Supply Chain Management Mid-Term
Exam 1
A process is an ordered set of _________? - correct answer-Activities
Supply chain management is the management of the ___________ of business processes
between functions in a firm and with suppliers and customers. - correct answer-Integration
Some companies do not outsource because they do NOT want to ____________. - correct
answer-Lose their ability to manage the activity
True or False:
Economies of scale is defined as an increase in average cost per unit when volumes are
increased. - correct answer-False
Logistics costs include which of the following? - correct answer-A. Warehousing costs
B. Transportation costs
C. All of these and more
D. Material handling costs
E. Inventory holding costs
Answer: C
True or False:
Economies of scale is defined as a reduction in average cost per unit when volumes are
increased. - correct answer-True
The management of the flow and storage of inventory, such that total costs are minimized
and customer service targets are achieved is referred to as: - correct answer-Logistics
True or False:
Effective supply chain management emphasizes the allocation of scarce resources. - correct
answer-True
True or False:
The use of third-party logistics (3PL) providers for supply chain management services is a
diminishing trend. - correct answer-False
Which of the following products would you expect to require the most safety stock?
PRODUCT A: Standard Dev. of Sales =18, Standard Dev. of Lead Time = 23
PRODUCT B: Standard Dev. of Sales = 20, Standard Dev. of Lead Time = 20
, PRODUCT C: Standard Dev. of Sales = 30, Standard Dev. of Lead Time = 31
PRODUCT D: Standard Dev. of Sales = 29, Standard Dev. of Lead Time = 15 - correct
answer-Product C
True or False:
Resilience in the 4 R's is defined as being able to deliver products to customers that are
demanding it. - correct answer-False
Reliability in the 4 R's of supply chain competition is defined as being able to
_______________. - correct answer-Consistently execute an activity or process at a target
level of performance.
True or False:
A supply chain strategically emphasizing reliability is likely to hold extra inventory to deal with
problems such as late delivery. - correct answer-True
Safety Stock is _______________. - correct answer-The expected number of units on hand
just before a replenishment is received and available for use or sale.
True or False:
There is an opportunity cost associated with holding inventory. - correct answer-True
True or False:
The cost of capital has little influence on a firm's inventory holding cost factor. - correct
answer-False
Which of the following is NOT a potential inventory holding cost: - correct answer-A. Service
Cost
B. Capital Cost
C. Shrinkage Cost
D. 3PL Cost
Answer: D
The inventory holding cost factor is 25% and the average inventory next year is expected to
be $185,000. What is the expected inventory holding cost? - correct answer-$46,250
A company operates 365 days a year. Annual inventory turns is 12. How many days of
supply does that represent? - correct answer-30
Average inventory last year was $160,000 and turns were 7. What was the cost of goods
sold last year? - correct answer-$1,120,000
Exam 1
A process is an ordered set of _________? - correct answer-Activities
Supply chain management is the management of the ___________ of business processes
between functions in a firm and with suppliers and customers. - correct answer-Integration
Some companies do not outsource because they do NOT want to ____________. - correct
answer-Lose their ability to manage the activity
True or False:
Economies of scale is defined as an increase in average cost per unit when volumes are
increased. - correct answer-False
Logistics costs include which of the following? - correct answer-A. Warehousing costs
B. Transportation costs
C. All of these and more
D. Material handling costs
E. Inventory holding costs
Answer: C
True or False:
Economies of scale is defined as a reduction in average cost per unit when volumes are
increased. - correct answer-True
The management of the flow and storage of inventory, such that total costs are minimized
and customer service targets are achieved is referred to as: - correct answer-Logistics
True or False:
Effective supply chain management emphasizes the allocation of scarce resources. - correct
answer-True
True or False:
The use of third-party logistics (3PL) providers for supply chain management services is a
diminishing trend. - correct answer-False
Which of the following products would you expect to require the most safety stock?
PRODUCT A: Standard Dev. of Sales =18, Standard Dev. of Lead Time = 23
PRODUCT B: Standard Dev. of Sales = 20, Standard Dev. of Lead Time = 20
, PRODUCT C: Standard Dev. of Sales = 30, Standard Dev. of Lead Time = 31
PRODUCT D: Standard Dev. of Sales = 29, Standard Dev. of Lead Time = 15 - correct
answer-Product C
True or False:
Resilience in the 4 R's is defined as being able to deliver products to customers that are
demanding it. - correct answer-False
Reliability in the 4 R's of supply chain competition is defined as being able to
_______________. - correct answer-Consistently execute an activity or process at a target
level of performance.
True or False:
A supply chain strategically emphasizing reliability is likely to hold extra inventory to deal with
problems such as late delivery. - correct answer-True
Safety Stock is _______________. - correct answer-The expected number of units on hand
just before a replenishment is received and available for use or sale.
True or False:
There is an opportunity cost associated with holding inventory. - correct answer-True
True or False:
The cost of capital has little influence on a firm's inventory holding cost factor. - correct
answer-False
Which of the following is NOT a potential inventory holding cost: - correct answer-A. Service
Cost
B. Capital Cost
C. Shrinkage Cost
D. 3PL Cost
Answer: D
The inventory holding cost factor is 25% and the average inventory next year is expected to
be $185,000. What is the expected inventory holding cost? - correct answer-$46,250
A company operates 365 days a year. Annual inventory turns is 12. How many days of
supply does that represent? - correct answer-30
Average inventory last year was $160,000 and turns were 7. What was the cost of goods
sold last year? - correct answer-$1,120,000
