Supply Chain Management ExerciseTrue or False1. A supply chain includes only the organizations directly involved in supplying components needed for manufacturing.Answer: FalseDifficulty: Moderate2. A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request.Answer: TrueDifficulty: Moderate3. A supply chain could be more accurately described as a supply network or supply web. Answer: TrueDifficulty: Moderate4.The objective of every supply chain is to maximize the overall value generated.Answer: TrueDifficulty: Easy5.The objective of every supply chain is to maximize the value generated for the manufacturing component of the supply chain.Answer: FalseDifficulty: Moderate6.All supply chain activities within a firm belong to one of three macro processes – CRM, ISCM and SRM.Answer: TrueDifficulty: Easy7.There is a close connection between the design and management of supply chain flows and the success of a supply chain.Answer: TrueDifficulty: Easy8. A company’s competitive strategy defines the set of customer needs that it seeks to satisfy through its products and services.Answer: TrueDifficulty: Easy9.The value chain emphasizes the close relationship between all the functional strategies withina company.Answer: TrueDifficulty: Moderate10. A company’s product development strategy defines the set of customer needs that it seeks to satisfy through its products and services.Answer: FalseDifficulty: Moderate11. A company’s product development strategy specifies t he portfolio of new products that it will try to develop.Answer: TrueDifficulty: Easy12. A company’s supply chain strategy specifies how the market will be segmented and how the product will be positioned, priced, and promoted.Answer: FalseDifficulty: Easy13. A company’s supply chain strategy determines the nature of procurement and transportation of materials as well as the manufacture and distribution of the product.Answer: TrueDifficulty: Easy14.The degree of supply chain responsiveness should be consistent with the implied uncertainty. Answer: TrueDifficulty: Easy15.The degree of supply chain responsiveness does not need to be consistent with the implied uncertainty.Answer: FalseDifficulty: Moderate16.The two major types of facilities are distribution sites and storage sites.Answer: FalseDifficulty: Moderate17.Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain’s efficiency and responsiveness.Answer: TrueDifficulty: Moderatermation is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.Answer: TrueDifficulty: Easy19.The high utilization facility will have no more difficulty responding to demand fluctuations than one with a lot of unused capacity.Answer: FalseDifficulty: Easy20.Stock keeping unit (SKU) storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.Answer: TrueDifficulty: Moderate21.Warehouse unit storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.Answer: FalseDifficulty: Moderate22.Distribution occurs between every pair of stages in the supply chain.Answer: TrueDifficulty: Moderate23.Distribution only occurs between manufacturing and consumers in the supply chain. Answer: FalseDifficulty: Moderatepanies in the same industry often select very different distribution networks, because the choice of the distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness.Answer: TrueDifficulty: Moderate25.The main advantage of a distribution network with local storage is that it can lower the delivery cost and provide a faster response than other networks.Answer: TrueDifficulty: Moderate26.When designing supply chain networks, companies must build appropriate flexibility to help counter fluctuations in exchange rates and demand across different countries.Answer: TrueDifficulty: Moderate27.Inventory and facility costs increase as the number of facilities in a supply chain increase. Answer: TrueDifficulty: Moderate28.Transportation costs increase as the number of facilities is increased.Answer: FalseDifficulty: Moderate29.When faced with a network design decision, the goal of a manager is to design a network that minimizes the firm’s costs while satisfying customer needs in terms of demand and responsiveness.Answer: FalseDifficulty: Hard30.The supply chain network is designed to maximize total profits, taking into account the expected margin and demand in each market, various logistics and facility costs, and the taxes and tariffs at each location.Answer: TrueDifficulty: Easy31.Decisions made during the supply chain design phase regarding significant investments in the supply chain, such as the number and size of plants to build, the number of trucks to purchase or lease, and whether to build or lease warehouse space, cannot be altered in the short term. Answer: TrueDifficulty: Moderate32.Decisions made during the supply chain design phase regarding significant investments in the supply chain, such as the number and size of plants to build, the number of trucks to purchase or lease, and whether to build or lease warehouse space, rarely remain in place for several years. Answer: FalseDifficulty: Moderate33.Decisions made during the supply chain design phase regarding significant investments in the supply chain, such as the number and size of plants to build, the number of trucks to purchase or lease, and whether to build or lease warehouse space, define the boundaries within which the supply chain must compete.Answer: TrueDifficulty: Moderate34.Long-term contracts for both warehousing and transportation requirements will be more effective if the demand and price of warehousing do not change in the future or if the price of warehousing goes up.Answer: TrueDifficulty: Easy35.Long-term contracts for both warehousing and transportation requirements will be more effective if either demand or the price of warehousing drops in the future.Answer: FalseDifficulty: Moderate36.The present value of future cash flows is found by using a discount factor.Answer: TrueDifficulty: Moderate37.The rate of return k is also referred to as the present value of capital.Answer: FalseDifficulty: Easy38. A negative NPV for an option indicates that the option will lose money for the supply chain. Answer: TrueDifficulty: Moderate39.The decision with the lowest NPV will provide a supply chain with the highest financial return.Answer: FalseDifficulty: Moderate40.In reality, demand and prices are highly uncertain and are likely to fluctuate during the life of any supply chain decision.Answer: TrueDifficulty: Moderate41.The goal of aggregate planning is to satisfy demand in a way that minimizes profit. Answer: FalseDifficulty: Easy42.Aggregate planning is a process by which a company determines levels of capacity, production, subcontracting, inventory, stockouts, and even pricing over a specified time horizon. Answer: TrueDifficulty: Moderate43.Aggregate planning solves problems involving aggregate decisions rather than stock keeping unit (SKU) level decisions.Answer: TrueDifficulty: Easy44.Forecasting errors are dealt with in aggregate plans using either safety backlog or safety capacity.Answer: FalseDifficulty: Moderate45.Safety inventory is defined as inventory held to satisfy demand that is higher than forecasted. Answer: TrueDifficulty: Easy46.Safety capacity is defined as capacity used to satisfy demand that is lower than forecasted. Answer: FalseDifficulty: Easypanies should work with downstream partners to produce forecasts and with upstream partners to determine constraints when doing aggregate planning.Answer: TrueDifficulty: Easy48.The aggregate plan should be viewed primarily as an in-house tool that does not need to be communicated to supply chain partners.Answer: FalseDifficulty: Easy49.Given that forecasts are always wrong to some degree, the aggregate plan needs to have some flexibility built into it if it is to be useful.Answer: TrueDifficulty: Moderate50.With supply and demand management decisions being made independently, it is easier to coordinate the supply chain, thereby increasing profit.Answer: FalseDifficulty: Moderate51. A firm can vary supply of product by controlling production capacity and inventory. Answer: TrueDifficulty: Easy52. A firm that uses flexible work hours from the workforce to manage capacity to better meet demand is using a seasonal workforce.Answer: FalseDifficulty: Moderate53.Offering a promotion during a peak period that has significant forward buying creates even more variable demand than before the promotion.Answer: TrueDifficulty: Easy54.Average inventory decreases if a promotion is run during the peak period and increases if the promotion is run during the off-peak period.Difficulty: Easy55.Promoting during a peak demand month may decrease overall profitability if a significant fraction of the demand increase results from a forward buy.Answer: TrueDifficulty: Hard56.As forward buying becomes a smaller fraction of the demand increase from a promotion, it is less profitable to promote during the peak period.Answer: FalseDifficulty: Hard57.As the product margin declines, promoting during the peak demand period becomes less profitable.Answer: TrueDifficulty: Easy58.Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to exploit economies of scale and increase cost.Answer: FalseDifficulty: Moderate59. A lot or batch size is the quantity that a stage of the supply chain either produces or purchases at a given time.Answer: TrueDifficulty: Moderate60.Cycle inventory is the physical inventory in the supply chain due to either production or purchases demanded by the customer.Answer: TrueDifficulty: Moderate61.The inventory profile is a plot depicting the level of inventory over time.Answer: TrueDifficulty: Easy62. A discount is volume-based if the pricing schedule offers discounts based on the quantity ordered in a single lot.Answer: FalseDifficulty: Hard63. A discount is volume-based if the discount is based on the total quantity purchased over a given period, regardless of the number of lots purchased over that period.Difficulty: Easy64.Pricing schedules with all unit quantity discounts encourage retailers to increase the size of their lots, which reduces the average inventory and flow time in a supply chain.Answer: FalseDifficulty: Moderate65.Safety inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period.Answer: TrueDifficulty: Moderate66.Safety inventory is carried because demand forecasts are accurate and a product shortage may result if the forecast demand exceeds the actual demand.Answer: FalseDifficulty: Moderate67.Raising the level of safety inventory increases product availability and thus the margin captured from customer purchases.Answer: TrueDifficulty: Moderate68.Raising the level of safety inventory increases inventory holding costs.Answer: TrueDifficulty: Easy69.Carrying excessive inventory can help counter demand volatility when new products come on the market.Answer: FalseDifficulty: Moderate70.The appropriate level of safety inventory is determined by the uncertainty of both demand and supply and the desired level of cycle inventory.Answer: FalseDifficulty: Moderate71.As the uncertainty of supply or demand grows, the required level of safety inventories increases.Answer: TrueDifficulty: Moderate72.As the desired level of product availability increases, the required level of safety inventory decreases.Difficulty: Easy73. Lead time is the gap between when an order is placed and when it is received.Answer: TrueDifficulty: Easy74.Periodic review policies require more safety inventory than continuous review policies for the same level of product availability.Answer: TrueDifficulty: Easy75.When using a continuous review policy, a manager has to account for the uncertainty of demand during the lead time and the review interval.Answer: FalseDifficulty: EasyMultiply Choice1.Which of the following is not a stage within a typical supply chain?a.Customersb.Retailersc.Wholesalers/Distributorsd.Manufacturerse.All of the above are stages within a typical supply chain.Answer: eDifficulty: Easy2.Supply chain profitability isa.not correlated to the value generated by the various stages of the supply chain.b.the total profit to be shared across all supply chain stages.c.the difference between the revenue generated from the customer and the overall cost across the supply chain.d.the total revenue generated by the distributor stage of the supply chain.e. b and c onlyAnswer: eDifficulty: Difficult3.Successful supply chain management requires which of the following decision phases?a.supply chain strategy/designb.supply chain planningc.supply chain operationd.all of the abovee. a and b onlyAnswer: dDifficulty: Moderate4.The objective of customer order entry is toa.get the correct orders to customers by the promised due date at the lowest possible cost.b.maintain a record of product receipt and complete payment.c.maximize the conversion of customer arrivals to customer orders.d.ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes.e.none of the aboveAnswer: dDifficulty: Easy5.The push/pull view of the supply chain is useful when considering strategic decisions relating to supply chain design, becausea.it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders.b.it specifies the roles and responsibilities of each member of the supply chain.c.it clearly defines the processes involved and the owners of each process.d.it focuses on processes that are external to the firm.e.it focuses on processes that are internal to the firm.Answer: aDifficulty: Hard6.Which of the following statements about pull processes is accurate?a.May also be referred to as speculative processes.b.Execution is initiated in anticipation of customer orders.c.At the time of execution, demand must be forecast.d.May also be referred to as reactive processes.e.None of the above are accurate.Answer: dDifficulty: Easy7.Which of the following statements about push processes is accurate?a.May also be referred to as speculative processes.b.Execution is initiated in response to customer orders.c.At the time of execution, demand is known with certainty.d.May also be referred to as reactive processes.e.None of the above are accurate.Answer: aDifficulty: Easy8.Supply chain macro processes include which of the following?a.Customer Relationship Management (CRM)b.Internal Supply Chain Management (ISCM)c.Supplier Relationship Management (SRM)d.all of the abovee.none of the aboveAnswer: dDifficulty: Easy9. A company’s competitive str ategya.defines the set of customer needs that it seeks to satisfy through its products and services.b.specifies the portfolio of new products that it will try to develop.c.specifies how the market will be segmented and how the product will be positioned, priced, and promoted.d.determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product.e.determines how it will obtain and maintain the appropriate set of skills and abilities to meet customer needs.10. A company’s supply chain strategya.defines the set of customer needs that it seeks to satisfy through its products and services.b.specifies the portfolio of new products that it will try to develop.c.specifies how the market will be segmented and how the product will be positioned, priced, and promoted.d.determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product.e.determines how it will obtain and maintain the appropriate set of skills and abilities to meet customer needs.Answer: dDifficulty: Easy11. A supply chain strategy includesa.supplier strategy.b.operations strategy.c.logistics strategy.d.all of the abovee.none of the aboveAnswer: dDifficulty: Moderate12.Customer demand from different segments varies along which of the following attributes?a.The quantity of product needed in each lot.b.The response time that customers are willing to tolerate.c.The variety of products needed.d.The service level required.e.all of the aboveAnswer: eDifficulty: Easy13.Which of the following is not an attribute along which customer demand varies?a.The uniqueness of the product.b.The quantity of product needed in each lot.c.The variety of products needed.d.The desired rate of innovation in the product.e.All of the above are attributes.Answer: aDifficulty: Moderate14.The uncertainty of customer demand for a product is thea.rate of strategic uncertainty.b.demand uncertainty.c.implied demand uncertainty.d.average forecast error.e.none of the aboveAnswer: bDifficulty: Moderate15.The uncertainty that exists due to the portion of demand that the supply chain is required to meet is thea.rate of strategic uncertainty.b.demand uncertainty.c.implied demand uncertainty.d.average forecast error.e.none of the aboveAnswer: cDifficulty: Moderate16.Which of the following supply chain capabilities will cause supply uncertainty to increase?a.Frequent breakdownsb.Unpredictable and low yieldsc.Poor qualityd.Limited supply capacitye.all of the aboveAnswer: eDifficulty: Easy17.Which of the following is not a major driver of supply chain performance?a.Facilitiesb.Inventoryc.Transportationrmatione.All of the above are major drivers of supply chain performance.Answer: eDifficulty: Easy18.Which of the following is not a major driver of supply chain performance?a.Customersb.Facilitiesc.Inventoryd.TransportationrmationAnswer: aDifficulty: Moderate19.The places in the supply chain network where product is stored, assembled, or fabricated are known asa.facilities.b.inventory.c.transportation.rmation.e.customers.Answer: aDifficulty: Easy20.The warehousing methodology that uses a traditional warehouse to store all of one type of product together isa.warehouse unit storage.b.stock keeping unit (SKU) storage.c.job lot storage.d.cross-docking.e.none of the aboveAnswer: bDifficulty: Moderate21.Seasonal inventory should be used whena. a company can rapidly change the rate of its production system at a very low cost.b.changing the rate of production is expensive (e.g., when workers must be hired or fired).c.adjusting to a period of low demand without incurring large costs.d.the world is perfectly predictable.e.production rate is flexible.Answer: aDifficulty: Hard22.The process by which a firm decides how much to charge customers for its goods and services isa.supply chain coordination.b.forecasting.c.aggregate planning.d.revenue management.e.pricing.Answer: eDifficulty: Easy23.Which of the following are measures of customer service that are influenced by the structure of the distribution network?a.Returnabilityb.Order visibilityc.Customer experienced.Product availabilitye.all of the aboveAnswer: eDifficulty: Moderate24.Which of the following is not a measure of customer service that is influenced by the structure of the distribution network?a.Returnabilityb.Customer experiencec.Customer maturityd.Product availabilitye.All of the above are measures of customer service.Answer: cDifficulty: Easy25.The time between when a customer places an order and receives delivery isa.response time.b.product variety.c.product availability.d.customer experience.e.order visibility.Answer: aDifficulty: Easy26.The number of different products/configurations that a customer desires from the distribution network isa.response time.b.product variety.c.product availability.d.customer experience.e.order visibility.Answer: bDifficulty: Easy27.As the number of facilities in a supply chain increases, total facility costsa.decrease.b.remain the same.c.increase.d.increase to a point and then decrease.e.decrease to a point and then increase.Answer: cDifficulty: Moderate28.Total logistics costs for a supply chain network are a sum ofa.inventory and facility costs.b.inventory, facility, and distributor costs.c.facility, transportation, and distributor costs.d.inventory, transportation, and facility costs.e.none of the aboveAnswer: dDifficulty: Moderate29.As the number of facilities in a supply chain network increases, total logistics costs willa.decrease.b.decrease at first and then increase.c.increase.d.increase at first and then decrease.e.neither increase or decrease.Answer: bDifficulty: Moderate30.Which of the following are key decisions in the design of a distribution network?a.Will product be delivered to the customer location or picked up from a pre-ordained site?b.Will product flow through a production facility?c.Will product flow through an intermediary (or intermediate location)?d.all of the abovee. a and c onlyAnswer: eDifficulty: Moderate31.Supply chain network design decisions includea.only the location of manufacturing, storage, or transportation-related facilities.b.only the allocation of capacity and roles to each facility.c.both the location of manufacturing, storage, or transportation-related facilities and the allocation of capacity and roles to each facility.d.neither the location of manufacturing, storage, or transportation-related facilities nor the allocation of capacity and roles to each facility.e.none of the aboveAnswer: cDifficulty: Easy32.Supply chain network design decisions classified as facility role are concerned witha.what processes are performed at each facility.b.where facilities should be located.c.how much capacity should be allocated to each facility.d.what markets each facility should serve and which supply sources should feed each facility.e.none of the aboveAnswer: aDifficulty: Moderate33.Supply chain network design decisions classified as facility location are concerned witha.what processes are performed at each facility.b.where facilities should be located.c.how much capacity should be allocated to each facility.d.what markets each facility should serve and which supply sources should feed each facility.e.none of the aboveAnswer: bDifficulty: Easy34.Developing countries often create free trade zones wherea.duties and tariffs are imposed as long as production is used primarily for export.b.duties and tariffs are imposed as long as production is used primarily for import.c.duties and tariffs are relaxed as long as production is used primarily for export.d.duties and tariffs are relaxed as long as production is used primarily for import.e.duties and tariffs are increased as long as production is used primarily for export. Answer: cDifficulty: Easy35.Building some over-capacity in the supply chain network and making the capacity flexible allows a firm to alter production flows within the supply chain toa.produce less in facilities that have a lower cost based on current exchange rates.b.produce more in facilities that have a lower cost based on current exchange rates.c.produce more in facilities that have a higher cost based on current exchange rates.d.produce less in facilities that have the same cost based on current exchange rates.e.None of the above are accurate.Answer: bDifficulty: Moderate36.Positive externalities are instances wherea.the collocation of multiple firms benefits all of them.b.the dispersion of multiple firms benefits all of them.c.the cooperation of multiple firms benefits all of them.d.the coordination of multiple firms benefits all of them.e.the disagreement of multiple firms benefits all of them.Answer: aDifficulty: Moderate37.The basis for all strategic and planning decisions in a supply chain comes froma.the forecast of demand.b.sales targets.c.profitability projections.d.production efficiency goals.e.all of the aboveAnswer: aDifficulty: Easy38.For push processes, a manager must forecast what customer demand will be in order toa.plan the service level.b.plan the level of available capacity and inventory.c.plan the level of productivity.d.plan the level of production.e.none of the aboveAnswer: dDifficulty: Moderate39.For pull processes, a manager must forecast what customer demand will be in order toa.plan the service level.b.plan the level of available capacity and inventory.c.plan the level of productivity.d.plan the level of production.e.none of the aboveAnswer: bDifficulty: Moderate40.In general, the further up the supply chain a company is (or the further they are from the consumer),a.the greater the distortion of information they receive.b.the smaller the distortion of information they receive.c.the information they receive is more accurate.d.the information they receive is more useful.e.none of the aboveAnswer: aDifficulty: Moderate41.Which of the following is not a forecasting method?a.qualitativeb.time seriesc.causald.simulatione.All of the above are forecasting methods.Answer: eDifficulty: Moderate42.Predictable variability isa.change in demand that can be forecasted.b.change in demand that cannot be forecasted.c.change in demand that has been planned.d.change in demand that has been scheduled.e.all of the aboveAnswer: aDifficulty: Easy43.Which of the following is not a problem caused by products experiencing predictable variability of demand?a.high levels of stockouts during peak demandb.high levels of excess inventory during periods of low demandc.increased responsiveness of the supply chaind.increased costs in the supply chaine.decreased responsiveness of the supply chainAnswer: cDifficulty: Easy44. A firm can handle predictable variability by managinga.supply using capacity, inventory, trade promotions, and backlogs.b.supply using capacity, inventory, subcontracting, and backlogs.c.demand using short-term price discounts and trade promotions.d. a and c onlye. b and c onlyAnswer: eDifficulty: Easy45.Seasonal demand can be met bya.maintaining enough manufacturing capacity to meet demand in any period.b.building up inventory during the off season to meet demand during peak seasons.c.offering a price promotion during periods of low demand to shift some of the demand into a slow period.d.all of the abovee. a and b onlyAnswer: dDifficulty: Moderate46.The advantage of maintaining enough manufacturing capacity to meet demand in any period isa.very low inventory costs because inventory needs to be carried from period to period.b.very low inventory costs because no inventory needs to be carried from period to period.c.very high inventory costs because no inventory needs to be carried from period to period.d.very high inventory costs because expensive capacity would go unused during most months when demand was lower.e.none of the aboveAnswer: bDifficulty: Moderate。