Chapter 1 Understanding the Supply Chain

True/False 1. A supply chain includes only the organizations directly involved in supplying components needed for manufacturing. Answer: False Difficulty: oderate A supply chain consists of all parties involved" directly or indirectly" in fulfilling a customer re#uest. Answer: $rue Difficulty: oderate A supply chain could &e more accurately descri&ed as a supply networ' or supply we&. Answer: $rue Difficulty: oderate $he o&)ective of every supply chain is to ma*imize the overall value generated. Answer: $rue Difficulty: +asy $he o&)ective of every supply chain is to ma*imize the value generated for the manufacturing component of the supply chain. Answer: False Difficulty: oderate +very supply chain must include all , stages. Answer: False Difficulty: +asy $he cycle view of a supply chain holds that the processes in a supply chain are divided into a series of activities performed at the interface &etween successive stages. Answer: $rue Difficulty: oderate $he cycle view of a supply chain holds that the processes in a supply chain are divided into ! categories depending on whether they are initiated in response to or in anticipation of customer orders. Answer: False Difficulty: oderate

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$he push1pull view of a supply chain holds that the processes in a supply chain are divided into ! categories depending on whether they are initiated in response to or in anticipation of customer orders. Answer: $rue Difficulty: +asy $he push1pull view of a supply chain holds that the processes in a supply chain are divided into a series of activities performed at the interface &etween successive stages. Answer: False Difficulty: +asy $he o&)ective of the customer arrival process is to ma*imize the conversion of customer arrivals to customer orders. Answer: $rue Difficulty: oderate $he o&)ective of the customer arrival process is to ensure that orders are #uic'ly and accurately entered and communicated to other affected supply chain processes. Answer: False Difficulty: oderate $he o&)ective of customer order entry is to ensure that orders are #uic'ly and accurately entered and communicated to other affected supply chain processes. Answer: $rue Difficulty: oderate $he o&)ective of customer order entry is to maintain a record of product receipt and complete payment. Answer: False Difficulty: 3ard $he replenishment cycle occurs at the retailer1distri&utor interface. Answer: $rue Difficulty: 3ard $he replenishment cycle occurs at the distri&utor1manufacturer interface. Answer: False Difficulty: 3ard $he replenishment cycle is initiated when a supermar'et runs out of stoc' of a particular item. Answer: $rue Difficulty: 3ard $he replenishment cycle is initiated when customers load items intended for purchase into their carts. Answer: False Difficulty: 3ard

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$he manufacturing cycle occurs at the distri&utor1manufacturer interface. Answer: $rue Difficulty: oderate $he manufacturing cycle occurs at the manufacturer1supplier interface. Answer: False Difficulty: oderate $he production scheduling process in the manufacturing cycle is similar to the order entry process in the replenishment cycle. Answer: $rue Difficulty: 3ard $he production scheduling process in the manufacturing cycle is similar to the order fulfillment process in the replenishment cycle. Answer: False Difficulty: 3ard $he procurement cycle occurs at the manufacturer1supplier interface. Answer: $rue Difficulty: +asy $he procurement cycle occurs at the retailer1distri&utor interface. Answer: False Difficulty: +asy $he cycle view of the supply chain is useful when considering operational decisions" &ecause it specifies the roles and responsi&ilities of each mem&er of the supply chain. Answer: $rue Difficulty: oderate $he cycle view of the supply chain is useful when considering operational decisions" &ecause it categorizes processes &ased on whether they are initiated in response to or in anticipation of customer orders. Answer: False Difficulty: oderate $he push1pull view of the supply chain is useful when considering strategic decisions relating to supply chain design" &ecause it categorizes processes &ased on whether they are initiated in response to or in anticipation of customer orders. Answer: $rue Difficulty: oderate $he push1pull view of the supply chain is useful when considering strategic decisions relating to supply chain design" &ecause it specifies the roles and responsi&ilities of each mem&er of the supply chain. Answer: False Difficulty: oderate

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4ull processes may also &e referred to as reactive processes. Answer: $rue Difficulty: +asy 4ull processes may also &e referred to as speculative processes. Answer: False Difficulty: +asy 4ush processes may also &e referred to as speculative processes. Answer: $rue Difficulty: +asy 4ush processes may also &e referred to as reactive processes. Answer: False Difficulty: +asy All supply chain activities within a firm &elong to one of three macro processes 5 C6 " 7SC and S6 . Answer: $rue Difficulty: +asy $here is a close connection &etween the design and management of supply chain flows and the success of a supply chain. Answer: $rue Difficulty: +asy

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Multiple Choice 1. 8hich of the following is not a stage within a typical supply chain9 a. Customers &. 6etailers c. 8holesalers1Distri&utors d. anufacturers e. All of the a&ove are stages within a typical supply chain. Answer: e Difficulty: +asy 8hich of the following is not a stage within a typical supply chain9 a. Customers &. 6etailers c. 8holesalers1Distri&utors d. erchandisers e. Component16aw material suppliers Answer: d Difficulty: +asy

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Supply chain profita&ility is a. not correlated to the value generated &y the various stages of the supply chain. &. the total profit to &e shared across all supply chain stages. c. the difference &etween the revenue generated from the customer and the overall cost across the supply chain. d. the total revenue generated &y the distri&utor stage of the supply chain. e. & and c only Answer: e Difficulty: Difficult Successful supply chain management re#uires which of the following decision phases9 a. supply chain strategy1design &. supply chain planning c. supply chain operation d. all of the a&ove e. a and & only Answer: d Difficulty: oderate $he decision phases in a supply chain include a. production scheduling. &. customer relationship management. c. supply chain operation. d. supply chain orientation. e. all of the a&ove Answer: c Difficulty: oderate $he cycle view of a supply chain holds that a. the processes in a supply chain are divided into ! categories. &. the processes in a supply chain are divided into a series of activities performed at the interface &etween successive stages. c. all processes in a supply chain are initiated in response to a customer order. d. all processes in a supply chain are performed in anticipation of customer orders. e. :one of the a&ove are true. Answer: & Difficulty: oderate $he push1pull view of a supply chain holds that a. the processes in a supply chain are divided into a series of activities performed at the interface &etween successive stages. &. all processes in a supply chain are initiated in response to a customer order. c. all responses in a supply chain are performed in anticipation of customer orders.

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the processes in a supply chain are divided into ! categories depending on whether they are initiated in response to or in anticipation of customer orders. e. :one of the a&ove are true. Answer: d Difficulty: oderate /. 8hich of the following is not a cycle in the supply chain cycle view9 a. Analysis cycle &. Customer order cycle c. 6eplenishment cycle d. anufacturing cycle e. 4rocurement cycle Answer: a Difficulty: oderate 8hich of the following is not a cycle in the supply chain cycle view9 a. Customer order cycle &. 6eplenishment cycle c. anufacturing cycle d. 4rocurement cycle e. All of the a&ove are part of the supply chain cycle view. Answer: e Difficulty: oderate $he customer order cycle occurs at the a. customer1retailer interface. &. retailer1distri&utor interface. c. distri&utor1manufacturer interface. d. manufacturer1supplier interface. e. none of the a&ove Answer: a Difficulty: +asy 8hich of the following is not a process in the customer order cycle9 a. Customer arrival &. Customer order entry c. Customer order fulfillment d. Customer order receiving e. All are processes in the customer order cycle Answer: e Difficulty: oderate Customer arrival refers to a. the point in time when the customer has access to choices and ma'es a decision regarding a purchase. &. the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. c. the process where product is prepared and sent to the customer. d. the process where the customer receives the product and ta'es ownership.

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e. none of the a&ove Answer: a Difficulty: oderate 1%. $he o&)ective of the customer arrival process is to a. get the correct orders to customers &y the promised due date at the lowest possi&le cost. &. maintain a record of product receipt and complete payment. c. ma*imize the conversion of customer arrivals to customer orders. d. ensure that orders are #uic'ly and accurately entered and communicated to other affected supply chain processes. e. none of the a&ove Answer: c Difficulty: +asy Customer order entry is a. the point in time when the customer has access to choices and ma'es a decision regarding a purchase. &. the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. c. the process where product is prepared and sent to the customer. d. the process where the customer receives the product and ta'es ownership. e. none of the a&ove Answer: & Difficulty: oderate $he o&)ective of customer order entry is to a. get the correct orders to customers &y the promised due date at the lowest possi&le cost. &. maintain a record of product receipt and complete payment. c. ma*imize the conversion of customer arrivals to customer orders. d. ensure that orders are #uic'ly and accurately entered and communicated to other affected supply chain processes. e. none of the a&ove Answer: d Difficulty: +asy Customer order fulfillment refers to a. the point in time when the customer has access to choices and ma'es a decision regarding a purchase. &. the customer informing the retailer of what they want to purchase and the retailer allocating product to the customer. c. the process where product is prepared and sent to the customer. d. the process where the customer receives the product and ta'es ownership. e. none of the a&ove Answer: c Difficulty: oderate

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$he o&)ective of customer order fulfillment is to a. get the correct orders to customers &y the promised due date at the lowest possi&le cost. &. maintain a record of product receipt and complete payment. c. ma*imize the conversion of customer arrivals to customer orders. d. ensure that orders are #uic'ly and accurately entered and communicated to other affected supply chain processes. e. none of the a&ove Answer: a Difficulty: +asy Customer order receiving is a. the point in time when the customer has access to choices and ma'es a decision regarding a purchase. &. the customer informing the retailer of what they want to purchase and the retailer allocates product to the customer. c. the process where product is prepared and sent to the customer. d. the process where the customer receives the product and ta'es ownership. e. none of the a&ove Answer: d Difficulty: oderate $he replenishment cycle occurs at the a. customer1retailer interface. &. retailer1distri&utor interface. c. distri&utor1manufacturer interface. d. manufacturer1supplier interface. e. none of the a&ove Answer: & Difficulty: +asy $he processes involved in the replenishment cycle include a. retail order receiving. &. retail order entry. c. retail order trigger. d. retail order fulfillment. e. all of the a&ove Answer: e Difficulty: oderate $he processes included in the replenishment cycle include all of the following except a. retail order receiving. &. retail order entry. c. retail order trigger. d. retail order fulfillment. e. none of the a&ove Answer: e Difficulty: oderate

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$he processes included in the replenishment cycle include a. order arrival. &. production scheduling. c. retail trigger. d. manufacturing. e. receiving. Answer: c Difficulty: oderate $he replenishment cycle is initiated when a. the customer wal's into the supermar'et. &. the customer calls a mail order telemar'eting center. c. customers load items intended for purchase into their carts. d. a product is received into stoc' at a store. e. :one of the a&ove. Answer: e Difficulty: 3ard $he manufacturing cycle occurs at the a. customer1retailer interface. &. retailer1distri&utor interface. c. distri&utor1manufacturer interface. d. manufacturer1supplier interface. e. none of the a&ove Answer: c Difficulty: +asy $he processes involved in the manufacturing cycle include a. receiving. &. manufacturing and shipping. c. production scheduling. d. order arrival. e. all of the a&ove Answer: e Difficulty: oderate $he processes involved in the manufacturing cycle include a. order trigger. &. production scheduling. c. order fulfillment. d. order entry. e. manufacturing order analysis. Answer: & Difficulty: oderate $he production scheduling process in the manufacturing cycle is similar to the a. order receiving process in the replenishment cycle. &. order fulfillment process in the replenishment cycle. c. order entry process in the replenishment cycle. d. order trigger process in the replenishment cycle. e. none of the a&ove

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Answer: c Difficulty: 3ard !/. $he manufacturing and shipping process in the manufacturing cycle is e#uivalent to the a. order receiving process in the replenishment cycle. &. order fulfillment process in the replenishment cycle. c. order entry process in the replenishment cycle. d. order trigger process in the replenishment cycle. e. none of the a&ove Answer: & Difficulty: 3ard $he procurement cycle occurs at the a. customer1retailer interface. &. retailer1distri&utor interface. c. distri&utor1manufacturer interface. d. manufacturer1supplier interface. e. none of the a&ove Answer: d Difficulty: +asy $he relationship &etween the manufacturer and supplier during the procurement cycle is very similar to the relationship &etween a. customer and retailer. &. retailer and distri&utor. c. distri&utor and manufacturer. d. manufacturer and customer. Answer: c Difficulty: oderate $he cycle view of the supply chain is useful when considering operational decisions" &ecause a. it categorizes processes &ased on whether they are initiated in response to or in anticipation of customer orders. &. it specifies the roles and responsi&ilities of each mem&er of the supply chain. c. processes are identified as either reactive or speculative. d. it focuses on processes that are e*ternal to the firm. e. it focuses on processes that are internal to the firm. Answer: & Difficulty: 3ard $he push1pull view of the supply chain is useful when considering strategic decisions relating to supply chain design" &ecause a. it categorizes processes &ased on whether they are initiated in response to or in anticipation of customer orders. &. it specifies the roles and responsi&ilities of each mem&er of the supply chain. c. it clearly defines the processes involved and the owners of each process. d. it focuses on processes that are e*ternal to the firm.

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e. it focuses on processes that are internal to the firm. Answer: a Difficulty: 3ard %%. 8hich of the following statements a&out pull processes is accurate9 a. ay also &e referred to as speculative processes. &. +*ecution is initiated in anticipation of customer orders. c. At the time of e*ecution" demand must &e forecast. d. ay also &e referred to as reactive processes. e. :one of the a&ove are accurate. Answer: d Difficulty: +asy 8hich of the following is not an accurate statement a&out pull processes9 a. ay also &e referred to as speculative processes. &. +*ecution is initiated in response to a customer order. c. At the time of e*ecution" demand is 'nown with certainty. d. ay also &e referred to as reactive processes. e. All of the a&ove are accurate. Answer: a Difficulty: +asy 8hich of the following statements a&out push processes is accurate9 a. ay also &e referred to as speculative processes. &. +*ecution is initiated in response to customer orders. c. At the time of e*ecution" demand is 'nown with certainty. d. ay also &e referred to as reactive processes. e. :one of the a&ove are accurate. Answer: a Difficulty: +asy 8hich of the following is not an accurate statement a&out push processes9 a. ay also &e referred to as speculative processes. &. +*ecution is initiated in anticipation of customer orders. c. At the time of e*ecution" demand must &e forecast. d. ay also &e referred to as reactive processes. e. All of the a&ove are accurate. Answer: d Difficulty: +asy Supply chain macro processes include which of the following9 a. Customer 6elationship anagement ;C6 < &. 7nternal Supply Chain anagement ;7SC < c. Supplier 6elationship anagement ;S6 < d. all of the a&ove e. none of the a&ove Answer: d Difficulty: +asy Supply chain macro processes include which of the following9 a. 7nternal 6elationship anagement ;76 <

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&. Customer 6elationship anagement ;C6 < c. +*ternal 6elationship anagement ;+6 < d. Supply Chain 6elationship anagement ;SC6 < e. none of the a&ove Answer: & Difficulty: oderate %0. Supply chain macro processes include which of the following9 a. 7nternal 6elationship anagement ;76 < &. +*ternal 6elationship anagement ;+6 < c. Supplier 6elationship anagement ;S6 < d. Supply Chain 6elationship anagement ;SC6 < e. none of the a&ove Answer: c Difficulty: oderate Activities involved in the Customer 6elationship anagement ;C6 < macro process include a. planning of internal production and storage. &. order fulfillment. c. mar'eting. d. supply planning. e. demand planning. Answer: c Difficulty: 3ard Activities involved in the Customer 6elationship process include all of the following except a. mar'eting. &. sales. c. order management. d. call center management. e. All of the a&ove are activities of C6 . Answer: e Difficulty: oderate Activities involved in the 7nternal Supply Chain process include a. mar'eting. &. order fulfillment. c. sales. d. order management. e. call center management. Answer: & Difficulty: 3ard anagement ;C6 < macro

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Activities involved in the 7nternal Supply Chain anagement ;7SC < macro process include all of the following except a. planning of internal production and storage. &. order fulfillment. c. supply planning.

d. order management. Answer: d Difficulty: 3ard ((. Activities involved in the Supplier 6elationship anagement ;S6 < macro process include a. planning of internal production and storage. &. order fulfillment. c. supplier evaluation and selection. d. order management. Answer: c Difficulty: oderate Activities involved in the Supplier 6elationship process include all of the following except a. negotiation of supply terms. &. design colla&oration. c. demand planning. d. supplier evaluation and selection. e. supply colla&oration. Answer: c Difficulty: 3ard anagement ;S6 < macro

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$he phenomenal success of .=+leven >apan is attri&uted to a. &eing in the right place at the right time. &. its supply chain design and management a&ility. c. having 0222 locations. d. serving fresh food. e. none of the a&ove Answer: & Difficulty: oderate A 'ey issue facing $oyota is a. developing an internet mar'eting system. &. whether to specialize in a particular mar'et. c. design of its glo&al production and distri&ution networ'. d. how to implement model changes. e. all of the a&ove Answer: c Difficulty: 3ard

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Essay/Problems 1. +*plain the % decision phases ;categories< that must &e made in a successful supply chain. Answer: $he % decision phases that occur within a supply chain are supply chain strategy ;or design<" supply chain planning and supply chain operation. Decisions

relate to the flow of information" product and funds. $he difference &etween categories depends upon the fre#uency of each decision and the time frame over which it has an impact. During the supply chain strategy phase" a company determines what the chain?s configurations will &e" how resources will &e allocated" and what processes each stage will perform. $his will esta&lish the structure of the supply chain for several years. Supply chain planning deals with decisions with a time frame from % months up to a year. $he planning phase must wor' within the constraints esta&lished in the strategy phase. 4lanning decisions include which mar'ets to supply from which locations" su&contracting of manufacturing" inventory policies and timing and size of mar'eting promotions. $he supply chain operation phase operates on a wee'ly or daily time horizon and deals with decisions concerning individual customer orders. Difficulty: 3ard !. Descri&e the cycle view of the processes within a supply chain. Answer: $he cycle view divides the supply chain into a series of ( cycles &etween the , different stages of a supply chain. $he cycles are the customer order cycle" replenishment cycle" manufacturing cycle and procurement cycle. $he customer order cycle occurs at the customer1retailer interface and includes all processes directly involved in receiving and filling the customer. $he replenishment cycle occurs at the retailer1distri&utor interface and includes all processes involved in replenishing retailer inventory. $he manufacturing cycle typically occurs at the distri&utor1manufacturer ;or retailer1manufacturer< interface and includes all processes involved in replenishing distri&utor ;or retailer< inventory. $he procurement cycle occurs at the manufacturer1supplier interface and includes all processes necessary to ensure that the materials are availa&le for manufacturing according to schedule. Difficulty: oderate %. +*plain the push1pull view of the processes within a supply chain. Answer: $he push1pull view of the supply chain divides supply chain processes into two categories &ased on whether they are e*ecuted in response to a customer order or in anticipation of customer orders. 4ull processes are initiated in response to a customer order. 4ush processes are initiated and performed in anticipation of customer orders. $he push1pull &oundary separates push processes from pull processes. $his view is very useful when considering strategic decisions relating to supply chain design" &ecause it forces a more glo&al consideration of supply chain processes as they relate to the customer. Difficulty: oderate (. +*plain the three macro processes within a supply chain. Answer: All processes within a supply chain can &e classified into three macro processes which are Customer 6elationship anagement ;C6 <" 7nternal Supply Chain anagement ;7SC <" and Supplier 6elationship anagement ;S6 <. Customer 6elationship anagement ;C6 < includes all processes that focus on the interface &etween the firm and its customers such as mar'eting" sales" call center management and order management. 7nternal Supply Chain anagement ;7SC < includes all processes that are internal to the firm such as

finalization of demand and supply plans" preparation of inventory management policies" order fulfillment and planning of capacity. Supplier 6elationship anagement ;S6 < includes all processes that focus on the interface &etween a firm and its suppliers such as evaluation and selection of suppliers" negotiation of supply terms and communication regarding new products and orders. Difficulty: oderate ,. +*plain why supply chain flows are important. Answer: Supply chain flows are important" &ecause there is a close connection &etween the design and management of supply chain flows ;product" information" and cash< and the success of a supply chain. $he success of many companies can &e directly traced to the design and management of an appropriate supply chain. $he failure of many &usinesses can &e lin'ed directly to their ina&ility to effectively design and manage supply chain flows. Difficulty: oderate