Supply Chain Strategy
Exam Answer Key
Course Introduction
Supply Chain Strategy explores the frameworks, principles, and best practices necessary for designing and managing supply chains that align with an organizations overall business objectives. The course examines strategic decisions related to sourcing, production, distribution, and logistics, integrating topics such as risk management, sustainability, globalization, and technology-driven innovation. Students will analyze real-world case studies to understand how leading companies build competitive advantage by optimizing supply chain flows, controlling costs, and enhancing customer value across diverse industries. Emphasis is placed on cross-functional collaboration, strategic partnerships, and leveraging supply chain analytics for informed decision-making.
Recommended Textbook
Supply Management 8th Edition by David N. Burt
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Chapter 1: The Progression to Professional Supply Management
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Q1) Which of the following is not a strategic supply management activity?
A) Corporate Strategic Plans
B) Simulation Modeling
C) Strategic Sourcing
D) Strategic Supply Alliances
E) Supply Chain / Supply Networks
Answer: B
Q2) Which bullet is not true of the clerical stage of SM?
A) Process Paperwork
B) Confirm actions of others
C) Emphasis: convenience
D) Total cost of ownership focus
E) Relationships: personal
Answer: D
Q3) SM requires change,driven by upper management.
Note: SM means Supply Management
A)True
B)False
Answer: True
Page 3
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Chapter 2: Organizational Issues
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Q1) Managing supplier relationships,contracts,placement of purchase orders and other transaction focused activities are _____ responsibilities: :
A) strategic
B) short term
C) long term A
D) operational B
E) action C
Answer: D
Q2) One of the key skills for any leader is to be an effective listener.
A)True
B)False
Answer: True
Q3) Cross function teams are often the key step in a firms evolution to supply chain management.
A)True
B)False
Answer: True
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Chapter 3: Supply Management: an Organization Spanning Activity
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Q1) Efforts to improve should cease at an organization's internal functions and not span over the supply chain.
A)True
B)False
Answer: False
Q2) In non-manufacturing organizations,supply management often must lead the requirements process.
A)True
B)False
Answer: True
Q3) the many internal interfaces of the supply management function begin with:
A) Engineering
B) Material control
C) The customer
D) Operations
E) Production Control
Answer: C
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Chapter 4: A Portfolio of Relationships
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Q1) Systematically selected supply alliances built on institutional trust help organizations complete their evolution to SM.
A)True
B)False
Q2) Institutional trust does not require much management.
A)True
B)False
Q3) Which of the following statements is not true about trust?
A) Trust is one of the key factors that differentiate the three classes of relationships.
B) The simplest definition of trust according to the textbook is "being confident that the other party will do what it says it will do."
C) Transactional relationships are completely void of trust
D) Some level of trust must be present in all three types of relationships
E) The level of trust increases with collaborative relationships and becomes an essential characteristic with strategic alliances
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) Early Supply Management Involvement requires policy development that only affects supply management.
A)True
B)False
Q2) Early Supply Management involvement was formerly called Early Purchasing Involvement (EPI).
A)True
B)False
Q3) Which of the following is not one of the recommendations given in the textbook for supply management to do so that the supply department's involvement in design is viewed by engineering as an asset and not a nuisance?
A) Convince upper management to establish policies that force engineering to coordinate with supply management on the design process
B) Supply Managers must acquire skills and knowledge
C) Learn how to read engineering drawings
D) Learn technical terms
E) Meet with supplier's sales personnel to review technical information about products
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Chapter 6: Purchasing Descriptions and Specifications
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Q1) Industrial standardization is the process of establishing agreement on uniform identifications for definite characteristics of quality, design, performance, quantity, service, and so on.
A)True
B)False
Q2) What type of specification is a request for a "white 2002 Ford Explorer Sport with standard features?"
Q3) What were the reasons that Eli Whitney appeared to be behind on his contract?
Q4) How does a materials catalog help reduce design time?
Q5) How can specifications limit competition?
Q6) Simplification means reducing the number of standard items a firm uses in its product design and carries in its inventory.
A)True
B)False
Q7) How does Dell use standardization to build competitive advantage?
Q8) What are the two ends of the continuum of electronic materials catalogs?
Q9) Simplification is a corollary of standardization.
A)True
B)False
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Chapter 7: Managing for Quality
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Q1) Which of the following is not true of the PDCA cycle?
A) Plan: review current performance, identify and target root causes of problems, devise possible solutions and plan implementation
B) Do: pilot the planned solution
C) Check (or study): measure the results of the test
D) Act: refine and expand the solution to make it permanent
E) The cycle was originally developed by Deming
Q2) Which of the following is generally not an option if inspection is needed and a rejection occurs?
A) Return the material to the supplier
B) Keep the material and refuse to pay the supplier
C) Keep some of the acceptable material and return the rest
D) Keep all the material and rework it
Q3) Which of the following is not a common tool of quality as presented in the textbook?
A) Quality Matrix
B) Pareto Charts
C) Cause and Effect Diagrams
D) Process Flow Charts
E) Run Plots
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Chapter 8: The Procurement of Equipment
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Q1) Which of the following is not true about financial leases and the firms that use them?
A) Primary motivation is to obtain financial benefits
B) Usually they are long term
C) Most often used when firm wants freedom/flexibility
D) Length is usually shorter than the life of the equipment
E) Many financial leases are non-cancelable
Q2) Operating leases are short-term and are used by most firms to facilitate business operations.
A)True
B)False
Q3) In many situations,the purchase of used capital equipment is necessary because a firm may:
A) Only have occasional use for the equipment
B) New equipment is not available
C) Not have sufficient capital to buy new
D) Lack of lead time
E) All of the above
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Chapter 9: Purchasing Services
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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) Supply management frequently must assume a less active role in services procurement than when purchasing materials.
A)True
B)False
Q3) Which of the following is not a tip given in the textbook for selecting service contractors?
A) Partner with users
B) Engage in reciprocity
C) Learn from the past
D) Update specifications
E) Minimize assumptions
Q4) Satisfaction is cannot be built into service products but must be added as an afterthought.
A)True
B)False
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Chapter 10: Outsourcing
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Q1) Many companies are not readily staffed to keep a company competitive in e-business.As a result,companies are outsourcing infrastructure development and maintenance to "Netsourcers."
A)True
B)False
Q2) Which of the following is a major element typically included in a "to buy" cost analysis?
A) Incremental factory overhead costs
B) Incremental managerial costs
C) Incremental purchasing costs
D) Incremental costs of capital
E) Receiving and inspection costs
Q3) Which one of the following points is not a reason that Netsourcing has become popular?
A) Netsourcing enables a quick e-business presence
B) Netsourcing provides supply managers that flexibility to make changes
C) Netsourcing can help create a sustained performance
D) Netsourcing can provide support without the need to train or hire specialized personnel
E) Netsourcing can completely replace supply management using intelligent agents
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Chapter 11: Sourcing
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Q1) Which of the following is a typical consideration in favor of multiple sourcing?
A) When the technology path is uncertain
B) Just-in-time requirements require a single source
C) Significantly lower freight costs may result with a single source
D) Special tooling is required
E) Total system inventory will be reduced
Q2) Which of the following is not one of the conditions demanding negotiation?
A) Impossible to estimate costs with a high degree of certainty
B) Price is not the only important variable
C) Market must consist of an adequate number of sellers
D) Purchasing firm anticipates a need to make changes in the specification
E) Special tooling of setup costs are major factors
Q3) The selection of bidding or negotiation should be decided by using objective criteria,a total cost perspective and sound supply management logic.
A)True
B)False
Q4) Supply base reduction is achieved through both reducing variety and increasing consolidation.
A)True
B)False
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Chapter 12: Global Supply Management
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Q1) Which of the following is not one of the three stages to global supply management presented in Chapter 12?
A) International Purchasing
B) Geopolitical Engagement
C) Global Sourcing
D) Global Supply Management
Q2) GSP is the acronym for Generalized System of Preferences.
A)True
B)False
Q3) A pro forma invoice is a government invoice estimate used mainly for banking and permit needs.
A)True
B)False
Q4) MFN is the acronym for Most Favored Nation.
A)True
B)False
Q5) Assists are used in aiding the production outside of the buying firm's country and are provided by the supplying firm.
A)True
B)False
Page 14
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Chapter 13: Total Cost of Ownership
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Q1) TCO analysis may include the study of all but one of the following issues.Which issue does not belong in the TCO analysis?
A) Manufacturability
B) Projected sales
C) Infrastructure
D) Outsource decision
E) Analysis of suppliers beyond tier one
Q2) TCO analysis of the labor base can reap lower per person costs,greater benefits,and improved morale.
A)True
B)False
Q3) Which of the following is not an ownership cost?
A) Downtime Costs
B) Planning Costs
C) Risk Costs
D) Cycle Time Costs
E) Conversion Costs
Q4) TCO is also applicable in one's private life enabling better decision-making.
A)True
B)False
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Chapter 14: Price and Cost Analysis
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Q1) A market price is a price established by demand in a constant supply environment. A)True
B)False
Q2) Cost analysis is generally most useful when purchasing nonstandard items and services than standard items and services.
A)True
B)False
Q3) A learning curve effect is a quantitative model of the commonsense observation that the unit cost of a new product decreases as more units of the product is made because of the learning process.
A)True
B)False
Q4) In the long run,a firm must recover all costs or go out of business.In other words,facilities and machinery must be maintained,modernized,and replaced A)True
B)False
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Chapter 15: Methods of Compensation
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Q1) FPEPA contracts are used to recognize economic contingencies,such as unstable labor or market conditions.
A)True
B)False
Q2) The compensation arrangement determines:
A) Degree and timing of the cost responsibility assumed by the supplier
B) Amount of profit or fee available to the supplier
C) Capability of the supplier with respect to quality
D) Motivational implications of the fee portion of the compensation arrangements
Q3) Common types of FFP contracts are: firm fixed price,fixed price with economic price adjustment and fixed price redemption.
A)True
B)False
Q4) FPEPA is an FFP contract that includes economic price adjustment clauses such as escalator clauses are for price increases and de-escalator clauses are for price decreases.
A)True
B)False
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Chapter 16: Negotiation
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Q1) In a negotiation,an objective position is the best estimate of what the seller's actual costs plus a fair profit should be.
A)True
B)False
Q2) Traditional non-cost objectives in a negotiation include all technical aspects of the purchase,buyer-furnished material and equipment and the mode of transportation.
A)True
B)False
Q3) "Using Debate Techniques" is a universally applicable technique of negotiation.
A)True
B)False
Q4) A typical collaborative and alliance negotiating technique is to focus on the people (negotiators)and not the problem (quality,price)in order to create a "warm and fuzzy" atmosphere where the supplier will give concessions away.
A)True
B)False
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Chapter 17: Contract Formation and Legal Issues
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Q1) A mistake in drawing up a contract usually must be made by both parties for the contract to be voided.
A)True
B)False
Q2) Supply managers need not possess and utilize knowledge of legal issues and considerations,but need to know where to find someone who has knowledge of legal issues and considerations.
A)True
B)False
Q3) Most disputes are best resolved through negotiation and compromise.
A)True
B)False
Q4) Letters of intent are:
A) The same as contracts
B) Pre-negotiations guides
C) A form of pre-contracting
D) Blanket orders
E) Used in dispute resolution
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Chapter 18: Contact and Relationship Management
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Q1) A delay in a critical path activity delays the expected project completion time.
A)True
B)False
Q2) Some of the common approaches that buying firms use to punish suppliers are: litigation and punitive damages,not awarding future business,downgrading a supplier and billing the supplier for failures.
A)True
B)False
Q3) In managing the relationship between buyers and sellers,the use of ________ has proven to be very effective.
A) Pert
B) CPM
C) Cross functional teams
D) The legal contract
E) Liberal reward systems
Q4) The critical path is the longest path through the network.
A)True
B)False
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Chapter 19: Ethics and Social Responsibilities
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Q1) The pressures that the marketplace exerts on supply management departments and on individual buyers make it essential that top management and supply management recognize and understand both the professional and ethical standards required in the performance of their duties.
A)True
B)False
Q2) Supply professionals should enhance the proficiency and stature of the supply management profession by acquiring and maintaining current technical knowledge and the highest standards of ethical behavior.
A)True
B)False
Q3) The drive towards high standards for supply professionals has increased the need for companies to establish ethics policies and professional standards that are created through cross-functional teams.
A)True
B)False
Q4) Supply Managers must understand the Clean Air Act.
A)True
B)False
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Chapter 20: Production and Inventory Control
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Q1) MRP logic is based on dependent demand.
A)True
B)False
Q2) C items require more management supervision because they represent such large numbers of items.
A)True
B)False
Q3) JIT production planning is basically a "pull" system where as MRP is basically a "push" system.
A)True
B)False
Q4) Order point or fixed order quantity systems requires the use of:
A) EOQ
B) MRP II
C) Perpetual inventory records per item
D) "Floating" or variable order points per item
E) All of the above
Q5) JIT can be used in most manufacturing situations.
A)True
B)False
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Chapter 21: Demand Management and Logistics
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Q1) Which of the following is not a demand management characteristic given in the textbook?
A) Balances the total costs of not meeting demand against the total costs of adding additional resources required to meet demand
B) Demand management does not require the inclusion of external supply chain members
C) World class demand management in a world class supply management context requires open lines of communication both internally and externally
D) Internally, functional areas must share information to enable improved accuracy of estimates of future demands
E) The demands generated through open internal communication must then be shared with external entities
Q2) Supply management provides the critical skills required to manage the interrelationships on which successful supply chains are built.
A)True
B)False
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Chapter 22: Implementing Value Network Management
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Q1) The Progression to VNM should include all of the following activities and approaches except one.Which one should not be included?
A) Develop and manage alliances and networks
B) Price based competition
C) Virtually defect free materials and services
D) Leverage supplier technology
E) Integrated supply strategy
Q2) Which of the following initiatives is not one of the proactive supply management initiatives proposed by the new supply management team at Megatronics?
A) Six Sigma program
B) Total Quality Management
C) Utilize early supplier involvement (ESI)
D) Early supply management involvement
E) Improve source selection process
Q3) According to Megatronics,the inflow of technology is not related to the supplier's investment in advancing its technological capabilities and the supplier's willingness to share its innovations.
A)True
B)False
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