File: ch10, Chapter 10: Supply Chain Management: Strategy and Design

Multiple Choice

27. The suppliers in a supply chain are referred to as ______________ supply chain
members.
a. downstream
b. midstream
c. upstream
d. None of these answer choices is correct.
Ans: C
Difficulty: Easy
Learning Objective: LO 1

28. Distributors, warehouses, and retailers are referred to as _____________ supply chain
members.
a. downstream
b. upstream
c. procurement
d. None of these answer choices is correct.
Ans: A
Difficulty: Easy
Learning Objective: LO 1

29. The purchasing of goods and services from suppliers is called

a. sourcing.
b. offshoring.
c. procurement.
d. None of these choices is correct.
Ans: C
Difficulty: Easy

Learning Objective: LO 1

30. A demand-driven value chain is considered to be a global supply chain that is

organized according to all the following overlapping areas of responsibility except
 a. supply management.
b. demand management.
c. product management.
d. process management.
Ans: D
Difficulty: Hard

Learning Objective: LO 1

31. Supply chain processes include

a. procurement.
b. production.
c. distribution.
d. All of these answer choices are correct.
Ans: D
Difficulty: Moderate
Learning Objective: LO 2

32. Which of the following refers to an approach to risk management that aggregates
risk?
a. Risk pooling
b. Risk optimizing
c. Risk capturing
d. None of these answer choices is correct.
Ans: A
Difficulty: Moderate

Learning Objective: LO 2

33. Supply chain management focuses on integrating and managing the flow of
a. services.
b. information.
c. goods.
d. All of these answer choices are correct.
Ans: D
Difficulty: Moderate
Learning Objective: LO 2
34. The bullwhip effect can
a. increase inventories.
b. increase demand.
c. increase customer service levels.
d. increase capacity.
Ans: A
Difficulty: Moderate
Learning Objective: LO 2

35. All the following are approaches used in risk pooling within a supply chain except
a. reducing the number and variety of parts.
b. encouraging large orders.
c. combining inventories from multiple locations into one location.
d. None of these answer choices is correct.
Ans: B
Difficulty: Moderate
Learning Objective: LO 2

36. Information sharing among supply chain members will typically result in all of the
following except
a. faster response times.
b. early problem detection.
c. an increased bullwhip effect.
d. greater trust and confidence among supply chain members.
Ans: C
Difficulty: Easy
Learning Objective: LO 2

37. One way to reduce the bullwhip effect is for supply chain members to
a. make ordering decisions independently of each other.
b. create demand forecasts independently of other supply chain members.
c. share demand forecasts with other supply chain members.
d. restrict information flows between supply chain members.
Ans: C
Difficulty: Moderate

Learning Objective: LO 2

38. Which of the following is not a key to effective supply chain management?
 a. communication among members
b. independence among members
c. collaboration among members
d. trust among members
Ans: B
Difficulty: Easy
Learning Objective: LO 2

39. Increased uncertainty and variability in a supply chain typically results in

a. faster deliveries.
b. more accurate order fulfillment.
c. larger inventories.
d. lower costs.
Ans: C
Difficulty: Moderate
Learning Objective: LO 2

40. The United Nations defines sustainability as meeting _________ needs without
compromising the ability of ______ generations to meet their needs.
a. future, present
b. present, future
c. present, present
d. future, future
Ans: B
Difficulty: Easy

Learning Objective: LO 3

41. Sustainability is also referred to as

a. going green.
b. keeping green.
c. sustaining green.
d. None of these answer choices is correct.
Ans. A
Difficulty: Easy

Learning Objective: LO 3
42. A common misconception of U.S. companies is that requiring suppliers in developing
countries to use green practices is not feasible because
a. developing countries do not face the same governmental, social and cultural
pressures.
b. green manufacturing methods will require costly new equipment and processes.
c. the customer market for products designed for green attributes is soft.
d. All of these answer choices are correct.
Ans. D
Difficulty: Moderate

Learning Objective: LO 3

43. Companies resist establishing green supply chains for all the following reasons
except that
a. the market is soft for products with green attributes.
b. green manufacturing requires costly new equipment and practice.
c. green initiatives lower costs because fewer resources are consumed.
d. green practices face additional government, societal and cultural pressures.
Ans: C
Difficulty: Moderate
Learning Objective: LO 3

44. The impetus for commitment to sustainability generally comes from ____________
in the supply chain and moves __________ to suppliers.
a. upstream, downstream
b. downstream, upstream
c. midstream, upstream
d. downstream, midstream
Ans. B
Difficulty: Moderate

Learning Objective: LO 3

45. Which of the following is not one of the three key performance indicators (KPI) used
to measure supply chain performance?
a. inventory turnover
b. postponement rate
 c. inventory days of supply
d. fill rate
Ans: B
Difficulty: Moderate

Learning Objective: LO 4

46. A computer-to-computer exchange of business documents in a standard format is

known as
a. e-business.
b. electronic data interchange (EDI).
c. radio frequency identification (RFID).
d. point-of-sale data.
Ans: B
Difficulty: Easy
Learning Objective: LO 4

47. All the following are enablers of efficient supply chain management except
a. bar codes.
b. price tags.
c. RFID tags.
d. the Internet.
Ans: B
Difficulty: Moderate
Learning Objective: LO 4

48. E-business replaces _________ processes with ___________ ones.

a. physical, electronic
b. electronic, physical
c. physical, physical
d. electronic, electronic
Ans: A
Difficulty: Easy

Learning Objective: LO 4

49. In general, it can be said of a modern supply chain that ________ information has the
effect of ________ inventory.
 a. increasing, decreasing
b. decreasing, increasing
c. increasing, increasing
d. decreasing, decreasing
Ans: A
Difficulty: Easy

Learning Objective: LO 4

50. _______________________ is not a perceived advantage of radio frequency

identification (RFID) technology.
a. Loss of personal privacy
b. Reduced stock-outs
c. Prevention of fraud or theft
d. Lower distribution costs
Ans: A
Difficulty: Moderate
Learning Objective: LO 4

51. Supply chain integration does not involve __________________ among supply chain
members.
a. providing information
b. collaborating on replenishment
c. reducing competition
d. coordinating work flows
Ans: C
Difficulty: Moderate

Learning Objective: LO 5

52. Information technology supports supply chain integration through

a. information sharing and collaborative planning.
b. workflow coordination.
c. adoption of new methods and technologies.
d. All of these answer choices are correct.
Ans: D
Difficulty: Moderate

Learning Objective: LO 5
53. Information sharing in support of supply chain integration includes all the following
types except
a. demand data.
b. inventory stocks.
c. cost and profit data.
d. production and shipping schedules.
Ans: C
Difficulty: Easy

Learning Objective: LO 5

54. Inventory turnover is computed by

a. dividing the cost of goods sold by the average aggregate inventory value.
b. dividing the average aggregate inventory value by costs of goods sold.
c. multiplying the average aggregate inventory value by cost of goods sold.
d. subtracting cost of goods sold from the average aggregate inventory value.
Ans: a
Difficulty: Hard
Learning Objective: LO 7

55. A company that produces small electric motors for treadmills had cost of goods sold
last year of $241,000,000. The average value of inventory for raw materials, work-
in-process, and finished goods are shown in the table below:

Raw Materials $12,379,000

Work-In-Process $7,631,000
Finished Goods $9,275,000

If the company operates 365 days a year, the days of supply being held in
inventory is
a. 44.4 days.
b. 27.4 days.
c. 8.2 days.
d. 0.1 day.
Ans: A
Difficulty: Hard

Solution: Days of supply=$29,285,000/($241,000,000/365 days)=44.4 days

Learning Objective: LO 7

56. A company that produces specialized video equipment had cost of goods sold last
year of $127,000,000. The average value of inventory for raw materials, work-in-
process, and finished goods are shown in the table below:

Raw Materials $6,189,000

Work-In-Process $2,541,000
Finished Goods $3,710,000

If the company operates 50 weeks per year then the number of inventory turns
would be
a. 1.4 turns.
b. 4.4 turns.
c. 9.0 turns.
d. 10.2 turns.
Ans: D
Difficulty: Hard
Solution: Inventory turns=$127,000,000/$12,440,000=10.2 turns
Learning Objective: LO 7

57. A company that produces specialized video equipment had cost of goods sold last
year of $127,000,000. The average value of inventory for raw materials, work-in-
process, and finished goods are shown in the table below:

Raw Materials $6,189,000

Work-In-Process $2,541,000
Finished Goods $3,710,000

If the company operates 50 weeks per year, then the weeks of supply in inventory
would be
a. 4.9 weeks.
b. 0.1 week.
c. 10.2 weeks.
d. 35.8 weeks.

Ans: A
Difficulty: Hard
Solution: Weeks of supply=$12,440,000/($127,000,000/50 weeks)=4.9 weeks
Learning Objective: LO 7
58. A company that produces printer cartridges had cost of goods sold last year of
$629,462,423. The average value of inventory for raw materials, work-in-process,
and finished goods are shown in the table below:

Raw Materials $7,367,528

Work-In-Process $22,893,232
Finished Goods $16,523,451

If the company operates 50 weeks per year then the number of inventory turns
would be
a. 3.7 turns.
b. 2.5 turns.
c. 13.5 turns.
d. 28.3 turns.
Ans: C
Difficulty: Hard
Solution: Number of turns=$629,462,423/$46,784,211=13.5 turns
Learning Objective: LO 7

59. A company that produces printer cartridges had cost of goods sold last year of
$629,462,423. The average value of inventory for raw materials, work-in-process,
and finished goods are shown in the table below:

Raw Materials $7,367,528

Work-In-Process $22,893,232
Finished Goods $16,523,451

If the company operates 50 weeks per year, then the weeks of supply in inventory
would be
a. 3.7 weeks.
b. 2.5 weeks.
c. 13.5 weeks.
d. 28.3 weeks.
Ans: A
Difficulty: Hard
Solution: Weeks of supply=$46,784,211/($629,462,423/50 weeks)=3.7 weeks
Learning Objective: LO 7

60. The fraction of orders filled by a distribution center or warehouse within a specific
time period is referred to as the
a. inventory turnover.
 b. inventory supply time.
c. fill rate.
d. aggregate orders processed.
Ans: C
Difficulty: Moderate
Learning Objective: LO 7

61. Which of the following is not a key performance indicator used in supply chain
management?
a. Fill rate
b. Days of supply
c. Cost of goods
d. Inventory turns
Ans: C
Difficulty: Moderate
Learning Objective: LO 7

62. All of the following are performance metrics in the SCOR system, except
a) perfect order fulfillment.
b) production flexibility.
c) value-added productivity.
d) asset fulfillment.
Ans: D
Difficulty: Hard
Learning Objective: LO 7