Supply Chain Management A Logistics Perspective 9th Edition Test Bank
CHAPTER 1 TEST QUESTIONS
- The first decade of the twenty-first century was a period of rapid change for organizations, especially businesses.
ANSWER: True, Page 5
- A key element in Wal-Mart’s ability to discount brand name products was an understanding of the criticality of efficiency in its logistics and supply chain system.
ANSWER: True, Page 6
- Globalization has had little effect on consumers.
ANSWER: False, Page 7
- Supply and demand has become less volatile as managers become more adept at controlling the elements.
ANSWER: False, Page 8
- Outsourcing is a fairly new concept.
ANSWER: False, Page 9
- SAB should examine their off-shore purchasing policy, even though the products are sourced from the U.S.
ANSWER: True, Page 9
- It is expected that some or all of the BRIC countries (Brazil, Russia, India & china) will replace the so-called VISTA countries (Vietnam, Indonesia, S. Africa, Turkey and Argentina) as low cost producers of various products and services.
ANSWER: False, Page 9
- The world economy still favors the United States and European countries, even though China and India can participate in the global economy much more readily.
ANSWER: False, Page 10
- It is predicted that social networks such as Facebook and Twitter will influence supply chains because of their impact on customer demand and the speed of information transfers.
ANSWER: True, Page 10
- The U.S. transportation system was deregulated in the 1930s and 1940s in response to economic conditions and World War 2
ANSWER: False, Page 12
- Even though there are references to supply chain management in the 1980s, SCM did not capture the attention of senior-level management until the 1990s.
ANSWER: True, Page 15
- Supply chain managers no longer need to worry about suboptimization in light of today’s technology.
ANSWER: False, Page 19
- Most retailers are essentially supply chain companies since
- they dominate the consumer market.
- own their warehouses and trucks.
- they buy products produced by others.
- engage in off-shore sourcing.
ANSWER: c, Page 6
- Which of the below is not one of the external forces driving the rate of change and shaping our economic and political landscape?
- Government policy
- Environmental concerns
ANSWER: c, Page 7
- Outsourcing involves
- moving company facilities away from the home office.
- hiring foreign nationals to manage parts of the business.
- obtaining materials, parts, and products from other companies.
- building a factory in another country.
ANSWER: c, Page 9
- Some individuals describe the current consumer as the “click here” generation because
- we all have Internet access.
- we no longer wait for information to be “pushed out” to us.
- we buy so much merchandise on line.
- we take little time to make purchasing decisions.
ANSWER: b, Page 10
- The demographics of our society has changed because
- the “Baby Boom” generation is now turning 60.
- of the increase in two-career families and single-parent households.
- of immigration.
- birth rates have changed.
ANSWER: b, Page 12
- The Supply Chain Concept
- is very new and considered cutting edge technology.
- is highly dependent of computerization.
- is not always well understood by senior managers.
- developed from the previous Physical Distribution concept.
ANSWER: d, Page 15
- Logistics, in its simplest form,
- is a military term, as it was developed originally to supply the battlefield.
- combines inbound logistics with the outbound logistics of physical distribution.
- is another term for transportation management.
- does not involve customer service or other related functions.
ANSWER: b, Page 16
- One of the major challenges of supply chain management is
- forward buying.
- maintaining the visibility of inventory.
- building safety-stock inventory.
- Pushing inventory back to vendors.
ANSWER: b, Page18
- Which of these flows only one way as illustrated in Figure 1-4?
- products and services
- None of these answers
ANSWER: d, Page 18
- Traditionally, information has been viewed as flowing in the opposite direction of
products, that is, from the market/customer back to the wholesalers, manufacturers, and
- This is still true and has not changed.
- Computerization has greatly increased the flow of information from the source.
- The “Big Box” stores have developed their own sources.
- None of these answers
ANSWER: d, Page 21
- One of the four supply chain flows in Figure 1 – 8 that has received increased attention from supply chain managers due to the growth in technology is:
- Product flow
- Information flow
- Cash flow
- Demand flow
ANSWER: d, page 23
- The challenge to develop and sustain an efficient and effective supply chain(s) requires organizations to address a number of issues. Which is not included?
- inventory deployment
- inventory carrying costs
ANSWER: c, Page 25
- Which of the following is not part of the Supply Chain network?
- distribution centers
ANSWER: b, Page 24
- Complexity in the supply chain is caused by
- the number of SKUs.
- locations of customers and suppliers.
- transportation requirements.
- All of these answers.
ANSWER: d, Page 24
- Cost/Value refers to
- getting the best value for the money spent.
- U.S. firms competing in the global arena.
- the importance of cost and value at the very end of the supply chain.
- product variety.
ANSWER: c, Page 25
- Performance measurement is important because
- it allows firms to rate competitors.
- without it, managers would not know how the global economy is doing.
- companies presently operating in the European Economic Community need to understand how its competitors are doing.
- lower-level metrics in an organization must connect directly to the high-level performance to achieve goals.
ANSWER: d, Page 27
- A critical outcome of the supply chain is to deliver
- the right product to the right place.
- on management’s expectations.
ANSWER: b, Page 27
- What is the significance of Globalization in Supply Chain Management?
ANSWER: Arguably, globalization is the most frequently cited change factor by business leaders, and it has replaced the post-World War II Cold War as the dominant driving force in world economics. The concept of the global marketplace or global economy has taken on new meaning for all enterprises (profit and nonprofit; small, medium, and large; products or services) and for individual consumers during the last two decades.
Overall, globalization has led to a more competitively intense economic and geopolitical environment. This environment manifests itself in opportunities and threats, both economic and political. Some individuals have implied that there is no “geography” in the current global environment (figuratively speaking) or, perhaps more aptly, that time and distance have been compressed. (Pages 7 – 8)
- What is Vendor Managed Inventory?
ANSWER: Essentially, vendor-managed inventory (VMI) usually means that the manufacturer will manage the inventory of its products (and possibly related products) at the retailer’s warehouse(s) and reorder as appropriate for customer fulfillment. The manufacturer may also have a representative at the designated retail warehouse locations to assure accurate and timely delivery. The retailer should experience lower costs associated with inbound logistics, and the manufacturer should be able to offset its additional cost with increased sales (fewer stockouts, more complete orders, etc.), because of the more accurate and timely information of product orders at the store level. (Page 11)
- Explain how today’s consumers are empowered and how they impact Supply Chain Management.
ANSWER: Today’s consumers are more enlightened and educated, and they are empowered more than ever by the information that they have at their disposal from the Internet and other sources. Their access to supply sources has expanded dramatically beyond their immediate locale by virtue of catalogs, the Internet, and other media. They have the opportunity to compare prices, quality, and service. Consequently, they demand competitive prices, high quality, tailored or customized products, convenience, flexibility, and responsiveness. They tend to have a low tolerance level for poor quality in products and services. Consumers also have increased buying power due to higher income levels. They demand the best quality at the best price and with the best service. These demands place increased challenges and pressure on the various supply chains for consumer products. (Page 12)
- Describe the concept of an “integrated supply chain” that begins with the supplier’s supplier and ends with the final consumer.
ANSWER: Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products, materials, services, information, and financials from the supplier’s suppliers through the various intermediate organizations or companies out to the customer’s customers, or a system of connected networks between the original vendors and the ultimate final consumer. The extended enterprise perspective of supply chain management represents a logical extension of the logistics concept, providing an opportunity to view the total system of interrelated companies for increased efficiency and effectiveness. (Page 17)
- Discuss how globalization and consolidation in supply have increased complexity.
ANSWER: Globalization and consolidation in supply chains have caused an increased complexity for organizations in terms of SKUs, customer and supplier locations, transportation requirements, trade regulations, taxes, and so forth. Companies need to take steps to simplify, as much as possible, the various aspects of their supply chains. For example, the number of SKUs has expanded for many companies, which exacerbates problems for inventory management and order fulfillment. Consequently, companies have been rationalizing SKUs to eliminate the slow movers and items that do not contribute to profitability. Locations also need to be analyzed to eliminate high-cost or duplicative operations. Customer service levels need to be rationalized, as do vendors or supplier alternatives. Layers of complexity develop and may seem necessary, but organizations need to continually evaluate those areas of complexity by evaluating processes, training people, and exploiting technology. (Pages 24 – 25)
- Discuss how Performance Measurement can affect Supply Chain Management.
ANSWER: Most organizations have measures of performance or metrics in place to analyze and evaluate their efficiency and progress over different time periods. Sometimes, such measures are used for setting baseline performance objectives or expected outcomes, for instance, orders filled and shipped per day. Measurement is important, and at this juncture, it is important to recognize that lower-level metrics in an organization must connect directly to the high-level performance measures of the organization and the supply chain, which are usually net profit, return on investment, or assets and cash flow. In some instances, metrics are set that appear logical for the subunit of the organization but are suboptimal for the overall organization or supply chain. For example, the warehouse manager who is measured by the cost per cubic foot of units stored will be motivated to fill the warehouse to the ceiling. (Page 27)
- What is the role of Transportation Management in connection with Supply Chains?
ANSWER: Transportation can be viewed as the glue that makes the supply chain model function. The critical outcomes of the supply chain are to deliver the right product, at the right time, in the right quantity and quality, at the right cost, and to the right destination. Transportation plays an important role in making these “rights” happen. Another aspect of the importance of transportation is related to some of the strategies that are being used by companies to remain competitive in today’s economy—for example, just-in-time inventory, lean logistics and manufacturing, and scheduled deliveries. The challenge has been exacerbated by economic changes among transportation providers; shortages of drivers, higher fuel costs, and changes in driver hours regulations have led to what some individuals have called a transportation crisis or the “perfect storm.” Transportation has gone from being a readily available commodity to potential users, especially in the 1990s, to today where transportation is scarce in some market areas. (Page 27)