sc management exam 2

Step 4 of the S&OP process involves addressing capacity issues and developing alternative scenarios for the executive meeting. T/F

true

The CPFR model is a sequence of business processes that include the consumer, worker, retailer, and manufacturer. T/F

false

Outbound-to-customer logistics systems are also referred to as physical distribution. T/F

true

How does CPFR benefit supply chain partners?

It relies solely on making products to inventory.

It results in lower in-stock rates and forecast accuracy.

It leads to increased inventories and out-of-stocks.

It reduces total inventories for the manufacturer.

It reduces total inventories for the manufacturer.

What is the primary focus of Step 5 (executive S&OP meeting)?

Assessing employee satisfaction levels

Making final decisions on marketing strategies

Agreeing on sales forecasts and capacity issues

Reviewing financial performance metrics

Agreeing on sales forecasts and capacity issues

Why is Mean Absolute Deviation (MAD) considered a good metric of forecast accuracy?

It assesses the percentage difference between forecasted and actual values.

It measures the variability of forecast errors without regard to direction.

It calculates the average of the squared forecast errors.

It indicates whether a forecast is above or below actual demand.

It measures the variability of forecast errors without regard to direction.

Phantom demand is created by over-ordering during peak demand. T/F

true

While evaluating recent demand forecasts, Caleb discovered that his company made an error, resulting in a stockout. Which type of forecast error calculation is he using that reveals this information?

MSE

MAPE

MAD

CFE

CFE

Henderson Air practices the principles of lean manufacturing, including setting up its production lines so they can easily and efficiently be switched to produce various product lines. Which strategy is this firm using to balance supply and demand?

Balancing inventory

Production flexibility

Reducing price

Increasing lead time

production flexibility

What is one type of demand fluctuation that necessitates holding safety stocks

Demand caused by predictable variation
Demand caused by international market manipulation

Demand caused by seasonal patterns

Demand caused by random variation

Demand caused by random variation

Historically, organizations consistently achieved complete consensus among functional forecasts for the same products.

T/F

false

Dependent demand is directly influenced by independent demand. T/F

true

CPFR has not been considered to be a good process, as it excludes transportation. T/F

false

Demand management entails estimating and controlling customer demand to influence operational decisions effectively. T/F

true

The CPFR model involves a linear sequence of business processes without feedback loops. T/F

false

Which of the following does a forecast always assume?

Business cycles do not exist.

The past always repeats itself.

Every forecast is seasonal.

Demand moves in a positive direction.

The past always repeats itself.

Acme Fastener and Tool is having major problems with demand management. The VP of Sales is very focused on increasing productivity according to forecasts, but the operations manager routinely presents obstacles to increasing production above current levels. Of the following, which problem is the firm experiencing?

Focus on tactics

Overemphasis on forecasting

Lack of attention on operations

Functional silos

functional silos

External balancing methods involve managing production and inventory flexibility to help offset the imbalance of supply and demand. T/F

false

A weighted moving average assigns higher weights to more recent periods.T/F

true

Materials management and physical supply are terms that cannot be used interchangeably. T/F

false

Exponential smoothing can use constants higher than 1, but not more than 5. T/F

false

CPFR has become recognized as a breakthrough business model for planning, forecasting, and replenishment. T/F

true

The second step in the monthly sales and operations planning process (S&OP) is supply planning. T/F

false

Bias measures how accurate the forecast is compared to actual demand. T/F

true

Three business co-owners are setting up a new manufacturing facility, and they are currently identifying partners to perform certain functions needed in the demand chain. Which aspect of demand management are they addressing?

Flow of information

Flow of services

Flow of products

Flow of capital

flow of services

What term refers to the processes, systems, and capabilities that enhance an organization's ability to serve its customers?

Internal supply chain

Physical distribution

Reverse logistics

Manufacturing

physical distribution

What does the topic of inbound-to-operations logistics systems primarily encompass?

Activities and processes preceding value-adding tasks

Processes involved in post-procurement logistics

Activities solely focused on assembly and value addition

Processes unrelated to value addition and logistics

Activities and processes preceding value-adding tasks

"Order to cash" and "order cycle" are the same. T/F

true

A driving force behind the attention to OTC cycle variability is safety stock. T/F

true

Activity Based Costing (ABC) allocates costs to activities based on a fixed predetermined measure (e.g., cases). T/F

false

A stockout always results in a back order. T/F

false

Lily is a manager at a leading supplier company that is planning to implement a Customer Relationship Management (CRM) program. She is excited about the potential benefits but is aware of the challenges ahead. What analogy best describes the nature of CRM implementation?

A random exploration without a clear goal

A mathematical equation to be solved

A marathon journey rather than a sprint

A quick fix solution to boost profits

A marathon journey rather than a sprint

By understanding customer-shipping interactions' cost impact, firms can segment customers based on profitability effectively. T/F

true

Imagine a scenario where a popular online retailer consistently fails to deliver orders on time due to logistical issues. Despite numerous complaints from customers about late deliveries, the retailer doesn't perceive any negative consequences. Which concept does this scenario best illustrate?

Opportunity costs of poor service

Customer retention strategies

Impact of poor service on revenue

Cost-benefit analysis in service management

Impact of poor service on revenue

Not all products require the same level of availability to the buyer. T/F

true

Which of the following order cycle lengths would require the buyer to hold the most total inventory during lead time?

9 days, +/- 3 days

10 days, +/- 4 days

10 days, +/- 2 days

8 days, +/- 5 days

10 days, +/- 4 days

National Sports Apparel manufactures high school and college athletic uniforms for a wide range of team sports, as well as cheerleading uniforms. Nearly every order requires some degree of customization, especially in the numbers and insignias that are printed or sewn onto the uniforms. Which of the following would be an important metric for National Sports to measure?

Logistics operations responsiveness

Quality control effectiveness

Customer satisfaction index

Inventory turnover rate

Logistics operations responsiveness

Shondine’s car broke down unexpectedly on Monday evening as she was driving home from work. She had it towed to the dealership on Tuesday morning, but the necessary replacement part wasn’t in stock. The dealer’s service department received the parts order on Wednesday afternoon, and Shondine’s car was finally ready for her to pick up on Thursday afternoon, after the new part had been installed. What are these three full days known as in the car repair industry?

Order-to-cash cycle

Customer cycle time

The lead time

Customer wait time

customer wait time

Taylor’s company has been growing rapidly, and she now recognizes that she can no longer serve all of her customers personally. In determining which customer relationships to maintain herself and which to reassign to her new sales assistant, she has recognized that some customers have bought a lot of her products because they allowed her to become deeply involved in their businesses, while other customers don’t want a lot of attention and just want to place a few small orders occasionally. Which step must Taylor be taking in implementing a CRM process?

Developing and executing the best processes

Segmenting the customer base by profitability

Segment-specific product/service package identification

Measuring performance and continuously improving

Segmenting the customer base by profitability

Modern businesses employ activity-based costing to precisely assign costs to customers based on the specifics of their orders. T/F

true

In which dimension of the marketing mix does the traditional role of customer service at the interface between marketing and logistics manifest itself?

Promotion

Place

Price

Product

place

Customer relationship management is a new concept only recently receiving attention. T/F

false

What aspect of service recovery emphasizes the importance of empowering frontline employees?

Minimizing management intervention

Reducing customer dissatisfaction

Lowering the cost-of-service failure

Speeding up resolution processes

Speeding up resolution processes

What characterizes a customer in the “Danger Zone” segment?

The least profitable

Customer for less than a year

Utilizing ABC to reduce price

Likely to switch to a competitor

The least profitable

What happens to stockout costs to the manufacturer as product substitutability level increases?

Indeterminable

Increase

Stay constant

Decrease

increase

What are the two parts of the order management process?

Marketing strategy; delivery scheduling

Inventory management; payment processing

Product selection; order tracking

Customer interaction; order fulfillment

Customer interaction; order fulfillment

Customer service is anything that touches the customer. T/F

true

The term replenishment cycle refers to:

material management.

the acquisition of additional inventory.

inventory and material management.

orders for raw material.

acquisition of additional inventory

The reorder point depends on the orders in-house at that time.T/F

false

Inventory management is not as important as it once was due to other factors that have come into play. t/f

false

Which of the following is associated with manufacturing?

Retail inventories

Raw material inventories

Finished goods inventories

Work-In-Process (WIP) inventories

Work-In-Process (WIP) inventories

The ABC analysis is based on Pareto's law. t/f

true

What are the two main results of reducing the number of stocking points according to the combination of the square-root rule and ABC analysis?

Safety stocks increase due to consolidation, while cycle stocks decrease with inventory reduction.

Redundant safety stocks are eliminated, and cycle stocks can be reduced through inventory consolidation.

Safety stocks remain unchanged, but cycle stocks decrease with facility consolidation.

Redundant safety stocks are increased, and cycle stocks are unaffected by consolidation.

Redundant safety stocks are eliminated, and cycle stocks can be reduced through inventory consolidation.

What financial impact does reducing inventories typically have on ROI in the short term?

Decreases assets and increases available working capital.

Decreases assets and reduces available working capital.

Increases assets and reduces available working capital.

Increases assets and increases available working capital.

Decreases assets and reduces available working capital.

Which factor contributes to organizations achieving lower inventory levels while maintaining acceptable customer service levels?

Utilizing advanced technology for inventory management.

Understanding inventory necessity and related trade-offs.

Outsourcing inventory management to third-party companies.

Increasing product prices to compensate for lower inventory.

Understanding inventory necessity and related trade-offs.

Which factor contributes to organizations achieving lower inventory levels while maintaining acceptable customer service levels?

Utilizing advanced technology for inventory management.

Understanding inventory necessity and related trade-offs.

Outsourcing inventory management to third-party companies.

Increasing product prices to compensate for lower inventory.

Understanding inventory necessity and related trade-offs.

Combining the square-root rule with ABC analysis increase aggregate inventories when stocking locations decrease. t/f

false

What does capital cost primarily concern in terms of investment allocation?

Inventory

Employees

Equipment

Buildings

inventory

From which sources do batching economies or cycle stocks usually arise?

Inventory management, sales, and distribution

Procurement, production, and transportation

Finance, customer service, and quality control

Marketing, research and development, and human resources

Procurement, production, and transportation

The square-root rule is based on a number of reasonable assumptions. Which of the following is one of these assumptions?

Demand at each location is not normally distributed.

Lead times remain consistent, unaffected by inbound supply uncertainty.

Customer service levels, indicated by inventory availability, fluctuate.

Inventory transfers between stocking locations are common practice.

Lead times remain consistent, unaffected by inbound supply uncertainty.

Henderson Air manufactures heating and air conditioning systems. Recently, the management team decided to implement a new method of classifying inventory based on two key criteria: value (as measured by the contribution to profit) and risk (as measured by the negative impact of not having the product available when needed). Which classification method is Henderson Air using?

Square-root method

ABC

Quadrant model

Axis model

Quadrant model

The JIT concept has three underlying elements: zero inventories; short, consistent lead times; and small, frequent replenishment quantities. t/f

false

Ordering cost refers to the expense of placing an order for additional inventory, including the cost or expense of the product itself. t/f

false

Purchase economies and transportation economies are not complementary. t/f

false

Purchase economies and transportation economies are not complementary. t/f

false

Inventory impacts the cost of goods sold as well as supports the balance sheet, a new concept only recently receiving attention. t/f

false

In comparison with the basic EOQ approach, the fixed interval model does not require close surveillance of inventory levels. t/f

true

A reason to hold inventory arises when an organization anticipates that an unusual event might occur that will negatively impact its source of supply. t/f

true

What criteria are used in the quadrant model to classify inventories?
Cost efficiency and demand variability

Market demand and product lifespan

Value contribution to profit and risk of product unavailability

Storage capacity and production lead time

Value contribution to profit and risk of product unavailability

What happens to the cost per order as Q decreases for EOQ?

Indeterminable

Increases

Constant

Decreases

decreases

The EOQ inventory model comprises four basic forms, including variations in quantity and interval. t/f

true

The faster and more reliable (and more expensive) the transportation, the less the cost of inventories. t/f

true

Which type of demand is most suitable for the fixed interval model?

Stable demand

Seasonal demand

Variable demand

Volatile demand

stable demand

What challenge do Consumer Packaged Goods (CPG) firms and their distribution partners face primarily?

Expanding market reach rapidly

Forecasting demand accurately

Enhancing product quality consistently

Managing production costs effectively

Forecasting demand accurately

ABC analysis uses a single criterion to classify SKUs from most important to least important. t/f

true

In dynamic environments, organizations often balance service and cost through various inventory and customer service policies. t/f

true

Trekker Luggage and Travel Gear needs to manufacture 10,000 suitcases for an upcoming order. Each suitcase requires four rivets. Trekker currently has 35,000 rivets in stock. Which of the following is true?

Due to independent demand, Trekker has an adequate number of rivets in stock to complete the order.

Due to dependent demand, Trekker does not have an adequate number of rivets in stock to complete the order.

Due to independent demand, Trekker does not have an adequate number of rivets in stock to complete the order.

Due to dependent demand, Trekker has an adequate number of rivets in stock to complete the order.

Due to dependent demand, Trekker does not have an adequate number of rivets in stock to complete the order.

Which one of the following could happen in the event of a "stockout"?

The SCOR process would come into play

The cost of capital is increased

Extra shipping costs may be incurred

The vendor's plant shuts down

Extra shipping costs may be incurred

Which of the following does not influence seasonal stocks?

Transportation

Weather

Holidays

EOQ

eoq

The square-root rule predicts how aggregate inventory changes with increasing or decreasing stocking locations. t/f

true

JIT, MRP, and MRP II all incorporate some version of the basic EOQ model into their philosophies. t/f

true

Storage space costs are not variable. t/f

false

Information technology’s impact on inventory has been labeled an exchange of “information for inventory.” t/f

true

"Batching economies" and "cycle stocks" are the same. t/f

true