Section 3: Supply Chain

Question 1

What is the difference between logistics and supply chain management?

1. Logistics is the internal movement of goods between supply chain elements, and supply chain is the overarching idea and processes to get goods to the customer.
2. Logistics and supply chain are terms that are interchangeable.
3. Logistics has more influence, and supply chain is part of logistics.

Answer 1

Logistics is the internal movement of goods between supply chain elements, and supply chain is the overarching idea and processes to get goods to the customer.

This option correctly defines logistics as the movement of goods within a supply chain and identifies supply chain management as the broader process of coordinating activities from suppliers to customers.

Question 2

A computer company participates in a practice called when it obtains the parts required to build their desktop computers from a variety of suppliers located in Mexico and India.

1. Sole sourcing
2. Insourcing
3. Outsourcing
4. Reverse logistics

Answer 2

Outsourcing

Outsourcing is when a company obtains goods or services from external suppliers. In this context, the company sources parts from various suppliers located in different countries.

Question 3

A locally-owned takeout restaurant makes vegetarian soups using vegetables and herbs that are grown on-site.

This restaurant engages in for its menu items.

1. Insourcing
2. Vertical integration
3. Outsourcing
4. Single sourcing

Answer 3

Insourcing

Insourcing is when a company brings production in-house rather than outsourcing it to external suppliers. In this case, the restaurant grows its own ingredients, which aligns with the definition of insourcing.

Question 4

A national chain of retail outlets owns two of its upstream suppliers, a division that makes wiper blades.

This is an example of ______________.

1. Global outsourcing
2. Backward vertical integration
3. Forward vertical integration
4. Reverse logistics

Answer 4

Backward vertical integration

Backward vertical integration involves a company owning its suppliers or taking control of earlier stages of the production process. In this scenario, the company owns its upstream suppliers.
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Question 5

A shoe company needs upstream and downstream partners that can respond quickly to changing exercise trends and customer styles.

Which strategy would best meet this shoe company’s needs?

1. Insourcing
2. A lean supply chain
3. Outsourcing
4. An agile supply chain

Answer 5

An agile supply chain

An agile supply chain allows the company to adapt quickly to changes in market demands and customer preferences by working with flexible partners.

Question 6

If a company manufactures a product that experiences stable, predictable demand in an industry with little innovation, which type of supply chain would improve efficiency and minimize costs?

1. Agile supply chain
2. Strategic supply chain
3. Lean supply chain
4. Custom-configured supply chain

Answer 6

Lean supply chain

A lean supply chain focuses on efficiency and minimizing costs by eliminating waste and optimizing processes, making it ideal for a product with stable, predictable demand.

Question 7

The American Trucking Association (ATA) forecasted a driver shortage as the current truckers retire and the demand for trucking services increases.

This shortage indicates which type of supply chain bottleneck?

1. Regulatory
2. Physical
3. Labor
4. Financial

Answer 7

Labor

The shortage of truck drivers as current drivers retire and demand increases is a labor bottleneck, as there are not enough qualified drivers to meet the demand.
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Question 8

Which supply-side risk is being addressed by the increasing number of technical school certification programs to support a specific industry demand like artificial intelligence (AI) or cybersecurity?

1. Advances in robotics
2. Insufficient skilled labor
3. Increased demand for gaming software
4. An increasing market for computers

Answer 8

Insufficient skilled labor

The increasing number of technical school certification programs is addressing the supply-side risk of insufficient skilled labor, particularly in fields like AI and cybersecurity.

Question 9

Why do the operations of organizations seek to form important strategic alliances?

1. Because when supplier bases become larger, managing supplier alliances becomes more strategic
2. Because strategic alliances develop one-time solutions to problems
3. Because collaborations or partnerships are needed when operations increase outsourcing, which contributes to the need for supplier development
4. Because successful strategic alliances can improve existing capabilities that are more significant than the opportunity to learn and develop new capabilities

Answer 9

Because collaborations or partnerships are needed when operations increase outsourcing, which contributes to the need for supplier development

As operations increase outsourcing, organizations may seek strategic alliances to manage relationships with suppliers and develop their capabilities.

Question 10

Why are strategic alliances important in operations management?

1. They are important because they allow management of activities along the entire supply chain.
2. They are important because once firmly established, they do not have to be modified.
3. They are important because they allow organizations to focus on their core competencies rather than on trying to manage activities along the entire supply chain.

Answer 10

They are important because they allow organizations to focus on their core competencies rather than on trying to manage activities along the entire supply chain.

Strategic alliances help organizations focus on their core competencies by allowing them to delegate non-core activities to partners along the supply chain.

Question 11

For vendor-managed inventory, what is needed in order to help the supplier plan production and provide the retailer with more goods, as needed?

1. A manager seeing product lines the store needs, enabling them to contact the vendor or supplier for ideas
2. A supplier having access to a retailer’s sales data and inventory levels
3. A customer asking a store manager for a wider variety of products
4. A vendor meeting with a store manager to sell the manager of the vendor’s products

Answer 11

A supplier having access to a retailer’s sales data and inventory levels

In a vendor-managed inventory system, the supplier needs access to the retailer’s sales data and inventory levels to accurately plan production and ensure the retailer has enough goods. This information allows the supplier to manage stock levels more efficiently.

Question 12

A lumberyard typically mills approximately two million board feet of lumber per year, mostly of species native to that region. A recent disease outbreak has led to recommendations for civilians to isolate. This has reduced the availability of the lumber yard’s workers.

Which category of bottleneck does this demonstrate?

1. Labor
2. Decision-making
3. Technology
4. Regulatory

Answer 12

Labor

Labor bottlenecks are related to labor strikes, workforce skills, or worker availability.

Question 13

A company produces outdoor furniture. A finish is applied to metal components and then cured using a heat treatment. Despite a large increase in demand, the company has been unable to ramp up production because there is only one oven that administers the heat treatment, and it is limited to 50 units per hour.

Which type of bottleneck exists in this situation?

1. Labor
2. Regulatory
3. Process
4. Financial

Answer 13

Process

Process bottlenecks are related to the production process itself, such as capacity, flexibility, or activities.

Question 14

A pharmaceutical company produces several medications for mental illnesses. The production of one of the medications is being hindered by a new law prohibiting the transportation of a specific ingredient in amounts greater than 100 liters.

Which category of bottleneck does this demonstrate?

1. Physical
2. Decision-making
3. Process
4. Regulatory

Answer 14

Regulatory

Regulatory bottlenecks are related to laws regarding imports, exports, customs, or emissions.

Question 15

A meat-packing facility has a workforce of approximately 2,000 employees. Failed negotiations with the employee union has resulted in a strike, forcing production to a near halt.

Which type of bottleneck exists in this situation?

1. Regulatory
2. Process
3. Labor
4. Decision-making

Answer 15

Labor

Labor bottlenecks are related to labor strikes, workforce skills, or worker availability.

Question 16

A company uses several chemicals in the production of its foam-based products. Based on company policy, each order from suppliers must be signed by the production manager. Production has been hindered lately because the production manager has been failing to sign the orders when needed.

Which category of bottleneck does this demonstrate?

1. Process
2. Decision-making
3. Labor
4. Technology

Answer 16

Decision-making

Decision-making bottlenecks are caused by procrastination or a misalignment of management authority with management responsibility.

Question 17

A manufacturing facility has used a machine for several years to produce metal chains. The company is aware of the need to replace the machine with one that will operate at twice the speed. However, the current budget does not allow for the purchase of the new machine.

Which category of bottleneck does this demonstrate?

1. Labor
2. Process
3. Regulatory
4. Financial

Answer 17

Financial

Financial bottlenecks are related to budgets or credit availability.

Question 18

A company that sells paper operates at low profit margins. In order to increase profitability, the company prioritizes suppliers that are best able to keep costs down and minimize the amount of stock on hand.

Which strategy does this scenario demonstrate?

1. Lean supply chain
2. Agile supply chain
3. Forward vertical integration
4. Vendor managed inventory

Answer 18

Lean supply chain

A lean supply chain is one that emphasizes high efficiency, the elimination of waste, and minimized costs.

Question 19

A manufacturer of wooden furniture works closely with a lumber supplier. The lumber supplier monitors the level of lumber on hand at the manufacturer’s factory and makes deliveries when needed.

What is the strategy implemented in this scenario?

1. Vendor managed inventory
2. Agile supply chain
3. Backward vertical integration
4. Lean supply chain

Answer 19

Vendor managed inventory

With vendor managed inventory, suppliers coordinate their own production with the replenishment of retailer inventory. The vendor typically monitors and manages the retailer’s inventory.

Question 20

A grocery store sends daily reports of dairy sales to a dairy product distributor. The distributor monitors the stock of items at the grocery store and replenishes the stock as needed.

Which strategy does this scenario demonstrate?

1. Lean supply chain
2. Backward vertical integration
3. Vendor managed inventory
4. Agile supply chain

Answer 20

Vendor managed inventory

With vendor managed inventory, suppliers coordinate their own production with the replenishment of retailer inventory. The vendor typically monitors and manages the retailer’s inventory.

Question 21

A bakery sends daily data to its flour supplier. The supplier uses this data along with periodic inspections to coordinate its production of flour with the replenishment of the bakery’s flour needs.

Which concept is illustrated in this example?

1. Lean supply chain
2. Vendor managed inventory
3. Backward vertical integration
4. Forward vertical integration

Answer 21

Vendor managed inventory

With vendor managed inventory, suppliers coordinate their own production with the replenishment of retailer inventory. The vendor typically monitors and manages the retailer’s inventory.

Question 22

A retailer is reevaluating its selection of suppliers in an effort to make the supply chain more agile.

What is a benefit of this strategy?

1. Minimization of product inventory
2. Greater level of product standardization
3. Elimination of production waste
4. More responsive production process

Answer 22

More responsive production process

The benefits of an agile supply chain are greater flexibility and responsiveness in the production process as well as better met customer expectations.

Question 23

A clothing retailer is merging with a manufacturer of the clothing in order to increase profitability. The leaders responsible for the merger are seeking ways to make the supply chain for the clothing products more agile.

What is a benefit the retailer hopes to attain using this strategy?

1. Greater level of product standardization
2. More predictable patterns of demand
3. Minimization of product inventory
4. Better met customer expectations
5. correct

Answer 23

Better met customer expectations

The benefits of an agile supply chain are greater flexibility and responsiveness in the production process as well as better met customer expectations.