Chapter 09 Test Bank
1. A set of three or more companies directly linked by one or more of the upstream and downstream flows of products, services,
finances, and information from a source to a customer is referred to as
2. By leveraging the resources and skills of its various component firms, a supply chain provides the end customer with
3. A supply chain refers to
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Difficulty: 1 Easy
Learning Objective: 09-01 Describe the flows within a supply chain.
Topic: Supply Chain Management
4. Brenda and Tim went to Carl’s Custom Dining to buy a new dining room set. At the store they configured the set to their
specifications in terms of size, finish and style. The store sent the order out via the Internet to the manufacturer. The
manufacturer, in turn, secured the correct type of wood from its supplier to complete the dining room set. When finished, the
manufacturer shipped the product to its local warehouse where Carl’s Custom Dining arranged for delivery to its store by a local
trucking company. For Carl’s Custom Dining, this is an example of
5. Intermediaries through which the flow of products travels are called
6. Which of the following statements is accurate regarding the way a supply chain works?
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Learning Objective: 09-01 Describe the flows within a supply chain.
Topic: Supply Chain Management
7. All along the supply chain, distribution channels add value to the product by
8. A management philosophy that guides the actions of company members toward the goal of actively managing the upstream
and downstream flows of goods, services, finances, and information across the supply chain is referred to as a
9. Compare the following statements and select the one that accurately describes a company that is practicing supply chain
management.
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Topic: Supply Chain Management
10. Supply chain management refers to
11. Which of the following statements reflects the underlying philosophy behind the concept of supply chain management?
12. The costs required to make or buy a product, including risk of obsolescence, taxes, insurance, and warehousing space used
to store the goods, are called
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13. Which of the following statements regarding supply chain management is not true?
A. Supply chain management allows companies to have greater control over the customer value they provide.
B. In a supply chain, all companies rely on related companies whose activities add value to the final product.
C. Supply chain management seeks to coordinate the various flows within a supply chain.
D. Decisions made in one area of the supply chain will affect other areas, sometimes negatively.
E. Each channel within a supply chain acts independently of the other channels.
Supply chain management involves making decisions that involve trade-offs. Understanding how the decisions of each channel
can affect the other channels is a key to effective supply chain management.
14. According to your text, the ultimate objective of supply chain management is
15. What sort of strategies must companies embrace for an integrated supply chain to work?
16. A supply chain strategy in which a company builds goods based on a sales forecast, puts those goods into storage, and
waits for a customer to order the product is called a
17. The main advantage of a push strategy is that
18. After the economic recession, the boating industry suffered from a decline in sales. However, recent sales forecasts indicate
that the upcoming season will produce a strong demand for boats and boating equipment. Based on this, Les has decided to
ramp up production this winter of both his bass fishing boats and speed boats, keep them in storage until the boating sales
season officially resumes, and hope that customers will buy them. This is an example of a
19. Bob’s Custom Millwork is a business that provides custom cabinetry and furniture for both businesses and individual
consumers. Bob does not make any products until he receives an order from the customer. What type of marketing strategy
does this represent?
20. Which of the following terms is not associated with a pull strategy?
21. A company that forecasts sales, builds an inventory based on the forecast, holds the components in inventory until a
customer order is received and then finalizes the product based on the order is using a
22. A push-pull supply chain strategy
23. If demand is unstable, as it often is in the introductory and growth stages of the product life cycle, it might be best for a firm
to use a
24. If cost reduction is part of a firm’s strategy, which of the following systems will allow it to achieve cost savings through
economies of scale in purchasing, manufacturing, and transportation?
25. Outdoor Living is a manufacturer of patio dining sets and outdoor furniture. Typically, customers purchase the company’s
products as the summer season begins and as such, do not want to wait for the product to be manufactured. Which supply chain
strategy would work best for Outdoor Living?
26. Which type of supply chain strategy is demonstrated by the following sequence: (Step 1) forecast sales, (Step 2) plan
production, (Step 3) order materials, (Step 4) customer orders, (Step 5) make product, and (Step 6) ship product?
27. The part of supply chain management that plans, implements, and controls the flow of goods, services, and information
between the point of origin and the final customer is called
28. Those activities that focus on delivering the right product, to the right place, to the right customer, at the right time, in the
right quantity, in the right condition, and at the right price is referred to as
29. Which element(s) of the four Ps of the marketing mix is/are affected by logistics?
30. Which of the following demonstrates how logistics has an effect on the product element of the marketing mix?
31. According to your text, companies that employ a pull or push-pull strategy typically establish logistics operations based on
32. Data management systems that integrate information across all the departments of an organization are called
33. The almost instantaneous transfer of information from one company‘s computer to another that allows ERP systems to
communicate with the information technology systems of other companies is done through
34. A company that outsources some or all of its logistics activities to other companies is engaged in
35. According to your text, the primary reason firms rely on inventory management is
36. The type of inventory a firm needs to meet average demand is called
37. Pipeline inventory refers to
38. Taylor’s toy shop bought a very large inventory of the newest superhero action figure. Because a new movie was supposed
to come out featuring the superhero, Taylor didn’t anticipate a problem selling the toy. However, production on the movie was
halted and now Taylor is having a hard time selling the action figure. This represents what type of inventory?
39. A firm must track three types of costs to determine the correct level of inventory to keep in stock: purchasing costs, inventory
carrying costs, and the costs incurred by
40. Storage and handling expenses and service costs such as property taxes and insurance are what type of inventory costs?
41. What is the term for the situation in which a company does not have enough inventory available to fill an order?
42. The number of times a firm’s entire inventory is sold and replaced is referred to as
43. Dividing the inventory on hand by the average daily usage or sales is the calculation for
44. Purchasing is an important logistical function for all of the following reasons except
45. Which of the following is not a job function of a purchasing manager as outlined in your text?
46. A legal obligation to buy a certain amount of product at a certain price from a supplier to be delivered at a specified date is
referred to as
47. Keegan is a purchasing manager for a large auto manufacturer. The contract with the company’s steel provider is just about
to expire, so Keegan is negotiating the terms and condition of a new contract with his supplier. Keegan is satisfied with the
negotiations, so he takes the next step of drawing up a legal obligation to buy the negotiated amount of steel at the price and
delivery date agreed upon by himself and his supplier. This legal obligation is otherwise known as
48. Which person is responsible for establishing performance expectations for suppliers and developing ways to measure their
performance?
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Learning Objective: 09-05 Describe the various logistics functions and their relationship to the marketing mix.
Topic: Logistics
49. What is the term used for the inbound movement and storage of materials in preparation for those materials to enter and
flow through the manufacturing process?
50. Coordinating the supply and demand for materials and ensuring that stored or recently received materials get to the
production floor when needed are jobs of the
51. Warehouse activities can be organized into which three basic functions?
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Topic: Logistics
52. What is the warehouse activity that involves retrieving materials from storage and bringing them to manufacturing to fulfill a
production order, or retrieving finishing goods from storage and preparing them for shipment to fulfill a customer order?
53. Alejandro works in a warehouse. His job is to assemble store displays and refurbish goods that have been returned by
customers. What warehouse function is Alejandro responsible for?
54. A distribution center functions much like a warehouse, but performs additional activities. Which of the following is not one of
the activities performed by a distribution center?
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Learning Objective: 09-05 Describe the various logistics functions and their relationship to the marketing mix.
Topic: Distribution Centers
55. The distribution center function of product accumulation involves
56. Lucy works in a distribution center for a vitamin and nutritional supplement company. Part of her job entails gathering all
goods with similar characteristics in one area of the distribution center. From there, she can facilitate the proper inventory
controls to ensure that no expired vitamins or supplements are shipped to stores for sale. Lucy’s job involves product
57. The ability of a distribution center to pick available goods down to a single piece allows customers to buy in quantities that
make sense for their business. This exemplifies the function of product
58. When the distribution center mixes goods coming from multiple suppliers into outgoing orders so that each order includes a
variety of goods rather than just one type of good, this is referred to as product
59. As noted in your text, managing ________ is one of the most important logistics function because it creates place and time
utilities that are essential to keeping customers satisfied.