Chapter 11

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A supply chain ends with

a satisfied customer.

Which of the following statements is NOT​ true?

An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.

Which of the following industries has the highest supply chain cost as a percentage of​ sales?


A response strategy requires suppliers be selected based primarily on

​capacity, speed, and flexibility.

Which of the following statements is NOT one of the differentiation strategy​ decisions?

Use buffer stocks to ensure speedy supply.

Prior to embarking on supply chain​ design, operations managers must first consider

"make-or-buy" and outsourcing decisions.

What is transferring a​ firm’s activities that have traditionally been internal to external​ suppliers?


Which of the following statements is NOT one of the response strategy​ decisions?

gather and communicate market research data

The advantage of having few suppliers is to

form a long-term relationship

The advantage of having many potential suppliers is their willingness to

offer lower prices in the short term.

What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a​ distributor?

vertical integration

Which of the following strategies is part​ collaboration, part purchasing from few​ suppliers, and part vertical​ integration?

keiretsu networks

Which of the following could reduce distribution​ risk?

careful​ selection, monitoring and effective contracts with penalties

Which of the following mitigation tactics could reduce economic​ risk?

purchasing contracts that address price fluctuations

Which of the following mitigation tactics is NOT designed to reduce the risk of information loss or​ distortion?

alternate sourcing

Which of the following statements is true regarding​ cross-sourcing?

Cross-sourcing uses one supplier for a component and a second supplier for another​ component, where each supplier acts as a backup for the other.

Which of the following statements is NOT true regarding the bullwhip​ effect?

The bullwhip effect occurs as order are relayed from​ retails, to​ distributors, to​ wholesalers, to​ manufacturers, with fluctuations decreasing at each step in the sequence.

What is a​ long-term purchase commitment to a supplier for items that are to be delivered against​ short-term releases to​ ship?

blanket order

A lawnmower assembly plant uses a variety of​ nuts, bolts,​ screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule.

This is an example of

vendor-managed inventory.

The​ do-it-yourselfer plucked a gallon can of base paint from the shelf of the local hardware store and handed it to​ Keith, the cheerful clerk at the paint counter. Their eyes met briefly and the​ do-it-yourselfer silently handed over sample​ 150C-1, Musical​ Mist, to the clerk. It was impractical to keep several gallons of every possible color on the shelves at the hardware​ store, so the paint manufacturer had created clever workaround. The workaround was a​ computer-based system that added predetermined quantities of pigments to a gallon can of base paint depending on the desired​ shade, in this​ case, Musical Mist. The hardware store now needed to stock only the base​ paint, this​ machine, and a small supply of paint pigments in order to create the thousands of colors in its catalog.

This scenario is a prime example of


Which of the following is the first stage of supplier​ selection?

supplier evaluation

Which negotiation strategy bases price on a​ published, auction, or index​ price?

market-based price model

With regard to the​ cost-based price model negotiation​ strategy, which of the following is​ true?

Prices are based upon supplier costs.

Which of the following is NOT one of the benefits accrued from a centralized purchasing​ function?

Increase the duplication of tasks.


is increasingly using computers to manage its operations


is a fast-growing mode of shipping

Supply chain managers outsource logistics to meet three​ goals:

drive down inventory​ investment, lower delivery​ costs, and improve delivery reliability and speed.

Which of the following statements is NOT true regarding channel​ assembly?

Channel assembly sends individual​ components, modules, and finished​ products, to the distributor.

Which of the following statements is NOT​ true?

A​ closed-loop supply chain is a designed to optimize only reverse flows.

Which of the following is NOT true about reverse logistics as compared to foward​ logistics?

Speed is often very important.

What is a supply chain designed to optimize both forward and reverse​ flows?

closed-loop supply chain

Which organization has developed principles and standards to be used as guidelines for ethical​ behavior?

Institute for Supply Management

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