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A company’s supply chain involves the flow of materials and information from suppliers, through production, to the end users.


In supply chain organizations, functions must operate independently of each other.


In purchasing, one’s only ethical obligation is to one’s suppliers.


Using third-party logistics involves using your organization’s logistics function to ship to customers that aren’t officially part of the supply chain.


Every business organization is part of at least one supply chain.


Frequent deliveries of small shipments can reduce inventory but also result in an increase in the transportation cost per unit.


The materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the beginning of the chain.


Managing supply chain visibility involves making sure that potential supply chain partners are aware of your organization’s needs.


The goal of supply chain management is to synchronize supply and demand of all of the organizations that are part of the chain.


The need for supply chain management increases as globalization increases.


The design of the supply chain and establishing partnerships with vendors and distributors are examples of operating issues in a supply chain.


Traffic management refers to truck movement within our parking areas.


One of the major reasons for a company to adopt third-party logistics is to concentrate on one’s core business.


E-commerce refers to the use of electronic technology to facilitate business transactions.


E-commerce involves business-to-business (B2B) interaction only.


Disintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain.


Most people working for a business organization are somehow involved with the supply chain of that business.


Strategic partnering is encouraged when two or more business organizations have complementary products or services that would benefit the others.


Forming strategic partnerships is beneficial for two or more business organizations that have the same products or services.


Inventory velocity refers to the average speed (in miles/hour) of material handling equipment in a warehouse.


Global supply chains make purchasing easier because of more options.


Centralized or decentralized purchasing is directly related to the size of an organization.


The optimization of the supply chain uses a mathematical model to determine the optimal number of business organizations to be included in the chain.


Information technology is the key to success of global supply chains.


Bullwhip effect refers to a phenomenon that demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain.


Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease.


Scheduling and maintaining equipment are operational decisions.


To prevent temporary storage in a warehouse, cross docking can be used.


Delayed differentiation is a means of increasing product variety without building the customized product from scratch or keeping large inventories of custom products.


Returned goods are part of reverse logistics.


A 30% reduction in product and service variety won’t really affect the efficiency of a supply chain.


The service function of purchasing interfaces with many area including legal, accounting, and engineering functions.


Gate keeping manages the cost of shipping returned goods.


Outsourcing logistics gives a company less flexibility because it forces them to focus more on core businesses.


Vendor analysis examines the function of purchased parts and materials with a view towards improvement or cost reduction.


Using third-party fulfillment means losing control of fulfillment.


Price is the primary determining factor in choosing a vendor since most products are essentially the same.


RFID eliminates the need for counting and bar-code scanning.


The importance of purchasing relates only to the cost of parts and materials purchased, which is often 60% or more of the cost of finished goods.


The importance of purchasing is the cost of goods purchased, the quality of goods and services, and the timing of deliveries of goods or services.


Vendor analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service.


In e-commerce, the front-end design is significantly more important than the back-end design.


One disadvantage to RFID is that they require a ‘line of sight’ for reading.


Decentralized purchasing can usually offer quicker response than centralized purchasing.


Some firms have structured their procurement function to include both centralized and decentralized purchasing.


Creating an effective supply chain requires linking the marketing, distribution, and supplier channels.

An advantage of decentralized purchasing is the attention given to local needs.


Event management is the advanced planning required for major performances such as concerts or conferences.


Supplier certification is the first step required in a supplier audit program.


Design and purchasing people should work closely because changes in design, specifications, or materials can impact future purchase requirements.


The purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items.


Producing and shipping in large lots may reduce costs but increase lead times.


Variations create uncertainty, thereby causing inefficiencies in a supply chain.


Disintermediation is the refusal of one party to use mediators for price negotiation.


Which of the following is not a goal of supply chain management?

lowest possible transportation costs

Logistics includes all of these except:

customer selection

Small changes in consumer demand can result in large variations in orders placed because of the

Bullwhip effect

RFID chips:
(I) are used to track goods in distribution
(II) are used to track job progress in production
(III) are used to provide special instructions to operators
(IV) can be used in inventory record keeping

I, II, and IV

Which of the following is not a benefit of RFID?

frequent deliveries of smaller shipments

A factor that makes it desirable for business organizations to actively manage their supply chains is:

increasing globalization

Which of the following is not a benefit of effective supply chain management?

larger number of suppliers

Which of the following is not a measure of the reliability of the supply chain?

supply chain response time

The automatic identification of material is part of/facilitated by:


Which of the following is not an application of E-business?

universal product codes

Which of the following is an advantage of E-business?

I and II

Which of the following is a barrier to integration of separate organizations in the supply chain?
(I) conflicting objectives of the companies in the chain.
(II) different level of capacity of the companies in the chain.
(III) reluctance of the organizations in the chain to allow other organizations access to their data.

I and III

_________ has helped business concentrate on their core business.


Outsourcing followed by __________ is not simple.


The interface between the firm and its suppliers is:


The two types of decisions that are relevant to supply chain management are:

Tactical, operational Decision-making in supply chain management falls into either tactical or operational areas.

One important objective of purchasing is to:

be knowledgeable about new products

The purchasing cycle begins with:

receiving a requisition

Examination of the sources of supply for purchased parts or materials in order to improve performance is called:

vendor analysis

Vendor analysis has the greatest potential for savings for items which have:

high annual cost-volume

Which of the following is not true of vendor analysis?

It involves an examination of the function of purchased parts or raw materials.

Which of the following is not a performance driver?


Which of the following would not usually be a main factor in selecting a vendor?

inventory turnover

Which of the following is part of the purchasing cycle?
(I) Purchasing selects a supplier.
(II) Orders from vendors are received.
(III) Purchasing receives a requisition.

I, II, and III

Which of the following is least likely to be a key consideration when a company chooses a supplier?

value analysis

Which of the following is not a benefit of centralized purchasing?

quick response to local needs

The purchasing perspective of the supplier as a partner is characterized by:

one or a few suppliers

Vendor Analysis is the examination of the _________ of purchased materials.


Last quarter, a retailer sold 8,000 t-shirts, 7,000 of which were sold directly from on-hand inventory. This retailer’s ________ was 88%.

fill rate

Which of the following is a principle required for ethical behavior in purchasing?
A. loyalty to employer.
B. justice to those you deal with.
C. faith in your profession.
D. all of the above.

all of the above.

The activity which begins with a request from within the organization is:

Purchasing cycle

Our organization can obtain visibility to potential trading partners on the internet by using:


Real time information about product movement on store shelves could benefit from the use of

radio frequency identification tags

The website and order fulfillment are essential features of:


A given inventory item has a per-year holding cost of $500. One method of shipping this item is three days faster than the other, but it is $2.50 more per unit. Using the slower method would be __________ more expensive overall than using the faster method.

$1.61 Multiply the holding cost by the speed differential, then divide by 365. Compare this to the actual shipping cost difference.

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