1
Operations Management, 11e (Heizer/Render)
Chapter 11 Supply Chain Management
14) Which of the following statements is true regarding the leverage of supply chain
savings?
Answer: C) Supply chain savings exert more leverage as the firm's net profit margin
decreases.
1) Outsourcing refers to transferring a firm's activities that have traditionally been internal
to external suppliers.
Answer: TRUE
2) Outsourcing is a form of specialization that allows the outsourcing firm to focus on its
key success factors.
Answer: TRUE
1) With the "many suppliers" sourcing strategy, the order usually goes to the supplier that
offers the highest quality.
Answer: FALSE
3) A fast-food retailer that acquired a spice manufacturer would be practicing backward
integration.
Answer: TRUE
5) Which one of the following is NOT one of the six sourcing strategies?
Answer: D) short-term relationships with few suppliers
10) Which of the following best describes vertical integration?
Answer: C) produce goods or services previously purchased
11) A fried chicken fast-food chain that acquired feed mills and poultry farms has
performed which of the following?
Answer: C) backward integration
13) A rice mill in south Louisiana purchases the trucking firm that transports packaged rice
to distributors. This is an example of which of the following?
Answer: B) forward integration
3) The supply chain management opportunity called postponement involves delaying
deliveries to avoid accumulation of inventory at the customer's site.
Answer: FALSE
5) What is the practice of keeping a product generic as long as possible before
customizing?
Answer: A) postponement
6) Local optimization is a supply-chain complication best described as:
Answer: A) optimizing one's local area without full knowledge of supply chain needs.
7) The bullwhip effect:
Answer: E) All of the above are true.
8) A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters
11-1
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as usual. When this large order is sent to the distributor, the distributor assumes the large
size is a trend, not a one-time event. The distributor therefore places an even larger order
with the lobsterman. This behavior is the result of which of the following?
Answer: B) the bullwhip effect
9) Which of the following is NOT an opportunity for effective management in the supply
chain?
Answer: D) local optimization
12) Hewlett-Packard withholds customization of its laser printers as long as possible. This
is an example of which of the following?
Answer: D) postponement
4) What term is used to describe the outsourcing of logistics?
Answer: E) third-party logistics (3PL)
Operations Management, 11e (Heizer/Render)
Chapter 12 Inventory Management
8) Which of the following would NOT generally be a motive for a firm to hold inventories?
Answer D) to minimize holding costs
8) Which of the following statements about ABC analysis is FALSE?
Answer: D) ABC analysis is based on the presumption that all items must be tightly
controlled to produce important cost savings.
9) All EXCEPT which of the following statements about ABC analysis are true?
Answer: D) ABC analysis suggests that all items require the same high degree of control.
10) ABC analysis is based upon the principle that:
Answer: B) there are usually a few critical items, and many items that are less critical.
11) ABC analysis divides on-hand inventory into three classes, generally based upon which
of the following?
Answer: E) annual dollar volume
4) Which category of inventory holding costs has a much higher percentage than average
for rapid-change industries such as PCs and cell phones?
Answer: E) pilferage, scrap, and obsolescence
10) The two most basic inventory questions answered by the typical inventory model are:
Answer: C) timing of orders and order quantity.
12) What is the primary purpose of the basic economic order quantity model shown below?
Q* =
Answer: D) to minimize the sum of setup cost and holding cost
15) Most inventory models attempt to minimize:
Answer: C) total inventory-based costs.
16) In the basic EOQ model, if the cost of placing an order doubles, and all other values
11-2
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Operations Management, 11e (Heizer/Render)
Chapter 11 Supply Chain Management
14) Which of the following statements is true regarding the leverage of supply chain
savings?
Answer: C) Supply chain savings exert more leverage as the firm's net profit margin
decreases.
1) Outsourcing refers to transferring a firm's activities that have traditionally been internal
to external suppliers.
Answer: TRUE
2) Outsourcing is a form of specialization that allows the outsourcing firm to focus on its
key success factors.
Answer: TRUE
1) With the "many suppliers" sourcing strategy, the order usually goes to the supplier that
offers the highest quality.
Answer: FALSE
3) A fast-food retailer that acquired a spice manufacturer would be practicing backward
integration.
Answer: TRUE
5) Which one of the following is NOT one of the six sourcing strategies?
Answer: D) short-term relationships with few suppliers
10) Which of the following best describes vertical integration?
Answer: C) produce goods or services previously purchased
11) A fried chicken fast-food chain that acquired feed mills and poultry farms has
performed which of the following?
Answer: C) backward integration
13) A rice mill in south Louisiana purchases the trucking firm that transports packaged rice
to distributors. This is an example of which of the following?
Answer: B) forward integration
3) The supply chain management opportunity called postponement involves delaying
deliveries to avoid accumulation of inventory at the customer's site.
Answer: FALSE
5) What is the practice of keeping a product generic as long as possible before
customizing?
Answer: A) postponement
6) Local optimization is a supply-chain complication best described as:
Answer: A) optimizing one's local area without full knowledge of supply chain needs.
7) The bullwhip effect:
Answer: E) All of the above are true.
8) A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters
11-1
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, 2
as usual. When this large order is sent to the distributor, the distributor assumes the large
size is a trend, not a one-time event. The distributor therefore places an even larger order
with the lobsterman. This behavior is the result of which of the following?
Answer: B) the bullwhip effect
9) Which of the following is NOT an opportunity for effective management in the supply
chain?
Answer: D) local optimization
12) Hewlett-Packard withholds customization of its laser printers as long as possible. This
is an example of which of the following?
Answer: D) postponement
4) What term is used to describe the outsourcing of logistics?
Answer: E) third-party logistics (3PL)
Operations Management, 11e (Heizer/Render)
Chapter 12 Inventory Management
8) Which of the following would NOT generally be a motive for a firm to hold inventories?
Answer D) to minimize holding costs
8) Which of the following statements about ABC analysis is FALSE?
Answer: D) ABC analysis is based on the presumption that all items must be tightly
controlled to produce important cost savings.
9) All EXCEPT which of the following statements about ABC analysis are true?
Answer: D) ABC analysis suggests that all items require the same high degree of control.
10) ABC analysis is based upon the principle that:
Answer: B) there are usually a few critical items, and many items that are less critical.
11) ABC analysis divides on-hand inventory into three classes, generally based upon which
of the following?
Answer: E) annual dollar volume
4) Which category of inventory holding costs has a much higher percentage than average
for rapid-change industries such as PCs and cell phones?
Answer: E) pilferage, scrap, and obsolescence
10) The two most basic inventory questions answered by the typical inventory model are:
Answer: C) timing of orders and order quantity.
12) What is the primary purpose of the basic economic order quantity model shown below?
Q* =
Answer: D) to minimize the sum of setup cost and holding cost
15) Most inventory models attempt to minimize:
Answer: C) total inventory-based costs.
16) In the basic EOQ model, if the cost of placing an order doubles, and all other values
11-2
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