Question 1

Why should on-time performance be considered in supplier selection decisions?

Accepted Answer

On-time performance affects the variability of the lead time.A reliable supplier has low variability of lead time,whereas an unreliable supplier has high variability.As the variability of lead time grows,the required safety inventory at the firm grows very rapidly.On-time performance can be translated into lead time variability,which is converted to required safety inventory.A firm can evaluate the impact of poor on-time performance by a supplier on the cost of holding safety inventory.

Question 2

Buyback contracts are most effective for a product with a low variable cost.

Accepted Answer

A) True 
 B)False  True

Question 3

Supplier viability can be especially important if the supplier is providing mission-critical products and it would be easy to find a replacement for them.

Accepted Answer

A) True 
 B)False  False

Question 4

With a quantity flexibility clause,the retailer increases their market intelligence.

Accepted Answer

A) True 
 B)False

Question 5

The procurement process for direct materials should primarily focus on

Accepted Answer

A)  improving coordination and visibility with the supplier.
B)  decreasing the transaction cost for each order.
C)  consolidation of orders to take advantage of economies of scale and quantity discounts.
D)  minimizing communication with the supplier.

Question 6

Figure 15-1
 
-Use Figure 15-1 to answer the question.Ensuring availability is the deciding factor for

Accepted Answer

A)  General items.
B)  Critical items.
C)  Strategic items.
D)  Bulk purchase items.

Question 7

Under quantity flexibility contracts,the manufacturer allows the retailer to change the quantity ordered after observing demand.

Accepted Answer

A) True 
 B)False

Question 8

Supplier services should be a distinguishing factor when deciding among suppliers for bulk purchase items.

Accepted Answer

A) True 
 B)False

Question 9

Using a third party requires a firm to share demand information and in some cases intellectual property.This risk would be described as

Accepted Answer

A)  leakage of sensitive data and information.
B)  underestimation of the cost of coordination.
C)  reduced customer/supplier contact.
D)  loss of internal capability.

Question 10

A third party can increase the supply chain surplus by aggregating demand across multiple firms and gaining production economies of scale that no single firm can on its own.This is called

Accepted Answer

A)  capacity aggregation.
B)  inventory aggregation.
C)  warehouse aggregation.
D)  relationship aggregation.

Question 11

Scenario 15.2 - The Hilltop
Gregory and his followers scavenge the countryside for anything of value and with minimal investment,make it ready to provide for any customer visiting their compound.Their average investment in a product is $3,and one popular product,body armor,is in high demand.Residents of The Kingdom and Alexandria in particular,are eager to procure The Hilltop's body armor for $65 and sell it to anyone left in the world at an average price of $650.The demand for the body armor is normally distributed,with a mean of 250 units and a standard deviation of 50.
-If Gregory and a single retailer - say Alexandria - act as a vertically integrated supply chain,what is the total supply chain expected profit if an optimal order quantity is placed?

Accepted Answer

A)  $161,312
B)  $165,712
C)  $166,802
D)  $167,892

Question 12

The procurement process for indirect materials should primarily focus on

Accepted Answer

A)  improving coordination and visibility with the supplier.
B)  decreasing the transaction cost for each order.
C)  consolidation of orders to take advantage of economies of scale and quantity discounts.
D)  minimizing communication with the supplier.

Question 13

What are some of the benefits of effective sourcing decisions?

Accepted Answer

The answer of What are some of the benefits of...

Question 14

Consider the factors influencing total cost and supplier performance.Which of the following is the LEAST quantifiable factor?

Accepted Answer

A)  Supplier price
B)  Supplier terms
C)  Support
D)  Warehousing cost

Question 15

The selection of suppliers,design of supplier contracts,product design collaboration,procurement of material,and evaluation of supplier performance are a part of

Accepted Answer

A)  procurement.
B)  sourcing.
C)  supplier scoring and assessment.
D)  supplier selection.

Question 16

Sourcing a product overseas may have

Accepted Answer

A)  higher product cost and will generally incur a higher inbound transportation cost.
B)  higher product cost but will generally incur a lower inbound transportation cost.
C)  lower product cost and will generally incur a lower inbound transportation cost.
D)  lower product cost but will generally incur a higher inbound transportation cost.

Question 17

A contract that allows a retailer to return unsold inventory up to a specified amount,at an agreed upon price is a

Accepted Answer

A)  buyback or returns contract.
B)  revenue-sharing contract.
C)  quantity flexibility contract.
D)  quantity discount contract.

Question 18

The procurement process for both direct and indirect materials should work on

Accepted Answer

A)  improving coordination and visibility with the supplier.
B)  decreasing the transaction cost for each order.
C)  consolidation of orders to take advantage of economies of scale and quantity discounts.
D)  minimizing communication with the supplier.

Question 19

Craigslist and eBay are examples of

Accepted Answer

A)  receivables aggregation.
B)  inventory aggregation.
C)  information aggregation.
D)  relationship aggregation.

Question 20

Supplier performance analysis should be used to build a portfolio of suppliers with similar strengths.

Accepted Answer

A) True 
 B)False

Exam 15: Sourcing Decisions in a Supply Chain

Why should on-time performance be considered in supplier selection decisions?

Buyback contracts are most effective for a product with a low variable cost.

Supplier viability can be especially important if the supplier is providing mission-critical products and it would be easy to find a replacement for them.

With a quantity flexibility clause,the retailer increases their market intelligence.

The procurement process for direct materials should primarily focus on

Figure 15-1 -Use Figure 15-1 to answer the question.Ensuring availability is the deciding factor for

Under quantity flexibility contracts,the manufacturer allows the retailer to change the quantity ordered after observing demand.

Supplier services should be a distinguishing factor when deciding among suppliers for bulk purchase items.

Using a third party requires a firm to share demand information and in some cases intellectual property.This risk would be described as

A third party can increase the supply chain surplus by aggregating demand across multiple firms and gaining production economies of scale that no single firm can on its own.This is called

The procurement process for indirect materials should primarily focus on

What are some of the benefits of effective sourcing decisions?

Consider the factors influencing total cost and supplier performance.Which of the following is the LEAST quantifiable factor?

The selection of suppliers,design of supplier contracts,product design collaboration,procurement of material,and evaluation of supplier performance are a part of

Sourcing a product overseas may have

A contract that allows a retailer to return unsold inventory up to a specified amount,at an agreed upon price is a

The procurement process for both direct and indirect materials should work on

Craigslist and eBay are examples of

Supplier performance analysis should be used to build a portfolio of suppliers with similar strengths.