ISDS 3115 Chapter 11

The supply chain for a brewery would include raw ingredients such as hops and barley as well as manufactured goods such as bottles and cans (T/F)

True

When using the low-cost strategy for supply chain management, a firm should design its distribution network to sell through discount distributors (T/F)

True

A firm that employs a response strategy should focus on providing premium customer service through the most economical modes of transportation (T/F)

False

Supply chain decisions are generally strategic in nature because purchasing is usually a large expense for most firms (T/F)

True

Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant (T/F)

False

Which of the following is TRUE regarding Red Lobster and its supply channels?

It employs just-in-time delivery

Which of the following would NOT be part of a firm’s low-cost supply chain strategy?

Speed and flexibility

Among which of the following industries are purchasing costs the LOWEST percentage of sales?

Restaurants

Outsourcing refers to transferring a firm’s activities that have traditionally been internal to external suppliers (T/F)

True

Outsourcing is a form of specialization that allows the outsourcing firm to outsource its key success factors (T/F)

False

The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally (T/F)

True

Outsourcing:

1. Transfers traditional internal activities to outside vendors

2. Utilizes the efficiency that comes with specialization.

3. Allows the outsourcing firm to focus on its key success factors.

4. All of these are true of outsourcing.

The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is:

Outsourcing

With the “many suppliers” sourcing strategy, the order usually goes to the highest bidder (T/F)

False

Vertical integration, whether forward or backward, requires the firm to become more specialized (T/F)

False

A manufacturer that acquires one of its key product distributors would be practicing forward integration (T/F)

False

Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers, and part vertical integration (T/F)

True

Long-term “partnering” relationships are one of the main goals of the “few suppliers” sourcing strategy (T/F)

False

Which one of the following is NOT one of the six sourcing strategies?

Short-term relationships with few suppliers

A disadvantage of the “few suppliers” sourcing strategy is:

The high cost of changing partners

Which sourcing strategy is particularly common when the products being sourced are commodities?

Many suppliers

Use of a limited supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories (T/F)

False

The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has increased the overall level of supply chain risk. (T/F)

True

Cross-sourcing describes the practice of having two suppliers provide every component (T/F)

False

Hedging increases currency exchange rate risks (T/F)

False

Walmart owns its trucking fleet and numerous distribution centers located throughout the United States, which helps it manage and minimize logistical delays (T/F)

True

Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other?

Cross-sourcing

The bullwhip effect refers to the decreasing fluctuations in orders that often occur as orders move upstream through the supply chain (T/F)

False

Drop shipping generally results in increases in shipping time and shipping costs. (T/F)

False

The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer’s site (T/F)

False

An enhancement approach involves using a single channel of both communication and shipping (T/F)

False

A main objective of keeping a product generic as long as possible before customizing is known as:

Postponement

Operations managers are finding online auctions a fertile area for disposing of discontinued inventory. (T/F)

True

In the cost-based price model, price is based on a published, auction, or index price (T/F)

False

Competitive bidding is particularly effective when the buy is a single supplier (T/F)

False

What type of negotiating strategy is based on a published, auction, or index price?

Market-based price model

Which of the following is NOT a common feature of purchase contracts?

Buybacks

What are the three classic types of negotiation strategies?

Cost-based price model, market-based price model, and competitive bidding

What are the four stages of supplier selection?

Supplier evaluation, supplier development, negotiations, and contracting

Which of the following would NOT be subject to negotiation between a buyer and supplier?

Price

Which of the following is NOT a typical benefit of centralized purchasing?

Reduce lead times

Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners (T/F)

True

Waterways are an attractive distribution system when cost is more important than shipping speed (T/F)

True

Logistics represents more than 20% of the U.S. gross domestic product (T/F)

False

What term is used to describe the outsourcing of logistics?

Third-party logistics (3PL)

Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas?

Airfreight

As the number of facilities in a distribution network increases, total logistics costs tend to follow a curve that first rises, then declines.

False

As the number of facilities in a distribution network increases, the response time also increases (T/F)

False

Once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may increase compared to the optimal number of facilities based on total logistics costs only (T/F)

True

As the number of facilities in a distribution network increases, profit tends to follow a curve that first rises, then declines (T/F)

False

Top-notch supply chain performance requires more downstream management than upstream (T/F)

False

Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced (T/F)

False

Establishing standards for a firm’s suppliers is beyond the ethical responsibility of the firm since suppliers are external and not controlled by the firm (T/F)

False

Managing reverse logistics is relatively more straightforward compared to forward logistics, due to the relatively low volume of goods flowing through reverse logistics (T/F)

False

A reverse auction involves the processes for sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal (T/F)

False

The Institute for Supply Management:

Publishes the principles and standards for ethical supply management conduct.

Benchmark firms have driven down costs of supply-chain performance (T/F)

True

Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model?

Sell

In the consumer packaged goods industry, the benchmark firms tend to have:

Short cash-to-cash cycle time