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MGT 3200- Chapter 11: Supply Chain Management

Waterways are an attractive distribution system when speed is more important than shipping cost. TRUE/FALSE
FALSE. -Waterways are not speedy.
Supply chain decisions are generally not strategic in nature, because purchasing is an ordinary expense to most firms. TRUE/FALSE
FALSE. -It is strategic.
The supply chain for a brewery would include raw ingredients such as hops and barley, but not the manufactured goods such as bottles and cans. TRUE/FALSE
FALSE. -Includes all materials.
Blanket orders are a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship. TRUE/FALSE
TRUE.- Blanket orders
Savings in the supply chain exert more leverage as the firm has a lower net profit margin. TRUE/FALSE
TRUE. -Savings in supply chain
In the make-or-buy decision, which of the following is a reason for making an item?
NOT: -management can focus on its primary business
-inadequate capacity
-reduce inventory costs
Which distribution system is the fastest growing mode of shipping?
In supply chain management, ethical issues:
-are particularly important because of the enormous opportunities for abuse
-may be guided by the company rules and codes of conduct
-become more complex the more global is in the supply chain
-may be guided by the principles and standards of the Institute for Supply Management
NOT a supply chain strategy:
-short-term relationships with few suppliers
Supply chain strategies:
-negotiation with many suppliers
-vertical integration
-virtual companies
One classic type of negotiation strategy is the market-based price model. TRUE/FALSE.
TRUE. -Classic type of negotiation strategy is market-based price model.
Benchmark firms have driven down costs of supply chain performance. TRUE/FALSE.
TRUE. -Benchmark firms have driven down costs.
Bar code and radio frequency technology, like that used to track UPS or FedEx packages on their global journeys, can also be used to track objects within the boundaries of a warehouse or shop. TRUE/FALSE.
TRUE. -Bar code and radio frequency can be used to track objects within warehouse or shop
-transfers traditional internal activities to outside vendors
-utilizes the efficiency which comes with specialization
-lets the outsourcing firm focus on its critical success factors
Term used to describe the outsourcing of logistics.
-Third-Party Logistics
NOT an opportunity for effective management in the supply chain?
-Local optimization
Opportunities for effective management in the supply chain?
-accurate “pull” data
-vendor managed inventory
-channel assembly
The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain. TRUE/FALSE.
TRUE. -Bullwhip effect causes increasing fluctuations in orders
What distribution system offers quickness and reliability when emergency supplies are needed overseas?
-Airfreight offers quickness and reliability
Keiretsus offer a middle ground between few suppliers and vertical integration. TRUE/FALSE.
TRUE. -Keiretsus offers middle ground
Logistics management can provide a competitive advantage through improved customer service. TRUE/FALSE.
TRUE. -Logistics mgmt can provide competitive advantage
Type of negotiating strategy that requires the supplier to open its books to the purchasers.
-Cost-based price model
Improvements in security, especially regarding the millions of shipping containers that enter the United States each year, are being held back by the lack of technological advances. TRUE/FALSE
FALSE. -Improvements in security are being improved by technological advances.
Keeping a product generic for as long as possible before customizing is known as:
What is *NOT* a condition that favors the success of vertical integration?
–>small market share
What are conditions that favor the success of vertical integration?
-availability of capital
-availability of managerial talent
-required demand
A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing:
–>drop shipping
Vertical integration, whether forward or backward, requires the firm to become more specialized. TRUE/FALSE
FALSE. -Vertical integration does not require a firm to become more specialized, and it does not move forward or backward. It moves up and down.
The Japanese concept of a company coalition of suppliers is:
“Opportunities” for supply chain management:
-drop shipment
-blanket orders
-channel assembly
*NOT* an opportunity for supply chain management:
–>line balancing
In several industries, online exchanges have been created by buyers. TRUE/FALSE.
TRUE. -Online exchanges have been created by buyers.
Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover?
–> $12.50
Even though a firm may have a low cost strategy, supply chain strategy can select suppliers primarily on response or differentiation. TRUE/FALSE.
FALSE. -Choosing suppliers primarily on response or differentation is not a low cost strategy.
One dollar saved in purchasing is:
–>worth even more than a dollar earned in sales revenue
*NOT* a concern of the supply chain:
–>maintenance scheduling
Concerns of the supply chain:
-warehousing and inventory levels
-credit and cash transfers
-distributors and banks
A reduction in inventory costs is one reason for making rather than buying. TRUE/FALSE.
FALSE. -A reduction in inventory costs would occur with buying rather than making.
Vendor Managed Inventory is a form of outsourcing. TRUE/FALSE.
TRUE. -Vendor Managed Inventory is a form of outsourcing
In the make-or-buy decision, one of the reasons for making is:
–> to assure adequate supply in terms of quantity
A disadvantage of the “few suppliers” strategy is:
–>the high cost of changing partners
When using the low cost strategy for supply chain management, the firm should invest aggressively to reduce production lead time. TRUE/FALSE.
FALSE. -The firm should not invest aggressively to reduce product lead time as a low cost strategy.
Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced. TRUE/FALSE.
FALSE. -Unethical behavior has increased.
Which of the following is an advantage of the postponement technique?
–>reduction in inventory investment
Outsourcing is a form of specialization that allows the outsourcing firm to focus on its critical success factors. TRUE/FALSE.
TRUE. -Outsourcing is a form of specialization so the firm can focus on its critical success factors.

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