Supply Chain Management Final Exam: Multiple Choice Exam Questions And Answers

The bullwhip effect causes: - ANS a. a loss of supply chain coordination. b. distortion of demand information within the supply chain. c. different stages of the supply chain to have a very different estimate of what demand looks like. The lack of coordination hurts both responsiveness and cost in a supply chain by making it more expensive to provide a given level of product availability. The impact of the lack of coordination includes - ANS a. manufacturing cost. b. inventory cost. c. transportation cost. d. profitability. What are the five major obstacles listed in the text to coordination in a supply chain? - ANS Incentive Information-processing Operational Pricing Behavioral Information distortion is exaggerated by the fact that: - ANS a. supply chains today produce a large amount of product variety. Information distortion is exaggerated by: - ANS a. the lack of information sharing between supply chain stages The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in: - ANS c. a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer. Rationing schemes that allocate limited production in proportion to the orders placed by retailers: - ANS t in a game in which retailers try to increase the size of their orders to increase the amount supplied to them. b. lead to a magnification of the bullwhip effect. c. lead to the manufacturer being left with a surplus of product and capacity. When a single stage controls replenishment decisions for the entire chain (e.g., continuous replenishment program (CRP) or vendor managed inventory (VMI)), coordination is achieved because: - ANS a. the problem of multiple forecasts is eliminated. One drawback of VMI arises because retailers often sell products from competing manufacturers that are ___________ in the customer's mind. - ANS c. substitutes. A fundamental aspect of successful collaboration is: - ANS b. identification and resolution of exceptions. What are the stages in Tuckman's Group Development Model? - ANS Forming Storming Norming Performing Adjourning? The Mumbai dabbawalas use temporal aggregation of demand, milk runs, and _____________ in order to pick up and deliver lunches every workday. - ANS c. cross-docking. The cost of holding inventory incurred by the shipper's supply chain network is: - ANS b. inventory cost. Firms can significantly reduce safety inventory they require by physically aggregating inventories in one location. _______________, however, generally increases when inventory is aggregated. - ANS c. Transportation cost. Which mode of transportation is the most expensive? - ANS a. Air. Which mode of transportation is the least expensive? - ANS d. Water. Which mode of transportation is used primarily for petroleum and natural gas? - ANS e. Pipeline. Which transportation network design option has the elimination of intermediate warehouses and its simplicity of operation and coordination as its major advantage? - ANS a. Direct shipping network. Which transportation network design option has the storing of product at an intermediate location between supplier and buyer locations? - ANS a. All shipments via central distribution center (DC). All transportation decisions made by shippers in a supply chain network must take into account their impact on: - ANS a. inventory costs. b. facility and processing costs. c. cost of coordinating operations. d. level of responsiveness provided to customers. What trade-offs do managers need to consider when making transportation decisions? - ANS a. Transportation cost versus inventory cost. b. Transportation cost versus customer responsiveness Cheaper modes of transport typically have: - ANS d. longer lead times and larger minimum shipment quantities Temporal aggregation: - ANS a. is the process of combining orders across time. Tailored transportation is the use of different transportation networks and modes based on: - ANS a. customer density and distance from warehouse. b. customer size and location. c. product demand and value. Why has same-day delivery of pizza been successful, whereas the practice has failed in other settings? - ANS a. Temporal aggregation of orders. b. Many delivery locations close to the customer. c. Relatively low variety of ingredients held in inventory. Which of the following is not a benefit of effective sourcing decisions? - ANS b. Better economies of scale can be achieved if orders within a firm are disaggregated. What are the benefits of effective sourcing decisions? - ANS a. Appropriate supplier contracts can allow for the sharing of risk, resulting in higher profits for both the supplier and the buyer. c. Design collaboration can result in products that are easier to manufacture and distribute, resulting in lower overall costs. d. Firms can achieve a lower purchase price by increasing competition through the use of auctions. When designing a sourcing strategy, it is important for a firm to - ANS d. be clear on the factors that have the greatest influence on performance and target improvement on those areas. Third parties increase the supply chain surplus if they either increase value for the customer or decrease the supply chain cost relative to the firm performing the task in-house. A third party may aggregate demand across multiple firms and gain production economies of scale that no single firm can on its own. What mechanism is the third party using to grow the surplus? - ANS a. Capacity aggregation. Third parties increase the supply chain surplus if they either increase value for the customer or decrease the supply chain cost relative to the firm performing the task in-house. A third party may aggregate procurement for many small players and facilitate economies of scale in ordering, production, and inbound transportation. What mechanism is the third party using to grow the surplus? - ANS d. Procurement aggregation. Third parties increase the supply chain surplus if they either increase value for the customer or decrease the supply chain cost relative to the firm performing the task in-house. A third party may aggregate transportation to a higher level than any shipper sending packages or LTL quantities can on its own. What mechanism is the third party using to grow the surplus? - ANS c. Transportation aggregation. An important factor that affects the increase in surplus that a third party provides is: - ANS a. scale. b. uncertainty. c. specificity of assets. Firms must evaluate the risks when they move any function to a third party. Which of the following is not a risk to the firm? - ANS e. Positive reputational impact.