Question 1

A company\'s supply chain involves the flow of materials and information from suppliers, through production, to the end users.

Accepted Answer

TRUE  Flow of materials and information are the central focus of supply chain management.

Question 2

In supply chain organizations, functions must operate independently of each other.

Accepted Answer

FALSE  Functions should be integrated.

Question 3

In purchasing, one\'s only ethical obligation is to one\'s suppliers.

Accepted Answer

FALSE  Purchasing personnel have ethical obligations with regard to a variety of stakeholders, primarily the organizations that employ them.

Question 4

Using third-party logistics involves using your organization\'s logistics function to ship to customers that aren\'t officially part of the supply chain.

Accepted Answer

FALSE  Using third-party logistics involves outsourcing the logistics function.

Question 5

Every business organization is part of at least one supply chain.

Accepted Answer

TRUE  Either the business organization is a complete supply chain or it is a player in a supply chain.

Question 6

Frequent deliveries of small shipments can reduce inventory but also result in an increase in the transportation cost per unit.

Accepted Answer

TRUE  This is one of the tradeoffs inherent in supply chain management.

Question 7

The materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the beginning of the chain.

Accepted Answer

FALSE  Material flows toward the final consumer and information and dollars flow upstream.

Question 8

Managing supply chain visibility involves making sure that potential supply chain partners are aware of your organization\'s needs.

Accepted Answer

FALSE  Supply chain visibility has to do with making sure that current trading partners have access to needed data in real time.

Question 9

The goal of supply chain management is to synchronize supply and demand of all of the organizations that are part of the chain.

Accepted Answer

TRUE  Synchronizing multiple organizations is one of the difficulties of supply chain management.

Question 10

The need for supply chain management increases as globalization increases.

Accepted Answer

TRUE  As globalization increases supply chain management is becoming more important.

Question 11

The design of the supply chain and establishing partnerships with vendors and distributors are examples of operating issues in a supply chain.

Accepted Answer

FALSE  These are tactical responsibilities.

Question 12

Traffic management refers to truck movement within our parking areas.

Accepted Answer

FALSE  Traffic management is the management of the shipment of incoming and outgoing goods.

Question 13

One of the major reasons for a company to adopt third-party logistics is to concentrate on one\'s core business.

Accepted Answer

TRUE  Outsourcing logistics to third parties enables a company to focus on its core business.

Question 14

E-commerce refers to the use of electronic technology to facilitate business transactions.

Accepted Answer

TRUE  E-commerce is a growing trend in supply chain management.

Question 15

E-commerce involves business-to-business (B2B) interaction only.

Accepted Answer

FALSE  E-commerce can also involve business-to-consumer (B2C) interactions.

Question 16

Disintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain.

Accepted Answer

TRUE  Disintermediation involves reducing one or more steps in a supply chain by cutting out intermediaries.

Question 17

Most people working for a business organization are somehow involved with the supply chain of that business.

Accepted Answer

TRUE  Most people working for a business organization are involved in the flow of materials, money or information.

Question 18

Strategic partnering is encouraged when two or more business organizations have complementary products or services that would benefit the others.

Accepted Answer

TRUE  Complementarity is key to successful strategic partnering.

Question 19

Forming strategic partnerships is beneficial for two or more business organizations that have the same products or services.

Accepted Answer

FALSE  Complementarity is key to successful strategic partnering.

Question 20

Inventory velocity refers to the average speed (in miles/hour) of material handling equipment in a warehouse.

Accepted Answer

FALSE  Velocity refers to the rate at which goods pass through a supply chain.

Question 21

Global supply chains make purchasing easier because of more options.

Accepted Answer

FALSE  Global purchasing is more complex because of the variety of issues and risks that must be considered.

Question 22

Centralized or decentralized purchasing is directly related to the size of an organization.

Accepted Answer

FALSE  The use of centralized or decentralized purchasing is independent of organization size.

Question 23

The optimization of the supply chain uses a mathematical model to determine the optimal number of business organizations to be included in the chain.

Accepted Answer

FALSE  Optimizing a supply chain through mathematical models is typically not feasible.

Question 24

Information technology is the key to success of global supply chains.

Accepted Answer

TRUE  Global supply chains are made possible by the use of information technology.

Question 25

Bullwhip effect refers to a phenomenon that demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain.

Accepted Answer

TRUE  The effect of demand variations grows as it works its way back through the supply chain.

Question 26

Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease.

Accepted Answer

FALSE  Safety stock might increase, but batch sizes won\'t.

Question 27

Scheduling and maintaining equipment are operational decisions.

Accepted Answer

TRUE  Maintenance would be a form of corrective or preventative action to ensure the continued availability of capacity.

Question 28

To prevent temporary storage in a warehouse, cross docking can be used.

Accepted Answer

TRUE  In cross-docking, inbound goods are moved directly onto outbound trucks.

Question 29

Delayed differentiation is a means of increasing product variety without building the customized product from scratch or keeping large inventories of custom products.

Accepted Answer

TRUE  Delayed differentiation is used to create customized output without large inventories.

Question 30

Returned goods are part of reverse logistics.

Accepted Answer

TRUE  Reverse logistics involves managing the flow of goods back up the supply chain.

Question 31

A 30% reduction in product and service variety won\'t really affect the efficiency of a supply chain.

Accepted Answer

FALSE  Reducing variety is a prominent means of increasing efficiency.

Question 32

The service function of purchasing interfaces with many area including legal, accounting, and engineering functions.

Accepted Answer

TRUE  Purchasing interfaces with a wide variety of areas.

Question 33

Gate keeping manages the cost of shipping returned goods.

Accepted Answer

FALSE  Gate keeping manages the cost of dealing with inappropriately returned goods.

Question 34

Outsourcing logistics gives a company less flexibility because it forces them to focus more on core businesses.

Accepted Answer

FALSE  Outsourcing logistics can lead to more flexibility.

Question 35

Vendor analysis examines the function of purchased parts and materials with a view towards improvement or cost reduction.

Accepted Answer

FALSE  Vendor analysis evaluates sources of supply with respect to price, quality, reputation and service.

Question 36

Using third-party fulfillment means losing control of fulfillment.

Accepted Answer

TRUE  Outsource this key function means a loss of control.

Question 37

Price is the primary determining factor in choosing a vendor since most products are essentially the same.

Accepted Answer

FALSE  With vendor analysis, price is just one of many considerations.

Question 38

RFID eliminates the need for counting and bar-code scanning.

Accepted Answer

TRUE  RFID does away with the need for counting and bar-code scanning.

Question 39

The importance of purchasing relates only to the cost of parts and materials purchased, which is often 60% or more of the cost of finished goods.

Accepted Answer

FALSE  Purchasing is important because other costs resulting from the purchase of parts and materials are highly consequential.

Question 40

The importance of purchasing is the cost of goods purchased, the quality of goods and services, and the timing of deliveries of goods or services.

Accepted Answer

TRUE  These costs resulting from the purchase of parts and materials are highly consequential.

Question 41

Vendor analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service.

Accepted Answer

TRUE  Evaluating sources of terms of price, quality, reputation, and service is vendor analysis.

Question 42

In e-commerce, the front-end design is significantly more important than the back-end design.

Accepted Answer

FALSE  Back-end design is often more consequential in e-commerce.

Question 43

One disadvantage to RFID is that they require a \'line of sight\' for reading.

Accepted Answer

FALSE  RFID doesn\'t need a \'line of sight\' reading.

Question 44

Decentralized purchasing can usually offer quicker response than centralized purchasing.

Accepted Answer

TRUE  Centralized purchasing can be more efficient, but decentralized purchasing can offer faster response.

Question 45

Some firms have structured their procurement function to include both centralized and decentralized purchasing.

Accepted Answer

TRUE  Good purchasing can involve both centralized and decentralized elements.

Question 46

Creating an effective supply chain requires linking the marketing, distribution, and supplier channels.

Accepted Answer

TRUE  These need to be synchronized if the supply chain is to be effective.

Question 47

An advantage of decentralized purchasing is the attention given to local needs.

Accepted Answer

TRUE  Decentralized purchasing is more responsive to specific needs.

Question 48

Event management is the advanced planning required for major performances such as concerts or conferences.

Accepted Answer

FALSE  Event management involves detecting and responding to unplanned events.

Question 49

Supplier certification is the first step required in a supplier audit program.

Accepted Answer

FALSE  Even uncertified suppliers are potential targets in a supplier audit program.

Question 50

Design and purchasing people should work closely because changes in design, specifications, or materials can impact future purchase requirements.

Accepted Answer

TRUE  Purchasing interfaces with a wide variety of functional areas.

Question 51

The purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items.

Accepted Answer

FALSE  The purchasing cycle ends when the shipment has been received in satisfactory condition.

Question 52

Producing and shipping in large lots may reduce costs but increase lead times.

Accepted Answer

TRUE  This is one of the tradeoffs in supply chain management.

Question 53

Variations create uncertainty, thereby causing inefficiencies in a supply chain.

Accepted Answer

TRUE  Reductions in disruptions helps improve supply chain efficiencies.

Question 54

Disintermediation is the refusal of one party to use mediators for price negotiation.

Accepted Answer

FALSE  Disintermediation involves reducing one or more steps in a supply chain by cutting out intermediaries.

Question 55

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

Accepted Answer

D. lowest possible transportation costs    Minimizing transportation costs might lead to an unacceptable tradeoff elsewhere.

Question 56

Logistics includes all of these except:

Accepted Answer

D. customer selection    Logistics involves moving goods.

Question 57

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

Accepted Answer

D. Bullwhip effect    Variations are amplified as they move backwards in the supply chain.

Question 58

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

Accepted Answer

D. I, II, and IV    RFID chips do not contain special instructions.

Question 59

Which of the following is not a benefit of RFID?

Accepted Answer

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

Question 60

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

Accepted Answer

B. increasing globalization    Globalization is making supply chain management more important.

Question 61

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

Accepted Answer

E. larger number of suppliers  Supply chain management often results in fewer suppliers.

Question 62

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

Accepted Answer

A. supply chain response time    Response time is a measure of supply chain effectiveness.

Question 63

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

Accepted Answer

B. RFID    RFID facilitates the automatic identification of material.

Question 64

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

Accepted Answer

E. universal product codes  Universal product codes are not part of E-business.

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