Student name:__________

TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) A company's supply chain involves the flow of materials and information from suppliers,
through production, to the end users.

⊚ true ⊚ false

2) In supply chain organizations, functions must operate independently of each other.

⊚ true ⊚ false

3) In purchasing, one's only ethical obligation is to one's suppliers.

⊚ true ⊚ false

4) Using third-party logistics involves using your organization's logistics function to ship to
customers that are not officially part of the supply chain.

⊚ true ⊚ false

5) Every business organization is part of at least one supply chain.

⊚ true ⊚ false

6) Frequent deliveries of small shipments can reduce inventory but also result in an
increase in the transportation cost per unit.

⊚ true ⊚ false

7) The materials in the supply chain flow toward the end of the chain, while the
information and the dollars move toward the beginning of the chain.

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⊚ true ⊚ false

8) Managing supply chain visibility involves making sure that potential supply chain
partners are aware of your organization's needs.

⊚ true ⊚ false

9) The goal of supply chain management is to synchronize supply and demand of all of the
organizations that are part of the chain.

⊚ true ⊚ false

10) The need for risk management increases as globalization of supply chains increases.

⊚ true ⊚ false

11) The design of the supply chain and establishing partnerships with vendors and
distributors are examples of operational issues in a supply chain.

⊚ true ⊚ false

12) Traffic management refers to truck movement within our parking areas.

⊚ true ⊚ false

13) One of the major reasons for a company to adopt third-party logistics is to concentrate
on one's core business.

⊚ true ⊚ false

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14) E-commerce refers to the use of electronic technology to facilitate business transactions.

⊚ true ⊚ false

15) E-commerce involves business-to-business (B2B) interaction only.

⊚ true ⊚ false

16) Disintermediation occurs when the traditional retailer or service provider is reduced or
eliminated in a supply chain.

⊚ true ⊚ false

17) Most people working for a business organization are somehow involved with the supply
chain of that business.

⊚ true ⊚ false

18) Strategic partnering is encouraged when two or more business organizations have
complementary products or services that would benefit the others.

⊚ true ⊚ false

19) Forming strategic partnerships is beneficial for two or more business organizations that
have the same products or services.

⊚ true ⊚ false

20) Inventory velocity refers to the average speed (in miles/hour) of material handling
equipment in a warehouse.

⊚ true ⊚ false

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21) Global supply chains make purchasing easier because there are more options.

⊚ true ⊚ false

22) Centralized or decentralized purchasing is directly related to the size of an organization.

⊚ true ⊚ false

23) The optimization of the supply chain uses a mathematical model to determine the
optimal number of business organizations to be included in the chain.

⊚ true ⊚ false

24) Information technology is a key to integrating operations across global supply chains.

⊚ true ⊚ false

25) Bullwhip effect refers to a phenomenon in which demand variations that exist at the
customer end of the supply chain are magnified as orders are generated back through the supply
chain.

⊚ true ⊚ false

26) Starting with the final customer and moving backward through the supply chain, batch
sizes and the level of safety stock tend to decrease.

⊚ true ⊚ false

27) Scheduling operations and shipping are operational responsibilities in supply chain
management.
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⊚ true ⊚ false

28) To avoid temporary storage in a warehouse, cross-docking can be used.

⊚ true ⊚ false

29) Delayed differentiation is a means of increasing product variety without building the
customized product from scratch or keeping large inventories of custom products.

⊚ true ⊚ false

30) Returned goods are part of reverse logistics.

⊚ true ⊚ false

31) A 30 percent reduction in product and service variety will not affect the efficiency of a
supply chain.

⊚ true ⊚ false

32) The service function of purchasing interfaces with many areas, including legal,
accounting, and engineering functions.

⊚ true ⊚ false

33) Gatekeeping contracts with 3PLs to minimize the cost of shipping returned goods.

⊚ true ⊚ false

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34) Outsourcing logistics gives a company less flexibility because it forces them to focus
more on core businesses.

⊚ true ⊚ false

35) Vendor analysis examines the function of purchased parts and materials with a view
toward improvement or cost reduction.

⊚ true ⊚ false

36) Using third-party fulfillment means losing control of fulfillment.

⊚ true ⊚ false

37) Price is the primary determining factor in choosing a vendor since most products are
essentially the same.

⊚ true ⊚ false

38) RFID eliminates the need for manual counting and bar-code scanning of goods at
receiving docks.

⊚ true ⊚ false

39) The importance of purchasing relates only to the cost of parts and materials purchased,
which is often 60 percent or more of the cost of finished goods.

⊚ true ⊚ false

40) Important factors in purchasing include the cost of goods purchased, the quality of goods
and services, and the timing of deliveries of goods or services.

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⊚ true ⊚ false

41) Vendor analysis is the process that evaluates the source of supply in terms of price,
quality, reputation, and service.

⊚ true ⊚ false

42) In e-commerce, the front-end design is significantly more important than the back-end
design.

⊚ true ⊚ false

43) One disadvantage to RFID is that it requires a clear “line of sight” to operate.

⊚ true ⊚ false

44) Decentralized purchasing can usually offer quicker response than centralized purchasing.

⊚ true ⊚ false

45) Some firms have structured their procurement function to include both centralized and
decentralized purchasing.

⊚ true ⊚ false

46) Creating an effective supply chain requires linking the marketing, distribution, and
supplier channels.

⊚ true ⊚ false

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47) An advantage of decentralized purchasing is the attention given to local needs.

⊚ true ⊚ false

48) Event-response capability is the advanced planning required to respond to planned

events such as receiving a scheduled shipment.

⊚ true ⊚ false

MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
49) Strategies to address supply chain risks include:

(I) risk avoidance

(II) risk reduction
(III) risk projection
(IV) risk sharing

A) I, II, and IV only

B) II and III only
C) I and IV only
D) II and IV only
E) I, II, III, and IV

50) Which of the following, while desirable from some perspectives, might actually increase
the risk of supply chain disruptions?

(I) fewer supply chain partners

(II) a shorter supply chain
(III) greater supply chain visibility

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 A) I and II only
B) II and III only
C) I and III only
D) I only
E) I, II, and III

51) One of the biggest ethical risks in supply chain management is that the __________
supply chain member tends to be the one that suffers the blame and/or lost goodwill when
something goes wrong.

A) most responsible
B) buying
C) most visible
D) supplying
E) most ethical

52) The more __________ a company's supply chain, the more difficult it is to ensure that
the supply chain is managed ethically.

A) interconnected
B) global
C) visible
D) shortened
E) Competitive

53) It is especially the case for small businesses that closer interactions and increased agility
make __________ relatively more attractive.

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 A) domestic suppliers
B) centralized purchasing
C) global suppliers
D) decentralized purchasing
E) risk transfer

54) Which of these aspects of supply chain management are especially concerning to small
business?

(I) customer reliability

(II) inventory management
(III) purchasing costs
(IV) risk management
(V) international trade

A) III, IV, and V only

B) I, II, and III only
C) I, III, and IV only
D) I and II only
E) II, IV, and V only

55) Which of the following is not a goal of supply chain management?

A) fewer suppliers and long-term relationships

B) small lot sizes
C) on-time deliveries
D) lowest possible transportation costs
E) delivery often to the place of use

56) Logistics includes all of these except

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 A) the movement of materials within a production facility.
B) incoming shipments of goods or materials.
C) outgoing shipments of goods or materials.
D) customer selection.
E) returned goods processing.

57) Small changes in consumer demand can result in large variations in orders placed
because of the

A) supply chain.
B) safety stock requirement.
C) lead time effect.
D) bullwhip effect.
E) FCFS scheduling.

58) RFID chips:

(I) are used to track goods in distribution.

(II) are used to track job progress in production.
(III) are used to provide special instructions to operators.
(IV) can be used in inventory record keeping.

A) II and III only

B) I and II only
C) II, III, and IV
D) I, II, and IV
E) IV only

59) Which of the following is not a benefit of RFID?

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 A) increased productivity
B) elimination of paperwork
C) frequent deliveries of smaller shipments
D) reduction in clerical labor
E) increased accuracy

60) A factor that makes it desirable for business organizations to actively manage their
supply chains is

A) more potential vendors.

B) increasing globalization.
C) downsizing.
D) the Internet.
E) RFIDs.

61) Which of the following is not a benefit of effective supply chain management?

A) lower inventory costs

B) higher productivity
C) shorter lead times
D) greater customer loyalty
E) larger number of suppliers

62) Which of the following is not a measure of the reliability of the supply chain?

A) supply chain response time

B) on-time delivery
C) fill rate
D) lead time variability
E) improving e-fulfillment statistics

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63) The automatic identification of material is part of/facilitated by

A) holding costs.
B) RFID.
C) working capital reduction.
D) net present value calculations.
E) vendor analysis.

64) Which of the following is not an application of e-business?

A) Internet buying and selling

B) e-mail
C) order and shipment tracking
D) electronic data interchange (EDI)
E) universal product codes

65) Which of the following is an advantage of e-business?

(I) reduction of transaction costs

(II) shortened supply chain response time
(III) greater customer loyalty

A) I
B) II
C) I and II
D) II and III
E) I, II, and III

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66) Which of the following is a barrier to the integration of separate organizations in the
supply chain?

(I) conflicting objectives of the companies in the chain

(II) different capacity levels of the companies in the chain
(III) reluctance of the organizations in the chain to allow other organizations access to their data

A) I only
B) I and II
C) II and III
D) I and III
E) I, II, and III

67) _________ has/have helped firms to concentrate on their core business.

A) Supply chains
B) Scheduling
C) Outsourcing
D) ERP
E) Lean production

68) After outsourcing to global suppliers, __________ is not simple.

A) integration
B) unionization
C) back-shoring
D) computerization
E) just-in-time

69) The interface between the firm and its suppliers is

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 A) purchasing.
B) production.
C) distribution.
D) engineering.
E) accounting.

70) One important role of purchasing is to

A) set quality standards for purchased items from suppliers.

B) be knowledgeable about new products from suppliers.
C) maintain numerous sources of supply.
D) obtain the lowest prices on all purchased items.
E) determine the processes that should be used by suppliers.

71) The purchasing cycle begins with

A) selecting a supplier.
B) placing an order.
C) evaluating potential vendors.
D) conducting a value analysis.
E) receiving a requisition.

72) Examination of the sources of supply for purchased parts or materials in order to
improve performance is called

A) vendor analysis.
B) value analysis.
C) negotiated purchasing.
D) reverse engineering.
E) disintegration.

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73) Vendor analysis has the greatest potential for savings for items which have

A) low cost per unit.

B) low annual cost-volume.
C) high cost per unit.
D) high annual usage.
E) high annual cost-volume.

74) Which of the following is not true of vendor analysis?

A) It involves an examination of the function of purchased parts or raw materials.

B) Its purpose is to reduce costs and/or improve performance of purchased goods or

services.
C) It is usually performed only periodically.
D) Representatives from design and operations may work with purchasing.
E) If improvements are identified, purchasing implements those that purchasing agrees
are justified.

75) Which of the following would not usually be a main factor in selecting a vendor?

A) location
B) price
C) quality
D) inventory turnover
E) vendor services

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76) Which of the following is part of the purchasing cycle?

(I) Purchasing selects a supplier.

(II) Orders from vendors are received.
(III) Purchasing receives a requisition.

A) II and III
B) I, II, and III
C) I only
D) I and II
E) I and III

77) Which of the following is least likely to be a key consideration when a company chooses
a supplier?

A) lead time and on-time delivery

B) reputation and financial stability
C) current inventory
D) quality and quality assurance
E) flexibility of design change

78) Which of the following is not a benefit of centralized purchasing?

A) potential for quantity discounts

B) better service from suppliers
C) quick response to local needs
D) potential for use of purchasing specialists
E) supplier research

79) The purchasing perspective of the supplier as a partner is characterized by

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 A) an emphasis on low prices.
B) one or a few suppliers.
C) low flexibility.
D) 100 percent inspection for quality.
E) low volume.

80) Vendor analysis is the examination of the _________ of purchased materials.

A) function
B) source
C) quality
D) cycle
E) quantity

81) Last quarter, a retailer sold 8,000 T-shirts, 7,000 of which were sold directly from on-
hand inventory. This retailer's ________ was 88 percent.

A) fill rate
B) inventory yield
C) profit margin
D) inventory turnover
E) working yield

82) Which of the following is a principle required for ethical behavior in purchasing?

(I) loyalty to employer

(II) justice to those you deal with
(III) faith in your profession

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 A) III only
B) I only
C) II only
D) I, II, and III
E) II and III only

83) The activity which begins with a request from within the organization is

A) outsourcing search.
B) purchasing cycle.
C) supplier selection.
D) order receipt.
E) supply chain management.

84) Our organization can obtain visibility to potential trading partners on the Internet by
using

A) C2C websites.
B) B2C enablers.
C) B2B exchanges.
D) C2B marketplaces.
E) 2BC commerce.

85) Real-time information about product movement on store shelves could benefit from the
use of

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 A) batch processing.
B) economic order quantities.
C) statistical process control.
D) radio frequency identification tags.
E) infrared remote scanners.

86) The website and order fulfillment are essential features of

A) delayed differentiation.
B) e-commerce.
C) Internet service providers.
D) inventory balancing.
E) market segmentation.

87) A given inventory item has a per-year holding cost of $500. One method of shipping this
item is three days faster than the other, but it is $2.50 more per unit. Using the slower method
would be __________ more expensive overall than using the faster method.

A) $1.08
B) $1.16
C) $2.37
D) $2.73
E) $1.61

88) This is known as the strategic coordination of the supply chain for the purpose of
integrating supply and demand management.

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 A) supply chain management
B) logistics
C) ERP
D) strategic partnerships
E) strategic procurement

89) Which of the following is not a key aspect of supply chain management?

A) determining the appropriate level of outsourcing

B) managing procurement
C) managing suppliers
D) implementing lean principles
E) managing customer relationships

90) This enables managers to incorporate economics into outsourcing and other decisions.

A) measuring outsourcing ROI

B) measuring distribution ROI
C) measuring procurement ROI
D) measuring supply chain ROI
E) measuring inventory ROI

91) It is essential to adopt procedures to manage _____ in the supply chain.

A) procurement
B) distribution
C) risks
D) inventory
E) suppliers

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92) _____ is the ability of a business to recover from an event that negatively impacts the
supply chain.

A) Risk avoidance
B) Risk reduction
C) Resiliency
D) Risk sharing
E) Establishing transparency

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Answer Key

Test name: Chapter 15 Test Bank

1) TRUE
2) FALSE
3) FALSE
4) FALSE
5) TRUE
6) TRUE
7) FALSE
8) FALSE
9) TRUE
10) TRUE
11) FALSE
12) FALSE
13) TRUE
14) TRUE
15) FALSE
16) TRUE
17) TRUE
18) TRUE
19) FALSE
20) FALSE
21) FALSE
22) FALSE
23) FALSE
24) TRUE
25) TRUE
26) FALSE
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27) TRUE
28) TRUE
29) TRUE
30) TRUE
31) FALSE
32) TRUE
33) FALSE
34) FALSE
35) FALSE
36) TRUE
37) FALSE
38) TRUE
39) FALSE
40) TRUE
41) TRUE
42) FALSE
43) FALSE
44) TRUE
45) TRUE
46) TRUE
47) TRUE
48) FALSE
49) A
50) D
51) C
52) B
53) A
54) E
55) D
56) D
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57) D
58) D
59) C
60) B
61) E
62) A
63) B
64) E
65) C
66) D
67) C
68) C
69) A
70) B
71) E
72) A
73) E
74) A
75) D
76) B
77) C
78) C
79) B
80) B
81) A
82) D
83) B
84) C
85) D
86) B
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87) E
88) A
89) D
90) D
91) C
92) C

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