MANAGEMENT MGT 322TEST 1-12: Chapter 1—Introduction to Supply Chain Management/ Chapter 2—Purchasing Management/ Chapter 3—Creating and Managing Supplier Relationships/ Chapter 4—Ethical and Sustainable Sourcing/ Chapter 5—Demand Forecasting/ Chapter 6—Resource Planning Systems/ Chapter 7—Inventory Management/ Chapter 9—Domestic U.S. and Global Logistics/ Chapter 10—Customer Relationship Management/ Chapter 11—Global Location Decisions/ Chapter 12—Service Response Logistics.

MANAGEMENT MGT 322TEST 1-12: Chapter 1—Introduction to Supply Chain Management/ Chapter 2—Purchasing Management/ Chapter 3—Creating and Managing Supplier Relationships/ Chapter 4—Ethical and Sustainable Sourcing/ Chapte ...

MANAGEMENT MGT 322TEST 1-12: Chapter 1—Introduction to Supply Chain Management/ Chapter 2—Purchasing Management/ Chapter 3—Creating and Managing Supplier Relationships/ Chapter 4—Ethical and Sustainable Sourcing/ Chapter 5—Demand Forecasting/ Chapter 6—Resource Planning Systems/ Chapter 7—Inventory Management/ Chapter 9—Domestic U.S. and Global Logistics/ Chapter 10—Customer Relationship Management/ Chapter 11—Global Location Decisions/ Chapter 12—Service Response Logistics. Chapter 1—Introduction to Supply Chain Management TRUE/FALSE 1. According to the textbook, the keys to successful supply chain management include trust and honest, accurate communications between supply chain partners. T PTS: 1 REF: p. 2-9 2. According to the textbook, rapidly changing communication technology makes the development of global partnerships more difficult than in the past. F PTS: 1 REF: p. 5 3. According to the textbook, supply chains include raw material suppliers, intermediate component manufacturers, end-product manufacturers, wholesale distributors, and retailers. T PTS: 1 REF: p. 6 4. According to the textbook, retail stores are considered the focal firms in modern supply chains. F PTS: 1 REF: p. 6 5. Reverse logistics activities include the return of defective and damaged items to the manufacturer, and the recycling of used packaging. T PTS: 1 REF: p. 6 6. Trucking companies, airfreight shipping companies, and information system providers can all be considered service providers to the supply chain. T PTS: 1 REF: p. 7 7. According to the textbook, a supply chain's end customers are the only true source of income for all supply chain organizations. T PTS: 1 REF: p. 7 8. Effective supply chain management relies on competitive bidding, corporate privacy, and contracts based on short-term performance. F PTS: 1 REF: p. 8 9. The bullwhip effect is the result of companies producing excessive defective products; defective items are whipped back from the end customer toward the manufacturer of the defect. F PTS: 1 REF: p. 11 10. According to the textbook, in the 1950's and 1960's, mass production techniques focused on creating supplier partnerships, improving process design and flexibility, and improving product quality. F PTS: 1 REF: p. 12 11. According to the textbook, third-party logistics providers (3LPs) do not offer assistance with helping products clear customs. F PTS: 1 REF: p. 14 12. According to the textbook, environmental and social impacts are considered outside of supply chain management. F PTS: 1 REF: p. 15 13. According to the textbook, 'integration' is one of the four supply chain elements. T PTS: 1 REF: p. 15 14. ISO9000 is a standardized program for certifying suppliers. T PTS: 1 REF: p. 16 15. The universally accepted definition of supply chain management is "the management and integration of the parties involved in producing the end items coveted by consumers." F PTS: 1 REF: p. 17 16. The assembly or production of finished products, producing the right amount of product, and ensuring that finished products meet specific quality, cost, and customer service requirements can all be considered elements of operations. T PTS: 1 REF: p. 17 17. Improved quality is one benefit of using a lean production system. T PTS: 1 REF: p. 19 18. Successful supply chain integration occurs when supply chain participants realize that the needs and desires of the end item manufacturer dictate the objectives and policies of all the other supply chain participants. F PTS: 1 REF: p. 21-22 19. Trends in supply chain management include increasing inventory levels and considering the elimination of logistics intensive online retailing. F PTS: 1 REF: p. 22-27 20. Trends in supply chain management include increasing supply chain responsiveness and considering the negative environmental impacts of supply chains. T PTS: 1 REF: p. 24 MULTIPLE CHOICE 1. Which of the following is an illustration of a company that has vertically integrated? a. A computer manufacturer that acquires its computer components supplier b. A computer manufacturer that acquires warehouses to aid in its product distribution c. A computer components supplier that begins to assemble computers for sale to consumers d. All of these D PTS: 1 REF: p. 5 2. Successful modern supply chain management typically includes the practice of: a. Keeping high inventories throughout the supply chain b. Always purchasing materials with the lowest per unit cost c. The sharing of information between supply chain partners d. Leadership through the practice of issuing ultimatums to your supply chain partners C PTS: 1 REF: p. 5 3. According to the textbook, which of the following statements is TRUE? Consumers buy products based on a combination of: a. Cost, quality, manufacturer, and simplicity of use b. Cost, quality, availability, and brand c. Cost, quality, advertising, store preference, and appearance d. Cost, quality, availability, maintainability, and reputation D PTS: 1 REF: p. 6 4. Which of the following is a reverse logistics activity: a. Recycling products and components b. Delivering finished goods to your customer c. Developing a collaborative relationship with your supplier d. Managing the quality of products A PTS: 1 REF: p. 6 5. According to the textbook, conditions which must be present for successful supply chain management include: a. Vertical Integration b. Corporate contracts regarding performance expectations c. Short-term company focused performance d. Cooperation among firms D PTS: 1 REF: p. 8 6. A certain supply chain is made up of: 1. Raw Materials Supplier 2. Components Manufacturer 3. A firm that manufacturers Sub-assemblies 4. End Item Manufacturer 5. Wholesale Distributor 6. Local Retail Chain Warehouse Who is considered the second tier supplier of the firm that manufacturers Sub-assemblies? a. Raw Materials Supplier b. Wholesale Distributor c. The final end item consumer d. Components Manufacturer e. Local Retail Chain Warehouse A PTS: 1 REF: p. 9 7. A certain supply chain is made up of: 1. Raw Materials Supplier 2. Components Manufacturer 3. A firm that manufacturers Sub-assemblies 4. End Item Manufacturer 5. Wholesale Distributor 6. Local Retail Chain Warehouse Who is considered the End Item Manufacturer's second tier supplier? a. Raw Materials Supplier b. Wholesale Distributor c. The final end item consumer d. Components Manufacturer e. Local Retail Chain Warehouse D PTS: 1 REF: p. 9 8. The following is an example of the bullwhip effect: a. Barkley's produces a defective product and thus realizes an excessive increase in consumer returns b. Barkley's products are so successful that it adds a new retailer for distribution c. Barkley's incorrectly anticipates consumer demand resulting in stockouts at several popular retailers d. Barkley's is unhappy with the performance of a distributor which causes a chain-reaction of replacements to companies involved in its supply chain C PTS: 1 REF: p. 11 9. The term Supply Chain Management and the field of study it represents today seems to have emerged in the: a. 1980's b. 1970's c. 1960's d. 1990's A PTS: 1 REF: p. 12-13 10. Which of the following would be considered a third party provider? a. A Raw materials supplier b. An intermediate component manufacturer c. A firm that leases storage warehousing d. An end product manufacturer C PTS: 1 REF: p. 14 11. Which of the following was a popular way in the 1990's of developing radically new business processes in an effort to reduce waste and increase performance? a. Business process reengineering b. Benchmarking c. Process integration d. Vertical integration A PTS: 1 REF: p. 14 12. Which of the following can be classified as a 3PL? a. A company that offers warehousing services b. A company that offers transportation services c. A company that offers customs clearing services d. All of these D PTS: 1 REF: p. 14 13. The following supply chain concept was introduced in the 1990's in an attempt to reduce waste and increase performance: a. Business Process Reengineering b. Offshoring c. Vertical Integration d. Material Requirement Planning A PTS: 1 REF: p. 14 14. According to the text, the FOUR important elements of the supply chain are: a. Purchasing, manufacturing, transportation, retail stores b. Purchasing, operations, logistics, integration c. Purchasing, manufacturing, logistics, transportation d. Purchasing, operations, manufacturing, distribution B PTS: 1 REF: p. 15 15. Encouraging or helping a firm's suppliers to perform in a desired fashion can be referred to as: a. Progressive procurement b. Supplier management c. Right-shoring d. Supply chain performance management B PTS: 1 REF: p. 16 16. One operational method for controlling and managing inventory is the implementation of a software system which can be referred to as: a. Material requirements planning (MRP) b. Demand capacity tracking (DCT) c. Inventory sourcing (IS) d. Demand process reengineering (DPR) A PTS: 1 REF: p. 17 17. Which of the following acronyms is NOT paired with its correct "translation?" a. TQM  Total Quality Management b. JIT  Just-in-Time c. MRP  Materials Requirements Planning d. ERP  Estimated Response Parameters D PTS: 1 REF: p. 17 18. Which of the following statements is TRUE? a. Supply chain management was invented by the auto manufacturing industry b. Strategic partnerships are seen as one of the foundations of supply chain management c. Purchasing is seen as the final and most difficult step in the supply chain d. Service response logistics is the digital distribution of services B PTS: 1 REF: p. 17 19. Which of the following acronyms is NOT paired with its correct "translation?" a. TQM  Total Quality Management b. JIT  Just-in-Time c. MRP  Manufacturing Responsiveness and Planning d. ERP  Enterprise Resource Planning C PTS: 1 REF: p. 17 20. Lean production is typically associated with which of the following company's production systems? a. Proctor and Gamble b. Toyota c. Boeing d. Intel B PTS: 1 REF: p. 19 21. Transportation management, customer relationship management, network design, and service response logistics are all important issues that are most closely related to: a. Purchasing b. Manufacturing c. Integration d. Logistics D PTS: 1 REF: p. 19-20 22. Which of the following is strategy usually employed by lean organizations in an effort to ensure continued quality compliance among suppliers and with internal production facilities? a. MRP II b. Six Sigma c. 3PL d. CAPS B PTS: 1 REF: p. 19 23. Assembly or production of finished products, producing the right amount of product, and ensuring that finished products meet specific quality, cost, and customer service requirements are all important issues that are most closely related to: a. Purchasing b. Operations c. Integration d. Distribution B PTS: 1 REF: p. 19 24. Right-shoring refers to: a. An expansion of the supply chain b. Contraction activities within the supply chain c. An increase in the responsiveness of the supply chain d. A decrease in the responsiveness of the supply chain B PTS: 1 REF: p. 23 25. Which of the following is a system that aids in controlling inventory? a. MRP b. ERP c. AARP d. Both MRP and ERP D PTS: 1 REF: p. 23 Chapter 2—Purchasing Management TRUE/FALSE 1. Purchasing can be broadly classified into two categories: merchants and industrial buyers. T PTS: 1 REF: p. 39 2. The acquisition of services is also known as contracting. T PTS: 1 REF: p. 39 3. The term Supply Management is used to describe responsibilities above and beyond those of traditional purchasing. T PTS: 1 REF: p. 39 4. In the context of Supply Chain Management, the acts of obtaining raw materials, services, maintenance, repair and operating supplies for money can all be defined as purchasing. T PTS: 1 REF: p. 39 5. Industrial supply chain member buyers purchase their merchandise in volume to take advantage of quantity discounts, transportation economy, and storage efficiency, and then they create value through services like consolidating merchandise or break bulking. F PTS: 1 REF: p. 39 6. The goal of a good purchasing system is to ensure efficient information transitions between the materials users, the purchasing personnel, and the suppliers. T PTS: 1 REF: p. 39-40 7. There is a clear line between purchasing activities and the supply management function. F PTS: 1 REF: p. 40 8. According to the Annual Survey of Manufacturers, the cost of materials exceeds the value added to the materials during manufacturing. T PTS: 1 REF: p. 40 9. The goal of a proper purchasing system is to ensure the efficient transmission of information from the users to the purchasing personnel, and ultimately, to the suppliers. T PTS: 1 REF: p. 43 10. A growing trend among firms that practice supply chain management is supplier development. T PTS: 1 REF: p. 45 11. A purchase order is legally binding once issued by the buyer. F PTS: 1 REF: p. 46 12. Procurement credit cards can be used for small purchases excluding meals, lodging, and travel expenses. F PTS: 1 REF: p. 51 13. Blank check purchase orders, Corporate purchasing cards, Petty cash, and Open-end purchase orders are all possible alternatives to dealing with small value purchases such as those for office supplies. T PTS: 1 REF: p. 51 14. If the break-even point in a typical make-buy scenario is 24,000 units and 8,000 units are required, than the firm should choose to make. F PTS: 1 REF: p. 55 15. If the break-even point in a typical make-buy scenario is 10,000 units and 15,000 units are required, than the firm should choose to make. T PTS: 1 REF: p. 55 16. The possibility of events like strikes, assembly line breakdowns, and natural disasters are all reasons a company should favor using a single supplier. F PTS: 1 REF: p. 60-61 17. Centralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs. F PTS: 1 REF: p. 62-63 18. Decentralized purchasing is the practice where individual, local purchasing departments throughout a single corporation make their own, individual purchasing decisions to fulfill their individual local needs. T PTS: 1 REF: p. 62-63 19. NAFTA and the WTO are trade organizations seeking to reduce tariff and non-tariff barriers among its member countries. T PTS: 1 REF: p. 63-64 20. The WTO is a trade organization seeking to establish trade barriers that will protect member countries by excluding nations that pose an economic threat. F PTS: 1 REF: p. 64 MULTIPLE CHOICE 1. The hybrid purchasing system, such as the one utilized by Harrah's, includes many benefits. In such a system the regional office preserves four fundamental purchasing rights. Which of the following is NOT one of those rights? a. Allow suppliers to bid for each purchase b. Select the supplier c. Use whichever pricing method is appropriate d. Monitor contacts with potential suppliers A PTS: 1 REF: p. 38 2. According to the textbook, the Las Vegas division of Harrah's Entertainment utilizes which of the following purchasing structures? a. Autocratic b. Decentralized c. Centralized d. Hybrid (centralized-decentralized) D PTS: 1 REF: p. 38 3. The primary goals of purchasing include all EXCEPT: a. Secure materials at the lowest cost b. Ensure the highest quality raw materials are purchased c. Improve the quality of finished goods produced d. Maximize customer satisfaction B PTS: 1 REF: p. 40 4. The measurement of the impact of change in purchase spend on a firm profit before taxes, assuming gross sales and other expenses remain unchanged, is referred to as: a. Break-Even Analysis b. Direct Offset c. Profit-Leverage Effect d. Leveraging Purchase Volume C PTS: 1 REF: p. 42 5. When calculating Return on Investment, current assets include: a. Cash, Accounts Receivable, and Inventory b. Cash, Accounts Receivable, and Equipment c. Accounts Receivable, Equipment, and Real Estate d. Equipment, Buildings, and Real Estate A PTS: 1 REF: p. 42 6. Which type of requisition is used for materials and standard parts that are requested on a recurring basis? a. Open requisition b. Blanket requisition c. Traveling requisition d. Recyclable requisition (Cyc-Rec) C PTS: 1 REF: p. 43 7. Inventory Turnover can be calculated by: a. Ratio of average inventory cost over cost of goods sold b. Ratio of cost of goods sold over average inventory cost c. Ratio of inventory days in stock over average inventory cost d. Ratio of average inventory cost over inventory days in stock B PTS: 1 REF: p. 43 8. A pre-printed order form for purchasing materials and standard parts that are requested on a recurring basis is referred to as: a. Material Requisition b. Purchase Requisition c. Planned Order Release d. Traveling Requisition D PTS: 1 REF: p. 44 9. A form of purchasing that is placed directly to the supplier and suitable when firms use the same components to make standard goods over a relatively long period of time is referred to as: a. Material Requisition b. Purchase Requisition c. Planned Order Release d. Traveling Requisition C PTS: 1 REF: p. 44 10. When a material is not available in the warehouse and there is no current supplier for the item, the buyer must identify a pool of suppliers and issue a: a. Request for Quotation b. Purchase Order c. Contract for Sale d. Sales Order A PTS: 1 REF: p. 45 11. On occasion, firms assist suppliers, new or old, to improve their processing capabilities, product or service quality, delivery effectiveness, and cost performance by providing the required technical and financial assistance. This is referred to as: a. Supplier development b. Outsourcing c. Centralized purchasing d. Supplier hybridization A PTS: 1 REF: p. 45 12. The Uniform Commercial Code governs the purchase and sale of goods in the US except in the state of: a. Hawaii b. Louisiana c. Mississippi d. South Dakota B PTS: 1 REF: p. 46 13. Which of the following documents is considered the buyer's offer to purchase products or services from a supplier, is legally binding once the supplier accepts it, and usually has the terms and conditions of purchase preprinted on the back of the document? a. Purchase requisition b. Planned order release c. Material requisition d. Purchase order D PTS: 1 REF: p. 46 14. Benefits derived from implementing e-procurement systems include all of the following EXCEPT: a. Allows buyers to submit bids and suppliers to respond to those bids in real time b. Increases the accuracy in communication between buyers and suppliers c. Creates numerous additional job opportunities in the purchasing department d. Tracking bids and transactions is easier and faster C PTS: 1 REF: p. 48-49 15. Benefits derived from implementing an e-procurement system include all EXCEPT: a. Time Savings b. Real Time Access c. Trackability d. Decentralized Purchasing D PTS: 1 REF: p. 49 16. Which of the following illustrates Forward Vertical Integration? a. Microsoft starting a new division that designs and manufactures clothing b. Ford automotive buying additional machines for production c. Subway sandwich company buying a bakery to make the bread for their sandwiches. d. Sony buying trucks to deliver their finished goods inventories to their customers' warehouses D PTS: 1 REF: p. 53 17. If a distribution company that focused on warehousing and distribution of grocery items decided to purchase a chain of grocery stores, the distribution company would be exemplifying: a. Backward vertical integration b. Forward vertical integration c. Backward horizontal integration d. Forward horizontal integration B PTS: 1 REF: p. 53 18. Which of the following would be a good reason to outsource (buy) versus making? a. A firm lacks the technology or expertise to produce an item b. To utilize existing capacity within a company's own firm c. To have more direct control over the design and production of an end item d. No competent supplier presently produces the needed item A PTS: 1 REF: p. 53-55 19. Given the following make-buy information, what would be the break-even point? Make Option Buy Option Fixed Costs $7500 $1500 Variable Costs $ 4 $ 9 a. 1200 units b. 1708 units c. 690 units d. 460 units A PTS: 1 REF: p. 55-56 20. Given the following make-buy information, what would be the break-even point? Make Option Buy Option Fixed Costs $15000 $1250 Variable Costs $ 5 $ 10 a. 917 units b. 2875 units c. 1083 units d. 2750 units D PTS: 1 REF: p. 55-56 21. As firms seek to improve the products they offer to the market, companies are seeking help from their suppliers in new product design and development through: a. Supplier certification programs b. Manufacturer certification programs c. Early supplier involvement d. Total Cost of Ownership initiatives C PTS: 1 REF: p. 58 22. Which of the following is a reason that single sourcing is considered risky/bad? a. The buyer's required ordering quantities are very low b. Larger orders make quantity discounts more likely c. The limited (finite) capacity of one supplier d. Decreases the item to item quality variability of items purchased C PTS: 1 REF: p. 60-61 23. Which of the following statements is FALSE? a. More than 50% of each sales dollar typically goes towards covering supply chain costs b. Decentralized purchasing means not having any purchasing departments and allowing all employees to act as purchasing agents c. Electronic procurement systems can aid a company in saving both time and money d. If a firm lacks the technology to make a required component they will need to consider buying/outsourcing. B PTS: 1 REF: p. 62-63 24. Which of the following is NOT a form of countertrade? a. Barter b. Offset c. Incoterming d. Counterpurchase C PTS: 1 REF: p. 64-65 25. While most public procurement is focused on goals similar to those of purchasing departments in the private sector, U.S. federal government purchases must comply with the: a. Federal Acquisition Regulation b. Fair Standards and Equitable Purchases Act c. Federal Code of Conduct for Procurement d. Services and Materials Acquisition Act A PTS: 1 REF: p. 66 Chapter 3—Creating and Managing Supplier Relationships TRUE/FALSE 1. If a company is effectively focusing on its core competencies, its level of outsourcing is likely to increase. T PTS: 1 REF: p. 75 2. In order to maintain a shared vision, the buyer alone should establish the objectives of the partnership, which must then be fulfilled by the actions of the supplier. F PTS: 1 REF: p. 76 3. Interpersonal relationships are not necessarily relevant to supplier relationships. F PTS: 1 REF: p. 76 4. Successful supplier relationships involve equal decision-making control. T PTS: 1 REF: p. 76 5. The development of relationships with suppliers brings about changes that must be managed in order for a company to stay focused on their core businesses. T PTS: 1 REF: p. 77 6. Evaluating supplier performance can help companies identify supplier strengths and weaknesses and improve supplier communication. T PTS: 1 REF: p. 78 7. The broad based performance metric, which is defined as "all costs associated with the acquisition, use, and maintenance of a good or service," is referred to as TCO, which stands for total cost of ownership. T PTS: 1 REF: p. 79 8. When evaluating a supplier it is not possible to create performance metrics that measure delivery speed, quality related outcomes, environmental responsibility, and costs related to inventory. F PTS: 1 REF: p. 79-80 9. In a TCO system, certification and training of suppliers would be considered post-transaction costs. F PTS: 1 REF: p. 80 10. In a TCO system, the costs associated with defective products, including repair and warranty costs would be considered post-transaction costs. T PTS: 1 REF: p. 81 11. When evaluating suppliers for supplier certification, personal visits may be made to the prospective supplier to observe operations first hand. T PTS: 1 REF: p. 84 12. One result of an effective supplier certification program is an increase in the supplier base. F PTS: 1 REF: p. 84 13. An effective supplier certification program will increase time spent on incoming inspections. F PTS: 1 REF: p. 84 14. In a weighted-criteria evaluation system the weights of all the performance dimensions must add up to total more than 1.00 and less than 100. F PTS: 1 REF: p. 84 15. When using a weighted-criteria evaluation system with five or more categories, vendors should be ranked based on their score in the two highest weighted categories, the others should be discarded. F PTS: 1 REF: p. 85 16. ISO 14000 is a family of international standards for environmental management. T PTS: 1 REF: p. 88 17. As companies outsource more and more parts, it becomes easier to achieve cost savings internally. F PTS: 1 REF: p. 89 18. Offering an awards program to suppliers both motivates the suppliers to commit to a program of continuous improvement as well as provides role models for suppliers to follow. T PTS: 1 REF: p. 91 19. A comprehensive SRM strategy would likely include dedicated supplier managers, processes that would help in establishing standardized best practices, and the utilization of tools that would help gather and evaluate results. T PTS: 1 REF: p. 92-93 20. Smoother processes, faster cycle times, reduced new product development, and improved time-to-market are possible benefits from the increased visibility that is offered by SRM software. T PTS: 1 REF: p. 94 MULTIPLE CHOICE 1. According to the text, key ingredients for developing successful supply partnerships include all of the following EXCEPT: a. Personal relationships b. Individualized objectives c. Mutual benefits and needs d. Performance metrics B PTS: 1 REF: p. 75-76 2. Which of the following is important in developing successful relationships in a partnership? a. Commitment by top management b. Interpersonal relationships between employees of the companies c. Mutual/compatible needs that result in a win-win situation for the partners d. All of these D PTS: 1 REF: p. 76-77 3. Which of the following is NOT important in developing a successful strategic alliance? a. Developing performance metrics b. Developing efficient processes that will remain unchanged for the duration of the partnership c. Investigating the capabilities and core competencies of the supplier d. Open lines of communication that both promote sharing and secure confidentiality B PTS: 1 REF: p. 77-78 4. According to the text, one of the most basic and successful approaches to protecting trade secrets is: a. Threat of litigation b. Working with law makers to increase fines and sentences for those that steal trade secrets c. Requiring employees and vendors to sign non-disclosure agreements d. Requiring employees and partners to get ISO 9000 certified C PTS: 1 REF: p. 78 5. According to the text, the goal of a good performance evaluation system is to provide metrics that are: a. Understandable, easy to measure, focused on value-added results b. Understandable, quantitative, focused of cost-related results c. Understandable, qualitative, focused on performance-related results d. Understandable, quantitative, focused on quality-related results A PTS: 1 REF: p. 78 6. The combination of the purchase price of a good and additional costs incurred before or after product delivery can be referred to as: a. Total cost of acquisition b. Total cost of ownership c. Purchase requisition cost d. Total procurement cost B PTS: 1 REF: p. 79 7. Costs associated with investigating alternative suppliers and investigating alternative delivery options can be classified as: a. Pre-transaction costs b. Post-transaction costs c. Transaction costs d. All of these A PTS: 1 REF: p. 80 8. The process of certifying a new supplier is considered what type of major cost category? a. Pretransaction Cost b. Supplier-Development Cost c. Transaction Cost d. Turnover Cost A PTS: 1 REF: p. 80 9. Field failures, loss of goodwill, a decreased reputation, and warranty costs can all be classified as: a. Pre-transaction costs b. Post-transaction costs c. Transaction costs d. All of these B PTS: 1 REF: p. 81 10. Which of the following is TRUE? a. SRM software modules are very affordable (less than $50,000) and can be implemented with a week. b. ISO 75000 is the supplier award given to the highest rated supplier in Japan. c. The key to successful partnerships is developing performance measures with weights greater than 3.50. d. Continuous improvement and change management are both keys to building successful partnerships. D PTS: 1 REF: p. 81 11. An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming inspections can be referred to as: a. Quality Systems Certification b. Supply Management c. Supplier Inspection d. Supplier Certification D PTS: 1 REF: p. 84 12. Benefits of implementing an effective supplier certification program include all or the following EXCEPT: a. Building long-term relationships b. Reducing time spent on incoming inspections c. Increasing supplier base d. Recognizing excellence C PTS: 1 REF: p. 84 13. When using a Weighted Criteria Evaluation System to evaluate suppliers, all of the following are true EXCEPT: a. Select the key dimensions of performance based on what is important to the consumer b. The weights for all dimensions must sum to 1 c. Evaluate each of the performance measures on a rating between zero and one-hundred d. Multiply the dimension ratings by their respective important weights and then sum to get an overall weighted score A PTS: 1 REF: p. 84 14. A company using a weighted-criteria evaluation system has established these 5 categories and the appropriate weight in parentheses: Quality (0.30) Responsiveness (0.20) Delivery (0.20) Cost (0.20) Technology (0.10) Company X received the following ratings in each of the five categories: Quality(90), Responsiveness(80), Delivery(80), Cost(90), Technology(90). What is their total score? a. 87.0 b. 85.5 c. 86.0 d. 84.0 C PTS: 1 REF: p. 85 15. A company using a weighted-criteria evaluation system has established these 3 categories and the appropriate weight in parentheses: Quality(0.30), Delivery(0.20), Cost(0.50). The scores for each category are shown below. Which of the following companies has the highest total score? a. Company A: Quality(90), Delivery(80), Cost(60) b. Company C: Quality(70), Delivery(80), Cost(80) c. Company B: Quality(70), Delivery(90), Cost(80) d. All companies scored the same. C PTS: 1 REF: p. 85 16. A company using a weighted-criteria evaluation system has established these 3 categories and the appropriate weight in parentheses: Quality(0.30), Delivery(0.40), Cost(0.30). The scores for each category are shown below. Which of the following companies has the highest total score? a. Company A: Quality(90), Delivery(80), Cost(60) b. Company C: Quality(70), Delivery(95), Cost(60) c. Company B: Quality(70), Delivery(80), Cost(80) d. All companies scored the same. D PTS: 1 REF: p. 85 17. A company using a weighted-criteria evaluation system has established these 5 categories and the appropriate weight in parentheses: Quality (0.25) Responsiveness (0.10) Delivery (0.20) Cost (0.25) Technology (0.20) Company X received the following ratings in each of the five categories: Quality(90), Responsiveness(90), Delivery(80), Cost(80), Technology(90). What is their total score? a. 87.0 b. 85.5 c. 86.0 d. 86.5 B PTS: 1 REF: p. 85 18. Which third party certification was adopted by the European Union in 1992 that caused US suppliers wanting to stay competitive in European Union countries to get certified? a. ISO 14000 b. ISO 9000 c. European Supplier Certification Initiative (ESCI '92) d. EU Third Party Initiative B PTS: 1 REF: p. 87 19. Direct benefits of ISO 14000 include: a. Reduced defect rates b. Improved on-time delivery rates c. Reduction of pollution emission d. All of these C PTS: 1 REF: p. 89 20. According to the textbook, which of the following companies utilizes a supplier development program called Supplier Continuous Quality Improvement (SQDI) focused on improving the quality of the goods and services purchased and minimize the time needed to inspect incoming products? a. Target b. Boeing c. Intel d. General Motors C PTS: 1 REF: p. 90 21. The Hormel company awards their Hormel Food Corporation's No. 1 Award to their top supplier. How often to the give this award? a. Every year b. Every 6 months c. Every 5 years d. Every 10 years C PTS: 1 REF: p. 91 22. The acronym SRM refers to: a. Supplier Requisition Monitoring b. Supplier Relationship Management c. Shipment Response Monitoring d. Supply chain Relationship Management B PTS: 1 REF: p. 92 23. Streamlining the processes and communications between the buyer and supplier using software applications that enable these processes to be managed more efficiently and effectively can be referred to as: a. CRM b. SRM c. ISO 9000 d. SCSS B PTS: 1 REF: p. 92 24. Summers, Inc. needs to generate a list of good/services purchased per supplier. Which type software program can the manager consult to obtain the information? a. ISO 9000 b. ISO 14000 c. SRM d. SCSS C PTS: 1 REF: p. 93 25. SRM software should be capable of: a. Automating transactional processes b. Making information flow between partners more visible c. Integration of the supply chain making it possible to monitor multiple departments and processes both internally and externally d. All of these D PTS: 1 REF: p. 94 Chapter 4—Ethical and Sustainable Sourcing TRUE/FALSE 1. The influence of corporate sourcing decisions interacts with internal design, production, finance, marketing, and accounting. T PTS: 1 REF: p. 101 2. Purchasing departments can be seen as a primary designer and facilitator of important inward- and outward-facing sourcing policies. T PTS: 1 REF: p. 101 3. Generally speaking, there are two approaches to deciding whether or not an action is ethical, utilitarianism and rights and duties. T PTS: 1 REF: p. 102 4. While paperless transactions are now possible through e-procurement and Web-based services, these would NOT be considered sustainable business practices. F PTS: 1 REF: p. 105-108 5. While a manufacturer may have substantial influence over its first tier suppliers, their influence over second and third tier suppliers is typically much higher. F PTS: 1 REF: p. 105-108 6. According to the textbook, Wal-Mart is perhaps the company that is most averse to implementing sustainable business practices. F PTS: 1 REF: p. 107 7. Retail items, which would likely be found at a store like Target or Wal-Mart, like lamps, blankets, microwave ovens, and candy bars would be classified as functional products. T PTS: 1 REF: p. 109 8. "Rationalizing the supplier base" would mean that the purchasing firm is attempting to reduce the number of suppliers in its supplier network by eliminating poor performing suppliers in its present supplier base. T PTS: 1 REF: p. 112 9. Because internationally recognized certifications like ISO 9000 are becoming so common among suppliers, it is becoming more important that purchasing firms develop internal certification programs that are geared toward the specific needs of the purchasing organization. T PTS: 1 REF: p. 113 10. The average annual Purchase spend as a percentage of sales has been declining over the years. F PTS: 1 REF: p. 113 11. Companies that experience late deliveries or low product quality from their supplier may resort to insourcing. T PTS: 1 REF: p. 114-115 12. Companies that lack internal expertise in a specific functional area would likely consider insourcing. F PTS: 1 REF: p. 114-115 13. Product parts, processes, and product assembly should all be designed by the manufacturing firm to assure a single-minded approach that the suppliers can follow. Supplier involvement in these design phases is considered counterproductive. F PTS: 1 REF: p. 115-116 14. Manufacturers typically have very little influence over second and third tier suppliers when compared to the influence they hold over first tier suppliers. T PTS: 1 REF: p. 118-119 15. Some strategic supplier agreements reward the highest performing suppliers with a share of the cost reductions resulting from supplier improvements, additional purchasing contracts, or contract extensions on existing contracts. T PTS: 1 REF: p. 118-119 16. According to the text, driving your suppliers to offer the lowest possible prices, which in turn will lower your cost of goods sold, could prove to be harmful to buyer-supplier relationships and may also decrease the quality levels of the items produced using your suppliers' low cost components. T PTS: 1 REF: p. 120 17. Developing a collaborative negotiation infrastructure include four steps: building a preparation process, develop a negotiation database. Design a negotiation launch process, and institute a feedback mechanism. T PTS: 1 REF: p. 121 18. Benchmarking is the practice of copying what other businesses do best. T PTS: 1 REF: p. 124 19. A 4PL, commonly referred to as a lead logistics provider, is a trucking company that also provides tracking services. F PTS: 1 REF: p. 125 MULTIPLE CHOICE 1. All of the following are reasons for the increasing use of ethical and sustainable sourcing practices EXCEPT: a. Global population growth b. Increasing environmental awareness c. Legislation requiring corporate ethical and sustainable sourcing d. Declining worldwide levels of natural resources C PTS: 1 REF: p. 101 2. Managing a firm's external resources in ways that support the long-term goals of the firm can be referred to as: a. Ethical souring b. Functional sourcing c. Strategic sourcing d. Hybrid Sourcing C PTS: 1 REF: p. 101 3. The management of the firm's external resources through identification and selection of suppliers, management of supplier relationships, and monitoring and rewarding supplier performance in an effort to support the long-term goals of the organization is called: a. Buyer-supplier integration b. Acceptance sampling c. Procurement rationalization d. Strategic sourcing D PTS: 1 REF: p. 101 4. Which of the following is NOT a step suggested in the Supply Chain Sourcing Strategy Framework? a. Classify supplier items as either innovative or functional b. Define the goals of the supply chain and check for consistency with products and firm strategy c. Distribute free samples of all purchased products to the end-user for detailed evaluation and feedback on supply chain development d. Identify and evaluate the capabilities of suppliers and then identify areas which could be improved C PTS: 1 REF: p. 101-102 5. Which of the following are considered outcomes of implementing a supplier evaluation and selection criteria? a. Allows firm to screen out poor performing suppliers in its present supplier base. b. Allows firm to screen out undesirable suppliers that they may be considering for future purchases. c. Allows firm and its suppliers to develop a better corporate relationship d. All of these D PTS: 1 REF: p. 101-102 6. The application of ethical principles to business situations can be referred to as: a. Business ethics b. Social responsibility c. Ethical Sourcing d. Strategic Sourcing A PTS: 1 REF: p. 102 7. The following term refers to an act that creates the greatest good for the greatest number of people: a. Rights and duties b. Corporate responsibility c. Utilitarianism d. Social sustainability C PTS: 1 REF: p. 102 8. The purchasing managers at Sunnydale Corporation decide to intentionally increase purchases from small, women-owned suppliers. This decision can be considered: a. Illegal b. Unethical c. Ethical Sourcing d. Utilitarianism C PTS: 1 REF: p. 103 9. The Ethical Trading Initiative (ETI) does NOT include which of the following: a. Children under 13 shall not be employed b. Working hours are not excessive c. Regular employment is provided d. Freedom of association and the right to collective bargaining are respected A PTS: 1 REF: p. 104 10. Wal-mart is the driving force behind a system of measurement intended to influence how products are made and purchased in the future. This system of measurement is the: a. Greenstream b. ISO 17000 c. Retail carbon footprint d. Global sustainability index D PTS: 1 REF: p. 106-107 11. According to the EcoMarkets survey, which surveys over 6000 private and public buyers, the most popular aspect of green sourcing is: a. Recycling b. Material reuse c. Energy conservation d. Packaging reuse C PTS: 1 REF: p. 108 12. Which of the following would most likely be considered a functional product? a. PDA  Personal Digital Assistant b. HDTV  High Definition Televisions c. DVD recorders d. Disposable Camera D PTS: 1 REF: p. 109 13. The textbook outlined a Supply Chain Ethical and Sustainability Sourcing Strategy Framework. How many steps are in this framework? a. 3 b. 5 c. 6 d. 10 C PTS: 1 REF: p. 109-111 14. Harold's Fish Shop decides to reduce its purchases from poorly performing fish suppliers and focus future orders with suppliers that have been top-performing in the past. This is an example of: a. Supply base rationalization b. Supplier development c. Top-tier supplier selection d. Selective sourcing B PTS: 1 REF: p. 112 15. Hard-bargaining sourcing departments focused on decreasing purchasing spend may experience which of the following from their suppliers? a. Lower levels of quality from their suppliers b. Lower levels of service from their suppliers c. Deteriorating buyer-supplier relationships d. All of these D PTS: 1 REF: p. 112-113 16. An outsourcing program can result in all of the following positive outcomes, except: a. Reducing staffing levels b. Decreased need for supplier management c. Cost reduction d. Gains in manufacturing flexibility B PTS: 1 REF: p. 113-114 17. Variations of outsourcing include all of the following EXCEPT: (C; 114) a. Co-sourcing b. Selective sourcing c. Front sourcing d. Insourcing C PTS: 1 REF: p. 114 18. One of the most value enhancing activities performed by a supplier, for a key customer, which minimizes carrying costs and can avoid stockouts: a. Early supplier involvement scheduling b. Vendor managed inventory c. Strategic inventory planning d. Purchase spend reduction forecasting B PTS: 1 REF: p. 116 19. Which of the following is FALSE? a. The use of 3PL's has been increasing as companies seek more effective supply chain strategies. b. VMI provides retail facilities the opportunity to communicate to manufacturers that the customers are requesting customized items c. The use of 3PL providers allows companies to gain competitive advantages without having to gain the required knowledge through firsthand experience. d. VMI allows suppliers to manage their customers' inventory provided they have the capability to see inventory levels in real time B PTS: 1 REF: p. 116 20. Which of the following is TRUE? a. VMI stands for Vertically Managed Inventory b. 3PL stands for Third Party Leverage c. VMI stands for Vendor-Managed Inventory d. 3PL stands for Three Point Logistics C PTS: 1 REF: p. 116 21. The inventory level where suppliers replenish their customer's inventory with a predetermined order quantity is called the: a. Channel Equity Level b. Reorder point c. Bill Back d. MRO point B PTS: 1 REF: p. 116-117 22. According to the textbook, collaborative relationships place a relatively lower importance rating on which of the following competitive priorities: a. Speed of Delivery b. Cost c. Product Quality d. Frequency of deliveries B PTS: 1 REF: p. 120-121 23. The primary benefits of ____ include costs savings and freeing up time for purchasing staff to concentrate on the firm's core activities. a. eProcurement b. Insourcing c. The Ethical Trade initiative d. Six Sigma B PTS: 1 REF: p. 121 24. Which of the following can be used as a punishment for suppliers that perform poorly? a. Elimination of future business with the focal firm b. Downgrade the supplier's status c. Billback penalty d. All of these D PTS: 1 REF: p. 123 25. Benchmarking is: a. A system of performance metrics that seeks to motivate suppliers to perform better. b. A practice where companies attempt to learn and apply the best practices of other companies. c. A system of marking defective inbound inventory so it can quickly be identified for return to the supplier. d. A program where suppliers compete for contracts, but those companies who are outbid are provided advice for winning future contracts B PTS: 1 REF: p. 124 Chapter 5—Demand Forecasting TRUE/FALSE 1. The Institute of Supply Management (ISM) surveys more than 300 purchasing and supply executives in the United States using a questionnaire seeking information on "changes in production, new orders, new export orders, imports, employment, inventories, prices, lead-times, and the timeliness of supplier deliveries in their companies comparing the current month to the previous month." The ISM Report on Business focuses only on the manufacturing sector. F PTS: 1 REF: p. 134 2. The modern day business environment must deal with a more homogenous consumer base, which has caused the evolution of a more "push" oriented environment where suppliers must focus on manufacturing high volumes of standardized goods. F PTS: 1 REF: p. 135 3. The goal of a good forecasting technique is to minimize the deviation between actual demand and the forecast. T PTS: 1 REF: p. 136 4. One of the goals of an effective CPFR system is to minimize the negative impacts of the bullwhip effect on supply chains. T PTS: 1 REF: p. 136 5. The goal of a good forecasting technique is to achieve 98.7% accuracy between the forecast and actual demand. F PTS: 1 REF: p. 136 6. Associative forecasting methods are based on opinions and intuition. F PTS: 1 REF: p. 137 7. Quantitative forecasting methods are based on opinions and intuition, whereas qualitative forecasting methods use mathematical models and relevant historical data to generate forecasts. F PTS: 1 REF: p. 137 8. In the Delphi forecasting method, a group of internal and external experts are surveyed during several rounds in terms of future events and long-term forecasts of demand but the group members do not physically meet. T PTS: 1 REF: p. 138 9. If you felt that recent demand trends were more significant, and thus should be emphasized more in formulating a forecast, then in forecasting demand for the upcoming demand period, you would probably favor using a simple moving average over the conventional weighted moving average. F PTS: 1 REF: p. 140 10. If you were calculating a forecast using an exponential smoothing model, a calculation using  = 0.2 would be putting a greater emphasis on recent data, while a calculation using  = 0.8 would be putting a greater emphasis on past data. Thus a lower  is more responsive to changes in demand in the most recent periods. F PTS: 1 REF: p. 143 11. Cause-and-Effect Models can have multiple independent variables. T PTS: 1 REF: p. 145 12. The difference between a simple regression forecast and a multiple regression forecast is that simple regression is used when there is only one explanatory (or independent) variable, while multiple regression is used when there are numerous explanatory variables. T PTS: 1 REF: p. 146 13. Examples of forecasting accuracy measures are Mean Absolute Deviation, Mean Absolute Percentage Error, and Mean Square Error. T PTS: 1 REF: p. 148 14. According to the text, the ultimate goal of any forecasting endeavor is to have an accurate and unbiased forecast. T PTS: 1 REF: p. 148 15. As tighter control limits are instituted for the tracking signal, there is a greater probability of finding exceptions that require no action, but it also means catching changes in demand earlier. T PTS: 1 REF: p. 149 16. The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information. F PTS: 1 REF: p. 151 17. The objective of CPFR is to optimize the supply chain by improving demand forecast accuracy, delivering the right product at the right time to the right location, reducing inventories across the supply chain, avoiding stock-outs, and improving customer service. As a result of the many benefits attributed to CPFR, this business practice has been widely adopted. F PTS: 1 REF: p. 151 18. Some of the benefits of CPFR include strengthening partner relationships, providing an analysis of sales and order forecasts both upstream and downstream, and allowing collaboration on future requirements and planning. T PTS: 1 REF: p. 152 19. Some of the important steps involved in implementation of a CPRF process model include developing a collaborative arrangement, creating a sales forecast, creating an order forecast, and generating those orders. T PTS: 1 REF: p. 152 20. Some of the leading suppliers of CPFR solutions mentioned in the textbook are JDA Software Group, i2 Technologies, and Oracle. T PTS: 1 REF: p. 161 MULTIPLE CHOICE 1. Which of the following indices provided by the Institute for Supply Management (ISM) is considered the most important by economists because it is a composite of five weighted, seasonally adjusted indices? a. Purchasing Managers Index b. Export Orders Index c. Production and Inventory Index d. New Orders Index A PTS: 1 REF: p. 134 2. According to the textbook, which of the following is NOT a way to closely match supply and demand? a. Holding high amounts of inventory b. Maintaining a rigid pricing system c. Utilizing overtime d. Hiring temporary workers B PTS: 1 REF: p. 135 3. The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the: a. Bullwhip effect b. Delphi method c. CPFR effect d. Mean deviation A PTS: 1 REF: p. 136 4. Inaccurate forecasts can result in negative outcomes like: a. Stockouts and poor responsiveness to market dynamics b. High inventory costs of inventory and increased profits c. Material shortages and decreased costs of obsolescence d. Low inventory costs of inventory and stockouts A PTS: 1 REF: p. 136 5. Which one of the following is not a type of qualitative forecasting? a. Sales force composite b. Consumer survey c. Jury of executive opinion d. Naïve method D PTS: 1 REF: p. 138 6. The following are all common qualitative forecasting models EXCEPT: a. Jury of Executive Opinion b. Trend Variation c. Delphi Method d. Sales Force Composite B PTS: 1 REF: p. 138 7. Which of the following statements is FALSE: a. Time Series forecasting is based on the assumption that the future is an extension of the past b. Cause-and-Effect forecasting assumes that one or more factors are related to demand and, therefore, can be used to predict future demand c. All quantitative methods become less accurate as the forecast's time horizon increases d. It is generally not recommended to use a combination of both quantitative and qualitative methods D PTS: 1 REF: p. 139 8. Your company is conducting forecasting that revolves around the current recession and expansion of the U.S. economy. This type of forecasting can be referred to as what component of a time series? a. Trend Variations b. Cyclical Variations c. Seasonal Variations d. Random Variations B PTS: 1 REF: p. 139 9. The following time-series approach to forecasting uses historical data to generate a forecast and works well when demand is fairly stable over time: a. Naïve Forecast b. Weighted Moving Average c. Simple Moving Average d. Exponential Smoothing C PTS: 1 REF: p. 140 Data Set E1 Period Sales Volume 1 10000 2 12400 3 14250 4 15750 5 20500 6 18500 7 15750 8 20500 9 21500 10 22550 10. Using Data Set E1, what would be the forecast for period 7 using a four period moving average: (Choose the closest answer.) a. 17625 b. 15225 c. 15300 d. 17250 D PTS: 1 REF: p. 140 11. Using Data Set E1, what would be the forecast for period 6 using a five period weighted moving average? The weights for each period are 0.05, 0.10, 0.20, 0.30, and 0.35 from the oldest period to the most recent period, respectively. (Choose the closest answer.) a. 16500 b. 17825 c. 14575 d. 16275 A PTS: 1 REF: p. 140 12. Using Data Set E1, what would be the forecast for period 6 using the exponential smoothing method? Assume the forecast for period 5 is 14000. Use a smoothing constant of  = 0.4 (Choose the closest answer.) a. 14575 b. 26100 c. 16600 d. 19700 C PTS: 1 REF: p. 143 13. Using the actual demand shown in the table below, what is the forecast for May (accurate to 1 decimal) using a 4-month weighted moving average and the weights 0.1, 0.2, 0.3, 0.4 (with the heaviest weight applied to the most recent period)? Nov. Dec. Jan. Feb. Mar. Apr. 39 36 40 38 48 46 a. 44.4 b. 43.0 c. 42.5 d. 41.6 A PTS: 1 REF: p. 140 14. Given the following information, calculate the forecast (accurate to 2 decimals) for period three using exponential smoothing and  = 0.3. Period Demand Forecast 1 64 59 2 70 a. 36.90 b. 57.50 c. 61.50 d. 63.35 D PTS: 1 REF: p. 143 15. The exponential smoothing forecast has the same value as the naïve forecast when  in the exponential smoothing model is equal to: a. 0 b. 0.5 c. 1 d. Insufficient information provided to determine answer C PTS: 1 REF: p. 143 16. The equation for a simple linear regression that saw sales averaging $225,000 over the last ten periods, and advertising budgets averaging $3,000 over the last 10 periods is: Y = 3250 + 120x This indicates that a $1 increase in advertising will increase sales by: a. $3370 b. $250 c. $120 d. $1875 C PTS: 1 REF: p. 144 17. One common Cause-and-Effect Model used is: a. Regression analysis b. Linear Trend Forecast c. Moving Average Forecast d. Mean Absolute Deviation A PTS: 1 REF: p. 145 18. Some measures of forecasting accuracy include mean absolute deviation, mean absolute percentage error, and mean squared error. The formula for each is dependent on the forecast error, which is calculated by using the equation: a. Actual demand for period t divided by the forecasted demand for period t b. Actual demand for period t plus the forecasted demand for period t c. Actual demand for period t minus the forecasted demand for period t d. The average of Actual demand for period t and forecasted demand for period t C PTS: 1 REF: p. 148 19. If a tracking signal is positive, which one of the following is true? a. Actual value is higher than forecast b. Actual value is less than forecast c. Actual value is equal to forecast d. Unable to draw any conclusion A PTS: 1 REF: p. 148 Data Set E2 Month Actual Forecast 1 10 11 2 8 10 3 9 8 4 6 6 5 7 8 20. A forecasting method has produced the following data over the past 5 months shown in Data Set E2. What is the mean absolute deviation (accurate to 2 decimals)? a. 0.60 b. 1.20 c. 1.00 d. 1.25 C PTS: 1 REF: p. 148 21. Based on the information in Data Set E2, what is the mean squared error (accurate to 2 decimals)? a. 7.00 b. 1.40 c. 1.00 d. 0.80 B PTS: 1 REF: p. 148 22. What does the acronym CPFR represent? a. Coordinated planning and forecasting relationships b. Collaborative planning, forecasting, and replenishment c. Centralized purchasing and forecasting relationships d. Collaborative purchasing, forecasting, and receivables B PTS: 1 REF: p. 151 23. According to textbook, the top three challenges for CPFR implementation include all of the following except: a. Making organizational and procedural changes b. Trust between supply chain partners c. Cost d. Supplier lead times D PTS: 1 REF: p. 156 24. According to textbook, which of the following companies is a leading forecasting software provider? a. Just Enough b. SAS c. Business Forecast Systems, Inc. d. All of these D PTS: 1 REF: p. 156-159 25. According to textbook, which of the following companies is recognized as a leader in CPFR software solutions? a. Autonomy b. Cloud software c. JDA software d. Transperion D PTS: 1 REF: p. 161 Chapter 6—Resource Planning Systems TRUE/FALSE 1. According to the text, resource planning is the process of determining the production capacity required to meet demand. T PTS: 1 REF: p. 168 2. The resource and operations planning done by operations managers is intended to balance capacity and output. T PTS: 1 REF: p. 168 3. According to the text, the goal of resource planning is to minimize the discrepancy between an organization's capacity and demand results. T PTS: 1 REF: p. 168 4. According to the text, a firm should always run its operations at 100 percent capacity to ensure changes affecting demand can be met. F PTS: 1 REF: p. 169 5. MRP systems are simply a more modern version of the ERP systems of the 1980's. F PTS: 1 REF: p. 169 6. MRP is the production planning system intended to develop long-range plans (more than a year away) concerning product families manufactured by the organization. F PTS: 1 REF: p. 169 7. A Master Production Schedule is a medium-range materials plan. T PTS: 1 REF: p. 169-170 8. The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the mixed production strategy. T PTS: 1 REF: p. 171 9. The Chase Production Strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern. F PTS: 1 REF: p. 171-173 10. A Mixed Production Strategy uses a blend of chase and level strategies by striving to maintain a stable core workforce while using other means like temporary workers to manage short-term high demand. T PTS: 1 REF: p. 175 11. System nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans. T PTS: 1 REF: p. 176 12. Computer and information technologies MRP has evolved to become closed-loop MRP which can now take into account APP, MPS, and CRP. T PTS: 1 REF: p. 181 13. The process of converting a parent item's planned order releases into component gross requirements is referred to as the ERP Implosion. F PTS: 1 REF: p. 184 14. An MRP system has a subassembly with a lot size of 100 units. In terms of filling future requirements, this would mean that planned order releases for the subassembly would always have to be exactly 100 units. F PTS: 1 REF: p. 184-186 15. Lead Capacity Strategy is a proactive approach that adds or subtracts capacity in anticipation of future market conditions and demand. T PTS: 1 REF: p. 188-189 16. Organizations that choose to discontinue use of old and inefficient computer and information systems in favor of adopting a modern ERP system are said to have implemented a decentralized database solution. F PTS: 1 REF: p. 192 17. When a single company that is implementing an ERP system chooses to use one company to provide an operations module, another to provide the sales and marketing application, and yet another company to provide the finance and accounting module, that single company has chosen to utilize the best-of-breed solution. T PTS: 1 REF: p. 193 18. Two reasons ERP implementations have been known to fail include: lack of employee training on the new ERP system and lack of adequate resources to support these complex and time consuming implementations. T PTS: 1 REF: p. 194-195 19. Key requirements to a successful ERP implementation include adequate computer support, accurate system inputs, and flexible business processes that can conform to the approaches used in the ERP software logic. T PTS: 1 REF: p. 196-197 20. Lack of communication between the implementing firm and its ERP software provider can become a major hindrance for a successful implementation. T PTS: 1 REF: p. 196-197 MULTIPLE CHOICE 1. Which of the following is an engineering document that shows an inclusive listing of all the component parts and assemblies making up the final product? a. Master Production Schedule b. Bill of Materials c. Distribution Requirement Plan d. Resource Requirement Plan B PTS: 1 REF: p. 167 2. The goal of resource planning is to minimize the discrepancy between capacity and: a. Resources b. Demand c. Workload d. Supply B PTS: 1 REF: p. 168 3. Which of the following consists of different products that share similar characteristics, components or manufacturing processes? a. Resource tree b. Product family c. Dependant allocation d. Implosion factor B PTS: 1 REF: p. 168 4. Which of the following seeks to develop short range plans seeking to effectively and efficiently manage components and/or subassemblies over time period of few days to a few weeks? a. RRP b. MPS c. RCCP d. MRP D PTS: 1 REF: p. 169 5. To check the feasibility of the Master Production Schedule, one would look to: a. Rough-Cut Capacity Plan b. Material Requirement Plan c. Capacity Requirement Plan d. Distribution Requirement Plan A PTS: 1 REF: p. 170 | p. 188 6. Which of the following is a Long Range Materials Plan: a. Aggregate Production Plan b. Master Capacity Plan c. Materials Requirements Plan d. Capacity Requirements Plan A PTS: 1 REF: p. 170 7. In a bill of materials, items at which level are independent demand items? a. Level 0 b. Level 1 c. Level 2 d. Level 3 A PTS: 1 REF: p. 170 8. Which of the following basic production strategies used for addressing the aggregate planning problem would work best with make-to-order manufacturing firms? a. Capacity Production Strategy b. Chase Production Strategy c. Level Production Strategy d. Backlog Production Strategy B PTS: 1 REF: p. 171 9. Which of the following could be considered a master production schedule for a service firm? a. The reservation book utilized by a restaurant b. The employee shift schedule utilized by an auto shop c. A hospital patient's personal information fill d. The recipe book utilized by a chef at a restaurant A PTS: 1 REF: p. 175 10. Which of the following is NOT one of the three basic methods used to calculate the available-to-promise quantities? a. Discrete available-to-promise b. Cumulative available-to-promise without looking ahead c. Indiscrete available-to-promise d. Cumulative available-to-promise with looking ahead C PTS: 1 REF: p. 177 11. Which of the following MRP terms represents a committed order awaiting delivery for a specific period? a. Projected on-hand inventory b. Time bucket c. Net requirement d. Scheduled receipt D PTS: 1 REF: p. 184 12. Which of the following MRP terms represents the parts demanded by a parent? a. Gross requirement b. Component c. Net requirement d. Scheduled receipt B PTS: 1 REF: p. 184 13. Which number should be placed in the spot presently filled with the X? Item ABC-Level 1 1 2 3 4 Gross Requirements 20 20 50 30 Schedule Receipts 25 Projected on Hand Inventory 30 10 15 40 10 Net Requirements Planned Order Releases X Q = 25; LT = 2; SS = 10 a. 50 b. 75 c. 10 d. 20 B PTS: 1 REF: p. 186 14. Which number should be placed in the spot presently filled with the X? Item ABC-Level 1 2 3 4 Gross Requirements 40 65 35 10 Schedule Receipts 60 Projected on Hand Inventory 70 30 25 20 10 Net Requirements Planned Order Releases X Q = 30; LT = 2; SS = 10 a. 10 b. 15 c. 30 d. 60 C PTS: 1 REF: p. 186 15. Which number should be placed in the spot presently filled with the X? Item ABC-Level 1 2 3 4 Gross Requirements 20 10 40 X Schedule Receipts 25 Projected on Hand Inventory 25 30 20 30 25 Net Requirements Planned Order Releases 50 Q = 25; LT = 2; SS = 20 a. 20 b. 5 c. 10 d. 15 B PTS: 1 REF: p. 186 16. Which number should be placed in the spot presently filled with the X? Item ABC-Level 1 2 3 4 Gross Requirements 20 20 10 15 Schedule Receipts 20 Projected on Hand Inventory 50 30 30 20 X Net Requirements Planned Order Releases 40 Q = 20; LT = 3; SS = 20 a. 20 b. 5 c. 45 d. 35 C PTS: 1 REF: p. 186 17. The acronym ERP is short for: a. Enterprise Resource Planning b. Electronic Resource Provider c. Executive Resource Plan d. Electronic Requirements Provider A PTS: 1 REF: p. 191 18. Which of the following is considered an advantage/benefit of utilizing in ERP system? a. Utilizes multiple databases in order to provide up-to-date information b. Increases the privacy level within an organization, thus functional departments can more easily protect their data from supporting or dependent functional departments c. Allows organizations to more easily communicate information about operational changes to supply chain members d. Increases the bullwhip effect C PTS: 1 REF: p. 191-193 19. Which of the following is considered an advantage/benefit of utilizing an ERP system? a. Fairly inexpensive to purchase and implement b. Enables the company to utilize a single centralized database system, thus eliminating duplicate data entry. c. Flexible enough that it allows different companies with different business models to mold the new ERP system to fit the company's business model d. All of these B PTS: 1 REF: p. 193 20. While ERP is a relatively new technology, it has grown rapidly since the early 1990s. Which of the following is the reason that has contributed to its rapid growth? a. The year 2000 millennium bug b. The trend for companies to eliminate their supply chain partners c. The increased use of email during the 1990's d. All of these A PTS: 1 REF: p. 194-195 21. Organizations that choose to implement one single system with all of the desired applications from a single vendor versus choosing to implement the best applications or modules for each of the different functional departments associated with the supply chain is said to have chosen a(n): a. Best-of-breed solution b. Elite integrator solution c. Single integrator solution d. Premier application solution C PTS: 1 REF: p. 195-196 22. Organizations that choose to implement the best applications or modules for each of the different functional departments associated with the supply chain versus choosing to implement one single system with all of the desired applications from a single vendor is said to have chosen a(n): a. Best-of-breed solution b. Elite integrator solution c. Multi-modular solution d. Premier application solution A PTS: 1 REF: p. 196 23. According to the textbook, which of the following is considered a reason that ERP implementations fail? a. The organization may lack the necessary workforce and expertise to properly implement the system b. Top management becomes overcommitted to the point where they constantly encourage the employees during implementation c. Organizations tend to spend too much time and money training their employees on the new system d. All of these A PTS: 1 REF: p. 196-197 24. Not all ERP software is designed to provide the exact same tools, nonetheless, some of the common modules usually included in ERP software packages include: a. Customer Relationship Management and human resource management b. Human resource management and accounting and finance c. Supplier relationship management and customer relationship management d. All of these D PTS: 1 REF: p. 200-201 25. Which of the following is NOT a common module of ERP systems? a. Human Resources Management b. Customer Relationship Management c. Marketing Resources Management d. Supply Chain Management C PTS: 1 REF: p. 200-201 Chapter 7—Inventory Management TRUE/FALSE 1. Service parts sold to the repair shops are examples of dependent demand. F PTS: 1 REF: p. 212 2. Dependent Demand must be forecasted based on market conditions. F PTS: 1 REF: p. 212 3. The four broad categories of inventory are raw materials, work-in-process, subassemblies, and finished goods. F PTS: 1 REF: p. 213 4. Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period. Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level. F PTS: 1 REF: p. 214 5. The term Cycle Counting is synonymous with physically counting inventory. T PTS: 1 REF: p. 215-216 6. The ABC inventory control system categorizes inventory items into three groups, A, B, and C. A items are given highest priority, while C items have the lowest priority. Prioritization may be based on annual dollar usage, shelf life, or sales volume. T PTS: 1 REF: p. 215-216 7. Pareto Analysis is an inventory model used to determine the optimal order size that minimizes total annual inventory costs. F PTS: 1 REF: p. 216 8. The ABC inventory matrix shows an ABC inventory classification based on annual usage on the vertical axis and an ABC inventory classification based on physical inventory on the horizontal axis. T PTS: 1 REF: p. 216-217 9. Radio Frequency Identification (RFID) is considered an eventual replacement of bar code because of its ability to store huge amount of information to differentiate specific unit of good. T PTS: 1 REF: p. 218 10. Electronic Product Code (EPC) is the only RFID standard adopted by the commercial sector and the U.S. Department of Defense. F PTS: 1 REF: p. 218 11. An RFID reader does not require direct line of sight to read the information stored in an RFID tag. T PTS: 1 REF: p. 220-222 12. The EOQ, also known as the economic order quantity, is the optimal order size in terms of cost because it minimizes the annual total inventory cost. The EOQ is the lot size where inventory holding costs equal annual ordering costs. T PTS: 1 REF: p. 225-226 13. The total annual inventory cost is the sum of the annual purchase cost, the annual holding cost, the annual capacity cost, and the annual ordering cost. F PTS: 1 REF: p. 226 14. Relaxing the instantaneous replenishment assumption of the EOQ model results in the Economic Manufacturing Quantity model. T PTS: 1 REF: p. 227 15. The optimal order quantity for the quantity discount model may exist at a price breakpoint. T PTS: 1 REF: p. 227-231 16. In the Economic Manufacturing Quantity model, the annual consumption rate must be higher than the annual production rate. F PTS: 1 REF: p. 231-232 17. When demand and lead time are constant, reorder point is the demand during lead time. T PTS: 1 REF: p. 237-238 18. The continuous review inventory system is more expensive to monitor compared to the periodic review inventory system. T PTS: 1 REF: p. 241-242 19. The (s, S) continuous review inventory system orders the same quantity Q when physical inventory reaches the reorder points. F PTS: 1 REF: p. 242-243 20. The periodic inventory review system reviews physical inventory at specific points in time. T PTS: 1 REF: p. 243 MULTIPLE CHOICE 1. Dependent demand and independent demand items differ in that I. for any product, all components are dependent-demand items II. the need for independent-demand items is forecast III. the need for dependent-demand items is calculated a. I only b. I & II only c. I & III only d. II & III only e. I, II & III E PTS: 1 REF: p. 212 2. Which of the following would most likely be considered a dependent demand item? a. Bicycle tires used to assemble a bicycle b. Television (TV) c. Couch d. Lawn Mower A PTS: 1 REF: p. 212 3. Which of the following cannot be considered as independent demand items? a. wholesale and retail merchandise items b. maintenance, repair, and operating supplies at a manufacturing company c. maintenance, repair, and operating supplies at a service firm d. raw material items that become part of the final product at a manufacturing firm e. service industry items such as hospital supplies or office supplies for law firms D PTS: 1 REF: p. 212 4. ____, such as lubricants for machines, are used in the production process, but do not become parts of the final products. a. Raw materials b. Work-in-process c. Maintenance, repair and operating supplies d. Finished goods e. Cycle stock C PTS: 1 REF: p. 213 5. Companies hold a supply of inventory for all of the following reasons EXCEPT: a. meet variation in product demand b. increase production change/setup costs c. allow production scheduling flexibility d. purchase in bulk to take advantage of quantity discounts e. maintain independence of operations (Decoupling) B PTS: 1 REF: p. 212-213 6. Which of the following is a disadvantage of excessive inventory? a. It hides production and other problems. b. It leads to higher inventory ordering cost. c. It leads to lower average inventory. d. It eliminates cycle stock. e. It reduces the need to conduct cycle count. A PTS: 1 REF: p. 212-214 7. Which of the following is not an example of an ordering cost for products purchased from a supplier? a. the cost of transmitting the order b. the cost of receiving the product c. the cost associated with processing the invoice d. the opportunity cost of not ordering from a least cost supplier e. the cost of handling the product D PTS: 1 REF: p. 214 ABC Inventory Matrix Use the graph below to answer the question(s). 8. In the ABC Inventory Matrix, inventory in area Y suggests a. under-stocked A and B items. b. under-stocked B and C items. c. overstocked A and B items. d. over-stocked B and C items. e. inventory matches sales. E PTS: 1 REF: p. 217-218 9. In the ABC Inventory Matrix, inventory in area Z suggests a. under-stocked A and B items. b. under-stocked B and C items. c. overstocked A and B items. d. over-stocked B and C items. e. inventory matches sales. D PTS: 1 REF: p. 217-218 10. Which of the following is NOT an assumption of the classic Economic Order Quantity (EOQ)? a. Lead time is known and constant. b. Demand is known and constant. c. Instantaneous replenishment. d. There is no quantity discount. e. The production rate must be greater than the consumption rate. E PTS: 1 REF: p. 225-226 11. The primary purpose of the basic economic order quantity model is a. to calculate the reorder point, so that replenishments take place at the proper time b. to minimize the sum of carrying cost and holding cost c. to maximize the customer service level d. to minimize the sum of setup cost and holding cost e. to calculate the optimum safety stock D PTS: 1 REF: p. 225-226 12. If an item is ordered at its economic order quantity, the annual carrying cost should be: a. slightly less than the annual ordering cost. b. equal to the annual ordering cost. c. twice the annual purchase price. d. the square root of the annual ordering cost. e. cannot be determined because there is insufficient information provided. B PTS: 1 REF: p. 225-229 13. What inventory factor may be omitted from the basic EOQ derivation because it is a constant? a. Annual order-processing cost b. Annual purchase cost of goods c. Annual capital cost d. Annual setup costs e. all of these B PTS: 1 REF: p. 226 14. Which of the following is not an assumption of the economic order quantity model? a. Demand is known, constant, and independent. b. Lead time is known and constant. c. Quantity discounts are not possible. d. Production and use can occur simultaneously. e. The only variable costs are setup cost and holding (or carrying) cost. D PTS: 1 REF: p. 226 15. The cost of a widget is $5, and the carrying rate is 40%; cost of processing an order is $25, annual demand is for 400 widgets, and supply and usage patterns are stable. What is the economic order quantity (EOQ)? a. 5 b. 20 c. 25 d. 100 e. 200 D PTS: 1 REF: p. 228 16. If usage is constant, as order size increases, annual order costs ____ but annual carrying costs ____. a. increase ..... increase b. decrease ..... decrease c. increase ..... decrease d. decrease ..... increase e. remain the same ..... increase D PTS: 1 REF: p. 229 17. Which one of the following statements regarding the economic order quantity is true? a. The EOQ model combines several different item orders to the same supplier. b. If an order quantity is larger than the EOQ, the annual holding cost exceeds the annual ordering cost. c. The EOQ model assumes a variable demand pattern. d. When the interest rate drops, both the holding cost and the EOQ decreases. e. EOQ is used to determine the optimum shipping quantity. B PTS: 1 REF: p. 225-229 18. Use this information below to calculate the optimal order quantity: Annual demand for backpacks is 43,000 units The cost to place an order is $220 The per unit cost of the item is $60.00 The annual holding rate is 37.5% Choose the closest answer. a. 920 units b. 250 units c. 710 units d. 830 units A PTS: 1 REF: p. 226-229 19. If your company had an annual purchase cost of items equal to $2,000,000, an annual holding cost of $150,000 and an annual ordering cost of $750,000 this scenario would reveal that: a. Your fixed lot size was lower than the EOQ b. Your fixed lot size was equal to the EOQ c. Your fixed lot size was higher than the EOQ d. Nothing because there is insufficient information to discern where the EOQ would be. A PTS: 1 REF: p. 226-229 20. The EOQ model with quantity discounts attempts to determine a. what is the lowest purchasing price. b. whether to use fixed-quantity or fixed period order policy. c. how many units should be ordered. d. what is the shortest lead time. e. what is the lowest amount of inventory necessary to satisfy a certain service level. C PTS: 1 REF: p. 227-231 Figure 7-1 Use the graph below to answer the question(s). 21. Which of the following is TRUE in relation to Figure 7-1? a. Curve J represents the annual ordering cost, and curve K represents the annual holding cost. b. A lot size of G has an annual total cost of about C. c. At lot size H both holding costs and ordering costs exceed the annual total cost. d. The EOQ is most likely lot size G, and curve L is the annual ordering cost curve. D PTS: 1 REF: p. 226-229 22. If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the model, the average amount of inventory on hand a. is zero b. is affected by the amount of product cost c. is one-half of the economic order quantity d. is smaller than the holding cost per unit e. cannot be determined from the given information C PTS: 1 REF: p. 228-230 23. In the absence of demand and delivery lead time variation, if demand is eight per day and purchase lead time is four days, the reorder point is: a. 3. b. 8. c. 32. d. 35. e. 56. C PTS: 1 REF: p. 236-238 24. In the absence of demand and delivery lead time uncertainty, reorder point is the ____. a. demand during lead time b. safety stock c. sum of demand during lead time and safety stock d. economic order quantity e. average inventory A PTS: 1 REF: p. 236-238 25. The UNLV Bookstore sells a unique calculator to college students. The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day. The lead time for this calculator is very stable at 9 days. Compute the statistical reorder point that results in a 95 percent in-stock probability (Z = 1.65). a. 19.8 units b. 80 units c. 180 units d. 199.8 units e. 720 units D PTS: 1 REF: p. 236-241 Chapter 9—Domestic U.S. and Global Logistics TRUE/FALSE 1. The responsibility of transportation is to create both time utility and place utility, which means that products will be delivered at precisely the right time to the desired location. T PTS: 1 REF: p. 303 2. According to the textbook, the five basic modes of transportation are motor, rail, air, water, and cyberspace. F PTS: 1 REF: p. 306 3. A small LTL shipment that originates on a truck in Los Angeles and is moved from Los Angeles to Phoenix where it is unloaded and put onto another truck for final shipment to Denver would be considered an intermodal shipment since it utilizes more than one vehicle during shipment. F PTS: 1 REF: p. 306-307 4. A shipment that originates in Los Angeles and is placed inside a sealed standardized 8' by 8' by 20' container attached to a truck trailer and is moved from Los Angeles to Phoenix where the container is then moved to a railcar for final shipment to Denver where it would then be loaded onto another truck trailer would be considered an intermodal shipment since the container remained sealed throughout the shipment. T PTS: 1 REF: p. 306-307 5. Generally speaking, rail carriers are less expensive than motor carriers. T PTS: 1 REF: p. 308 6. While high speed trains in the United States are commonly utilized to provide quick delivery of product, countries like Japan and France are struggling to develop a competitive high-speed rail system. F PTS: 1 REF: p. 308-309 7. Because air transport is so expensive the best cargo candidates for air travel are those cargo shipments with a high cost to weight ratio. T PTS: 1 REF: p. 309-310 8. Limitations of air carrier transport include cost and airport accessibility. T PTS: 1 REF: p. 309-310 9. In order to provide more comprehensive delivery service, some freight-only airlines have invested in developing their own motor carrier fleets to provide full door to door service delivery. T PTS: 1 REF: p. 309-310 10. In cost-of-service pricing, the cost of shipping increases proportionally with distance. F PTS: 1 REF: p. 312 11. With FOB pricing, a supplier is the legal owner of a product until the product reaches its destination. T PTS: 1 REF: p. 313 12. When a supplier provides a price quote to a buyer for supplies that includes transportation to the buyer's location this is known as FOB destination pricing, or free on board to the shipment's destination. T PTS: 1 REF: p. 313 13. The primary difference between FOB origination and FOB destination is that FOB destination requires that the supplier legal own the product until it reaches the destination; in FOB origination the buyer takes ownership immediately and is thus responsible for arranging delivery. T PTS: 1 REF: p. 313 14. While transportation regulation and deregulation both have their supporters, proponents of regulation consider it to be good since it is said to encourage competition and allows the negotiation of prices to dictate market costs. F PTS: 1 REF: p. 316 15. The Department of Transportation was created by the 1920 Transportation Act. F PTS: 1 REF: p. 318 16. Private warehouses refer to warehouses that are owned by the firm storing the goods. T PTS: 1 REF: p. 321 17. Efficient supply chain management distribution requires that modern warehouses concentrate their efforts on a wide array of warehousing and distribution functions like storing purchases, work in progress inventories, and finished goods inventories, receiving shipments, breaking down shipments, repackaging, and the distribution of components. T PTS: 1 REF: p. 322 18. Risk pooling is a strategy that attempts to use fewer warehouses to decrease the required safety stock levels since the negatively correlated market demands reduce the overall demand variance across the markets which the centralized warehouse services. T PTS: 1 REF: p. 323 19. International intermediaries can provide shipping, consolidation, and other import and export services. Some examples of these international intermediaries include: foreign freight forwarders, NVOCCs, FTZs, and TOFCs. F PTS: 1 REF: p. 337 20. Some of the e-commerce related services that transportation companies offer nowadays to remain competitive include allowing customers to plan itineraries, get freight quotes, and track shipments online. T PTS: 1 REF: p. 337 MULTIPLE CHOICE 1. The supply chain management element that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements is also referred to as: a. Operations b. Transportation planning c. Logistics d. Procurement C PTS: 1 REF: p. 303 2. Which of the following carriers typically transports goods for the company that owns the carrier, they are not subject to economic regulation, and since the fleets are rather large the cost of transport is very likely less than if the company had hired another company to provide the service? a. Common carrier b. Exempt Carrier c. Contract Carrier d. Private Carrier D PTS: 1 REF: p. 305 3. What does LTL stand for in the transportation industry? a. Logistical Train-car Lift b. Less-Than-Truckload c. Large Truck Leasing d. Local Train Logistics carriers B PTS: 1 REF: p. 306-307 4. Which of the following types of warehouses takes a large number of LTL shipments and repackages them in TL or CL quantities to a manufacturer or user-facility located in another area or region? a. Consolidation warehouse b. Private warehouse c. Breakbulk warehouse d. Public warehouse A PTS: 1 REF: p. 306-307 5. Which of the following modes of cargo transport can be characterized as being the most inexpensive and very slow, yet good for transporting very heavy goods a long-distance? a. Air Carriers b. Rail Carriers c. Water Carriers d. Motor Carriers C PTS: 1 REF: p. 306-310 6. What is the abbreviation for a truck trailer which is placed on a flat railcar that would then be pulled by a train engine? a. TOFC b. COFC c. NVOCC d. TTFC A PTS: 1 REF: p. 308 7. According to the textbook, the largest ocean containerships can carry how many twenty-foot containers? a. Between 3,000 and 5,000 b. Between 5,000 and 8,000 c. Between 8,000 and 10,000 d. Over 10,000 D PTS: 1 REF: p. 308-311 8. Real time location systems (RTLS) are used for the following type of transportation: a. Motor carriers b. Rail Carriers c. Air carriers d. Water carriers B PTS: 1 REF: p. 309 9. Which of the following is NOT a characteristic of cost-of-service pricing? a. Prices are established based on fixed and variable costs of transportation b. Prices vary based on volume and distance c. Prices tend to rise as shipping distance increases d. Carriers price their services at the highest levels the markets will bear D PTS: 1 REF: p. 312 10. According to the text, FOB destination pricing is typically preferred for all of the following EXCEPT: a. High-value shipments b. Buyer has little transportation expertise c. Buyer is purchasing a reoccurring order d. Small shipments C PTS: 1 REF: p. 313 11. The first major transportation regulation in the U.S. was which of the following: a. Interstate Commerce Act b. Motor Carrier Act c. Granger Laws d. Interstate Initiation Act C PTS: 1 REF: p. 316-317 12. Which of the following would be considered an act of deregulation? a. Reed Bullwinkle act  legalized rate bureaus or conferences b. Granger law  Established maximum rates, prohibited discrimination, and forbade mergers for railroads. c. Trucking Industry Regulatory Reform Act  Motor carriers freed from filing rates with the Interstate Commerce Commission d. Freight Forwarders Act  Allowed Interstate Commerce Commission control over freight forwarders; controlled entry, rates, and services. C PTS: 1 REF: p. 316-318 13. The transportation legislation that created the Interstate Commerce Commission (ICC) was which of the following: a. Interstate Commerce Act b. Motor Carrier Act c. Granger Laws d. Interstate Initiation Act A PTS: 1 REF: p. 317 14. Which of the following legislative acts is NOT in support of transportation deregulation? a. Railroad Revitalization and Regulatory Reform Act b. Staggers Rail Act c. FAA Authorization Act d. Reed-Bulwinkle Act D PTS: 1 REF: p. 317-320 15. The acts of receiving shipments, breaking down shipments, repackaging shipments, and distributing components to a manufacturing location or finished products to customers by a distribution center is referred to as: a. Piggy backing b. Crossdocking c. Transshipping d. Customs Brokering B PTS: 1 REF: p. 321 16. According to the text, currently the three largest private warehouse operators in North America are: a. United Parcel Service, Wal-Mart and Sears Holding Corp. b. United Parcel Service, Target and U.S. Army c. Target, Microsoft and U.S. Army d. Wal-Mart, Ford Motor Corp. and U.S. Army A PTS: 1 REF: p. 321 17. Public warehouses can provide a wide range of services. Which of the following is NOT one of the services offered by public warehouses? a. Breakbulk b. Assembly c. Repackaging d. High security shipment D PTS: 1 REF: p. 322 18. Which of the following is NOT consistent with a decentralized warehousing system? a. Higher safety stocks required b. Shorter lead times c. Lower transportation fees d. Lower total operating costs D PTS: 1 REF: p. 323 19. A furniture manufacturer presently owns a total of four warehouses in the following cities Sacramento, Phoenix, Cincinnati, and Atlanta. The average inventory levels for the four warehouses are 8000 units, 10,000 units, 10,000 units, and 8000 units, respectively. They plan on moving all of their inventory to one warehouse in Memphis. Using the square root rule, what will be the required average inventory level at the new central Memphis warehouse required to maintain the system's present 98% customer service level? (Choose the closest answer.) a. 9000 b. 18000 c. 20000 d. 24500 D PTS: 1 REF: p. 323-324 20. According to the text, a warehouse location strategy that proposes locating a warehouse closest to the sources of supply is referred to as: a. Market positioned strategy b. Supply positioned strategy c. Product positioned strategy d. Intermediately positioned strategy C PTS: 1 REF: p. 325 21. The following are all examples of lean warehousing capabilities EXCEPT: a. Decreased assembly operations b. Greater emphasis on crossdocking c. Reduced lot sizes and shipping quantities d. Increased automation A PTS: 1 REF: p. 326 22. A transportation intermediary used to consolidate large numbers of small shipments to fill entire truck trailers or rail cars to achieve truckload or carload transportation rates is referred to as: a. Consolidation forwarder b. Load broker c. Transportation broker d. Freight forwarder D PTS: 1 REF: p. 330 23. Which of the following was NOT mentioned in the textbook as being one of the more popular logistics management software applications? a. Transportation management systems b. Freight management systems c. Warehouse management systems d. Returns management systems B PTS: 1 REF: p. 333-336 24. Which of the following is similar to a travel agent for cargo since they provide services like documentation completion, special rate handling, and customs clearance, in addition to their consolidating of small shipments to fill entire truckloads? a. Transportation Broker b. Freight Forwarder c. Shippers' Association d. Integrated Logistics Service Provider B PTS: 1 REF: p. 336-337 25. Which of the following international intermediaries helps foreign buyers and sellers find each other and then handles all of the shipping arrangements and documentation preparation? a. Customs broker b. Foreign freight forwarder c. Trading company d. NVOCC C PTS: 1 REF: p. 337 SHORT ANSWER 1. Warehousing is considered a very important part of the transportation process. Why is it, though, that many buildings that used to be called warehouses typically refer to themselves as distribution centers nowadays? A complete answer should include the traditional role of warehouses, the changes to supply chains, and the Cross-Docking activities now performed at distribution centers. The traditional warehouse was seen as a means to provide customer service in the form of having inventory on hand at all times so that the supply chain could react to customer needs without stressing manufacturing facilities. Modern supply chains strive to practice many JIT objectives, which could include low inventories, elimination of wasteful processes, fast deliveries, and supply chain flexibility. It is for this reason that warehouses now consider themselves distribution centers whose primary objective is not to hold inventory, but rather to receive, breakdown, repackage, and distribute components to customers. PTS: 5 REF: p. 318-319 2. Does risk pooling favor a centralized or decentralized warehousing system? Why? Risk pooling favors a centralized warehousing system. Risk pooling, through the square root rule, illustrates the relationship between inventory, customer service levels, and the number of warehouses. By using the square root rule formula it can be seen that demand in different markets is negatively correlated. This means that high demand in one area will likely be offset by low demand in another area. Thus, having fewer warehouses offsets the need for a large pool of safety stock distributed amongst a large number of warehouses. In other words system variability can be better controlled from one centralized warehouse versus a large number of warehouses all of which would have to have their own pool of safety stocks in order to control demand variability within their region. PTS: 5 REF: p. 321-323 3. List and explain three capabilities of lean warehousing. 1. Greater emphasis on cross docking  Faster inbound and outbound turnaround results in lower overall inventory requirements 2. Reduced lot sizes and shipping quantities  inbound and outbound shipments are smaller in size. Faster, but more handling is required 3. A commitment to customers and service quality  Employees more focused on satisfying warehouses inbound and outbound customers 4. Increased automation  To be faster and more reliable, more automation is required to remain competitive. 5. Increased assembly operations  lean systems and mass customization will require last minute assembly. This increases the requirements for employee skill and machinery at these facilities. PTS: 5 REF: p. 324-325 4. Suppose you have a shipment of products that needs to be transported. What type of service does each of the following intermediaries offer? • Freight forwarders • Transportation brokers • Shippers' Associations Freight forwarders  These intermediaries take small shipments from numerous companies and consolidate them to make large shipments. These larger consolidated shipments can thus realize the lower rates associated with large shipments. Some of these savings can then be passed along to the individual shippers. Transportation brokers  These intermediaries bring together shippers and transportation companies. They often have excellent knowledge of transportation alternatives. Small companies that need transportation options may approach transportation brokers who can then lead them to the optimal shipping solution available to them. Shippers' Associations  These are non-profit cooperatives made up of companies that seek to move product domestically or internationally. They take their members' shipments consolidate them into full truckloads and thus help their members realize volume discounts. In addition, the larger pooled shipments can then allow for the negotiation of improved terms of service. PTS: 5 REF: p. 328-329 ESSAY 1. International Cosmopolitan is a company that sells an enormous amount of fine jewelry worldwide from its headquarters in Paris, France. Presently 10% of their revenues come from sales in the United States. International Cosmopolitan would like to grow the business by about 200% over the next three years. Presently, a majority of their product is kept in a private warehouse in France. While the shipments to United States will always be relatively small in size due to the cost and nature of the product, International Cosmopolitan would still like to take advantage of any possible distribution efficiencies by sending their shipments to a distribution center in United States that can then package their small shipments with other jewelry shipments headed towards common retailers and/or wholesalers. In order to do so they'll need to make accommodations for shipment, find retail and wholesale companies willing to distribute their product, find intermediaries to both help export the product out of France and help import the product into the United States. Based on the above information and your knowledge of international transportation, answer the questions below in the hopes of providing International Cosmopolitan with some preliminary information that will aid them in creating a successful logistical itinerary: • Which modes of transportation should be utilized in getting the product from International Cosmopolitan's warehouse in France to a distribution center in United States? Why? • Which intermediaries should International Cosmopolitan consider in finding customers in United States and exporting the product out of a France? Why? • Which intermediary should International Cosmopolitan consider in helping them import the product into United States? Why? • Briefly discuss their warehousing plan. Does it make sense? Why? • Which modes of transportation should be utilized in getting the product from International Cosmopolitan's warehouse in France to distribution Center in United States? Why? The most likely mode of transportation to get product with such a high cost to weight ratio out of France and into the United States would be air. The student should probably also include information on how the product will get to the airplane from the private warehouse and from the airplane to the final distribution Center. For this portion of the shipment a motor carrier would most likely be used. Motor transportation is both versatile in terms of the products that it can carry and agile in terms of the locations it can reach. • Which intermediaries should International Cosmopolitan consider in finding customers in United States and exporting the product out of a France? Why? A trading company most likely would be the best answer for this particular question. Trading companies aid foreign sellers in finding foreign buyers. In addition, they can handle the export arrangements, documentation, and transportation of the goods in question. While the student may also cite foreign freight forwarders, this answer is not as desirable. While a foreign freight forwarder can handle the export arrangements, documentation, and transportation of goods, they typically do not aid foreign sellers in finding foreign buyers. Nonetheless, partial credit may be deserved. • Which intermediary should International Cosmopolitan consider in helping them import the product into United States? Why? Customs brokers aid in moving international shipments through customs. They are knowledgeable on documentation and other customs related areas, thus they make the importation of product easier and they help in answering any questions Customs Officials may have. Some students may cite that trading company's help make import arrangements also. This would also be an acceptable answer according to the language in the textbook. • Briefly discuss their warehousing plan. Does it make sense? Why? This question is fairly open-ended. The student may comment on the positive and negative aspects of International Cosmopolitan utilizing a private warehouse in France. They may then discuss the benefits of taking their moderate sized shipments that were imported into United States and then consolidating those shipments at consolidation warehouses with other small shipments headed towards common customers. PTS: 10 2. As a logistics specialist for your organization you are being asked to develop a model, which will aid your company in future global expansion projects. Answer the following questions as part of your initial step in developing a helpful model. • List 5 key components of the local infrastructure that must be investigated before committing to expansion? Why are these important? • Provide 3 aspects of government relating to logistics that need to be considered before committing to expansion? • List 5 key components of the local infrastructure that must be investigated before committing to expansion? Why are these important? There are many possible answers, below is a list of some of the more common/likely answers: 1. Roads  Important to trucking and Intermodalism. Accessibility. 2. Ports  Important to ocean shipping and Intermodalism. Accessibility. 3. Rail network  Important to shipment by rail and Intermodalism. 4. Airports  Important to shipment by air. 5. Telecommunication infrastructure  Important to all modes of transport. Provides supply chain/shipment visibility. 6. Fuel/Utility network  Allows for shipment via all modes without interruption. 7. Warehousing/DC availability  Allows for efficient shipment and storage, as well as complex distribution systems. 8. Pipeline network  Allows for uninterrupted shipment via pipelines. • Provide 3 aspects of government relating to logistics that need to be considered before committing to expansion? There are many possible answers, below is a list of some of the more common/likely answers: 1. Transportation regulations 2. Amount Bureaucracy 3. Ability to maintain a stable uncorrupt law enforcement team 4. Commitment to secure logistics network 5. Commitment to building and maintaining infrastructure 6. Commitment to international trade  Trade agreements, open markets... 7. Level of environmental regulations that might affect logistics 8. Customs laws, Import/export laws PTS: 10 3. List the five modes of transportation. For each mode provide a brief description (or examples) of the type of cargo that typically travels via that mode of transport. a. MOTOR: Motor carriers are actually quite versatile, so nearly anything from packaged household goods to building materials to liquid petroleum are all candidates to be moved via motor carrier. b. RAIL: Rail carriers typically carry very heavy shipments. This might include heavy building materials, construction equipment, or coal. c. AIR: Air carriers typically carry items with a high cost to weight ratio. In other words, air carriers carry very light, high-value goods that need to travel long distances quickly. This might include items like jewelry, fine wines, or even racehorses. On occasion items are also shipped by air because of an emergency, for convenience, or perhaps to offset high packaging and/or insurance costs. d. WATER: Water carriers typically haul heavy, bulky, low value materials like cold, grain, and sand. Nonetheless, because transport by water is so cheap almost any item may be shipped by water. Some items that typically travel via water carrier include: automobiles, petroleum, liquefied natural gas, containerized cargo, frozen fish, and produce. e. PIPELINE: Pipelines move materials only when they are in a liquid or gaseous state. Items that would typically moved via pipeline include: petroleum, coal in a slurry form, natural gas, drinking water, or gasoline. PTS: 10 Chapter 10—Customer Relationship Management TRUE/FALSE 1. While a company's Internet presence may be desirable for finding information or conducting product transfers, touching products and talking face-to-face with company representatives remains an integral part of the supplier-customer interface. T PTS: 1 REF: p. 347-348 2. While a well planned and organized CRM plan can be extremely useful in developing effective and efficient marketing programs for retailers, they are not particularly helpful for manufacturing companies like GM since their touches with the customer are few. F PTS: 1 REF: p. 348-349 3. According to the text, customer relationship management refers to building and maintaining profitable long-term customer relationships. T PTS: 1 REF: p. 348 4. Through the use permission marketing programs, customers are allowed to select the type of communications companies can make with them. Actually, customers can even choose to be completed eliminated from both e-mail and traditional mailing lists. T PTS: 1 REF: p. 349 5. Up until now CRM has been very effective for most companies because it has focused on building customers' trust and loyalty, ultimately building a strong relationship with the customer through programs that make it easy for the customer to return products and get information from people inside the organization. F PTS: 1 REF: p. 349 6. Because integrated supply chains require good suppliers to act as good supply-chain customer partners, CRM programs should include first-tier customer training and education to ensure proper use of purchase products. T PTS: 1 REF: p. 349 7. Segmenting customers on the basis of things like products purchased, sales history, demographic information, and desired product features can dilute the results of a CRM program; segmenting customers should be avoided. F PTS: 1 REF: p. 351 8. Cross-selling is a term used when customers are sold additional products as the result of an initial purchase. T PTS: 1 REF: p. 352 9. When web sites suggest other items for purchase based on already purchased items, this is an example of Clickstream Selling. F PTS: 1 REF: p. 352-353 10. As customers navigate through a website CRM software can record and analyze the customer's clickstream so website images and ads can be tailored to the needs and desires of that individual customer. T PTS: 1 REF: p. 353 11. Sales force automation products help salespeople better manage their accounts, their business opportunities, and communications while away from the office. T PTS: 1 REF: p. 354 12. Cloud computing is a term used to describe how a customer navigates a website. F PTS: 1 REF: p. 355 13. Some of the ways customers evaluate the customer service capabilities of an organization are through their experiences with human response call centers, automated response call centers, and consumer web sites. T PTS: 1 REF: p. 358-361 14. According to the text, poor planning is typically the cause for most unsuccessful CRM initiatives. T PTS: 1 REF: p. 363 15. The objectives of any CRM initiative should be focused on what the company can reasonable achieve. F PTS: 1 REF: p. 364 16. It is best to integrate information about and results relating to marketing efforts like customer loyalty programs, frequent user cards, and credit card applications within an organization. Integrating the efforts of these programs between employees and an organization's IT systems (data warehouses) can help managers make more informed customer-focused decisions. T PTS: 1 REF: p. 364 17. Future trends in CRM include coping with the delicate issue of privacy, utilization of social media, and utilization of cloud computing. T PTS: 1 REF: p. 366-369 18. In general, companies avoid social media sites since they rarely are able to find useful information about customer opinions via blogs and social networking sites. T PTS: 1 REF: p. 367 19. Companies that provide on-demand applications are often referred to as data warehouses. F PTS: 1 REF: p. 369 20. Private clouds allow corporate users to internally manage their data centers. T PTS: 1 REF: p. 369 MULTIPLE CHOICE 1. Which of the following statements about consumer focused programs/initiatives is TRUE? a. Customers want additional support services and other offerings that add value to their initial product or service purchases b. CRM programs are simple in that they involve treating customers properly and making them feel valued c. CRM programs are complex in that they involve identifying all customers, their needs, and then creating a system geared towards completely satisfying the customer. d. All of these D PTS: 1 REF: p. 346-348 2. Which of the following are required elements of an effective CRM initiative? a. Sending out promotional materials via e-mails and traditional mail to a large random group of a potential customers b. Segmenting customers c. Preserving a traditional sales force that communicates with the supply-chain via a traditional paper document/contract system d. All of these B PTS: 1 REF: p. 349 3. The online retailer Ecatalog.com has decided to send consumers of the new John Grisham book an e-mail with suggestions for books with similar themes and has also offered them a 20% discount if those suggested books were purchased. This type of marketing/promotion is an example of: a. Target marketing b. Segmented selling c. Clickstream selling d. Cross-selling D PTS: 1 REF: p. 350 4. CRM can allow organizations to identify which customers have stopped purchasing products or services from the organization so that the organization can target those former customers for future promotions and/or perhaps to investigate why they stopped purchasing in the first place. The CRM attribute is called: a. Customer profitability determination b. Customer-base retention initiative c. Customer defection analysis d. Customer clickstream analysis C PTS: 1 REF: p. 351 5. Companies work very hard to reduce the number of their present customers which never return. This customer defection is often referred to as: a. Customer churn b. Clickstream defection c. Balking d. Revenue Exodus A PTS: 1 REF: p. 351 6. All of the following are required elements for the development of an effective CRM initiative EXCEPT: a. Segmenting customers b. Customer value determination c. Utilization of MRP d. Personalizing customer communications C PTS: 1 REF: p. 351 7. You work for a company that segments customers by demographic information markets specifically to those customers who are located in the Los Angeles area. This is an example of: a. Target marketing b. Cross-selling c. Geographic marketing d. Personalized customer communication A PTS: 1 REF: p. 351 8. Your company's marketing efforts allow customers to "opt-out" of receiving email advertisers. This is referred to as: a. Event-based marketing b. Relationship marketing c. Customer churn d. Customer preference marketing B PTS: 1 REF: p. 351 9. The use of quick response codes (QR Codes) to retrieve marketing information is a type of: a. Geographic marketing b. Target marketing c. Customer churn d. Mobile marketing D PTS: 1 REF: p. 352 10. The element of a CRM program involved with the use of data-mining software and customer behavior analytics is: a. Segmenting customers b. Predicting customer behaviors c. Customer value determination d. Customer preference determination B PTS: 1 REF: p. 353 11. The element of a CRM program in which a customer's lifetime value is calculated is referred to as: a. Segmenting customers b. Predicting customer behaviors c. Customer value determination d. Customer preference determination B PTS: 1 REF: p. 354 12. When an organization attempts to offer the right products and services to customers at the right time through the offer of individual promotions tied to specific events, like birthdays and anniversaries, this is referred to as: a. Event-based marketing b. Segmented selling c. Personal holiday marketing d. Extreme segmentation marketing A PTS: 1 REF: p. 354 13. Which of the following is a method that organizations typically use in attempting to effectively manage the relationships between the organization and its customers at the customer service level? a. Reengineering and/or automating call centers based on past call center data b. Developing web sites that allow customers to access their personal accounts and/or information like hours of operation, store locations, and product information c. Utilizing CRM programs to administer personalized surveys based specific customer segments d. All of these D PTS: 1 REF: p. 356-361 14. A system which allows sales managers to obtain current information and reporting capabilities regarding each salesperson's activities on each customer's account is referred to as a: a. Sales activity management system b. Sales territory management system c. Lead management system d. Knowledge management system B PTS: 1 REF: p. 357 15. Your top sales executive leaves your company to work for a competitor. Fortunately, all of her notes regarding prior dealings with customers have been captured in a: a. Sales activity management system b. Sales territory management system c. Lead management system d. Knowledge management system D PTS: 1 REF: p. 357 16. According to the text, in logistics, a "perfect order" occurs when: a. The Seven R Rule is satisfied b. A customer is successfully cross-selled c. Customer churn does not occur d. Clickstream is minimized A PTS: 1 REF: p. 358 17. Which of the following customer service elements can be classified as examples of pre-transaction elements? a. Salesperson politeness and order processing capabilities b. Warranty repair capabilities and customer complaint resolution c. Product returns and information about the operation of the product purchased d. Customer service policies and the company's choice of organizational structure D PTS: 1 REF: p. 358 18. Which of the following customer service elements can be classified as examples of post-transaction elements? a. Salesperson politeness b. Customer complaint resolution c. Customer service policies d. The company's choice of organizational structure B PTS: 1 REF: p. 358 19. You are a manager at Sunnydale Appliances. A customer who recently purchased a dishwasher contacts you with a problem and requests warranty information. According to the text, this is an example of: a. Customer churn b. Posttransaction customer service c. Customer management d. Pretransaction customer service B PTS: 1 REF: p. 360-361 20. All of the following are requirements for designing and implementing a successful CRM program EXCEPT: a. Support from the firm's top executive b. Knowledge of the tools available to aid in CRM c. Adherence to a static CRM program d. Continuous awareness of customers' changing requirements B PTS: 1 REF: p. 363 21. Users in a company can retrieve and study a large amount of information about consumers by housing that information in a centralized database that is commonly referred to as a: a. Clickstream b. QR code c. Data warehouse d. Social media site C PTS: 1 REF: p. 364 22. According to the textbook, a performance measurement type for CRM would include: a. Customer loyalty b. Customer Satisfaction c. Average sales revenue per customer d. All of these D PTS: 1 REF: p. 365 23. When integrating new CRM modules, it is important that compatible CRM modules are linked to a(n): a. Data warehouse b. Data knowledge system c. Sales activity management system d. Sales force automation system A PTS: 1 REF: p. 366 24. Since many companies do not have the knowledge, resources (money/people), or capability of building an infrastructure to support a CRM program, many companies have chosen to outsource this responsibility to a(n): a. ASP b. Customer Support Specialist Firm c. DSS d. Marketing Facilitator A PTS: 1 REF: p. 369 25. According to the textbook, which of the following statements is TRUE? a. CRM stands for customer resource management b. ASP stands for application service provider c. CRM stands for centralized resource management d. ASP stands for accelerated shipment process B PTS: 1 REF: p. 369 Chapter 11—Global Location Decisions TRUE/FALSE 1. According to the text, with increasing globalization the access to global markets and corporate networks makes the role of location less important as a source of competitive advantage. F PTS: 1 REF: p. 377 2. According to the text, global location decisions are made to optimize the performance of the supply chain and be consistent with the firm's competitive strategy. T PTS: 1 REF: p. 377 3. According to the text, the primary objective of an offshore factory is to take advantage of low labor costs. T PTS: 1 REF: p. 379 4. A lead factory is set up in a location with an abundance of advanced suppliers, competitors, research facilities and knowledge centers in order to have access to the most current information on materials, components, technologies and products. F PTS: 1 REF: p. 379 5. The WTO is the only global international organization dealing with the rules of trade between nations. T PTS: 1 REF: p. 380 6. China's economy is shifting from labor-intensive industries to arrears like marketing and the production of high technology products that typically provide higher levels of value. T PTS: 1 REF: p. 380 7. The Americas have two primary regional trade agreements, NAFTA, an agreement between the United States, Canada, and Mexico, and COMESA, an agreement between all of the South American countries. F PTS: 1 REF: p. 380 8. Facility location is a business decision that will ultimately impact issues like the cost of supplies, facilities, and materials, as well as lead times and customer service levels. T PTS: 1 REF: p. 380 9. Regional trade agreements and the World Trade Organization provide a framework for managers in terms of investigating important facility location elements like tariffs, costs, and the free flow of goods and services in different regions of the world. T PTS: 1 REF: p. 380 10. The European Union (EU) created the world's largest free trade area. F PTS: 1 REF: p. 381 11. While many developing countries are attractive to companies seeking out low labor costs, there are other important factors such as productivity levels, employee skill and education levels, turnover rates, and employment trends that certain industries find just as important, if not more important, in determining facilities' location. T PTS: 1 REF: p. 381 12. When trying to gauge a nation's competitiveness a manager may want to consult one of two primary world competitiveness rankings, the World Competitiveness Yearbook published by IMD and The Global Competitiveness Report prepared by the World Economic Forum. T PTS: 1 REF: p. 383-385 13. A country that imposes high tariffs encourages foreign-based companies to import goods. F PTS: 1 REF: p. 384-385 14. While the development and proliferation of the Internet and web-based commerce has not completely eliminated the relevancy of facilities location, because of the Internet, the speed of delivery and cost in serving the customer are no longer factors in determining the strategic location of an organization's facilities. F PTS: 1 REF: p. 387 15. Many multinational corporations are moving their facilities and headquarters out of Taiwan and some Southeast Asian countries in order to take advantage of the proximity to customers. The more attractive customer markets are developing in China. T PTS: 1 REF: p. 387 16. If an organization wanted to set up a facility in an area near a number of advanced suppliers, competitors, and research facilities in order to have access to current information on materials, components, and technologies the organization would likely set up a source factory. F PTS: 1 REF: p. 388 17. A list of quality-of-life factors would most likely include proximity to customers, proximity to suppliers, tariff rates, and currency stability. F PTS: 1 REF: p. 389 18. A right-to-work law allows employees to decide for themselves whether or not they want to join or financially support a union. T PTS: 1 REF: p. 390 19. According to the textbook, two models that utilize quantitative data, which can help determine the attractiveness of one location versus another, are the Break-Even Model and the Extrapolated Average Cost Model. F PTS: 1 REF: p. 391 20. While business clusters seem logical in well-established areas with developed economies like Silicon Valley and Hollywood, California because companies can easily collaborate, compete, and share knowledge, some high-tech clusters have developed in areas with emerging economies such as Mexico, Singapore, and India. T PTS: 1 REF: p. 394 MULTIPLE CHOICE 1. Organizations that primarily compete on speed of delivery, such as FedEx and UPS, utilize which of the following approaches for location determination: a. Sourcing center b. Hub and spoke c. Air and ground d. LTL consolidation B PTS: 1 REF: p. 378 2. Which of the following strategic foreign facilities is set-up primarily to avoid tariff barriers, minimize exchange risk, and/or take advantage of government incentives? Ultimately the factory operates as most normal factories making only minor improvements in either the products or processes. a. Offshore factory b. Server factory c. Source factory d. Outpost factory B PTS: 1 REF: p. 379 3. Which of the following strategic foreign facilities is set-up primarily produce products at a low cost with minimal technical and managerial resources? The items produced at these factories are often exported to countries where costs to produce similar items would be higher. a. Offshore factory b. Server factory c. Source factory d. Outpost factory A PTS: 1 REF: p. 379 4. According to the text, when the location of a factory is dictated by low production costs, fairly developed infrastructure and availability of skilled workers the factory is referred to as a(n): a. Offshore factory b. Source factory c. Server factory d. Lead factory B PTS: 1 REF: p. 379 5. Your company needs to determine the appropriate location of a factory in order to take advantage of government incentives and avoid tariff barriers, the type of factory needed can be referred to as a(n): a. Offshore factory b. Source factory c. Server Factory d. Lead Factory C PTS: 1 REF: p. 379 6. The type of factory which is the source of product and process innovation and competitive advantage for the entire organization is referred to as a(n): a. Offshore factory b. Source factory c. Server factory d. Lead factory D PTS: 1 REF: p. 379 7. Examples of regional trade agreements include all of the following EXCEPT: a. Association of Southeast Asian Nations (ASEAN) b. European Union (EU) c. Association of African Markets (AAM) d. Southern Common Market (MERCOSUR) C PTS: 1 REF: p. 380 8. Which of the following issues is (are) important to consider when trying to determine the location of a firm's facilities? a. The stability in the location considered b. Environmental issues regulated by domestic laws or international trade agreements c. Access to suppliers from the location considered d. All of these D PTS: 1 REF: p. 380 9. Which of the following trade agreements was set up after WWII and originally consisted of six countries? a. Association of Southeast Asian Nations (ASEAN) b. European Union (EU) c. Association of African Markets (AAM) d. Southern Common Market (MERCOSUR) B PTS: 1 REF: p. 380-382 10. Which of the following regional trade agreements is paired with the appropriate region of the world? a. NAFTA  Southeast Asian Nations b. COMESA  United States, Canada, and Mexico c. MERCOSUR  Argentina, Brazil, Paraguay, and Uruguay d. EU  Middle East nations, not including Israel C PTS: 1 REF: p. 380-382 11. The World Economic Forum creates International Competitive Rankings that are ranked on their Pillars of Competitiveness. How many Pillars of Competitiveness does the World Economic Forum have? a. Three b. Five c. Ten d. Twelve D PTS: 1 REF: p. 382 12. Some companies import components, use them in the production of their end items, and ultimately export them to other countries. If a company wanted to import the components duty-free, use those components in the production of their end items, and then export them to other countries, they would most likely utilize a(n): a. Duty-free Territory b. Foreign Trade Zone c. International Cross Docking Zone d. International Processing Center B PTS: 1 REF: p. 385-386 13. Which of the following is a factor in choosing a location? a. Currency Stability b. Proximity to Markets c. Access to Suppliers d. All of these D PTS: 1 REF: p. 386-388 14. Which of the following would be considered a quality of life factor? a. Education b. Arts, culture, and recreation c. Community safety d. All of these D PTS: 1 REF: p. 389-390 15. Certain states in the United States have laws that secure the rights of employees to decide for themselves whether or not to join or financially support a labor union. These laws are called: a. Employee freedom acts b. Free trade laws c. Right-to-work laws d. Sanctioned union acts C PTS: 1 REF: p. 390 16. Which of the following secures the right of employees to decide whether or not to join or financially support a union? a. Union shop laws b. Union planning forums c. Ethical union initiatives d. Right-to-work laws D PTS: 1 REF: p. 390 17. Use the breakeven model to determine which of the statements below is TRUE according to the information provided in the table relating to two different locations considered for a new manufacturing facility. LOCATION ANNUAL FIXED COSTS UNIT VARIABLE COSTS Site A $50,000 $10 Site B $20,000 $30 a. Site A is the desired location if the production rate is 1000 units per year b. The breakeven point for these two locations is 1500 units per year c. Site B is the desired location if the production rate is 2000 units per year d. The breakeven point for these two locations is 500 units per year B PTS: 1 REF: p. 391 18. A certain organization trying to decide where to locate their future factory is considering three locations. They are taking into account three factors: labor costs, currency stability, and proximity to market. Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model. SCORES (Maximum 100) FACTOR WEIGHT SITE A SITE B SITE C Labor Cost 0.30 90 80 80 Currency Stability 0.40 80 85 80 Proximity to Market 0.30 80 80 80 a. Site A b. Site B c. Site C d. All sites are equally attractive A PTS: 1 REF: p. 391 19. A certain organization trying to decide where to locate their future factory is considering three locations. They are taking into account three factors: labor costs, currency stability, and proximity to market. Using the weights for each factor listed below and the scores achieved by each of the three considered locations, determine which location should be chosen for the new facility based on the weighted factory location model. SCORES (Maximum 100) FACTOR WEIGHT SITE A SITE B SITE C Labor Cost 0.20 90 65 90 Currency Stability 0.50 80 90 80 Proximity to Market 0.30 80 80 80 a. Site A b. Site B c. Site C d. All sites are equally attractive D PTS: 1 REF: p. 391 20. The following facility location technique uses quantitative and qualitative dimensions and is subject to interpretation and bias by the analyst: a. Break-even model b. Business cluster analysis model c. Weighted-factor rating model d. Mean absolute deviation model C PTS: 1 REF: p. 391 21. The following facility location technique uses fixed and variable costs to analyze potential locations: a. Break-even model b. Business cluster analysis model c. Weighted-factor rating model d. Mean absolute deviation model A PTS: 1 REF: p. 391 22. All of the following are considered components of fixed costs EXCEPT: a. Cost of land b. Equipment c. Insurance d. Utilities D PTS: 1 REF: p. 391 23. All of the following are considered components of variable costs EXCEPT: a. Labor b. Materials c. Property Taxes d. Utilities C PTS: 1 REF: p. 391 24. When a number of interconnected companies and institutions from a particular field are located in a single geographic location, that location is referred to is a(n): a. Business cluster b. Metroplex c. Regional business center d. Industrial point A PTS: 1 REF: p. 395 25. The Bruntland Commission defines ____ as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. a. Lean manufacturing b. Sustainable development c. Six Sigma manufacturing d. Progressive design B PTS: 1 REF: p. 396 Chapter 12—Service Response Logistics TRUE/FALSE 1. When a customer takes their automobile to a carwash, the carwash provides state utility to the vehicle. T PTS: 1 REF: p. 403 2. In most services, customers are either directly or indirectly involved in the production of the service itself. T PTS: 1 REF: p. 403 3. Service facilities are normally decentralized. T PTS: 1 REF: p. 404 4. Service organizations need to consider the fact that the services they provide are not consumed by the immediate customer, rather, services are typically passed on to customers farther down a distribution channel. F PTS: 1 REF: p. 404 5. Since the 1950s, the percentage of service related jobs has increased much more rapidly than the percentage of manufacturing and agriculture related jobs in United States due to the use of technology and mass production techniques developed during that time. T PTS: 1 REF: p. 404 6. In order to maximize customer satisfaction/visits, service organizations must be able to identify customer needs, create systems that can quickly satisfy these needs in a cost-effective manner, hire, train, and schedule service representatives effectively, utilize technology effectively, and conveniently locate service facilities. T PTS: 1 REF: p. 404 7. Baumol's disease refers to the fact that multiple factor productivity measures tend to be bad, because firms often concentrate on improving one, while neglecting others. F PTS: 1 REF: p. 405 8. A service bundle includes the explicit service, the supporting facility, the facilitating goods, as well as the implicit services. T PTS: 1 REF: p. 408 9. Location strategy is important in that it can provide barriers to entry, and competitive positioning, as well as generating additional demand. T PTS: 1 REF: p. 409 10. Long-term customer satisfaction, especially in the face of service failures, requires organizations to empower front-line service personnel to identify problems and then provide solutions quickly and an empathetic way. T PTS: 1 REF: p. 409 11. The optimal capacity utilization for an organization would be 100%. F PTS: 1 REF: p. 417 12. Cross-training workers is a typical capacity management technique for times when demand exceeds capacity. T PTS: 1 REF: p. 418 13. When a level demand strategy is used for managing capacity, the firm is required to use a demand management or queue management tactic to deal with excess customers. T PTS: 1 REF: p. 418 14. When a chase demand strategy is used for managing capacity, effective plans must be in place to utilize, transfer or reduce service capacity when there is excess available and to develop or borrow capacity quickly when demand exceeds capacity. T PTS: 1 REF: p. 418 15. According to the text, good queue management consists of managing only what the customer perceives to be as the waiting time. F PTS: 1 REF: p. 423 16. Balking occurs when customers decide to leave the queue after some length of waiting time in the queue. F PTS: 1 REF: p. 425 17. A very popular fast food restaurant is presently staffed with three cash register attendants that are taking orders. Upon entering the restaurant, customers must choose from three separate lines, each of which leads to one of the three registers. Immediately upon placing their order with the register attendant, customers are given their food and drinks by the register attendant. To analyze this situation you would use the queuing model for an infinite source, multiple servers, and multiple channels. T PTS: 1 REF: p. 426 18. A retailer with two checkout stands is an example of a single-channel, multiple-phase queuing system. F PTS: 1 REF: p. 426 19. Themed restaurants such as the ESPN zone (sports theme), Rainforest Cafe (jungle theme), and Chuck E. Cheese (kids theme) are all examples of Entertailment facilities. F PTS: 1 REF: p. 432 20. In a franchise, the franchisee invests some of their own money, while paying a percentage of sales to the franchiser. T PTS: 1 REF: p. 434 21. When companies sell products both online and in traditional retail stores this is called a mixed internet distribution strategy. T PTS: 1 REF: p. 436 22. The five dimensions of service quality include: Reliability, durability, performance, aesthetics, and availability. F PTS: 1 REF: p. 437 MULTIPLE CHOICE 1. Which of the following is an example of a person that would be considered to provide a Pure Service? a. Attorney/Lawyer b. Management Consultant c. Musical Entertainer d. All of these D PTS: 1 REF: p. 403 2. Countries that shift from a manufacturing-oriented economy to a service-oriented economy sometimes see their productivity growth decline over time. This phenomenon is called: a. Service Shrink b. Deming's Decline c. State Utility d. Baumol's Disease D PTS: 1 REF: p. 405 3. The Wal-Mart effect is best described by which of the following? a. As large retailers locate in communities, the put smaller companies our of business b. Information technologies have allowed large retailers to maintain good productivity growth rates c. Wal-Mart's use of supplier capacity has made it difficult for other companies to find Suppliers d. The growth of large retailers has had a negative impact on the environment B PTS: 1 REF: p. 405 4. Which of the following would result in an INCREASE in productivity? a. The value/amount of the inputs used increases and the value/amount of outputs decreases b. The value/amount of the inputs used increases and the value/amount of outputs stays the same c. The value/amount of the inputs used stays the same and the value/amount of outputs decreases d. The value/amount of the inputs used stays the same and the value/amount of outputs increases D PTS: 1 REF: p. 405 5. You are determining the productivity of your company's service. In your calculation, the inputs used consist of the sum of your company's labor, materials, energy, and capital costs. This can also be referred to as: a. Multiple-factor productivity b. Productivity utilization c. Multi-input efficiency d. Extended productivity A PTS: 1 REF: p. 405 6. The three generic competitive strategies are: a. profit-based, nonprofits, and free services b. cost leadership, differentiation, and focus c. manufacturing, service, and retail d. mass-production, make-to-order, and services B PTS: 1 REF: p. 406-408 7. Which of the following organizations would be considered an example of a global service? a. FedEx b. Deutsche Bank c. Wal-Mart International d. All of these D PTS: 1 REF: p. 406 8. Which of the following strategies is being followed by a company that is based on creating a service that is considered to offer unique service elements for which customers may consider paying higher prices? a. Focus Strategy b. Differentiation Strategy c. Cost Leadership Strategy d. Exclusivity Strategy B PTS: 1 REF: p. 407 9. According to the text, which of the following is a service strategy characterized by the idea that a service can serve a narrow target market better than a broad market? a. Differentiation strategy b. Demand strategy c. Focus strategy d. Transitional strategy C PTS: 1 REF: p. 408 10. Which of the following items would be considered a facilitating product? a. The automobiles washed by the car wash b. The suits being cleaned by the dry cleaner c. The tools used to fix your car at an auto shop d. All of these C PTS: 1 REF: p. 413 11. The number of customers per day an organization's service delivery systems are designed to serve within a certain time frame is referred to as: a. Service Capacity b. Capacity Utilization c. Productivity Potential d. Service Throughput A PTS: 1 REF: p. 417 12. A basic strategy for managing capacity when the firm utilizes a constant amount of capacity regardless of demand variations is: a. Level demand strategy b. Differentiation demand strategy c. Chase demand strategy d. Baumol's demand strategy A PTS: 1 REF: p. 417 13. Which of the following would NOT be considered an acceptable option in managing capacity when demand exceeds available service capacity? a. Utilizing fewer facilitating products b. Utilizing technological tools like computers and automated systems c. Cross-training and sharing employees d. Using customers to provide services A PTS: 1 REF: p. 418 14. According to the text, the primary elements of all queuing systems include all of the following EXCEPT: a. Input process b. Queue characteristics c. Output process d. Service characteristics C PTS: 1 REF: p. 423 15. Assuming the number of arrivals per time period is Poisson distributed with a mean arrival rate of 6 customers per hour, determine the mean interarrival time. a. 10 minutes b. 6 minutes c. 60 minutes d. 14 minutes A PTS: 1 REF: p. 424 16. If the average service rate is 15 minutes per customer, and assuming the negative exponential distribution is used to describe the randomness of the service time distribution, then determine the probability that the service time will be less than or equal to 10 minutes. a. zero b. 0.49 c. 0.28 d. 0.62 B PTS: 1 REF: p. 424 17. When studying queuing models, a customer who enters the waiting line but leaves the system prior to receiving service is said to have: a. Balked b. Reneged c. Stalled d. Disposed B PTS: 1 REF: p. 425 18. Service provided by multiple servers acting in parallel is referred to as: a. Multi-platform servicescape b. Multiple-phase queuing system c. Multiple-channel queuing system d. Multi-delivery servicescape C PTS: 1 REF: p. 426 19. The average transaction at a single channel, single phase automatic teller can be completed in 7.5 minutes and customers arrive at the average rate of one every ten minutes. On average, what is the server utilization? (Choose the closest answer.) a. 0.167 b. 0.75 c. 0.125 d. 1.33 B PTS: 1 REF: p. 427-428 20. The average transaction at an automatic teller can be completed in 7.5 minutes and customers arrive at the average rate of one every ten minutes. On average, how many customers are there in line? (Choose the closest answer.) a. 4.000 Customers b. 0.300 Customers c. 3.000 Customers d. 0.375 Customers C PTS: 1 REF: p. 428 21. If  = 6 CUSTOMERS/HOUR and  = 11 CUSTOMERS/HOUR, in a single server model, find the probability that there will be exactly 1 person in LINE. a. 0.162 b. 0.297 c. 0.248 d. 0.135 D PTS: 1 REF: p. 428 22. First-come-first-served is an example of a(n): a. queue discipline b. unfair waiting policy c. channel queuing arrangement d. single-phase queue design A PTS: 1 REF: p. 425 23. David Maister's First Rule of Service is: a. It always takes longer than you think to perform the service b. You can't please all the customers all the time c. Satisfaction = perception  expectation d. Under-promise and over-deliver C PTS: 1 REF: p. 430 24. All of the following are included in the five dimensions of service quality EXCEPT: a. Reliability b. Responsiveness c. Reasonability d. Assurance C PTS: 1 REF: p. 437 25. The dimension of service quality concerned with using knowledgeable, competent, courteous employees who convey trust and confidence to customers is referred to as: a. Reliability b. Responsiveness c. Reasonability d. Assurance D PTS: 1 REF: p. 437