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Supply Chain Management Multiple Choice Questions
1. The costs of inventory at various levels and cost of logistics form the total cost of ___.
Answer: Distribution network
2. Distributors and retailers often rely on storage warehouses. (True/False)
Answer: True
3. At ___ level, the decisions are made with long-term objectives. (Pick the right option)
a) Performance
b) Strategic
c) Tactical
d) Operational
Answer: b) Strategic
4. A company can understand the customer only if it identifies the needs of the ___.
Answer: Customer segment
5. What is demand uncertainty?
Answer: Demand uncertainty is the uncertainty of customers who demand the product.
6. A new product developed will have low supply uncertainty because the design and production processes will not be fully developed. (True/False)
Answer: False. A new product developed will have high supply uncertainty because the design and production processes will not be fully developed.
7. Companies that intend to increase the performance level must move their competitive strategy and supply chain strategy towards the ___.
Answer: Zone of strategic fit
8. Each functional area creates its own independent strategy with the objective of optimizing its ___.
Answer: Performance
9. The intracompany – intraoperative scope is a scope of strategic fit which is limited to two operations in a functional area within a company. (True/False)
Answer: False. The intracompany – intraoperative scope is a scope of strategic fit which is limited to one operation in a functional area within a company.
10. In intracompany – intra-functional scope, different functions have conflicting ___.
Answer: Objectives
11. In intercompany – inter-functional scope, the two parties work together to minimize the amount of ___ required.
Answer: Inventory
12. Just-In-Time delivery (JIT) is a service provided by ___.
Answer: Package carriers
13. Truck Load shipping is best suited for transportation between manufacturing facilities and warehouses or between suppliers and manufacturers. (True/False)
Answer: True
14. Rail services are considered as an ideal model for carrying large, heavy, or high-density products over long distances. (True/False)
Answer: True
15. ___ modes of transportation suit high quantity shipments. (Pick the right option)
a) Air transportation
b) Water transportation
c) Rail transportation
d) Intermodal transportation
Answer: b) Water transportation
16. ___ are mostly used to transport liquid and gases.
Answer: Pipelines
17. Intermodal transportation is a combination of at least two or more modes of transportation. (True/False)
Answer: True
18. Mass transportation is expensive than transporting goods in small quantities. (True/False)
Answer: False. Mass transportation is cheaper than transporting goods in small quantities.
19. Trip-related cost and quantity-related costs remain the same with all carriers. (True/False)
Answer: False. Trip-related costs and quantity-related costs differ from carrier to carrier.
20. ___ cost includes administrative costs, rent of an office building, and so on.
Answer: Overhead
21. Which of the following is the cost involved in holding goods in a warehouse?
a) Facility cost
b) Processing cost
c) Inventory cost
d) Transportation cost
Answer: c) Inventory cost
22. Facility costs include the fuel of a vehicle used in transportation. (True/False)
Answer: False. Facility cost does not include the fuel of a vehicle used in transportation.
23. ___ cost is the cost involved in direct labor.
Answer: Processing
24. Higher service levels and fast delivery cost more. (True/False)
Answer: True
25. Which of the following are true with respect to traffic assignment?
a) Estimating the volume of traffic on a network
b) Estimating the turning movements at intersections
c) Both a) and b)
d) None of the above
Answer: c) Both a) and b)
26. All-or-none assignment model deals with different paths for every O-D pair. (True/False)
Answer: False. The all-or-none assignment model deals with a single path for every O-D pair.
27. ___ implements the all-or-none assignment model in steps.
Answer: Incremental assignment
28. The following traffic assignment model tries to estimate an equilibrium solution based on the all-or-none assignment model.
a) Capacity restraint assignment
b) User equilibrium assignment
c) Incremental assignment
d) System optimum assignment
Answer: Capacity restraint assignment
29. ___ is based on Wardrop’s first principle.
Answer: User equilibrium assignment
30. System optimum assignment model is based on Wardrop’s second principle. (True/False)
Answer: True
31. For a high value-to-weight ratio shipment, increasing inventories is important. (True/False)
Answer: False. For a high value-to-weight ratio shipment, decreasing inventories is important.
32. As the degree of inventory aggregation increases, the cost of transportation goes up. (True/False)
Answer: True
33. Temporal aggregation of demands in a limited amount reduces the cost of transportation effectively. (True/False)
Answer: True
34. Which of the following is the approach that is learned and mastered by experience and self-learning?
a) Heuristic approach
b) Exact approach
c) Interactive approach
d) Combination approach
Answer: a) Heuristic approaches
35. ___ approach is also known as the Optimal approach.
Answer: Exact
36. Interactive approach is approaching that use tools like simulation, cost calculation, and graphics. (True/False)
Answer: True
37. Combinational approach focuses on time and money-saving as a result of decreasing vehicle operating expenses, giving better services to customers, and improving productivity in fleet management. (True/False)
Answer: True
38. ___ modes of transportation best suit time-sensitive and emergency shipments. (Pick the right option)
a) Air
b) Truck
c) Pipeline
d) Water transportation
Answer: Air
39. To minimize the supply and demand imbalances in the supply chain, firms utilize various methods of ___.
Answer: Inventory management
40. ___ represents an investment in a product or material.
Answer: Inventory
41. ___ provides a low-cost service for export production. (Pick the right option)
a) Source facility
b) Offshore facility
c) Contributor facility
d) Outpost facility
Answer: b) Offshore facility
42. Source facilities need to be established in places where production cost is relatively high. (True/False)
Answer: False. Source facilities prefer to be established in places where production costs are relatively low.
43. A server facility is established as a result of tax incentives,___, and tariff barriers.
Answer: Local market requisites
44. ___ is established to gain the knowledge and skills of a certain region.
Answer: Outpost facility
45. If facilities have lower fixed costs many local facilities can be established because this reduces ___
a) Fixed costs
b) Exchange rates
c) Transportation costs
d) Taxes
Answer: c) Transportation costs
46. The availability of good infrastructure is an important pre-condition to locate a facility in a region. (True/ False)
Answer: True
47. Taxes and ___ affect the profits of a firm.
Answer: Tariffs
48. The goal of the network design models is to maximize the profit with the ___.
a) Reduction in transportation cost
b) Increased plant capacity
c) Suitable location
d) Satisfaction of the customer needs
Answer: d) Satisfaction of customer needs
49. The variable costs are the costs that are gained without considering the quantity produced or shipped from a facility. (True/False)
Answer: False. The variable costs are the costs that are gained as a result of the quantity produced or shipped from a facility.
50. The main objective of the ___ model is to minimize the transportation cost of both raw materials and finished goods.
Answer: Gravity location
51. The factors such as ___, costs, and also the situations of technology change must be considered while selecting a location. (Pick the right option)
a) Future demand
b) Cultural independence
c) Taxes
d) Workforce
Answer: a) Future demand
52. It is difficult in most of the supply chains, to change ___ than storage facilities.
Answer: Production facilities
53. The performance of the available workforce and its morale has a great impact on the quality of life supported in the selected location. (True/ False)
Answer: True
54. The selection of international locations is often decided on the basis of___.
Answer: Tax incentives
55. Physical inventory needs to be done at least once a year, and as often as once a month, depending on the probability of loss of items. (True/False)
Answer: True
56. The basic equation used for ordering and re-ordering goods by all firms is ___.
Answer: Economic Order Quantity
57. ___ is the total cost of holding inventory.
Answer: Carrying Cost
58. Demand forecasting involves techniques including both informal methods such as educated guesses and quantitative methods such as the use of historical sales data or current data from test markets. (True/False).
Answer: True
59. By combining inventory at a single location, the amount of safety stock that is necessary for a service level ___.
a) Decreases
b) Increases
c) Remains fixed
d) Halves
Answer: a) Decreases
60. Unlike other systems, Thrive Demand Forecasting automatically detects seasonal patterns where they exist and projects them in the forecast using proprietary harmonic soothing science. (True/False).
Answer: True
61. ___ is designed to leverage today’s computing power, efficiently crunching the math required to calculate fresh forecasts.
Answer: Thrive Demand Forecasting
62. Risk pooling involves the use of centralized inventory to gain benefits when demand is higher than average at some retailers and lower than average at others. (True/False)
Answer: True
63. Higher the ___, greater the benefit obtained from risk pooling.
Answer: Coefficient of variation
64. ___ bulk shipping has been a part of inventory management for a long time.
Answer: Bulk shipping
65. The fixed order interval models are used when the supply is uniform at uniform intervals, such as 10 meters of cloth per week. (True/False)
Answer: True
66. The accounts department receives the invoice from the vendor. (True/False)
Answer: True
67. What are routine commodities?
Answer: Routine commodities are many standard items at a low price.
68. Leverage occurs when there is low-to-high expenditure. (True/False)
Answer: False. Leverage occurs when there is medium-to-high expenditure.
69. A ___ adds details to the mission.
a) Business strategy
b) Corporate strategy
c) Functional strategy
d) Vision
Answer: b) Corporate strategy
70. The strategic decision made by the purchasing department is considered as the ___ made in an organization.
Answer: Broader decision
71. Some of the quality techniques are ___, ___, and ___.
Answer: SPC, HALT, and HASS
72. Mention any one condition for the selection of sources.
Answer: Complying to checklist consisting of supply selection criteria
73. Reports on quality control, inventory control systems are the criteria for which of the following factors?
a) Operating controls
b) Labour relation
c) Training aids
d) Reciprocal arrangements
Answer: a) Operating controls
74. On what basis did Dickson formulate the evaluation factors?
Answer: Based on the survey done on purchasing agents and managers
75. Mention any two of the SCM constructs.
Answer: Level of information sharing, quality of information sharing
76. The main areas of SQM are Supply Chain Management and Quality Control. (True/False)
Answer: False. The main areas of SQM are Supply Chain Management and Quality Management.
77. ___, ___, and ___ help in identifying the competitive advantage.
Answer: Price, Quality, and delivery dependability
78. ___ does not belong to QM practices. (Pick the right option)
a) Customer focus
b) Top management leadership
c) Process management
d) Internal lean practices
Answer: d) Internal lean practices
79. Aligning goal is a long-term process. (True/False)
Answer: True
80. Mention one business model.
Answer: Six sigma
81. The risks involved in the operational performance environment are ___, exchanges of currency with foreign clients.
Answer: Trading relations
82. Accepting third-party standards is a practice approach in designing a robust system. (True/False)
Answer: True
83. The main aim of VRM is to free purchasers from the control of vendors. (True/False)
Answer: True
84. VRM must enable customers to control their own ___.
Answer: Data
85. Purchasing strategy defines goods and services that can be purchased with a specified amount of ___.
Answer: Currency
86. The costs of goods and services are considered as the most important___ of the purchasing process.
Answer: Determinants
87. Tax maximizes the real income. (True/False)
Answer: False. Tax minimizes the real income.
88. Purchasing is a process of acquiring all the materials needed by an organization in exchange for goods. (True/False)
Answer: False. Purchasing is a process of acquiring all the materials needed by an organization in exchange for funds.
89. The high-value products usually require ___.
Answer: Bids
90. The goods that are received from the supplier go through ___.
a) Receipting process
b) Tender process
c) Payment process
d) Selection process
Answer: a) Receipting process
91. ___ is defined as the increase in the demand variation in a supply chain from downstream to upstream.
Answer: Bullwhip effect
92. Which among the following options is a reason for the bullwhip effect?
a) Demand forecasting
b) Strategic partnership
c) Lead time reduction
d) Misguided capacity plan
Answer: a) Demand forecasting
93. Variability increases with an increase in lead time. (True/ False)
Answer: True
94. Most retailers place ___ orders during the shortage periods of products.
Answer: Inflated
95. Uncertainty can be reduced by centralizing the ___.
Answer: Demand information
96. ___ is defined as a management tool that is used to predict the uncertain future.
Answer: Forecasting
97. Information sharing among various systems in the supply chain leads to affective forecasting. (True/False)
Answer: True
98. In which among the following methods is expert’s opinions taken into consideration while creating forecasts?
a) Judgement method
b) Time-series method
c) Casual method
d) Market research method
Answer: a) Judgement method
99. In the market research method, various past data is used to create the forecast. (True/False)
Answer: False. In the market research method, market testing or market surveys are conducted to understand the behavior of the consumers.
100. Reducing the ___ between forecast and actual demand should be the goal of an effective forecast.
Answer: Variation
101. Effective sharing of ___ is very important to coordinate the various stages of the supply chain.
Answer: Information
102. Manufacturing, ___, transportation, and ___ are the various systems involved in a supply chain.
Answer: Storage, the retail system
103. In local optimization, one system in a supply chain finds out what is best for the entire system. (True/False)
Answer: False. In local optimization, each system optimizes its own operations without considering the effect of its operations on other systems in the supply chain.
104. The time is taken from the moment the buyer places an order to the moment the buyer receives it is defined as ___.
Answer: Lead time
105. ___ and ___ are the components of lead times.
Answer: Order lead time, information lead time
106. Information lead time is the time taken to transport and produce the product. (True/False)
Answer: False. Information lead time is the time taken to process an order in a supply chain.
107. Lead time reduction is helpful to reduce the cost throughout the supply chain and it helps to improve ___.
Answer: Customer satisfaction
108. Clear information regarding the status of the entire supply chain to reduce lead time is necessary. (True/False)
Answer: True
109. Information can be used effectively to lessen the need for many of the tradeoffs. (True/ False)
Answer: True
110. Large lot sizes lead to low inventory level. (True/ False)
Answer: False. Large lot sizes lead to high inventory.
111. We can reduce ___ cost by aggregating the product movement. (Pick the right option)
a) Inventory cost
b) Transportation cost
c) Order cost
d) Warehouse cost
Answer: b) Transportation cost
112. The complexity of supply chain management increases with an increase in ___.
Answer: Product variety
113. We can improve ___ by reducing inventories, manufacturing, and transportation costs.
Answer: Customer service
114. The purchase of machinery, equipment, or materials must go through the ___ department.
Answer: Purchasing
115. A department place a document called requisition and gets approved by the authorized person in the ___ department.
a) Purchasing
b) Requisitioning
c) Finance
d) Warehouse
Answer: b) Requisitioning
116. Many organizations prefer using ___ to manage their vendor relationship.
Answer: Vendor Relationship Management (VRM)
117. Many companies have realized that the Internet helps the companies to move away from ___.
Answer: Push strategy
118. The distribution strategies must be organized according to emerging ___.
Answer: Industrial trends
119. Which of the following is a type of transshipment facility?
a) Warehousing
b) Cross-docking
c) Direct shipment
d) Distribution center
Answer: b) Cross-docking
120. The warehouses which are being owned, managed, and controlled by both government and private agencies are called as___.
Answer: Bonded warehouses
121. The objective of this centralized system is to minimize the cost associated with it for satisfying the service-level requirements. (True/False)
Answer: True
122. The design and the facilities offered by ___ warehouses are dependent on the nature of products that are to be stored.
Answer: Private
123. The production and distribution decision forms the long-term forecasts in a pull-based supply chain. (True/False)
Answer: False. The production and distribution decision forms the long-term forecasts in a push-based supply chain.
124. ___ system reduces bullwhip effect. (Pick the right option)
a) Distribution
b) Push-based
c) Pull-based
d) Supply chain management
Answer: c) Pull based
125. E-business strategies were developed in a view to meet some expectations like reducing cost, decreasing flexibility, profits. (True/False)
Answer: False. E-business strategies increase flexibility and profits.
126. ___ is defined as the ability to electronically perform major commerce transactions.
Answer: E-commerce
127. Push or pull-based systems come into play depending on the execution time of the process with respect to___.
Answer: Customer demand
128. ___are referred to as speculative processes.
Answer: Push process
129. Partnerships that improve time to market, distribution times, or repair times help in___
a. Adding technological strength
b. Adding value to products
c. Enhancing strategic growth
d. Strengthening operations
Answer: b) Adding value to products
130. A partnership that enhances advertising or increases access to new___ can be beneficial to firms.
Answer: Market channels
131. Outsourcing is a process wherein a company assigns some of its___ functions or processes to a third party.
Answer: In-house
132. The benefits of outsourcing that are associated with decreased cost, cycle times, better customer perception, and approval are indirect benefits. (True/False)
Answer: False. The benefits of outsourcing that are associated with decreased costs and cycle times and better customer perception and approval are direct benefits.
33. Strategic alliances provide a great opportunity for organizational learning. (True / False)
Answer: True
134. Firms with appropriate partnerships can improve operations by reducing ___ and operation cycle times.
Answer: System costs
135. Asset-owning 3PL companies are termed fourth-party logistics service providers (4PL). (True / False)
Answer: False. Non-asset-owning 3PL companies are termed fourth-party logistics service providers (4PL).
136. Which of the following categories of 3PL companies provide standard logistic services like warehousing, packing, and distribution?
a) Standard 3PL companies
b) Service developers
c) Customer developers
d) Customer adapters
Answer: a) Standard 3PL companies
137. The benefit of using 3PL in a company is that it allows the company to focus on its core competencies. (True/False)
Answer: True
138. ___ is a business model in which parts or goods are delivered just when needed.
Answer: Just In Time (JIT)
139. The continuous-replenishment strategy is also called ___.
Answer: Rapid replenishment strategy
140. Data accuracy can be maintained by using barcoding and scanning techniques. (True/False)
Answer: True
141. For designing a purchase strategy, it is necessary to understand the ___ that in turn helps to identify what purchasing has to achieve.
Answer: Business objectives