question

Predictable variability is change in demand that cannot be forecasted.

answer

False

question

Faced with predictable variability of demand, a company's goal is to respond in a manner that maximizes profitability.

answer

True

question

The advantage of carrying enough manufacturing capacity to meet demand in any period is very low inventory costs, because no inventory needs to be carried from period to period.

answer

True

question

The disadvantage of carrying enough manufacturing capacity to meet demand in any period is that much of the expensive capacity would go unused during most months when demand was lower.

answer

True

question

The advantage of building up inventory during the off season to keep production stable year round lies in the fact that a firm could get by with a smaller, more expensive factory.

answer

False

question

The disadvantage of building up inventory during the off season to keep production stable year round is the expensive capacity that would go unused during most months when demand was lower.

answer

False

question

An approach where a firm works with their retail partners in the supply chain to offer a price promotion during periods of low demand would shift some of the demand into a slow period, thereby spreading demand more evenly throughout the year and reducing the seasonal surge.

answer

True

question

With supply and demand management decisions being made independently, it is easier to coordinate the supply chain, thereby increasing profit.

answer

False

question

A firm can vary supply of product by controlling production capacity inventory.

answer

True

question

A firm that uses flexible work hours from the workforce to manage capacity to better meet demand is using a seasonal workforce

answer

False

question

Scheduling the workforce so that the available capacity better matches demand is using time flexibility from the workforce.

answer

True

question

The use of a part-time workforce to increase the capacity flexibility by enabling the firm to have more people at work during peak periods is designing product flexibility into the production processes.

answer

False

question

A firm that uses a temporary workforce during the peak season to increase capacity to match demand is using a seasonal workforce.

answer

True

question

The use of dual facilities to manage capacity may be hard to sustain if the labor market is tight.

answer

False

question

A firm that purchases peak production capability from other companies so that internal production remains level and can be done cheaply is using subcontracting.

answer

True

question

A firm that builds dedicated facilities to produce a relatively stable output of products over time in a very efficient manner and purchases peak production capability from other companies is using subcontracting.

answer

False

question

A firm that has production lines whose production rate can easily be varied to match demand has designed product flexibility into the production processes.

answer

True

question

The use of a seasonal workforce requires that the workforce be multi-skilled and easily adapt to being moved from line to line.

answer

True

question

The use of common components across multiple products, with each product having predictably variable demand, will result in the demand for the components being relatively constant.

answer

True

question

When most of the products a firm produces have the same peak demand season, the use of common components to create relatively constant overall demand in the components is feasible.

answer

False

question

When most of the products a firm produces have the same peak demand season, it is necessary to build products during the off season that have more predictable demand.

answer

True

question

Operations usually make the promotion and pricing decisions.

answer

False

question

Maximizing revenue is typically the objective when marketing and sales make the promotion and pricing decisions.

answer

True

question

Pricing decisions based only on revenue considerations often result in an increase in overall profitability.

answer

False

question

The combination of pricing and aggregate planning (both demand and supply management) can be used to maximize supply chain profitability.

answer

True

question

When performing aggregate planning, the goal of all firms in the supply chain should be to maximize individual firm profits.

answer

False

question

Determining how profits will be allocated to different members of the supply chain is a key to successful collaboration.

answer

True

question

In general, as the fraction of increased demand coming from forward buying grows, offering the promotion during the peak demand period becomes more attractive.

answer

False

question

Offering a promotion during a peak period that has significant forward buying creates even more variable demand than before the promotion.

answer

True

question

Average inventory decreases if a promotion is run during the peak period and increases if the promotion is run during the off-peak period.

answer

False

question

Promoting during a peak demand month may decrease overall profitability if a significant fraction of the demand increase results from a forward buy.

answer

True

question

As forward buying becomes a smaller fraction of the demand increase from a promotion, it is less profitable to promote during the peak period.

answer

False

question

As the product margin declines, promoting during the peak demand period becomes less profitable.

answer

True

question

When faced with seasonal demand, a firm should use a combination of pricing (to manage demand) and production and inventory (to manage supply) to improve profitability.

answer

True

question

Predictable variability is a. change in demand that can be forecasted. b. change in demand that cannot be forecasted. c. change in demand that has been planned. d. change in demand that has been scheduled. e. all of the above

answer

a. change in demand that can be forecasted.

question

Which of the following is not a problem caused by products experiencing predictable variability of demand? a. high levels of stockouts during peak demand b. high levels of excess inventory during periods of low demand c. increased responsiveness of the supply chain d. increased costs in the supply chain e. decreased responsiveness of the supply chain

answer

c. increased responsiveness of the supply chain

question

A firm can handle predictable variability by managing a. supply using capacity, inventory, trade promotions, and backlogs. b. supply using capacity, inventory, subcontracting, and backlogs. c. demand using short-term price discounts and trade promotions. d. a and c only e. b and c only

answer

e. b and c only

question

Seasonal demand can be met by a. maintaining enough manufacturing capacity to meet demand in any period. b. building up inventory during the off season to meet demand during peak seasons. c. offering a price promotion during periods of low demand to shift some of the demand into a slow period. d. all of the above e. a and b only

answer

d. all of the above

question

The advantage of maintaining enough manufacturing capacity to meet demand in any period is a. very low inventory costs because inventory needs to be carried from period to period. b. very low inventory costs because no inventory needs to be carried from period to period. c. very high inventory costs because no inventory needs to be carried from period to period. d. very high inventory costs because expensive capacity would go unused during most months when demand was lower. e. none of the above

answer

b. very low inventory costs because no inventory needs to be carried from period to period.

question

The disadvantage of maintaining enough manufacturing capacity to meet demand in any period is a. much of the expensive capacity would go unused during most months when demand was lower. b. the expensive capacity would be used consistently throughout the year. c. most of the expensive capacity would still be used during most months when demand was lower. d. very low inventory costs because no inventory needs to be carried from period to period. e. None of the above are true.

answer

a. much of the expensive capacity would go unused during most months when demand was lower.

question

The advantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is a. very low inventory costs because no inventory needs to be carried from period to period. b. much of the expensive capacity would go unused during most months when demand was lower. c. in the fact that a firm could get by with a smaller, less expensive factory. d. in the fact that a firm could get by with a larger, more expensive factory. e. None of the above are true.

answer

c. in the fact that a firm could get by with a smaller, less expensive factory.

question

The disadvantage of building up inventory during the off season to meet demand during peak seasons and keep production stable year round is a. very low inventory costs because no inventory needs to be carried from period to period. b. very high inventory costs because inventory needs to be carried from period to period. c. in the fact that a firm could get by with a smaller, less expensive factory. d. in the fact that a firm could get by with a larger, more expensive factory. e. None of the above are true.

answer

b. very high inventory costs because inventory needs to be carried from period to period.

question

The advantage of offering a price promotion during periods of low demand to shift some of the demand into a slow period is a. a demand pattern that is less expensive to supply. b. very high inventory costs because inventory needs to be carried from period to period. c. in the fact that a firm could get by with a smaller, more expensive factory. d. much of the expensive capacity would go unused during most months when demand was lower. e. all of the above

answer

a. a demand pattern that is less expensive to supply.

question

Companies typically divide the task of supply and demand so that a. Marketing manages demand and Operations manages supply. b. Marketing manages supply and Operations manages demand. c. Marketing manages demand and supply. d. Operations manages demand and supply. e. none of the above

answer

a. Marketing manages demand and Operations manages supply.

question

As the product margin declines, promoting during the peak demand period becomes a. less profitable. b. more profitable. c. less of a risk. d. more desirable. e. none of the above

answer

a. less profitable.

question

Promoting during a peak demand month may decrease overall profitability if a. a small fraction of the demand increase results from a forward buy. b. any of the demand increase results from a forward buy. c. a significant fraction of the demand increase results from a forward buy. d. none of the above e. all of the above

answer

c. a significant fraction of the demand increase results from a forward buy.

question

Average inventory a. increases if a promotion is run during the peak period. b. increases if a promotion is run during the off-peak period. c. decreases if a promotion is run during the peak period. d. decreases if a promotion is run during the off-peak period. e. both a and d

answer

b. increases if a promotion is run during the off-peak period.

question

Offering a promotion during a peak period that has significant forward buying a. creates a desirable demand pattern. b. creates a demand pattern less costly to serve. c. creates a demand pattern even more costly to serve. d. shifts demand from the peak period to the slow period. e. shifts demand to a more desirable period.

answer

c. creates a demand pattern even more costly to serve.

question

In general, as the fraction of increased demand coming from forward buying grows, offering the promotion during the peak demand period becomes a. less attractive. b. more attractive. c. more profitable. d. less significant. e. none of the above

answer

a. less attractive.

question

Customers moving up future purchases to the present is a. market growth. b. stealing share. c. forward selling. d. forward buying. e. none of the above

answer

d. forward buying.

question

Customers substituting the firm's product for a competitor's product is a. market growth. b. stealing share. c. forward selling. d. forward buying. e. none of the above

answer

b. stealing share.

question

An increase in consumption of the product either from new or existing customers is a. market growth. b. stealing share. c. forward selling. d. forward buying. e. none of the above

answer

a. market growth.

question

Which of the following is not a factor that would result in increased demand from a trade promotion? a. market growth b. stealing share c. forward selling d. forward buying e. All of the above are factors in increased demand.

answer

c. forward selling

question

Which of the following is not a key factor influencing the timing of a trade promotion? a. impact of the promotion on demand b. product margins c. cost of holding inventory d. cost of changing capacity e. none of the above

answer

e. none of the above

question

One key to successful collaboration when the supply chain is performing aggregate planning is a. determining how losses will be allocated to different members of the supply chain. b. determining how profits will be allocated to different members of the supply chain. c. determining how labor will be allocated to different members of the supply chain. d. determining how customers will be allocated to different members of the supply chain. e. none of the above

answer

b. determining how profits will be allocated to different members of the supply chain.

question

When planning, the goal of all firms in the supply chain should be to maximize supply chain profits because a. this leaves them less profit to divide among themselves. b. this leaves them more profit to divide among themselves. c. this outcome leaves them more profit to pay tax on. d. this outcome will increase their charitable giving. e. none of the above

answer

b. this leaves them more profit to divide among themselves.

question

When performing aggregate planning, the goal of all firms should be to a. minimize company profits. b. maximize company profits. c. minimize supply chain profits. d. maximize supply chain profits. e. All of the above are accurate.

answer

d. maximize supply chain profits.

question

The combination of pricing and aggregate planning (both demand and supply management) can be used to a. maximize customer orders. b. minimize customer orders. c. maximize supply chain profitability. d. minimize supply chain profitability. e. None of the above are accurate.

answer

c. maximize supply chain profitability.

question

Pricing decisions based only on revenue considerations often result in a. a decrease in overall profitability. b. an increase in overall profitability. c. a decrease in overall revenue. d. a decrease in supply chain revenue. e. an increase in supply chain profitability.

answer

a. a decrease in overall profitability.

question

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. e. maximizing profitability across the supply chain.

answer

d. maximizing revenue.

question

The pricing and promotion decisions are often made by a. marketing and sales. b. marketing and operations. c. operations and sales. d. marketing, operations, and sales. e. marketing and operations without sales.

answer

a. marketing and sales.

question

Supply chains can influence demand by using a. production capacity and inventory. b. pricing and other promotions. c. price promotions and inventory. d. production capacity and inventory promotions. e. production capacity and other promotions.

answer

b. pricing and other promotions.

question

When most of the products a firm produces have the same peak demand season, in order to meet predictable variability with inventory, it must a. use common components across multiple products. b. use a seasonal workforce. c. build inventory of high demand or predictable demand products. d. use subcontracting. e. use dual facilities—dedicated and flexible.

answer

c. build inventory of high demand or predictable demand products.

question

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. use of dual facilities—dedicated and flexible e. using common components across multiple products

answer

e. using common components across multiple products

question

Which approach to capacity management would only be effective if the overall demand across all the products is relatively constant? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

e. designing product flexibility into the production processes

question

Which approach to capacity management would use production machinery that can be changed easily from producing one product to another? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

e. designing product flexibility into the production processes

question

Which approach to capacity management would require that the workforce be multi-skilled and easily adapt to being moved from line to line? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

e. designing product flexibility into the production processes

question

The key to which capacity management approach would involve having both volume (fluctuating demand from a manufacturer) and variety flexibility (demand from several manufacturers) to be sustainable? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

c. use of subcontracting

question

Which approach to capacity management would use a part-time workforce to increase capacity flexibility by enabling the firm to have more people at work during peak periods? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

a. time flexibility from workforce

question

Which approach to capacity management would schedule the workforce so that the available capacity better matches demand? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

a. time flexibility from workforce

question

Which approach to capacity management makes use of overtime, which is varied to match the variation in demand? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

a. time flexibility from workforce

question

Which approach to capacity management makes use of spare plant capacity that exists in the form of hours when the plant is not operational? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

a. time flexibility from workforce

question

Which approach to capacity management may be hard to sustain if the labor market is tight? a. time flexibility from workforce b. use of seasonal workforce c. use of subcontracting d. use of dual facilities—dedicated and flexible e. designing product flexibility into the production processes

answer

b. use of seasonal workforce

question

The capacity management approach where a firm has production lines whose production rate can easily be varied to match demand 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. e. designing product flexibility into the production processes.

answer

e. designing product flexibility into the production processes.

question

With supply and demand management decisions being made independently, a. it is increasingly difficult to coordinate the supply chain, thereby increasing profit. b. it is increasingly difficult to coordinate the supply chain, thereby decreasing profit. c. it is easier to coordinate the supply chain, thereby decreasing profit. d. it is easier to coordinate the supply chain, thereby increasing profit. e. none of the above

answer

b. it is increasingly difficult to coordinate the supply chain, thereby decreasing profit.

question

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. e. designing product flexibility into the production processes.

answer

d. the use of dual facilities—dedicated and flexible.

question

The capacity management approach where a firm purchases peak production from another firm so that internal production remains level and can be done cheaply 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. e. designing product flexibility into the production processes.

answer

c. the use of subcontracting.

question

The capacity management approach that uses a temporary workforce during the peak season to increase capacity to match demand 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. e. designing product flexibility into the production processes.

answer

b. the use of seasonal workforce.

question

The capacity management approach that uses flexible work hours from the workforce to manage capacity to better meet demand is a. time flexibility from workforce. b. use of seasonal workforce. c. use of subcontracting. d. use of dual facilities—dedicated and flexible. e. designing product flexibility into the production processes.

answer

a. time flexibility from workforce.

question

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to exploit economies of scale and increase cost.

answer

False

question

Increasing the lot size or cycle inventory often decreases the cost incurred by different stages of a supply chain.

answer

True

question

Cycle inventory is primarily held to take advantage of economies of scale and reduce profit within the supply chain.

answer

False

question

Lot sizes and cycle inventory do not affect the flow time of material within the supply chain.

answer

False

question

The inventory profile is a plot depicting the level of inventory over time.

answer

True

question

A lot or batch size is the quantity that a stage of the supply chain either produces or purchases at a given time.

answer

True

question

Cycle inventory is the physical inventory in the supply chain due to either production or purchases demanded by the customer.

answer

True

question

Cycle inventory exists in a supply chain because different stages exploit economies of scale to lower total cost

answer

True

question

Aggregating across products, retailers, or suppliers in a single order allows for a reduction in lot size for individual products because fixed ordering and transportation costs are now spread across multiple products, retailers, or suppliers

answer

True

question

A firm is often better served by ordering a convenient lot size close to the economic order quantity rather than the precise EOQ

answer

True

question

Total ordering and holding costs are unstable around the economic order quantity

answer

False

question

The costs considered in lot sizing decisions include material cost, fixed ordering cost, and manufacturing cost

answer

False

question

A key to reducing cycle inventory is the reduction of lot size

answer

True

question

Trade promotions lead to a significant increase in lot size and cycle inventory because of forward buying by the retailer

answer

True

question

Although a forward buy is often the retailer's appropriate response and increases their own profits, it usually increases demand variability with a resulting increase in inventory and flow times within the supply chain

answer

True

question

The goal of trade promotions is to influence retailers to act in a way that helps the retailer achieve its objectives

answer

False

question

Price discrimination is the practice where a firm charges differential prices to maximize profits

answer

True

question

Discounts related to price discrimination will be lot size based

answer

False

question

For products where the firm has market power, two-part tariffs can be used to achieve coordination in the supply chain and maximize supply chain profits

answer

True

question

The supply chain profit is higher if each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit

answer

False

question

For commodity products where price is set by the market, manufacturers can use lot size based quantity discounts to achieve coordination in the supply chain and decrease supply chain cost

answer

True

question

A key to reducing lot size without increasing costs is to reduce the holding cost associated with each lot.

answer

False

question

Quantity discounts lead to a minor buildup of cycle inventory in the supply chain

answer

False

question

Marginal unit quantity discounts have also been referred to as multi-block tariffs

answer

True

question

Pricing schedules with all unit quantity discounts encourage retailers to increase the size of their lots, which reduces the average inventory and flow time in a supply chain

answer

False

question

A discount is volume-based if the discount is based on the total quantity purchased over a given period, regardless of the number of lots purchased over that period

answer

True

question

A discount is volume-based if the pricing schedule offers discounts based on the quantity ordered in a single lot

answer

False

question

Reduction of fixed cost may be achieved by aggregating lots across multiple products, customers, or suppliers

answer

True

question

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to a. exploit economies of scale and raise cost. b. exploit economies of scale and lower cost. c. exploit customers and lower cost. d. exploit customers and raise cost. e. none of the above

answer

b. exploit economies of scale and lower cost.

question

Which of the following is not a situation in which any stage of the supply chain exploits economies of scale in its replenishment decisions? a. A fixed cost is incurred each time an order is placed or produced. b. A holding cost is incurred each period for each unit of inventory. c. The supplier offers price discounts based on the quantity purchased per lot. d. The supplier offers short-term discounts or holds trade promotions. e. all of the above

answer

b. A holding cost is incurred each period for each unit of inventory.

question

Economies of scale in purchasing and ordering motivate a manager to a. increase the lot size and cycle inventory. b. decrease the lot size and cycle inventory. c. eliminate inventory. d. increase the lot size and reduce cycle inventory. e. none of the above

answer

a. increase the lot size and cycle inventory.

question

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. e. none of the above

answer

b. purchase product in lot sizes that minimize the sum of the material, ordering, and holding cost.

question

The quantity of inventory that a stage of the supply chain either produces or purchases at a given time is a. an order. b. a job. c. a shipment. d. a lot or batch. e. none of the above

answer

d. a lot or batch.

question

Cycle inventory is primarily held to a. take advantage of diseconomies of scale and increase cost within the supply chain. b. take advantage of diseconomies of scale and reduce cost within the supply chain. c. take advantage of economies of scale and increase cost within the supply chain. d. take advantage of economies of scale and reduce cost within the supply chain. e. None of the above are true.

answer

d. take advantage of economies of scale and reduce cost within the supply chain.

question

A graphical plot depicting the level of inventory over time is a. an inventory graph. b. a distribution inventory. c. an inventory drawing. d. an inventory profile. e. an inventory picture.

answer

d. an inventory profile.

question

The average inventory in the supply chain due to either production or purchases in lot sizes that are larger than those demanded by the customer is a. annual inventory. b. distribution inventory. c. cycle inventory. d. physical inventory. e. b and c only

answer

c. cycle inventory.

question

Aggregating across products, retailers, or suppliers in a single order allows for a reduction in lot size for individual products because a. fixed ordering and transportation costs are now charged to retailers. b. fixed ordering and transportation costs are now charged to suppliers. c. fixed ordering and transportation costs are now spread across multiple products, retailers, or suppliers. d. holding costs are now charged to retailers or suppliers. e. holding costs are now spread across multiple products, retailers, or suppliers.

answer

c. fixed ordering and transportation costs are now spread across multiple products, retailers, or suppliers.

question

Aggregating across products, retailers, or suppliers in a single order allows for a. an increase in lot size for individual products. b. an increase in customer demand. c. a reduction in holding cost per unit. d. a reduction in lot size for individual products. e. a reduction in purchase price per unit.

answer

d. a reduction in lot size for individual products.

question

Total ordering and holding costs a. are relatively stable. b. are relatively stable around the economic order quantity. c. are relatively unstable around the economic order quantity. d. are unstable. e. none of the above

answer

b. are relatively stable around the economic order quantity.

question

Which of the following would not be included in holding cost? a. cost of capital b. cost of physically storing the inventory c. cost of manufacturing d. cost that results from the product becoming obsolete e. none of the above

answer

c. cost of manufacturing

question

Which of the following would not be an example of a fixed ordering cost? a. administrative cost incurred to place an order b. trucking cost incurred to transport an order c. labor cost incurred to receive an order d. labor cost incurred to manufacture a part e. none of the above

answer

d. labor cost incurred to manufacture a part

question

A key to reducing cycle inventory is a. the reduction of holding cost. b. the reduction of manufacturing cost. c. the reduction of lot size. d. the reduction of warehouse space. e. all of the above

answer

c. the reduction of lot size.

question

The practice where a firm charges differential prices to maximize profits is a. lot pricing. b. marginal pricing. c. price incrimination. d. price discrimination. e. all of the above

answer

d. price discrimination.

question

For products where the firm has market power, coordination in the supply chain can be achieved and supply chain profits maximized through the use of a. two-part tariffs or volume based quantity discounts. b. marginal unit quantity discounts. c. all unit quantity discounts. d. basic quantity discounts. e. none of the above

answer

a. two-part tariffs or volume based quantity discounts.

question

In a supply chain where each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit, a. supply chain profit is lower than a coordinated solution. b. supply chain profit is higher than a coordinated solution. c. supply chain profit is about the same as a coordinated solution. d. supply chain profit will be maximized. e. None of the above are accurate.

answer

a. supply chain profit is lower than a coordinated solution.

question

For commodity products where price is set by the market, manufacturers can use lot size based quantity discounts to a. achieve coordination in the supply chain and decrease supply chain cost. b. relax coordination in the supply chain and increase supply chain cost. c. relax coordination in the supply chain and decrease supply chain cost. d. achieve coordination in the supply chain and decrease supply chain cost. e. None of the above are accurate.

answer

d. achieve coordination in the supply chain and decrease supply chain cost.

question

Quantity discounts lead to a. a significant buildup of cycle inventory in the supply chain. b. a slight buildup of cycle inventory in the supply chain. c. a decrease in cycle inventory in the supply chain. d. minor fluctuations of cycle inventory in the supply chain. e. a major drop in cycle inventory in the supply chain.

answer

a. a significant buildup of cycle inventory in the supply chain.

question

In the pricing schedule for marginal unit quantity discounts a. the average cost of a unit decreases at a breakpoint. b. the average cost of a unit increases at a breakpoint. c. the marginal cost of a unit decreases at a breakpoint. d. the marginal cost of a unit increases at a breakpoint. e. the average cost and the marginal cost of a unit decrease at a breakpoint.

answer

c. the marginal cost of a unit decreases at a breakpoint.

question

Pricing schedules with all unit quantity discounts encourage retailers to a. decrease the size of their lots. b. increase the size of their lots. c. decrease the size of their inventory. d. increase the price of their products. e. none of the above

answer

a. decrease the size of their lots.

question

A key to reducing lot size without increasing costs is to a. reduce the holding cost associated with each lot. b. reduce the fixed cost associated with each lot. c. reduce the material cost associated with each lot. d. reduce the manufacturing cost associated with each lot. e. increase the holding cost associated with each lot.

answer

b. reduce the fixed cost associated with each lot.

question

A price discount where the discount is based on the total quantity purchased over a given period, regardless of the number of lots purchased over that period is a. customer based. b. lot size based. c. supplier based. d. volume based. e. none of the above

answer

d. volume based.

question

A price discount where the pricing schedule offers discounts based on the quantity ordered in a single lot is a. customer based. b. lot size based. c. supplier based. d. volume based. e. none of the above

answer

b. lot size based.

question

Discounts related to price discrimination will be a. volume based. b. unit based. c. marginally based. d. lot size based. e. none of the above

answer

a. volume based.

question

Which of the following would not be a component of order cost? a. buyer time b. transportation cost c. handling cost d. receiving cost e. All of the above are components of order cost.

answer

c. handling cost

question

Which cost should reflect the incremental change in space cost due to changing cycle inventory? a. cost of capital b. obsolescence (spoilage) cost c. handling cost d. occupancy cost e. none of the above

answer

d. occupancy cost

question

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 e. none of the above

answer

c. handling cost

question

Which cost estimates the rate at which the value of the product being stored drops either because the market value of that product drops or because the product quality deteriorates? a. cost of capital b. obsolescence (spoilage) cost c. handling cost d. occupancy cost e. none of the above

answer

b. obsolescence (spoilage) cost

question

Which cost takes into account the return demanded on the firm's equity and the amount the firm must pay on its debt? a. cost of capital b. obsolescence (spoilage) cost c. handling cost d. occupancy cost e. none of the above

answer

a. cost of capital

question

When developing estimates for holding and ordering costs, it is important to a. estimate these costs to a high level of precision. b. get a good approximation quickly. c. develop estimates that will not be changed. d. both a and c e. none of the above

answer

b. get a good approximation quickly.

question

The goal of trade promotions is to a. influence retailers to act in a way that helps the retailer achieve its objectives. b. influence retailers to act in a way that helps the manufacturer achieve its objectives. c. influence retailers to act in a way that will maximize supply chain profit. d. influence retailers to act in a way minimize supply chain cost. e. none of the above

answer

b. influence retailers to act in a way that helps the manufacturer achieve its objectives.

question

Replenishment orders in multi-echelon supply chains should be a. synchronized to increase cycle inventory and order costs. b. synchronized to facilitate supplier evaluation and selection. c. synchronized to keep cycle inventory and order costs low. d. separated to increase cycle inventory and order costs. e. separated to keep cycle inventory and order costs low.

answer

c. synchronized to keep cycle inventory and order costs low.

question

The retailer can justify the forward buying when a. they have inadvertently built up a lot of excess inventory. b. the forward buy allows the manufacturer to smooth demand by shifting it from peak to low-demand periods. c. it decreases his total cost. d. all of the above e. a and c only

answer

c. it decreases his total cost.

question

The manufacturer can justify offering trade promotions resulting in forward buying by retailers when a. they have inadvertently built up a lot of excess inventory. b. the forward buy allows the manufacturer to smooth demand by shifting it from peak to low-demand periods. c. the retailer decreases his total cost. d. all of the above e. a and b only

answer

e. a and b only

question

When the retailer decides to pass through very little of the promotion to customers but purchase in greater quantity during the promotion period to exploit the temporary reduction in price, the result is a. a lowering of the price of the product for the end customer. b. increased purchases and thus increased sales for the entire supply chain. c. an increase in the amount of inventory held at the retailer. d. all of the above e. a and b only

answer

c. an increase in the amount of inventory held at the retailer.

question

When the retailer decides to pass through some or all of the promotion to customers to spur sales, the result is a. a lowering of the price of the product for the end customer. b. increased purchases and thus increased sales for the entire supply chain. c. an increase in the amount of inventory held at the retailer. d. all of the above e. a and b only

answer

e. a and b only

question

Which of the following is a possible response that a retailer could make to a trade promotion? a. Pass through some or all of the promotion to customers to spur sales. b. Pass through very little of the promotion to customers but purchase in greater quantity during the promotion period to exploit the temporary reduction in price. c. Shift inventory from the retailer to the customer. d. a and b only e. b and c only

answer

d. a and b only

question

Which of the following is not a key goal (from the manufacturer's perspective) of a trade promotion? a. Induce retailers to use price discounts, displays, or advertising to spur sales. b. Shift inventory from the manufacturer to the retailer and the customer. c. Shift inventory from the retailer to the customer. d. Defend a brand against competition. e. none of the above

answer

c. Shift inventory from the retailer to the customer.

question

Safety inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period.

answer

True

question

A shortage occurs in a replenishment cycle only if the demand during the lead time exceeds the ROP

answer

True

question

The expected shortage per replenishment cycle (ESC) is the average units of demand that are satisfied from inventory in stock per replenishment cycle.

answer

False

question

With periodic review, inventory status is checked at regular intervals and an order is placed to raise the inventory level to a specified threshold.

answer

True

question

With continuous review, inventory is continuously tracked and an order for a lot size Q is placed at regular intervals of time

answer

False

question

Tracking order fill rates is important when customers place a high value on the entire order being filled simultaneously

answer

True

question

The distinction between product fill rate and order fill rate is significant in a single product situation.

answer

False

question

Product fill rate is the fraction of product demand that is satisfied from product in inventory.

answer

True

question

Order fill rate is the fraction of product demand that is satisfied from product in inventory.

answer

False

question

Product availability reflects a firm's ability to fill a customer order out of available inventory.

answer

True

question

Safety inventory is carried because demand forecasts are accurate and a product shortage may result if the forecast demand exceeds the actual demand

answer

False

question

Lead time is the gap between when an order is placed and when it is received.

answer

True

question

As the desired level of product availability increases, the required level of safety inventory decreases.

answer

False

question

As the uncertainty of supply or demand grows, the required level of safety inventories increases.

answer

True

question

The appropriate level of safety inventory is determined by the uncertainty of both demand and supply and the desired level of cycle inventory.

answer

False

question

Carrying excessive inventory can help counter demand volatility when new products come on the market.

answer

False

question

Raising the level of safety inventory increases inventory holding costs.

answer

True

question

Raising the level of safety inventory increases product availability and thus the margin captured from customer purchases.

answer

True

question

The fill rate increases and the cycle service level decreases as the safety inventory is increased.

answer

False

question

15. When using a continuous review policy, a manager has to account for the uncertainty of demand during the lead time and the review interval.

answer

False

question

Periodic review policies require more safety inventory than continuous review policies for the same level of product availability.

answer

True

question

13. Postponement allows the supply chain to delay product differentiation, which results in disaggregating most of the inventories in the supply chain.

answer

False

question

12. Manufacturer-driven substitution increases overall profitability for the manufacturer by allowing some aggregation of demand, which reduces the inventory requirements for the same level of availability.

answer

True

question

10. If aggregation reduces the required safety inventory for a product by a small amount, it may be best to carry the product in multiple decentralized locations to reduce response time and transportation cost.

answer

True

question

8. Aggregation reduces the standard deviation of demand only if demand across the regions being aggregated is not perfectly positively correlated.

answer

True

question

For the same safety inventory, an increase in lot size increases the fill rate but not the cycle service level.

answer

True

question

7. A reduction in supply can help dramatically reduce safety inventory required without hurting product availability.

answer

False

question

6. In most supply chains, the key to reducing the underlying forecast uncertainty is to link all forecasts throughout the supply chain to customer demand data.

answer

True

question

A goal of any supply chain manager is to reduce the level of safety inventory required regardless of the affect product availability.

answer

False

question

The required safety inventory increases with an increase in the lead time and the standard deviation of periodic demand.

answer

True

question

The required safety inventory grows rapidly with a decrease in the desired product availability.

answer

False

question

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. e. all of the above

answer

c. safety inventory.

question

Lead time is the gap between a. when an order is placed and when it is received. b. when an order is received and when it is put away. c. when an order is received and when it is used. d. when an order is acknowledged and when it is received. e. none of the above

answer

a. when an order is placed and when it is received.

question

As the desired level of product availability increases, the required level of safety inventory a. decreases. b. increases. c. remains stable. d. both a and b e. none of the above

answer

e. none of the above

question

8. As the uncertainty of supply or demand grows, the required level of safety inventories a. decreases. b. increases. c. remains stable. d. both a and b e. none of the above

answer

b. increases.

question

7. The appropriate level of safety inventory is determined by a. the uncertainty of both demand and supply. b. the desired level of product availability. c. the desired level of cycle inventory. d. the processes in a supply chain are divided into 2 categories depending all of the above e. a and b only

answer

e. a and b only

question

What key question(s) need(s) to be considered when planning safety inventory for any supply chain? a. What is the appropriate lead time to establish? b. What is the appropriate level of safety inventory to carry? c. What actions can be taken to improve product availability while reducing safety inventory? d. a and b only e. b and c only

answer

e. b and c only

question

Safety inventory is carried because a. demand forecasts are accurate. b. demand forecasts are uncertain. c. adequate supplies are available. d. excess product was manufactured. e. forecast demand exceeds the actual demand.

answer

b. demand forecasts are uncertain.

question

A key to success at which company has been its ability to provide a high level of product availability to customers while carrying very low levels of safety inventory in its supply chain? a. Compaq b. Hewlett-Packard c. Dell d. Packard-Bell e. all of the above

answer

c. Dell

question

4. 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. e. a and b only

answer

b. product life cycles are short and demand is very volatile.

question

The trade-off that a supply chain manager must consider when planning safety inventory is a. increasing product availability versus increasing inventory holding costs. b. decreasing product availability versus decreasing inventory holding costs. c. increasing product availability versus raising the level of safety inventory. d. decreasing product availability versus decreasing the level of safety inventory. e. none of the above

answer

a. increasing product availability versus increasing inventory holding costs.

question

10. A company that checks inventory status at regular periodic intervals and places an order to raise the inventory level to a specified threshold is using a. continuous review. b. daily review. c. occasional review. d. periodic review. e. none of the above

answer

d. periodic review.

question

9. A company that tracks inventory and places an order for a lot size Q when the inventory declines to the reorder point (ROP) is using a. continuous review. b. daily review. c. occasional review. d. periodic review. e. none of the above

answer

a. continuous review.

question

A replenishment policy a. consists of decisions regarding when to reorder and how much to reorder. b. determines the cycle and safety inventories along with the fr and the CSL. c. may take several forms. d. All of the above are true. e. None of the above are true.

answer

d. All of the above are true.

question

The distinction between product fill rate and order fill rate is a. not significant in a single product situation. b. significant in a single product situation. c. not significant when a firm is selling multiple products. d. significant when a firm is selling multiple products. e. both a and d

answer

a. not significant in a single product situation.

question

If a customer order arrives when product is not available a. a sale results. b. the retailer allocates product to the customer. c. a stockout results. d. the order is filled from safety inventory. e. none of the above

answer

c. a stockout results.

question

Which of the following is not a measure of product availability? a. customer fill rate b. product fill rate c. order fill rate d. cycle service level (CSL) e. none of the above

answer

a. customer fill rate

question

5. The fraction of replenishment cycles that end with all the customer demand being met is the a. customer fill rate. b. product fill rate. c. order fill rate. d. cycle service level (CSL). e. none of the above

answer

d. cycle service level (CSL).

question

The fraction of product demand that is satisfied from product in inventory is the a. customer fill rate. b. product fill rate. c. order fill rate. d. cycle service level (CSL). e. none of the above

answer

b. product fill rate.

question

The fraction of orders that are filled from available inventory is the a. customer fill rate. b. product fill rate. c. order fill rate. d. cycle service level (CSL). e. none of the above

answer

c. order fill rate.

question

1. The expected shortage per replenishment cycle (ESC) is a. the units of demand that are not satisfied from inventory in stock in a given replenishment cycle. b. the units of demand that are satisfied from inventory in stock in a given replenishment cycle. c. the average units of demand that are not satisfied from inventory in stock per replenishment cycle. d. the average units of demand that are satisfied from inventory in stock per replenishment cycle. e. none of the above

answer

c. the average units of demand that are not satisfied from inventory in stock per replenishment cycle.

question

10. A goal of any supply chain manager is to a. increase the level of safety inventory required in a way that does not adversely affect product availability. b. increase the level of safety inventory required regardless of the effect on product availability. c. reduce the level of safety inventory required regardless of the effect on product availability. d. reduce the level of safety inventory required in a way that does not adversely affect product availability. e. none of the above

answer

d. reduce the level of safety inventory required in a way that does not adversely affect product availability.

question

The required safety inventory a. increases with an increase in the lead time and the standard deviation of periodic demand. b. decreases with an increase in the lead time and the standard deviation of periodic demand. c. remains stable with an increase in the lead time and the standard deviation of periodic demand. d. increases with a decrease in the lead time and the standard deviation of periodic demand. e. none of the above

answer

d. increases with a decrease in the lead time and the standard deviation of periodic demand.

question

The required safety inventory a. grows rapidly with a decrease in the desired product availability. b. grows rapidly with an increase in the desired product availability. c. decreases with an increase in the desired product availability. d. remains stable with an increase in the desired product availability. e. none of the above

answer

b. grows rapidly with an increase in the desired product availability.

question

For the same safety inventory, an increase in lot size a. decreases the fill rate but not the cycle service level. b. increases the fill rate but not the cycle service level. c. decreases both the fill rate and the cycle service level. d. increases both the fill rate and the cycle service level. e. none of the above

answer

c. decreases both the fill rate and the cycle service level.

question

5. As the safety inventory is increased a. fill rate increases and cycle service level decreases. b. fill rate decreases and cycle service level increases. c. both fill rate and cycle service level increase. d. both fill rate and cycle service level decrease. e. none of the above

answer

c. both fill rate and cycle service level increase.

question

4. A shortage occurs in a replenishment cycle a. only if the demand during the lead time exceeds the ROP. b. only if the demand during the lead time is less than the ROP. c. only if the demand during the lead time exceeds the average demand. d. only if the demand during the lead time is less than the average demand. e. none of the above

answer

a. only if the demand during the lead time exceeds the ROP.

question

Which of the following is not an approach to reduce the level of safety inventory required in a way that does not adversely affect product availability? a. Reduce the supplier lead time. b. Reduce the underlying uncertainty of demand. c. Reduce the cost of material coming from suppliers. d. All of the above are approaches. e. None of the above are approaches.

answer

c. Reduce the cost of material coming from suppliers.

question

18. As retailers decrease the level of safety inventory they carry, the distributor will have to a. decrease his or her safety inventory. b. increase his or her safety inventory. c. keep his or her safety inventory at the same level. d. increase his or her cycle inventory. e. decrease his or her cycle inventory.

answer

b. increase his or her safety inventory.

question

17. A distributor should decide his safety inventory levels based on a. the level of safety inventory carried by all retailers supplied by him. b. the level of safety inventory carried by other distributors. c. the level of safety inventory carried by manufacturers supplying him. d. the level of cycle inventory carried by all retailers supplied by him. e. the level of cycle inventory carried by other distributors.

answer

a. the level of safety inventory carried by all retailers supplied by him.

question

16. All inventory between a given stage in the supply chain and the final customer is called the a. cycle inventory. b. demand inventory. c. echelon inventory. d. safety inventory. e. none of the above

answer

c. echelon inventory.

question

15. Periodic review policies require a. more safety inventory than continuous review policies for the same level of product availability. b. less safety inventory than continuous review policies for the same level of product availability. c. the same safety inventory as continuous review policies for the same level of product availability. d. no more safety inventory than continuous review policies for the same level of product availability. e. none of the above

answer

a. more safety inventory than continuous review policies for the same level of product availability.

question

14. Continuous review policies for inventory replenishment require safety inventory to cover demand during a. lead time only. b. the review interval only. c. both lead time and the review interval. d. neither lead time or the review interval. e. lead time when it exceeds the review interval.

answer

a. lead time only.

question

Periodic review policies for inventory replenishment require safety inventory to cover demand during a. lead time only. b. the review interval only. c. both lead time and the review interval. d. neither lead time or the review interval. e. lead time when it exceeds the review interval.

answer

c. both lead time and the review interval.

question

12. Which approach to aggregation has the goal of moving product differentiation as close to the pull phase of the supply chain as possible? a. information centralization b. specialization c. product substitution d. component commonality e. postponement

answer

e. postponement

question

2. Often, safety inventory calculations in practice a. do not include any measure of supply uncertainty, resulting in levels that may be higher than required. b. do not include any measure of supply uncertainty, resulting in levels that may be lower than required. c. include measures of supply uncertainty, resulting in levels that may be higher than required. d. include any measures of supply uncertainty, resulting in levels that may be lower than required. e. None of the above are accurate.

answer

b. do not include any measure of supply uncertainty, resulting in levels that may be lower than required.

question

The ability of a supply chain to delay product differentiation or customization until closer to the time the product is sold is a. information centralization. b. specialization. c. product substitution. d. component commonality. e. postponement.

answer

e. postponement.

question

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 e. postponement

answer

a. information centralization

question

The use of one product to satisfy demand for a different product is a. information centralization. b. specialization. c. product substitution. d. component commonality. e. postponement.

answer

c. product substitution.

question

Which approach to aggregation would stock the fast-moving items at decentralized locations close to the customer and slow-moving items at a centralized location? a. information centralization b. specialization c. product substitution d. component commonality e. postponement

answer

b. specialization

question

Which approach to aggregation requires an information system that allows access to current inventory records from each location? a. information centralization b. specialization c. product substitution d. component commonality e. postponement

answer

a. information centralization

question

6. Which of the following is not a method by which a supply chain can extract the benefits of aggregation without having to physically centralize all inventories in one location? a. information centralization b. specialization c. product substitution d. component differentiation e. postponement

answer

d. component differentiation

question

Which of the following is not a major disadvantage of aggregating all inventory in one location? a. Increase in forecast accuracy of customer demand. b. Increase in response time to customer order. c. Increase in transportation cost to customer. d. All of the above are disadvantages. e. All of the above are advantages.

answer

a. Increase in forecast accuracy of customer demand.

question

Aggregation reduces the standard deviation of demand a. only if demand across the regions being aggregated is perfectly positively correlated. b. only if demand across the regions being aggregated is not perfectly positively correlated. c. even if demand across the regions being aggregated is not perfectly positively correlated. d. whenever demand across the regions being aggregated is not perfectly positively correlated. e. All of the above are accurate.

answer

b. only if demand across the regions being aggregated is not perfectly positively correlated.

question

The level of product availability is also referred to as the customer service level.

answer

True

question

23. In product-based tailored sourcing, low-volume products with uncertain demand are obtained from a flexible source, while high-volume products with less demand uncertainty are obtained from an efficient source.

answer

True

question

In volume-based tailored sourcing, the predictable part of a product's demand is produced at a flexible facility, whereas the uncertain portion is produced at an efficient facility.

answer

False

question

21. Tailored sourcing may be volume-based or product-based depending on the source of uncertainty.

answer

True

question

20. In tailored sourcing, firms use a combination of two supply sources, one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost. Answer: False Difficulty: Moderate

answer

False

question

19. Tailored postponement allows a firm to increase its profitability by only postponing the uncertain part of the demand and producing the predictable part at a lower cost without postponement.

answer

True

question

18. Postponement may increase overall profits for a firm if a single product contributes the majority of the demand because the increased manufacturing expense due to postponement outweighs the small benefit that aggregation provides in this case.

answer

False

question

17. Postponement is valuable for a firm that sells a large variety of products with demand that is independent and comparable in size.

answer

True

question

There is a cost associated with postponement because the production cost using postponement is typically lower than the production cost without it.

answer

False

question

Quick response results in the manufacturer making a lower profit in the short term if all else is unchanged.

answer

True

question

A supply chain can use a high level of product availability to improve its responsiveness and attract customers.

answer

True

question

If quick response allows multiple orders in the season, profits increase and the overstock quantity increases.

answer

False

question

Supply chain managers are able to increase their forecast accuracy as lead times decrease, which allows them to better match supply with demand and increase supply chain profitability.

answer

True

question

An increase in forecast accuracy increases both the overstocked and understocked quantity and decreases a firm's profits.

answer

False

question

With reduced demand uncertainty, a supply chain manager can better match supply and demand by reducing both overstocking and understocking.

answer

True

question

As the ratio of the cost of overstocking to the cost of understocking gets smaller, the optimal level of product availability decreases.

answer

False

question

9. The costs of overstocking and understocking have a direct impact on both the optimal cycle service level and profitability.

answer

True

question

8. The cost of underselling is a key factor that influences the optimal level of product availability.

answer

False

question

5. Whether the optimal level of availability is high or low depends on where a particular company believes they can maximize profits.

answer

True

question

A supply chain needs to achieve a balance between the level of availability and the cost of inventory that maximizes supply chain revenues.

answer

False

question

A high level of product availability requires less inventory, which will keep costs down for the supply chain.

answer

False

question

The level of product availability a. is also referred to as the customer service level. b. is an important component of any supply chain's responsiveness. c. increases revenues for the supply chain by increasing sales. d. All of the above are true. e. Only a and b are true.

answer

e. Only a and b are true.

question

20. A company with multiple products, that chooses to delay product differentiation until closer to the point of sale, is using a. tailored sourcing. b. quick response. c. postponement. d. improved forecasting. e. decreased margin.

answer

c. postponement.

question

19. A company that reduces replenishment lead time so that multiple orders may be placed in the selling season is making use of a. tailored sourcing. b. quick response. c. postponement. d. improved forecasting. e. decreased margin.

answer

b. quick response.

question

18. A company that uses better market intelligence and collaboration to reduce demand uncertainty is making use of a. tailored sourcing. b. quick response. c. postponement. d. improved forecasting. e. decreased margin.

answer

d. improved forecasting.

question

17. With reduced demand uncertainty, a supply chain manager can a. increase both overstocking and understocking. b. increase overstocking and reduce understocking. c. reduce overstocking and increase understocking. d. reduce both overstocking and understocking. e. none of the above

answer

d. reduce both overstocking and understocking.

question

16. Which of the following is not an approach to reduce the uncertainty of demand? a. tailored sourcing b. quick response c. postponement d. improved forecasting e. decreased margin

answer

e. decreased margin

question

15. As the ratio of the cost of overstocking to the cost of understocking gets smaller, a. the optimal level of product availability becomes irrelevant. b. the optimal level of product availability decreases. c. the optimal level of product availability remains stable. d. the optimal level of product availability increases. e. none of the above

answer

d. the optimal level of product availability increases.

question

A supply chain can use a high level of product availability to a. improve its responsiveness and attract customers. b. reduce costs for the supply chain by reducing inventories. c. increase revenues for the supply chain by increasing sales. d. All of the above are true. e. Only a and c are true.

answer

e. Only a and c are true.

question

14. Which of the following would be a strategy to decrease the margin lost in a stockout? a. arranging for backup sourcing b. discarding the unused material c. selling unsold product to an outlet store d. reduce the level of cycle inventory e. none of the above

answer

a. arranging for backup sourcing

question

13. Which of the following would be a strategy to increase the salvage value of an unsold product? a. discarding the unused material b. selling unsold product to an outlet store c. keeping the product in inventory until it sells d. reduce the level of cycle inventory e. none of the above

answer

b. selling unsold product to an outlet store

question

Which of the following is not a managerial lever to increase profitability? a. increasing the salvage value of each unit b. decreasing the margin lost from a stockout c. reducing demand uncertainty d. reducing the level of product availability below optimal e. increasing forecast accuracy

answer

d. reducing the level of product availability below optimal

question

11. The costs of overstocking and understocking have a direct impact on a. the optimal cycle service level but not profitability. b. profitability but not the optimal cycle service level. c. both the optimal cycle service level and profitability. d. neither the optimal cycle service level or profitability. e. the optimal cycle service level and an indirect impact on profitability.

answer

c. both the optimal cycle service level and profitability.

question

10. Which of the following is not a situation involving the trade-off between the cost of overstocking and the cost of understocking? a. seasonal products where all leftover items must be disposed of at the end of the season b. continuously stocked items where demand during stockout is backlogged c. continuously stocked items where demand during stockout is lost d. continuously stocked items where demand during stockout is redirected e. none of the above

answer

d. continuously stocked items where demand during stockout is redirected

question

The margin lost from current as well as future sales if the customer does not return should be included in a. the cost of overstocking the product. b. the cost of stocking the product. c. the cost of understocking the product. d. the cost of overselling the product. e. the cost of underselling the product.

answer

c. the cost of understocking the product.

question

8. The margin lost by a firm for each lost sale because there is no inventory on hand is a. the cost of overstocking the product. b. the cost of stocking the product. c. the cost of understocking the product. d. the cost of overselling the product. e. the cost of underselling the product.

answer

c. the cost of understocking the product.

question

The loss incurred by a firm for each unsold unit at the end of the selling season is a. the cost of overstocking the product. b. the cost of stocking the product. c. the cost of understocking the product. d. the cost of overselling the product. e. the cost of underselling the product.

answer

a. the cost of overstocking the product.

question

The key factors that influence the optimal level of product availability do not include a. the cost of overstocking the product. b. the cost of stocking the product. c. the cost of understocking the product. d. All of the above are key factors. e. None of the above are key factors.

answer

b. the cost of stocking the product.

question

5. Whether the optimal level of product availability is high or low depends on where a particular company believes they can a. minimize cost. b. maximize revenue. c. maximize profits. d. maximize product availability. e. all of the above

answer

c. maximize profits.

question

A high level of product availability requires a. large inventories and tends to raise costs for the supply chain. b. large inventories and tends to reduce costs for the supply chain. c. small inventories and tends to raise costs for the supply chain. d. small inventories and tends to reduce costs for the supply chain. e. none of the above

answer

a. large inventories and tends to raise costs for the supply chain.

question

A supply chain needs to achieve a balance between the level of availability and the cost of inventory that a. maximizes supply chain revenues. b. minimizes supply chain costs. c. maximizes supply chain profitability. d. maximizes supply chain availability. e. all of the above

answer

c. maximizes supply chain profitability.

question

1. A company that uses a more expensive short lead time supplier as a backup for a low cost, long lead time supplier is using a. tailored sourcing. b. quick response. c. postponement. d. improved forecasting. e. decreased margin.

answer

a. tailored sourcing.

question

17. 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. all of the above e. a and b only

answer

e. a and b only

question

16. In volume-based tailored sourcing a. the predictable part of a product's demand is produced at an efficient facility. b. the uncertain portion is produced at a flexible facility. c. the predictable part of a product's demand is produced at a flexible facility. d. all of the above e. a and b only

answer

e. a and b only

question

15. In tailored sourcing, firms use a combination of two supply sources, a. one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost. b. one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost. c. one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty at a lower cost. d. one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty at a lower cost. e. None of the above are accurate.

answer

a. one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost.

question

14. Under tailored postponement, a firm produces the amount that is very likely to sell using a. the lower cost production method with postponement and produces the portion of demand that is uncertain using postponement. b. the lower cost production method without postponement and produces the portion of demand that is uncertain using postponement. c. the higher cost production method with postponement and produces the portion of demand that is uncertain using postponement. d. the higher cost production method without postponement and produces the portion of demand that is uncertain using postponement. e. All of the above are accurate.

answer

b. the lower cost production method without postponement and produces the portion of demand that is uncertain using postponement.

question

13. 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. e. none of the above

answer

d. tailored postponement.

question

12. Postponement is a. not very effective if a large fraction of demand comes from multiple products. b. not very effective if a small fraction of demand comes from a single product. c. only effective if a large fraction of demand comes from a single product. d. effective even if a large fraction of demand comes from a single product.

answer

b. not very effective if a small fraction of demand comes from a single product.

question

11. Postponement is valuable for a firm that a. sells a large variety of products with demand that is dependent and comparable in size. b. sells a large variety of products with demand that is independent and comparable in size. c. sells a small variety of products with demand that is dependent and comparable in size. d. sells a small variety of products with demand that is independent and comparable in size. e. focuses on processes that are internal to the firm.

answer

b. sells a large variety of products with demand that is independent and comparable in size.

question

10. There is a cost associated with postponement because the production cost using postponement is typically a. higher than the production cost without it. b. lower than the production cost without it. c. very stable. d. equal to the production cost without it. e. none of the above

answer

a. higher than the production cost without it.

question

9. Quick response results in a. the manufacturer making a lower profit in the long term if all else is unchanged. b. the manufacturer making a lower profit in the short term if all else is unchanged. c. the retailer making a lower profit in the short term if all else is unchanged. d. the distributor making a lower profit in the short term if all else is unchanged. e. none of the above

answer

b. the manufacturer making a lower profit in the short term if all else is unchanged.

question

8. Quick response is clearly advantageous to a. a distributor in the supply chain. b. a retailer in the supply chain. c. a manufacturer in the supply chain. d. every step in the supply chain. e. none of the above

answer

b. a retailer in the supply chain.

question

2. An increase in forecast accuracy a. decreases both the overstocked and understocked quantity and decreases a firm's profits. b. decreases both the overstocked and understocked quantity and increases a firm's profits. c. increases both the overstocked and understocked quantity and decreases a firm's profits. d. increases both the overstocked and understocked quantity and increases a firm's profits. e. none of the above

answer

b. decreases both the overstocked and understocked quantity and increases a firm's profits.

question

7. If quick response allows multiple orders in the season, a. profits decrease and the overstock quantity decreases. b. profits decrease and the overstock quantity increases. c. profits increase and the overstock quantity decreases. d. profits increase and the overstock quantity increases. e. none of the above

answer

c. profits increase and the overstock quantity decreases.

question

6. As the total quantity for the season is broken up into multiple smaller orders, the buyer is better able to a. match supply and demand and increase cost. b. match supply and demand and increase profitability. c. match supply and demand and decrease profitability. d. match supply and demand and decrease product availability. e. none of the above

answer

b. match supply and demand and increase profitability.

question

5. Which of the following is not a consequence of being able to place a second order during the season for a seasonal product? a. The expected total quantity ordered during the season with two orders is less. b. The average overstock to be disposed of at the end of the sales season is less. c. The profits are higher. d. The average inventory level is higher. e. none of the above

answer

d. The average inventory level is higher.

question

4. As lead times decrease, supply chain managers are able to a. better match supply with demand. b. better match demand with supply. c. increase supply chain cost. d. decrease product availability. e. none of the above

answer

a. better match supply with demand.

question

3. Supply chain managers are able to a. increase their forecast accuracy as lead times increase. b. increase their forecast accuracy as lead times decrease. c. decrease their forecast accuracy as lead times decrease. d. decrease their forecast accuracy as lead times increase. e. a product is received into stock at a store.

answer

b. increase their forecast accuracy as lead times decrease.

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