Question 1

Chapter 7  Safety stock exists for which of the following reasons?     A. To allow less expensive purchases by buying more. B. To allow for transportation time. C. To provide protection against the uncertainties of supply and demand. D. None of these.

Accepted Answer

C. To provide protection against the uncertainties of supply and demand.

Question 2

Which of the following is NOT a role of inventory?   A. Increasing quality of finished goods B. Balancing supply and demand C. Buffering uncertainty in supply or demand D. Enabling geographical specialization

Accepted Answer

A. Increasing quality of finished goods

Question 3

A batch of Raisin Bran that has been made at Kellogg\'s but not yet packaged in its final cereal box would be an example of what type of inventory?   A. Raw material B. Work-in-process C. Finished goods D. Maintenance, repair, and operating supplies (MRO)

Accepted Answer

B. Work-in-process

Question 4

Taxes and insurance costs are an example of which of the following costs?    A. Ordering cost.  B. Governmental costs.  C. Carrying (or holding) costs.  D. None of these.

Accepted Answer

C. Carrying (or holding) costs.

Question 5

5. Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000. Johnson has determined inventory carrying cost to be 25 percent. Johnson\'s inventory carrying cost was:     A. $250,000.  B. $275,000.  C. $300,000.  D. None of these.

Accepted Answer

B. $275,000.

Question 6

6. Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20. What is the annual inventory turnover?     A. 10  B. 9  C. 0.75  D. 15

Accepted Answer

B. 9

Question 7

7. Next year a tire company wants to have an inventory turnover rate of 22 times per year. To achieve this turnover rate, what should be the average number of days of supply?     A. 16.6 days  B. 36 days  C. 0.6 days  D. 22 days

Accepted Answer

A. 16.6 days

Question 8

8. Independent demand inventory models can be used to determine:     A. When to buy and how much to buy.  B. How to reduce stockouts.  C. Stock levels for regular and one-time buys.  D. All of these.

Accepted Answer

D. All of these.

Question 9

9. Which of the following statements is true regarding a periodic review inventory system?     A. Safety stock is not needed when periodic review systems are used.  B. The same quantity of inventory is ordered each time an order is placed.  C. Inventory replenishment orders are placed in equal increments of time.  D. None of the selections are true.

Accepted Answer

D. None of the selections are true.

Question 10

10. What might a company do to reduce the amount of cycle stock it holds?     A. Attempt to reduce supplier lead time.  B. Always take advantage of supplier quantity discounts.  C. Attempt to reduce demand variation.  D. Attempt to reduce order costs.  E. All of these.

Accepted Answer

D. Attempt to reduce order costs.

Question 11

11. Which of the following might a company try to do to reduce the total amount of safety stock it holds?     A. Implement and use ABC analysis of inventory items.  B. Attempt to reduce variation in supplier lead times.  C. Implement demand management approaches.  D. A and B.  E. All of these.

Accepted Answer

E. All of these.

Question 12

12. The ABC analysis used for analyzing inventory is an example of:     A. Safety stock calculation.  B. Regression analysis.  C. Pareto\'s Law.  D. Inventory carrying cost.

Accepted Answer

C. Pareto\'s Law.

Question 13

13. Which of the following pieces of information is identified in the original 12-digit UPC code?     A. Product price.  B. Where product was manufactured.  C. The manufacturer of the item.  D. A and B.  E. All of these are part of a UPC code.

Accepted Answer

C. The manufacturer of the item.

Question 14

14. ___________ inventory is the costliest form of inventory one can hold.     A. Finished goods  B. Raw materials  C. Components  D. Work-in-process

Accepted Answer

A. Finished goods

Question 15

15. When small changes generated by a customer produce progressively larger changes at each stage upstream in the supply chain, this is known as:     A. Buffering.  B. Bullwhip effect.  C. Pareto effect.  D. Vendor managed inventory.

Accepted Answer

B. Bullwhip effect.

Question 16

16. Which of the following are NOT often associated with a vendor-managed inventory (VMI) arrangements?     A. Long-term commitments from both parties.  B. Supplier representative located at the customer site.  C. Customers recommend to suppliers how they should schedule production.  D. Supplier places replenishment orders.  E. All of these are typically associated with VMI.

Accepted Answer

C. Customers recommend to suppliers how they should schedule production.

Question 17

Chapter 10   1. All of the following are supply management goals EXCEPT:     A. Ensure timely availability of resources.  B. Purchase at the lowest price.  C. Enhance quality.  D. Assess technology and innovation.

Accepted Answer

B. Purchase at the lowest price.

Question 18

2. Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided to continue to outsource but bring the production back to a company located in the United States. This decision was likely made after Zanda:     A. Conducted a spend analysis.  B. Conducted a make or buy analysis.  C. Examined total cost of ownership.  D. Developed supplier certification processes.

Accepted Answer

C. Examined total cost of ownership.

Question 19

3. Which of the following would NOT be a step in conducting a make/buy analysis?     A. Assessing quantitative costs of outsourcing  B. Evaluating new suppliers who could make the SKU  C. Assessing the relationship of the product to the firm\'s core competencies  D. Conducting a detailed internal audit of purchasing practices

Accepted Answer

D. Conducting a detailed internal audit of purchasing practices

Question 20

4. Outsourcing is often a good choice when:     A. There are only a few suppliers.  B. A product is in the mature phase of the life cycle.  C. Technology is new.  D. The product is critical to a firm\'s competitiveness.

Accepted Answer

B. A product is in the mature phase of the life cycle.

Question 21

5. Which of the following is NOT a benefit of outsourcing?     A. Greater flexibility to change product specifications  B. Better access to market information  C. Lower supply management costs  D. Less capital needed for investment

Accepted Answer

C. Lower supply management costs

Question 22

6. The process of understanding how a firm is spending its money and with which suppliers is called:     A. Strategic sourcing.  B. Make or buy analysis.  C. Market analysis.  D. Spend analysis.

Accepted Answer

D. Spend analysis.

Question 23

7. Aspen Corporation has discovered that it uses 10 different suppliers for a particular type of item, has bought 20 different models of that item, and total expenditures last year for the item were $100,000. Aspen most likely is conducting:     A. Supplier audits.  B. Spend analysis.  C. Supplier certification.  D. Make or buy analysis.

Accepted Answer

B. Spend analysis.

Question 24

8. Jones Company has identified an item for which the supply risk is high and the value of the purchase to the firm is low. A recommended sourcing strategy for Jones is to:     A. Multiple source.  B. Increase efficiencies.  C. Build partnerships.  D. Consolidate purchases

Accepted Answer

A. Multiple source.

Question 25

9. Benefits of single sourcing include all of the following EXCEPT:     A. Quantity discounts.  B. More consistent quality.  C. Better supplier relationships.  D. Less supply risk.

Accepted Answer

D. Less supply risk.

Question 26

10. Squeaky Klean, a small consumer products company, purchases custom-designed plastic bottles for its cleaning products that are made at a single plant in Cleveland, Ohio. To make these bottles, specialized tooling must be purchased at a high cost and installed at a supplier\'s plant. Its sourcing strategy for bottles should be to:     A. Use three or more suppliers.  B. Dual source.  C. Single source.  D. Insource bottle production.

Accepted Answer

C. Single source.

Question 27

11. A primary reason for using global suppliers is to:     A. Improve sustainability.  B. Reduce transportation costs.  C. Take advantage of free trade agreements such as NAFTA.  D. Work with the same suppliers in many different regions of the world.

Accepted Answer

D. Work with the same suppliers in many different regions of the world.

Question 28

12. A global food products company makes soups that are specifically tailored to the tastes of consumers in individual countries. What sourcing strategy is the company likely to use for its fresh ingredients such as vegetables?     A. Local, close to its production plant when possible.  B. National, using suppliers within each country.  C. Global, using the same suppliers across the world.  D. Low-cost country sourcing.

Accepted Answer

A. Local, close to its production plant when possible.

Question 29

13. Which of the following is (are) advantages of full partnerships with suppliers, as compared to traditional adversarial relationships?  I. They help reduce uncertainties for both buyer and supplier. II. The full partnership is easier to establish and maintain than other relationships, so more suppliers can be dealt with. III. The full partnership assures the lowest material price.     A. I only  B. II only  C. III only  D. I and II only  E. II and III only

Accepted Answer

A. I only

Question 30

14. Zanda Corp. is considering trying to develop a full partnership with a particular supplier. This suggests that the item Zanda buys from the supplier is:     A. A noncritical part.  B. A \"bottleneck\" item.  C. A strategically important part.  D. An item appropriate for a \"leverage\" strategy.

Accepted Answer

C. A strategically important part.

Question 31

15. A relationship with a supplier that is characterized by lack of trust, little communication, and short-term transactions is called a(n):     A. Adversarial relationship.  B. Arms-length relationship.  C. Acceptance of mutual goals.  D. Full partnership.

Accepted Answer

A. Adversarial relationship.

Question 32

16. When you need to identify a supplier for a new purchase, the FIRST place that you should look is:     A. A local trade show.  B. The list of your company\'s current suppliers.  C. The list of suppliers that your company has used in the past.  D. The Web site of industry groups.

Accepted Answer

B. The list of your company\'s current suppliers.

Question 33

17. Advanced Manufacturing Company is evaluating two suppliers for a component sourcing. After much internal discussion, AMC\'s management has determined that the critical factors in choosing suppliers are: quality, delivery, price, and service. Further, management has rated the importance of these factors as 0.4, 0.3, 0.2, and 0.1, respectively. On a scale of 1 to 5, Supplier A is rated at 5, 3, 3, and 3, respectively. Supplier B\'s ratings are 4, 4, 3, and 4. Which supplier has the better weighted score?     A. Supplier A  B. Supplier B  C. Neither, they both have the same weighted score.

Accepted Answer

C. Neither, they both have the same weighted score.

Question 34

18. Which of the following is true about the use of weighted scoring models for supplier selection?     A. Once developed, the model weights should never change.  B. The supply management department should determine the weights.  C. The highest-scoring supplier should always be selected to receive the business.  D. There is a good deal of subjectivity in developing and using the model.

Accepted Answer

C. The highest-scoring supplier should always be selected to receive the business.

Question 35

19. All of the following are true about supplier scorecards EXCEPT:     A. They reduce the need for incoming quality inspection.  B. They are used to provide performance feedback to suppliers.  C. They are often used to categorize suppliers based on an overall score.  D. They are used to measure supplier performance based on key performance indicators.

Accepted Answer

A. They reduce the need for incoming quality inspection.

Question 36

20. Williams Inc. has acquired software to help manage interactions with its supply base. This suggests that Williams Inc. is involved in:     A. Vendor-managed inventory.  B. Supplier relationship management.  C. Online reverse auctions.  D. Supplier auditing.

Accepted Answer

B. Supplier relationship management.

Question 37

Chapter 11  1. Which of the following best describes the concept of total landed cost?     A. The sum of all logistics costs related to a product.  B. The lowest logistics cost for a product.  C. The sum of all product- and logistics-related costs.  D. None of these.

Accepted Answer

C. The sum of all product- and logistics-related costs.

Question 38

2 Zanda Corp. had established a production plant in Thailand. Recently it decided to close the plant and move production to Mexico. This decision was likely made after Zanda:     A. Conducted a spend analysis.  B. Conducted a make-or-buy analysis.  C. Examined total landed cost.  D. Evaluated consolidation strategies.

Accepted Answer

C. Examined total landed cost.

Question 39

3. With respect to transportation regulation today in the United States:     A. There is no economic regulation of transportation.  B. There is more economic regulation than ever before.  C. There is very little safety/social regulation.  D. There is more safety/social regulation than ever before.

Accepted Answer

D. There is more safety/social regulation than ever before.

Question 40

4. Jones Company learned that several other shippers in its hometown had customers located in the same markets that it serves. With this information, Jones should investigate the possibility of:     A. Market area consolidation.  B. Scheduled delivery consolidation.  C. Pooled delivery consolidation.  D. All of these.

Accepted Answer

C. Pooled delivery consolidation.

Question 41

5. Zanda Corp. can make three individual deliveries to three different customers at a cost of $500 each or can consolidate them into one shipment with a cost of $1,300 and a stop-off charge of $100 per stop. Should Zanda do this?     A. Yes, it will save $100.  B. Yes, it is simpler to do.  C. No, it will increase cost by $100.  D. It doesn\'t matter based on cost.

Accepted Answer

C. No, it will increase cost by $100.

Question 42

6. With respect to the following operating service characteristics of the modes of transportation, which combination is INCORRECTLY specified?     A. Speed: air is best; pipeline is worst.  B. Availability: truck is best; pipeline is worst.  C. Capability: pipeline is best; water is worst.  D. Dependability: pipeline is best; air is worst.

Accepted Answer

C. Capability: pipeline is best; water is worst.

Question 43

7. With respect to the following operating service characteristics of the modes of transportation, which combination is CORRECTLY specified?     A. Speed: air is best; pipeline is worst.  B. Availability: air is best; pipeline is worst.  C. Capability: rail is best; air is worst.  D. Dependability: pipeline is best; truck is worst.

Accepted Answer

A. Speed: air is best; pipeline is worst.

Question 44

8. Bill\'s glass store needs to ship an order of 10 chandeliers to a builder about 1,000 miles away. The chandeliers cost about $10,000 each, and Bill will be paid upon delivery. Bill plans to ship the order by truck at a cost of $1,000. The delivery will take 10 days. Bill uses a 30 percent annual inventory carrying cost. What will be the approximate total shipping and transit inventory carrying cost of the shipment?     A. $633.33  B. $821.92  C. $1,000  D. $1,821.92

Accepted Answer

D. $1,821.92

Question 45

9. Richard\'s Rollerskate Company relies on Simon\'s Trucking to transport all of their products. Simon\'s Trucking is the only shipping company for RRC, and all products are shipped in trucks that look like giant roller skates with Richard\'s Rollerskate branding on the trucks. Richard\'s Rollerskate is likely using which carrier type?     A. Common carrier.  B. Contract carrier.  C. Private carrier.  D. None of these.

Accepted Answer

B. Contract carrier.

Question 46

10. Suppose you were the logistics manager for Way-Off Manufacturing and Marketing, a manufacturer of mosquito repellant. Further suppose that Way-Off markets its products in the entire United States. However, in each geographic region of the country, Way-Off only needs to warehouse products for two months during each year. Way-Off probably would use what type of warehousing?     A. Public  B. Private  C. Contract  D. Common

Accepted Answer

A. Public

Question 47

11. A major disadvantage of private warehousing is:     A. It offers less control than contract warehousing.  B. It requires more investment than contract warehousing.  C. It has less flexibility in operating policies than contract warehousing.  D. All of these are disadvantages of private warehousing.

Accepted Answer

B. It requires more investment than contract warehousing.

Question 48

12. Zanda Corporation\'s CEO watched in amazement and frustration as workers handled and loaded individual products onto trucks. She felt handling the individual items was very cumbersome. She should investigate the possibility of:     A. Using RFID.  B. Containerization.  C. AS/RS.  D. None of these.

Accepted Answer

B. Containerization.

Question 49

13. A company has determined the ideal number of locations by looking at the trade-offs described the text. It decides to open more warehouse locations than this \"ideal.\" This decision would most likely result in ___________ and ___________.     A. Poorer service to customers and higher cost  B. Better service to customers and less cost  C. Better service to customers and higher cost  D. Poorer service to customers and lower cost

Accepted Answer

C. Better service to customers and higher cost

Question 50

Chapter 16  1. When people and profit intersect, from a sustainability perspective, which of the following areas is most impacted?     A. Equitability  B. Sustainability  C. Bearability  D. Viability

Accepted Answer

A. Equitability

Question 51

2.. Which of the following environmental initiatives/programs deals most specifically with building design and construction?     A. The Kyoto Protocol  B. Responsible Care  C. ISO 14000  D. LEED certification

Accepted Answer

C. ISO 14000

Question 52

3.. Which of the following approaches provides management with an appropriate tool for assessing the full impact from \"seed to sewer\" (from creation to disposal)?     A. Life cycle analysis  B. Total cost of ownership  C. Trade-off analysis  D. Cost of quality analysis

Accepted Answer

A. Life cycle analysis

Question 53

4. Over which stage of the product\'s life cycle does operations management have the greatest amount of direct control?     A. Extraction  B. Packaging/transportation  C. Usage  D. Disposal

Accepted Answer

B. Packaging/transportation

Question 54

5. BMW has introduced a program of covered scheduled maintenance for its cars. That is, when you bring in your vehicle for maintenance at a BMW dealership, BMW will cover the costs of everything (except for worn-out tires). This practice specifically targets which stage of the product life cycle?     A. Extraction  B. Packaging/transportation  C. Usage  D. Disposal

Accepted Answer

C. Usage

Question 55

6. Which of the following statements most accurately represents the challenge of being environmentally sustainable?     A. The choices facing the firm are clear, and the obvious candidates for improvement can be easily identified.  B. It is not easy to be environmentally responsible since the choices facing management involve trade-offs.  C. This is a decision that firms must move on since the demand for environmental responsibility is driven by forces that cannot be ignoredâgovernmental regulations, decreasing resource levels, and changing customer demands.  D. Being environmentally responsible is simply a matter of complying with governmental regulations.

Accepted Answer

B. It is not easy to be environmentally responsible since the choices facing management involve trade-offs.

Question 56

7. From an operations standpoint, sustainability means that:     A. Profit is not an important goal.  B. A company should focus its efforts on reducing pollution.  C. Firms should pursue profit without damaging the environment or the well-being of future generations.  D. The firm must improve how it manages its people resources since these are important to the long-term survival of the firm.

Accepted Answer

C. Firms should pursue profit without damaging the environment or the well-being of future generations.

Question 57

8. Lean systems thinking in operations management can extend to sustainability in what way?     A. Its focus on improving product quality.  B. Its focus on delivering products to customers faster.  C. Its focus on reducing waste of all types.  D. Its focus on product innovation.

Accepted Answer

C. Its focus on reducing waste of all types.

Question 58

9. A specific analysis of the total greenhouse gases caused directly or indirectly by a product is called:     A. Carbon footprinting.  B. Life cycle analysis.  C. Life cycle waste assessment matrix.  D. Cap and trade.

Accepted Answer

A. Carbon footprinting.

Question 59

10. The following environmentally responsible process/material matrix was developed for Zanda Corp. Zanda has determined that a score of 40 is its goal at this time, but efforts to lower its score will continue regardless. What is Zanda\'s current score, and what is your conclusion?       A. 53, Zanda is doing better than its goal.  B. 53, Zanda is doing worse than its goal.  C. 47, Zanda, is doing better than its goal.  D. 47, Zanda is doing worse than its goal.

Accepted Answer

D. 47, Zanda is doing worse than its goal.

Question 60

11. Walmart has announced that suppliers must attempt to improve their efforts in environmental management. In this announcement, Walmart could have included a requirement that suppliers meet the standards of:     A. ISO 9000.  B. ISO 2011.  C. ISO 9002.  D. ISO 14000.

Accepted Answer

D. ISO 14000.

Question 61

12. The \"triple bottom line\" suggests that efforts should be devoted to assessing the impact of activities on:     A. People, profit, processes.  B. Profit, profit, profit.  C. People, planet, profit.  D. Profit, planet, processes.

Accepted Answer

C. People, planet, profit.

Question 62

14. Which of the following sustainability issues has a significant impact on supply chain relationships?     A. Culture  B. Common usage of lean systems  C. Location  D. Governmental regulations and tariffs

Accepted Answer

A. Culture

Question 63

15. Zanda Corp. has always operated within one country. It is contemplating opening production facilities in another country. Zanda should realize:     A. Production processes used domestically should work well in a different country.  B. The means of motivating the workforce domestically may not work well in a different country.  C. The technology used domestically is often the best to use in a different country.  D. The same business model that is used domestically should apply to the foreign country.

Accepted Answer

B. The means of motivating the workforce domestically may not work well in a different country.

Question 64

16. As technology and cultures evolve, the best approach for operations managers is to:     A. Work harder.  B. Adapt their business models.  C. Retire.  D. Make their processes more efficient.

Accepted Answer

B. Adapt their business models.

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