MGSC 487 Exam 1 - Gaffney Questions with Correct Answers Latest Update 2026/2027
In today's "sourcing sandbox" _________ are at the center - Answers customers
In a supply chain, information flows __________ from the customers to the suppliers/raw
materials, and materials and products flow ____________ from the materials stage to the
customers - Answers backward; forward
Supply Chain: - Answers the integration of sequentially related firms' inbound and outbound
logistics, together with operations (manufacturing and service), and supporting information
systems
Profit Leverage Effect - Answers the increase in corporate profit obtained by decreasing
purchase spend; measured by determining the increase in profit obtained by a decrease in
purchase spend (ex. in the book shows that in order to achieve increased revenue of $6mil, the
company could either increase sales by 75% or decrease purchase spend by 10%); more
realistic in firms that have neglected supply and given sales a lot of attention already
better to dec spending than inc sales
Return on Assets (ROA) - Answers displayed as a percentage; an indicator of how profitable a
company is relative to its total assets - gives an idea as to how efficient management is at using
its assets to generate earnings (higher is better, in terms of attractiveness to investors)
__________________________ as a percentage of total revenues is a good indicator of supply's
financial impact - Answers dollars spent with suppliers
Increased ______________ over the last decade has increased sourcing spend significantly -
Answers outsourcing
In almost all manufacturing organizations, the __________ area represents by far the largest
single category of spend, ranging from about _____________ of revenue - Answers supply; 50-80%
Collectively, private and public organizations in North America spend at least ________________
with suppliers - Answers $29 trillion (about 1.5 the combined GDPs)
Evolution of the Supply Function: Early 1900s - Answers clerical and tactical, focused on policies
and procedures
key challenges: availability of supply and cost management
Evolution of the Supply Function: Early 21st Century - Answers strategy orientation, global
supply chains, executive level leadership
,key challenges: sustainability, security, globalization, risk management
Supply in railroads in the 1900s: clerical - Answers recognized as an important function,
regarded by most firms as primarily a clerical activity (ADMINISTRATIVE)
Supply in WWII factories: market unlimited - Answers market was pretty much unlimited.. not
dependent on sales, so ability to obtain materials, supplies, and services from suppliers became
the key determinant of organizational success; attention was given to the organization, policies,
and procedures of the supply function; emerged as a recognized managerial activity
(TRANSPORTATION)
Supply in the 1970s: supply shortages - Answers organizations faced an international shortage
of almost all basic raw materials and a rate of price increase far above the norm; Middle East oil
embargo in 1973 intensified these issues.. put the spotlight on supply because their ability to
obtain necessary items at realistic prices determined success or failure (NEGOTIATION)
Supply in the 1990s: low cost labor - Answers became clear that companies must have efficient
and effective supply chain to compete in the global marketplace (ORGANIZATIONAL STRATEGY)
Supply today: ethics, sustainability & risk - Answers the early 21st century has brought new
challenges in areas such as sustainability, supply chain security, and risk management
(BUSINESS LEADERSHIP)
Spending in the Supply Chain - Answers lead times are usually in months, value add times as
very small percentages
The ________________ case study illustrates the logistics considerations of supplying multiple
locations - Answers Qmont Mining
The 3 major perspectives on how supply contributes to organizational goals and strategies -
Answers 1. operational vs. strategic
2. direct & indirect
3. negative, neutral, & positive
Operational (troubleshooter) context of supply - Answers the most familiar context -
characterized as trouble avoidance; focuses on existing current tasks as designed
(transactional, day-to-day, quality, quantity, delivery)
Strategic (opportunist) context of supply - Answers future oriented, searches for opportunities
to provide competitive advantage, strategic side focuses on new and better solutions to
organizational/supply challenges (better, faster, cheaper)
Supply savings, the profit leverage effect, and the ROA effect demonstrate the ________
, contribution that supply can make to a company's financial statements - Answers direct
Direct supply contributions: - Answers are tangible (profit leverage, higher ROA, inventory space,
headcount)
Indirect supply contributions: - Answers come from supply's role as an information source, its
effect on efficiency, competitive position, risk, and company image - may be more beneficial
than direct contribution; however the benefits are harder to measure/quantify because they are
"soft"
Supply function as an information source: - Answers the contacts of the supply function in the
marketplace provide a useful source of information for various functions such as prices,
availability of goods, new sources of supply, new goods, new technology, etc.
Supply Strategy Questions: - Answers who? what? where? when? why? how much? what price?
Supply Strategy: What? - Answers the most fundamental question.. make or buy, insourcing,
outsourcing
will the organization require standard items/materials that are readily available, or will they need
special, custom-specified requirements
Supply Strategy: Quality? - Answers a more consistent quality of end product output is essential
to maintaining and growing market share - strategy for developing suppliers' knowledge of
quality requirements and helping them implement program to achieve these is essential (zero
defect plans, process quality control programs, quality certification programs)
Supply Strategy: How Much? - Answers how much will be acquired in total - and how much per
delivery; trending towards smaller quantities delivered as needed (JIT) supply should analyze
inventory position to figure out which method is best
Supply Strategy: Who? - Answers who should make the supply decisions?
whether supply should be centralized, where staff should be located, to what extend top
management should be involved in the total acquisition process
Supply Strategy: When? - Answers decision tied closely with how much; now vs. later
Supply Strategy: What Price? - Answers whether the organization wants to pay premium price
for amazing service and quality, standard price to be aligned with the rest of the market, or low
price to give cost advantage
Supply Strategy: Where? - Answers there are tradeoffs between local, regional, domestic, or
international sourcing; buying from large vs. small suppliers; single vs. multiple sourcing; low vs.
high supplier turnover
In today's "sourcing sandbox" _________ are at the center - Answers customers
In a supply chain, information flows __________ from the customers to the suppliers/raw
materials, and materials and products flow ____________ from the materials stage to the
customers - Answers backward; forward
Supply Chain: - Answers the integration of sequentially related firms' inbound and outbound
logistics, together with operations (manufacturing and service), and supporting information
systems
Profit Leverage Effect - Answers the increase in corporate profit obtained by decreasing
purchase spend; measured by determining the increase in profit obtained by a decrease in
purchase spend (ex. in the book shows that in order to achieve increased revenue of $6mil, the
company could either increase sales by 75% or decrease purchase spend by 10%); more
realistic in firms that have neglected supply and given sales a lot of attention already
better to dec spending than inc sales
Return on Assets (ROA) - Answers displayed as a percentage; an indicator of how profitable a
company is relative to its total assets - gives an idea as to how efficient management is at using
its assets to generate earnings (higher is better, in terms of attractiveness to investors)
__________________________ as a percentage of total revenues is a good indicator of supply's
financial impact - Answers dollars spent with suppliers
Increased ______________ over the last decade has increased sourcing spend significantly -
Answers outsourcing
In almost all manufacturing organizations, the __________ area represents by far the largest
single category of spend, ranging from about _____________ of revenue - Answers supply; 50-80%
Collectively, private and public organizations in North America spend at least ________________
with suppliers - Answers $29 trillion (about 1.5 the combined GDPs)
Evolution of the Supply Function: Early 1900s - Answers clerical and tactical, focused on policies
and procedures
key challenges: availability of supply and cost management
Evolution of the Supply Function: Early 21st Century - Answers strategy orientation, global
supply chains, executive level leadership
,key challenges: sustainability, security, globalization, risk management
Supply in railroads in the 1900s: clerical - Answers recognized as an important function,
regarded by most firms as primarily a clerical activity (ADMINISTRATIVE)
Supply in WWII factories: market unlimited - Answers market was pretty much unlimited.. not
dependent on sales, so ability to obtain materials, supplies, and services from suppliers became
the key determinant of organizational success; attention was given to the organization, policies,
and procedures of the supply function; emerged as a recognized managerial activity
(TRANSPORTATION)
Supply in the 1970s: supply shortages - Answers organizations faced an international shortage
of almost all basic raw materials and a rate of price increase far above the norm; Middle East oil
embargo in 1973 intensified these issues.. put the spotlight on supply because their ability to
obtain necessary items at realistic prices determined success or failure (NEGOTIATION)
Supply in the 1990s: low cost labor - Answers became clear that companies must have efficient
and effective supply chain to compete in the global marketplace (ORGANIZATIONAL STRATEGY)
Supply today: ethics, sustainability & risk - Answers the early 21st century has brought new
challenges in areas such as sustainability, supply chain security, and risk management
(BUSINESS LEADERSHIP)
Spending in the Supply Chain - Answers lead times are usually in months, value add times as
very small percentages
The ________________ case study illustrates the logistics considerations of supplying multiple
locations - Answers Qmont Mining
The 3 major perspectives on how supply contributes to organizational goals and strategies -
Answers 1. operational vs. strategic
2. direct & indirect
3. negative, neutral, & positive
Operational (troubleshooter) context of supply - Answers the most familiar context -
characterized as trouble avoidance; focuses on existing current tasks as designed
(transactional, day-to-day, quality, quantity, delivery)
Strategic (opportunist) context of supply - Answers future oriented, searches for opportunities
to provide competitive advantage, strategic side focuses on new and better solutions to
organizational/supply challenges (better, faster, cheaper)
Supply savings, the profit leverage effect, and the ROA effect demonstrate the ________
, contribution that supply can make to a company's financial statements - Answers direct
Direct supply contributions: - Answers are tangible (profit leverage, higher ROA, inventory space,
headcount)
Indirect supply contributions: - Answers come from supply's role as an information source, its
effect on efficiency, competitive position, risk, and company image - may be more beneficial
than direct contribution; however the benefits are harder to measure/quantify because they are
"soft"
Supply function as an information source: - Answers the contacts of the supply function in the
marketplace provide a useful source of information for various functions such as prices,
availability of goods, new sources of supply, new goods, new technology, etc.
Supply Strategy Questions: - Answers who? what? where? when? why? how much? what price?
Supply Strategy: What? - Answers the most fundamental question.. make or buy, insourcing,
outsourcing
will the organization require standard items/materials that are readily available, or will they need
special, custom-specified requirements
Supply Strategy: Quality? - Answers a more consistent quality of end product output is essential
to maintaining and growing market share - strategy for developing suppliers' knowledge of
quality requirements and helping them implement program to achieve these is essential (zero
defect plans, process quality control programs, quality certification programs)
Supply Strategy: How Much? - Answers how much will be acquired in total - and how much per
delivery; trending towards smaller quantities delivered as needed (JIT) supply should analyze
inventory position to figure out which method is best
Supply Strategy: Who? - Answers who should make the supply decisions?
whether supply should be centralized, where staff should be located, to what extend top
management should be involved in the total acquisition process
Supply Strategy: When? - Answers decision tied closely with how much; now vs. later
Supply Strategy: What Price? - Answers whether the organization wants to pay premium price
for amazing service and quality, standard price to be aligned with the rest of the market, or low
price to give cost advantage
Supply Strategy: Where? - Answers there are tradeoffs between local, regional, domestic, or
international sourcing; buying from large vs. small suppliers; single vs. multiple sourcing; low vs.
high supplier turnover
