Chapter 3Supply Chain Drivers and ObstaclesTrue/False1. The major drivers of supply chain performance are facilities, inventory, transportation, and information.Answer: TrueDifficulty: Moderate2. The major drivers of supply chain performance are customers, facilities, inventory, transportation, and information.Answer: FalseDifficulty: Moderate3. The two major types of facilities are production sites and storage sites.Answer: TrueDifficulty: Moderate4. The two major types of facilities are distribution sites and storage sites.Answer: FalseDifficulty: Moderate5. Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain’s efficiency and responsiveness.Answer: TrueDifficulty: Moderate6. Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.Answer: TrueDifficulty: Easy7. Information is potentially the biggest driver of performance in the supply chain even though it has little impact on each of the other drivers.Answer: FalseDifficulty: Easy8. A facility with little excess capacity will likely be more efficient per unit of product it produces than one with a lot of unused capacity.Answer: TrueDifficulty: Easy9. A facility with little excess capacity will likely be no more or less efficient per unit of product it produces than one with a lot of unused capacity.Answer: FalseDifficulty: Easy10. The high utilization facility will have difficulty responding to demand fluctuations.Answer: TrueDifficulty: Easy11. The high utilization facility will have no more difficulty responding to demand fluctuations than one with a lot of unused capacity.Answer: False Difficulty: Easy12. Stock keeping unit (SKU) storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.Answer: TrueDifficulty: Moderate13. Warehouse unit storage is the warehousing methodology that uses a traditional warehouse to store all of one type of product together.Answer: FalseDifficulty: Moderate14. The components of inventory decisions include cycle inventory, safety inventory, seasonal inventory, and sourcing.Answer: TrueDifficulty: Easy15. The components of inventory decisions include capacity, cycle inventory, safety inventory, seasonal inventory, and sourcing.Answer: FalseDifficulty: Easy16. Cycle inventory is inventory that is built up to counter predictable variability in demand.Answer: FalseDifficulty: Easy17. Seasonal inventory is inventory that is built up to counter predictable variability in demand.Answer: TrueDifficulty: Moderate18. Companies using seasonal inventory will build up inventory in periods of low demand and store it for periods of high demand when they will not have the capacity to produce all that is demanded.Answer: TrueDifficulty: Moderate19. Companies using seasonal inventory will maintain a level inventory increase rate of production for periods of high demand.Answer: FalseDifficulty: Easy20. A company’s ability to find a balance between responsiveness and efficiency that best matches the needs of the customer it is targeting is the key to achieving strategic fit.Answer: TrueDifficulty: Moderate 21. Many obstacles, such as growing product variety and shorter life cycles, have made it increasingly difficult for supply chains to achieve strategic fit.Answer: TrueDifficulty: ModerateMultiple Choice1. Which of the following is not a major driver of supply chain performance?a. Facilitiesb. Inventoryc. Transportationd. Informatione. All of the above are major drivers of supply chain performance.Answer: eDifficulty: Easy2. Which of the following is not a major driver of supply chain performance?a. Customersb. Facilitiesc. Inventoryd. Transportatione. InformationAnswer: aDifficulty: Moderate3. The places in the supply chain network where product is stored, assembled, or fabricated are known asa. facilities.b. inventory.c. transportation.d. information.e. customers.Answer: aDifficulty: Easy4. All raw materials, work in process, and finished goods within a supply chain are known asa. facilities.b. inventory.c. transportation.d. information.e. customers.Answer: bDifficulty: Easy5. Moving inventory from point to point in the supply is known asa. facilities.b. inventory.c. transportation.d. information.e. customers.Answer: cDifficulty: Easy6. The data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain is known asa. facilities.b. inventory.c. transportation.d. information.e. customers.Answer: dDifficulty: Easy7. The two major types of facilities area. distribution sites and storage sites.b. production sites and distribution sites.c. production sites and storage sites.d. retail sites and distribution sites.e. distribution sites and inventory sites.Answer: cDifficulty: Moderate8. Which component of the supply chain decision-making framework would be established first?a. Customer strategy b. Supply chain strategyc. Supply chain structured. Competitive strategye. Replenishment strategyAnswer: dDifficulty: Moderate9. Which component of the supply chain decision-making framework would be established second?a. Customer strategy b. Supply chain strategyc. Supply chain structured. Competitive strategye. Replenishment strategyAnswer: bDifficulty: Moderate10. Which component of the supply chain decision-making framework would be used to reach the performance level dictated by the supply chain strategy?a. Customer strategy b. Supply chain strategyc. Supply chain structured. Competitive strategye. Replenishment strategyAnswer: cDifficulty: Easy11. Which of the following is not a component of facilities decisions?a. Locationb. Capacityc. Operations methodologyd. Warehousing methodologye. All of the above are components of facilities decisions.Answer: eDifficulty: Moderate12. Which of the following is not a component of facilities decisions?a. Warehousing methodologyb. Forecasting methodologyc. Operations methodologyd. Capacitye. LocationAnswer: bDifficulty: Moderate13. Which of the following statements concerning decisions regarding location of facilities is false?a. Deciding where a company will locate its facilities constitutes a large part of the design of a supply chain.b. A basic trade-off here is whether to centralize to gain economies of scale or decentralize to become more responsive by being closer to the customer.c. Companies must also consider a host of issues related to the various characteristics of the local area in which the facility may be situated.d. All of these statements are true.e. None of these statements are true.Answer: dDifficulty: Moderate14. Which of the following is not an issue companies need to consider in facility location decisions?a. quality of workersb. product developmentc. proximity to customers and the rest of the networkd. cost of facilitye. tax effectsAnswer: bDifficulty: Moderate15. Which of the following is not an issue companies need to consider in facility location decisions?a. quality of workersb. availability of infrastructure c. proximity to customers and the rest of the networkd. cost of facilitye. All of the above are issues companies need to consider in facility location decisions.Answer: eDifficulty: Moderate16. Excess capacity a. allows a facility to be very flexible and to respond to wide swings in the demands placed on it.b. costs money and therefore can decrease efficiency.c. requires proximity to customers and the rest of the network.d. both a and be. all of the aboveAnswer: dDifficulty: Moderate 17. Which of the following is a characteristic of a facility with excess capacity? a. will likely be more efficient per unit of product it produces than one with a lot of unused capacityb. would be very flexible and to respond to wide swings in the demands placed on itc. would be considered a high utilization facilityd. will have difficulty responding to demand fluctuationse. none of the aboveAnswer: aDifficulty: Easy18. A facility with little excess capacitya. will likely be more efficient per unit of product it produces than one with a lot of unused capacity.b. would be considered a high utilization facility.c. will have difficulty responding to demand fluctuations.d. All of the above are true.e. None of the above are true.Answer: dDifficulty: Moderate19. Which of the following would be a characteristic of a facility with little excess capacity?a. allows a facility to be very flexible and to respond to wide swings in the demands placed on itb. costs money and therefore can decrease efficiencyc. requires proximity to customers and the rest of the networkd. will likely be more efficient per unit of product it producese. none of the aboveAnswer: dDifficulty: Moderate20. Which of the following is not a warehousing methodology? a. Warehouse unit storageb. Stock keeping unit (SKU) storagec. Job lot storaged. Cross-docking e. All of the above are warehousing methodologies.Answer: aDifficulty: Moderate 21. The warehousing methodology that uses a traditional warehouse to store all of one type of product together isa. warehouse unit storage.b. stock keeping unit (SKU) storage.c. job lot storage.d. cross-docking.e. none of the aboveAnswer: bDifficulty: Moderate22. The warehousing methodology in which all the different types of products needed to perform a particular job or satisfy a particular type of customer are stored together isa. warehouse unit storage.b. stock keeping unit (SKU) storage.c. job lot storage.d. cross-docking.e. none of the above Answer: cDifficulty: Moderate23. The following warehousing methodology is one in which goods are not actually warehoused in a facility. Instead, trucks from suppliers, each carrying a different type of product, deliver goods to a facility. There the inventory is broken into smaller lots and quickly loaded onto store-bound trucks that carry a variety of products, some from each of the supplier trucks.a. warehouse unit storageb. stock keeping unit (SKU) storagec. job lot storaged. cross-dockinge. none of the aboveAnswer: dDifficulty: Moderate24. All of the following are components of inventory decisions excepta. cycle inventory.b. safety inventory.c. seasonal inventory.d. sourcing.e. All of the above are components of inventory decisions.Answer: eDifficulty: Easy25. All of the following are components of inventory decisions excepta. capacity.b. cycle inventory.c. safety inventory.d. seasonal inventory.e. sourcing.Answer: aDifficulty: Easy26. The average amount of inventory used to satisfy demand between receipt of supplier shipments is referred to asa. cycle inventory.b. safety inventory.c. seasonal inventory.d. sourcing.e. none of the aboveAnswer: aDifficulty: Moderate27. The inventory that is built up to counter predictable variability in demand is calleda. cycle inventory.b. safety inventory.c. seasonal inventory.d. sourcing.e. none of the aboveAnswer: cDifficulty: Moderate28. The inventory held in case demand exceeds expectation in order to counter uncertainty is calleda. cycle inventory.b. safety inventory.c. seasonal inventory.d. sourcing.e. none of the aboveAnswer: bDifficulty: Moderate29. The set of business processes required to purchase goods and services is known asa. cycle inventory.b. safety inventory.c. seasonal inventory.d. sourcing.e. none of the aboveAnswer: dDifficulty: Easy30. Cycle inventory decisions involvea. how much to order for replenishment. b. how often to place orders.c. a basic trade-off between the cost of holding larger lots of inventory and the cost of ordering product frequently.d. all of the abovee. a and b onlyAnswer: dDifficulty: Moderate31. Cycle inventory is used becausea. the world is perfectly predictable.b. demand is uncertain and may exceed expectations.c. it involves making a trade-off between the costs of having too much inventory and the costs of losing sales due to not having enough inventory.d. it focuses on processes that are external to the firm.e. it focuses on processes that are internal to the firm.Answer: bDifficulty: Moderate32. Seasonal inventory should be used whena. a company can rapidly change the rate of its production system at a very low cost.b. changing the rate of production is expensive (e.g., when workers must be hired or fired).c. adjusting to a period of low demand without incurring large costs.d. the world is perfectly predictable.e. production rate is flexible.Answer: aDifficulty: Hard33. Sourcing involvesa. deciding the tasks that will be outsourced and those that will be per-formed within the firm.b. deciding whether to source from a single supplier or a portfolio of suppliers.c. identifying the set of criterion that will be used to select suppliers and measure their performance.d. selecting suppliers and negotiating contracts with them.e. all of the aboveAnswer: eDifficulty: Easy34. Which of the following are key components of transportation decisions when designing and operating a supply chain?a. Mode of transportationb. Route and network selectionc. In-house or outsourced. all of the abovee. none of the aboveAnswer: dDifficulty: Moderate35. Which of the following are key components of transportation decisions when designing and operating a supply chain?a. Software selectionb. Mode of transportationc. Source selectiond. Warehouse selectione. none of the aboveAnswer: bDifficulty: Easy36. Which of the following are key components of information that must be analyzed to increase efficiency and improve effectiveness in a supply chain?a. Push versus pullb. Coordination and information sharingc. Forecasting and aggregate planningd. Pricing and revenue managemente. all of the aboveAnswer: eDifficulty: Moderate37. Which of the following are key components of information that must be analyzed to increase efficiency and improve effectiveness in a supply chain?a. Software selectionb. Source selectionc. Warehouse selectiond. Forecasting and aggregate planninge. none of the aboveAnswer: dDifficulty: Moderate38. When all the different stages of a supply chain work toward the objective of maximizing total supply chain profitability, rather than each stage devoting itself to its own profitability without considering total supply chain profit, it is known asa. supply chain coordination.b. forecasting.c. aggregate planning.d. revenue management.e. pricing.Answer: aDifficulty: Easy39. The art and science of making projections about what future demand and conditions will be isa. supply chain coordination.b. forecasting.c. aggregate planning.d. revenue management.e. pricing.Answer: bDifficulty: Easy40. Transforming forecasts into plans of activity to satisfy the projected demand is known asa. supply chain coordination.b. forecasting.c. aggregate planning.d. revenue management.e. pricing.Answer: cDifficulty: Easy41. The process by which a firm decides how much to charge customers for its goods and services isa. supply chain coordination.b. forecasting.c. aggregate planning.d. revenue management.e. pricing.Answer: eDifficulty: Easy42. The use of differential pricing over time or customer segments to maximize profits from a limited set of supply chain assets isa. supply chain coordination.b. forecasting.c. aggregate planning.d. revenue management.e. pricing.Answer: dDifficulty: Moderate43. Which of the following are technologies that share and analyze information in the supply chain?a. Electronic Data Interchange (EDI)b. Internetc. Enterprise Resource Planning (ERP)d. Supply Chain Management (SCM) softwaree. all of the aboveAnswer: eDifficulty: Easy44. Which of the following are technologies that share and analyze information in the supply chain?a. Internetb. Enterprise Data Planning (EDP)c. Electronic Resource Interchange (ERI)d. Chain Management (CM) softwaree. none of the aboveAnswer: aDifficulty: Moderate45. Which of the following are obstacles to achieving strategic fit?a. Increasing variety of productsb. Decreasing product lifecyclesc. Increasingly demanding customersd. Fragmentation of supply chain ownershipe. all of the aboveAnswer: eDifficulty: Easy46. Which of the following are obstacles to achieving strategic fit?a. Difficulty executing new strategiesb. Globalizationc. Increasingly demanding customersd. Fragmentation of supply chain ownershipe. all of the aboveAnswer: eDifficulty: Moderate47. Which of the following is not an obstacle to achieving strategic fit?a. Increasing variety of productsb. Decreasing product lifecyclesc. Increasingly demanding customersd. Consolidation of supply chain ownershipe. none of the aboveAnswer: dDifficulty: ModerateEssay/Problems1. List and define the four major drivers of supply chain performance.Answer: Facilities are the places in the supply chain network where product is stored, assembled, or fabricated. The two major types of facilities are production sites and storage sites.Inventory is all raw materials, work in process, and finished goods within a supply chain. Inventory is an important supply chain driver because changing inventory policies can dramatically alter the supply chain’s efficiency and responsiveness.Transportation entails moving inventory from point to point in the supply chain. Transportation can take the form of many combinations of modes and routes.Information consists of data and analysis concerning facilities, inventory, transportation, and customers throughout the supply chain. Information is potentially the biggest driver of performance in the supply chain as it directly affects each of the other drivers.Difficulty: Moderate2. Explain the supply chain decision-making framework and the role of the four major drivers.Answer: The goal of a supply chain strategy is to strike the balance between responsiveness and efficiency, resulting in a strategic fit with the competitive strategy. To reach this goal, a company uses the four supply chain drivers discussed earlier. For each of the individual drivers, supply chain managers must make a trade-off between efficiency and responsiveness. The combined impact of these four drivers then determines the responsiveness and efficiency of the entire supply chain.Most companies begin with a competitive strategy and then decide what their supply chain strategy ought to be. The supply chain strategy determines how the supply chain should perform with respect to efficiency and responsiveness. The supply chain must then use the supply chain drivers to reach the performance level the supply chain strategy dictates.Difficulty: Moderate3. Explain the basic trade-off between responsiveness and efficiency for each of the major drivers of supply chain performance.Answer: The fundamental trade-off when making facilities decisions is between the cost of the number, location, and type of facilities (efficiency) and the level of responsiveness that these facilities provide the company’s customers.The fundamental trade-off when maki。
