Supply Chain Management
Exam Answer Key
Course Introduction
Supply Chain Management explores the end-to-end flow of goods, information, and finances across the stages of producing and delivering products or services. This course covers the strategic and operational aspects involved in sourcing raw materials, managing suppliers, manufacturing, inventory control, logistics, and distribution to customers. Students will learn how effective supply chain coordination can improve organizational efficiency, reduce costs, enhance customer satisfaction, and create competitive advantage. The curriculum incorporates case studies, current industry practices, integration of emerging technologies, and sustainability considerations to prepare students for the complexities of global supply chains.
Recommended Textbook
Supply Management 8th Edition by David
N. Burt
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Page 2
Chapter 1: The Progression to Professional Supply Management
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Sample Questions
Q1) The term extended enterprise is an extension of supply networks, we now have:
A)true value creation
B)real value maintenance
C)innovative and virtual integration
D)a network of firms collaborating in partnership
E)adaptive networks
Answer: D
Q2) Supply management is also known as procurement at many firms and government agencies.
A)True
B)False
Answer: True
Q3) Which of the following is not a strategic supply management activity?
A) Environment Monitoring
B) Supply Chain / Supply Networks
C) Operations Research
D) Social Responsibilities
E) Understand Key Supply Industries
Answer: C
Page 3
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Chapter 2: Organizational Issues
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Sample Questions
Q1) Of the purchasing/supply responsibilities and activities, ______ becomes more important as the function becomes responsible for supply and value network chains:
A) buying supply management
B)executive management
C)strategic planning and research work
D)contract and relationship management
E)Supplier liaison work
Answer: C
Q2) Managing contract and blanket order releases are operational responsibilities.
A)True
B)False
Answer: True
Q3) The smaller the organization,the less likely the purchasing operations will be strategic.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Supply Management: an Organization Spanning Activity
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Sample Questions
Q1) As a philosophy,SM is internally focused.
A)True
B)False Answer: False
Q2) The best way to insure interface with key business functions is:
A) Policy Statements
B) Directives from upper management
C) Cross functional teams
D) Use of meetings
E) Monthly conferences
Answer: C
Q3) Efforts to improve do not cease at an organization's internal functions,but should span over the supply chain as well.
A)True
B)False
Answer: True
Q4) Many advances in supply management originated in the federal government. A)True
B)False Answer: True
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Chapter 4: A Portfolio of Relationships
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Sample Questions
Q1) A captive supplier makes investments in order to secure a portion of the buyer's business,with no assurance of sufficient business to recoup the investment.
A)True
B)False
Q2) Which of the following is not an e-Commerce trap presented in the textbook?
A) Gilding the pig
B) The Magic pill
C) Shooting the moon
D) Supplier equality
Q3) Which of the following is not one of the outcomes that collaborative relationships tend to foster?
A) Longer term contracts
B) Reduction of risk for suppliers
C) Reducing total costs
D) A focus on price
E) Improvement of processes
Q4) Power is a topic that makes people uncomfortable.
A)True
B)False
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Chapter 5: New Product Development
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Sample Questions
Q1) Which of the following questions does not typically belong on a value-engineering checklist?
A) Can more parts be used to achieve the same quality?
B) Can you make the item less expensively in your plant?
C) Is the item properly classified for shipping purposes to obtain lowest transportation rates?
D) Can cost of packaging be reduced?
E) Are suppliers contributing suggestions to reduce cost?
Q2) Supply managers need only be assigned to a design team in order to become a viable and lasting member of the team.
A)True
B)False
Q3) Value engineering is a systematic study of every element of cost in a material,item of equipment,service or construction project that is conducted by design engineering only.
A)True B)False
Q4) Value engineering is focused on the design stage. A)True B)False
Page 7
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Chapter 6: Purchasing Descriptions and Specifications
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Sample Questions
Q1) In buying market graded commodities why is inspection important?
Q2) What are the purposes of specifications?
Q3) How does Dell use standardization to build competitive advantage?
Q4) In the Unreasonable Tolerances Example, what are some of the ways the problem could have been prevented five years earlier?
Q5) WCSM requires supply management professionals and suppliers to be actively involved in the tactical and strategic development of specifications and standards to proactively reduce total costs of products and services.
A)True
B)False
Q6) In the Unreasonable Tolerances Example, do you agree with the senior design engineer's definition of quality?
Q7) Simplification means reducing the number of non-standard items a firm uses in its product design and carries in its inventory. A)True
B)False
Q8) What are the situations that require the development of qualified products?
Page 8
Q9) What is the difference between industrial and managerial standardization?
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Chapter 7: Managing for Quality
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Sample Questions
Q1) A SM firm views its quality system and the supplier's quality system as two parts of a single integrated system.
A)True
B)False
Q2) Which of the following is not a Six Sigma theme?
A) Genuine Focus on the Customer
B) Proactive Management
C) Involvement of People
D) Boundaryless Collaboration
E) Drive for Perfection
Q3) Product testing objectives should be implemented after a supplier has been selected,not before selection.
A)True
B)False
Q4) Which of the following is not a basic problem with inspection?
A) Duplication of inspection activity often occurs
B) Inspection does not help to identify sources of problems
C) Often results in a very large number of items being inspected
D) Defective items are found only after they are finished
E) Responsibility for quality is divided between inspector and supplier
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Chapter 8: The Procurement of Equipment
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Sample Questions
Q1) The sourcing team for capital equipment must determine the supplier's:
A) Reputation, time in business, location
B) Technical production and commercial capabilities'
C) Engineering staff and installation procedure, skill
D) Delivery lead time and history of on time completion
E) All of the above
Q2) Which of the following is not true about operating leases and the firms that use them?
A) Used by most firms to facilitate business operations
B) Many operating leases are non-cancelable
C) Firm is usually not interested in ownership
D) Most operating leases are short term
E) Most often used when firm wants freedom/flexibility
Q3) Financial leases are usually short term.
A)True
B)False
Q4) Among the reasons that firms utilize leases are: they would like to purchase the equipment at a later time and the firm wants freedom and flexibility.
A)True
B)False
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Chapter 9: Purchasing Services
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Sample Questions
Q1) In planning the statement of work,all of the following should be considered: performance measurements,deliverables,delivery schedule,performance schedule and service levels.
A)True
B)False
Q2) The ideal services supplier focus on cost reduction ahead of customer satisfaction.
A)True
B)False
Q3) Which is usually not included in planning the statement of work?
A) Work approvals
B) Process flows in the supplier's facility
C) Use of subcontractors
D) Authorized personnel
E) Exhibits, schedules, and attachments
Q4) The procurement of services is one of supply management's most interesting and challenging assignments.
A)True
B)False
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Chapter 10: Outsourcing
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Sample Questions
Q1) Which of the following is not a strategic issue in making the outsourcing decision?
A) The Issue of Short-term Vulnerabilities
B) Core Competencies
C) Supplier Dominance
D) The Creation of Strategic Vulnerabilities
E) The Dangers of Vertical Integration
Q2) Which of the following activities or steps was not included in the typical framework for outsourcing provided in the textbook?
A) Development of a strategic roadmap
B) Development of a decision flowchart
C) Development of a tactical roadmap
D) Development of a transition back plan
E) Development of a review system
Q3) Which of the following points is not considered a danger of outsourcing?
A) Loss of cost control
B) Ineffective management
C) Loss of confidentiality
D) Double outsourcing
E) Lack of responsibility
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Page 12
Chapter 11: Sourcing
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Sample Questions
Q1) In the discovery stage of the strategic sourcing plan given in the textbook,several analyses were presented.Which of the following was not one of those analyses?
A) Capacity Capability Analysis
B) Service Capability Analysis
C) Flexibility Capability Analysis
D) Corporate Accountability Analysis
E) Information Technology Capability Analysis
Q2) If a supplier is unlikely to meet future requirements,the buying firm has several alternatives.Which is typically not one of the alternatives?
A) Assist with financing to help the supplier meet future requirements
B) Negotiate a better price with the supplier for the current contract
C) Assist with technological assistance to help the supplier meet future requirements
D) Develop new sources to replace the supplier
E) Develop the capability internally to replace the supplier
Q3) A national source is defined as a firm headquartered outside of the buying firm's country.
A)True
B)False
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13
Chapter 12: Global Supply Management
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Sample Questions
Q1) GSP is the acronym for Greek System of Procurement.
A)True
B)False
Q2) Which of the following is generally not considered a part of the "future" of global supply management?
A) World financial markets will become even more closely linked through 24-hour trading
B) International business will no longer be limited to large multinational corporations
C) Fewer marketplace differences will exist
D) Productivity and quality improvements will slow and even digress worldwide
E) "Westernization" of global consumer markets will continue to occur at a rapid rate
Q3) Statutory rates are partial rates for tariffs.
A)True
B)False
Q4) Foreign governments never impose countertrade requirements.
A)True
B)False
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Chapter 13: Total Cost of Ownership
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Sample Questions
Q1) Total cost of ownership (TCO)is a philosophy for understanding all supply chain related costs of doing business with a particular supplier for a particular good or service.
A)True
B)False
Q2) TCO analysis of the labor base can reap lower per person costs,greater benefits,and improved morale.
A)True
B)False
Q3) TCO analysis of equipment purchases may help reduce the expenditures for maintenance and parts over the lives of the investments.
A)True
B)False
Q4) TCO is not applicable in one's private life to enable better decision-making. A)True
B)False
Q5) TCO analysis should not be used on recurring material costs. A)True B)False
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Chapter 14: Price and Cost Analysis
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Sample Questions
Q1) Independent cost estimates should always be used,even if other easier and less expensive methods are available.
A)True
B)False
Q2) The right price is the one most beneficial to the buyer.
A)True
B)False
Q3) Once understood,cost analysis becomes a cornerstone of other supply management activities,such as negotiation,pricing,forecasting and alliance development.
A)True
B)False
Q4) Which of the following is not a category of discounts?
A) Trade Discounts
B) Quantity Discounts
C) Credit Card Discounts
D) Seasonal Discounts
E) Cash Discounts
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Page 16
Chapter 15: Methods of Compensation
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Sample Questions
Q1) Three general types of contract compensation arrangements were presented in the textbook: fixed price contracts,buyer's favor contracts and supplier's favor contracts.
A)True
B)False
Q2) Which of the following statements is not true about incentive arrangements in contracts?
A) Used to motivate the supplier to control costs
B) Used to encourage good supplier performance
C) Contract price will usually be lower
D) Ceiling price is usually fixed during negotiations
E) Cost responsibility is usually shared
Q3) FPEPA contracts are used to recognize economic contingencies,such as unstable labor or market conditions.
A)True B)False
Q4) The target cost is the cost outcome both buyer and supplier feel is the most likely outcome.
A)True B)False
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Chapter 16: Negotiation
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Sample Questions
Q1) A murder board is a powerful preparation activity for an upcoming negotiation.
A)True
B)False
Q2) Determinates of the seller's bargaining strength include: how badly the seller wants the contract,how certain he or she feels of getting it,and how much time is available to reach agreement on suitable terms.
A)True
B)False
Q3) The primary determinate of the seller's bargaining strength is the size of the selling firm.
A)True
B)False
Q4) "Narrowing the Price" is a stage of face-to-face discussions.
A)True
B)False
Q5) Negotiation should be used when it is impossible to estimate costs with a high degree of certainty.
A)True
B)False
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Chapter 17: Contract Formation and Legal Issues
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Sample Questions
Q1) The law gives a patent holder the exclusive right to manufacture,sell,and use the patented device for a specified number of years.A buying firm who engages in any of these activities during the period of patent protection,without permission from the patent holder,is guilty of patent infringement and can be sued for damages by the patent holder.
A)True
B)False
Q2) Supply managers need to possess and utilize knowledge of legal issues and considerations.Such knowledge must be coupled with the wisdom to communicate and interact with legal professionals and suppliers proactively in efforts to develop and maintain relationships between supply chain members that minimize conflict and maximize opportunities for collaborative success.
A)True
B)False
Q3) The "Bottom Line" in deciding if there is a contract is:
A) The written word
B) Do the parties act as if they have a contract
C) What the UCC says
D) Determined by litigation
E) Settled by arbitration
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Chapter 18: Contact and Relationship Management
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Sample Questions
Q1) Which of the following is not a common approach that buying firm's use to punish a supplier?
A) Bad mouthing the supplier to other buyers
B) Litigation and punitive damages
C) Not awarding future business
D) Downgrading a supplier
E) Billing the supplier for failures
Q2) Supply Management calls for contract and relationship management techniques,tools,and philosophies that enable collaboration,where appropriate.The key objectives are timely delivery,desired quality and performance; while simultaneously empowering supply professionals to foster synergistic opportunities.
A)True
B)False
Q3) A typical cost ratio is calculated by dividing the total dollar purchase from that supplier by the sum of the cost and the total dollar purchase.
A)True
B)False
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20
Chapter 19: Ethics and Social Responsibilities
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Sample Questions
Q1) Supply professionals should know and obey the letter and spirit of laws governing the supply management function,and remain alert to the legal ramifications of supply management decisions.
A)True
B)False
Q2) Supply professionals should engage in reciprocal agreements that restrain competition when the opportunity will yield significant financial gain for the buying firm.
A)True
B)False
Q3) Which of the following is not one of the 12 topics that ethical and professional standards of supply management practice are built upon as advocated by the Institute for Supply Management?
A) Small, Disadvantaged, and Minority Owned Businesses
B) Truth in all Dealings
C) Personal Purchases for Employees
D) Responsibilities to the Profession
E) Global Supply Management
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Chapter 20: Production and Inventory Control
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Sample Questions
Q1) Materials Requirements Planning (MRP)is used to determine quantity and timing of required materials under conditions of:
A) Independent demand
B) JIT operations
C) Changing CRP requirements
D) Dependent demand
E) Stable demand
Q2) The inventory/open order netting concept is used to determine the
A) Planned order releases
B) Time phasing
C) Bill of material
D) MPS
E) "On hand" balances
Q3) The major mistake most users commit when calculating EOQ is:
A) Using inaccurate demand numbers
B) Using "sunk" cost figures
C) Using average costs
D) Using standard engineering costs
E) Using the wrong labor rates
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Page 22
Chapter 21: Demand Management and Logistics
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Sample Questions
Q1) Since supply professionals are responsible for developing and managing the interrelationships between supply chain members,supply management is the critical function responsible for managing the supply chain.
A)True
B)False
Q2) Supply management provides the critical skills required to manage the interrelationships on which successful supply chains are built.
A)True
B)False
Q3) Which of the following is not a frequently overheard comment about demand forecasts,as presented in the textbook?
A) "Forecasts are always inaccurate - why try to improve them?"
B) "Someone must be to blame for an inaccurate forecast!"
C) "If only we had a good computerized forecasting software module."
D) "You must believe the numbers since they are objective!"
E) "Using statistical forecasting tools takes too much time."
Q4) Logistics can be defined as synonymous with the term SCM.
A)True
B)False
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Chapter 22: Implementing Value Network Management
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Sample Questions
Q1) The overall goals for year 1 at Megatronics were to reduce the average price on incoming goods and services by 5 percent and reduce the average incoming defects by 10 percent to 900 ppm.
A)True
B)False
Q2) Which of the following was not a conclusion about transformational training as presented in Chapter 22?
A) During boom times, firms don't have time for training
B) During bad times, firms should be getting ready for the next upside of the cycle
C) During bad times firms often claim that they can't afford training
D) Without training, employees will leave their companies
E) Training should be a vehicle of transformation
Q3) The first leadership principle advocated by ex Chrysler CEO,Tom Stallkamp is to:
A) Coach, don't command
B) Encourage debate
C) Focus on the macro
D) Challenge conventional thinking
E) Be informed
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