Purchasing and Supply Management
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Course Introduction
Purchasing and Supply Management explores the strategic and operational roles of procurement within organizations, emphasizing the acquisition of goods and services essential for business functions. The course covers key topics such as purchasing processes, supplier selection and evaluation, contract negotiation, quality management, ethical sourcing, risk management, and the impact of globalization on supply chains. Students will develop skills in creating effective sourcing strategies, managing supplier relationships, and understanding the legal aspects of purchasing. By the end of the course, participants will be equipped to contribute to value creation and cost savings through efficient and responsible procurement practices.
Recommended Textbook
Operations and Supply Chain Management 14th Edition by F. Robert Jacobs
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Chapter 1: Introduction
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Q1) Operations and supply chain management is defined as the design, operation, and improvement of the systems that create and deliver the firm's primary products and services.
A)True
B)False
Answer: True
Q2) Value is the ratio of __________________________. Answer: quality to price paid
Explanation: Related to efficiency and effectiveness is the concept of value, which can be metaphorically defined as quality divided by price.
Q3) It is critical that a sustainable strategy meet the needs of shareholders and employees.It is also highly desirable that it preserves the environment.
A)True
B)False
Answer: False
Q4) Automobiles and appliances are classified as "pure goods."
A)True
B)False Answer: False
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Chapter 2: Strategy
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Q1) In a partial measure of productivity, the denominator of the ratio would include all resources used or all inputs.
A)True
B)False
Answer: False
Q2) An activity-system map is which of the following?
A)A network guide to route airlines
B)A listing of activities that make up a project
C)A diagram that shows how a company's strategy is delivered to customers
D)A facility layout schematic noting what is done where
E)A timeline displaying major planned events
Answer: C
Q3) Within a sustainability framework, the environmental dimension of the triple bottom line concept has to do with labor, the community, and the region in which a firm conducts its business.
A)True
B)False
Answer: False
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Chapter 3: Design of Products and Services
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Q1) What is the name for a matrix that helps a product design team translate customer requirements into operating and engineering goals?
Answer: house of quality
Explanation: By building a house of quality matrix, the cross-functional QFD team can use customer feedback to make engineering, marketing, and design decisions.
Q2) Which of the following is primarily used to help design products that will connect product attributes with customer desires?
A)Phase 0: Planning
B)House of quality matrix
C)Value analysis/value engineering
D)Concurrent engineering
E)System-level design
Answer: B
Q3) Core competencies are those things that everyone in the firm must be able to do well.
A)True
B)False
Answer: False
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Chapter 4: Project Management
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Q1) What is a work breakdown structure?
A)A list of the activities making up the higher levels of the project
B)A definition of the hierarchy of project tasks, subtasks, and work packages
C)A depiction of the activities making up a project
D)A Gantt chart
E)A structure that is incompatible with the critical path method
Q2) A series of projects that are organized in such a way that each project utilizes people from different functional areas is using which of the following organizational structures?
A)Matrix project
B)Integrated task force
C)Functional project
D)Pure project
E)Cross-functional flexible team
Q3) Project management can be defined as planning, directing, and controlling resources to meet the technical, cost, and time constraints of the project.
A)True
B)False
Q4) What do the initials EVM stand for?
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Chapter 5: Strategic Capacity Management
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Q1) Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.
A)True
B)False
Q2) Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities is considered as which one of the following planning horizons?
A)Intermediate range
B)Long range
C)Short range
D)Current
E)Upcoming
Q3) Compared with a service operation, a manufacturing operation's capacity is which of the following?
A)More dependent on time and location
B)Subject to more volatile demand fluctuations
C)Utilization more directly impacts quality
D)Demand can be smoothed by inventory policies
E)More capable of reacting to demand fluctuations
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Chapter 6: Learning Curves
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Q1) If a person performing a task has been achieving an 85 percent learning curve and if it took 1 minute to produce the first unit, what will be the total time to produce 1,000 units?
Q2) A company can produce a product the first time at a cost of $2,500.If its 85 percent learning curve allows the company to reduce its costs on each product, what is the total cost of producing 400 units of the new product? _________________
Q3) If a person performing a task has been achieving an 85 percent learning curve and if it took 1 minute to produce the first unit, the total time to produce 1,000 units will be 437.5 minutes.
A)True
B)False
Q4) If a person performing a task has been achieving a 95 percent learning curve and you know that the task will end after the 100<sup>th</sup> unit, the last unit produced will take 71.12 percent as much time as the first unit.
A)True
B)False
Q5) Describe an example of industrial learning where learning curve analysis might be useful.
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Chapter 7: Manufacturing Processes
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Q1) Give an example of a project layout.______________________
Q2) One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.
A)True
B)False
Q3) Describe the implications of the product-process matrix for process design in a competitive situation.
Q4) Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, not variable costs.
A)True
B)False
Q5) The volume requirements for the product are one determinant of the choice of which process structure to select.
A)True
B)False
Q6) An example of an assemble-to-order firm is Dell Computer.
A)True
B)False
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Chapter 8: Facility Layout
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Q1) In designing a production line, a mixed-model line layout is used by JIT manufacturers.
A)True
B)False
Q2) Some of the suggestions for a good layout for manufacturing and back-office operations include which of the following?
A)Backtracking kept to a minimum
B)Plenty of interstage materials storage to avoid starving downstream workstations
C)Workstations separated so operators don't spend time socializing
D)Adequate waiting facilities
E)None of these
Q3) For the purposes of assembly-line balancing, cycle time is found by dividing production time per day by the required units of output per day.
A)True
B)False
Q4) Is office layout more akin to retail service layout or to manufacturing layout? Explain your answer.
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Chapter 9: Service Processes
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Q1) Which one of the following is not a major factor distinguishing service design and development from manufacturing design and development?
A)The process and product must be developed at the same time.
B)Many service organizations can change their service offerings virtually overnight.
C)Many parts of the service package are often defined by the training that individuals receive before they become part of the service organization.
D)The service package, rather than a definable good, is the output of the development process.
E)Service operations can be protected by patents; manufacturing operations cannot.
Q2) A characteristic of a well-designed service system is that it manages the evidence of service quality in such a way that customers are aware of the value of the service provided.
A)True
B)False
Q3) What are the physical resources that must be in place before a service can be offered called?
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Chapter 10: Waiting Line Analysis and Simulation
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Q1) Machine breakdown and repair in a 12-machine factory having three repair mechanics would develop which type of queuing system line structure concerning machine breakdowns?
A)Single channel, single phase
B)Single channel, multiphase
C)Multichannel, single phase
D)Multichannel, multiphase
E)None of these
Q2) Which of the following is an example of a finite population in a queuing system?
A)People waiting to place their order at a fast-food restaurant
B)The departmental faculty in line at the copier
C)People waiting in line at an ATM
D)Patients seeking help in a hospital emergency room
E)Taxpayers calling for assistance from the IRS
Q3) Special-purpose simulation software is specially built to run specific applications and may have provisions in manufacturing models to allow for specifying the number of workcenters, their descriptions, arrival rates, and even batch sizes.
A)True
B)False
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Chapter 11: Process Design and Analysis
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Q1) Process analysis can help answer many important questions such as why change in a process is necessary.
A)True
B)False
Q2) Three fast-food chains are discussed in the text.McDonald's traditional process is make-to-stock; Wendy's has a make-to-order process; Burger King has a process which is a hybrid of the other two.Discuss the advantages and disadvantages of each of these approaches.Why do you suppose that each of these approaches can survive in the fast-food industry?
Q3) Productivity in a production process can be measured by the ratio of output to input.
A)True
B)False
Q4) To reduce process throughput time, you might try which of the following actions?
A)Outsource activities.
B)Change the sequence of activities.
C)Improve teamwork.
D)Reduce management interference.
E)Introduce incentive pay
Q5) The formula (Flow time = Inventory/Throughput rate) is known as _____________.
Page 13
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Chapter 12: Six Sigma Quality
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Q1) What is the difference between the concepts of design quality and conformance quality?
Q2) ISO 14000 is primarily concerned with what?
Q3) A quality guru named Joseph M.Juran defined quality as fitness for use.
A)True
B)False
Q4) The term CTQ stands for "cost through quality," which is another way to express Philip Crosby's idea that "quality is free."
A)True
B)False
Q5) What are expenditures related to achieving product or service quality, including the costs of appraisal and prevention of defects, called?
Q6) An operational goal of total quality management is the careful design of the product or service.
A)True
B)False
Q7) What does the acronym "CTQ" stand for?
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Chapter 13: Statistical Quality Control
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Questions
Q1) You are developing an X-bar chart based on sample means.You know the standard deviation of the sample means is 4, the desired confidence level is 99.7 percent, and the average of the sample means is 24.What is your UCL?
Q2) Measurement by attributes means taking a sample, measuring the attribute in question, and determining the level of quality in the population from which the sample was drawn.
A)True
B)False
Q3) One hundred percent inspection is justified when the cost of inspection is low. A)True
B)False
Q4) Variation that is inherent in a production process itself is called common variation. A)True
B)False
Q5) You want to develop a three-sigma R-chart.You know the average range is 5 based on several samples of size 10.Which of the following is the resulting UCL?
Q6) What does it mean when we say that a process is capable?
Page 15
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Chapter 14: Lean Supply Chains
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Q1) Lean production replaced JIT in the 1990s because JIT did not address the problem of reducing waste.
A)True
B)False
Q2) In the textbook, the expression "quality at the source" means that we need to purchase the best quality a supplier or vendor can provide.
A)True
B)False
Q3) Applying lean concepts to logistics is difficult unless either the manufacturer or the customer owns the logistics activities.
A)True
B)False
Q4) In implementing a lean production system you should work with suppliers to do which of the following?
A)Calculate lead times.
B)Use quality circles.
C)Freeze windows.
D)Make frequent deliveries.
E)Achieve bottom-round management.
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Chapter 15: Logistics Distribution, and Transportation
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Q1) One of the objectives of facility location analysis is to select a site with the lowest total cost.Which of the following costs should be excluded from the analysis?
A)Historical costs
B)Inbound distribution costs
C)Land
D)Construction
E)Regional costs
Q2) What transportation mode has very high initial investment costs but gives a very low cost per mile for products that are highly specialized and require no packaging?
A)Highway
B)Rail
C)Water
D)Pipeline
E)Air
Q3) As a facility location consultant, would you advise a client wanting to locate a retail service facility differently than you would advise a client wanting to locate an on-line stock trading operation? Explain.
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Chapter 16: Global Sourcing and Procurement
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Q1) A firm that controls most of the activities in its supply chain is said to be vertically integrated.
A)True
B)False
Q2) In conducting a total cost of ownership analysis, it is probably best to use a team representing the key functional areas.
A)True
B)False
Q3) In Hau Lee's uncertainty framework to classify supply chains, a supply chain for innovative products with an evolving supply process is called which of the following?
A)Efficient
B)Forward looking
C)Agile
D)Risk hedging
E)Responsive
Q4) The optimal strategy for functional products is to use a responsive supply chain.
A)True
B)False
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Chapter 17: Enterprise Resource Planning Systems
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Q1) What is the cash-to-cash cycle time if AR<sub>d</sub> = 6.5 days, I<sub>d</sub> = 22.2 days, and AP<sub>d</sub> = 4.2 days?
A)32.9 days
B)19.9 days
C)16.45 months
D)24.5 days
Q2) _______________ indicates where cash comes from (its source), where cash is spent (its use), and the net change in cash for the year.
Q3) When moving product, it is optimal to focus on the lowest price quote of each individual distribution stage.
A)True
B)False
Q4) What is the common name for a computer system that integrates application programs in accounting, sales, manufacturing, and other functions in a firm by way of a shared database?
A)Entrepreneurial resource programming (ERP)
B)Enterprise resource planning (ERP)
C)Endeavor reconstruction planning (ERP)
D)Enterprise retention programming (ERP)
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Chapter 18: Forecasting
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Q1) When analyzing time series data, if demand data contains both seasonal and trend effects at the same time, what are the two ways that they can relate to each other discussed in the text?
(1) ___________________________
(2) ___________________________
Q2) A company has a MAD of 10.It wants to have a 99.7 percent control limit on its forecasting system.Its most recent tracking signal value is 3.1.What can the company conclude from this information?
A)The forecasting model is operating acceptably.
B)The forecasting model is out of control and needs to be corrected.
C)The MAD value is incorrect.
D)The upper control value is less than 20.
E)It is using an inappropriate forecasting methodology.
Q3) Because the factors governing demand for products are very complex, all forecasts of demand contain error.
A)True
B)False
Q4) What do we call forecasts needed for how a firm operates on a day-to-day basis?
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Chapter 19: Sales and Operations Planning
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Q1) In a services organization, strategic capacity planning follows process planning.
A)True
B)False
Q2) Matching the production rate to the order rate by hiring and laying off employees as the order rate varies is which of the following pure production planning strategies?
A)Stable workforce, variable work hours
B)Chase
C)Level
D)Meeting demand
E)Minimizing inventory
Q3) The International Aggregate Planning Society (IAPS) has developed aggregate operations planning guidelines that are followed by a majority of manufacturing firms.
A)True
B)False
Q4) Explain how yield management works and why some companies are able to use it to manage demand patterns.
Q5) Describe the aggregate sales and operations planning process.
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Chapter 20: Inventory Management
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Q1) What are the five purposes of inventory?
(1) _______________________________
(2) _______________________________
(3) _______________________________
(4) _______________________________
(5) _______________________________.
Q2) The fixed-order-quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and, therefore, quicker response to a potential stock out.
A)True
B)False
Q3) In a price-break model of lot sizing, to find the lowest-cost order quantity, it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.
A)True
B)False
Q4) Distinguish between dependent and independent demand.How are these demands treated differently?
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Chapter 21: Material Requirements Planning
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Q1) If annual demand is 1,000 units, annual holding cost is $0.50 per unit, and the cost per order is $10, what is the EOQ? ______________________________________
Q2) MRP provides the schedule specifying when each part and component of an end item should be ordered or produced.
A)True
B)False
Q3) The economic order quantity (EOQ) lot-sizing technique produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods.
A)True
B)False
Q4) A master production schedule is an input to a material requirements planning (MRP) system.
A)True
B)False
Q5) An output of MRP is a bill of materials (BOM) file.
A)True B)False
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Chapter 22: Workcenter Scheduling
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Q1) For a low-volume job shop type of manufacturing, which of the following is the typical production scheduling approach?
A)Finite forward scheduling
B)Finite backward scheduling
C)Infinite backward scheduling
D)Infinite forward scheduling
E)Soonest due date
Q2) Which of the following priority rules used in scheduling the sequence of production is calculated as the slack time remaining in the schedule divided by the number of remaining operations, with the smallest value being run first?
A)STR
B)Johnson's
C)STR/OP
D)LCFS
E)FCFS
Q3) The LCFS and Johnson's priority rules are basically the same except LCFS uses due dates as a major determiner of job sequence.
A)True
B)False
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Chapter 23: Theory of Constraints
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Q1) Which of the following is one of Dr.Eli Goldratt's rules of production scheduling for optimized production technology?
A)Utilization and activation of a resource are not the same.
B)Do not allow bottlenecks to govern the flow of the line.
C)An hour lost at a bottleneck saves an hour for the entire system.
D)Balance the capacities, not the flows.
E)The level of utilization of a bottleneck resource is not determined by its own potential but by some other constraint in the system.
Q2) A useful measure of inventory performance is called "dollar days." In which of the following areas are dollar days measurements not useful?
A)Marketing
B)Research and development
C)Manufacturing
D)Project management
E)Purchasing
Q3) Where in a dependent-events sequence should an in-process quality inspection be placed? Why there?
Q4) What is the term that refers to the normal variation about a mean or average?
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Chapter 24: Health Care
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Q1) SBAR is an acronym for the procedure used when recording a patient's medical history.
A)True
B)False
Q2) The flow of work through a hospital is sometimes referred to as:
A)An unending procession of sickness and trauma
B)The care chain
C)Hurry up and wait
D)Pre-cash flow
E)Moving sicker and quicker
Q3) SBAR is an acronym for a checklist technique for communicating information about a patient's condition among members of the health care team.
A)True
B)False
Q4) The acronym CPOE stands for computerized prescription order entry.
A)True
B)False
Q5) Florence Nightingale is credited with the development of the bar chart.
A)True
B)False
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Chapter 25: Operations Consulting
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Q1) Which of the following is not a problem definition tool from the operations consulting tool kit?
A)Customer surveys
B)Computer simulation
C)Gap analysis
D)Issue trees
E)Five forces model
Q2) What is the most common method for improving efficiency in consulting firms?
Q3) SWOT stands for strengths, weaknesses, opportunities, and threats.
A)True
B)False
Q4) Which of the following is not a major strategic or tactical area where companies typically seek operations consulting?
A)Adding new plants
B)Refocusing existing facilities
C)Locating new plants
D)Expanding an existing plant
E)Refurbishing an existing facility
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