Supply Chain Final Exam - True/False Questions And Answers

Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages. - ANS True With an uncoordinated supply chain each stage tries to maximize its own profits, resulting in actions that often increase total supply chain surplus. - ANS False The bullwhip effect results in improved supply chain coordination. - ANS False The bullwhip effect enables different stages of the supply chain to have a consistent estimate of what demand looks like. - ANS False Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits. - ANS True Information processing obstacles refer to situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain. - ANS True Pricing obstacles refer to situations in which the pricing policies for a product lead to a decrease in variability of orders placed. - ANS False Lot size based quantity discounts reduce the bullwhip effect within the supply chain. - ANS False Managers can improve coordination within the supply chain by aligning goals and incentives such that every participant in supply chain activities works to maximize total supply chain profits. - ANS True Tuckman's Group Development Model describes four stages that a team will go through in its sequence of decision making. - ANS True Transportation plays a key role in every supply chain because products are usually produced and consumed in the same location - ANS False The shipper is the party that requires the movement of the product between two points in the supply chain. The carrier is the party that moves or transports the product - ANS True When transportation infrastructure is publicly owned, overuse and congestion result because the cost borne by a user is less than the user's marginal impact on total cost - ANS True Intermodal traffic has declined considerably with the decreased use of containers for shipping and the rise of global trade. Containers are difficult to transfer from one mode to another. - ANS False Milk runs make sense when the quantity destined for each location is too small to fill a truck but multiple locations are close enough to each other such that their combined quantity fills the truck - ANS True The mode of transportation that results in the lowest transportation cost will lower total costs for a supply chain, therefore increase supply chain surplus - ANS False Inventory aggregation decisions must account for inventory and transportation costs. Inventory aggregation decreases supply chain costs if the product has high value-to-weight ratio, high demand uncertainty, low transportation cost, and customer orders are large - ANS True If a firm has high responsiveness to customer orders, this will result in higher transportation costs than if the firm decreased its responsiveness - ANS True Temporal aggregation of demand results in reduction of transportation costs because it entails larger shipments and reduces the variation in shipment sizes from one shipment to the next. It does however hurt customer response time - ANS True The Mumbai dabbawalas use a direct shipment network in order to pick up and deliver lunches every workday - ANS False Purchasing, also known as procurement, is the process used to rate supplier performance - ANS False Sourcing is the entire set of business processes required to move product from one location to another in a supply chain - ANS False Outsourcing results in a supply chain function being performed by a third party - ANS False A third party may be able to provide a sustainable growth of surplus by aggregating to a higher level than the firm itself. The growth in surplus come s from aggregating capacity, inventory, inbound/outbound transportation, warehousing, procurement, information, receivables, or relationships to a level that the firm cannot achieve on its own - ANS True A firm gains the most by outsourcing to a third party if its needs are small, highly uncertain, and shared by other firms sourcing from the same third party - ANS True If the assets required are specific to a firm and cannot be used by others, outsourcing to a third party is unlikely to increase the surplus - ANS True Supplier performance should be compared based on the impact on the total cost of ownership. In addition to acquisition costs, ownership and post-ownership costs should also be considered. In many instances, a higher acquisition cost is more than compensated for by lower ownership and post-ownership costs. - ANS True In the absence of risk sharing, retailers aim for a lower level of product availability than would be required to maximize supply chain profits. - ANS True Firms must consider a tailored sourcing strategy that couples responsive onshore or near-shore sources with low-cost offshore sources. The responsive onshore/near-shore sources should focus on high-value products with high demand volatility, whereas the low-cost offshore sources should focus on the lower-value, high-volume products - ANS True Revenue management is the use of pricing to increase the profit generated from a limited availability of supply chain assets - ANS True Most revenue management strategies use differential pricing as a critical lever to maximize earnings - ANS True Every product and every unit of capacity can be sold both in bulk and in the spot market. Revenue management increase profits by finding the right portfolio of long-term and spot-market customers - ANS True To differentiate between various customer segments, the firm must create barriers by identifying product or service attributes that the segments value differently - ANS True