The primary role of cycle inventory is to allow different stages in the supply chain to
A) purchase product in lot sizes that maximize the sum of the material, ordering, and
holding cost.
B) purchase product in lot sizes that minimize the sum of the material, ordering, and
holding cost.
C) sell product in lot sizes that maximize the sum of the material, ordering, and holding
cost.
D) sell product in lot sizes that minimize the sum of the material, ordering, and holding
cost.
Historical demand for Peeps is as displayed in the table.
What is the level component of Holt’s model for period 0?
A) -2.5
B) 10.3
C) 2.5
D) 6.4
Supply chain responsiveness includes the ability to do which of the following?
A) Understand customers and supply chain
B) Meet a very high service level
C) Match supply chain responsiveness with the implied uncertainty of demand
D) Ensure that all functional strategies within the supply chain support the supply
chain’s level of responsiveness
The issue of product availability and the level of safety inventory is particularly
significant in industries where
A) product life cycles are short and demand is stable.
B) product life cycles are short and demand is very volatile.
C) product life cycles are long and demand is stable.
D) product life cycles are long and demand is very volatile.
Situations where incentives offered to different stages or participants in a supply chain
lead to actions that increase variability and reduce total supply chain profits are referred
to as
A) incentive obstacles.
B) information processing obstacles.
C) operational obstacles.
D) behavioral obstacles.
Inventory carried for the purpose of satisfying demand that exceeds the amount
forecasted for a given period is
A) cycle inventory.
B) demand inventory.
C) safety inventory.
D) security inventory.
The rate of return k is also referred to as the
A) discount rate.
B) hurdle rate.
C) opportunity cost of capital.
D) all of the above
The decision to move a production facility outside of domestic boundaries and still
maintain ownership is called
A) insourcing.
B) outsourcing.
C) offshoring.
D) onshoring.
The replenishment cycle occurs at the
A) customer/retailer interface.
B) retailer/distributor interface.
C) distributor/manufacturer interface.
D) manufacturer/supplier interface.
Which distribution network design is being used when inventory is not held by
manufacturers at the factories, but is held by distributors/retailers in intermediate
warehouses and package carriers are used to transport products from the intermediate
location to the final customer?
A) Manufacturer storage with direct shipping
B) Manufacturer storage with direct shipping and in-transit merge
C) Distributor storage with package carrier delivery
D) Distributor storage with manufacturer pickup
Company A and Company B of the same supply chain rely on market responsiveness to
attract customers. Each company has access to the other company’s designs, production
schedules, and goals, and if Company A needs product overnight, Company B gladly
ships it, knowing that in the long run it works to the benefit of both. Such an
arrangement is an example of
A) intrafunctional scope.
B) intraoperation scope.
C) interfunctional scope.
D) intercompany scope.
Which of the following is an approach that firms can use when managing inventory to
meet predictable demand variability?
A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Using common components across multiple products
When a firm uses production with postponement to satisfy a part of its demand with the
rest being satisfied without postponement, it is using
A) adjustable postponement.
B) flexible postponement.
C) managed postponement.
D) tailored postponement.
Calculate the MSE for this scenario if the forecasts for periods 1-10 are in order, 176.6,
174.2, 176.1, 178.7, 160.4, 165.4, 177.7, 191.1, 191.0, and 175.2.
A) 216.60
B) 219.80
C) 210.40
D) 221.20
Bahouth Ltd. is planning for the next two years of production and debating whether to
construct a large cross-dock facility with 40 truck bays or a smaller one with 20 truck
bays. The cost to build the large facility is $2 million and the cost to build the small one
is $1.2 million. If they construct a large facility and demand is as high as they hope,
then operating costs are $450,000 annually. If they construct a large facility and demand
is low, then operating costs are $300,000. If they construct a small facility and demand
is low, the operating costs are $275,000 but if they experience high demand, the
operating cost of a small facility increases to $600,000. After having conducted some
market research, they feel that the likelihood of high demand is 0.7 and the likelihood
of small demand is 0.3.
Use the information from Scenario 6.1 to determine the expected cost of operating a
small facility for a period of two years.
A) $1,102,500
B) $1,005,500
C) $502,500
D) $2,205,000
Historical demand for Peeps is as displayed in the table.
The measure of forecast error where the average absolute error of each forecast is
shown as a percentage of demand is
A) mean squared error (MSE).
B) mean absolute percentage error (MAPE).
C) bias.
D) the tracking signal.
The most significant sourcing decision for a firm is
A) whether to locate a plant close to customers or locate a plant close to sources of raw
materials or suppliers.
B) whether to use highly automate processes or manual labor.
C) whether to use traditional inventory methods or adopt a just in time approach to
stocking.
D) whether to perform a task in-house or outsource it to a third party.
The coefficient of variation measures
A) the accuracy of the demand forecast.
B) the size of the uncertainty relative to demand.
C) the relevance of cycle inventory to demand.
D) the relative certainty of the forecast.