cost-to-service trade-offs.
Cost-to-service trade-offs.
All of the following are considered when determining total landed costs EXCEPT:

Fuel costs.

Product liability costs.

Insurance.

Supply chain risk.
Product liability costs.
The sum of all product- and logistics-related costs is:

Total landed costs.

Total cost of ownership.

Cost-to-cost trade-offs.

Cost-to-service trade-offs.
Total landed costs.
Which of the following is LEAST likely to be considered when determining total landed costs?

Raw material costs.

Currency exchange rates.

The cost of inventory held as safety stock.

Product warranty costs.
Product warranty costs
Companies that provide a bundle of logistical services to their customers are called:

AS/RS providers.

Common carriers.

3PLs.

Contract logistics companies.
3PLs.
3PLs:

Typically only operate fulfillment centers.

Consolidate storage and shipments across customers.

Increase supply chain risk.

Have minimal investment in information systems.
Consolidate storage and shipments across customers.
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