34) A manufacturer with significant market power should use
A) two-part tariffs and volume discounts to achieve coordination.
B) lot-size-based quantity discounts to achieve coordination.
C) forward-buying with retail coupons to achieve coordination.
D) liquidators and reverse-buying to achieve coordination.
35) Which of these changes will serve to break order synchronization?
A) Have each customer order once a week on Mondays rather than the 1st and 15th of each
month.
B) Have each customer order on their date, with 20% of your customers ordering each day of the
week.
C) Have each customer order on Mondays or Fridays rather than Monday through Friday.
D) Have each customer order on the last day of the month.
36) If demand is uncertain, a manufacturer can incentivize retailers to provide high levels of
product availability by using
A) high fixed costs.
B) buyback contracts.
C) low fixed costs.
D) zero-cost contracts.
37) Allocating existing supply based on past retailer sales rather than current retailer orders is
known as
A) spurn and fern.
B) yearn and kern.
C) churn and burn.
D) turn and earn.
38) One appropriate measure to reduce replenishment lead times is to
A) reduce flexibility.
B) increase the planning horizon.
C) order electronically.
D) average the aggregate plans from each supply chain member.
39) Mickey the manager reviewed his company’s customers’ orders for the past year and
compared the variability of those orders with the variability of the orders he placed with his
suppliers. This comparison allowed him to estimate his own company’s contribution to
A) the forecast.
B) supply chain surplus.
C) market demand.
D) the bullwhip effect.
40) One of the best ways to solve coordination problems is
A) through teams comprised of different members of the supply chain.
B) through investments in cutting edge information technology.
C) by institution penalties for supply chain members that don’t cooperate.
D) by implementing a supply chain resource planning module.
41) The full benefit of coordination is achieved when
A) all adjacent pairs of supply chain partners are coordinated.
B) the entire supply chain network is coordinated.
C) the POS data is shared with the manufacturer.
D) the POS data is shared with the retailer.
42) Which method would serve to reduce the information distortion in a supply chain consisting
of a fabricator, manufacturer, supplier, and a retailer?
A) Make both the fabricator and retailer responsible for all decisions regarding product
inventories at the retailer.
B) Make the manufacturer responsible for all decisions regarding product inventories at the
retailer.
C) Make the supplier responsible for all decisions regarding product inventories at the retailer.
D) Make the customer responsible for all decisions regarding product inventories at the retailer.
43) One replenishment system that assigns replenishment responsibility to a single entity in a
supply chain is
A) coordinated stocking.
B) a sell-in to sell-through system.
C) owner-managed inventory.
D) a continuous replenishment program.
44) One replenishment system that assigns replenishment responsibility to a single entity in a
supply chain is
A) vendor managed inventory.
B) coordinated stocking.
C) a sell-in to sell-through system.
D) owner-managed inventory.
45) Vendor managed inventory and continuous replenishment systems both serve to
A) minimize channel confusion.
B) minimize information distortion.
C) maximize information quality.
D) maximize information flow.
46) In a continuous replenishment program, the wholesaler or manufacturer replenishes a retailer
regularly based on
A) the POS data of the wholesaler.
B) the forecast of the retailer.
C) the POS data of the retailer.
D) the forecast of the manufacturer.
47) In most instances, CRP systems are driven by
A) the withdrawal of inventory from distributor warehouses.
B) the withdrawal of materials from supplier warehouses.
C) the withdrawal of goods customer pantry shelves.
D) the withdrawals of inventory from retailer warehouses.
48) In a CRP system, inventory at the retailer is owned by
A) the retailer.
B) the supplier.
C) the customer.
D) no one.
49) The replenishment decision in a VMI system is owned by the
A) manufacturer.
B) retailer.
C) customer.
D) cloud.
50) Quite often in a VMI system, the inventory is
A) owned by the retailer before it is shipped by the supplier.
B) owned by the supplier until it is sold by the retailer.
C) sold by the supplier before it is owned by the retailer.
D) sold by the retailer before it is shipped by the supplier.
51) In a VMI system, the ________ must share demand information with the ________.
A) manufacturer; customer
B) customer; retailer
C) retailer; manufacturer
D) manufacturer; designer
52) If retailers sell products from competing manufacturers in a VMI system,
A) inventory at the manufacturer will be lower than optimal.
B) inventory at the manufacturer will be higher than optimal.
C) sales at the retailer will be lower than optimal.
D) inventory at the retailer will be higher than optimal.
53) What is the responsibility of a designated category leader?
A) The category leader manages replenishment decisions for all suppliers.
B) The category leader manages purchasing decisions for all retailers.
C) The category leader manages purchasing decisions for all customers.
D) The category leader manages replenishment decisions for all retailers.
54) A fundamental aspect of successful collaboration is
A) sharing product designs.
B) identification and resolution of exceptions.
C) no stock outs.
D) a duplication of effort.
55) Successful collaborative planning, forecasting and replenishment must be built on a
foundation of
A) a common logistics carrier and data synchronization.
B) a single forecasting approach and a common logistics carrier.
C) data synchronization and established standards for exchanging information.
D) established standards for exchanging information and a single forecasting approach.
56) The most common form of collaboration observed in practice is
A) store replenishment.
B) retail event.
C) collaborative assortment.
D) distribution center replenishment.
57) Trading partners collaborate on store-level POS forecasts in
A) store replenishment collaboration.
B) DC replenishment collaboration.
C) retail event collaboration.
D) collaborative assortment planning.
58) When implementing a CPFR system, a fundamental aspect of successful collaboration is
A) shielding data that should not be shared.
B) establishing cross functional, customer-specific teams.
C) retail event collaboration.
D) planning for succession along all levels of management and supervision.
59) In a CPFR system, a gap between forecasts made by two sides is termed a(n)
A) discrepancy.
B) mismatch.
C) opportunity.
D) exception.
60) As forecasts become firm, they are converted to
A) production plans.
B) third stage forecasts.
C) actual orders.
D) forecast feedback.
61) A high fashion retailer should rely on
A) historical data to forecast next season’s demand.
B) interpretation of industry trends and customer tastes to forecast next season’s demand.
C) store-level POS data to forecast next season’s demand.
D) distribution center withdrawals to forecast next season’s demand.
62) The local hominy man is anticipating a bumper crop this year, so he arranges with a chain of
grocery stores to stock up on his hominy as part of a Homina Homina Hominy campaign to lure
customers in to the stores during September for cans of the divinely salty, yet nutritious
vegetable. This approach is an example of
A) DC replenishment collaboration.
B) store replenishment collaboration.
C) retail event collaboration.
D) assortment planning collaboration.
63) Retailers of all sizes can explore CPFR as a strategic option, but in order to be scalable,
________ is needed.
A) a process
B) labor
C) money
D) technology
64) A CPFR used for ________ relies less on historical data and more on interpretation of
industry trends, macroeconomics factors, and customer tastes.
A) seasonal goods
B) commodities
C) heavy equipment
D) high tech products
65) Implementation of a CPFR requires implementation of appropriate technology and
A) replenishment at rates roughly double pre-implementation levels.
B) implementation of cross-functional, customer-specific teams.
C) revision of standard operating procedures for all organizational processes.
D) reduction of SKUs by 20%-30%.
10.3 Essay Questions
1) What is the bullwhip effect and how does it relate to lack of coordination in the supply chain?
2) What is the impact of lack of coordination on the performance of the supply chain?
3) Describe the impact of forecasts based on orders rather than actual customer demand.
28
4) Describe the impact of behavioral obstacles on supply chain coordination.
5) How does cooperation and trust improve performance in a supply chain partnership?
Answer: Cooperation and trust within the supply chain help improve performance for the
following reasons:
A more natural aligning of incentives and objectives is achieved. When stages trust each other,
they are more likely to take the other party’s objective into consideration when making decisions.
29
6) How do improperly structured incentives lead to a lack of coordination in the supply chain?
7) What is a disadvantage of vendor managed inventory?