8) A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual.
When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-
time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the
result of which of the following?
A) double marginalization
B) the bullwhip effect
C) CPFR
D) postponement
E) vendor-managed inventory
9) Which of the following is NOT an opportunity for effective management in the supply chain?
A) accurate “pull” data
B) vendor-managed inventory
C) postponement
D) local optimization
E) CPFR
10) Drop shipping:
A) is equivalent to cross-docking.
B) is the opposite of a blanket order.
C) means the supplier will ship directly to the end consumer, rather than to the seller.
D) is the same thing as keiretsu.
E) is a good reason to find a new firm to ship your products.
11) A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet
dealer. The carpet manufacturer is practicing which of the following?
A) postponement
B) cross-docking
C) channel assembly
D) drop shipping
E) float reduction
12) Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example
of which of the following?
A) vendor-managed inventory
B) standardization
C) backward integration
D) postponement
E) timely customization
13) All EXCEPT which of the following are “opportunities” in managing the integrated supply chain?
A) postponement
B) drop shipping
C) blanket orders
D) standardization
E) line balancing
14) Which of the following is an advantage of the postponement technique?
A) reduction in automation
B) early customization of the product
C) better quality of the product
D) reduction in training costs
E) reduction in inventory investment
15) A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture
store. The furniture maker is practicing which of the following?
A) postponement
B) drop shipping
C) channel assembly
D) passing the buck
E) float reduction
16) TAL Apparel’s management of its supply chain for Stafford shirts sold in JCPenney in an example of
which of the following?
A) blanket orders
B) standardization
C) postponement
D) lot size reduction
E) single-stage control of replenishment
17) Local optimization, incentives, and large lots all contribute to ________ about what is really occurring
in the supply chain.
18) ________ involves delaying any modifications or customization to the product as long as possible in
the production process.
19) ________ involves reducing the number of variations in materials and components as an aid to cost
management.
20) Identify the ten opportunities in managing the integrated supply chain.
21) Describe vendor-managed inventory (VMI). How is it related to outsourcing? Cite an example from
your experiences as a shopper.
22) Identify three common occurrences that contribute to distortions of information about what is really
occurring in the supply chain.
23) Define EDI.
1) Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.
2) One classic type of negotiation strategy is the market-based price model.
3) While the prices that consumers pay are often inflexible, a significant number of final prices paid in
business-to-business transactions are negotiated.
4) What type of negotiating strategy requires the supplier to open its books to the purchasers?
A) cost-based price model
B) market-based price model
C) competitive bidding
D) price-based model
E) transparent negotiations
5) E-procurement:
A) works best in long-term contract situations but is not suited for auctions.
B) is the same thing as Internet purchasing.
C) has many benefits but requires a lot of paperwork.
D) is illegal in all states except Nevada and New Jersey.
E) All of the above are true of e-procurement.
6) What are the three classic types of negotiation strategies?
A) supplier evaluation, supplier development, and supplier selection
B) Theory X, Theory Y, and Theory Z
C) many suppliers, few suppliers, and keiretsu
D) cost-based price model, market-based price model, and competitive bidding
E) traditional auctions, reverse auctions, and online exchanges
7) What are the four stages of supplier selection?
A) supplier evaluation, supplier development, negotiations, and contracting
B) supplier evaluation, negotiations, supplier acquisition, and supplier development
C) introduction, growth, maturity, and decline
D) supplier evaluation, supplier development, negotiations, and centralized purchasing
E) negotiations, contracting, centralized purchasing, and E-procurement
8) Which of the following would NOT be subject to negotiation between a buyer and supplier?
A) price
B) credit and delivery terms
C) quality standards
D) cooperative advertising agreements
E) All of the above could be negotiated.
9) Which of the following is NOT a typical benefit of centralized purchasing?
A) leverage purchase volume for better pricing
B) develop specialized staff expertise
C) reduce the duplication of tasks
D) reduce lead times
E) promote standardization
10) In what type of auction does a buyer initiate the process by submitting a description of the desired
product or service?
A) traditional
B) buyer
C) Dutch
D) French
E) Mexican
11) ________ is the term describing purchasing facilitated through the Internet.
12) Of the four stages of supplier selection, the stage at which the factor weighting approach would be
used is ________.
13) Suppliers are also known as ________.
14) What is e-procurement?
15) What are the three classic negotiation strategies? Briefly describe each of them.
16) Identify the four stages of supplier selection.
17) Identify three common features of contracts between buyers and suppliers.
18) Describe a reverse auction (also known as a Dutch auction).
Section 7 Logistics Management
1) Channel assembly, which sends components and modules to be assembled by a distributor, treats these
distributors as manufacturing partners.
2) Waterways are an attractive distribution system when speed is more important than shipping cost.
3) Logistics management can provide a competitive advantage through improved customer service.
4) What term is used to describe the outsourcing of logistics?
A) e-logistics
B) shipper-managed inventory (SMI)
C) hollow logistics
D) sub-logistics
E) third-party logistics (3PL)
5) Which one of the following distribution systems offers speed and reliability when emergency supplies
are needed overseas?
A) trucking
B) railroads
C) airfreight
D) waterways
E) pipelines
6) By which distribution system is more than 90 percent of U.S. coal shipped?
A) railroads
B) trucks
C) waterways
D) pipelines
E) none of the above
7) While freight rates are often based on very complicated pricing systems, in general, the primary freight
price factor is based on which of the following attributes?
A) damage record
B) on-time delivery
C) door-to-door service
D) speed of shipment
E) consolidation capabilities
8) Warehouses sometimes perform certain other functions besides storing goods. Which of the following
is NOT typically one of those functions?
A) purchasing
B) postponement
C) break-bulk activities
D) consolidation point
E) cross-docking
9) ________ postpones final assembly of a product so the distribution channel can assemble it.
10) ________ is an approach that seeks efficiency of operations through the integration of all material
acquisition, movement, and storage activities.
11) What is the trucking industry doing to improve efficiency?
12) Why is channel assembly popular in the personal computer industry?
13) Supply chain managers outsource logistics to meet what three goals?
14) What are several advantages of shipping by truck?
1) As the number of facilities increases, total logistics costs tend to follow a curve that first rises, then
declines.
2) Designing distribution networks to meet customer expectations suggests three criteria: (1) rapid
response, (2) cost, and (3) service.
3) Once revenue and total logistics costs are considered together, the optimal number of facilities in a
distribution network may decrease compared to the optimal number of facilities based on total logistics
costs only.
4) Distribution management focuses on which of the following?
A) the outbound flow of products
B) incoming materials
C) allocation of demand among suppliers
D) setting dividend rates
E) balancing an assembly line
5) Designing distribution networks to meet customer expectations suggests what three criteria?
A) rapid response, service, and cost
B) rapid response, product choice, and service
C) product choice, cost, and service
D) cost, process choice, and service
E) rapid response, cost, and process choice
6) What three logistics-related costs are relevant when analyzing the choice of number of facilities in a
distribution network?
A) inventory costs, production costs, and transportation costs
B) inventory costs, production costs, and facility costs
C) inventory costs, transportation costs, and facility costs
D) facility costs, production costs, and transportation costs
E) facility costs, inventory costs, and marketing costs
7) As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then
rises. Why?
A) Transportation and inventory costs first decline steeply, then rise, while facility costs always rise.
B) Transportation costs always decline, but eventually the rise in facility and inventory costs outweigh
the declining transportation costs.
C) Facility costs first decline steeply, then rise, while transportation and inventory costs always rise.
D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise.
E) Inventory costs first decline steeply, then rise, while transportation and facility costs always rise.
8) Which of the following statements does NOT accurately explain what occurs when the number of
facilities in a distribution network increases?
A) response time decreases
B) profit first increases, then decreases
C) total logistics costs first decrease, then increase
D) inventory costs increase
E) response time first decreases, then increases
9) ________ management focuses on the outbound flow of products.
10) Explain why once revenue and total logistics costs are considered together, the optimal number of
facilities in a distribution network may well increase compared to the optimal number of facilities based
on total logistics costs only. Include details about the behavior of relevant cost and revenue elements.
Section 9 Ethics and Sustainable Supply Chain Management
1) Because the supply chain has become so electronic and automated, opportunities for unethical
behavior have been greatly reduced.
2) The Institute for Supply Management:
A) establishes laws and regulations for supply management.
B) is an agency of the United Nations charged with promoting ethical conduct globally.
C) publishes the principles and standards for ethical supply management conduct.
D) prohibits backward integration into developing economies.
E) grants Ph.D. degrees in purchasing.
3) In supply chain management, ethical issues:
A) are particularly important because of the enormous opportunities for abuse.
B) may be guided by company rules and codes of conduct.
C) become more complex the more global is the supply chain.
D) may be guided by the principles and standards of the Institute for Supply Management.
E) All of the above are true.
4) What term describes a supply chain that is designed to optimize both forward and reverse flows?
A) closed-loop supply chain
B) full-journey supply chain
C) circular supply chain
D) network supply chain
E) recycled supply chain
5) Which of the following is NOT true about reverse logistics as compared to forward logistics?
A) Inventory management is not consistent.
B) Distribution costs are less directly visible.
C) Pricing is dependent upon many factors.
D) Speed is often very important.
E) Forecasting is more uncertain.
6) The ________ is an organization that has developed principles and standards for ethical supply
management conduct.
7) ________ is the process of sending returned products back up the supply chain for value recovery or
disposal.
8) Of all areas of the organization, why is the supply chain especially vulnerable to ethical lapses?
Section 10 Measuring Supply Chain Performance
1) Benchmark firms have driven down costs of supply-chain performance.
2) Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods
sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property,
plant & equipment, what is the inventory turnover?
A) 12.50
B) 10.00
C) 42.00
D) 4.16
E) 20.00
3) Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods
sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property,
plant & equipment, how many weeks of supply does the firm hold?
A) 12.50
B) 5.20
C) 2.60
D) 0.08
E) 4.16
4) Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR)
model?
A) Make
B) Sell
C) Plan
D) Source
E) Return
5) The ________ is a set of processes, metrics, and best practices developed by the Supply Chain Council.
6) Identify three specific measures that indicate how well assets are utilized. What are the formulas for
each measure?
7) The following data are pulled from a recent Walsh Manufacturing annual report.
Assets
Raw material inventory $120,000
Work-in-process inventory $50,000
Finished goods inventory $300,000
Property, plant & equipment $500,000
Other assets $200,000
Total assets $1,170,000
Condensed Income Statement
Revenue $2,000,000
Cost of goods sold $600,000
Other expenses $1,000,000
Net income $400,000
Calculate: (a) Percent invested in inventory, (b) Inventory turnover, and (c) Weeks of supply.
8) A manufacturing plant averaged $740 of raw materials, $230 of work–in-process inventory, and $1030
of finished goods inventory during the month. If the cost of goods sold this month amounted to $10,000,
what is the inventory turnover for the month?