Chapter 10 - Supply-Chain Strategy

Chapter 10 Supply-Chain Strategy

True / False Questions 1. The idea of supply-chain management is to apply a total system approach to managing the entire flow of information, materials and services from raw-materials suppliers through factories and warehouses to the end customer. TRUE

Level: Easy

2. Two common measures to evaluate supply-chain efficiency are the consumer price index and the eta flow system. FALSE

Level: Easy

!. Two common measures to evaluate supply-chain efficiency are the inventory turnover and wee"s-of-supply ratios. TRUE

Level: Easy

#. $nventory turn values that are considered %good% differ y industry and the type of products eing handled. TRUE

Level: Easy

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Chapter 10 - Supply-Chain Strategy

&. 'etailers who stoc" up during promotion periods where the prices of goods are reduced are doing ac"ward uying. FALSE

Level: Easy

(. The phenomenon that magnifies the varia ility in order )uantities for goods as orders move through the supply-chain from the customer to the producer is called the ullwhip effect. TRUE

Level: Easy

*. +unctional products include staples that people uy in a wide range of retail outlets, such as grocery stores and gas stations. TRUE

Level: Easy

,. The optimal strategy for functional products is to utili-e an efficient supply-chain. FALSE

Level: Medium

.. The optimal strategy for functional products is to utili-e a responsive supply-chain. FALSE

Level: Medium

10. The optimal strategy for innovative products is to utili-e an efficient supply-chain. FALSE

Level: Medium

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Chapter 10 - Supply-Chain Strategy

11. The est strategy for innovative products is to use either a responsive or an agile supplychain. TRUE

Level: Medium

12. /utsourcing is the act of moving some of a firm0s internal activities and decision responsi ility to outside providers. TRUE

Level: Easy

1!. /utsourcing allows a firm to achieve an improved focus on its core competencies. TRUE

Level: Easy

1#. 1ogistics is a term indicating transportation choices for goods produced internationally ut consumed domestically. FALSE

Level: Easy

1&. 1ogistics is a term that refers to the management functions that support the complete cycle of material flow, from the purchase and internal control of production materials2 to the planning and control of wor"-in-process2 to the purchasing, shipping and distri ution of the finished product. TRUE

Level: Easy

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Chapter 10 - Supply-Chain Strategy

1(. 3 financially-driven reason for outsourcing is that it can generate cash y transferring assets to the provider. TRUE

Level: Easy

1*. 3n employee-driven reason for outsourcing is that it can give employees a stronger career path. TRUE

Level: Easy

1,. 3 revenue-driven reason for outsourcing is that it can transform the organi-ation. FALSE

Level: Medium

1.. 3n improvement-driven reason for outsourcing is that it can increase product and service value, customer satisfaction and shareholder value. FALSE

Level: Easy

20. The value of an item per pound of weight is called value density. TRUE

Level: Easy

21. 4alue density is an important measure for determining the )uality of logistical services. FALSE

Level: Easy

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Chapter 10 - Supply-Chain Strategy

22. 4alue density is an important measure when deciding where items should e stoc"ed geographically and how they should e shipped. TRUE

Level: Easy

2!. 3 sta le supply process is one where product volumes are high, demand is predicta le and there is a long product life. FALSE

Level: Medium

2#. 3 sta le supply process is where the manufacturing process and the underlying technology are mature and the supply ase is well esta lished. TRUE

Level: Easy

2&. +irms producing functional products are forced to introduce a steady stream of innovations in order to survive. FALSE

Level: Easy

2(. Studies show that there is no clear correlation etween supply chain performance and change in stoc" mar"et capitali-ation. FALSE

Level: Easy

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Chapter 10 - Supply-Chain Strategy

2*. The value chain and the supply chain are different terms for the same thing. FALSE

Level: Easy

2,. $n service supply chains flows tend to e linear with services flowing from vendors to customers. FALSE

Level: Medium

2.. Supply chain thin"ing can not e applied to many services as services can not e inventoried. FALSE

Level: Easy

!0. 3n important issue in applying supply chain thin"ing to services is that customers tend also to e suppliers of some of the inputs to the service product. TRUE

Level: Medium

!1. Service supply chains focus on the interaction etween the customer and the provider, while manufacturing supply chains focus on the creation and delivery of a physical good. TRUE

Level: Easy

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Chapter 10 - Supply-Chain Strategy

!2. $t is not unusual for a service supply chain to e unidirectional which contrasts with the more typical idirectional manufacturing supply chain. FALSE

Level: Medium

Multiple Choice Questions !!. The inventory turnover ratio used in measuring supply-chain efficiency is found y the ratio of which of the following5 A Cost of goods sold63verage aggregate inventory value 7. +ixed costs64aria le costs C. Sales costs68ar"eting costs 9. Cost of goods sold6Cost to sell goods :. /perations flow costs6Suppliers flow costs

Level: Easy

!#. The total value of all items held in inventory for the firm at cost is which of the following5 3. Cost of goods to e sold ! 3verage aggregate inventory value C. ;ee"s supply of goods 9. $nventory turnover :. <one of the a ove

Level: Easy

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Chapter 10 - Supply-Chain Strategy

!&. $f the average aggregate inventory value is =#&,000 and the cost of goods sold is =10,000, which of the following is wee"s of supply5 3. #&,000 ! 2!# C. 120 9. 2!.# :. #.&

Level: Easy

!(. $f the average aggregate inventory value is =1,200,000 and the cost of goods sold is =(00,000, which of the following is wee"s of supply5 3. 1,0#0 7. (0( C 10# 9. (0.( :. 2.0

Level: Easy

!*. $f the average aggregate inventory value is =1,200,000 and the cost of goods sold is =(00,000, which of the following is inventory turnover5 3. (0 7. 10.# C. 2 " 0.& :. <one of the a ove

Level: Easy

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Chapter 10 - Supply-Chain Strategy

!,. $f the average aggregate inventory value is =100,000 and the cost of goods sold is =#&0,000, which of the following is inventory turnover5 3. 1..2! ! #.& C. 0.,(&# 9. 0.2222 :. <one of the a ove

Level: Easy

!.. $n >au 1ee0s uncertainty framewor" to classify supply chains, a supply chain that has functional products and an evolving supply process is called which of the following5 3. :fficient 7. +orward loo"ing C. 3gile " 'is" hedging :. 'esponsive

Level: Medium

#0. $n >au 1ee0s uncertainty framewor" to classify supply chains, a supply chain that has functional products and a sta le supply process is called which of the following5 A :fficient 7. +orward loo"ing C. 3gile 9. 'is" hedging :. 'esponsive

Level: Medium

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Chapter 10 - Supply-Chain Strategy

#1. $n >au 1ee0s uncertainty framewor" to classify supply chains, a supply chain that has innovative products and an evolving supply process is called which of the following5 3. :fficient 7. +orward loo"ing C 3gile 9. 'is" hedging :. 'esponsive

Level: Medium

#2. $n >au 1ee0s uncertainty framewor" to classify supply chains, a supply chain that has innovative products and a sta le supply process is called which of the following5 3. :fficient 7. +orward loo"ing C. 3gile 9. 'is" hedging E 'esponsive

Level: Medium

#!. The effect of the lac" of synchroni-ation among supply-chain mem ers is referred to as which of the following5 3. +orward uying 7. Continuous replenishment C 7ullwhip effect 9. 8etcalf0s 1aw :. 7eing out of step

Level: Easy

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Chapter 10 - Supply-Chain Strategy

##. $n /utsourcing which of the following internal activities and decision responsi ilities can not e transferred to outside contractors5 3. 3ctivities involving people 7. 3ctivities involving facilities C. 3ctivities involving e)uipment " 3ctivities involving shareholders :. 3ctivities involving technology

Level: Easy

#&. ;hich of the following is an organi-ationally-driven reason for outsourcing5 A :nhance effectiveness y focusing on what you do est 7. Turn fixed costs into varia le costs C. ?enerate cash y transferring assets to the provider 9. ?ive employees a stronger career path :. <one of the a ove

Level: Medium

#(. ;hich of the following is an organi-ationally-driven reason for outsourcing5 3. $mprove operating performance 7. ?ive employees a stronger career path C. ?enerate cash y transferring assets to the provider 9. Turn fixed costs into varia le costs E Transform the organi-ation

Level: Medium

#*. ;hich of the following is an improvement-driven reason for outsourcing5 A $mprove operating performance 7. ?ive employees a stronger career path C. ?enerate cash y transferring assets to the provider 9. Turn fixed costs into varia le costs :. Commercially exploit existing s"ills

Level: Medium

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Chapter 10 - Supply-Chain Strategy

#,. ;hich of the following is not an improvement-driven reason for outsourcing5 3. $mprove management and control ! :nhance effectiveness y focusing on what you do est C. $mprove ris" management 9. / tain expertise, s"ills and technologies not otherwise availa le :. 3c)uire innovative ideas

Level: Medium

#.. ;hen considering outsourcing, what should firms e sure to avoid5 3. 1osing control of non-core activities which don0t distinguish the firm 7. 3llowing outsourcing to develop into a su stitute for innovation C ?iving the outsourcing partner the opportunity to ecome a strong competitor 9. 3llowing employees transferred to the outsourcing partner to re@oin the firm :. 3dverse corporate tax implications of asset transfers to the outsourcing partner

Level: Medium

&0. ;hich is the most challenging "ind of supply chain to manage according to >au 1ee5 A 3gile supply chain 7. :fficient supply chain C. 'is"-hedging supply chain 9. :rratic supply chain :. 'esponsive supply chain

Level: Medium

&1. >ighly speciali-ed, low cost per mile, product re)uiring no pac"aging and very high initial investment costs are characteristics of which transportation mode5 3. >ighway 7. 'ail C. ;ater " Aipeline :. 3ir

Level: Easy

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Chapter 10 - Supply-Chain Strategy

&2. ;hich of the following terms est descri es the a ility of a company to deliver highly customi-ed products and services to different customers around the world5 3. Customi-ation 7. >igh customi-ation C 8ass customi-ation 9. ?lo al sourcing :. /utsourcing

Level: Easy

&!. ;hich of the following functional areas in an organi-ation do not directly support an effective mass customi-ation program5 A >uman resources 7. 8ar"eting C. +inance 9. 8anufacturing :. 9istri ution

Level: Easy

&#. ;hich of the following of +isher0s product categories includes fashiona le clothing, personal computers and other products that typically have a very rief life cycle5 3. +unctional products 7. 9ysfunctional products C $nnovative products 9. 7ullwhip products :. 1ow value-density products

Level: Easy

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Chapter 10 - Supply-Chain Strategy

&&. /ne of the reasons that decision ma"ing related to glo al sourcing is so very complex is which of the following5 3. 8ultiple languages 7. Cultural differences C. <ew currencies, li"e the :uro " 9istance etween materials, la or and mar"ets :. Aowerful new mar"ets

Level: Medium

&(. ;hich of the following is not an improvement-driven reason to outsource5 3. $mprove ris" management ! $ncrease commitment in a noncore area C. 3c)uire innovative ideas 9. $mprove control :. / tain expertise, s"ills and technologies

Level: Medium

&*. ;hich of the following is one of the strategic characteristics to consider when deciding how supplier relationships should e structured on the continuum etween vertical integration Bdo not outsourceC to arm0s length relationships BoutsourceC5 3. Cost 7. 1ocation C. $nvestment " Coordination :. $nvestment

Level: Medium

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Chapter 10 - Supply-Chain Strategy

Short Ans#er Questions &,. <ame the transportation modes discussed in the text oo". 1. >ighway 2. 'ail !. ;ater #. 3ir &. Aipeline

Level: Medium

&.. ;hat is the effect of the lac" of synchroni-ation among supply-chain mem ers called5 The ullwhip effect

Level: Easy

(0. <ame the four types of supply chain in >au 1ee0s uncertainty framewor" for classifying supply chains. 1. :fficient 2. 'esponsive !. 'is"-hedging #. 3gile

Level: Medium

(1. $n >au 1ee0s uncertainty framewor" to classify supply chains, a supply chain that com ines the strengths of a %ris"-hedging% and a %responsive% supply chain is called what5 3gile

Level: Medium

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Chapter 10 - Supply-Chain Strategy

(2. $f the average aggregate inventory value is =#,000 and the cost of goods sold is =10#,000, what is the wee"s of supply5 2

Level: Easy

(!. $f the wee"s of supply is 10 and the average aggregate inventory value is =1,000,000, what is the cost of goods sold5 =&,200,000

Level: Medium

(#. $f inventory turnover is 20 and cost of goods sold is =100,000, what is the average aggregate inventory value5 =&,000

Level: Medium

(&. ;hat are the main distinctions etween service supply chains and manufacturing supply chains5 The role of the customer and the direction of flow of the delivery processes.

Level: Medium

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Chapter 10 - Supply-Chain Strategy

Essay Questions ((. ;hat is %design for logistics%5 9esign for logistics is discussed on page !*0 of the text. The concept is that the interface etween procurement, manufacturing engineering and mar"eting can e exploited during the design phase so that the )uantity of materials ordered and delivered corresponds to the way they are assem led, thus minimi-ing inventory and eliminating excess handling.

Level: Medium

(*. ;hat is the principle of %postponement% and why is it considered the "ey to mass customi-ation5 8ass customi-ation is discussed in the text on pages !*(. 3 successful response to this )uestion should articulate that mass customi-ation is a process of providing a differentiated family of products to a wide variety of mar"ets and6or geographies )uic"ly and efficiently with a minimum of inventory. Aostponement means adding differentiating factors to the product at the latest possi le point in the supply chain. ;ith many different customers for what is essentially the same product economies of scale may e achieved in the early stages of the supply chain and differentiating features added later in the process. 3 great example of this is the cell phone mar"et in 200,. 3 manufacturer may produce the same cell phone for a do-en different firms around the world ut differentiate y adding different software features, logos, pac"aging, etc. specifically for each customer. >ence, Sprint, 4eri-on and other firms can have the %identical% Samsung phone each tailored to their specifications. /ther mass customi-ation principles of modularity of product and processes are also critical to mass customi-ation and an excellent response will riefly discuss those principles as well.

Level: Medium

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