MNP 2602 MCQ-and-Essay-Questions. 100% CORRECT ANS.

Key Definitions: MCQs 1. Define the term ‘logistics management’. • The part of supply chain management that plans, implements and controls the efficient and effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption to meet customers’ requirements. It includes inbound, outbound, internal and external movements, and is relevant in both manufacturing and service organisations and in both private and public-sector organisations. 2. Define the term strategic sourcing from both abroad and a narrow sense a) In a broad sense, strategic sourcing is all the issues that are of strategic importance in the supply of materials and services to a modern organisation. b) In a narrow sense, strategic sourcing is the strategic management process whereby commodities (materials and services) and suppliers are analysed, and relationships are formed and managed according to best practices and appropriate strategies in support of long-term organisational goals. 3. Define the term value chain a) The value chain (developed by Michael Porter) comprises primary and support activities that can lead to a competitive advantage for an organisation when they are configured properly. The value chain is also seen as a management philosophy. b) Explanatory notes on the term "value chain": i. Primary activities include inbound logistics, operations, outbound logistics, marketing and sales, and customer service. ii. Support activities include purchasing, human resources management, technological development and infrastructure. 4. Define distribution management a) Distribution management entails managing downstream processes (or outbound logistics) and activities to deliver and thus physically distribute the product or service from the end of the production line to the ultimate (or end) customer. 5. What is the main difference between a supply chain and a value chain? A. [1] A supply chain is focused on the supply activity, whereas the value chain is focuses on value-adding activities. B. [2] A supply chain has different upstream and downstream linkages, whereas the value chain has only downstream linkages. C. [3] A supply chain consists of the value-adding activities of a network of organisations, whereas a value chain consists of the value-adding activities of a specific organisation. D. [4] A supply chain focuses its activities on satisfying the final consumer ’s need, whereas a value chain coordinates the supply chain activities of different supply chain role players. 6. In a typical supply chain, an upstream linkage will be on the … side of the supply chain. a) A. [1] supplier b) B. [2] end consumer c) C. [3] focal firm d) D. [4] outbound Learning Unit 2 - Chapter 2: Essay 7. Explain how an organisation like BMW would use the purchasing process to purchase raw materials from their suppliers. The purchasing process starts when the material user initiates a request for a material by issuing a material requisition form. On the form the product, quantity and delivery due date are clearly described. A copy of the requisition will be sent to the warehouse for delivery and a copy is sent to the accounts department for the necessary invoicing to be done. A Bill of Materials is also sometimes used by certain companies to order materials. In certain cases, the requested material may be out of stock, in these cases the materials requisition will be sent to the purchasing department or the firm will let know the buyer of an alternative product available. If BMW has no current supplier of an item or would like to change suppliers, a Request for quotation may be issued to a supplier. This form will outline the product that is required and quantity in which it is required. Once a suitable supplier will be found a purchase order will be issued to the selected suppliers. An original and a copy of the order will be sent to supplier 8. Define centralised and decentralised purchasing (4) Centralised Purchasing – A single purchasing department, usually located at the firm’s corporate office, makes all the purchasing decisions for the entire corporations (2) Decentralised Purchasing – A system where individual, local purchasing departments such as at the plant or field-office level, make their own purchasing decisions (2) 9. Under which conditions would you most likely utilize a centralized purchasing system? A centralized purchasing system would be favored by a company that is looking to reduce safety stocks, increase control in purchasing, centralize decision making, avoid duplicate purchases, centrally manage supplier relationships, and maximize available quantity discounts. List two advantages that would be gained by utilizing a centralized purchasing system. a. Concentration of purchasing leading to lower purchase costs