Supply Chain Management
Midterm Exam
Course Introduction
Supply Chain Management explores the strategic coordination and integration of business functions that move goods, services, information, and finances from raw material suppliers to end consumers. The course covers core topics such as procurement, production, logistics, inventory management, and distribution, emphasizing the importance of collaboration and information sharing across organizations. Students will analyze real-world supply chain challenges, learn to identify inefficiencies and risks, and examine the impact of globalization, technology, sustainability, and ethical considerations on supply chain operations. Through case studies, simulations, and practical assignments, students will develop the skills necessary to design, manage, and optimize supply chains in diverse industries.
Recommended Textbook
Operations Management Processes and Supply Chains 12th Edition by Lee
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Page 2
J. Krajewski
Chapter 1: Using Operations to Create Value
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Q1) A(n) ________ is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides one or more outputs for its customers.
Answer: process
Q2) Support functions in an organization include Accounting, Human Resources and Engineering.
A)True
B)False
Answer: True
Q3) Competitive priorities are the means by which operations implements the firm's corporate strategies.
A)True
B)False
Answer: False
Q4) Every sub-contractor knew that their quality had to be excellent to be considered for the project; it was their ability to deliver on time that would secure the lucrative contract. Quality was recognized as being an ________, but on-time delivery was the
Answer: order qualifier, order winner
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Chapter 2: Process Strategy and Analysis
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Q1) ________ is represented in a process flow chart when an outgoing arrow from one step splits into two or more arrows that lead to different boxes.
Answer: Divergence
Q2) ________ is the process of creating labor standards based on the judgment of skilled observers.
Answer: Work measurement
Q3) With a dramatic flourish, the team leader tore the employee orientation guidelines into pieces. He then distributed blank pieces of paper to the team and asked them to envision the perfect orientation process without regard to how it has always been done. This team is probably engaging in process reengineering.
A)True
B)False
Answer: True
Q4) Petroleum refineries typically use continuous flow processes.
A)True
B)False
Answer: True
Q5) The first step of the systematic approach to process analysis is ________.
Answer: identify opportunities
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Chapter 3: Quality and Performance
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Q1) One of the principles that total quality management (TQM) stresses is customer satisfaction.
A)True
B)False
Answer: True
Q2) Appraisal costs are associated with preventing defects before they happen.
A)True
B)False
Answer: False
Q3) A manufacturer embarking on a Six Sigma program sets the goal of having True Six Sigma capability for all processes by the end of the month. If their current process capability index on a key metric is less than 2.0 and the process capability ratio is 1.0, what must happen with the process standard deviation?
A) The process standard deviation must be doubled.
B) The process standard deviation must be reduced by a factor of six.
C) The process standard deviation must be cut in half.
D) The process tolerances should be doubled.
Answer: C
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Chapter 4: Capacity Planning
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Q1) Capacity decisions should be linked closely to ________ and ________ throughout the organization.
Q2) Use the information in Scenario 4.7. What is the pre-tax cash flow (net present value) for alternative #1 compared to the base case of doing nothing for the next five years?
A) negative pre-tax cash flow
B) more than $0 but less than $100,000
C) more than $100,000 but less than $200,000
D) more than $200,000
Q3) A process's ________ is the length of time it takes to switch from making one type of product to another.
Q4) Extremely complex service capacity problems for which there are no optimizing equations should be analyzed using ________.
Q5) Define utilization and give a service process example of it.
Q6) Waiting line models are often used for capacity planning.
A)True B)False
Q7) Give four principal reasons economies of scale can occur when output increases. Provide examples of each for a service firm.
Page 6
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Chapter 5: Constraint Management
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Q1) What is the definition of "theoretical maximum efficiency"?
A) It is the amount by which efficiency falls short of 100 percent.
B) It is the efficiency that could be obtained by a solution that achieves the theoretical minimum number of stations.
C) It is the maximum time allowed for work on a unit at each station.
D) It is alternatively called the desired output rate.
Q2) Managers should produce products with the highest contribution margins or unit sales, provided they have market demand for them.
A)True
B)False
Q3) Use the information in Figure 5.1. What is the throughput time for the A-B-D-E process route?
A) 17 minutes
B) 27 minutes
C) 21 minutes
D) 19 minutes
Q4) What are five of the seven key principles of the Theory of Constraints?
Q5) Instead of producing products with the highest profit margins, operations managers should focus on the ________ generated at the ________.
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Chapter 6: Lean Systems
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Q1) In the Toyota Production System, services and goods are pushed to the next available person or machine to maintain smooth, rapid flow.
A)True
B)False
Q2) How can group technology be used in a service setting? Provide an example and describe two advantages of using this principle in a service setting.
Q3) An operator standing idly by his workstation because a previous process with quality issues was delayed is an example of ________.
Q4) Which of the following statements about the Toyota Production System is best?
A) Toyota has built a learning organization over the course of 50 years.
B) The key to success for Toyota is the set of tools and procedures readily apparent on a plant tour.
C) The four principles that form the basis to TPS are impossible to replicate.
D) Toyota has 23 manufacturing plants in North America alone.
Q5) ________ refers to the goal of having a setup time of fewer than 10 minutes.
Q6) What are the four underlying principles of the Toyota Production System?
Q7) In a ________ system based on other Kanban signals, an empty space signals a need to fill it.
Page 8
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Chapter 7: Project Management
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Q1) Using Table 7.14, what is the critical path and expected completion time for this project?
A) D-E; 29.5 weeks
B) A-B-C; 25 weeks
C) D-E; 27.5 weeks
D) A-B-C; 26.5 weeks
Q2) Using Table 7.14, if the expected time for activity C is changed to 12 weeks, by how many weeks will the project's expected completion time increase?
A) It will not change.
B) It will increase by one week.
C) It will increase by two weeks.
D) It will increase by three weeks.
Q3) Activity slack is defined as:
A) latest start time minus earliest start time.
B) earliest start time minus latest start time.
C) earliest finish time minus latest finish time.
D) latest finish time minus earliest start time.
Q4) The phase of project management that takes the most resources is the ________, during which managers focus on activities that pertain to deliverables.
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Chapter 8: Forecasting
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Q1) Use the information from Table 8.8. The pizza shop manager is looking for a forecasting approach that will forecast her demand within 0.5 pizzas. If the actual demand for week #7 was 39 pizzas, which of the combination forecasts came closest to predicting this demand?
A) simple moving average and weighted moving average forecast
B) simple moving average and exponentially smoothed forecast
C) weighted moving average and exponentially smoothed forecast
D) week #7 demand of 39 is within 0.5 pizzas for all three of these combination forecasts, and thus all of them are appropriate
Q2) A linear regression model is developed that has a slope of -2.5 and an intercept of 10. The sample coefficient of determination is 0.50. Which of the following statements is True?
A) The sample correlation coefficient must be 0.250.
B) The sample correlation coefficient must be -0.707.
C) The sample correlation coefficient must be -0.250.
D) The sample correlation coefficient must be 1.00.
Q3) Traditional data processing applications are capable of handling big data.
A)True
B)False
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Chapter 9: Inventory Management
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Q1) Use the information in Scenario 9.12. What is the standard deviation of demand during lead time?
A) greater than 0 but less than or equal to 500 units
B) greater than 500 units but less than or equal to 1,500 units
C) greater than 1,500 units but less than or equal to 2,500 units
D) greater than 2,500 units
Q2) Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day. A)True B)False
Q3) Setup cost is independent of order size. A)True B)False
Q4) The ________ is the average elapsed time between receiving replenishment orders of Q units for a particular lot size.
Q5) The term ________ is used to refer to the quantity of inventory management either buys from a supplier or manufactures using internal processes.
Q6) What is ABC analysis and how does it work?
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Chapter 10: Operations Planning and Scheduling
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Q1) Pick any manufacturing organization and describe some supply options at their disposal.
Q2) Using the information in Table 10.7 and the first-come, first-served (FCFS) rule, what is the average days past due?
A) fewer than or equal to 6 days
B) greater than 6 days but fewer than or equal to 10 days
C) greater than 10 days but fewer than or equal to 14 days
D) greater than 14 days
Q3) A company is attempting to cope with seasonal demand patterns by managing its demand. Which one of the following will not help achieve this aim?
A) complementary products or services
B) adjusting workforce levels
C) promotional campaigns
D) creative pricing
Q4) ________ is the situation that occurs when employees work longer than the regular workday or workweek.
Q5) A(n) ________ strategy involves hiring and laying off employees to match the demand forecast over the planning horizon.
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Chapter 11: Resource Planning
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Q1) A(n) ________ is a record that divides the future into time periods called time buckets.
Q2) What information can be gleaned from a bill of materials? If you were asked to produce an item based solely on a copy of its BOM, what missing information would you need?
Q3) A front-office module for an ERP system includes:
A) manufacturing.
B) accounting and finance.
C) sales and marketing.
D) human resources.
Q4) Which of the following statements concerning MRP is True?
A) Dependent-demand items tend to experience relatively constant demand rates.
B) MRP systems use independent demands for each component item.
C) Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned order releases to estimate capacity requirements for critical workstations.
D) The most accurate way to forecast dependent demand is to examine past usage rates.
Q5) ________ is an estimate of the amount of inventory available each week after gross requirements have been satisfied.
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Chapter 12: Supply Chain Design
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Q1) The objective of a firm in a responsive supply chain is likely to be realized if it has a:
A) standardized product.
B) short lead time.
C) low-capacity cushion.
D) line-flow process.
Q2) Padco averages $15 million worth of inventory in all of its worldwide locations. They operate 51 weeks a year and each week average $3 million in sales (at cost). Their inventory turnover is:
A) 1.13 turns.
B) 5 turns.
C) 10.2 turns.
D) 17 turns.
Q3) When a customer orders an item that is a completely new and different product, the company's supply chain must be able to deliver an item that is ________-to-order.
Q4) ________ is the process of using members of the distribution channel as if they were assembly stations in the factory.
Q5) Compare and contrast efficient versus responsive supply chains.
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Chapter 13: Supply Chain Logistic Networks
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Q1) Using the data in Table 13.2, identify an optimal location for the new facility.
Q2) Quality of life issues include:
A) proximity to markets.
B) prevailing wage rates.
C) local and state taxes.
D) recreational facilities.
Q3) The center of gravity technique does not take into consideration the:
A) total volume of product any given site receives.
B) location of any given site.
C) number of locations that must be served.
D) balance of supply and demand.
Q4) Forward placement is a reduction in inventory and safety stock because of the merging of variable demands from customers.
A)True
B)False
Q5) What are the components and capabilities of a geographical information system?
Q6) A(n) ________ is a standard matrix that is used to solve location problems using the transportation method.
Q7) Costs that are represented in each cell of a transportation tableau are based on ________.
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Chapter 14: Supply Chain Integration
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Q1) Define the term logistics and briefly discuss any three important logistics decisions.
Q2) ________ is an extreme application of the forward placement tactic.
Q3) Which of the following is not an external cause of supply chain disruptions?
A) late deliveries
B) new service or product introductions
C) customer service or product mix changes
D) underfilled shipments
Q4) The authors present four types of e-purchasing; what are they and how do they work? Which of these could be accomplished by the least IT-savvy supply chain? Why?
Q5) ________ is a supplier relation in which the buyer and seller are partners, each helping the other as much as possible.
Q6) Electronic Data Interchange enables the transmission of routine, standardized business documents from computer to computer over telephone or direct leased lines.
A)True
B)False
Q7) The ________ process involves the activities required to deliver a product or service to a customer.
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Chapter 15: Supply Chain Sustainability
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Q1) Which of the following is not one of the seven principles of social responsibility or standards included in ISO 26000?
A) Transparency
B) Respect for human rights
C) Ethical Behavior
D) Certification process requirements
Q2) Identify the item below that is not included in the authors' discussion of how a firm might manage its supply chains to ensure that they are sustainable.
A) Gather data on the buying habits of customers and ensure that data is freely shared throughout the supply chain.
B) Develop a sustainable supply chain framework.
C) Engage in active supplier management and utilize all available ethical means to influence their behavior.
D) Gather data on the performance of current suppliers and use the same questionnaire to screen potential new suppliers.
Q3) One motivation for reverse logistics is warranty repair or replacement.
A)True
B)False
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Chapter 16: Supplement A Decision Making
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Q1) Under what conditions can decision trees be useful?
Q2) If the payoff table contains expenses instead of revenues, then the best alternative is the lowest payoff.
A)True
B)False
Q3) A manufacturing firm is considering whether to produce or outsource the production of a new product. If they produce the item themselves, they will incur a fixed cost of $950,000 per year, but if they outsource overseas there will be a $1.5 million cost per year. The advantage of outsourcing overseas is the variable cost of 95¢ per unit, which is a fraction of their $43/unit cost in their own union shop. Regardless of where these devices are made, they will sell for $98 each. What is the break-even quantity for each alternative? Solve this problem graphically and algebraically.
Q4) A company faces a fixed cost of $568 and sells items at a 50% markup on their cost of $12. What is their break-even point in both units and dollar sales?
Q5) The preference matrix technique can be used only with quantitative factors to consider.
A)True
B)False
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Chapter 17: Supplement J Operations Scheduling
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Q1) A rule that establishes a job's priority based on one piece of information, such as how long it will take to process or when the job arrived, is a(n) ________.
Q2) Using the information in Table J.17 and Johnson's rule, how much idle time does Team 2 have from the start of the first project through completion of the seventh?
A) 2 days
B) 3 days
C) 4 days
D) 5 days
Q3) Using the information in Table J.1 and the FCFS rule, what is the average flow time?
A) fewer than or equal to 19 days
B) greater than 19 days but fewer than or equal to 21 days
C) greater than 21 days but fewer than or equal to 23 days
D) greater than 23 days
Q4) Why is flow time an important measure of performance?
Q5) What are multiple-dimension scheduling rules? Provide examples and discuss how each rule performs.
Q6) ________ is the total amount of time required to complete a group of jobs.
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Chapter 18: Supplement K Layout
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Q1) A detailed visual representation of the block plan helps decision-makers discuss the proposal and problems that might be otherwise overlooked, particularly when evaluating high customer-contact processes.
A)True
B)False
Q2) Use the information in Figure K.1. If travel between departments is restricted to the aisles shown in Figure 1, what is the total weighted-distance (wd) score for the block plan shown in Figure 1?
A) less than or equal to 30
B) greater than 30 but less than or equal to 60
C) greater than 60 but less than or equal to 90
D) greater than 90
Q3) Using Figure K.6, what is the best area for the associate dean?
A) area 1
B) area 2
C) area 3
D) area 4
Q4) The ________ method measures distance between two points with a series of 90-degree turns.
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Chapter 19: Supplement B Waiting Lines
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Q1) A(n) ________ is a single step in providing a service.
Q2) Students arrive at a university business library during peak evening hours at a rate of 40 students every half hour. A periodic count shows that there are 200 students in the library at any one time. On average, how long is each student's stay in the library?
A) less than or equal to one hour
B) greater than 1.0 but less than or equal to 2.0 hours
C) greater than 2.0 but less than or equal to 3.0 hours
D) greater than 3.0 hours
Q3) Customers are serviced at a rate of 10 customers per hour according to an exponential distribution. What is the probability that customer service will require fewer than two minutes?
A) less than or equal to 0.25
B) greater than 0.25 but less than or equal to 0.30
C) greater than 0.30 but less than or equal to 0.35
D) greater than 0.35
Q4) Comment on the tension between cost management and customer satisfaction management in a call center situation.
Q5) Explain how waiting lines can develop even when the service time is a constant.
Q6) A ________ is a single step in the service process.
Page 21
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Chapter 20: Supplement C Special Inventory Models
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Q1) Warren's Ice Cream makes 4 different flavors of ice cream using their secret process and top-secret recipes. Each of their flavors is equally popular and experiences a demand of 5,000 gallons/year. Warren's process is capable of producing 100 gallons/day once they incur the $25 setup cost. The ice cream holding cost is 10% of the $5 per gallon price. Warren's plant runs 250 days a year and stays busy doing so, but management feels they can add another flavor to their product line and increase their revenue. Which of the following statements is appropriate for this scenario?
A) Warren's can comfortably add a fifth flavor without increasing the number of days they operate.
B) Warren's cannot add the fifth flavor because the holding cost would increase.
C) Warren's can add the fifth flavor only if there is zero setup time between flavors.
D) Warren's cannot add the fifth flavor because demand would exceed capacity.
Q2) Sketch the economic production lot size (ELS) graph of inventory level as a function of time and label all elements of the graph.
Q3) The need for one-time inventory decisions also can arise in manufacturing plants when ________ items are made to a single order and ________ are high.
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Chapter 21: Supplement D Linear Programming
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Q1) Degeneracy occurs when the linear program model consists of only an infeasible region.
A)True
B)False
Q2) ________ is useful for allocating scarce resources among competing demands.
Q3) The ________ is an expression in linear programming models that states mathematically what is being maximized or minimized.
Q4) Use the information in Table D.3. According to the optimal production plan, what is the total ending inventory in the second quarter? Assume that the plan that uses the least amount of subcontracting is used.
A) none
B) two units
C) three units
D) greater than three units
Q5) Referring to Scenario D.1, what is an appropriate constraint for this scenario?
A) 4*Eggs + 8*Tomatoes + 14*Chicken 15
B) 5*Eggs + 1*Tomatoes + 22*Chicken 20
C) 4*Eggs + 8*Tomatoes + 14*Chicken = 15
D) 15*VitaminA = Eggs + Tomatoes + Chicken
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Chapter 22: Supplement E Simulation
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Q1) Refer to the bank process model. The Marketing Department for the bank has decided to run a special promotion for new customers that will increase the number of customers arriving at the bank. The new arrival rate is expected to be an average time between arrivals of 2.0 minutes instead of the current average time between arrivals of 2.5 minutes. With the potential increase in business, the bank manager is concerned about the number of customers who will arrive and leave because the line is full (with 6 customers) and the average wait time in line at the bank. All other parameters of the model remain the same. Using SimQuick, estimate the new arrive and immediately leave rate and average time in line. Should the manager be concerned?
Q2) The manager of a branch bank wants to build a simulation model of the lobby operation to reduce the waiting time of her customers. The number of tellers is an example of:
A) a decision variable.
B) an uncontrollable variable.
C) a time-compressed variable.
D) a dependent variable.
Q3) If the difference in results between different simulation runs results in a mathematical difference in system performance, the difference is said to be ________.
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Chapter 23: Supplement F Financial Analysis
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Q1) The net present value (NPV) method evaluates an investment by calculating the present values of all after-tax total cash flows and then subtracting the original investment amount from their total.
A)True
B)False
Q2) The ________ is the interest rate that is the lowest desired return on an investment.
Q3) Straight-line depreciation is an accelerated depreciation method.
A)True
B)False
Q4) The interest rate is also called the discount rate.
A)True
B)False
Q5) In the formula
P = \( \frac{F}{(1+r)^{n}} \) the term r is ________.
Q6) The ________ is the concept that a dollar in hand today is worth more than a dollar to be received in the future.
Q7) Since 1986, the only acceptable accelerated depreciation method is the ________.
Page 25
Q8) What are the problems and advantages of managing by the numbers?
Q9) The ________ is the discount rate that makes the NPV of a project zero.
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Chapter 24: Supplement G Acceptance Sampling Plans
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Q1) Rectified inspection occurs when all defective items in the lot are replaced with good items if the lot is rejected and any defective items in the samples are replaced if the lot is accepted.
A)True
B)False
Q2) A double-sampling plan is usually less expensive than a single-sampling plan if the lot has a high number of defectives.
A)True
B)False
Q3) Discuss producer's risk and consumer's risk.
Q4) Use Table G.1 for the following question. What is the acceptance number of a single-sampling plan if n = 300, LPTD = 0.02, and = 0.15?
A) c = 0
B) c = 1
C) c = 2
D) c = 3
Q5) Replacing all defective items in a rejected lot and all defective items in a sample with good items is called ________ inspection.
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Chapter 25: Supplement H Measuring Output Rates
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Q1) The sample size needed for a time study will increase as ________ and/or ________ increase.
Q2) An industrial engineer is conducting a time study for a work element. The select time is 4.5 minutes, and the sample standard deviation of the observed time is 20 seconds. What is the appropriate sample size if the estimate is to be 5 percent of the True average time 95 percent of the time?
A) fewer than or equal to seven
B) greater than seven but fewer than or equal to eight
C) greater than eight but fewer than or equal to nine
D) greater than nine
Q3) The work measurement technique that breaks down tasks into a series of generic micro-motions is the:
A) time study method.
B) elemental standard data approach.
C) predetermined data approach.
D) work sampling method.
Q4) How can work standards be developed for higher level services and creative processes?
Q5) What is the impact of greater reliance on technology on work measurement?
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Chapter 26: Supplement I Learning Curve Analysis
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Q1) The first learning curve was developed by the aircraft industry.
A)True
B)False
Q2) Which one of the following is an assumption of learning curves?
A) The cumulative time of production decreases as production increases.
B) Time reduction per unit increases as cumulative production increases.
C) The same learning curve should be used when a company increases its level of automation.
D) The reduction in time per unit follows an exponential curve.
Q3) A company is introducing a new product. The first unit took 1,000 hours to complete, and the fourth unit took 750 hours to complete. What is the rate of learning for this product?
A) less than 40 percent
B) greater than or equal to 40 percent but less than 60 percent
C) greater than or equal to 60 percent but less than 80 percent
D) greater than 80 percent
Q4) One assumption about learning curves is that the reduction in time obeys a normal distribution.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 29