The tactic of overbooking or overselling the available asset is suitable in any situation
where customers are able to cancel orders and the value of the asset drops significantly
after a deadline.
The forecast error measures the difference between the forecast and the estimate.
Supply chain coordination requires each stage of the supply chain to take into account
the impact its actions have on other stages.
To achieve complete strategic fit, a firm must ensure that all functions in the value chain
have diverse strategies that support functional goals.
Managers can encourage the bullwhip effect by devising pricing strategies that
encourage retailers to order in smaller lots and reduce forward buying.
Safety inventory is defined as inventory held to satisfy demand that is higher than
forecasted.
The use of dual facilities to manage capacity may be hard to sustain if the labor market
is tight.
The main advantage of simulation models is that they can provide low-cost evaluations
of complex situations.
An example of a relative measure of emission output is pounds of CO2per gallon of
diesel fuel.
Distributors add value to a supply chain between a supply stage and a customer stage if
there are many small players at the customer stage, each requiring a small amount of
the product at a time.
If all functional strategies are deliberately aligned with each other and with the overall
competitive strategy, then the company profit will be maximized.
Which cost should only include receiving and storage costs that vary with the quantity
of product received?
A) Cost of capital
B) Obsolescence (spoilage) cost
C) Handling cost
D) Occupancy cost
The allocation of supply sources and markets to facilities should be reconsidered on a
regular basis so that
A) the allocation can be held constant as market conditions or plant capacities expand.
B) the allocation can be changed as market conditions or plant capacities stagnate.
C) the allocation can be held constant as market conditions or plant capacities change.
D) the allocation can be changed as market conditions or plant capacities change.
The complexity and scale of transportation makes it an excellent area within the supply
chain for the use of
A) a dedicated logistics manager.
B) a fleet of vehicles.
C) information technology systems.
D) a common unit of money.
Trade promotions lead to a significant ________ in lot size and cycle inventory because
of forward buying by the ________.
A) decrease, retailer
B) increase, retailer
C) decrease, supplier
D) increase, supplier
In product-based tailored sourcing,
A) low-volume products with uncertain demand are obtained from a flexible source.
B) high-volume products with less demand uncertainty are obtained from an efficient
source.
C) high-volume products with less demand uncertainty are obtained from a flexible
source.
D) A and B only
It is very important that long-term consequences be thought through when making
facility decisions, because
A) network designers can use this fact to influence the role of the new facility and the
focus of people working there.
B) facilities last a long time and have an enduring impact on a firm’s performance.
C) it is astounding how often tax incentives drive the choice of location.
D) the location of a facility has a significant impact on the extent and form of
communication that develops in the supply chain network.
Increased product variety and shrinking product life cycles usually result in
A) the deliberate phase-out of older products.
B) a decrease in overall uncertainty for the supply chain.
C) an increase in the time allowed for a supply chain to develop specific competencies.
D) a deliberate proliferation in the variety of components used for all products
produced.
Which of the following is a disadvantage of distributor storage with last mile delivery?
A) Transportation cost is higher than any other distribution option.
B) Information cost is similar to distributor storage with package carrier delivery.
C) Customer experience is very good, particularly for bulky items.
D) Returnability is easier to implement than other options.
Which of the following is a traditional logistics driver of sourcing?
A) Pricing
B) Inventory
C) Sourcing
D) Information
The tactic of varying price over time is suitable for assets
A) that do not have a clear date beyond which they lose a lot of their value.
B) that have a clear date beyond which they lose a lot of their value.
C) where customers are able to cancel orders and the value of the asset drops
significantly after a deadline.
D) where customers are unable to cancel orders and the value of the asset drops
significantly after a deadline.
The inventory that is built up to counter predictable variability in demand is called
A) cycle inventory.
B) safety inventory.
C) seasonal inventory.
D) sourcing.
Which use of common components in a variety of products has been a very effective
supply chain strategy to exploit aggregation and reduce component inventories?
A) Information centralization
B) Specialization
C) Product substitution
D) Component commonality
Much less success for sustainability initiatives has been driven by
A) increased revenue for sustainability initiatives.
B) customer demand.
C) attracted customers who value sustainability.
D) reduced risk and improving the financial performance of the supply chain.
The promotion and pricing decisions made by marketing and sales typically have the
objective of
A) maximizing profitability.
B) minimizing profitability.
C) minimizing revenue.
D) maximizing revenue.
Both ________ and ________ increase as the safety inventory is increased.
A) fill rate, cycle service level
B) lead time, cycle service level
C) fill rate, lead time
D) reorder point, lead time
George takes an eclectic mix of spices to make his authentic jerk seasoning as a rub for
chicken, pork, and fish. The ingredients and packaging cost $1.50 and he sells the
packets by the case to Jerk Stores in the Caribbean for $2.50 per packet. Tourists to the
islands gladly pay $8.75 for these packets, eager to host their friends for an authentic
Caribbean meal and bore them with vacation photos upon their return. The demand for
the packets is normally distributed, with a mean of 2500 packets and a standard
deviation of 600.
If George and a single Jerk Store act as a vertically integrated supply chain, what is the
total supply chain expected profit if an optimal order quantity is placed?
A) $16,462
B) $16,571
C) $16,680
D) $16,789
A firm can vary supply of product by controlling
A) revenue.
B) pricing.
C) demand.
D) capacity.
The capacity management approach where a firm builds facilities to produce a
relatively stable output of products over time in a very efficient manner and facilities to
produce a widely varying volume and variety of products, but at a higher unit cost is
A) time flexibility from workforce.
B) the use of seasonal workforce.
C) the use of subcontracting.
D) the use of dual facilities-dedicated and flexible.
Total logistics costs are the sum of inventory, transportation, and facility costs for a
supply chain network. What occurs as the number of facilities increases?
Weekly demand for corn tortillas at Big Truck Tacos is normally distributed with a
mean of 1500 and a standard deviation of 300. Marco’s takes one and one half weeks to
supply a Big Truck order. Big Truck is targeting a CSL of 95 percent and monitors its
inventory continuously. How much safety inventory of corn tortillas should Big Truck
carry? What should their ROP be?
In the previous problem, the manufacturer performs additional market research. Based
on this research, they determine that they can increase the price to $150 and are able to
reduce the standard deviation of the forecast to = 30. At the same time, they have made
an arrangement with an outlet store that will purchase unsold equipment for $60 each.
How will these changes affect the cost of overstocking, cost of understocking, optimal
cycle service level and optimal order size?
Why should on-time performance be considered in supplier selection decisions?
Describe the two key factors that influence the optimal level of product availability
within a supply chain.
Discuss how a firm can respond to predictable variability of demand in the supply
chain.