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Strategies to address supply chain risks include:

(I) risk avoidance.
(II) risk reduction.
(III) risk projection.
(IV) risk sharing.

A. I, II, and IV only

B. II and III only

C. I and IV only

D. II and IV only

E. I, II, III, and IV

i, II, and IV only

Risk management strategies include risk avoidance, risk reduction, and risk sharing with supply chain partners.

Which of the following, while desirable from some perspectives, might actually increase the risk of supply chain reductions?

(I) fewer supply chain partners
(II) a shorter supply chain
(III) greater supply chain visibility

A. I and II only

B. II and III only

C. I and III only

D. I only

E. I, II, and III

I only

Fewer suppliers results in greater concentration among suppliers, making the supply chain riskier.

51. One of the biggest ethical risks in supply chain management is that the __________ supply chain member tends to be the one that suffers the blame and/or lost goodwill when something goes wrong.

A. most responsible

B. buying

C. most visible

D. supplying

E. most ethical

most visible
Consumers tend to blame the major company or brand in the supply chain associated with the ethical infractions.
The more __________ a company’s supply chain, the more difficult it is to ensure that the supply chain is managed ethically.

A. interconnected

B. global

C. visible

D. shortened

E. competitive


-Problems with supply chain ethics are particularly difficult to manage when supply chains are global.

It is especially the case for small businesses that closer interactions and increased agility make __________ relatively more attractive.

A. domestic suppliers

B. centralized purchasing

C. global suppliers

D. decentralized purchasing

E. risk transfer

domestic suppliers

-For small businesses, the advantages of domestic suppliers include lower shipping times and costs, closer interactions with suppliers, and increased agility.

Which of these aspects of supply chain management are especially concerning to small business?

(I) customer reliability
(II) inventory management
(III) purchasing costs
(IV) risk management
(V) international trade

A. III, IV, and V only

B. I, II, and III only

C. I, III, and IV only

D. I and II only

E. II, IV, and V only


Three aspects of supply chain management that are often of concern to small businesses are: (1) inventory management; (2) reducing risks; and (3) international trade.

Which of the following is not a goal of supply chain management?

A. fewer suppliers and long-term relationships

B. small lot sizes

C. on-time deliveries

D. lowest possible transportation costs

E. delivery often to the place of use


-Minimizing transportation costs might lead to an unacceptable trade-off elsewhere.

Logistics includes all of these except:

A. the movement of materials within a production facility.

B. incoming shipments of goods or materials.

C. outgoing shipments of goods or materials.

D. customer selection.

E. returned goods processing.

customer selection

-Logistics involves moving goods.

Small changes in consumer demand can result in large variations in orders placed because of the:

A. supply chain.

B. safety stock requirement.

C. lead time effect.

D. bullwhip effect.

E. FCFS scheduling.

bullwhip effect
RFID chips:

(I) are used to track goods in distribution.
(II) are used to track job progress in production.
(III) are used to provide special instructions to operators.
(IV) can be used in inventory record keeping.

A. II and III only

B. I and II only

C. II, III, and IV

D. I, II, and IV

E. IV only

I,II, and IV

RFID chips do not contain special instructions.

Which of the following is not a benefit of RFID?

A. increased productivity

B. elimination of paperwork

C. frequent deliveries of smaller shipments

D. reduction in clerical labor

E. increased accuracy


RFID does little to facilitate the cost reductions required to make frequent, small deliveries feasible.

60. A factor that makes it desirable for business organizations to actively manage their supply chains is:

A. more potential vendors.

B. increasing globalization.

C. downsizing.

D. the Internet.


increasing gobalization

-Globalization is making supply chain management more important.

Which of the following is not a benefit of effective supply chain management?

A. lower inventory costs

B. higher productivity

C. shorter lead times

D. greater customer loyalty

E. larger number of suppliers

Larger # of suppliers

Supply chain management often results in fewer suppliers.

Which of the following is not a measure of the reliability of the supply chain?

A. supply chain response time

B. on-time delivery

C. fill rate

D. lead time variability

E. improving e-fulfillment statistics

sc response time

Response time is a measure of supply chain effectiveness.

The automatic identification of material is part of/facilitated by:

A. holding costs.


C. working capital reduction.

D. net present value calculations.

E. vendor analysis.


-RFID facilitates the automatic identification of material.

Which of the following is not an application of E-business?

A. Internet buying and selling

B. e-mail

C. order and shipment tracking

D. electronic data interchange (EDI)

E. universal product codes

universal product codes

-Universal product codes are not part of E-business

Which of the following is an advantage of E-business?

(I) reduction of transaction costs
(II) shortened supply chain response time
(III) greater customer loyalty

A. I


C. I and II

D. II and III

E. I, II, and III

I and II

Gaining and maintaining customer loyalty is even more difficult once a firm is involved in E-business.

Which of the following is a barrier to the integration of separate organizations in the supply chain?

(I) conflicting objectives of the companies in the chain
(II) different capacity levels of the companies in the chain
(III) reluctance of the organizations in the chain to allow other organizations access to their data

A. I only

B. I and II

C. II and III

D. I and III

E. I, II, and III

I and III

Capacity imbalances can be overcome, but conflicting objectives and mistrust are substantial barriers.

_________ has/have helped firms to concentrate on their core business.

A. Supply chains

B. Scheduling

C. Outsourcing


E. Lean production


-Outsourcing enables firms to focus on what they do, or should do, best

Outsourcing followed by __________ is not simple.

A. integration

B. unionization

C. backsourcing

D. computerization

E. just-in-time


-Backsourcing is difficult to implement effectively if outsourcing has been done

69. The interface between the firm and its suppliers is:

A. purchasing.

B. production.

C. distribution.

D. engineering.

E. accounting.


-The purchasing function bridges the organization and its suppliers.

The two types of decisions that are relevant to supply chain management are:

A. short- and long-term.

B. domestic and international.

C. location and layout.

D. in-sourcing and outsourcing.

E. tactical and operational.


-Decision making in supply chain management falls into either tactical or operational areas.

One important objective of purchasing is to:

A. set quality standards for purchased items.

B. be knowledgeable about new products.

C. maintain numerous sources of supply.

D. obtain the lowest prices on all purchased items.

E. determine the processes that should be used.

be knowledgeable about new products.

-Purchasing can play a crucial role by helping solidify the supplier base for a new product.

The purchasing cycle begins with:

A. selecting a supplier.

B. placing an order.

C. evaluating potential vendors.

D. conducting a value analysis.

E. receiving a requisition.

Receiving a requisition

-The requisition notes what is needed, in what quantity, and when it is needed.

Examination of the sources of supply for purchased parts or materials in order to improve performance is called:

A. vendor analysis.

B. value analysis.

C. negotiated purchasing.

D. reverse engineering.

E. disintegration.


-Performance can be evaluated with respect to price, quality, reputation, or service.

Vendor analysis has the greatest potential for savings for items which have:

A. low cost per unit.

B. low annual cost-volume.

C. high cost per unit.

D. high annual usage.

E. high annual cost-volume.

High Annual Cost Volume

These represent the bulk of purchasing costs.

Which of the following is not true of vendor analysis?

A. It involves an examination of the function of purchased parts or raw materials.

B. Its purpose is to reduce costs and/or improve performance of purchased goods or services.

C. It is usually performed only periodically.

D. Representatives from design and operations may work with purchasing.

E. If improvements are identified, purchasing implements those that purchasing agrees are justified.


-The function of purchased parts or raw materials would be done by the procuring department.

Which of the following is not a performance driver?

A. quality

B. cost

C. stability

D. velocity

E. flexibility


-Stability is not a performance driver.

Which of the following would not usually be a main factor in selecting a vendor?

A. location

B. price

C. quality

D. inventory turnover

E. vendor services


-Turnover would only rarely be associated with the vendor that is selected.

Which of the following is part of the purchasing cycle?

(I) Purchasing selects a supplier.
(II) Orders from vendors are received.
(III) Purchasing receives a requisition.

A. II and III

B. I, II, and III

C. I only

D. I and II

E. I and III


-These are all part of the purchasing cycle.

79. Which of the following is least likely to be a key consideration when a company chooses a supplier?

A. lead time and on-time delivery

B. reputation and financial stability

C. value analysis

D. quality and quality assurance

E. flexibility of design change

Value Analysis

-All the others are highly likely to be considered in supplier selection.

80. Which of the following is not a benefit of centralized purchasing?

A. potential for quantity discounts

B. better service from suppliers

C. quick response to local needs

D. potential for use of purchasing specialists

E. supplier research


-Quick response to local needs is a benefit of decentralized purchasing

The purchasing perspective of the supplier as a partner is characterized by:

A. an emphasis on low prices.

B. one or a few suppliers.

C. low flexibility.

D. 100 percent inspection for quality.

E. low volume.

one or a few suppliers

-Fewer suppliers enhance the chances of building real partnerships.

Vendor analysis is the examination of the _________ of purchased materials.

A. function

B. source

C. quality

D. cycle

E. quantity


-Sources of supply are evaluated in vendor analysis.

Last quarter, a retailer sold 8,000 T-shirts, 7,000 of which were sold directly from on-hand inventory. This retailer’s ________ was 88 percent.

A. fill rate

B. inventory yield

C. profit margin

D. inventory turnover

E. working yield

fill rate

-This retailer’s fill rate was 88 percent.

Which of the following is a principle required for ethical behavior in purchasing?

(I) loyalty to employer
(II) justice to those you deal with
(III) faith in your profession

A. III only

B. I only

C. II only

D. I, II, and III

E. II and III only

I, II and III

-All of these are ethical principles in purchasing.

The activity which begins with a request from within the organization is:

A. outsourcing search.

B. purchasing cycle.

C. supplier selection.

D. order receipt.

E. supply chain management.

purchasing cycle

-The purchasing cycle begins with a requisition

Our organization can obtain visibility to potential trading partners on the Internet by using:

A. C2C.

B. B2C.

C. B2B.

D. C2B.

E. 2BC.

Real-time information about product movement on store shelves could benefit from the use of:

A. batch processing.

B. economic order quantities.

C. statistical process control.

D. radio frequency identification tags.

E. infrared remote scanners.

RFI tags

-RFID facilitates real-time data gathering.

The website and order fulfillment are essential features of:

A. delayed differentiation.

B. e-commerce.

C. Internet service providers.

D. inventory balancing.

E. market segmentation.


-These are front-end and back-end facets of e-commerce

A given inventory item has a per-year holding cost of $500. One method of shipping this item is three days faster than the other, but it is $2.50 more per unit. Using the slower method would be __________ more expensive overall than using the faster method.

A. $1.08

B. $1.16

C. $2.37

D. $2.73

E. $1.61


Multiply the holding cost by the speed differential, then divide by 365. Compare this to the actual shipping cost difference.

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