SCM Chapter 3

Cash to case (C2C) is the duration of time from when cash enters the process as cost to when it returns as collected revenue. Best in class performance on this metric is a C2C that is almost zero.

False

Lost sales are easily tracked by most retailers.

False

The major drivers of supply chain performance are customers, facilities, inventory, transportation, and information.

False

The two major types of facilities are production sites and storage sites.

True

Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain's efficiency and responsiveness.

True

Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.

True

A facility with little excess capacity will likely be no more or less efficient per unit of product it produces than one with a lot of unused capacity.

False

The high utilization facility will have difficulty responding to demand fluctuations.

True

The components of inventory decisions include capacity, cycle inventory, safety inventory, seasonal inventory, and sourcing.

False

Cycle inventory is inventory that is built up to counter predictable variability in demand.

False

Seasonal inventory is inventory that is built up to counter predictable variability in demand.

True

Companies using seasonal inventory will build up inventory in periods of low demand and store it for periods of high demand when they will not have the capacity to produce all that is demanded.

True

Companies using seasonal inventory will maintain a level inventory increase rate of production for periods of high demand.

False

A company's ability to find a balance between responsiveness and efficiency that best matches the needs of the customer it is targeting is the key to achieving strategic fit.

True

A company using a faster mode of transportation can function as effectively with fewer facilities than a company using a slower mode of transportation.

True

Average inbound transportation cost and average outbound transportation cost are ideally measured on a per unit basis.

True

The most significant sourcing decision is whether to perform a task in house or to outsource it to a third party.

True

Procurement should be designed to decrease both the total cost of ownership and the supply chain surplus.

False

Katz reports total revenue of $245,600, cost of goods sold of $18,950 and net income of $121,000. Their total assets are $585,000 and total liabilities are $250,000. What is their return on equity (ROE)?

36.12%

Katz reports total revenue of $375,650, cost of goods sold of $267,400 and net income of $48,325. Their total assets are $784,325 and total liabilities are $387,775. What is their return on equity (ROE)?

12.19%

Dogz reports total revenue of $47,561, cost of goods sold of $32,856 and net receivables of $19,595. Their property, plant and equipment is $19,813 and they have $16,240 of inventory. What is their accounts receivable turnover?

2.42

Dogz reports total revenue of $47,561, cost of goods sold of $32,856 and net receivables of $19,595. Their property, plant and equipment is $19,813 and they have $16,240 of inventory. Which ratio is highest — ART, INVT or PPET?

ART

Dogz reports total revenue of $47,561, cost of goods sold of $32,856 and net receivables of $19,595. Their property, plant and equipment is $19,813 and they have $16,240 of inventory. If they operate 300 days a year, how long does the average item stay in inventory?

148 days

Which of the following would result in lower return on assets for Katz if all other entries in their selected financial data were held constant?

A reduction in earnings before interest and taxes

Which of the following would result in an improvement in the C2C cycle for Katz if all other entries in their selected financial data were held constant?

An increase weeks payable

Geoff strolled into his local big box retailer in search of sunflower seeds for the flock of cardinals that graced his property during the cold winter. Much to his (and the cardinals') dismay, the shelf where the 50 pound bags of sunflower seeds were kept was bare. He pirouetted and left the store in disgust, empty-handed and fearing the wrath of an angry flock of cardinals when he returned home. This sad scenario illustrates

a lost sale.

Why would anyone in their right mind buy a brand new car in the spring when they know that new car models will appear in late summer and early fall and the dealers will use

markdowns to move that old inventory?

The places in the supply chain network where product is stored, assembled, or fabricated are known as

facilities.

All raw materials, work in process, and finished goods within a supply chain are known as

inventory.

Moving inventory from point to point in the supply is known as

transportation.

The data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain is known as

information.

Which component of the supply chain decision-making framework would be established first?

Competitive strategy

Which component of the supply chain decision-making framework would be used to reach the performance level dictated by the supply chain strategy?

Supply chain structure

The two major types of facilities are

production sites and storage sites.

Which of the following is a characteristic of a facility with excess capacity?

Will likely be more efficient per unit of product it produces than one with a lot of unused capacity

Which of the following would be a characteristic of a facility with little excess capacity?

Will likely be more efficient per unit of product it produces

The following warehousing methodology is one in which goods are not actually warehoused in a facility. Instead, trucks from suppliers, each carrying a different type of product, deliver goods to a facility. There the inventory is broken into smaller lots and quickly loaded onto store-bound trucks that carry a variety of products, some from each of the supplier trucks.

Cross-docking

The average amount of inventory used to satisfy demand between receipt of supplier shipments is referred to as

cycle inventory.

The inventory that is built up to counter predictable variability in demand is called

seasonal inventory.

The inventory held in case demand exceeds expectation in order to counter uncertainty is called

safety inventory.

The set of business processes required to purchase goods and services is known as

sourcing.

Safety inventory is held because

demand is uncertain and may exceed expectations.

Seasonal inventory should be used when

changing the rate of production is expensive (e.g., when workers must be hired or fired).

Which of the following are key components of transportation decisions when designing and operating a supply chain?

Mode of transportation

Although faster transportation is more expensive, a firm receives which benefit as a result of the faster transportation?

Lower inventories

Blue Nile is an online retailer of diamonds that has used responsive transportation to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. Which is the mode of transportation used with this strategy?

Air

Blue Nile is an online retailer of diamonds that has used responsive transportation to ship diamonds to customers in the United States, Canada, and several countries in Europe and Asia. As part of an audit, their logistics manager has been asked to calculate the sum of the fraction transported by mode for all modalities. What should this sum equal?

The total value of diamonds shipped in that year.

________ typically measures the cost of bringing product into a facility as a percentage of sales or cost of goods sold (COGS).

Average inbound transportation cost

Which of the following are key components of information that must be analyzed to increase efficiency and improve effectiveness in a supply chain?

Forecasting and aggregate planning

When all the different stages of a supply chain work toward the objective of maximizing total supply chain profitability, rather than each stage devoting itself to its own profitability without considering total supply chain profit, it is known as

supply chain coordination.

The art and science of making projections about what future demand and conditions will be is

forecasting.

Transforming forecasts into plans of activity to satisfy the projected demand is known as

aggregate planning.

The process by which a firm decides how much to charge customers for its goods and services is

pricing.

________ identifies the difference between the planned production/inventories and the actual values.

Variance from plan

________ measures the average time between when an order is placed and the product arrives.

Supply lead time

Zara sources basic products such as white t-shirts from low cost countries because demand is predictable. For trendy products for which demand is unpredictable, Zara sources from company-owned higher cost factories in Europe. For the predictable demand, Zara strives for ________ and for the unpredictable demand, Zara hopes to achieve ________.

efficiency, flexibility

The most significant sourcing decision for a firm is

whether to perform a task in-house or outsource it to a third party.

Lisa rented her goats out to anyone interested in clearing underbrush the natural way on their acreage. She received a call from her client Mary on June 21 and delivered her herd of goats to the site on June 24. The goats were done on June 30 and Lisa presented Mary with an invoice the same day. Mary wrote Lisa a check on July 18 and Lisa cashed it on July 21. What was Lisa's days payable outstanding for Mary's job?

18 days

Over the past two months, Lisa has received several orders for goat grazing services. The order date, promise date, and delivery dates are shown in the table below. What is Lisa's percentage of on-time deliveries?

64%

Over the past two months, Lisa has had to supplement her goats' diet with some 14% protein feed. Her order date, the number of sacks of feed and the total cost are exhibited in the table. What is Lisa's average purchase price for 14% protein feed?

$15.09

The ________ strategy results in a peak during the discount week, often followed by a steep drop in demand during the following weeks.

High-low pricing

________ measures the incremental costs that are independent of the size of the order.

Incremental fixed cost per order

Economies of scale are illustrated by

a supplier waiting until enough demand has built up to send a full truckload shipment to their customer.

On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below: What is the average sale price of the gasoline?

$2.64

On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below: What is the average order size of the gasoline?

$13.75

On a recent road trip to the Big Easy, the absentee landlord recorded his gasoline purchases in a logbook that he intended to support his rental expenses for the year. The entries are in the table below: What is the range of sale price of the gasoline per gallon?

$0.69

Amazon uses different prices for the products that are purchased from the company – often for the speed of the shipping. What is the name of this pricing scheme?

Menu pricing