CHAPTER 7

DEMAND MANAGEMENT, ORDER MANAGEMENT AND CUSTOMER

SERVICE

Essay Questions

1. 7-1. What is the relationship between demand management, order management,

and customer service?

2. 7-2. Discuss the three basic demand forecasting models.

3. 7-4. What do you understand by “order to cash cycle”? Why is it used by many
organizations?

4. 7-5. Does a longer order cycle invariably mean that an organization must hold a
higher level of inventory?

5. 7-6. List the various methods of order transmittal and discuss relevant
characteristics of each one.

6. 7-8. How might an organization decide on the location that will fulfill a
customer’s order?

7. 7-9. Discuss how the effectiveness and efficiency of order picking and assembly
can be improved without large expenditures.

8. 7-10. What is pick-to-light technology and how can it improve order picking?

9. 7-12. How can customer service act as a competitive weapon?

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Multiple Choice Questions (correct answers are bolded)

1. The creation across the supply chain and its markets of a coordinated flow of demand
is the definition of ____.

a. order cycle
b. order management
c. demand management
d. supply chain management

2. Which of the following is not a basic type of demand forecasting model?

a. exponential smoothing
b. cause and effect
c. judgmental
d. time series
e. all of the above are basic types of forecasting models

4. An underlying assumption of ____ forecasting is that future demand is dependent on

past demand.

a. trial and error

b. time series
c. judgmental
d. cause and effect

5. Which forecasting technique assumes that one or more factors are related to demand
and that this relationship can be used to estimate future demand?

a. exponential smoothing
b. judgmental
c. cause and effect
d. time series

8. ____ refers to the management of various activities associated with the order cycle.

a. logistics
b. order processing
c. demand management
d. order management

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9. The order cycle is ____.

a. the time that it takes for a check to clear

b. the time that it takes from when a customer places an order until the selling
firm receives the order
c. also called the replenishment cycle
d. also called the vendor cycle

10. The order cycle is composed of each of the following except:

a. order retrieval
b. order delivery
c. order picking and assembly
d. order transmittal

11. Which of the following is false?

a. some organizations have expanded the order management concept to include

the length of time it takes an organization to receive payment for an order
b. the order cycle should be analyzed in terms of total cycle time and cycle time
variability
c. order management has been profoundly impacted by advances in information
systems
d. the various activities associated with an order cycle are not uniformly agreed
upon
e. all of the above are true

12. Order transmittal is ____.

a. the same thing as an order cycle

b. the series of events that occur between the time a customer places an order and
the time the seller receives the order
c. the series of events that occur between the time a customer perceives the need
for something and the time the seller receives the order
d. the series of events between the time a customer places an order and the time
the order cycle begins

14. Which of the following is not a possible method of order transmittal?

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 a. in-person
b. mail
c. fax
d. electronic
e. all of the above are methods of order transmittal

15. ____ refers to the time from when the seller receives an order until an appropriate
location is authorized to fill the order.

a. order processing
b. order cycle
c. order management
d. order transmittal

16. Classifying orders according to pre-established guidelines so that a company can

prioritize how orders are to be filled refers to ____.

a. ABC analysis
b. order management
c. order processing
d. order triage

17. Order picking and assembly is:

a. the final stage of the order cycle

b. the most important component of the order cycle
c. the order cycle component that follows order processing
d. the order cycle component that follows order transmittal

18. The text suggests that ____ often represents the best opportunity to improve the
effectiveness and efficiency of an order cycle.

a. order transmittal
b. order picking and assembly
c. order delivery
d. order processing

19. Which of the following is not a characteristic of contemporary voice-based order

picking systems?

a. easily disrupted by other noises

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 b. better voice quality than earlier systems
c. more powerful than earlier systems
d. less costly than earlier systems
e. all of the above are characteristics of voice-based order picking systems

20. Which of the following is not a characteristic of advances in order pick technology?

a. fewer picking errors

b. higher pick rates
c. reduced employee turnover
d. fewer employee accidents
e. all of the above are characteristics

22. The time span within which an order must arrive refers to ____.

a. transit time reliability

b. order delivery
c. delivery window
d. transit time

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True-False Questions

1. Demand management is important because efficient and effective supply chains have
learned to match both supply and demand. ( )

2. In make-to-order situations, finished goods are produced after receiving a customer

order. ( )

5. Forecasting accuracy refers to the relationship between the actual and forecasted
demand. ( )

8. The order cycle is usually the time from when a customer places an order to when the
firm receives the order. ( )

9. There are four possible ways to transmit orders. ( )

10. Order information is checked for completeness and accuracy in the order processing
component of the order cycle. ( )

12. A commonsense approach is to fill an order from the facility location that is closest to
the customer, with the idea that this should generate lower transportation costs as well as
a shorter order cycle time. ( )

13. Order processing often represents the best opportunity to improve the effectiveness
and efficiency of the order cycle. ( )

14. Travel time accounts for a majority of an order picker’s total pick time. ( )

15. Pick-to-light technology is an order picking technique that has grown in popularity in
recent years. ( )

16. Order retrieval is the final phase of the order cycle. ( )

17. A key change in the order delivery component of the order cycle is that more and
more shippers are emphasizing both the elapsed transit time and transit time variability.
( )

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