Information Systems Today, 7e (Valacich)
Chapter 8 Strengthening Business-to-Business Relationships via Supply Chain and
Customer Relationship Management
1) The term ________ is commonly used to refer to a collection of companies and processes
involved in moving a product from the suppliers of raw materials to the customer.
A) supply warehouse
B) supply chain
C) procurement
D) demand chain
E) value network
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
2) Which of the following statements about a just-in-time strategy is true?
A) Retailers using this strategy allow suppliers to maintain ownership of inventory within their
warehouses or stores until items are scanned at the point of sale.
B) Companies using this strategy allow suppliers to manage the manufacturer’s inventory levels
based on pre-established service levels.
C) Companies using this strategy maintain large inventories of supplies, parts, warehousing
resources, and extra workers to meet production contingencies.
D) Companies using this strategy try to optimize their ordering quantities such that parts or raw
materials arrive just when they are needed for production.
E) A manufacturer or retailer using this strategy shares real-time sales data with suppliers who
maintain inventory levels based on preestablished agreements.
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
1
3) ________ is a business model in which the suppliers to a manufacturer manage the
manufacturer’s inventory levels based on preestablished service levels.
A) Just-in-case manufacturing
B) Scan-based trading
C) Vendor-managed inventory
D) Lean manufacturing
E) Just-in-time manufacturing
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
4) Which of the following statements about vendor-managed inventory (VMI) is true?
A) To make VMI possible, the manufacturer must maintain large inventories of supplies, parts,
warehousing resources, and extra workers to meet production contingencies.
B) Manufacturers using the VMI business model manage the inventories themselves and send
out requests for additional items to the vendors as needed.
C) Companies using this strategy try to optimize their ordering quantities such that parts or raw
material arrive just when they are needed for production.
D) To make VMI possible, the manufacturer allows the supplier to monitor stock levels and
ongoing sales data.
E) Retailers using this strategy allow suppliers to maintain ownership of inventory within their
warehouses or stores until items are scanned at the point of sale.
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
5) One major problem affecting supply chains are ripple effects referred to as the ________
effect.
A) backflush
B) multiplier
C) bullwhip
D) incremental
E) stockwhip
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
2
6) Computer maker Dell realized the problems with keeping large inventories, especially because
of the fast rate of obsolescence of electronics components. Dell now keeps only about two hours
of inventory in its factories. The company is most likely using a ________ system.
A) scan-based trading
B) customer-managed inventory
C) just-in-time inventory management
D) vendor-managed inventory
E) just-in-case inventory management
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
7) MaXoSteel Inc. has been supplying steel to Agis Corp., a well-known car manufacturer, for
the past three years. Concerned employees at MaXoSteel can directly access Agis’ inventory and
sales information via electronic data interchange. This allows MaXoSteel to monitor Agis’
inventory levels on a real-time basis. The system has worked well for both companies so far and
there has never been any delay in the supply of steel. Which of the following steps, if taken by
Agis, would most strengthen its supply chain strategy?
A) Agis Corp.’s management decides to take strong measures for increasing its safety stock of all
raw materials.
B) Agis takes measures to add wholesalers and retailers into its supply chain.
C) Agis wants to purchase MaxSteel in order to reduce dependency.
D) Agis takes measures to directly contact the consumers by removing wholesalers and retailers
from its supply chain.
E) Agis takes measures to ensure that the information shared with MaxSteel is not shared with
outsiders.
Difficulty: Difficult
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Application
3
8) Fen-phen was an anti-obesity medication that consisted of two drugs: fenfluramine and
phentermine. Fenfluramine was initially marketed by American Home Products. It was shown to
cause potentially fatal pulmonary hypertension and heart valve problems. This eventually led to
the withdrawal of the product and legal damages of over $13 billion. This is an example of
________.
A) a product recall
B) lean manufacturing
C) production control
D) the bullwhip effect
E) a green business
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Application
9) La Belle Inc. introduced a new line of accessories for teenage girls the last season. Following
its immense popularity with the targeted group, the company anticipated high sales in the current
season and ordered raw materials accordingly. . However, the success of the new line turned out
to be a fad as the teens soon turned to other products offered by competing brands and La Belle’s
sales declined. This forecasting error caused a huge discrepancy in the amount of raw materials
they needed and the amount of inventory they had already piled up in anticipation of good sales.
This is an example of ________.
A) the multiplier effect
B) hindsight bias
C) product recall
D) the bullwhip effect
E) safety stock planning
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Application
4
10) Which of the following is the main objective of information systems that focuses on
improving supply chains?
A) discouraging vendor-managed inventory systems
B) accelerating product development and innovation
C) discouraging sustainable production processes
D) decentralizing the organizations
E) encouraging the bullwhip effect
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
11) Which of the following is the key use of the distribution planning module of supply chain
management?
A) to ensure that the materials required for production are available when needed
B) to forecast and plan anticipated demand for products
C) to optimize the allocation of available supply to meet demand
D) to support production processes taking into account capacity and material constraints
E) to support receiving, storing, and picking of goods in a warehouse
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
12) The key use of the order promising module of supply chain management is to ________.
A) work with partners across the supply network to improve accuracy of demand forecasts,
reduce inventory buffers, and improve customer service
B) monitor key performance indicators to assess performance across the supply chain
C) manage logistics between company locations or from company to customers, taking into
account transportation modes and constraints
D) assign optimal safety stock and target stock levels in all inventories in the supply network
E) provide answers to customer relationship management queries regarding product availability,
costs, and delivery times
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
5
13) The key use of the manufacturing execution module of supply chain management is to
________.
A) forecast and plan anticipated demand for products
B) support production processes, taking into account capacity and material constraints
C) ensure that the materials required for production are available where needed and when needed
D) assign optimal safety stock and target stock levels in all inventories in the supply network
E) support receiving, storing, and picking of goods in a warehouse
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
14) ________ involves the development of various resource plans to support the efficient and
effective production of goods and services.
A) Requirement planning
B) Supply chain analytics
C) Requirement execution
D) Supply chain networking
E) Supply chain planning
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
15) Supply chain planning begins with ________.
A) product demand planning and forecasting
B) product distribution planning and scheduling
C) production scheduling
D) inventory planning
E) safety stock planning
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
6
16) Demand planning and estimating leads to the development of the overall ________.
A) sourcing plan
B) demand paging
C) production plan
D) demand forecast
E) safety stock plan
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
17) ________ planning focuses on delivering products or services to consumers as well as
warehousing, delivering, invoicing, and payment collection.
A) Product demand
B) Production
C) Distribution
D) Safety stock
E) Inventory
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
18) Distribution planning leads to the development of the overall ________ plan.
A) production
B) safety stock
C) manufacturing
D) transportation
E) security
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
7
19) Production scheduling ________.
A) focuses on the coordination of all activities needed to create the product or service
B) focuses on delivering products or services to consumers as well as warehousing
C) leads to the development of a sourcing plan
D) leads to the development of inventory estimates
E) provides immediate communication and feedback to and from customers
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
20) Analytical tools are used to optimally utilize materials, equipment, and labor during the
________ process of supply chain planning.
A) demand forecasting
B) production scheduling
C) distribution planning
D) inventory planning
E) safety stock scheduling
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
21) Inventory and safety stock planning ________.
A) leads to the development of the overall demand forecast
B) focuses on the coordination of all activities needed to create a product or service
C) leads to the development of a sourcing plan
D) focuses on delivering products or services to consumers as well as warehousing
E) leads to the development of a transportation schedule
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
8
22) In the context of business-to-business market places, the term ________ refer to the markets
that comprise of firms operating within a certain industry sector.
A) market segmentations
B) share markets
C) market paradigms
D) horizontal markets
E) vertical markets
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
23) Supply chain execution ________.
A) involves the development of a sourcing plan
B) refers to the use of key performance indicators to monitor production
C) involves the management of product flow, information flow, and financial flow
D) refers to the ability to track products as they move through the supply chain
E) involves the development of demand forecast
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
24) Which of the following statements is true about product flow, a key element of supply chain
execution?
A) It refers to the ability of tracking products as they move through the supply chain.
B) It refers to the movement of information along the supply chain, such as order processing and
delivery status updates.
C) It refers to the movement of goods from the supplier to production, from production to
distribution, and from distribution to the consumer.
D) It tracks a one-way flow of products from producers to consumers but cannot process returns
or customer refunds.
E) It refers primarily to the movement of financial assets throughout the supply chain.
Difficulty: Moderate
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
9
25) Which of the following statements is true about information flow, a key element of supply
chain execution?
A) A key element of information flow is to foresee external events.
B) Information can only flow up the supply chain.
C) It refers to the use of key performance indicators to monitor performance of the entire supply
chain.
D) The key element to the information flow is the complete removal of paper documents.
E) It refers primarily to the movement of financial assets throughout the supply chain.
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
26) Which of the following key elements of supply chain execution includes information related
to payment schedules, consignment, and ownership of products and materials?
A) financial flow
B) personnel flow
C) information flow
D) product flow
E) material flow
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
27) The ability to track products as they move through the supply chain and to foresee external
events is a characteristic of ________.
A) supply chain visibility
B) supply chain sustainability
C) supply chain analytics
D) supply network collaboration
E) supply chain risk management
Difficulty: Easy
Learning Obj.: 8.1: Describe supply chain management systems and how they help to improve
business-to-business processes.
Classification: Concept
10