Chapter- Supply Chain Management

1. A supply chain is a sequence of firms that perform activities required:

A) to find products that are similar
B) to facilitate wholesalers inventory selections
C) to create and deliver goods to consumers
D) to support the acquisition of raw materials

2. An important feature of supply chain management is its application of electronic

commerce technology that allows companies to share and operate systems for:
A) order processing, transportation scheduling, and inventory management.
B) cost-effective flowing of raw materials
C) future purchasing of computer systems
D) future merger opportunities

3. A supply chain is essentially a sequence of linked:

A) customer and prospects
B) supplier and manufacturer
C) suppliers and customers
D) warehousing and wholesaling units

4. In the automotive industry, the person who is responsible for translating customer
requirements into actual orders and arranges delivery dates is the car maker:
A) supply manager
B) purchasing manager
C) production manager
D) supply chain manager

5. It is estimated that the logistics costs of a new car are about:

A) 10-20%
B) 20-25%
C) 25-30%
D) 30-40%

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6. Poor supply chain management practices can ____________________ an otherwise
excellent marketing strategy.
A) Seriously damage
B) make SWOT analysis difficult for
C) keep people employed on
D) repair

7. The physical characteristics of a product will often dictate what:

A) types of sales can be made
B) types of instructions needed
C) geographic regions will be included
D) kinds of transportation can be used

8. Pricing interacts with a supply chain in many ways. For instance, transportation rate
structures are adjusted by the carrier based on:
A) cost to unload
B) the size of the shipment
C) local currency rates
D) the logistics costs concept

9. The total logistics cost includes expenses associated with transportation, materials
handling and:
A) customer complaints, cost of food and highway usage taxes
B) warehousing, inventory, stock outs and order processing
C) inventory control with sales forecasting
D) stock outage control with sales forecasting

10 The total logistics cost factors need to be balanced against the:

A) supply chain managers total experience
B) total expected transportation needs
C) customer service factors
D) lead time expectations

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11 Lead time and order cycle time are the same as:
A) customer service time
B) supply chain flow
C) logistical clockage
D) replenishment time

12. The inventory management systems designed to reduce the retailer's lead time for
receiving merchandise is called:
A) efficient consumer response delivery system.
B) Effective response.
C) on-time market delivery system.
D) Efficient logistical response.

13 Examples of third-party logistics providers are:

A) FedEx and Rosenau Transport
B) Sentinel Self-Storage and UPS
C) FedEx and UPS
D) UPS and Metro Van Lines

14 The seller must concentrate on removing unnecessary barriers for:

A) a quick response.
B) Customer convenience.
C) Transportation modes.
D) A piggyback operation.

15 There are five basic transportation modes. They are air carrier, motor carrier, and:
A) pipelines, railways an water carriers
B) railways, ocean vessels and dirigibles
C) trucks, canals and robotics
D) water routes, railways and trucks

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16 Rail has the largest shipping capacity compared to all except:
A) pipeline
B) air carrier
C) water carrier
D) motor carrier

17 TOFC is the same as:

A) piggyback
B) total fleet command
C) tri-optic float carrier
D) one-way dispatching

18 Air freight is costly, but its speed may create savings because of:
A) the extensive availability of airports
B) lower inventory.
C) Getting to store shelves before water carriers.
D) Lower costs created by FIFO.

19 A reason to carry inventory would include:

A) to have tax write-off opportunities
B) having a wide variety to meet customer expectations
C) to increase ways to use the product
D) to promote purchasing and transportation discounts

20 Saturn's manufacturing operations in Spring Hill, Tennessee, uses a sophisticated

system called:
A) JIT
B) OJT
C) OJE
D) POP
E) FOB

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21. A marketing expert described a _____ as looking like a butterfly. The manufacturer
is the body of the butterfly with many different suppliers accumulated on one side of the
body for the left wing and a large number of buyers collected on the other side to form
the right wing.
A) logistical flow
B) demand chain
C) materials handling facility
D) supply chain

22. _____ is the integration and organization of information and logistics across firms in a
supply chain for the purpose of creating and delivering goods and services that provide value
to consumers.
A) Supply chain management
B) Logistics management
C) Point-to-point management
D) Just-in-time management

23. What is the first step in choosing a supply chain?

A) developing an umbrella mission statement
B) understanding the customer
C) making sure the members of the supply chain harmonize with the organizational culture
D) creating a unifying interorganizational strategy

24. Bombardier makes corporate jets and its strategy involves streamlining production
activities, maintaining its reputation for quality, and reducing its costs. It has developed
the Continental, an airplane assembled from just a dozen large component parts (not
counting rivets). While building planes with subassemblies is not new, Bombardier is
the first to not use vertical integration. All parts are supplied by carefully chosen
independent companies that share the development costs and market risk. In terms of
its supply chain, Bombardier has
A) lengthened its supply chain unnecessarily.
B) implemented a just-in-time materials handling policy.
C) created a marketing channel.
D) harmonized its supply chain and its strategy.
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25. Winemaker Robert Mondavi Corp. buys satellite images from NASA to spot
problems in its vineyards and aims to push those images out over a(n) _____ to its
independent growers this year. Mondavi will help growers avoid vineyard problems-
and improve the grapes it buys.
A) Extranet
B) customized search engine
C) electronic downloadable information (EDI)
D) customized database management system

26. With which customer service factor are quick response and efficient consumer
response delivery systems most closely related?
A) Time
B) dependability
C) inventory costs
D) communication

27. Celarix.com is a business entity that monitors and calculates tariffs and exchange
rates for small companies that ship export their products. Celarix is an example of a:
A) materials handling expert.
B) content provider.
C) freight forwarder.
D) third-party logistics provider.

28. Which of the following statements about air carriers is true?

A) One advantage of air carriers is door-to-door delivery.
B) There are no space constraint limitations as to what can be transported in planes.
C) This method of transportation is especially effective for piggybacking.
D) Air carriers are commonly used for perishable flowers, clothing, and electronics
parts.

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29. William "Gus" Pagonis is an executive vice president at Sears and oversees the
systems the retailer depends on to make 5,000 home deliveries per day and move
250,000 truckloads of goods every year. With 30 large distribution centres and 90
smaller outlets, it's Pagonis's job to supply 100,000-plus products to more than 2,000
Sears stores. When asked to describe the retailer's distribution centres, Pagonis would
most likely say,
A) "Just like other companies, Sears spends more money on distribution centres than any
other element of its supply chain."
B) "Our success is due to the centralization of our distribution centres."
C) "Because our distribution centres are so efficient, they are the least expensive part of our
supply chain."
D) "We use our distribution centres to facilitate sorting consolidating products from
different suppliers."

30. Modes of transportation are typically evaluated on the basis of all of the following
criteria EXCEPT:
A) accessibility.
B) perishability.
C) frequency.
D) capability.

31 TransCanada PipeLines, a natural gas transmission and distribution company,

launched an advertising campaign in national Canadian newspapers and the country's
major dailies to educate people about what pipelines do and where they fit into the
economics of the community. The advertising might have told Canadians that pipelines:
A) are expensive to use.
B) have a high degree of reliability.
C) are weather sensitive.
D) rank high in terms of accessibility.

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32. The Danish-flagged Carsten Maersk can carry enough merchandise packed in
containers that when they are laid end to end, the containers would stretch 27 miles.
When it reaches its destination, the containers will be removed from the ship and loaded
onto trucks and railcars. This is an example of:
A) piggyback.
B) freight forwarding.
C) intermodal transportation.
D) an export agent.

33 Traditionally, stores have carried inventory to:

A) prevent strikes or product shortages.
B) Provide better service for those customers who wish to be served on demand.
C) Eliminate forecasting uncertainty.
D) Terminate production economies.

34. Dramatic cost savings are possible when efficient transportation systems and
information technology can be substituted for _____ costs.
A) Advertising
B) personal selling
C) publicity
D) inventory

35. Supply chain management impacts all of the following aspects of the marketing mix
strategy EXCEPT:
A) the target market selection decision.
B) Product mix decisions.
C) Pricing decisions.
D) Promotion decisions.

36. An online retailer like Amazon.com relies on an efficient supply chain. The
development of its supply chain supported its clearly defined marketing strategy and
began with:
A) inventory forecasts.
B) a logistics mission statement.
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C) the mature stage of the product life cycle.
D) Understanding the customer.

37. In Canada, Coca-Cola Beverages has rolled out new marketing, technologies, and
packaging to outmaneuver private-label Canadian cola bottlers, which have captured
considerable market share. Coke will bring in a new just-in-time distribution system
based on unit trains and cross-docking sales centres. Which of the following statements
describes how Coke will use cross-docking?
A) Cross-docking will allow Coca-Cola to greatly reduce the need to store and
warehouse products.
B) The use of cross-docking means Coca-Cola will rely more on business-to-business
marketing.
C) The use of cross-docking means Coca-Cola will implement the customer service concept
in its relations with ultimate consumers.
D) Cross-docking will allow Coca-Cola to use less freight forwarding.

38. In physical distribution decisions, total logistics cost includes:

A) order processing.
B) materials handling and warehousing.
C) transportation.
D) all of the above.

39. Canadian graphic arts, publishing and advertising companies, as well as their clients
and suppliers, can exchange camera-ready art and other images faster and cheaper
than before as the result of an agreement between Bell Nexxia and Montreal-based
Cenosis. These two companies market a(n) _____ for the graphic arts. It allows a
graphic designer to transmit the full contents of a magazine to clients or printing firms
across the country-reducing production costs and delivery time.
A) efficient response system
B) vendor-managed communication system
C) Extranet
D) online logistics system

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40. Lead time is:
A) also called replenishment time.
B) Typically more important to resellers than to consumers.
C) Defined as the time that passes from ordering an item until it is received and ready for use
or sale.
D) Accurately described by all of the above.

41. Combining different transportation modes in order to get the best features of each is
called:
A) freight forwarding.
B) dual distribution.
C) intermodal transportation.
D) bimodal logistics.

42. In Canada, Coca-Cola Beverages has rolled out new marketing, technologies, and
packaging to outmaneuver private-label Canadian cola bottlers, which have captured
considerable market share. Coke will bring in a new just-in-time distribution system
based on unit trains and cross-docking sales centres. Coca-Cola's use of unit trains will
allow it to:
A) have a dedicated train that uses permanently coupled cars that run a continuous
route from Coke's bottling plants to its retailers and back.
B) use intermodal transportation for export purposes.
C) use trucks to make door-to-door deliveries.
D) use more warehousing.

43. The major purpose of a trailer on flatcar (TOFC) is to:

A) deregulate the motor carrier industry.
B) Combine the economy of rail carriers with the flexibility of motor carriers.
C) Implement a JIT transportation strategy both domestically and internationally.
D) Eliminate the need for containers.

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44. Air Canada, a Montreal-based airline, uses its excess storage capacity on passenger
flights to Europe to haul cargo. It typically collects several small shipments consigned to
a common European destination. Shipment schedules are mandated by the passenger
side of its business. Air Canada is an example of a(n):
A) third-party service provider.
B) Extranet.
C) vendor-managed logistics expert.
D) Freight forwarder.

45. A warehouse that emphasizes speed and efficient product flow to hold goods for
short periods of time and move them out as soon as possible:
A) is a storage warehouse.
B) is a freight forwarder.
C) is a distribution centre.
D) is an inventory expediting centre.

46. . _______ analysis relates to what processes, activities, and decisions actually
create costs in your supply chain1.
A. Cost driver
B. Value proposition
C. Cost reduction
D. Target costing

47. In the 1980s, Toyota and Honda outcompeted American carmakers because they
relied on suppliers for approximately _______ percent of a cars value.
A. 30
B. 45
C. 60
D. 80

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48. Value stream mapping is an application of process mapping, developed to apply
_______ principles to process improvement.
A. management
B. lean
C. supply chain
D. cycle time1

49. . A supply chain is made up of a series of processes that involve an input, a _______,
and an output.
A. shipment
B. supplier
C. customer
D. transformation

50. . _______ is a tool to chart how individual processes are currently being conducted
and to help lay out new improved processes.
A. Process mapping
B. Pareto charting
C. Supply chain design
D. Design chain mapping

51. Identify from the following list a major strategic risk associated with outsourcing.
A. Outsourcing landed cost is usually higher than in sourcing cost.
B. The supplier is purchased by a competitor.1
C. The business loses sight of market trends.
D. The cost of supplied material is passed on to the customer.

52. . _______ is the design of seamless value-added processes across organization

boundaries to meet the real needs of the end customer.
A. Operations
B. Supply chain management
C. Process engineering
D. Value charting

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53. . The impact of cost reduction on profits is much larger than the impact of
increased
A. innovation.
B. production.
C. information.
D. sales.

54. . _______ considers how your organization competes and is an essential element
of corporate strategy.
A. Value proposition analysis
B. Leadership
C. A consultant
D. A competitor

55. 3PL involves using a supplier to provide _______ services.

A. marketing
B. design
C. logistics
D. contract manufacturing1

56. . The collective learning in the organization, especially how to coordinate diverse
production skills and integrate multiple streams of technologies, is called
A. innovative constraint.
B. second-tier competency.
C. corporate skill.
D. core competency.

57. . Integration of business economics and strategic planning has given rise to a new
area of study called __________.
A. Micro Economics
B. Corporate Economics
C. Macro Economics
D. Managerial Economics

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58. The _______ has made it possible for other companies to eliminate intermediaries
and sell directly to the end consumer.
A. SCM
B. Internet
C. competition
D. global sourcing

59. Which of the following is true for supply chain management?

A. The physical material moves in the direction of the end of chain
B. Flow of cash backwards through the chain
C. Exchange of information moves in both the direction
D. All of the above

60. The sequence of a typical manufacturing supply chain is

A. StorageSuppliermanufacturingstoragedistributorretailercustomer
B. SupplierStorage-manufacturingstoragedistributorretailercustomer
C. SupplierStorage-manufacturing distributorstorageretailercustomer
D. SupplierStorage-manufacturingstorage retailerdistributorcustomer

61. The purpose of supply chain management is

A. provide customer satisfaction
B. improve quality of a product
C. integrating supply and demand management
D. increase production

62. Logistics is the part of a supply chain involved with the forward and reverse flow of
A. goods
B. services
C. cash
D. all of the above

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63. Due to small change in customer demands, inventory oscillations become
progressively larger looking through the supply chain. This is known as
A. Bullwhip effect
B. Netchain analysis
C. Reverse logistics
D. Reverse supply chain

64. VMI stands for

A. Vendor material inventory
B. Vendor managed inventory
C. Variable material inventory
D. Valuable material inventory

65. The major decision areas in supply chain management are

A. location, production, distribution, inventory
B. planning, production, distribution, inventory
C. location, production, scheduling, inventory
D. location, production, distribution, marketing

66. Distribution requirement planning is a system for

A. Inventory management
B. Distribution planning
C. Both a and b
D. None of the above

67. Reverse logistics is required because

A. Goods are defective
B. Goods are unsold
C. The customers simply change their minds
D. All of the above

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68.3-PL stands for
A. Three points logistics
B. Third party logistics
C. Three points location
D. None of the above

69. Process which involves controlling, implementing and planning materials and final
goods to meet final customer at high profits is classified as
A. exclusive distribution
B. exclusive dealing
C. physical distribution
D. supply chain management

70. Logistic network through which unwanted or excess products by resellers or

consumers is classified as
A. inbound distribution
B. outbound distribution
C. forward distribution
D. reverse distribution

71. Logistic network which moves finished product from company to resellers and then
to end users is classified as
A. risk averse distribution
B. reverse distribution
C. inbound distribution
D. outbound distribution

72. Logistic network which moves materials from suppliers to manufacturing unit is
classified as
A. inbound distribution
B. outbound distribution
C. forward distribution
D. reverse distribution

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73. Process of managing upstream and downstream of final goods, flow of raw materials
and information about resellers and final consumers is classified as
A. marketing logistics network
B. supply chain management
C. delivery network
D. physical distribution network

74. An organizations supply chain can be viewed from a system's perspective that starts
with the acquisition of resources which are then transformed into products or services.
Simply, put the sequence is represented:
A. Sourcing - input - process - outputs
B. Inputs - outputs - process
C. Process - inputs - outputs
D. Inputs - process - outputs

75. Logistics is an integral part of supply chain management. Which explanation best
represents outbound logistics?
A. The management of material resources entering an organization from its suppliers and
other partners
B. A supply chain that emphasizes distribution of a product to passive customers
C. An emphasis on using the supply chain to deliver value to customers who are
actively involved in product and service specification
D. The management of resources supplied from an organization to its customers and
intermediaries

76. What does the following definition refer to: an organization which uses
communications technology to allow it to operate without clearly define physical
boundaries between different functions?
A. E-organization
B. Virtual organization
C. Base-free organization
D. Cloud organization

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77. The typical benefits of e-supply chain management gained by a B2B company are
quite comprehensive. Which of the following is false though?
A. Increased efficiency of individual processes
B. Improved data integration between elements of the supply chain
C. Increased costs through outsourcing
D. Reduced complexity of the supply chain

78. What does a company's information system need to deliver to different parties who
need to access the supply chain information of an organization, whether they be
employees, suppliers, and logistics service providers or customers?
A. Supply chain visibility
B. Radio-frequency identification of products
C. Password and user name reminders
D. None of these

79. As guidance to managing a global distribution, seven action points have been
suggested. Do these include
A. Treat local distributors as short-term partners
B. Let distributors pick you
C. Do not waste money, time and energy initially
D. None of these

80. Which of these is an output to a single organization's transformation process?

A. Information
B. Intangible needs
C. Fulfilled needs
D. Materials

81. Which of these statements about the transformation process is best?

A. Inputs to operations usually come from only one place and take one form.
B. Operations activities are usually independent of other business activities such as
engineering and marketing.
C. The availability of inputs usually has little impact on the operations function.
D. Operations are highly dependent on the quality of inputs.
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82. Which of these is NOT a flow that moves up and down the supply chain?
A. Physical
B. Information
C. Monetary
D. Procedural

83. Which area of the SCOR model includes the activities that are necessary to handle
warranty repairs and exchanges or shipments in excess of what is needed at a retail
location?
A. Delivery
B. Source
C. Return
D. Planning

84. The use of information technology to automate business transactions is known as

A. Management information systems
B. Computer integrated manufacturing
C. POS
D. E-commerce

85. Which of these operations and supply chain management career paths works closely
with manufacturing, marketing, and purchasing to create timely, cost-effective
import/export supply chains?
A. Analyst
B. Logistics and Material Planner
C. International logistics manager
D. Sourcing manager

86. Which of these is NOT a key element of the operations function?

A. People
B. Technology
C. Regulations
D. Systems

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87. Which of these statements about the operations function is best?
A. A manufacturing company provides only tangible goods as outputs.
B. Inputs to the operations function can come from many different places.
C. The quality and availability of inputs to the operations function do not matter if the
operation is well-managed.
D. Operations are the most isolated of all business functions, rarely needing to interface
with marketing, finance, or engineering.

88. Which of these professional organizations has the broadest scope in the operations
and supply chain management discipline?
a. APICS
b. ASQ
c. CSCMP
d. ISM

89. The capacity planning function is closely linked with which two key inter
organizational supply chain participants?
A. Finance and Accounting
B. Suppliers and Customers
C. Marketing and Human Resources
D. Government and APICS

90. The logistics function interfaces with which two key inter functional supply chain
participants?
A. Human Resources and IT
B. Suppliers and Customers
C. Accounting and Engineering
D. Marketing and Engineering

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91. Zero defects in manufacturing is
A. Is a relevant goal only in electronic assembly
B. is readily achievable in all areas
C. is the goal of TQM
D. is an unobtainable and misleading idea

92. According to the manufacturing-based definition of quality

A. quality is the degree of excellence at an acceptable price and the control of variability at
an acceptable cost
B. quality depends on how well the product fits patterns of consumer preferences
C. even though quality cannot be defined, you !now what it is
D. quality is the degree to which a specific product conforms to standards

93. The supply chain concept originated in what discipline?

A. marketing
B. operations
C. logistics
D. production

94. Quality is defined by the customer is:

A. An unrealistic definition of quality
B. A user-based definition of quality
C. A manufacturing-based definition of quality
D. A product-based definition of quality

95. The supply chain management philosophy emerged in which decade?

A. 1960s
B. 1970s
C. 1980s
D. 1990s

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96. A ____________ encompasses all activities associated with the flow and
transformation of goods from the raw material stage, through to the end user, as well
as the associated information flows
A. production line
B. supply chain
C. marketing channel
D. warehouse

97. Which one of the following is not a typical question dealt with by operations
managers?
A. How much capacity will be needed in the months ahead?
B. That is a satisfactory location for a new facility?
C. How to motivate employees?
D. All are typical of operations decisions

98. Which of the following are not key attributes of supply chain management?
A. inventory control
B. leveraging technology
C. customer power
D. all are key attributes

99. Positive, long-term relationships between supply chain participants refer to:
A. Co-opetitions
B. tailored logistics
C. partnerships
D. supply chain management

100. Which one of the following best represents a pure good?

A. Soap
B. Fast food
C. Attending a play
D. Vehicle repair

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