Chapter 6

Procurement Methods
Multiple Choice Questions
Q1. Procurement methods have considerable impact on _________.
a. b. c. d. e. product pricing inventory level warehouse space transportation modes all the above

Q2. Inventories are maintained for meeting production requirements, supporting the operations, extending customer service and hedge against future __________.
a. b. c. d. e. uncertainties production schedules cost reduction profit goals none of the above

Q3. Effective implementation of VMI depends on smoothly addressing the concerns of __________.
a. b. c. d. defining incentive programs based on partnership and not on sales volume building partnerships with management commitment conduct simulations and pilots before actual implementation organize training sessions before launching VMI program e. all the above

Q4. The modern approach to control inventories is not focused on __________. a. flow b. flexibility c. adaptability d. balancing e. integration
Q5. The inventory carrying cost is consisting of the cost of the funds invested in inventory, handling cost, ___________, damage and obsolescence cost and opportunity cost. a. insurance cost b. promotional cost c. marketing cost d. production cost e. all the above

Q6. AITS in inventory controls means __________.

a. b. c. d. all inventory transport system automated inventory tracking and system alternative inventory trading system adoption of inventory tracing in storage

e. administration of inventory transfer system

Q7. The procurement policy decisions are concerned with managing the inventory ___________ across the various distribution network.
a. b. c. d. e. independently or interdependently collectively using erp in transit none of the above

Q8. Inventory should be held only when the ___________ of holding the inventory exceeds the ___________ of carrying the inventory.
a. b. c. d. e. cost; benefits benefits; cost average level; optimum level benefits; purpose all the above

Q9. The purchasing is a process covering many steps such as sending enquiries, request for quotations, soliciting quotation, __________, issuing purchase order, shipping advice, invoice, and finally issuing payments.
a. b. c. d. e. setting specifications stratification administration negotiations noting stock levels

Q10. EOQ is an inventory decision model, based on __________.

a. b. c. d. e. differential calculus maxima and minima Just-in-Time linear programming queuing technique

Q11. The Economic Order Quantity (EOQ) is the number of units that a company should add to inventory with each order to minimize the total costs of inventory which covers holding costs, ___________, and shortage costs.
a. b. c. d. e. opportunity cost damage cost pilferage shrinkage cost order costs

Q12. The EOQ model is based on the following assumptions; demand is constant, and ____________.
a. b. c. d. inventory inventory inventory inventory is depleted at a fixed rate until it reaches zero is replenished instantly safety stock remains constant prices fluctuates in market

e. all the above

Q13. Cost of inventory under the EOQ model involves a tradeoff between inventory _______ costs and _______ costs.
a. b. c. d. e. damage; holding holding; order opportunity; loss; damage shrinkage; holding shrinkage; order

Q14. The EOQ model finds the quantity that minimizes the sum of ___________ costs.
a. b. c. d. e. order and holding replenishment and transportation storage and damage insurance and opportunity loss all the above

Q15. To go as per the EOQ formula will be rarely possible because __________.
a. b. c. d. e. ordered quantity modified due to available standard pack size quantity discount offered by the suppliers availability of funds will with buyer anticipated shortage of material in the market all the above

Q16. JIT (Just-in-Time) cuts waste by supplying parts just at the time of assembly process and ensure improvement in __________.
a. b. c. d. e. auality productivity reduces assembly time improvement in suppliers relationship improvement in plant layout

Q17. At the heart of JIT lies the ___________ in Japanese language.

a. b. c. d. e. Kanban; card Kaizan; continuous improvement Muda; waste Shitsuke; sustain Pokayoke; no mistakes

___________, which means

Q18. JIT is used primarily for ___________ manufacturing processes.

a. b. c. d. Low-volume job order intermittent high-volume repetitive flow customized product e. all the above

Q19. Vendor Managed inventory, Just-in-time distribution and Efficient Consumer Response (ECR) all refer to ___________ concepts, but applied to ___________ industries.
a. b. c. d. e. Similar; different different; similar different; different similar; similar none of the above

Q20. In Vendor Managed Inventory the ownership of inventory lies with __________.
a. b. c. d. e. purchaser both seller and purchase third party seller insurance company

Answers:
1.(b) 2.(a) 3.(e) 4.(c) 5.(a) 6.(b) 7.(a) 8.(b) 9.(d) 10.(a) 11.(e) 12.(a) 13.(b) 14.(a) 15.(e) 16.(b) 17.(a) 18.(c) 19.(a) 20.(d)

VENDOR MANAGEGED INVENTORY (VMI)

Today, most of the firms are concentrating on the "core competences." They want to outsource minor tasks and activities when it is cost effective to do so. For a distributor, an example of one of these tasks is the replenishment of less-expensive products. For a manufacturer, it may be the procurement of MRO (maintenance, repairs, and operations) inventory. A popular way to outsource these procurement activities is a vendor-managed inventory (VMI) agreement. Under a VMI, a supplier takes full responsibility for maintaining stock of its products at a customer's facility. VMI differ from traditional inventory management in that the customer is billed for material when it is delivered, not when it is consumed or issued. For example, the grocery and apparel industries tend to use ECR, whereas the automobile industry tends to use VMI and JIT Distribution. VMI reduces stock outs and reduces inventory in the supply chain. Some features of VMI include: Shortening of the supply chain 4

Centralized forecasting Frequent communication on inventory position Inventory fill up in a prioritized order Relationship with downstream distribution channels Result Inventory and stock out reduction In general, the supply chain is not synchronized to consumer demand. Hence, to secure high service levels, both the wholesaler and the retail chain feel the need to buffer against supply disruption. This in turn, distorts the demand that is communicated to the supply factories. The objective of VMI is to find an effective way for the vendor to take responsibility of the wholesalers inventory. This way the need for double buffering against supply disruptions could be eliminated and the basis for planning supply request from manufacturers could be improved. In its simplest form, Vendor Managed Inventory is the process where the vendor assumes the task of generating purchase orders to replenish a customers inventory. VMI covers many types of supply chain initiatives. These different VMI activities can vary substantially in purpose and application. VMI is about improving visibility of demand and product flow in a supply chain, facilitating a more timely and accurate replenishment process between a supplier (vendor) and an inventory site (customer, distributor, distribution center, etc). The application of VMI can be at any point within a supply chain: Manufacturer Wholesale Distributor Retail Manufacturer - End Customer/ OEM Manufacturer Internal Inventory Sites

VMI in Retail Industry In Organised Retail Chain Industry, VMI is a process where the supplier (manufacturer) maintains the inventory and fulfills orders of the retail stores based on demand information sent by the retail store. During this process the supplier is guided by mutually agreed objectives for inventory levels, fill rates and transaction costs. The inventory data is typically segmented into various groups such as inventory on hand, on order, committed, back ordered and so forth. This transaction is the back bone of VMI and is sent by the retail stores on a prearranged daily schedule. The decision to order is based on this data. The business process supported by this data is relatively simple. The manufacturer (supplier) reviews the information that has been sent in by the retail store to determine if an order is needed. This review of the data varies by supplier and the software being used. The supplies (manufacturers) undergo the following steps: Data verification for accuracy and meaningfulness (Software verifies it automatically).

 Software calculates a reorder point for each item based on its movement data and any overrides contributed by the retail store or manufacturer. These overrides might include information such as projects, seasonality, new items and so forth. Software compares the quantity available at the retail store with the reorder point for each item at each location to determine whether material is needed. Order quantities are then calculated taking into considerations the carton quantities and transaction costs in completing the order process. Further VMI transaction informs the retail stores what product to expect from the supplier (manufacturer). There are two transactions being used for this function. The most frequently used is the purchase order acknowledgment. This document contains the product numbers and quantities ordered by the supplier on the retailers behalf. A few distributors skip this and rely on the advance shipping notice to alert them to the order and shipment. This document differs in both timing and content. This document is sent after the shipment has been made and contains information on the part numbers shipped as well as additional information such as carrier and waybill information. The VMI system imparts advantages to both manufacturer and the retailer stores in terms of lower inventories levels, better planning and lower administrative costs
For VMI partnership to be successful and fruitful, when establishing an agreement, the supplier and customer must agree on: The specific products that will be covered under the VMI agreement "Acceptable availability" of these products at the customer's site and the corresponding investment required by the customer. Mutually acceptable service level agreement How often the stock of these products will be replenished. Automatic return of material not required by the customer. The advantages for a customer participating in a VMI program covers: Eliminating of transaction cost Reduced inventory capital costs Establishing an extremely reliable source of supply for products Customer does not pay for the inventory until it is sold or used. Elimination in inventory stock outs Better financial planning Elimination in ordering errors The advantages for a supplier in a VMI program covers: Securing all of a customer's business for products it supplies. 6

Better planning of its own inventory replenishment needs Better capacity utilization of its plant Better demand management Customer focused approach leading to competitive advantage Supply chain visibility Better planning The risks involved for supplier in participating VMI program are high administrative cost as it is assuming responsibility for replenishment activity that was previously carried out by the customer's buyers. The real world implementations of VMI can be broken into three main categories: collaboration, automation, and cost transfer A Collaborative Planning model consists of sharing data, and jointly developing forecasts and/or production schedules amongst supplier chain partners. This collaborative process occurs at the tactical or item level. The buyer collaborates with the supplier on demand/usage plans in order to develop an agreed upon consensus forecast of future demand that both companies will use to drive their business. This strictly collaborative model is applicable to supply chains were a few, distinct items (SKUs) generate substantial volumes of business. In this environment it is valuable for people to review and arrive at consensus on forecasting and replenishment plans for each SKU. In business environments, where thousands of SKUs have to be managed daily, collaboration at the tactical (item) level is impractical, costly and error prone. The more effective collaborative process is at the strategic level, where overall service and inventory investment goals are agreed upon, along with the constraints within each company. The collaborative stage is critical in establishing the goals and key performance indicators for the VMI relationship. Periodically, this stage is reviewed for current performance and adjusted or reconfirmed the goals and constraints. When the collaboration and planning stages are done properly, the execution stage becomes automated with very few exceptions, requiring less human interaction on a daily basis. Furthermore, the Execution stage can provide suppliers with valuable information beyond a purchase order quantity, enabling improvements to the order fulfillment and inventory allocation processes. In many instances a VMI relationship is the first time supply chain partners both have access to, and are measuring performance using the same metrics. When two companies are focused on the same goals and have access to the same key performance metrics, a true supply chain partnership emerges, resulting in a better performing supply chain. VMI delivers tangible results throughout the supply chain. As the concepts and practices of lean extend beyond the manufacturing floor down through the supply chain, VMI is the enabling process to drive out costs and time. For success of VMI implementation the following are the keys: Set, review and maintain performance goals Manage all SKUs through VMI to minimize transactions Ensure data accuracy Utilize automated replenishment system 7

Organise periodic performance reviews Use the metrics to find cost and inefficiencies VMI can be made to work, but the problem is not just one of logistics. VMI often encounters resistance from the sales force and distributors. The issues are roles, skills, trust and power shifts.

ONLINE PROCUREMENT

e-Procurement system allows businesses use the Internet for acquiring the necessary goods and services. There are three main categories of e-Procurement systems. One type focuses on improving the transactions and the decision-making capabilities of the company. Businesses may deal with hundreds of transactions weekly, but these applications simplify the process and help to build stronger relationships between buyers and suppliers. The second category of e-procurement system involves managing assets. Systems in this category provide inventory management, maintenance scheduling, inhouse product availability, as well as other similar services. These applications are useful for businesses that need to keep a close watch on the quality of materials in stock. The third category includes systems designed to optimize a company's production operations. Many of these applications deal with the entire production cycle, including the procurement of materials when the inventory runs low, the management of supplier contracts, and the production scheduling. Because of the differences between the systems, it is important for companies to choose the one that is most appropriate for their industry. For example an automobile manufacturing company is likely to use systems from the third category. The applications would allow them to maintain minimum level of inventory but they also need to have a system which helps them plan and forecast their production. However, companies such as automotive repair shops, would be more likely to use e-Procurement systems from the second category. Since they need to keep track not only of their inventory of car parts, but also of helping them set repair schedules. To the businesses, e-Procurement system imparts benefits such as saving money on purchases, improving the timeliness of the purchasing process, and eliminating waste. In addition to these benefits, companies can also improve the efficiency of their supply chain. Additionally, using e-Procurement to enhance supply chain relationships can make it easier for accounting departments to track and keep a record of payments and invoices. e-Procurement systems don't automatically boost supply chain efficiency. However, the company must select a system that has the capabilities necessary to achieve those benefits first. For example, the system must include applications to assist with contract management, including storing pricing information, maintaining sales terms, and helping negotiations. By having all of this information in one place, the purchasing process is expedited. E-Procurement allows buyer to easily compare suppliers (on price) so that the best one can be chosen to meet that company's particular needs. However, choosing the right supplier depends on more than just price; it also involves product availability, customer service, industry reputation, and quality. E-procurement is more than just a system for making purchases online. A properly implemented system connects companies and their business processes directly with suppliers while managing all interactions between them. This includes management of correspondence, bids, questions and answers, previous pricing, and multiple emails sent to multiple participants. A good e-Procurement system helps a firm organize its 8

interactions with its most crucial suppliers. It provides those who use it with a set of built-in monitoring tools to help control costs and assure maximum supplier performance. It provides an organized way to keep an open line of communication with potential suppliers during a business process. The system allows managers to confirm pricing, and leverage previous agreements to assure each new price quote is more competitive than the last. e-Procurement helps with the decision-making process by keeping relevant information neatly organized. e-Procurement process is template-driven which makes all transactions standardized and trackable. Keeping track of all bids means leveraging firms knowledge to obtain better pricing. Well-managed e-procurement helps reduce inventory levels. e-Procurement system allows multiple access levels and permissions and help managers to organize administrative users by roles, groups, or tasks.

Chapter 7

E-Procurement
Multiple Choice Questions

Q1. e-Procurement can deliver significant __________ cost savings to businesses companies and marketplaces.
a. b. c. d. e. buy-side sell-side transportation storage inventory

Q2. Scope of E-procurement covers __________.

a. b. c. d. e. e-catalogue ordering online ordering web tendering reverse auction all the above

Q3. The optimization of supply chain cost requires streamlined, collaborative business processes and a supporting technology infrastructure that enables synchronization of information and _________ across the supply chain.
a. b. c. d. e. material flow information flow quality product development production schedules

Q4. Benefits of E-procurement __________.

a. b. c. d. e. transaction convenience global reach transparency and paperless cost saving all the above

Q5. e-Procurement, which is done for the ___________.products helps in reducing time and the cost of transaction.
a. b. c. d. e. customized standard significant value critical essential

Q6. e-Procurement process is ___________ resulting into ___________ and _______ saving.
a. b. c. d. e. complex; time; cost factual; time;, cost radical; time and cost paperless; time;, cost all the above

Q7. e-Procurement is perhaps the most direct and effective way for an organization to leverage the ___________ to reduce costs, improve productivity and boost profits.
a. b. c. d. e. internal strengths web core competencies software skills back end processes

Q8. E-procurement automates and streamlines the process by creating a web-based, _________ environment that pushes product selection and order initiation to the computer of buyer while maintaining corporate trading agreements, workflows and authorization rules.
a. b. c. d. e. programming self-service budgeting cost cutting vendor controlling

Q9. With adoption of e-Procurement the purchase department now focuses on activities such as supply source development, negotiation and __________.
a. b. c. d. vendor management inventory stratification vendor segmentation value mapping e. customer satisfaction

Q10. e-Sourcing helps in compression of __________ cycle.

a. b. c. d. e. replenishment procurement manufacturing distribution service

Q11. e-Procurement is outsourced to a third-party service provider the _________ have no possibilities of creeping into.
a. b. c. d. e. sellers en-efficiencies dummy quotes buyers culture sellers influence sellers pressure

Q12. e-Procurement process exhibits following features except

__________.
a. b. c. d. e.

transparent non-biased market centric paperless quick

Q13. The following are the features of reverse auction process except the one ___________..
a. b. c. d. e. easy process global reach transparency time managed suppliers knows each other

Q14. There are three process cycles in procurement such as identifying, evaluating vendors and calling the suppliers for submitting bids. All these processes are _______ in an eprocurement process.
a. b. c. d. e. not-covered simplified sometimes overlooked one of them by-passed none of the above

Q15. Against the benefits, e-procurement has certain constraints, such as __________.
a. b. c. d. e. internet infrastructure reluctance for acceptance of new system different time zones all the above none of the above

Answers:
1.(a) 2.(e) 3.(a) 4.(e) 5.(b) 6.(d) 7.(b) 8.(b) 9.(d) 10.(b) 11.(b) 12.(c) 13.(e) 14.(b)

Chapter 8

Strategic Sourcing
Multiple Choice Questions
Q1. Strategic Sourcing is a process aimed at obtaining maximum advantage on the following by leveraging companys buying power __________.
a. cost b. technology c. process d. quality e. all the above

Q2. Strategic sourcing recognizes that people, including ___________ suppliers, are a valuable part of an organization and focuses on reducing waste or non-value-added costs.
a. innovative b. loyal c. large d. integrated e. few

Q3. Strategic sourcing is a disciplined, systematic process for reducing the total costs of __________ purchased materials, products and services while maintaining or improving levels of quality, service and technology.
a. b. c. d. externally collectively centrally inspected e. imported

Q4. Strategic Sourcing studies are ___________ initiatives.

a. b. c. d. e. tedious and time-consuming cost effective valid and acceptable convincing all the above

Q5. The process used for strategic procurement is designed to ensure that the organizations needs, issues and ___________ are effectively managed.
a. b. c. d. e. sources risks plans facilities inventory

Q6. Today the procurement function of most of the high-technology companies cover interaction with important ___________ that goes into planning, sourcing, making and delivering a final product.
a. b. c. d. e. business processes business goals customers suppliers none of the above

Q7. Strategic Procurement exists whenever an organisation seeks to acquire a project, a service, a product, or a commodity that has high ___________ significance or importance to it.
a. b. c. d. e. usage value output technology customer

Q8. The relationships with suppliers are more ___________ in strategic procurement as compared to traditional buying process.
a. b. c. d. e. integrated personal challenging external limited

Q9. In the strategic procurement process, the products justify the__________, which buying company would spend on the study of the product and the industry further to develop long term relationship with the supplier.
a. b. c. d. convenience and approach technology used and investments issues and challenges time and expenses e. losses and delays

Q10. Orientations ___________.

a. b. c. d. e.

observed

to

get

materials

from

suppliers

buying (discreet) procurement supply chain all the above none of the above

Q11. Strategic sourcing exhibits following feature ___________.

a. b. c. d. e. emphasis on value lowing of price avoid stock outs customer satisfaction commercial and follow up skills

Q12. Strategic sourcing process provides the guidelines to handle key sourcing decisions such as __________.
a. b. c. d. e. outsourcing low cost country sourcing accelerated sourcing collaborative sourcing all the above

Q13. The biggest single issue in strategic procurement is ________ relying on a group of single suppliers.
a. b. c. d. e. trust and reliability quality and speed technology and infrastructure demand variability adaptability

Q14. Traditioinal buying process is __________.

a. b. c. d. e. knowledge based buying discreet buying behaviour emphasis on value creation life time contracting cross functional approach

Q15. The important trends observed in procurement practices across the various industries are as; global sourcing, compressing supply chain cycle, __________; green procurement, real-time value-added partnerships, emphasis on outsourcing to focus on core competencies. a. eliminating middlemen b. multi sourcing c. multi tasking d. discreet buying e. standardization 3

Answers:
1.(e) 2.(a) 3.(a) 4.(e) 5.(b) 6.(a) 7.(b) 8.(a) 9.(d) 10.(d) 11.(a) 12.(e) 13.(a) 14.(b) 15.(a)

Chapter 10

Distribution Decisions
Multiple Choice Questions
Q1. In distribution there are two categories of issues and decisions which need to be handled while designing the distribution strategy. These are management of marketing channels and ___________.
a. b. c. d. e. physical supplies channel members distribution centers transportation nodes none of the above

Q2. Channels of distribution are concerned not only with the physical movement of goods but also with their promotion, selling and marketing ___________.
a. b. c. d. e. functions organizing planning control all the above

Q3. Channels of distribution helps movement of goods from one place to create utility such as __________.
a. b. c. d. e. place time possession all the above none of the above

Q4. The alternative to ___________ distribution is to establish own retail stores for example Bata Ltd that has established its own retail stores throughout the country to sell their products to the consumers.
a. b. c. d. e. indirect direct franchise online none of the above

Q5. Depending on the product and markets there are channel distribution structures such as __________.
a. b. c. d. e. intensive selective exclusive all the above none of the above

Q6. Distribution involves getting the product from the manufacturer to the ultimate consumer and thus distributor adds efficiency by __________.
a. b. c. d. e. breaking bulk consolidation and distribution carrying inventory credit financing all the above

Q7. Channels related decisions are dependent on the buying behavior of the customers and the factors to be considered are
__________.

a. b. c. d.

customer involvement (time devoted) in purchasing number of brands compared comparable substitutes available similar products nearby e. all the above

Q8. Distribution cost as a percentage of the product price _________ as the unit prices of the product decreases.
a. b. c. d. e. increase decreases remains same cant say all the above

Q9. The trend in distribution management is the concept of ________ marketing wherein the producer, wholesalers and retailers are united into one integrated channel. a. horizontal b. vertical c. co-operative d. direct e. indirect Q10. In fact logistics ________ have to be tuned to the needs of the channel members to reduce the loss of sales opportunity.
a. b. programs speed

c. d. e.

cost promotion mission

Q11. The consumer goods companies have a ___________ channel structure because the end customers are very large in numbers, they are spread over the wide geographical areas, the unit price of the product is low and the frequency of purchase is more.
a. b. c. d. e. short and dense long and dense short and sparse long and sparse none of the above

Q12. Basic functions __________.

a. b. c. d. e. exchange logistical facilitating all the above none of the above

of

middlemen

are

categorized

into

Q13. Flows in distribution channel are, except __________.

a. b. c. d. e. product negotiation and ownership information cost promotion

Q14. The place and the time utility of the product are not possible without the close coordination between channel __________ and the logistics __________.
a. b. c. d. e. task; operation operation; task programme; task task; plan plan; operation

Q15. The distribution is the heart of the logistical system and there are many obvious reasons why distribution center needs a critical focus for its management of the operations for __________.
a. b. c. d. maximizing space occupancy operating cost effectiveness enhancing the assets productivity inventory and transportation cost optimization

e. all the above

Q16. Logistics program variants are __________.

a. b. c. d. e. delivery frequency and time lot size and packaging (loose/packed/unitized) transportation mode customer service norms all the above

Q17. Factors influencing decision on numbers of warehouse ___________.

a. b. c. d. e.

planning

optimum

market size, product and demand pattern area coverage by each warehouse customer service level establishment, transportation and operating cost all the above

Q18. Logistics performance parameters are __________.

a. order processing cycle b. inventory norms c. transportation cost d. all the above e. none of the above

Q19. The channel structure helps in ___________.as it passed from the manufacturer to the customers.
a. b. c. d. e. transfer of ownership title control of WIP calculating working capital requirements deciding storage area deciding transit damages

Q20. Information flow in the channel structure is the basic input to logistics to activate the _________ flow from the manufacturer to the customer via channel members.
a. b. c. d. e. activities materials credits cash service

Answers:
1.(a) 2.(e) 3.(d) 4.(a) 5.(d) 6.(e) 7.(e) 8.(a) 9.(b) 10.(a) 11.(b) 12.(d) 13.(d) 14.(a) 15.(e) 16.(e) 17.(d) 18.(d) 19.(a) 20.(b) 4

Chapter 11

Decisions on Transportation and Freight

Multiple Choice Questions
Q1. Transportation is the most ___________ element of logistics operation.
a. b. c. d. e. visible uncontrollable rational operational standard

Q2. The transportation serves two purposes one is the product movement and the other one the ___________ product storage.
a. b. c. d. e. field pipeline in-transit excise paid damaged

Q3. In-transit storage is not ____________ for the longer period.

a. b. c. d. e. customer satisfying cost effective system efficient optimizing integrative

Q4. The guiding principle for choosing the transportation mode is, the ___________ cost per unit weight/volume of the product moved over the unit distance.
a. b. c. d. e. optimum least standard average competitive

Q5. Selection of particular mode is dependent on the ___________ of transportation infrastructure in the region.
a. b. c. d. e. availability cost speed size quality

Q6. Road transportation offers a number of advantages such as __________.

a. b. c. d. e. door to door service flexibility reliability and speed reach to remote places all the above

Q7. Trucking industry in the country it is predominantly in the ___________ private sector and bulk of truck operators are ___________ truck owners.
a. b. c. d. Unorganized; single Organized; multiple Unorganized; multiple Organized; single e. none of the above

Q8. The bulk cargo is transported through railways because of ___________ advantage over other modes.
a. b. c. d. e. speed reliability cost convenience door-to-door service

Q9. Air transportation is a costly affair and it is used only for highly ______________ commodities and items, whose life is short and value is high.
a. b. c. d. e. respiring and transpiring costly important strategic bulky

Q10. Logistics is _________ based activity to move goods from one place to other place.
a. b. c. d. e. cost customer supplier transport mode information

Q11. Reduce freight vehicle mileage and increase load factors the strategy is __________.
a. b. c. d. e.
.

use proper mode improve scheduling and routing less loading of vehicle choose long routes change transport modes

Q12. Reduce total freight, transport by relying on ___________ products from facilities closer to their destination markets.
a. b. c. d. e. local imported diverse customized all the above

Q13. The selection of transportation mode depends on the product characteristics and the ___________ requirements.
a. b. c. d. e. customer location customer service customer paying capacity customer relationship none of the above

Q14. Reliability of transportation means ability of the carrier to deliver the shipment in good condition, in the ___________.delivery time frame to the customer.
a. b. c. d. e. stipulated shorter longer standard average

Q15. Freight cost is influenced by __________.

a. volumes and distance b. product type, shape and Density c. product handling d. market dynamics e. all the above

Q16. Hub and Spoke Network in transportation tends to

__________.
a. b. c. d. e.

minimize freight minimizes delivery time enables reliability in delivery optimizes the number the of distribution centers all the above

Q17. In the business context Milk-run is a tested and proven method of optimizing a service providers trucking operations in ___________ activities.
a. b. c. d. e. collection or dispatch storage production handling round the route

Q18. Milk-run supports a firm in ___________ inventory availability in automotive and electronic industries.
a. b. c. d. e. speedy safety stocks JIT advance damage free

Q19. For the conservation of fuel and ___________ the transportation time, the route planning exercise is of utmost importance to the carrier owner.
a. b. c. d. e. optimizing saving increasing equalizing all the above

Q20. Containerisation ensures usage of ___________ transportation and safe door-to-door transportation of the cargo.
a. b. c. d. e. multi-route multi-modal multi-product sea route none of the above

Answers:

1.(a) 2.(c) 3.(b) 4.(b) 5.(a) 6.(e) 7.(a) 8.(c) 9.(a) 10.(e) 11.(b) 12.(a) 13.(b) 14.(a) 15.(e) 16.(d) 17.(a) 18.(c) 19.(b) 20.(b)

Chapter 12

Inventory Management
Multiple Choice Questions
Q1. Inventory levels are affected by level of customer service, ___________ and flexibility in business operations.
a. b. c. d. e. demand variations warehousing layout type of handling equipment transportation modes storage pattern

Q2. Managing the inventory is the most important function of supply chain to achieve trade-off between ____________.
a. b. c. d. e. suppliers and customers location cost and customer service raw materials and finish goods cost transportation mode and cost none of the above

Q3. _________ in effective inventory management will always give a competitive edge to the business, regardless of its nature.
a. b. c. d. e. accuracy timeliness efficiency documentation optimization

Q4. Inventory generally constitutes the second largest item after ________ in the financial balance sheet of the manufacturing company.
a. b. c. d. e. fixed liability fixed asset investments contingent liability none of the above

Q5. Inventory related cost comprising of the following elements ___________.

a. b. c. d. e. capital invested storage and material handling transportation, insurance and obsolescence exchange rate fluctuation all the above

Q6. The benefits of inventory reduction are not reflected in __________.

a. b. c. d. e. profit margins return on investment economic value addition customer value economies of scale

Q7. Inventory turns may be enhanced by using __________.

a. b. c. d. e. MRP ERP DRP JIT all the above

Q8. The distribution side is primarily concerned with the finished goods inventories, which again are divided into __________.
a. b. c. d. e. non excise paid goods excise paid goods pipeline inventory channel inventory all the above

Q9. The investments in inventory cannot be used for other ___________.purpose or ___________.assets.
a. b. c. d. e. unproductive; creating productive; creating productive; engineering unproductive; reengineering business; re-organising

Q10. Inventory carries the risk of damage, theft, pilferage or

______. a. obsolesce b. exploitation c. expansion d. explosion e. extension

Q11. The manufacturers inventory commitments are closely related to the investments made in anticipation of the expected returns, _______, complexity and width of distribution network, unit value of the product and the nature of demand.
a. meeting competition b. lead time of inputs c. expected pricing

d. compliance e. meeting commitments

Q12. For the seasonal products the wholesaler purchases the inventory in advance in anticipation of the future sales, which ___________ his risk factor.
a. b. c. d. e. increases decreases even out average out postpone

Q13. The inventory commitments of the wholesaler are not of _________ as compared to manufacturer.
a. b. c. d. e. longer duration shorter duration greater commitment market driven futuristic

Q14. Retailer faces ___________ duration risk for inventory as compared to manufacturer and wholesaler.
a. b. c. d. e. shorter longer extended multiple none of the above

Q15. Retailers risk for inventory is spread over the ___________ product. Hence, his commitment to inventory is not ________.
a. b. c. d. e. high value; deep low value; deep large range; deep fast moving; deep slow moving; deep

Q16. The long lead times for inventory makes the manufacturer ___________.and vulnerable to unforeseen changes and inaccurate demand forecasts.
a. b. c. d. e. flexible inflexible lean responsive committed

Q17. The safety stocks act as buffers for the lack of ___________.in the supply chain.
a. b. c. d. e. flexibility inflexibility planning forecasting rigidity

Q18. KANBAN is basically an information system to support _______ inventory for manufacturing operations.
a. b. c. d. e. buffer pipeline Just in time excise paid retail

Q19. In order to implement the desired inventory management policies, control procedures need to be devised. These procedures may cover review period, review frequency, __________, safety stock level etc.
a. b. c. d. e. inventory type reorder point goods in transit allowance for transit damages stocking points

Q20. DRP operates in an _________ environment, where customer demand at various distribution points/locations determines inventory requirements.
a. b. c. d. e. independent dependent inter dependent focused volatile

Q21. In risk pooling of inventory management firm adopts _________ system which can aggregate the demand and takes care of the fluctuations in various markets by averaging out the variations.
a. b. c. d. e. centralized decentralize variable fixed market

Q22. ABC classification is used to develop inventory __________.

a. b. c. d. e. planning policies set count frequencies for cycle counting slot inventory for optimized order picking inventory management activities all the above

Q23. ABC analysis is a technique for inventory control. The basic assumption is that ________ value is attached to ___________ stocks.
a. b. c. d. e. same; different different; same different; different same; same high; low

Q24. For managing the inventory of A class items the actions required ___________.
a. b. c. d. e. continuous follow up no safety stocks accurate forecast central procurement all the above

Q25.The severity of Bullwhip Effect increase as one move closer to the __________.
a. b. c. d. e. retailer wholesaler procurement production customer

Q26. The methods intended to reduce uncertainty, variability, and lead-time are __________.
a. b. c. d. e. vendor-managed inventory (VMI) just-in-time replenishment (JIT) strategic partnership all the above none of the above

Q27. Distribution Requirement Planning (DRP)is one of latest IT tools for controlling the inventory in the distribution system of the organization. It allocates the inventory from mother warehouse to the various distribution centers based on the following ___________.
a. b. c. d. e. demand pattern safety stock provision order quantity and Reorder point average performance cycle length all the above

Q28. Prerequisites of successful JIT system are __________.

a. b. c. d. e. buyerseller partnership online communication and information sharing commitment to zero defects from both the sides frequent and small lot size shipments all the above

Q29. The main barriers to the successful operation of JIT system are Organization culture, Technology differentials at buyer and supplier ends, ___________, Reluctance to information sharing.
a. b. c. d. e. organization structure centralized suppliers organized suppliers product mix proliferation technology used

Q30. In Vendor Managed Inventory the ownership of inventory is with __________.

a. b. c. d. e. buyer both buyer and seller seller middleman all the above

Answers:
1.(a) 2.(b) 3.(c) 4.(b) 5.(e) 6.(e) 7.(e) 8.(e) 9.(b) 10.(a) 11.(b) 12.(b) 13.(a) 14.(a) 15.(c) 16.(b) 17.(a) 18.(c) 19.(b) 20.(c) 21.(a) 22.(a) 23.(c) 24.(e) 25.(c) 26.(d) 27.(e) 28.(e) 29.(a) 30.(c)

Chapter 15

Strategic Alliance
Multiple Choice Questions
Q1. Supply chain aims at delivering a set of goods or services to an end-customer by ___________ of/to supply chain partners, who share the common goal.
a. b. c. d. e. aligning the capabilities extending activities monitoring the processers using the network all the above

Q2. Alliance partners in supply chain are not the ones amongst the following listed below ___________.
a. b. c. d. e. suppliers vendors retailers distributors employees

Q3. Outsourcing brings about the ____________ in supply chain operations as there a real-time information sharing amongst supply chain partners and customers. However, there are many other issues in supply chain collaboration with vendors and these are __________.
a. b. c. d. e. intelligence soft skills buoyancy responsiveness image

Q4. Bullwhip effect, results into either in excess inventory or stock outs in supply chain. This is due to time lag in _________ progression in upstream from market, resulting into its distortion.
a. b. c. d. e. process information activity schedule all the above

Q5. Supply chain collaboration to bring fruits should be focused on ________ sharing.
a. b. c. d. e. facilities manpower information network assets

Q6. Alliance is cooperation or collaboration which aims for a _______ where each partner hopes that the benefits from the alliance will be greater than those from individual efforts.
a. b. c. d. e. synergy inventory management speed to market cost reduction survival

Q7. Alliance in supply chain often involves, __________, economic specialization, shared expenses, and shared risk.
a. b. c. d. e. material handling effective storage access to knowledge and expertise quick transportation none of the above

Q8. Strategic alliances in supply chain are except the one __________.
a. b. c. d. e. third party fourth party logistics retailer-supplier partnerships stand alone distributor integration

Q9. Strategic alliances necessarily do not bring partners the following benefits ___________.
a. b. c. d. e. market access access to management skills access technology, and intellectual property access to partner's capital price skimming

Q10. Supply chain improvement areas available to firms through strategic alliance relationships ___________.
a. b. c. d. e. managing supply channel conflict on-time product delivery improved supply chain productivity prompt response to complaints all the above

Q11. There are following categories of 3PL providers, except

__________.
a. b. c. d. e.

stand alone practitioners integrator customer adapter customer developer

Q12. One who provides entire logistic services and offers logistic solutions to the customer problems is called as __________.
a. b. c. d. e. integrator wholesaler 4PL standalone assembler

Q13. Broader objective, the corporations had in mind for going in for 3PL services are __________.
a. b. c. d. e. reduction in risk and liability value added services process improvement wider market coverage all the above

Q14. Fourth Party Logistics Provider is a supply chain integrator that ________ the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver comprehensive supply chain solutions.
a. b. c. d. e. purchases and implements assembles and manages synchronizes integrates co-ordinates

Q15. Fourth Party Logistics provider is _______ of all 3 PL service providers.

a. b. c. d. e. integrator coordinator aligner all the above none of the above

Q16. Fourth party logistics service provider operates with __________.

a. IT platform b. assets c. inventory solutions

d. transport fleets e. warehouses

Q17. Network arrangement can be termed as 4PL, provided it fulfills the following requirement ___________.
a. covers the entire supply chain of the customer b. collaboration between logistics service providers on the resources sharing basis. c. alliances to be led by integrator with IT based and not asset based d. flexible arrangement e. all the above

Q18. 4PL does not work in following ways ___________.

a. b. c. d. e. increases revenue increased assets reduces cost reduces working capital reduces fixed capital

Q19. 4PL supply chain solution includes three phases of work, re-organizing ________ and execution.
a. b. c. d. e. transition reduction reframing transformation re-engineering

Q20. The strategic alliance relationship depends on the following, except __________.
a. b. c. d. e. advanced information systems top management commitment trust amongst the partners inventory ownership financial measures

Answers:
1.(a) 2.(e) 3.(d) 4.(b) 5.(c) 6.(a) 7.(c) 8.(d) 9.(e) 10.(e) 11.(b) 12.(a) 13.(e) 14.(b) 15.(a) 16.(a) 17.(e) 18.(b) 19.(d) 20.(e)