Chapter 1 Introduction To Supply Chain Management-Merged Removed

Chapter 1 - Introduction to Supply Chain Management
57. The Department of Transportation was created by the 1920 Transportation Act.
a. True
b. False
ANSWER: False
POINTS: 1
58. Private warehouses refer to warehouses that are owned by the firm storing the goods.
a. True
b. False
ANSWER: True
POINTS: 1
59. Efficient supply chain management distribution requires that modern warehouses concentrate their efforts on a wide
array of warehousing and distribution functions like storing purchases, work in progress inventories, and finished goods
inventories, receiving shipments, breaking down shipments, repackaging, and the distribution of components.
a. True
b. False
ANSWER: True
POINTS: 1
60. Risk pooling is a strategy that attempts to use fewer warehouses to decrease the required safety stock levels since the
negatively correlated market demands reduce the overall demand variance across the markets which the centralized
warehouse services.
a. True
b. False
ANSWER: True
POINTS: 1
61. International intermediaries can provide shipping, consolidation, and other import and export services. Some examples
of these international intermediaries include: foreign freight forwarders, NVOCCs, FTZs, and TOFCs.
a. True
b. False
ANSWER: False
POINTS: 1
62. Some of the e-commerce related services that transportation companies offer nowadays to remain competitive include
allowing customers to plan itineraries, get freight quotes, and track shipments online.
a. True
b. False
ANSWER: True
POINTS: 1
Multiple Choice
63. Which of the following statement is TRUE of many large firms today?
a. They are selling-off business units to focus more on core capabilities
b. They are trying to create alliances or strategic partnerships with suppliers
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c. They are paying closer attention to what their direct customers really think of the goods and services bought
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Comprehension
OTHER: Analytic
NOTES: 1-1
64. According to the textbook, conditions which must be present for successful supply chain management include:
a. Cooperation among firms
b. Corporate contracts regarding performance expectations
c. Short-term company focused performance
d. Vertical Integration
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Knowledge
OTHER: Analytic
NOTES: 1-2
65. According to the text, the FOUR important elements of the supply chain are:
a. Purchasing, manufacturing, transportation, retail stores
b. Supply, operations, logistics, integration
c. Purchasing, manufacturing, logistics, transportation
d. Supply, operations, manufacturing, distribution
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-2
66. Which of the following can be classified as a 3PL?

a. A company that offers warehousing services
b. A company that offers transportation services
c. A company that offers customs clearing services
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
67. The following supply chain concept was introduced in the 1990's in an attempt to reduce waste and increase
performance:
a. Business Process Reengineering
b. Offshoring
c. Vertical Integration
d. Material Requirement Planning
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
68. Encouraging or helping a firm's suppliers to perform in a desired fashion can be referred to as:
a. Progressive procurement
b. Supplier management
c. Right-shoring
d. Supply chain performance management
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
69. One operational method for managing inventory is the implementation of a software system which can be referred to
as:
a. Material requirements planning (MRP)
b. Demand capacity tracking (DCT)
c. Inventory sourcing (IS)
d. Demand process reengineering (DPR)
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Technology
NOTES: 1-3
70. A factor that encourages and enables firms to work together more effectively than ever before is
a. More people are opening small specialized mom-and-pop businesses
b. Competition is contracting in all industries and markets around the world
c. Communication technologies make partnerships much easier than ever before
d. Companies are adopting 3 working shifts
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Technology
NOTES: 1-3
71. According to the textbook, the order of product & service flow is as follows:
a. Raw material supplier, retailer, component manufacturer, wholesale distributor, end product manufacturer,
end-product consumer
b. Raw material supplier, component manufacturer, retailer, wholesale distributor, end product manufacturer,
c. Component manufacturer, raw material supplier, retailer, wholesale distributor, end product manufacturer,
d. Raw material supplier, component manufacturer, end product manufacturer, wholesale distributor, retailer,
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
72. Which of the following is a reverse logistics activity:

a. Recycling products and components
b. Delivering finished goods to your customer
c. Developing a collaborative relationship with your supplier
d. Managing the quality of products
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
73. A certain supply chain is made up of:

1. Raw Materials Supplier
2. Components Manufacturer
3. A firm that manufacturers Sub-assemblies
4. End Item Manufacturer
5. Wholesale Distributor
6. Local Retail Chain Warehouse
Who is considered the second tier supplier of the firm that manufacturers Sub-assemblies?
a. Raw Materials Supplier
b. Wholesale Distributor
c. The final end item consumer
d. Components Manufacturer
e. Local Retail Chain Warehouse

ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
74. A certain supply chain is made up of:

1. Raw Materials Supplier
2. Components Manufacturer
3. A firm that manufacturers Sub-assemblies
4. End Item Manufacturer
5. Wholesale Distributor
6. Local Retail Chain Warehouse
Who is considered the End Item Manufacturer's second tier supplier?
a. Raw Materials Supplier
b. Wholesale Distributor
c. The final end item consumer
d. Components Manufacturer
e. Local Retail Chain Warehouse
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
75. The following is an example of the bullwhip effect:

a. Barkley's produces a defective product and thus realizes an excessive increase in consumer returns
b. Barkley's products are so successful that it adds a new retailer for distribution
c. Barkley's incorrectly anticipates consumer demand resulting in stockouts at several popular retailers
d. Barkley's is unhappy with the performance of a distributor which causes a chain-reaction of replacements to
companies involved in its supply chain
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Application
OTHER: Analytic
NOTES: 1-3
76. Which of the following would be considered a third party provider?

a. A Raw materials supplier
b. An intermediate component manufacturer
c. A firm that leases storage warehousing
d. An end product manufacturer

ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
77. Which of the following statements is TRUE?

a. Supply chain management was invented by the auto manufacturing industry
b. Strategic partnerships are seen as one of the foundations of supply chain management
c. Purchasing is seen as the final and most difficult step in the supply chain
d. Service response logistics is the digital distribution of services
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
78. Which of the following acronyms is NOT paired with its correct "translation?"
a. TQM - Total Quality Management
b. JIT - Just-in-Time
c. MRP - Manufacturing Responsiveness and Planning
d. ERP - Enterprise Resource Planning
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
79. Transportation management, customer relationship management, distribution network, and service response logistics
are all important issues that are most closely related to:
a. Purchasing
b. Manufacturing
c. Integration
d. Logistics
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3

80. Lean production is typically associated with which of the following company's production systems?
a. Proctor and Gamble
b. Toyota
c. Boeing
d. Intel
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
81. Which of the following is strategy usually employed by lean organizations in an effort to ensure continued quality
compliance among suppliers and with internal production facilities?
a. MRP II
b. Six Sigma
c. 3PL
d. CAPS
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
82. Assembly or production of finished products, producing the right amount of product, and ensuring that finished
products meet specific quality, cost, and customer service requirements are all important issues that are most closely
related to:
a. Purchasing
b. Operations
c. Integration
d. Distribution
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
83. Right-shoring refers to:

a. An expansion of the supply chain
b. Contraction activities within the supply chain
c. An increase in the responsiveness of the supply chain
d. A decrease in the responsiveness of the supply chain
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
84. Which of the following can be classified as a 3PL?

a. A company that offers warehousing services
b. A company that offers transportation services
c. A company that offers customs clearing services
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
85. Which of the following was a popular way in the 1990's of developing radically new business processes in an effort to
reduce waste and increase performance?
a. Business process reengineering
b. Benchmarking
c. Process integration
d. Vertical integration
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-4
86. The term Supply Chain Management and the field of study it represents today seems to have emerged in the:
a. 1980's
b. 1970's
c. 1960's
d. 1990's
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-4
87. An internal or external event that causes a disruption or failure of supply chain operations is an example of
a. Bull-whip effect
b. Back-shoring
c. Supply chain risk
d. Six Sigma quality management
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-4
88. Which of the following is not one of the features of the new model of progressive purchasing?
a. Developing closer relationships with important suppliers.
b. Performing due diligence on suppliers before awarding longer-term contracts.
c. Focusing primarily on price analysis and short term contracts.
d. Conducting worldwide Internet searches for the best sources of supply.
e. Inviting key suppliers to participate in product and process development.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
KEYWORDS: Bloom’s: Understanding
OTHER: Analytic
NOTES: 1
89. Which of the following is not one of the factors driving an emphasis on supply chain management?
a. An increasing emphasis on domestic sourcing due to the longer lead times and higher levels of pipeline
inventories associated with global sourcing.
b. The cost and availability of information resources among entities in the supply chain that allow easy linkages
that eliminate time delays in the network.
c. The level of competition in both domestic and international markets requires organizations to be fast, agile,
and flexible.
d. Customer expectations and requirements that are becoming much more demanding.
e. The ability of an organization’s supply chain to identify and mitigate risk minimizes disruptions in both supply
and downstream product or services to mitigate the impact on lost sales.
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 1
90. _____ is a functional group (i.e., a formal entity on the organizational chart as well as a functional activity (i.e.,
buying goods and services).
a. Engineering
b. Purchasing
c. Quality assurance
d. Logistics
e. Treasury operations
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
KEYWORDS: Bloom’s: Remembering
OTHER: Analytic
NOTES: 1
91. The _____ is a change index, and generally a rating over 50 indicates that the economy is expanding.
a. Consumer Price Index
b. Producer Price Index
c. ISM Report on Business
d. rate of inflation
e. None of the above.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1
92. According to the Institute for Supply Management, _____ is the identification, acquisition, access, positioning, and
management of resources and related capabilities an organization needs or potentially needs in the attainment of its
strategic objectives.
a. supply chain management
b. procurement
c. logistics
d. supply management
e. distribution
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1
93. Instead of adversarial relationships which characterize _____, _____ features a long-term, win-win relationship
between a buying company and specially selected suppliers.
a. traditional purchasing….supply management
b. traditional purchasing….logistics management
c. supply management….traditional purchasing
d. strategic sourcing….supply management
e. supply chain management….strategic sourcing
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 1
94. A _____ is a set of three or more organizations linked directly by one or more of the upstream or downstream flows of
products, services, finances, and information from a source to a customer.
a. process
b. manufacturing system
c. value chain
d. social media chain
e. supply chain
ANSWER: e
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2
95. All of the following are typical processes involved in supply chain management except _____.
a. new-product development
b. customer-order fulfillment
c. supplier evaluation and selection
d. demand and supply planning
e. cash flow management
ANSWER: e
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2
96. According to Michael Porter, a firm’s _____ is composed of primary and secondary support activities that can lead to
competitive advantage when configured properly.
a. supply chain
b. process
c. value chain
d. marketing channel
e. core competency
ANSWER: c
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 2
97. The _____ states that success is a function of effectively managing a linked group of firms past first-level suppliers or
customers.
a. supply chain orientation
b. value chain concept
c. traditional purchasing perspective
d. extended enterprise concept
e. process orientation
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 2
98. _____ are those items provided by suppliers and used directly during production or service delivery.
a. Direct materials
b. Indirect materials
c. Indirect services
d. Internal materials
e. Vendor managed inventories
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2
99. Which of the following is an example of a purchased direct item for a manufacturing firm?
a. Parts and components.
b. Travel.
c. Office and janitorial supplies.
d. Advertising and media.
e. Personal computers.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3
100. Within the downstream portion of a supply chain, _____ are responsible for the actual movement of materials
between locations.
a. buyers
b. trucking firms
c. logistics managers
d. accountants
e. purchasing managers
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3
101. Which of the following is not an example of a typical resource shared between a buyer and supplier?
a. Dedicated capacity.
b. Specific information.
c. Technological capabilities.
d. Direct financial support.
e. Advertising and media.
ANSWER: e
POINTS: 1
OTHER: Analytic
NOTES: 3
102. All of the following are examples of demand planning activities except _____.
a. forecasts of anticipated demand
b. accounts payable
c. inventory adjustments
d. orders taken but not filled
e. spare parts and aftermarket requirements
ANSWER: b
POINTS: 1
OTHER: Analytic
NOTES: 3
103. _____ schedules the firm’s output; while _____ is the process of taking demand data and developing a supply,
production, and logistics network capable of satisfying demand requirements.
a. Inventory control….quality control
b. Quality control….supply planning
c. Order processing….material control
d. Demand planning….customer service

e. Demand planning….supply planning

ANSWER: e
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3
104. _____ involves generating the materials release, contacting a supplier directly concerning changes, and monitoring
the status of inbound shipments.
a. Order processing
b. Material control
c. Warehousing
d. Customer service
e. Quality control
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3
105. _____ helps ensure that customers receive material when and where they require it and represents the key link
between the producer and the external customer.
a. Order processing
b. Inbound transportation
c. Customer service
d. Scheduling
e. Inventory control
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3
106. The _____ activity involves physically getting a product ready for distribution to the customer.
a. customer service
b. material control
c. materials handling
d. quality control
e. shipping
ANSWER: e
POINTS: 1

DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3
107. Which of the following is not one of the four enablers of purchasing and supply chain management?
a. Sufficient cash flow and large on-hand cash deposits.
b. Capable human resources.
c. Proper organizational design.
d. Real-time collaborative technology capabilities.
e. Right measures and measurement systems.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 4
108. Recent research indicates that all of the following are top knowledge areas for purchasers except _____.
a. supplier relationship management
b. total cost analysis
c. supplier analysis
d. consumer behavior
e. competitive market analysis
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 4
109. _____ refers to the process of assessing and selecting the structure and formal system of communication, division of
labor, coordination, control, authority, and responsibility required to achieve organizational goals and objectives,
including supply chain objectives.
a. Supply chain orientation
b. Human resource management
c. Demand planning
d. Organizational design
e. Extended value chain
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic

NOTES: 4
110. _____ seeks to improve forecast accuracy, optimize production scheduling, reduce working capital costs, shorten
cycle times, cut transportation costs, and improve customer service; while _____ helps obtain materials and manage
physical flows from suppliers through downstream distribution to ensure that customers receive the right products at the
right location, time, and cost.
a. RFID….GPS
b. Execution software….planning software
c. Customer service….inbound transportation
d. The process approach….cost management
e. Planning software….execution software
ANSWER: e
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 4
111. All of the following are roadblocks between measurement and improved performance except _____.
a. up-to-date information technology
b. too many metrics
c. debate over the correct metrics
d. constantly changing metrics
e. old data
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 4
112. The supply chain management element that plans, implements, and controls the efficient, effective forward and
reverse flow and storage of goods, services and related information between the point of origin and the point of
consumption in order to meet customers' requirements is also referred to as:
a. Operations
b. Transportation planning
c. Logistics
d. Procurement
ANSWER: c
POINTS: 1
113. Which of the following carriers typically transports goods for the company that owns the carrier, they are not subject
to economic regulation, and since the fleets are rather large the cost of transport is very likely less than if the company had
hired another company to provide the service?
a. Common carrier
b. Exempt Carrier
c. Contract Carrier
d. Private Carrier
ANSWER: d
POINTS: 1
114. What does LTL stand for in the transportation industry?

a. Logistical Train-car Lift
b. Less-Than-Truckload
c. Large Truck Leasing
d. Local Train Logistics carriers
ANSWER: b
POINTS: 1
115. Which of the following types of warehouses takes a large number of LTL shipments and repackages them in TL or
CL quantities to a manufacturer or user-facility located in another area or region?
a. Consolidation warehouse
b. Private warehouse
c. Breakbulk warehouse
d. Public warehouse
ANSWER: a
POINTS: 1
116. Which of the following modes of cargo transport can be characterized as being the most inexpensive and very slow,
yet good for transporting very heavy goods a long-distance?
a. Air Carriers
b. Rail Carriers
c. Water Carriers
d. Motor Carriers
ANSWER: c
POINTS: 1
117. What is the abbreviation for a truck trailer which is placed on a flat railcar that would then be pulled by a train
engine?
a. TOFC
b. COFC
c. NVOCC
d. TTFC
ANSWER: a
POINTS: 1
118. According to the textbook, the largest ocean containerships can carry how many twenty-foot containers?
a. Between 3,000 and 5,000
b. Between 5,000 and 8,000
c. Between 8,000 and 10,000
d. Over 10,000

ANSWER: d
POINTS: 1
119. Real time location systems (RTLS) are used for the following type of transportation:
a. Motor carriers
b. Rail Carriers
c. Air carriers
d. Water carriers
ANSWER: b
POINTS: 1
120. Which of the following is NOT a characteristic of cost-of-service pricing?

a. Prices are established based on fixed and variable costs of transportation
b. Prices vary based on volume and distance
c. Prices tend to rise as shipping distance increases
d. Carriers price their services at the highest levels the markets will bear
ANSWER: d
POINTS: 1
121. According to the text, FOB destination pricing is typically preferred for all of the following EXCEPT:
a. High-value shipments
b. Buyer has little transportation expertise
c. Buyer is purchasing a reoccurring order
d. Small shipments
ANSWER: c
POINTS: 1
122. The first major transportation regulation in the U.S. was which of the following:
a. Interstate Commerce Act
b. Motor Carrier Act
c. Granger Laws
d. Interstate Initiation Act
ANSWER: c
POINTS: 1
123. Which of the following would be considered an act of deregulation?

a. Reed Bullwinkle act − legalized rate bureaus or conferences
b. Granger law − Established maximum rates, prohibited discrimination, and forbade mergers for railroads.
c. Trucking Industry Regulatory Reform Act − Motor carriers freed from filing rates with the Interstate
Commerce Commission
d. Freight Forwarders Act − Allowed Interstate Commerce Commission control over freight forwarders;
controlled entry, rates, and services.
ANSWER: c
POINTS: 1
124. The transportation legislation that created the Interstate Commerce Commission (ICC) was which of the following:
a. Interstate Commerce Act

b. Motor Carrier Act
c. Granger Laws
d. Interstate Initiation Act
ANSWER: a
POINTS: 1
125. Which of the following legislative acts is NOT in support of transportation deregulation?
a. Railroad Revitalization and Regulatory Reform Act
b. Staggers Rail Act
c. FAA Authorization Act
d. Reed-Bulwinkle Act
ANSWER: d
POINTS: 1
126. The acts of receiving shipments, breaking down shipments, repackaging shipments, and distributing components to a
manufacturing location or finished products to customers by a distribution center is referred to as:
a. Piggy backing
b. Crossdocking
c. Transshipping
d. Customs Brokering
ANSWER: b
POINTS: 1
127. According to the text, currently the three largest private warehouse operators in North America are:
a. United Parcel Service, Wal-Mart and Sears Holding Corp.
b. United Parcel Service, Target and U.S. Army
c. Target, Microsoft and U.S. Army
d. Wal-Mart, Ford Motor Corp. and U.S. Army
ANSWER: a
POINTS: 1
128. Public warehouses can provide a wide range of services. Which of the following is NOT one of the services offered
by public warehouses?
a. Breakbulk
b. Assembly
c. Repackaging
d. High security shipment
ANSWER: d
POINTS: 1
129. Which of the following is NOT consistent with a decentralized warehousing system?
a. Higher safety stocks required
b. Shorter lead times
c. Lower transportation fees
d. Lower total operating costs

ANSWER: d
POINTS: 1
130. A furniture manufacturer presently owns a total of four warehouses in the following cities Sacramento, Phoenix,
Cincinnati, and Atlanta. The average inventory levels for the four warehouses are 8000 units, 10,000 units, 10,000 units,
and 8000 units, respectively. They plan on moving all of their inventory to one warehouse in Memphis. Using the square
root rule, what will be the required average inventory level at the new central Memphis warehouse required to maintain
the system's present 98% customer service level? (Choose the closest answer.)
a. 9000
b. 18000
c. 20000
d. 24500
ANSWER: d
POINTS: 1
131. According to the text, a warehouse location strategy that proposes locating a warehouse closest to the sources of
supply is referred to as:
a. Market positioned strategy
b. Supply positioned strategy
c. Product positioned strategy
d. Intermediately positioned strategy
ANSWER: c
POINTS: 1
132. The following are all examples of lean warehousing capabilities EXCEPT:
a. Decreased assembly operations
b. Greater emphasis on crossdocking
c. Reduced lot sizes and shipping quantities
d. Increased automation
ANSWER: a
POINTS: 1
133. A transportation intermediary used to consolidate large numbers of small shipments to fill entire truck trailers or rail
cars to achieve truckload or carload transportation rates is referred to as:
a. Consolidation forwarder
b. Load broker
c. Transportation broker
d. Freight forwarder
ANSWER: d
POINTS: 1
134. Which of the following was NOT mentioned in the textbook as being one of the more popular logistics management
software applications?
a. Transportation management systems
b. Freight management systems
c. Warehouse management systems

d. Returns management systems
ANSWER: b
POINTS: 1
135. Which of the following is similar to a travel agent for cargo since they provide services like documentation
completion, special rate handling, and customs clearance, in addition to their consolidating of small shipments to fill
entire truckloads?
a. Transportation Broker
b. Freight Forwarder
c. Shippers' Association
d. Integrated Logistics Service Provider
ANSWER: b
POINTS: 1
136. Which of the following international intermediaries helps foreign buyers and sellers find each other and then handles
all of the shipping arrangements and documentation preparation?
a. Customs broker
b. Foreign freight forwarder
c. Trading company
d. NVOCC
ANSWER: c
POINTS: 1
Subjective Short Answer
137. There are many definitions for supply chain management.a. Define supply chain management in your own words. b.
What is the goal of supply chain management?
ANSWER:
a. Supply chain management is managing the activities involved in sourcing, production, and
distribution of products. It is also involved in coordinating or integrating a number of goods-
and services-related activities among supply chain participants.
b. The goal of supply chain management typically involves improving operating efficiencies,
increasing quality of products and strengthening customer service among the collaborating
organizations.
POINTS: 5
OTHER: Communication
NOTES: 1-1
138. Explain the concept of 'value-enhancing benefits' by giving THREE examples of benefits that may be realized by a
firm that successfully manages its supply chain.
ANSWER: Benefits from successfully managing the supply chain
a. Lower purchasing and inventory carrying costs
b. Better product quality
c. Higher levels of customer service

d. Increase in sales.
POINTS: 5
NOTES: 1-2
139. Briefly explain how technology has impacted supply chain management? Give three examples.
ANSWER: How technology has impacted supply chain management
a. Shipments can be tracked and monitored using technology and alerts sent
to shippers about items that are in transit and delivered.
b. Technology can be used to help a facility make more economic use of
their utilities such as automated controls for lighting and air conditioning.
c. RFID and automated storage and retrieval systemscan be used to move
product through a warehouse
d. Inventory visibility is made easier by technology and the use of MRP and
ERP systems.
POINTS: 5
OTHER: Technology
NOTES: 1-4
140. List three concepts used by supply chain managers in an attempt to make a firm more flexible and responsive to
customers' changing needs:
ANSWER: a. Agile manufacturing
b. JIT
c. Mass customization
d. Lean manufacturing
e. Quick response
POINTS: 5
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 1-3
141. Warehousing is considered a very important part of the transportation process. Why is it, though, that many buildings
that used to be called warehouses typically refer to themselves as distribution centers nowadays?
ANSWER: A complete answer should include the traditional role of warehouses, the changes to supply chains, and the
Cross-Docking activities now performed at distribution centers.
The traditional warehouse was seen as a means to provide customer service in the form of having inventory on
hand at all times so that the supply chain could react to customer needs without stressing manufacturing
facilities. Modern supply chains strive to practice many JIT objectives, which could include low inventories,
elimination of wasteful processes, fast deliveries, and supply chain flexibility. It is for this reason that
warehouses now consider themselves distribution centers whose primary objective is not to hold inventory, but
rather to receive, breakdown, repackage, and distribute components to customers.
Chapter 2 - Purchasing Management
OTHER: Analytic
NOTES: 2-5
18. Decentralized purchasing is the practice where individual, local purchasing departments throughout a single
corporation make their own, individual purchasing decisions to fulfill their individual local needs.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-7
19. NAFTA and the WTO are trade organizations seeking to reduce tariff and non-tariff barriers among its member
countries.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
OTHER: Diversity
NOTES: 2-8
20. Foreign suppliers located farther away may be able to deliver goods faster than domestic suppliers due to more
efficient transportation and logistical systems.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
OTHER: Diversity
NOTES: 2-8
Multiple Choice
21. Which of the following is a reason small value purchases are handled differently?
a. To give the buyer additional supplier choices
b. To obtain a higher quality product
c. To have better tracking of material usage
d. To control unnecessary administrative costs
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-3
22. Total Cost of Ownership does NOT consider which of the following factors?
a. Purchase order costs
b. Freight costs
c. Payment terms
d. Tooling costs
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-5
23. The primary goals of purchasing include all EXCEPT:

a. Secure materials at the lowest cost
b. Ensure the highest quality raw materials are purchased
c. Improve the quality of finished goods produced
d. Maximize customer satisfaction
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-1
24. The measurement of the impact of change in purchase spend on a firm profit before taxes, assuming gross sales and
other expenses remain unchanged, is referred to as:
a. Break-Even Analysis
b. Direct Offset
c. Profit-Leverage Effect
d. Leveraging Purchase Volume
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-1
25. When calculating Return on Investment, current assets include:

a. Cash, Accounts Receivable, and Inventory

b. Cash, Accounts Receivable, and Equipment
c. Accounts Receivable, Equipment, and Real Estate
d. Equipment, Buildings, and Real Estate
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-1
26. Which type of requisition is used for materials and standard parts that are requested on a recurring basis?
a. Open requisition
b. Blanket requisition
c. Traveling requisition
d. Recyclable requisition (Cyc-Rec)
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
27. Inventory Turnover can be calculated by:

a. Ratio of average inventory cost over cost of goods sold
b. Ratio of cost of goods sold over average inventory cost
c. Ratio of inventory days in stock over average inventory cost
d. Ratio of average inventory cost over inventory days in stock
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-1
28. Which of the following is a reason for favoring single sourcing?

a. Encourages competition among suppliers
b. Spreads the risk of supply interruption
c. Reduces variabilities in quality levels
d. Reduces information about new processing technologies
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-6
29. A form of purchasing that is placed directly to the supplier and suitable when firms use the same components to make
standard goods over a relatively long period of time is referred to as:
a. Material Requisition
b. Purchase Requisition
c. Planned Order Release
d. Traveling Requisition
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
30. When a material is not available in the warehouse and there is no current supplier for the item, the buyer must identify
a pool of suppliers and issue a:
a. Request for Quotation
b. Purchase Order
c. Contract for Sale
d. Sales Order
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
31. On occasion, firms assist suppliers, new or old, to improve their processing capabilities, product or service quality,
delivery effectiveness, and cost performance by providing the required technical and financial assistance. This is referred
to as:
a. Supplier development
b. Outsourcing
c. Centralized purchasing
d. Supplier hybridization
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
32. The Uniform Commercial Code governs the purchase and sale of goods in the US except in the state of:
a. Hawaii
b. Louisiana
c. Mississippi
d. South Dakota
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
33. Which of the following documents is considered the buyer's offer to purchase products or services from a supplier, is
legally binding once the supplier accepts it, and usually has the terms and conditions of purchase preprinted on the back of
the document?
a. Purchase requisition
b. Planned order release
c. Material requisition
d. Purchase order
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
34. Benefits derived from implementing e-procurement systems include all of the following EXCEPT:
a. Allows buyers to submit bids and suppliers to respond to those bids in real time
b. Increases the accuracy in communication between buyers and suppliers
c. Creates numerous additional job opportunities in the purchasing department
d. Tracking bids and transactions is easier and faster
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-2
35. Which of the following is an advantage of a centralized purchasing department?:

a. Quantity discounts
b. More frequent shipments
c. Closer contact between buyer and user
d. Better knowledge of unit requirements
ANSWER: a
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 2-7
36. Which of the following illustrates Forward Vertical Integration?

a. Microsoft starting a new division that designs and manufactures clothing
b. Ford automotive buying additional machines for production
c. Subway sandwich company buying a bakery to make the bread for their sandwiches.
d. Sony buying trucks to deliver their finished goods inventories to their customers' warehouses
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-4
37. Which of the following is NOT a potential challenge for global sourcing?:
a. Long delivery lead times
b. Costs involved in selecting foreign suppliers
c. Relaxed trade barriers
d. Labor and legal problems
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-8
38. Which of the following would be a good reason to outsource (buy) versus making?
a. A firm lacks the technology or expertise to produce an item
b. To utilize existing capacity within a company's own firm
c. To have more direct control over the design and production of an end item
d. No competent supplier presently produces the needed item
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-4
39. Given the following make-buy information, what would be the break-even point?
Make Option Buy Option

Fixed Costs $7500 $1500
Variable Costs $4 $9
a. 1200 units

b. 1708 units
c. 690 units
d. 460 units
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-4
40. Given the following make-buy information, what would be the break-even point?
Make Option Buy Option

Fixed Costs $15000 $1250
Variable Costs $5 $ 10
a. 917 units
b. 2875 units
c. 1083 units
d. 2750 units
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-4
41. As firms seek to improve the products they offer to the market, companies are seeking help from their suppliers in new
product design and development through:
a. Supplier certification programs
b. Manufacturer certification programs
c. Early supplier involvement
d. Total Cost of Ownership initiatives
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-4
42. Which of the following is a reason that single sourcing is considered risky/bad?
a. The buyer's required ordering quantities are very low
b. Larger orders make quantity discounts more likely
c. The limited (finite) capacity of one supplier
d. Decreases the item to item quality variability of items purchased
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-6
43. Which of the following statements is FALSE?

a. More than 50% of each sales dollar typically goes towards covering supply chain costs
b. Decentralized purchasing means not having any purchasing departments and allowing all employees to act as
purchasing agents
c. Electronic procurement systems can aid a company in saving both time and money
d. If a firm lacks the technology to make a required component they will need to consider buying/outsourcing.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-7
44. Which of the following is NOT a form of countertrade?

a. Barter
b. Offset
c. Incoterming
d. Counterpurchase
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Diversity
NOTES: 2-8
45. While most public procurement is focused on goals similar to those of purchasing departments in the private sector,
U.S. federal government purchases must comply with the:
a. Federal Acquisition Regulation
b. Fair Standards and Equitable Purchases Act
c. Federal Code of Conduct for Procurement
d. Services and Materials Acquisition Act
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 2-8

46. When using the Total Cost of Ownership concept, explain how a supplier with a higher unit price and higher tooling
cost can end up being more cost effective than another supplier with a lower unit price and tooling cost.
ANSWER: When calculating the Total Cost of Ownership, unit price and tooling cost are not the only criterion used
in supplier selection. Other qualitative and quantitative factors, including freight and inventory costs,
tariffs and duties, currency exchange fees, payment terms, maintenance and nonperformance costs should
be considered. After calculating these other factors, the Total Cost of Ownership may have been lower
with the second supplier.
POINTS: 5
NOTES: 2-5
47. Use what you understand about the outsourcing decision (Make vs. Buy) to answer this question. List and explain
three reasons a person might decide to buy a meal at a restaurant rather than making a meal at home.
ANSWER: Reasons a person might buy a meal at a restaurant
Cost - Cooking a very nice meal at home might require a large number of
a. ingredients. They may not be able to take advantages of economies of
scale, especially if they are buying for one person (or a very small group).
Insufficient Capacity − A person may not have time to shop for groceries
b.
and cook a meal.
Lack of expertise − This person may not know how to cook. Or perhaps
c.
they do not know how to cook the particular meal they desire.
Quality − While they may have the time, money, and skill to cook a specific
d.
meal, they may realize that the same meal is made better at a restaurant.
Similar answers with slightly different rationale may also be acceptable.
POINTS: 5
NOTES: 2-4
48. Answer the questions that follow, based on the diagram provided below

a. What are the fixed costs for the make decision?

b. What is the breakeven quantity for the two options illustrated?
c. At Q = 500, would you choose the make or buy option? Why?
d. At Q = 100, what will be the total cost associated with the best decision at this quantity?
ANSWER: a. What are the fixed costs for the make decision?
$3000
b. What is the breakeven quantity for the two options illustrated?

The Break-even quantity seems to be near 300 units. Anything within 290 and 320 would
probably deemed acceptable.
c. At Q = 500, would you choose the make or buy option? Why?

The make option is better since the total costs for making are about $4600 versus about
$6200 for buying.
d. At Q = 100, what will be the total cost associated with the best decision at this quantity?
The best decision is to buy, and the total cost is slightly over $1500.
POINTS: 5
KEYWORDS: Bloom’s: Analysis
OTHER: Analytic
NOTES: 2-4
49. Global sourcing has become commonplace. Many companies now consider expanding their supply base to include
foreign suppliers. List three reasons why companies choose to source globally.
ANSWER:
Lower price of materials (and services)
Overseas products may be of higher quality
Faster delivery times
Better array of services offered by the material supplier
Favorable exchange rates
Support local economies
Countertrade contracts
Chapter 3 - Creating and Managing Supplier Relationship
18. A SRM strategy refers to a situation wherein a supplier’s employee is permanently housed in the purchasing
department of the buyer’s organization.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-4
19. Smoother processes, faster cycle times, reduced new product development, and improved time-to-market are possible
benefits from the increased visibility that is offered by SRM software.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-4
20. It is critical that customers and suppliers develop stronger relationships and partnerships based on a tactical rather than
a strategic perspective.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-1
Multiple Choice
21. According to the text, key ingredients for developing successful supply partnerships include all of the following
EXCEPT:
a. Personal relationships
b. Individualized objectives
c. Mutual benefits and needs
d. Performance metrics
ANSWER: b
POINTS: 1
DIFFICULTY: Easy

OTHER: Analytic
NOTES: 3-2
22. Which of the following is important in developing successful relationships in a partnership?

a. Commitment by top management
b. Interpersonal relationships between employees of the companies
c. Mutual/compatible needs that result in a win-win situation for the partners
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-1
23. Which of the following is NOT important in developing a successful strategic alliance?
a. Developing performance metrics
b. Developing efficient processes that will remain unchanged for the duration of the partnership
c. Investigating the capabilities and core competencies of the supplier
d. Open lines of communication that both promote sharing and secure confidentiality
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-1
24. According to the text, one of the most basic and successful approaches to protecting trade secrets is:
a. Threat of litigation
b. Working with law makers to increase fines and sentences for those that steal trade secrets
c. Requiring employees and vendors to sign non-disclosure agreements
d. Requiring employees and partners to get ISO 9000 certified
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-2
25. According to the text, the goal of a good performance evaluation system is to provide metrics that are:
a. Understandable, easy to measure, focused on value-added results
b. Understandable, quantitative, focused of cost-related results
c. Understandable, qualitative, focused on performance-related results

d. Understandable, quantitative, focused on quality-related results
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
26. Supplier Development includes all EXCEPT which of the following?

a. Financial and human resource investments
b. Reducing the supply base
c. Training of the supplier’s personnel
d. Working with suppliers to lower the total cost of materials purchased
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-4
27. Costs associated with investigating alternative suppliers and investigating alternative delivery options can be classified
as:
a. Pre-transaction costs
b. Post-transaction costs
c. Transaction costs
d. All of these
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-2
28. The process of certifying a new supplier is considered what type of major cost category?
a. Pretransaction Cost
b. Supplier-Development Cost
c. Transaction Cost
d. Turnover Cost
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-2
29. Field failures, loss of goodwill, a decreased reputation, and warranty costs can all be classified as:
a. Pre-transaction costs
b. Post-transaction costs
c. Transaction costs
d. All of these
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-2
30. Which of the following is TRUE?

a. SRM software modules are very affordable (less than $50,000) and can be implemented with a week.
b. ISO 75000 is the supplier award given to the highest rated supplier in Japan.
c. The key to successful partnerships is developing performance measures with weights greater than 3.50.
d. Continuous improvement and change management are both keys to building successful partnerships.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-2
31. An organization's process for evaluating the quality systems of key suppliers in an effort to eliminate incoming
inspections can be referred to as:
a. Quality Systems Certification
b. Supply Management
c. Supplier Inspection
d. Supplier Certification
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
32. The benefits of implementing an effective supplier certification program include all of the following EXCEPT:
a. Building long-term beneficial relationships
b. Reducing time spent on incoming inspections
c. Increasing supplier base
d. Recognizing excellence
ANSWER: c

POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
33. When using a Weighted Criteria Evaluation System to evaluate suppliers, all of the following are true EXCEPT:
a. Select the key dimensions of performance based on what is important to the consumer
b. The weights for all dimensions must sum to 1
c. Evaluate each of the performance measures on a rating between zero and one-hundred
d. Multiply the dimension ratings by their respective important weights and then sum to get an overall weighted
score
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
34. Companies consider outsourcing more and more parts when it becomes increasingly more difficult to:
a. Find suppliers to do business with
b. Reward quality suppliers
c. Achieve further cost savings internally
d. Monitor supplier performance
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-4
35. A company using a weighted-criteria evaluation system has established these 3 categories and the appropriate weight
in parentheses: Quality(0.30), Delivery(0.20), Cost(0.50).
The scores for each category are shown below. Which of the following companies has the highest total score?
a. Company A: Quality(90), Delivery(80), Cost(60)
b. Company C: Quality(70), Delivery(80), Cost(80)
c. Company B: Quality(70), Delivery(90), Cost(80)
d. All companies scored the same.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
in parentheses: Quality(0.30), Delivery(0.40), Cost(0.30).
The scores for each category are shown below. Which of the following companies has the highest total score?
a. Company A: Quality(90), Delivery(80), Cost(60)
b. Company C: Quality(70), Delivery(95), Cost(60)
c. Company B: Quality(70), Delivery(80), Cost(80)
d. All companies scored the same.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
in parentheses:
Quality (0.25)
Responsiveness (0.10)
Delivery (0.20)
Cost (0.25)
Technology (0.20)
Company X received the following ratings in each of the five categories: Quality(90), Responsiveness(90), Delivery(80),
Cost(80), Technology(90). What is their total score?
a. 87.0
b. 85.5
c. 86.0
d. 86.5
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-3
38. Which third party certification was adopted by the European Union in 1992 that caused US suppliers wanting to stay
competitive in European Union countries to get certified?
a. ISO 14000
b. ISO 9000
c. European Supplier Certification Initiative (ESCI '92)
d. EU Third Party Initiative
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Diversity
NOTES: 3-3
39. Direct benefits of ISO 14000 include:

a. Reduced defect rates
b. Improved on-time delivery rates
c. Reduction of pollution emission
d. All of these
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Ethics
NOTES: 3-3
40. According to the textbook, which of the following companies utilizes a supplier development program called Supplier
Continuous Quality Improvement (SQDI) focused on improving the quality of the goods and services purchased and
minimize the time needed to inspect incoming products?
a. Target
b. Boeing
c. Intel
d. General Motors
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-4
41. The Hormel company awards their Hormel Food Corporation's No. 1 Award to their top supplier. How often to the
give this award?
a. Every year
b. Every 6 months
c. Every 5 years
d. Every 10 years
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-5
42. Supplier relationship management (SRM):

a. Improves sales force productivity and boosts customer satisfaction
b. Facilitates collaboration between an organization and its trading partners
c. Permanently houses a supplier’s employee in the purchasing department of the buyer’s organization
d. All of the these
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-6
43. Streamlining the processes and communications between the buyer and supplier using software applications that
enable these processes to be managed more efficiently and effectively can be referred to as:
a. CRM
b. SRM
c. ISO 9000
d. SCSS
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Technology
NOTES: 3-6
44. Summers, Inc. needs to generate a list of good/services purchased per supplier. Which type software program can the
manager consult to obtain the information?
a. ISO 9000
b. ISO 14000
c. SRM
d. SCSS
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 3-7
45. SRM software should be capable of:

a. Automating transactional processes
b. Making information flow between partners more visible
c. Integration of the supply chain making it possible to monitor multiple departments and processes both
internally and externally
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy

Chapter 5 - Demand Forecasting
21. Which of the following indices provided by the Institute for Supply Management (ISM) is considered the most
important by economists because it is a composite of five weighted, seasonally adjusted indices?
a. Purchasing Managers Index
b. Export Orders Index
c. Production and Inventory Index
d. New Orders Index
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-2
22. According to the textbook, which of the following is NOT a way to closely match supply and demand?
a. Holding high amounts of inventory
b. Maintaining a rigid pricing system
c. Utilizing overtime
d. Hiring temporary workers
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-1
23. The impact of poor communication and inaccurate forecasts resonates along the supply chain and results in the:
a. Bullwhip effect
b. Delphi method
c. CPFR effect
d. Mean deviation
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-1
24. Inaccurate forecasts can result in negative outcomes like:

a. Stockouts and poor responsiveness to market dynamics
b. High inventory costs of inventory and increased profits
c. Material shortages and decreased costs of obsolescence
d. Low inventory costs of inventory and stockouts
ANSWER: a

POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-1
25. Which one of the following is not a type of qualitative forecasting?

a. Sales force composite
b. Consumer survey
c. Jury of executive opinion
d. Naïve method
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-3
26. The following are all common qualitative forecasting models EXCEPT:
a. Jury of Executive Opinion
b. Trend Variation
c. Delphi Method
d. Sales Force Composite
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-3
27. Which of the following statements is FALSE:

a. Time Series forecasting is based on the assumption that the future is an extension of the past
b. Cause-and-Effect forecasting assumes that one or more factors are related to demand and, therefore, can be
used to predict future demand
c. All quantitative methods become less accurate as the forecast's time horizon increases
d. It is generally not recommended to use a combination of both quantitative and qualitative methods
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-3
28. Your company is conducting forecasting that revolves around the current recession and expansion of the U.S.
economy. This type of forecasting can be referred to as what component of a time series?
a. Trend Variations
b. Cyclical Variations
c. Seasonal Variations
d. Random Variations
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-2
29. The following time-series approach to forecasting uses historical data to generate a forecast and works well when
demand is fairly stable over time:
a. Naïve Forecast
b. Weighted Moving Average
c. Simple Moving Average
d. Exponential Smoothing
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-3
Data Set E1
Period Sales Volume
1 10000
2 12400
3 14250
4 15750
5 20500
6 18500
7 15750
8 20500
9 21500
10 22550
30. Using Data Set E1, what would be the forecast for period 7 using a four period moving average: (Choose the closest
answer.)
a. 17625
b. 15225
c. 15300
d. 17250
ANSWER: d
POINTS: 1
OTHER: Analytic
NOTES: 5-4
31. Using Data Set E1, what would be the forecast for period 6 using a five period weighted moving average? The weights
for each period are 0.05, 0.10, 0.20, 0.30, and 0.35 from the oldest period to the most recent period, respectively. (Choose
the closest answer.)
a. 16490
b. 17825
c. 14575
d. 16275
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5-4
32. Using Data Set E1, what would be the forecast for period 6 using the exponential smoothing method? Assume the
forecast for period 5 is 14000. Use a smoothing constant of α = 0.4 (Choose the closest answer.)
a. 14575
b. 26100
c. 16600
d. 19700
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5-4
33. Using the actual demand shown in the table below, what is the forecast for May (accurate to 1 decimal) using a 4-
month weighted moving average and the weights 0.1, 0.2, 0.3, 0.4 (with the heaviest weight applied to the most recent
period)?
Nov. Dec. Jan. Feb. Mar. Apr.
39 36 40 38 48 46
a. 44.4
b. 43.0
c. 42.5
d. 41.6
ANSWER: a
POINTS: 1
OTHER: Analytic
NOTES: 5-4
34. Given the following information, calculate the forecast (accurate to 2 decimals) for period three using exponential
smoothing and α = 0.3.
Period Demand Forecast

1 64 59
2 70
a. 36.90
b. 57.50
c. 61.50
d. 63.35
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
OTHER: Analytic
NOTES: 5-4
35. The exponential smoothing forecast has the same value as the naïve forecast when α in the exponential smoothing
model is equal to:
a. 0
b. 0.5
c. 1
d. Insufficient information provided to determine answer
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5-5
36. The equation for a simple linear regression that saw sales averaging $225,000 over the last ten periods, and advertising
budgets averaging $3,000 over the last 10 periods is:
Y = 3250 + 120x
This indicates that a $1 increase in advertising will increase sales by:

a. $3370
b. $250
c. $120
d. $1875
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5-5
37. One common Cause-and-Effect Model used is:

a. Regression analysis
b. Linear Trend Forecast
c. Moving Average Forecast
d. Mean Absolute Deviation
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-4
38. Some measures of forecasting accuracy include mean absolute deviation, mean absolute percentage error, and mean
squared error. The formula for each is dependent on the forecast error, which is calculated by using the equation:
a. Actual demand for period t divided by the forecasted demand for period t
b. Actual demand for period t plus the forecasted demand for period t
c. Actual demand for period t minus the forecasted demand for period t
d. The average of Actual demand for period t and forecasted demand for period t
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-5
39. If a tracking signal is positive, which one of the following is true?

a. Actual value is higher than forecast
b. Actual value is less than forecast
c. Actual value is equal to forecast
d. Unable to draw any conclusion
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-5
Data Set E2
Month Actual Forecast

1 10 11
2 8 10
3 9 8
4 6 6
5 7 8
40. A forecasting method has produced the following data over the past 5 months shown in Data Set E2. What is the mean
absolute deviation (accurate to 2 decimals)?
a. −0.60
b. −1.20
c. 1.00
d. 1.25
ANSWER: c
POINTS: 1
OTHER: Analytic
NOTES: 5-5
41. Based on the information in Data Set E2, what is the mean squared error (accurate to 2 decimals)?
a. 7.00
b. 1.40
c. 1.00
d. 0.80
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-5
42. What does the acronym CPFR represent?

a. Coordinated planning and forecasting relationships
b. Collaborative planning, forecasting, and replenishment
c. Centralized purchasing and forecasting relationships
d. Collaborative purchasing, forecasting, and receivables
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-6
43. According to textbook, the top three challenges for CPFR implementation include all of the following except:
a. Making organizational and procedural changes
b. Trust between supply chain partners
c. Cost
d. Supplier lead times
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-6
44. Which of the following is NOT a benefit of CPFR?

a. Improved corporate image among regulators
b. Integrates planning, forecasting and logistics activities
c. Provides analysis of sales and order forecasts
d. Provide an analysis of key performance metrics
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-6
45. Qualitative methods of forecasting include which of the following:

a. Sales Force Composite
b. Customer Surveys
c. Jury of Executive Opinion
d. All of these
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
OTHER: Analytic
NOTES: 5-6
46. List and describe two types of qualitative forecasting methods.

ANSWER:
a. Jury of Executive Opinion: This type of qualitative forecasting is usually used to for long-
range forecasting. An experienced group of senior management executives knowledgeable
about the market, competitors, and the business environment develop a forecast in the
hopes that their experience will provide them with a competitive advantage.
b. Delphi Method: Internal and external experts are surveyed about future events and long-
term forecasts of demand. Following the survey, the answers are summarized, and this
summary is sent back out to the experts. Experts are then able to modify their responses
based on the summary. The process continues until a consensus is reached. Experts in this
process never physically need to meet; they communicate only through their survey
responses and their subsequent responses to the summaries.

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Chapter 1 - Introduction to Supply Chain Management

66. Which of the following can be classified as a 3PL?

72. Which of the following is a reverse logistics activity:

73. A certain supply chain is made up of:

e. Local Retail Chain Warehouse

74. A certain supply chain is made up of:

75. The following is an example of the bullwhip effect:

76. Which of the following would be considered a third party provider?

d. An end product manufacturer

77. Which of the following statements is TRUE?

Cengage Learning Testing, Powered by Cognero Page 18

83. Right-shoring refers to:

84. Which of the following can be classified as a 3PL?

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e. Demand planning….supply planning

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114. What does LTL stand for in the transportation industry?

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120. Which of the following is NOT a characteristic of cost-of-service pricing?

123. Which of the following would be considered an act of deregulation?

a. Interstate Commerce Act

d. Lower total operating costs

c. Warehouse management systems

Subjective Short Answer

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23. The primary goals of purchasing include all EXCEPT:

25. When calculating Return on Investment, current assets include:

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27. Inventory Turnover can be calculated by:

28. Which of the following is a reason for favoring single sourcing?

35. Which of the following is an advantage of a centralized purchasing department?:

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36. Which of the following illustrates Forward Vertical Integration?

Make Option Buy Option

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Make Option Buy Option

43. Which of the following statements is FALSE?

44. Which of the following is NOT a form of countertrade?

Subjective Short Answer

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a. What are the fixed costs for the make decision?

b. What is the breakeven quantity for the two options illustrated?

c. At Q = 500, would you choose the make or buy option? Why?

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22. Which of the following is important in developing successful relationships in a partnership?

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26. Supplier Development includes all EXCEPT which of the following?

30. Which of the following is TRUE?

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39. Direct benefits of ISO 14000 include:

42. Supplier relationship management (SRM):

45. SRM software should be capable of:

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24. Inaccurate forecasts can result in negative outcomes like:

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25. Which one of the following is not a type of qualitative forecasting?

27. Which of the following statements is FALSE:

Period Demand Forecast

This indicates that a $1 increase in advertising will increase sales by:

37. One common Cause-and-Effect Model used is:

39. If a tracking signal is positive, which one of the following is true?