1. The basic purpose of supply chain management is to
a. create an exclusive set of suppliers who will not supply your competitors.
b. link your customers together so that the flow of materials remains under control.
c. synchronize the operations of all suppliers with those of purchasing, production, distribution, and customers.
d. reduce the inventory by proper selection of customers and transportation modes.
2. Which one of the following is TRUE for supply chain management?
a. Supply-chain concept applies to both manufacturing and service organizations.
b. Supply chain applies only to manufacturing because it deals with flow of materials.
c. Supply chain is about suppliers and does not include distributors or customers.
d. Supply chain includes any operation that deals with materials.
3. For improving the efficiency and productivity of a complex supply chain, a company should do which of the following?
a. Never adopt backward vertical integration.
b. Enter into agreements with first-tier suppliers, and let them manage their suppliers.
c. Adopt backward vertical integration or enter into agreements with first-tier suppliers.
d. Adopt backward vertical integration, but avoid writing agreements with first-tier suppliers.
4. Which one of the following statements is TRUE about purchasing?
a. Purchasing must satisfy the firm's long-term supply needs.
b. Purchasing's primary role should be placing and tracking orders.
c. Purchasing's primary role is to negotiate lower prices.
d. Purchasing's primary role is to negotiate prices and delivery dates.
5. Which one of the following statements regarding supplier selection criteria is TRUE?
a. Supplier should be selected on the basis of price only because the cost of materials is a significant portion of total product cost.
b. Supplier should be selected on the basis of quality, price, and delivery.
c. Supplier should be selected primarily on the basis of the shortest lead time because higher lead time increases the cost of inventory.
d. Supplier should be selected on the basis of quality because quality is always the most important characteristic of a product.
6. Which one of the following statements is TRUE about a cooperative orientation in supplier relationships?
a. It cannot be implemented in Western countries because competitive bidding is more effective in that culture.
b. It cannot be implemented in the Western countries because it always benefits the supplier.
c. It requires all parts and subassemblies to be purchased from the same supplier.
d. It requires few suppliers for each item or service.
7. One of the benefits of a cooperative orientation in supplier relationships is
a. the buyer sometimes suggests ways to improve the supplier's operations.
b. the supplier implements its own quality standards.
c. the buyer does not have to share much information with the supplier.
d. the supplier has complete freedom in choosing the delivery time.
8. Which one of the following statements is TRUE about a competitive orientation in supplier relationships?
a. It tends to emphasize short-term advantages over long-term commitments.
b. The supplier gains repeatability and can move toward a line flow process.
c. The supplier is obliged to offer the lowest possible price every time.
d. The supplier is obliged to deliver the material in the shortest possible time, every time.
9. Which one of the following statements is TRUE?
a. A buying firm should always adopt a competitive orientation for a standard item with high demand.
b. Single sourcing is always desirable for high demand items.
c. Long-term contracts are consistent with a cooperative orientation to supplier relationships.
d. The buyer always wins in a competitive orientation to supplier relationships.
10. Which one of the following statements correctly represents a benefit of centralized buying?
a. Local managers have more control over their business.
b. Purchases and production schedules are meshed more easily.
c. Purchasing lead times may be shorter.
d. Increased buying power can result in significant savings in purchasing costs.
11. Which one of the following statements on inventory placement of finished goods is best?
a. Forward placement might help reduce transportation cost.
b. Forward placement is consistent with a competitive priority that calls for customization.
c. Inventory pooling should be avoided when demand in various regions fluctuates month to month.
d. Backward placement is consistent with a competitive priority that calls for fast delivery times.
12. Some manufacturers and service providers want to measure the performance of supply chain by the percentage of on-time deliveries. The main reason for this measure is
a. it will discourage the competitors to enter the market.
b. it measures the satisfaction levels of suppliers.
c. increased on-time delivery increases revenue by inducing customers to buy more products from the firm.
d. It helps accounting to debit customer's accounts promptly.
13. Which one of the following statements about the relation between financial and supply chain performance measures is TRUE?
a. Longer delivery times require higher levels of working capital.
b. Shorter new product development time decreases revenue.
c. Higher inventory turns call for higher working capital requirement.
d. Lower aggregate inventory value means higher current assets.
14. Efficient supply chain should be preferred when
a. product variety is high.
b. competitive priority is customization.
c. demand is highly predictable.
d. demand is unpredictable.
15. The type of goods for which efficient supply chain is appropriate is
a. high product cost.
b. frequent design changes.
c. high contribution margin.
d. standardized products.
16. Responsive supply chains should be preferred when
a. product variety is low.
b. demand is predictable.
c. contribution margins are low.
d. product variety is high.
17. The type of goods for which a responsive supply chain is appropriate are
a. fashion goods.
b. products with a long shelf life.
c. expensive products.
d. those with infrequent design changes.
18. A firm in the higher echelon of an efficient supply chain is likely to have
a. high-capacity utilization.
b. low inventory turns.
c. high-capacity cushions.
d. a flexible flow process.
19. It is desirable for a firm in the higher echelon of an efficient supply chain to have
a. high-capacity cushions.
b. delivery by air.
c. a line flow process.
d. high inventory investment.
20. It is recommended that a firm in the higher echelon of an efficient supply chain have
a. delivery by air.
b. high-capacity cushions.
c. low inventory investments.
d. low-capacity utilization.
21. Firms in a responsive supply chain are expected to have
a. long delivery times.
b. high inventory investments.
c. flexible flow process.
d. low-capacity cushions.
22. It is desirable for a firm in a responsive supply chain to have
a. low-capacity cushions.
b. delivery by railroad.
c. high-capacity utilization consistent with high-volume delivery.
d. low inventory investments consistent with fast delivery times.
23. It is recommended that a firm in a responsive supply chain should have
a. volume flexibility.
b. flexible quality policy.
c. standardized product.
d. low-capacity cushion.
24. The objective of a firm in a responsive supply chain is likely to be realized if it has a
a. standardized product.
b. short lead time.
c. low-capacity cushion.
d. line flow process.
25. One source of disruption caused by the internal supply chain is
a. forecast error.
b. underfilled shipments.
c. volume changes.
d. late deliveries.
26. One source of disruption caused by the external supply chain is
a. product or sales promotions.
b. new product or service introduction.
c. late deliveries.
d. engineering changes.
27. Possible causes of disruption due to internal supply chain are
a. late deliveries.
b. machine breakdowns or inexperienced workers.
c. product and service mix changes.
d. underfilled shipments.
28. Last year, CMS Enterprises had total inventories (raw materials, work-in-process, and finished goods) of $5.5 million. During this same year the cost of goods sold was $22 million. The company operates 52 weeks per year. What is the total inventory (measured as weeks of supply) held by CMS Enterprises last year?
a. Less than or equal to 10 weeks of supply
b. Greater than 10 but less than or equal to 12 weeks of supply
c. Greater than 12 but less than or equal to 14 weeks of supply
d. Greater than 14 weeks of supply
29. Henderson Corporation is a supplier of alloy ball bearings to auto manufacturers in Detroit. Because of the specialized manufacturing process employed, considerable work-in-process and raw material inventories are created. The current inventory levels are $1,152,000 and $2,725,000, respectively. In addition, finished goods inventory is $3,225,000, and sales (at cost) for the current year are expected to be about $24 million. The inventory turnover that Henderson Corporation is currently expecting is
a. less than 2.0.
b. greater than 2.0 but less than 2.5.
c. greater than 2.5 but less than 3.0.
d. greater than 3.0.
30. Maple Leaf, Inc., a television manufacturer, would like to reduce its inventory. To this end, you are asked by the operations manager to assess its inventory level. You have the following information on inventories from last year's financial statement:
Raw materials $2,500,000
Work-in-process $1,000,000
Finished goods $ 800,000
In addition, the cost of goods sold last year (50 weeks) was $15 million. What was the inventory turnover?
a. Less than or equal to 2
b. Greater than 2 but less than 3
c. Greater than 3 but less than 4
d. Greater than 4
31. The average inventory at Hamilton Industries, comprising raw materials, work-in-process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.
a. Less than or equal to 3.50
b. Greater than 3.50 but less than 3.75
c. Greater than 3.75 but less than 4.00
d. Greater than 4.00
32. Marvin Johnson, Jr., materials manager at Johnson & Sons, has determined that a certain product experienced 3.8 turns last year. Johnson & Sons operates 52 weeks a year, and its annual sales volume (at cost) was $975,000. What was the average inventory value for this product last year?
a. Less than or equal to $150,000
b. Greater than $150,00 but less than or equal to $300,000
c. Greater than $300,00 but less than or equal to $450,000
d. Greater than $450,000
33. Which one of the following basic patterns of demand is difficult to predict because it is affected by national or international events or because of a lack of demand history reflecting the stages of demand from product development to decline?
a. Horizontal
b. Seasonal
c. Random
d. Cyclical
34. Which one of the following statements about the patterns of a demand series is FALSE?
a. The five basic patterns of most business demand series are the horizontal, trend, seasonal, cyclical, and random.
b. Estimating cyclical movement is difficult. Forecasters do not know the duration of the cycle because they cannot predict the events that cause it.
c. The trend, over an extended period of time, always increases the average level of the series.
d. Every demand series has at least the following two components: horizontal and random.
35. Which one of the following is a leading indicator for the general business cycle?
a. Residential building contracts
b. Retail sales
c. Unemployment figures
d. Bank rates on business loans
36. Which one of the following is a coincident indicator for the general business cycle?
a. Residential building contracts
b. Retail sales
c. Unemployment figures
d. Bank rates on business loans
37. Which one of the following indicators is a lagging indicator of the general business cycle?
a. Residential building contracts
b. Retail sales
c. Unemployment figures
d. Price changes of a major competitor
38. Which one of the following statements about demand indicators is TRUE?
a. Leading indicators are time series with turning points that generally match those of the general business cycle.
b. Coincident indicators are time series with turning points that typically precede the peaks and troughs of the general business cycle.
c. Lagging indicators follow the turning points, typically by several weeks or months.
d. Demand indicators are time series that are used to predict random errors in a forecast before they occur.
39. Which one of the following factors affecting demand for goods and services is an external factor?
a. Product design
b. Consumer tastes
c. Price and advertising promotions
d. Packaging design
40. Which one of the following factors affecting demand for goods and services is an external factor?
a. Salesperson quotas or incentives
b. Expansion or contraction of geographical market target areas
c. Government actions
d. Product mix
41. An example of an external factor affecting the demand for goods or services is
a. product mix changes.
b. the company's price and advertising promotions.
c. backlog policy.
d. competitor pricing actions.
42. Which one of the following factors affecting demand for goods and services is an internal factor?
a. Backlog policy
b. General state of the economy
c. Competitor actions
d. Consumer tastes
43. Which one of the following factors affecting demand is an internal factor?
a. Public image of the product
b. competitor actions
c. Availability and cost of complementary products
d. Expansion or contraction of geographical market target areas.
44. Which one of the following statements about forecasting is FALSE?
a. To achieve the objective of developing a useful forecast from the information at hand, the forecaster must select the appropriate technique. This choice sometimes involves a trade-off between forecast accuracy and cost.
b. Three general types of forecasting techniques are used for demand forecasting: time-series analysis, causal methods, and judgment methods.
c. Time series express the relationship between the factor to be forecast and related factors, such as promotional campaigns, economic conditions, and competitor actions.
d. A time series is a list of repeated observations of a phenomenon, such as demand, arranged in the order in which they actually occurred.
45. Which one of the following statements about forecasting is TRUE?
a. The five basic patterns of demand are the horizontal, trend, seasonal, cyclical, and the subjective judgment of forecasters.
b. Judgment methods are designed particularly for situations when historical data are lacking.
c. Casual methods are used when historical data are available and the relationship between the factor to be forecast and other external and internal factors cannot be identified.
d. Focused forecasting is a technique that focuses on one particular component of demand and develops a forecast from it.
46. Which one of the following statements is FALSE?
a. Managers are typically interested in forecasts of unit demand for individual products for the short term.
b. Causal models are the methods most often used for short-term forecasting.
c. In the short term, operations managers rarely can wait for the development of causal models, even though these models may be more accurate than time-series models.
d. Managers use judgment methods for short-term forecasts when historical data are not available for a specific term.
47. Which one of the following statements about forecasting is FALSE?
a. In the short term (here, 0-3 months in the future), managers are typically interested in forecasts of total sales and groups (or families) of products.
b. Time-series analysis is the method most often used for short-term forecasting.
c. The need for medium-term forecasts arises from planning problems related to issues of capacity.
d. Determining turning points is very important for the operations manager, particularly in the medium and long term.
48. Which one of the following statements about forecasting is TRUE?
a. Determining turning points, which are periods when the growth rate of demand will change, can best be accomplished with time-series methods.
b. In the short-term (here, 1-3 months in the future), managers are typically interested in forecasts of total sales and groups or families of products.
c. Causal models are the methods most often used for short-term forecasting.
d. For time horizons exceeding two years, forecasts are usually developed for total sales demand in dollars or some other common unit of measurement, such as barrels, pounds, or kilowatts.
49. Using sales force estimates for forecasting has the advantage that
a. no biases exist in the forecasts.
b. statistical estimates of seasonal factors are more precise than any other approach.
c. forecasts of individual sale force members can be easily combined to get regional or national sales totals.
d. confusion between customer "wants" (wish list) and customer "needs" (necessary purchases) is eliminated.
50. Which one of the following is an example of a time-series forecasting technique?
a. Survey analysis
b. Delphi method
c. Trend-adjusted exponential smoothing
d. Market research
51. The judgment methods of forecasting are to be used for purposes of
a. making adjustments to quantitative forecasts due to unusual circumstances.
b. forecasting seasonal demands in lieu of time-series approaches.
c. avoiding the calculations necessary for quantitative forecasts.
d. making forecasts more variable.
52. The Delphi method of forecasting is useful when
a. judgment and opinion are the only bases for making informed projections.
b. a systematic approach to creating and testing hypotheses is needed and the data are usually gathered by sending a questionnaire to consumers.
c. historical data are available and the relationship between the factor to be forecast and other external or internal factors can be identified.
d. historical data is available and the best basis for making projections is to use past demand patterns.
53. Which one of the following statements about forecasting is FALSE?
a. You should use the simple moving average method to estimate the mean demand of a time series that has a pronounced trend and seasonal influences.
b. The weighted moving average method allows forecasters to emphasize recent demand over earlier demand. The forecast will be more responsive to change in the underlying average of the demand series.
c. The most frequently used time-series forecasting method is exponential smoothing because of its simplicity and the small amount of data needed to support it.
d. In exponential smoothing, higher values place greater weight on recent demands in computing the average.
54. When the underlying mean of a time series changes frequently but there is no trend, cyclical, or seasonal influence,
a. a simple moving average forecast with n = 20 should outperform a simple moving average forecast with n = 3.
b. a simple moving average forecast with n = 3 should outperform a simple moving average forecast with n = 20.
c. a simple moving average forecast with n = 20 should perform about the same as a simple moving average forecast with n = 3.
d. an exponential smoothing forecast with a = 0.01 should outperform a simple moving average forecast with a = 0.30.
55. When the underlying mean of a time series is very stable and there are no trend, cyclical, or seasonal influences,
a. a simple moving average forecast with n = 20 should outperform a simple moving average forecast with n = 3.
b. a simple moving average forecast with n = 3 should outperform a simple moving average forecast with n = 20.
c. a simple moving average forecast with n = 20 should perform about the same as a simple moving average forecast with n = 3.
d. an exponential smoothing forecast with a = 0.30 should outperform a simple moving average forecast with a = 0.01.
56. With the trend-adjusted exponential smoothing method,
a. the forecast for the next period is simply the average computed this period.
b. an estimate of the trend is computed by taking the difference between the demand this period and the demand last period to avoid lengthy averaging calculations.
c. the only smoothing is done on the trend estimates using exponential smoothing.
d. the forecast can be adjusted to account for changes in the trend.
57. With the multiplicative seasonal method of forecasting,
a. the times series cannot exhibit a trend.
b. seasonal factors are multiplied by an estimate of average demand to arrive at a seasonal forecast.
c. the seasonal amplitude is a constant, regardless of the magnitude of average demand.
d. there can only be four seasons in the time-series data.
58. The multiplicative seasonal method is most appropriate when
a. the seasonal influence is a constant regardless of the level of demand.
b. the seasonal influence is erratic, changing in the timing of the peaks and valleys.
c. the seasonal influence is dependent on the level of demand.
d. the demand each period is a constant multiple of the demand in the previous period.
59. Which one of the following statements about forecasting is FALSE?
a. The method for incorporating a trend in an exponentially smoothed forecast requires the estimation of three smoothing constants: one for the mean, one for the trend, and one for the error.
b. The cumulative sum of forecast errors (CFE) is useful in measuring the bias in a forecast.
c. The standard deviation and the mean absolute deviation measure the dispersion of forecast errors.
d. A tracking signal is a measure that indicates whether a method of forecasting has any built-in biases over a period of time.
60. Which one of the following is most useful for measuring the bias in a forecast?
a. Cumulative sum of forecast errors
b. Standard deviation of forecast errors
c. Mean absolute deviation of forecast errors
d. Percentage forecast error in period t
61. Which one of the following time-series forecasting methods will generate the most accurate forecasts when demands have a consistent trend pattern?
a. Simple moving average method
b. Weighted moving average method
c. Exponential smoothing method
d. Trend-adjusted exponential smoothing method
62. A tracking signal greater than zero and a mean absolute deviation greater than zero imply that the forecast has
a. no bias and no variability of forecast error.
b. a nonzero amount of bias and a nonzero amount of forecast error variability.
c. no bias and a nonzero amount of forecast error variability.
d. a nonzero amount of bias and no variability of forecast error.
63. Assume that a time-series forecast is generated for future demand, and subsequently it is observed that the forecast method did not accurately predict the actual demand. Specifically, the forecast errors were found to be:
Mean absolute percent error= 10%
Cumulative sum of forecast errors = 0%
Which one of the statements concerning this forecast is TRUE?
a. The forecast has no bias but has a positive standard deviation of errors.
b. The forecast has a positive bias and a standard deviation of errors equal to zero.
c. The forecast has no bias and has a standard deviation of errors equal to zero.
d. The forecast has a positive bias and a positive standard deviation of errors.
64. Which one of the following is an example of causal forecasting technique?
a. Weighted moving average
b. Linear regression
c. Exponential smoothing
d. Delphi method