CSCP 2011
ExamREADINESS Ed
202 Review Questions
Supply Chain Professional
Practice Questions
ã
ExamREVIEW PRO & ExamREVIEW PRESS
2011
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Notes:
In order to increase the level of difficulty, we have
increased the number of choices in many of the
review questions. You will often be asked to pick
more than one options from the lists. The only
way for you to give the correct answer(s) is to truly
understand the underlying topics and study
material. We believe that this form of questions
are more challenging and are better suited for test
prep purpose.
Notes:
1, A supply chain consists of which of the following components (Choose all that apply):
A. Retailers
B. distributors
C. Transporters
D. storage facilities
E. suppliers
ANSWER: A B C D E
Notes:
2, The concept of supply chain often involves what type of integration?
A. Backward
B. Functional
C. Cross border
D. Downward
ANSWER: A
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Notes:
3, Which of the following are the functional components of most supply chains (Choose all
that apply):
A. demand planning
C. supply planning
D. transportation planning
ANSWER: A B C D
1. demand planning
3. supply planning
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Notes:
4. transportation planning
Some supply chains deploy the push system, while some deploy the pull one. Most chains
deploy a mixture of both.
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Notes:
4, What systems are triggered by interpretation of the expected demand and scheduling of
supply to meet that demand (Choose all that apply):
A. Push
B. Pull
C. Just in time
D. EOQ-II
ANSWER: A
Push systems are triggered by interpretation of the expected demand and scheduling of
supply to meet that demand. MRP does have elements of the push system built-in. Pull
systems have replenishment triggered by the usage or depletion of stock. JIT is pull based.
13
Notes:
5, Which of the following are the major SCM flows (Choose all that apply):
ANSWER: A B C
Shorts for supply chain management, SCM refers to the oversight of materials, information,
and finances as they move in a process from supplier to manufacturer to wholesaler to retailer
to consumer. The 3 major SCM flows:
l The product flow: the movement of goods from a supplier to a customer, as well as any
customer returns or service needs
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Notes:
l The information flow: transmitting orders, updating the status of delivery and the likes
l The finances flow: credit terms, payment schedules, consignment, title ownership
arrangements …etc
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Notes:
6, Which of the following is an industry term for methodologies and technologies that helps
an enterprise manages customer relationships in an organized and efficient manner?
A. SCM
B. ERP
C. CRM
D. ERM
E. CSCP
ANSWER: C
Don’t confuse SCM with CRM. Shorts for Customer Relationship Management, CRM is an
industry term for methodologies and technologies that helps an enterprise manages customer
16
Notes:
relationships in an organized and efficient manner. Even though customer satisfaction is the
ultimate goal of SCM, CRM is not a topic covered by this CSCP exam.
17
Notes:
7, Supply chain management solutions focus on providing:
ANSWER: A
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Notes:
8, The technical methods of collaboration among chain partners often involve the use of
which of the technologies (Choose all that apply):
A. Ecommerce
B. Internet
C. Extranet
D. VPN
ANSWER: A B C D
The technical methods of collaboration among chain partners often involve the use of
modern technologies like Ecommerce, Internet and Extranet. Short for electronic commerce,
eCommerce is the buying and selling of goods and services on the Internet. In practice, this
term and the term “e-business” are often used interchangeably. An extranet is a private
network that uses the Internet protocol and the public communication network to securely
share business information or operations with your external partners (such as your suppliers,
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Notes:
vendors, partners and customers). In fact, it can be viewed as part of a company's intranet
that is extended to the outside users. VPN is an implementation of an Extranet.
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Notes:
9, A successful extranet for chain members MUST be (choose the BEST answer):
ANSWER: A
To implement an extranet, you need firewall server management, the issuance and use of
digital certificates (or similar means of user authentication), encryption of transmitted data,
and the use of virtual private network (VPN) technologies that tunnel through the public
internet.
21
Notes:
10, In general, what products are mostly commodities with very elastic demand, while low
volume/high margin and designer items are demand in-elastic?
C. Designer products
ANSWER: A
To provide value through the supply chain, you must make the connection between the chain
and the products, demand patterns, and markets which constitute the broad organization
strategy. The broad categories of products must be identified, cos your organization will need
to have an appropriate supply chain to support each of them:
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Notes:
l Designer products
In general, high volume/low margin products are mostly commodities with very elastic
demand, while low volume/high margin and designer items are demand in-elastic.
23
Notes:
11, For products that are high volume/low margin, which of the following statements are
true (Choose all that apply):
A. the supply chain should be able to efficiently move items through the supply system in a
continuous flow
B. steady demand, low technology, well established distribution system and commodity
pricing are needed
C. management should aim at minimizing supply chain costs by keeping inventory in days
of supply
ANSWER: A B C
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Notes:
l the supply chain should be able to efficiently move items through the supply system in a
continuous flow
l steady demand, low technology, well established distribution system and commodity
pricing are needed
l management should aim at minimizing supply chain costs by keeping inventory in days
of supply and by intense coordination of transportation logistics
l suppliers should be able to dependably furnish raw materials that need no incoming
inspection
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Notes:
12, For products that are low volume/high margin, the mostly used regular SKUs often
exhibit what sort of demand pattern?
A. lumpy
B. flat
C. seasonal
ANSWER: A
l use mostly regular SKUs which exhibit the classically “lumpy” demand pattern
Notes:
l requires flexibility and agility in the supply system
l may require modest buffer stocks of finished goods inventory. Keep in mind though,
that inventory risk in such products is significant, as the products are expensive
(relatively)
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Notes:
13, For products that are low volume/high margin, demand can mostly be forecast with
reasonable accuracy over a long horizon.
A. True
B. False
ANSWER: A
l use mostly regular SKUs which exhibit the classically “lumpy” demand pattern
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Notes:
l may require modest buffer stocks of finished goods inventory. Keep in mind though,
that inventory risk in such products is significant, as the products are expensive
(relatively)
29
Notes:
14, For products that are low volume/high margin, which of the following elements are
important?
B. pure performance
D. cost effectiveness
ANSWER: A
l use mostly regular SKUs which exhibit the classically “lumpy” demand pattern
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Notes:
l can mostly be forecast with reasonable accuracy over a long horizon
l may require modest buffer stocks of finished goods inventory. Keep in mind though,
that inventory risk in such products is significant, as the products are expensive
(relatively)
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Notes:
15, Which of the following statements correctly describe the nature of designer products
(Choose all that apply):
D. often do not get manufactured on the same equipment as the standard items
ANSWER: A B C
Designer products:
Notes:
l demand forecasting is mostly impossible
l requires flexibility, quick response, rapid design and readily available production capacity
33
Notes:
16, Manufacturing flexibility can be achieved via (Choose all that apply):
ANSWER: A BC
How is manufacturing flexibility achieved? First, you must be able to achieve the following:
34
Notes:
l Scheduling Techniques to Signal Production in Quick Succession
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Notes:
17, Which of the following are the valid ways to compress time (Choose all that apply):
ANSWER: A B C D
You must be able to compress time. Time has become a precious commercial commodity,
and you cannot afford to squander it through excessive down time, leisurely set-ups, and long
queues and production cycles. To compress time, you may do the following:
36
Notes:
l Compress cycle time through industrial engineering and process realignment
37
Notes:
18, Work cells are usually staffed by team members who are empowered to (Choose all that
apply):
E. authorize purchases
F. meet customers
ANSWER: A B C D
38
Notes:
Work cells are usually staffed by team members who have a strong sense of quality: they are
employees who are empowered to:
39
Notes:
19, How do you achieve efficient work cells manufacturing (Choose all that apply):
ANSWER: A B C
40
Notes:
l design a plant layout for greater throughput and productivity
l establish cross functional work teams in both cellular and traditional organizations;
41
Notes:
20, FMS is principally used in mid-volume mid-variety production.
A. True
B. False
ANSWER: A
42
Notes:
21, Which of the following are the benefits of a FMS (Choose all that apply):
ANSWER: C D E F
43
Notes:
l lowering direct labor cost
44
Notes:
22, Which of the following is a financial analysis technique that accompanies the
implementation of constraints management with a focus on maximizing contribution margins
through identification and exploitation of constraints?
A. Throughput Accounting
B. Management Accounting
C. Account costing
D. Material Budgeting
ANSWER: A
All factories on earth have constraints. Sometimes these constraints are being referred to as
bottlenecks. Regardless of how they are called, the “Theory of Constraints” focuses your
attention on successive management of constraints by a systematic process beginning with
identification and following through to elimination. “Throughput Accounting" is a financial
analysis technique that accompanies the implementation of constraints management with a
45
Notes:
focus on maximizing contribution margins through identification and exploitation of
constraints.
46
Notes:
23, Perfect fill rate tells:
B. how quickly you get materials from suppliers, convert them into product, ship to
customers, collect the receivables and handle the payables.
C. the amount of time between the placing of an order and the receipt of the goods
ordered.
D. how fast you are able to move materials through the supply chain.
ANSWER: A
Perfect fill rate: it tells if you are achieving the goal of delighted end customers.
47
Notes:
24, Cash to cash cycle tells:
B. how quickly you get materials from suppliers, convert them into product, ship to
customers, collect the receivables and handle the payables.
C. the amount of time between the placing of an order and the receipt of the goods
ordered.
D. how fast you are able to move materials through the supply chain.
ANSWER: B
Cash to cash cycle: it is the indicator of chain velocity that tells how quickly you get materials
from suppliers, convert them into product, ship to customers, collect the receivables and
handle the payables.
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Notes:
25, Inventory turn tells:
B. how quickly you get materials from suppliers, convert them into product, ship to
customers, collect the receivables and handle the payables.
C. the amount of time between the placing of an order and the receipt of the goods
ordered.
D. how fast you are able to move materials through the supply chain.
ANSWER: D
Inventory turns: also known as turnover, it is the indicator of the speed with which you are
able to move materials through the supply chain. For a company, it is the ratio of annual sales
to inventory or the fraction of a year that an average item remains in inventory. Note that low
turnover indicates poor efficiency.
49
Notes:
26, “Inventory turns” is also known as (Choose all that apply):
A. turnover
B. fill over
C. turn rate
ANSWER: A
It is the indicator of the speed with which you are able to move materials through the supply
chain. For a company, it is the ratio of annual sales to inventory or the fraction of a year that
an average item remains in inventory. Note that low turnover indicates poor efficiency.
50
Notes:
27, The basic function of inventory is to insulate the production process from changes in the
environment.
A. True
B. False
ANSWER: A
In regards to inventory: The basic function of inventory is to insulate the production process
from changes in the environment. Even though there is a cost to hold stock, you should
always attempt to lower such cost (as it is not adding value to the production process).
51
Notes:
28, What indicate how well you repeatedly receive and manufacture in small lots and fulfill
customer needs?
A. Lot sizes
B. Fill rate
C. Cash count
D. Satisfaction index
ANSWER: A
Lot sizes: includes the average lot size for purchases and the average lot size in manufacturing.
They indicate how well you repeatedly receive and manufacture in small lots and fulfill
customer needs.
52
Notes:
29, Velocity can be defined as:
A. the average number of units sold by day or week for a grouping of merchandise.
B. the aggregate number of units sold by day or week for a grouping of merchandise.
C. the average number of units sold by hours or days for a grouping of merchandise.
ANSWER: A
Velocity can be defined as “The average number of units sold by day or week for a grouping
of merchandise. Indicates the impact on inventory levels (fast sales can cause shortages, slow
sales can cause excess stock)”.
53
Notes:
30, The simplest form of BOM lists (Choose all that apply):
ANSWER: A B
Shorts for Bill of Materials, it is a table-like document that lists all the items that go into a
finished good or subassembly. The simplest form of BOM lists only the Materials and
Quantities being used to manufacture a finished good or sub assembly.
54
Notes:
31, Which of the following statements about BOM is true (Choose all that apply):
A. It describes the parent/child relationship between an assembly and its component parts
or raw materials.
B. It can be nested.
ANSWER: A B C D
A BOM describes the parent/child relationship between an assembly and its component
parts or raw materials. BOM can be nested. In addition, BOM can be structured in a tree like
format to indicate all the steps of assembly. In such a tree, the finished good or subassembly
is shown as root. Note that a BOM that is flat is perceived to be better than a staged one, cos
55
Notes:
a flat BOM can accommodate parallel progresses. We will talk about this in the MRP section.
Always remember, BOMs are needed to support the assembly process. Also, the BOM for
products released to manufacturing is a key part of a MRP system's database.
56
Notes:
32, Which of the following statements are true about a primary bill (Choose all that apply):
A. It is a list of components that are most frequently use for building a product.
C. You must define a primary bill before you can define an alternate.
D. A primary bill can have many alternate bills, and vice versa.
ANSWER: A B C
A primary bill is a list of components that are most frequently use for building a product. An
alternate bill is another list of components for the same basic assembly. Note that:
l You must define a primary bill before you can define an alternate.
l A primary bill can have many alternate bills, but not vice versa.
Notes:
33, What is known as a type of standard bill that provides a set of option choices made from
a model bill that comprises a buildable product?
A. Configuration Bill
B. Primary Bill
C. Alternate Bill
D. Process Bill
E. Model Bill
ANSWER: A
Configuration Bill - a type of standard bill that provides a set of option choices made from a
model bill that comprises a buildable product. In a computerized system, configuration items
and bills are automatically created from model bills after a customer chooses her options on a
sales order.
58
Notes:
34, What type of bill defines the list of options and option classes you can choose for
ordering a configuration?
A. Configuration Bill
B. Primary Bill
C. Alternate Bill
D. Process Bill
E. Model Bill
F. Planning Bill
ANSWER: E
Model Bill of Material - it defines the list of options and option classes you can choose for
ordering a configuration. It specifies mandatory components or included items that are
required for each configuration of that model.
59
Notes:
35, What type of bill represents a BOM structure that includes a percentage distribution for its
components?
A. Configuration Bill
B. Primary Bill
C. Alternate Bill
D. Process Bill
E. Model Bill
F. Planning Bill
ANSWER: F
Planning Bill of Material - It is a BOM structure that includes a percentage distribution for its
components. Keep in mind that the percentages associated with the components on such a
60
Notes:
bill do not need to add to 100%. Also, planning items are commonly nested within one
another.
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Notes:
36, What bill is typically used to prototype variations from the primary bill that produces the
same assembly?
A. Engineering Bill
B. Primary Bill
C. Alternate Bill
D. Process Bill
E. Model Bill
F. Planning Bill
ANSWER: A
Engineering Bills of Material - This is often used as an alternate for a manufacturing bill. It is
typically used to prototype variations from the primary bill that produces the same assembly.
62
Notes:
37, The non-stocked assembly that groups together material needed to produce a
subassembly is known as:
A. Phantom Assembly
B. Shadow Assembly
C. Image Assembly
D. Classic Assembly
ANSWER: A
63
Notes:
38, What BOM related process involves the determination of an item's gross requirements
from the MPS for immediate parents that are end items, the planned order releases for
parents below the MPS level, as well as any other requirements?
A. explosion
B. derivation
C. aggregation
D. profiling
ANSWER: A
As new work orders are suggested (by, let’s say, a MRP system), additional material
requirements will be created for the components needed by these new work orders, which in
turns will create additional suggested work orders and purchase orders. The process will
continue down through all levels of the BOM and is therefore known as "explosion." The
explosion process involves the determination of an item's gross requirements from the MPS
64
Notes:
for immediate parents that are end items, the planned order releases for parents below the
MPS level, as well as any other requirements (such as demand for replacement parts).
65
Notes:
39, What is the commonly used identification of a particular product that allows it to be
tracked for inventory purposes?
A. SKU
B. CRU
C. ADU
D. ADR
ANSWER: A
Short for stockkeeping unit, SKU is an identification of a particular product that allows it to
be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with
any purchasable item in a catalog. It may or may not be made visible to a customer, and is
definitely not the same as a product model number from a manufacturer (although the model
66
Notes:
number could be used to form all or part of the SKU). The SKU is established by the
merchant or the manufacturer, not by any industry or trade association.
67
Notes:
40, The SKU is established by an industry wide trade association.
A. True
B. False
ANSWER: B
Short for stockkeeping unit, SKU is an identification of a particular product that allows it to
be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with
any purchasable item in a catalog. It may or may not be made visible to a customer, and is
definitely not the same as a product model number from a manufacturer (although the model
number could be used to form all or part of the SKU). The SKU is established by the
merchant or the manufacturer, not by any industry or trade association.
68
Notes:
41, The basic assumption of EOQ is that:
A. as the lot size increases, the setup cost per unit decreases, since setup costs can be
amortized over a larger quantity of parts.
B. as the lot size increases, the setup cost per unit increases, since setup costs can be
amortized over a larger quantity of parts.
C. as the lot size decreases, the setup cost per unit decreases, since setup costs can be
amortized over a larger quantity of parts.
ANSWER: A
Shorts for Economic Order Quantity, EOQ is the amount of orders that minimizes total
variable costs required to order and hold inventory. It can also be described as the most
economical quantity of parts to order at one time, considering the applicable procurement
and inventory costs. “The basic assumption of EOQ is that as the lot size increases, the setup
69
Notes:
cost per unit decreases, since setup costs can be amortized over a larger quantity of parts.
Conversely, as the lot size increases, the inventory carrying cost per unit increases, because
parts are carried in inventory for a longer period of time. The EOQ is determined by the
point at which the total of inventory and setup costs is at a minimum. Thus EOQ drives to
minimize unit cost, but not total operating cost”.
70
Notes:
42, To use EOQ, what assumptions must be made (Choose all that apply):
B. Whole lots
D. Item independence
ANSWER: A B C D E
71
Notes:
l Constant demand rate
l Whole lots
l Item independence
72
Notes:
43, Which of the following represents the number of units of material or a manufactured item
that can be purchased or produced within the lowest unit cost range?
A. EOQ
B. EOQ Plus
C. ELS
D. JIT-2
ANSWER: C
Shorts for Economic Lot Size, ELS represents the number of units of material or a
manufactured item that can be purchased or produced within the lowest unit cost range. The
determination of ELS involves reconciling the decreasing trend in preparation unit costs and
73
Notes:
the increasing trend in unit costs (of storage, interest, insurance, depreciation, and other costs)
incident to ownership, as the size of the lot is increased.
74
Notes:
44, With reorder point planning, a reorder level is established for each item based on what
criteria (Choose all that apply):
A. usage
B. lead time
D. sales level
ANSWER: A B C
Many organizations use a minimum stock level and reorder point to order and schedule
materials. With reorder point planning, a reorder level is established for each item based on:
o usage
75
Notes:
o lead time
76
Notes:
45, Which of the following are the biggest problems with reorder point planning (Choose all
that apply):
D. it can easily lead to stocking levels lower than what are actually needed
ANSWER: B C
Notes:
o it can easily lead to stocking levels higher than what are actually needed
78
Notes:
46, Based on the JIT philosophy, one should (Choose all that apply):
ANSWER: A B C
O'Grady’s definition of JIT is more strategic1. He said that based on the JIT philosophy,
one should:
1 O'Grady, P J. Putting the Just-in-time Philosophy into Practice: A Strategy for Production Managers
79
Notes:
47, Which of the following are benefits that can be produced by JIT (Choose all that
apply):
ANSWER: A B C D
Based on Cheng and Podolsky’s summary2 we may conclude that the benefits of
implementing JIT, in general, may include:
Notes:
· Increased product quality and reduced scrap and rework.
· Reduced manufacturing lead time.
· Greater flexibility in changing the production mix.
· Smoother production flow with fewer disruptions.
· Worker participation in problem solving.
· Pressure to build good relationships with vendors.
· Increased productivity levels and utilization of equipment.
· Reduction in the need for certain indirect labor.
81
Notes:
48, What is known as a manufacturing strategy in which parts are produced or delivered only
as needed?
A. Kanban
B. Pull bin
C. Push bin
D. Dual Trays
ANSWER: A
82
Notes:
49, With Kanban square, an assembly line or work cell with a square drawn on the bench or
floor between two factories is used.
A. True
B. False
ANSWER: B
Kanban square - it is used on an assembly line or work cell with a square drawn on the bench
or floor between two operators. When one operator has finished a part, instead of giving it to
the next operator, she would put it into the Kanban square and wait for it to be taken before
herself is allowed to make another one.
83
Notes:
50, With double card Kanban, what card is used to authorize the movement of material from
the supplier to the using company?
ANSWER: A
Double card Kanban - the "move" card is used to authorize the movement of material from
the supplier to the using company, while the "production" card is used by the supplying
company to launch another batch of work into his manufacturing facility when he returns
with an empty container from the customer.
84
Notes:
51, Which of the following are the advantages of the Kanban concept (Choose all that apply):
ANSWER: A B C
85
Notes:
o it requires less buffer stock
86
Notes:
52, In order to successfully implement TQM, one must concentrate on what key elements
(Choose all that apply):
A. Ethics
B. Integrity
C. Trust
D. Training
E. Teamwork
ANSWER: A B C D E
To truly unlock the ultimate potential of TQM, it is important for you to realize that TQM is
built on a foundation of ethics, integrity and trust, that it fosters openness, fairness and
87
Notes:
sincerity and allows involvement by everyone. As described by Nayantara Padhi3, in order to
successfully implement TQM, one must concentrate on eight key elements:
l Ethics
l Integrity
l Trust
l Training
l Teamwork
l Leadership
l Recognition
l Communication
3 http://www.isixsigma.com/library/content/c021230a.asp
88
Notes:
53, One of the major criticisms of MRP is the concept of a staged Bill of Material, which:
ANSWER: A
"One of the major criticisms of MRP is the concept of a staged Bill of Material, which
represented the stages of manufacture and also enshrined that into a sequential process,
which ignored the potential for parallel working. Work by Burbidge, showed that by flattening
the Bill of Material, and parallel working not only simplified the administration of production
but also reduced lead-times"4.
4 http://www.smthacker.co.uk/materials_management_stock_control.htm
89
Notes:
54, What is a time-phased planning chart that can help the master scheduler create the MPS?
A. master schedule
B. production plan
C. capacity plan
D. flow schedule
ANSWER: A
MPS is the product of Master Scheduling. A master schedule is a time-phased planning chart
that can help the master scheduler create the MPS, which is the anticipated build schedule
which applies only to items assigned to the master scheduler. The MPS drives the MRP. It is
also an essential component in many of the popular MRP-II implementations.
90
Notes:
55, The MRP drives the MPS.
A. True
B. False
ANSWER: B
MPS is the product of Master Scheduling. A master schedule is a time-phased planning chart
that can help the master scheduler create the MPS, which is the anticipated build schedule
which applies only to items assigned to the master scheduler. The MPS drives the MRP. It is
also an essential component in many of the popular MRP-II implementations.
91
Notes:
56, Which of the following items should you master schedule (Choose all that apply):
E. high-value materials
ANSWER: A B C D E F G
92
Notes:
Why do you master schedule? Firstly, to provide stability to materials plans. Secondly, to
manage the impact on key production resources. Thirdly, to ensure the proper execution of
the production plan. Which items should you master schedule?
l high-value materials
93
Notes:
57, MRP-2 can be thought of as (Choose all that apply):
C. version 2 of MRP
ANSWER: A D
MRP2 is not the version 2 of MRP. In fact, it stands for Manufacturing Resources Planning,
which is a modeling technique for analyzing and controlling complicated Manufacturing
operations using computer technologies. When the manufacturing data has been collected,
the lead time and cost of every component can be predicted under any manufacturing
94
Notes:
conditions. And as soon as an order is received, the workload on the manufacturing
organization and the delivery time can be calculated quite accurately.
95
Notes:
58, Variability can be induced in the supply chain by (Choose all that apply):
A. Sales processes
B. Management accounting
ANSWER: A B C D
l Sales processes - sales people are often motivated with financial incentives by short-term
considerations, thus leading to feverish activity spurred by special deals at the end of the
accounting period, that there are no sales at all at the beginning of the following period.
96
Notes:
l Management accounting - due to the need for monthly and annual accounting cycles,
pressure is applied to operations management to ship things to make the numbers at the
end of the accounting period. Then you should know the consequences...
97
Notes:
59, Actual material usage might deviate significantly from the forecast because of (Choose all
that apply):
A. unusual usage activity that will probably not occur again in the future.
ANSWER: A B C
"Today's competitive market requires accurate forecasts for the future demand of each product in inventory. We
are constantly looking for ways to reduce the forecasting error (i.e., the difference between a forecast and the
resulting usage). But these efforts are often frustrated by unusual activity imbedded in historic usage data"5.
5 http://www.effectiveinventory.com/article46.html
98
Notes:
Based on Jon’s reasoning, actual usage might deviate significantly from the forecast because
of:
l unusual usage activity that will probably not occur again in the future.
99
Notes:
60, Which of the following put more weight on recent and less on past data (Choose all that
apply):
B. Exponential average
C. Weighted average
D. EO average
E. Smoothed average
ANSWER: B C
Standard moving averages apply equal weight to the numbers. It adds the closing number
for a number of time periods and divides this total by the number of periods. This results in
the average over a specific time period. Exponential average puts more weight on recent
data and less weight on past data. The exponential moving average applies a percentage of
today's closing to yesterday's moving average. The formula used is as follow: Moving
Average = ((today's close)*x) + ((yesterday's moving average)*x) while x = the selected
100
Notes:
percentage. Weighted average puts more weight on recent and less on past data as well.
However, it works by multiplying each of the previous day's data by a predetermined weight.
101
Notes:
61, A typical capacity model used for capacity management has what principal categories of
capacity use (Choose all that apply):
A. productive
B. nonproductive
C. idle
D. tangible
E. intangible
ANSWER: A B C
A typical capacity model used for capacity management has the following principal categories
of capacity use:
o productive
102
Notes:
o nonproductive
o idle
103
Notes:
62, Rated capacity is often set as:
B. 1.0
C. 90%
D. 99.9%
ANSWER: A
Rated capacity = productive capacity (used for producing goods as well as in process and
product improvement efforts) + nonproductive capacity (uses of capacity which do not
produce goods, such as set-ups, maintenance, waste, and standby) + idle capacity (capacity
that is not marketable or not in demand). Rated capacity is often set as 100 per cent, which is
24 hours a day and seven days a week. If a production machine is being measured, it’s rated
capacity is the full productive speed as determined by the manufacturer. This rate is without
allowance for repair, setup and other kinds of downtime, and may sometimes be overstated
intentionally.
104
Notes:
63, Demand for finished goods is an example of:
A. Independent demand
B. Dependent demand
C. Mixed demand
ANSWER: A
Independent demand refers to the demand for an item that is unrelated to the demand for
other items. Demand for finished goods is one such example. On the other hand,
dependent demand refers to the demand that is directly related to or derived from the BOM
structure for other items or products.
105
Notes:
64, Which of the following types of demand can be calculated?
A. Independent demand
B. Dependent demand
C. Mixed demand
ANSWER: B
106
Notes:
65, Which of the following refers to the planning process for predicting the demand of
products and services based on forecasts?
A. Demand Planning
B. Demand Aggregation
C. Demand summarization
D. Demand Analyst
ANSWER: A
Demand Planning refers to the planning process for predicting the demand of products and
services based on forecasts. By accurately forecasting customer demand, one can improve the
level of customer service while decreasing costs through reducing demand uncertainty.
107
Notes:
66, You may achieve increasingly accurate demand forecasts by integrating volume
predictions based on:
A. price elasticity
B. customer locations
D. demand seasoning
ANSWER: A
6 http://www.manugistics.com/solutions/profitable_demand_management.asp
108
Notes:
o achieve increasingly accurate demand forecasts by integrating volume predictions
based on price elasticity
o bring your supply and demand chains into balance, improving enterprise profitability
and customer service (this is important)
o adaptively manage volatile demand, short product life cycles, and dynamic market
changes (this is important)
o determine the best product mix to optimize the profitability of existing assets
o optimize price lists and customer quotes to maximize margins and gain market share
109
Notes:
67, Optimized demand management can be achieved via which of the following ways (choose
all that apply):
ANSWER: A B C D E
7 http://www.manugistics.com/solutions/profitable_demand_management.asp
110
Notes:
o achieve increasingly accurate demand forecasts by integrating volume predictions
based on price elasticity
o bring your supply and demand chains into balance, improving enterprise profitability
and customer service (this is important)
o adaptively manage volatile demand, short product life cycles, and dynamic market
changes (this is important)
o determine the best product mix to optimize the profitability of existing assets
o optimize price lists and customer quotes to maximize margins and gain market share
111
Notes:
68, Actual usage might deviate significantly from the forecast due to which of the following
reasons (choose all that apply):
E. price elasticity
ANSWER: A B C D
112
Notes:
"Today's competitive market requires accurate forecasts for the future demand of each product in inventory. We
are constantly looking for ways to reduce the forecasting error (i.e., the difference between a forecast and the
resulting usage). But these efforts are often frustrated by unusual activity imbedded in historic usage data"8.
Based on Jon’s reasoning, actual usage might deviate significantly from the forecast because
of:
l unusual usage activity that will probably not occur again in the future.
8 http://www.effectiveinventory.com/article46.html
113
Notes:
69, Which of the following represents a better way of forecasting?
A. identify items that might have experienced unusual usage activity and perform manual
adjustment.
B. identify AND correct items that might have experienced unusual usage activity on the
spot.
ANSWER: A
Jon believes that one better way of forecasting is “to identify, but not correct, items that
might have experienced unusual usage activity. Buyers, planners, and/or salespeople review
the list of items and determine whether unusual activity actually occurred, a significant new
trend has begun, or the wrong forecasting method has been applied to the item. They can
then manually adjust actual usage to reflect what usage would have been had no unusual
activity occurred”.
114
Notes:
70, Sporadic usage items are items that are:
A. sold infrequently.
B. sold frequently.
C. sold seasonally.
D. sol AS IS.
ANSWER: A
Sporadic usage items are items that are sold infrequently. It is not easy to forecast the demand
of such items, and the key point to make here is that you must carefully avoid using an
incorrect forecast method or you will risk stocking the wrong quantity of the wrong item in
the wrong location at the wrong time.
115
Notes:
71, Many companies use ABC Analysis to:
ANSWER: C
Many companies use ABC Analysis to manage inventory: they drive their cycle counts based
on the ABC classifications, where items of high value (A items) are counted very frequently,
and items of lower value are counted less frequently. In fact, the use of ABC Analysis is not
restricted to cycle counting. In the case of demand management, you may spend more
resources on managing the demand for A items (and spend less to take care of B and C items).
If safety stock is a way of reacting to rising demands, you may, for example, have all “A”
116
Notes:
items get 4 weeks of safety stock, all “B” items get 3 weeks, and all “C” items get 2
weeks…etc.
117
Notes:
72, The primary drawbacks of the ABC approach are (choose all that apply):
A. it is not clear whether the three classes can cover the length of priority periods.
B. it is not clear whether % or decimal values should b used in the three classes.
C. it is not clear whether the three classes suffice for longer term estimation period.
D. it is not clear whether the three classes can capture the diversity and differences of the
large number of SKUs many companies carry.
ANSWER: D
The ABC approach is believed to be flawed though. One primary drawback of this approach
is that it is not clear whether the three classes can capture the diversity and differences of the
large number of SKUs many companies carry.
118
Notes:
73, Which of the following statements correctly describe the “Bullwhip effect” (choose all
that apply):
A. Demand variability increases as one moves up the supply chain away from the retail
customer
B. Any small changes in consumer demand can result in large variations in orders placed
upstream
D. The supply network can oscillate in very small and frequent swings
E. Any small changes in consumer demand can result in large variations in orders placed
downstream
ANSWER: A B C
119
Notes:
“Demand variability increases as one moves up the supply chain away from the retail customer, and small
changes in consumer demand can result in large variations in orders placed upstream. Eventually, the network
can oscillate in very large swings as each organization in the supply chain seeks to solve the problem from its own
perspective”9.
9 http://www.quickmba.com/ops/bullwhip-effect/
120
Notes:
74, Bullwhipping effect is caused by variability and delays that are mostly the results of
(choose all that apply):
A. Overreaction to backlogs
B. Shortage gaming
ANSWER: A B C D
It is the variability coupled with time delays in the transmission of information up the supply
chain and time delays in manufacturing and shipping goods down the supply chain that
produce this kind of bullwhipping effect. The variability and delays are mostly the results of:
o Overreaction to backlogs
121
Notes:
o Poor communication along the supply chain
o Order batching produces larger orders which can produce more variance.
o Shortage gaming (customers order more than they need during a period of short
supply)
o Free return policies (this is especially true in the US where 30-day money back
guarantee is the norm)
122
Notes:
75, Which of the following are NOT the basic determinants for the bullwhip effect (choose
all that apply):
E. protective buying
F. speculative buying
ANSWER: G
123
Notes:
Lee, Padmanabhan and Whang (1997) identified the basic determinants for the bullwhip
effect10:
10 http://www.stud.fernuni-hagen.de/q5153735/research/bullwhiptop.htm
124
Notes:
76, Sometimes a decision maker along the chain may order in higher quantities than he
receives customer orders. The most typical rationales include (choose 3):
C. speculative ordering
D. price optimization
ANSWER: A B C
To reduce the impact of the effect, better communication and cooperation among chain
members is the key. If information can flow through the chain timely and accurately, bullwhip
effect can be minimized.
125
Notes:
Sometimes a decision maker along the chain may order in higher quantities than he receives
customer orders. The most typical rationales are:
o speculative ordering
126
Notes:
77, The deliverables of S&OP are:
E. MRP schedules.
F. income statements.
ANSWER: A
“S&OP is a formal process that consists of a series of meetings, finishing with a high level meeting where key
long term decisions are made. In these meetings, data from various areas of your business is discussed. The end
goal is an agreement between various departments on the best course of action to achieve the optimal balance
127
Notes:
between supply and demand and to meet your profitability goals. It's a tool that helps you properly manage your
business”11.
11 http://www.sopoverview.com/definition.htm
128
Notes:
78, Sales & Operations Planning is intended for achieving which of the following purposes
(choose all that apply):
D. putting your operational plan in line with your job shop flows
ANSWER: A B C
Shorts for Sales & Operations Planning, S&OP is intended for helping companies to
maximize customer satisfaction and meet profitability goals by achieving an optimal balance
of demand and supply. In theory, S&OP can:
Notes:
o put your operational plan in line with your Business Plan
130
Notes:
79, Proper Sales & Operations Planning can contribute to which of the following results
(choose all that apply):
ANSWER: A B C D E
131
Notes:
As suggested by Adexa12, proper S&OP can contribute to the following results:
12 http://www.adexa.com/solutions/sales.asp
132
Notes:
80, Which of the following correctly describe the order of the stages of S&OP?
A. Demand Review -> Supply Review -> Partnership Meeting -> Sales and Operations
Planning Meeting
B. Supply Review -> Demand Review -> Partnership Meeting -> Sales and Operations
Planning Meeting
C. Demand Review -> Sales and Operations Planning Meeting -> Supply Review ->
Partnership Meeting
D. Sales and Operations Planning Meeting -> Demand Review -> Supply Review ->
Partnership Meeting
ANSWER: A
133
Notes:
In the article “Sales and Operations Planning overview”, four stages of the S&OP process
have been mentioned13:
o Demand Review - chaired by the Sales and Marketing Director, attended by Sales and
Marketing Managers plus development engineers where relevant.
o Partnership Meeting - bringing together the demand and supply reviews and often
chaired by the Finance Director
o Sales and Operations Planning Meeting - full review and commitment to the plan,
chaired by the Managing Director
13 http://www.bpic.co.uk/sop.htm
134
Notes:
81, During the S&OP process, Demand Review is often chaired by:
ANSWER: A
In the article “Sales and Operations Planning overview”, four stages of the S&OP process
have been mentioned14:
o Demand Review - chaired by the Sales and Marketing Director, attended by Sales and
Marketing Managers plus development engineers where relevant.
14 http://www.bpic.co.uk/sop.htm
135
Notes:
o Supply Review - chaired by the Logistics Director, and attended by manufacturing
and planning personnel
o Partnership Meeting - bringing together the demand and supply reviews and often
chaired by the Finance Director
o Sales and Operations Planning Meeting - full review and commitment to the plan,
chaired by the Managing Director
136
Notes:
82, Rate this comment: “Short term forecasts are always more accurate than their long term
counterparts”.
A. This is mostly true unless the short term forecasts use improper methods
C. This is true only if the long term forecasts use improper methods
ANSWER: A
Short term forecasts are always more accurate than their long term counterparts. If the
forecast time frame has to be long, you may consider the use of a time phased forecast
process — have your forecast spread out by day or week or month. As recommended by
Calvin (above), such a forecast could better support manufacturing and warehouse capacity
planning, work force assignments, sales forecasting, and budgeting. However, to obtain an
accurate time-phased forecast, careful modeling of day-of-week, trend, and seasonal effects
and consideration of supplier constraints within the demand chain are required.
137
Notes:
83, In order to obtain an accurate time-phased forecast, which of the following are required
(choose all that apply):
ANSWER: A B
Short term forecasts are always more accurate than their long term counterparts. If the
forecast time frame has to be long, you may consider the use of a time phased forecast
process — have your forecast spread out by day or week or month. As recommended by
Calvin (above), such a forecast could better support manufacturing and warehouse capacity
138
Notes:
planning, work force assignments, sales forecasting, and budgeting. However, to obtain an
accurate time-phased forecast, careful modeling of day-of-week, trend, and seasonal effects
and consideration of supplier constraints within the demand chain are required.
139
Notes:
84, You may define and maintain forecasts:
D. for only the top level items at any level of your BOM.
ANSWER: A
You may define and maintain forecasts for any item at any level of your BOM. You may
forecast demand for products directly, or forecast product families and explode forecasts to
individual products through your planning bills.
140
Notes:
85, When are forecasts consumed (choose the BEST answer)?
A. each time your customers place order demand for the forecasted product.
B. each time your customers place order demand for the entire line of products.
C. each time you place manufacturing order for the promoted products.
D. each time you place manufacturing order for the competing products.
ANSWER: A
Forecasts are consumed each time your customers place order demand for the forecasted
product.
141
Notes:
86, Which of the following moving average techniques apply more weight on recent data
(choose all that apply):
B. Exponential average
C. Weighted average
ANSWER: B C
The moving average is a way of calculating the average over a given time span. As the
numbers change over time, the average reflects the change, but at a slower pace.
o Standard moving averages apply equal weight to the numbers. It adds the closing
number for a number of time periods and divides this total by the number of periods.
This results in the average over a specific time period.
o Exponential average puts more weight on recent data and less weight on past data.
The exponential moving average applies a percentage of today's closing to yesterday's
142
Notes:
moving average. The formula used is as follow: Moving Average = ((today's close)*x)
+ ((yesterday's moving average)*x) while x = the selected percentage
o Weighted average puts more weight on recent and less on past data as well.
However, it works by multiplying each of the previous day's data by a predetermined
weight.
143
Notes:
87, Which of the following moving average methods adds the closing number for a number
of time periods and divides this total by the number of periods?
B. Exponential average
C. Weighted average
ANSWER: A
The moving average is a way of calculating the average over a given time span. As the
numbers change over time, the average reflects the change, but at a slower pace.
o Standard moving averages apply equal weight to the numbers. It adds the closing
number for a number of time periods and divides this total by the number of periods.
This results in the average over a specific time period.
144
Notes:
o Exponential average puts more weight on recent data and less weight on past data.
The exponential moving average applies a percentage of today's closing to yesterday's
moving average. The formula used is as follow: Moving Average = ((today's close)*x)
+ ((yesterday's moving average)*x) while x = the selected percentage
o Weighted average puts more weight on recent and less on past data as well.
However, it works by multiplying each of the previous day's data by a predetermined
weight.
145
Notes:
88, ABC Analysis is a method for determining:
A. priority
B. stock turns
C. inventory level
D. EOQ
ANSWER: A
To maintain accurate forecast for every item and to manage the demand for every item can be
an exhaustive task – no one can afford to do good on everything. With ABC Analysis, you
can produce a list of priority – you decide what is the most important item to take care of,
and what items can receive less focus. To be precise, an ABC analysis determines the relative
value of a group of inventory items based on your valuation criterion. "ABC" refers to the
rankings you assign your items as a result of this analysis, where "A" items are ranked higher
than "B" items, and so on.
146
Notes:
89, Which of the following statements correctly describe ABC Analysis?
A. it determines the relative value of a group of inventory items based on your valuation
criterion
B. it determines the absolute value of a group of inventory items based on your valuation
criterion
ANSWER: A
To maintain accurate forecast for every item and to manage the demand for every item can be
an exhaustive task – no one can afford to do good on everything. With ABC Analysis, you
can produce a list of priority – you decide what is the most important item to take care of,
and what items can receive less focus. To be precise, an ABC analysis determines the relative
147
Notes:
value of a group of inventory items based on your valuation criterion. "ABC" refers to the
rankings you assign your items as a result of this analysis, where "A" items are ranked higher
than "B" items, and so on.
148
Notes:
90, For many make-to-stock companies that require on-hand inventory, a reorder level that
triggers purchase orders is being deployed. Such a reorder level approach is typically workable
for (choose all that apply):
ANSWER: A
For many make-to-stock companies that require on-hand inventory, a reorder level that
triggers purchase orders is being deployed. Such a reorder level is typically determined by the
average usage of material, the lead time it takes to get in, and the amount of safety stock for
covering unusual usage. Any combination of requirements that causes the inventory level to
dip below the pre-determined reorder level will trigger a purchase order. This approach is
typically workable for a very short time horizon (of less than several weeks), and is no good
for longer time frame (as it tends to inflate the needed inventory estimation).
149
Notes:
91, Why do you master schedule (choose all that apply):
ANSWER: A B C
Why do you master schedule? Firstly, to provide stability to materials plans. Secondly, to
manage the impact on key production resources. Thirdly, to ensure the proper execution of
the production plan.
150
Notes:
92, Year-end physical inventories (choose all that apply):
ANSWER: A
You should count your inventory on a continuous basis via cycle counting to maintain high
levels of accuracy. Year-end physical inventories are tools for accounting purpose and can do
very little for inventory accuracy.
151
Notes:
93, When you send your counters out without giving them any quantity information on the
item being counted, ________ occurs.
A. blind count
B. informed count
C. guess count
D. ineffective count
E. random count
ANSWER: A
A blind count occurs when you send your counters out without giving them any quantity
information on the item being counted. They count the product and write down the quantity.
You then compare the count quantities to on-hand quantities and investigate any variances.
Such method is believed to be inferior because it produces lower first-pass accuracy rates and
can be very time consuming.
152
Notes:
94, Which of the following are the valid factors that are essential to maintaining inventory
accuracy (choose all that apply):
B. Procedure Documentation
E. Setting Standards
F. Tracking Accuracy
ANSWER: A B C D E F
Dave Piasecki in his article "Guide to Inventory Accuracy" lists the factors that are essential
to maintaining inventory accuracy:
153
Notes:
l Correct attitude (at both the individual level and the top management level)
l Procedure Documentation
l Setting Standards
l Tracking Accuracy
l Accountability
l Cycle counting
l Re-evaluate regularly
l Storage Areas - Crowded unorganized areas often become the "black holes" for missing
product.
154
Notes:
l Know your inventory system.
155
Notes:
95, Which of the following are the major categories of bar codes (choose all that apply):
A. 1D
B. 2D
C. 3D
D. 4D
E. 5D
ANSWER: A B
Shorts for Automated Data Collection, ADC is also known as Automated Data Capture,
Automated Identification AutoID, Automated Identification and Data Capture AIDC or just
Barcoding. There are two major categories of bar codes:
156
Notes:
l 1D - most popular nowadays, consist of different symbologies including UPC, Code
128, Code 39, Interleaved 2 of 5 ...etc. The symbology to use is usually dictated by
supply chain partners through a standardized compliance label program.
l 2D - uses bar code symbologies such as UPS's MaxiCode, can store more data and
require special scanners to read.
157
Notes:
96, Talking about bar-code scanners, the device that acts like a small digital camera and takes a
digital image of the bar code which is then decoded is known as:
A. BSA scanner
B. CCD scanner
C. RAD scanner
D. Biometric scanner
E. Keyboard-wedge scanner
ANSWER: B
l Laser, which uses a laser beam that moves back and forth across the bar code reading
the light and dark spaces, or Charged Coupled Device CCD scanner, which acts like a
158
Notes:
small digital camera and take a digital image of the bar code which is then decoded.
CCD scanners are cheaper but are limited to a shorter scan distance.
159
Notes:
97, Economic Order Quantity tends to ignore the actual demand pattern.
A. True
B. False
ANSWER: A
Economic Order Quantity EOQ ignores the actual demand pattern but is simple enough to
implement. Period Order Quantity POQ is based on EOQ with more information being
taken account into, but still cannot make use of all of the available data.
160
Notes:
98, Period Order Quantity is superior to Economic Order because it can make use of all of
the available data.
A. True
B. False
ANSWER: B
Economic Order Quantity EOQ ignores the actual demand pattern but is simple enough to
implement. Period Order Quantity POQ is based on EOQ with more information being
taken account into, but still cannot make use of all of the available data.
161
Notes:
99, Which of the following methods works out an irregular interval between replenishment
orders on the basis of what number of weeks will minimize unit cost (choose all that apply):
A. LUC
B. POQ
C. EOQ
D. ROQ
E. POQ
ANSWER: A
Whereas the Period Order Quantity POQ method computes a fixed number of weeks, the
Least Unit Cost LUC method works out an irregular interval between replenishment orders
on the basis of what number of weeks will minimize unit cost. LUC makes use of all of the
available data and gives room for intuitive interpretation, but is more complicated than POQ
and EOQ.
162
Notes:
100, Which of the following theories states that the capacity of the supply chain system was
governed by the capacity of it's weakest link?
A. Theory of Constraints
B. Economy of Scale
ANSWER: A
Based on the "Theory of Constraints", the capacity of the supply chain system was governed
by the capacity of it's weakest link, that overproduction in other areas would simply produce
unwanted inventory.
163
Notes:
101, A typical capacity model used for capacity management should have which of the
following principal categories of capacity use (choose 3):
A. productive
B. nonproductive
C. idle
D. max
E. half
F. min
ANSWER: A B C
A typical capacity model used for capacity management has the following principal categories
of capacity use:
l productive
164
Notes:
l nonproductive
l idle
165
Notes:
102, Which of the following formulas is correct?
ANSWER: D
Rated capacity = productive capacity (used for producing goods as well as in process and
product improvement efforts) + nonproductive capacity (uses of capacity which do not
produce goods, such as set-ups, maintenance, waste, and standby) + idle capacity (capacity
that is not marketable or not in demand).
166
Notes:
103, When drawing up tenders for the purchase of major equipment, which of the
following information should be obtained (choose all that apply):
A. Installation costs
B. Training costs
C. Annual Operating costs
D. Maintenance costs
E. Disposal costs
F. None of the choices.
ANSWER: A B C D E
When drawing up tenders for the purchase of major equipment, it is recommended that the
following information be obtained as well as the capital cost:
l Installation costs: There may well be costs associated with building alterations special
utility requirements i.e. water, electrical supply;
l Training costs: usually training is provided by the successful supplier as part of their
overall package, however, there may well be instances when more specific training is
required and can only be provided by the supplier over an extended period at an
external location. Suppliers should be asked to provide a breakdown of any associated
costs;
167
Notes:
l Annual Operating costs i.e. running/consumable costs: An assessment of the
anticipated annual workload through the equipment should be established and
tenderers should be asked to provide a breakdown of associated costs;
l Maintenance costs over the proposed life of the equipment: These days because of
technical advancement the figure usually used is between 3-5 years. This should
include all service/replacement parts, which are required on an annual basis together
with call-out charges for non-scheduled visits;
l Disposal costs.
168
Notes:
104, Partnering is a technique for:
A. preventing disputes.
B. lowering procurement cost.
C. sharing development cost.
D. sharing market information.
E. None of the choices.
ANSWER: A
169
Notes:
105, Which of the following are factors that must be seriously considered regarding material
disposal (choose all that apply):
A. environmental hazards
ANSWER: A B C D E
- environmental hazards
170
Notes:
- potential for creating liability
171
Notes:
106, In terms of supplier management, what does ESI stand for (Fill in the blank please):
___________________
Now the trend is towards using fewer suppliers and maintaining closer relationships /
cooperation with them. Emphasizing WIN WIN relationship with them is the key here.
The terms below are all examples of such concept:
Never focus on price alone. You need good service and reliability as well as the willingness
to co-operate. And this is what Supply Chain management is all about.
172
Notes:
107, In terms of supplier management, what does EPI stand for (Fill in the blank please):
___________________
Now the trend is towards using fewer suppliers and maintaining closer relationships /
cooperation with them. Emphasizing WIN WIN relationship with them is the key here.
The terms below are all examples of such concept:
Never focus on price alone. You need good service and reliability as well as the willingness
to co-operate. And this is what Supply Chain management is all about.
173
Notes:
108, The concept of supply chain often involves:
A. backward integration.
B. forward integration.
C. horizontal integration.
D. no integration.
ANSWER: A
174
Notes:
109, JIT is ______ based.
A. Push
B. Pull
C. Push + Pull
ANSWER: B
Push systems are triggered by interpretation of the expected demand and scheduling of
supply to meet that demand. MRP does have elements of the push system built-in. Pull
systems have replenishment triggered by the usage or depletion of stock. JIT is pull based.
175
Notes:
110, Which of the following is an identification of a particular product that allows it to be
tracked for inventory purposes?
A. MPR
B. MRP
C. SKU
D. SSU
E. SDU
F. SRK
ANSWER: C
176
Notes:
Short for stockkeeping unit, SKU is an identification of a particular product that allows it to
be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with
any purchasable item in a catalog. It may or may not be made visible to a customer, and is
definitely not the same as a product model number from a manufacturer (although the model
number could be used to form all or part of the SKU).
The SKU is established by the merchant or the manufacturer, not by any industry or trade
association.
177
Notes:
111, The SKU is established by:
C. the government
D. ANSI
ANSWER: A
Short for stockkeeping unit, SKU is an identification of a particular product that allows it to
be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with
any purchasable item in a catalog. It may or may not be made visible to a customer, and is
definitely not the same as a product model number from a manufacturer (although the model
number could be used to form all or part of the SKU).
The SKU is established by the merchant or the manufacturer, not by any industry or trade
association.
178
Notes:
112, What does RFP stand for (Fill in the blank please):
_______________
Pay particular attention to Request for Quote (RFQ), Request for Information (RFI) and
Request for Proposal (RFP). If a RFP is used, once the evaluation is completed, the project is
usually awarded to the vendor who presents the best value (not only in terms of price, but
include other considerations too, such as Quality of the product or service provided, On-time
& cost-effective delivery of products, Technology infrastructure of the supplier,
Demographics, Financial solvency, Experience, Environmentally conscious policies …etc).
179
Notes:
113, All of the Incoterms are expressed as:
A. three-letter codes
B. three-alphanumeric codes
C. four-letter codes
D. four-alphanumeric codes
E. None of the choices.
ANSWER: A
Central to the concept of the Incoterms is the understanding that at any given point where
either risk, responsibility, liability or costs terminate from the seller's perspective, so they must
instantly initiate from the buyer's perspective. All of the Incoterms are expressed as three-
letter codes for facilitating the use of EDI.
180
Notes:
114, Under EXW arrangement, who undertakes to take responsibility for the cargo from the
production factory?
A. the seller
B. the buyer
D. no body
ANSWER: B
EXW - the buyer undertakes to take responsibility for the cargo from the seller’s factory.
Once the seller has made the goods available for collection, the seller’s physical obligations
under the contract have been completely met.
181
Notes:
115, Packaging serves the functions of (choose all that apply):
A. containment
B. protection
C. apportionment
D. unitization
E. None of the choices.
ANSWER: A B C D
l containment
l protection
l apportionment
l unitization
l convenience
Notes:
116, Which of the following extends DRP-I by including the planning of key enterprise
resources?
A. DRP-II
B. MRP-II
C. LDR-II
D. CDR-II
E. None of the choices.
ANSWER: A
Distribution Resource Planning (DRP-II) extends DRP-I by including the planning of key
enterprise resources like warehouse spaces, manpower, transport capacity and financials.
Simply put, a DRP-II system can translate demand forecasts for each SKU at each
warehouse/distribution center into a proper time phased replenishment plan.
183
Notes:
117, Which of the following are the valid types of distribution mode in a production
environment where goods of different nature are produced and marketed (choose all that
apply):
A. Intensive distribution
B. Selective distribution
C. Exclusive distribution
D. Evaluative distribution
E. None of the choices.
ANSWER: A B C
Through effective logistical measures one may achieve market coverage objectives to the
fullest extent by implementing proper distribution tactics. Types of distributions can include:
l Intensive distribution
l Selective distribution
l Exclusive distribution
184
Notes:
118, Which of the following supply chain modeling approaches provides normative models
for strategic decisions by focusing on the design aspect of the supply chain?
A. Network Design
B. Rough Cut
C. Simulation based
D. Risk based
E. None of the choices.
ANSWER: A
There are three major kinds of supply chain modeling approaches. They are Network Design
methods, Rough Cut methods, and simulation based methods. Network design methods
provide normative models for strategic decisions by focusing on the design aspect of the
supply chain. Rough cut methods which emphasize the development of inventory control
policies can provide guiding policies for the various operational decisions. Simulation
methods allow a comprehensive supply chain model to be analyzed with both strategic and
operational elements considered.
185
Notes:
119, Which of the following supply chain modeling approaches primarily emphasizes the
development of inventory control policies?
A. Network Design
B. Rough Cut
C. Simulation based
D. Risk based
E. None of the choices.
ANSWER: B
There are three major kinds of supply chain modeling approaches. They are Network Design
methods, Rough Cut methods, and simulation based methods. Network design methods
provide normative models for strategic decisions by focusing on the design aspect of the
supply chain. Rough cut methods which emphasize the development of inventory control
policies can provide guiding policies for the various operational decisions. Simulation
methods allow a comprehensive supply chain model to be analyzed with both strategic and
operational elements considered.
186
Notes:
120, Decisions involved in SCM can generally be classified as:
ANSWER: D
Decisions involved in SCM can generally be classified as either strategic or operational, and
may be further grouped into four major areas, including location decisions, production
decisions, inventory decisions, and transportation decisions.
187
Notes:
121, Decisions involved in SCM can generally be grouped into which 4 major areas (choose
4):
A. location decisions
B. production decisions
C. inventory decisions
D. transportation decisions
E. human decisions
F. training decisions
ANSWER: A B C D
Decisions involved in SCM can generally be classified as either strategic or operational, and
may be further grouped into four major areas, including location decisions, production
decisions, inventory decisions, and transportation decisions.
188
Notes:
122, Which of the following correctly describes simulation methods for analyzing supply
chain?
ANSWER: D
There are three major kinds of supply chain modeling approaches. They are Network Design
methods, Rough Cut methods, and simulation based methods. Network design methods
provide normative models for strategic decisions by focusing on the design aspect of the
supply chain. Rough cut methods which emphasize the development of inventory control
policies can provide guiding policies for the various operational decisions. Simulation
methods allow a comprehensive supply chain model to be analyzed with both strategic and
operational elements considered.
189
Notes:
123, Which of the following disciplines aims at reducing dependency and promoting synergy
among supply chain partners?
A. SCRM
B. SCCM
C. SCEM
D. SCTM
E. None of the choices.
ANSWER: A
Supply Chain Risk Management (SCRM) aims at reducing dependency and promoting
synergy among supply chain partners. It takes a pro-active approach to ensure effective
management of all potential risks throughout the supply chain, with greater focus placed on
the various unpredictable factors along the chain.
190
Notes:
124, Which of the following best describes SCRM?
A. It has to be proactive
B. It has to be reactive
C. It must be quarterly budgeted
D. It must be reviewed at the company policy level
E. None of the choices.
ANSWER: A
Supply Chain Risk Management (SCRM) aims at reducing dependency and promoting
synergy among supply chain partners. It takes a pro-active approach to ensure effective
management of all potential risks throughout the supply chain, with greater focus placed on
the various unpredictable factors along the chain.
191
Notes:
125, Talking about GSCM, the valid types of GREEN are (choose all that apply):
A. stock green
B. scientific green
C. government green
D. customer green
E. None of the choices.
ANSWER: B C D
The concept of Green Supply Chain Management (GSCM) covers every stage in
manufacturing, from product design to recycle, or from cradle to grave. The three types of
GREEN are scientific green, government green, and customer green.
192
Notes:
Additional Practice Review Questions
Operations Management for Competitive Advantage (11 ed) by Chase, Jacobs and Aquilano
(2006)
Supply Chain Management: Strategy, Planning & Operation (3 rd) by Chopra and Meindl
(2007)
193
Notes:
Additional Review Questions Module 1:
Question 1:
Possible Choices:
fixed in the short run
194
Notes:
Answer: fixed in the short run
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 89
195
Notes:
Question 2:
Rail companies are technically:
Possible Choices:
monopolistics
not monopolistics
highly competitive.
196
Notes:
Answer: monopolistics
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 89
197
Notes:
Question 3:
Road haulage offers MOST flexibility to shippers.
Possible Choices:
True
False
198
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 91
199
Notes:
Question 4:
Pipelines are ALWAYS the MOST efficient mode of transport for certain
commodities.
Possible Choices:
True
False
200
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 93
201
Notes:
Question 5:
Air freight can SOMETIMES be way more cost effective than other shipment
modes.
Possible Choices:
True
False
202
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 93
203
Notes:
Question 6:
Commercial water transport would occur only in inland waterways.
Possible Choices:
True
False
204
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 94
205
Notes:
Question 7:
Deregulation takes place MOSTLY for domestic transport only.
Possible Choices:
True
False
206
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 97
207
Notes:
Question 8:
Which of the following involves placing US customs in major seaports
worldwide?
Possible Choices:
CSI
AIS
ISPS
208
Notes:
Answer: CSI
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 102
209
Notes:
Question 9:
MOST warehouses serve as points of gathering.
Possible Choices:
True
False
210
Notes:
Answer: False
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 134
211
Notes:
Question 10:
Centralizing warehouses can cut inventory holding costs in general.
Possible Choices:
True
False
212
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 135
213
Notes:
Question 11:
Which of the following are the valid kinds of facility location techniques
(choose all that apply):
Possible Choices:
optimization
simulation
heuristics
214
Notes:
Answer: optimization, simulation, heuristics
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 137
215
Notes:
Question 12:
Private warehousing has the risk of sub-optimization.
Possible Choices:
True
False
216
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 139
217
Notes:
Question 13:
The basic kinds of packages are (choose all that apply):
Possible Choices:
consumer package
industrial package
liquid package
solid package
218
Notes:
Answer: consumer package, industrial package
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 156
219
Notes:
Question 14:
The main kinds of bar code scanners are (choose all that apply):
Possible Choices:
automatic
handheld
laser
radio
220
Notes:
Answer: automatic, handheld
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 160
221
Notes:
Question 15:
Inbound logistics is often being referred to as:
Possible Choices:
materials management
source management
procurement management
222
Notes:
Answer: materials management
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 185
223
Notes:
Question 16:
Inventory concerns are virtually the SAME for raw materials and for finished
goods.
Possible Choices:
True
False
224
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 187
225
Notes:
Question 17:
Concerning shipping, cost of service pricing:
Possible Choices:
is usually difficult to implement
is highly regulated
226
Notes:
Answer: is usually difficult to implement
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 114
227
Notes:
Question 18:
DRP begins with:
Possible Choices:
supplier demand
customer demand
warehouse demand
228
Notes:
Answer: customer demand
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 77
229
Notes:
Question 19:
DRP is a _________ approach to demand satisfaction.
Possible Choices:
push
pull
230
Notes:
Answer: push
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 77
231
Notes:
Question 20:
Inventory that no one wants is:
Possible Choices:
speculative stock
seasonal stock
stop stock
halt stock
dead stock
232
Notes:
Answer: dead stock
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 65
233
Notes:
Question 21:
Which of the following is NOT an example of inventory holding costs?
Possible Choices:
theft
insurance
handling
taxes
234
Notes:
Answer: None of the choices.
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 65
235
Notes:
Question 22:
With new technologies, demand can be made known with close to absolute
certainty.
Possible Choices:
True
False
236
Notes:
Answer: False
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 64
237
Notes:
Question 23:
Logistics outsourcing is ONLY common in manufacturing businesses.
Possible Choices:
True
False
238
Notes:
Answer: False
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 219
239
Notes:
Question 24:
Foreign trade zones can ease impact of:
Possible Choices:
market fluctuations
demand uncertainty
customs regulations
240
Notes:
Answer: customs regulations
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 214
241
Notes:
Question 25:
Which of the following correctly describe Center Led Procurement?
Possible Choices:
it covers different purchasing models
it is a US only model
it is a EU only model
it emphasizes decentralization.
242
Notes:
Answer: it covers different purchasing models
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 198
243
Notes:
Question 26:
Multidimensional barcode:
Possible Choices:
is replaced by RFID.
244
Notes:
Question 27:
Which of the following is a standard EDI language?
Possible Choices:
EDIFACT
EDICODE
EDIXML
245
Notes:
Answer: EDIFACT
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 178
246
Notes:
Question 28:
The biggest constraint affecting EDI use is:
Possible Choices:
lack of standard
lack of security
lack of support
247
Notes:
Answer: lack of standard
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 175
248
Notes:
Question 29:
Centralization of warehouse may not work for country specific products.
Possible Choices:
True
False
249
Notes:
Answer: True
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 136
250
Notes:
Question 30:
In terms of transportation pricing, value-of-service aims at setting:
Possible Choices:
upper limit
minimum charges
fair pricing
average pricing
251
Notes:
Answer: upper limit
Reference page number: GOURDIN’S “GLOBAL LOGISTICS
MANAGEMENT (2 ED)”, 2006 - 115
252
Notes:
Additional Review Questions Module 2:
Question 1:
Possible Choices:
capacity
inventory
backlog
lost sales
253
Notes:
Answer: capacity, inventory, backlog, lost sales
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 221
254
Notes:
Question 2:
When conducting aggregate planning, a chase strategy would mean:
Possible Choices:
using utilization as the lever
255
Notes:
Answer: using capacity as the lever
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 221
256
Notes:
Question 3:
When conducting aggregate planning, a capacity strategy would mean:
Possible Choices:
using utilization as the lever
257
Notes:
Answer: using utilization as the lever
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 222
258
Notes:
Question 4:
When conducting aggregate planning, a level strategy would mean:
Possible Choices:
using utilization as the lever
259
Notes:
Answer: using inventory as the lever
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 222
260
Notes:
Question 5:
Which of the following are the valid goals of aggregate planning (choose all that
apply):
Possible Choices:
maximizing profits
meeting demand
261
Notes:
Answer: maximizing profits, meeting demand
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 222
262
Notes:
Question 6:
Aggregate planning is particularly important when (choose all that apply):
Possible Choices:
capacity is limited
263
Notes:
Answer: capacity is limited, lead times are long
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 234
264
Notes:
Question 7:
You may conclude that demand forecasts form the basis of all supply chain
planning.
Possible Choices:
True
False
265
Notes:
Answer: True
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 187
266
Notes:
Question 8:
Long term forecasts are usually less accurate than short term forecasts.
Possible Choices:
True
False
267
Notes:
Answer: True
Reference page number: Chopra & Meindl’s “Supply Chain Management:
Strategy, Planning & Operation (3 rd)”, 2007 - 188
268
Notes:
Question 9:
Aggregate forecasts are usually less accurate than disaggregate forecasts.
Possible Choices:
True
False
269
Notes:
Answer: False
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 188
270
Notes:
Question 10:
Qualitative forecasts are usually less subjective than quantitative forecasts.
Possible Choices:
True
False
271
Notes:
Answer: False
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 190
272
Notes:
Question 11:
Causal forecast assumes the existence of:
Possible Choices:
correlations.
product maturity.
supply leak
273
Notes:
Answer: correlations.
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 190
274
Notes:
Question 12:
Qualitative forecast would be appropriate when:
Possible Choices:
you have sufficient historical data
275
Notes:
Answer: you do not have much historical data
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 190
276
Notes:
Question 13:
Demand forecasting focuses on predicting:
Possible Choices:
the systematic component of demand
277
Notes:
Answer: the systematic component of demand
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 193
278
Notes:
Question 14:
Deseasonalized demand represents:
Possible Choices:
demand with seasonal fluctuations
biased demand.
279
Notes:
Answer: demand without seasonal fluctuations
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 195
280
Notes:
Question 15:
Adaptive forecasting would require:
Possible Choices:
computer modeling
seasonalized demand
281
Notes:
Answer: updates after each observation
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 198
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Notes:
Question 16:
The Holt’s model assumes:
Possible Choices:
seasonality
no seasonality
no trend
pure randomness
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Notes:
Answer: no seasonality
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 200
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Notes:
Question 17:
Forecast errors could increase when product life cycles are:
Possible Choices:
known
short
long
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Notes:
Answer: short
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 212
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Notes:
Question 18:
Demand pooling may mitigate forecast risk.
Possible Choices:
True
False
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Notes:
Answer: True
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 212
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Notes:
Question 19:
Time series methods are either:
Possible Choices:
static or adaptive
static or dynamic
static or random
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Notes:
Answer: static or adaptive
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 213
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Notes:
Question 20:
The Winter’s model for forecasting is:
Possible Choices:
largely obsolete
seasonality corrected
pure random
never reliable
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Notes:
Answer: seasonality corrected
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 208
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Notes:
Question 21:
Supply chain network design should cover (choose all that apply):
Possible Choices:
facility role
facility location
capacity location
293
Notes:
Answer: facility role, facility location, capacity location, market and supply
allocation
294
Notes:
Question 22:
Market and supply allocation may affect (choose all that apply):
Possible Choices:
production
inventory
transportation
customer demand
295
Notes:
Answer: production, inventory, transportation
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 115
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Notes:
Question 23:
Supply chain network design should consider which of the following
macroeconomic factors (choose all that apply):
Possible Choices:
company culture
tax
tariff
exchange rate
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Notes:
Answer: tax, tariff, exchange rate
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 117
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Notes:
Question 24:
Exchange rate risks may be best handled through:
Possible Choices:
varying demand
varying capacity
299
Notes:
Answer: using financial instruments
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 118
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Notes:
Question 25:
Which of the following would lead to competitors locating close to each other?
Possible Choices:
negative externalities
positive externalities
negative internalities
positive internalities
301
Notes:
Answer: positive externalities
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 119
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Notes:
Question 26:
Inventory costs would increase when the number of facilities increases.
Possible Choices:
True
False
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Notes:
Answer: True
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 121
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Notes:
Question 27:
Quality of life could be an important issue related to productivity in a facility
location.
Possible Choices:
True
False
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Notes:
Answer: True
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 142
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Notes:
Question 28:
Tax incentive should NOT be a major factor to consider when choosing facility
location.
Possible Choices:
True
False
307
Notes:
Answer: False
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 142
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Notes:
Question 29:
Gravity location models emphasize:
Possible Choices:
control cost minimization
309
Notes:
Answer: transport cost minimization
Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN
MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”,
2007 - 143
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Notes:
Question 30:
Relevant infrastructure elements to consider when locating a facility may
include (choose all that apply):
Possible Choices:
rail service
congestion
utilities
road access
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Notes:
Additional Review Questions Module 3:
Question 1:
Possible Choices:
procurement
inventory control
receiving
warehousing
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Notes:
Answer: procurement, inventory control, receiving, warehousing
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 174
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Notes:
Question 2:
With JIT delivery you may greatly reduce the need for:
Possible Choices:
scheduling
master scheduling
BOM development
inbound warehousing
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Notes:
Answer: inbound warehousing
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 176
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Notes:
Question 3:
Which of the following is a primary duty of the material disposal function?
Possible Choices:
disposal classification
inbound logistics
master scheduling
disposal forecasting
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Notes:
Answer: disposal classification
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 179
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Notes:
Question 4:
5-S is a concept for:
Possible Choices:
TQM
JIT
Lean
SCM
318
Notes:
Answer: TQM
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 181
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Notes:
Question 5:
Service levels of the materials management function may be measured by
(choose all that apply):
Possible Choices:
order cycle time
production delay
stock out
320
Notes:
Answer: order cycle time, order fill rate, production delay, stock out
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 183
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Notes:
Question 6:
A high level of inventory with a uniform production schedule would be better
than a fluctuating schedule with less inventory.
Possible Choices:
True
False
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Notes:
Answer: True
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 187
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Notes:
Question 7:
Uneven demand may be coped with through:
Possible Choices:
leveling the production schedule
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Notes:
Answer: leveling the production schedule
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 187
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Notes:
Question 8:
Which of the following is a drawback of MRP I in terms of material cost?
Possible Choices:
it cannot really optimize material acquisition cost
326
Notes:
Answer: it cannot really optimize material acquisition cost
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 189
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Notes:
Question 9:
Which of the following is a drawback of MRP I in terms of transportation cost?
Possible Choices:
it cannot really optimize material transportation cost
328
Notes:
Answer: it cannot really optimize material transportation cost
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 189
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Notes:
Question 10:
MRP II would allow for:
Possible Choices:
lower inventory turnover
330
Notes:
Answer: higher inventory turnover
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 190
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Notes:
Question 11:
MRP II can reduce the need of expediting shipments.
Possible Choices:
True
False
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Notes:
Answer: True
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 191
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Notes:
Question 12:
Gravity flow storage racks are often used for storing:
Possible Choices:
high demand items
small parts
large parts
334
Notes:
Answer: high demand items
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 263
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Notes:
Question 13:
Modular storage drawers are often used for storing:
Possible Choices:
high demand items
small parts
large parts
336
Notes:
Answer: small parts
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 263
337
Notes:
Question 14:
Using AS/RS can have which of the following benefits (choose all that apply):
Possible Choices:
reduced labor cost
338
Notes:
Answer: reduced labor cost, reduced floor space, increased inventory accuracy
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 269
339
Notes:
Question 15:
A carousel is a form of:
Possible Choices:
AS/RS
RFID
Bluetooth
ERP
DRP-II
340
Notes:
Answer: AS/RS
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 272
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Notes:
Question 16:
AGVSs are typically driverless.
Possible Choices:
True
False
342
Notes:
Answer: True
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 274
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Notes:
Question 17:
Reverse logistics is sometimes being referred to as:
Possible Choices:
red logistics
green logistics
blue logistics
344
Notes:
Answer: green logistics
Reference page number: “FUNDAMENTALS OF LOGISTICS
MANAGEMENT”, 2006 - 283
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Notes:
End of Module
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Notes: