SCMT 2103 UNIT 1 EXAM QUESTIONS
AND ANSWERS
economies of slope - Correct Answers -cost advantage that can decrease the cost per
unit because fixed costs are spread out over more units
procurement costs - Correct Answers -what is required to obtain raw materials
logistics - Correct Answers -the management of the flow and storage of inventory such
that total cost is minimized and customer service targets are achieved
supply chain management - Correct Answers -the management of the integration of
business processes between functions in a firm with suppliers and customers
business process - Correct Answers -a set of activities and information flows
companies outsource because - Correct Answers -1. it reduces their risk
2. cost reduction
3. asset reduction
4. performance improvement
causal modeling method - Correct Answers -argues that demand is influenced by one or
more independent variables
simple moving average - Correct Answers -places the same weight, or emphais, on
each time period. Works well when the demand is fairly stable over time and in the
absence of trends
weighted moving average - Correct Answers -allows different emphasis to be placed on
different time periods. Works well when demand is fairly stable over time and absent of
trends
exponential smoothing - Correct Answers -suitable for data without a trend;
sophisticated weighted moving average forecasting; lags actual demand; initial forecast
is required and a smoothing parameter is given
the 4 R's of supply chain competition - Correct Answers -1. responsiveness- the ability
to make changes
2. reliability- the ability to consistently execute an activity
, 3. resilience- the ability to deal with unexpected disruptions in the supply chain
4. relationships- the ability to manage communication, interaction, and trust with
customers and suppliers
coefficient of variation - Correct Answers -standard deviation/mean
safety stock - Correct Answers -the expected number of units on hand just before
replenishment is received and available for use or sale
inventory turnover formula - Correct Answers -COGS/value of inventory
periods of supply formula - Correct Answers -inventory/COGS
inventory holding cost - Correct Answers -(carrying cost) made up of the costs of space
(warehouses), risk, obsolete products, damage, deterioration/expiration, stolen goods,
opportunity cost of capital, tradeoffs
opportunity cost of capital - Correct Answers -money could have been spent on
something else
percentage of items in stock (PTIS) - Correct Answers -measures how often a particular
item is in stock and available to customers
PTIS formula - Correct Answers -time item is in stock/given period
item fill rate (IFR) - Correct Answers -the percentage of demand that is filled from on-
hand inventory
stockout - Correct Answers -when an order exists but there is no inventory to fill the
order
backorder - Correct Answers -when the customer is willing to wait for the order
lost sale - Correct Answers -when the customer is not willing to wait and goes
elsewhere
IFR formula - Correct Answers -number of units of demand filled from inventory/total
amount of demand
optimal PTIS formula - Correct Answers -cost of not producing enough/(cost of not
producing enough + cost of producing too much)
ABC analysis - Correct Answers -a method of classifying inventory items into three
groups in terms of importance
AND ANSWERS
economies of slope - Correct Answers -cost advantage that can decrease the cost per
unit because fixed costs are spread out over more units
procurement costs - Correct Answers -what is required to obtain raw materials
logistics - Correct Answers -the management of the flow and storage of inventory such
that total cost is minimized and customer service targets are achieved
supply chain management - Correct Answers -the management of the integration of
business processes between functions in a firm with suppliers and customers
business process - Correct Answers -a set of activities and information flows
companies outsource because - Correct Answers -1. it reduces their risk
2. cost reduction
3. asset reduction
4. performance improvement
causal modeling method - Correct Answers -argues that demand is influenced by one or
more independent variables
simple moving average - Correct Answers -places the same weight, or emphais, on
each time period. Works well when the demand is fairly stable over time and in the
absence of trends
weighted moving average - Correct Answers -allows different emphasis to be placed on
different time periods. Works well when demand is fairly stable over time and absent of
trends
exponential smoothing - Correct Answers -suitable for data without a trend;
sophisticated weighted moving average forecasting; lags actual demand; initial forecast
is required and a smoothing parameter is given
the 4 R's of supply chain competition - Correct Answers -1. responsiveness- the ability
to make changes
2. reliability- the ability to consistently execute an activity
, 3. resilience- the ability to deal with unexpected disruptions in the supply chain
4. relationships- the ability to manage communication, interaction, and trust with
customers and suppliers
coefficient of variation - Correct Answers -standard deviation/mean
safety stock - Correct Answers -the expected number of units on hand just before
replenishment is received and available for use or sale
inventory turnover formula - Correct Answers -COGS/value of inventory
periods of supply formula - Correct Answers -inventory/COGS
inventory holding cost - Correct Answers -(carrying cost) made up of the costs of space
(warehouses), risk, obsolete products, damage, deterioration/expiration, stolen goods,
opportunity cost of capital, tradeoffs
opportunity cost of capital - Correct Answers -money could have been spent on
something else
percentage of items in stock (PTIS) - Correct Answers -measures how often a particular
item is in stock and available to customers
PTIS formula - Correct Answers -time item is in stock/given period
item fill rate (IFR) - Correct Answers -the percentage of demand that is filled from on-
hand inventory
stockout - Correct Answers -when an order exists but there is no inventory to fill the
order
backorder - Correct Answers -when the customer is willing to wait for the order
lost sale - Correct Answers -when the customer is not willing to wait and goes
elsewhere
IFR formula - Correct Answers -number of units of demand filled from inventory/total
amount of demand
optimal PTIS formula - Correct Answers -cost of not producing enough/(cost of not
producing enough + cost of producing too much)
ABC analysis - Correct Answers -a method of classifying inventory items into three
groups in terms of importance
