Supply Chain Management, 5e (Chopra/Meindl) Chapter 15 Sourcing Decisions in a Supply Chain
15.1 True/False Questions 1) Purchasing, also known as procurement, is the process used to rate supplier performance. Answer FA!"# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing %) "ourcing processes include the selection of suppliers, design of supplier contracts, product design colla*oration, procurement of material, and e+aluation of supplier performance. Answer T&# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing ) For man' firms, price has traditionall' *een the onl' dimension that suppliers ha+e *een compared on. Answer T&# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing ) There are man' supplier characteristics other than price, such as lead time, relia*ilit', relia*ilit', 0ualit', and design capa*ilit' that impact the total cost of doing *usiness with a supplier. Answer T&# $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing 5) A good supplier scoring and assessment process will primaril' track performance along the price dimension when e+aluating a supplier. supplier. Answer FA!"# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing
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6) $esign colla*oration ensures that an' design changes are communicated effecti+el' to all parties in+ol+ed with designing and manufacturing the product. Answer T&# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing 7) The goal of procurement is to ena*le orders to *e placed and deli+ered on schedule at the lowest possi*le price. Answer T&# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing 8) The role of sourcing planning and anal'sis is to anal'9e spending across +arious suppliers and component categories to identif' opportunities for decreasing the total co st. Answer T&# $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing :) (ost of ;oods "old <(;") represents less than %3 p ercent of sales for most ma=or manufacturers. Answer FA!"# $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing 13) #ffecti+e sourcing processes within a firm can impro+e profits for the firm and total suppl' chain surplus in a +ariet' of wa's. Answer T&# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different different sourcing strategies including outsourcing and insourcing
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11) >hen designing a sourcing strateg', it is important for a firm to *e clear on the factors that ha+e the least influence on performance and target impro+ement on those areas. Answer FA!"# $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1%) "upplier performance must *e rated on se+eral factors other than purchase price *ecause the' all impact the total suppl' chain cost. Answer T&# $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1) As the replenishment lead time from a supplier grows, the amount of safet' in+entor' that needs to *e held *' the *u'er also grows in direct proportion to the replenishment lead time. Answer FA!"# $iff Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1) A relia*le supplier has low +aria*ilit' of lead time, whereas an unrelia*le supplier has high +aria*ilit'. Answer T&# $iff % Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 15) The less fle?i*le a supplier is, the less lead time +aria*ilit' he will displa' as order 0uantities change. Answer FA!"# $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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16) As the replenishment lot si9e grows, the c'cle in+entor' at the firm grows, thus increasing the cost of holding in+entor'. Answer T&# $iff % Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 17) Qualit' has little effect on the lead time taken *' the supplier to complete the replenishment order or the +aria*ilit' of this lead time. Answer FA!"# $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 18) "ourcing a product o+erseas ma' ha+e lower product cost *ut will generall' incur a higher in*ound transportation cost. Answer T&# $iff 1 Topic 15. sing Total (ost to "core and Assess "uppliers AA("- $'namics of the ;lo*al #conom' !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1:) Quantit' discounts lower the unit cost and tend to increase the re0uired *atch si9e. Answer FA!"# $iff 1 Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %3) The +alue of *etter information coordination will *e linked to the amount of +aria*ilit' introduced into the suppl' chain as a result of the *ullwhip effect. Answer T&# $iff Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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%1) ;ood design colla*oration for manufactura*ilit' and suppl' chain can also increase re0uired in+entories and transportation cost. Answer FA!"# $iff 1 Topic 15.7 $esign (olla*oration AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %%) #?change rates, ta?es, and duties can *e significant for a firm with a glo*al manufacturing and suppl' *ase. Answer T&# $iff 1 Topic 15. sing Total (ost to "core and Assess "uppliers AA("- $'namics of the ;lo*al #conom' !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) "upplier +ia*ilit' can *e especiall' important if the supplier is pro+iding missioncritical products and the' would *e eas' to find a replacement for. Answer FA!"# $iff % Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) "upplier performance should *e compared *ased on their impact on total cost. Answer T&# $iff 1 Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %5) "ingle sourcing is used to ensure a degree of competition and guarantee the possi*ilit' of a *ackup should a source fail to deli+er. Answer FA!"# $iff % Topic 15.5 "upplier "electionAuctions and @egotiations !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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%6) a+ing multiple sources ensures a degree o f competition and also the possi*ilit' of a *ackup should a source fail to deli+er. Answer T&# $iff % Topic 15.5 "upplier "electionAuctions and @egotiations AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %7) nless each supplier has a somewhat different role, it is +er' likel' that a firms suppl' *ase is too small. Answer FA!"# $iff % Topic 15.5 "upplier "electionAuctions and @egotiations !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %8) nless adding a supplier with a uni0ue and +alua*le capa*ilit' clearl' adds to total cost, the firms suppl' *ase ma' *e too small. Answer T&# $iff % Topic 15.5 "upplier "electionAuctions and @egotiations AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %:) To impro+e o+erall profits, the supplier must design a contract that re0uires the *u'er to share in some of the suppliers demand uncertaint'. Answer FA!"# $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 3) -u'*ack contracts counter dou*le marginali9ation *' lowering the cost of o+erstocking for the retailer. Answer T&# $iff 1 Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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1) &e+enuesharing contracts counter dou*le marginali9ation *' decreasing the cost per unit charged to the retailer, thus effecti+el' decreasing the cost of understocking. Answer FA!"# $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) Quantit' fle?i*ilit' contracts counter dou*le marginali9ation *' gi+ing the retailer the a *ilit' to modif' the order *ased on impro+ed forecasts closer to the point of sale. Answer T&# $iff 1 Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing ) Quantit' discounts can coordinate suppl' chain costs if the supplier has large fi?ed costs per lot. Answer T&# $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing ) Twopart tariffs and threshold contracts can *e used to counter dou*le marginali9ation and increase agent effort in a suppl' chain. Answer T&# $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- $'namics of the ;lo*al #conom' !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 5) The procurement process for indirect materials should focus on decreasing the transaction cost for each order. Answer T&# $iff % Topic 15.8 The Procurement Process !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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6) "upplier performance anal'sis should *e used to *uild a portfolio of suppliers with similar strengths. Answer FA!"# $iff % Topic 15.8 The Procurement Process !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 7) Procurement is the process *' which companies ac0uire raw materials, components, products, ser+ices, or other resources from suppliers to e?ecute their operations. Answer T&# $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 8) Outsourcing results in a suppl' chain function *eing performed *' a third part'. Answer T&# $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 15.% Bultiple (hoice Questions 1) The process *' which companies ac0uire raw materials, components, products, ser+ices, and other resources from suppliers to e?ecute their operations is A) procurement. -) sourcing. () supplier scoring and assessment. $) supplier selection. Answer A $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) The entire set of *usiness processes re0uired to purchase goods and ser+ices is A) procurement. -) sourcing. () supplier scoring and assessment. $) supplier selection. Answer $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 158 (op'right 2 %31 Pearson #ducation, 4nc. pu*lishing as Prentice all
) The process used to rate supplier performance is A) procurement. -) sourcing. () supplier scoring and assessment. $) supplier selection. Answer ( $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing ) sing the output from supplier scoring and assessment to identif' the appropriate supplier
7) "upplier characteristics such as lead time, relia*ilit', 0ualit', and design capa*ilit' that impact the total cost of doing *usiness with a supplier should * e considered during the process of A) procurement. -) sourcing. () supplier scoring and assessment. $) supplier selection. Answer ( $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 8) $esign colla*oration is important *ecause A) a*out 83 percent of the cost of a product is determined during design. -) it ensures that an' design changes are communicated effecti+el' to all parties in+ol+ed with designing and manufacturing the product. () the supplier sends product in response to orders placed *' the *u'er. $) A and Answer $ $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing :) The goal of procurement is A) to anal'9e spending across +arious suppliers and component categories to identif' opportunities for decreasing the total cost. -) to anal'9e spending across +arious suppliers and component categories to identif' opportunities for increasing the total cost. () to ena*le orders to *e placed and deli+ered on schedule at the lowest possi*le o+erall cost. $) to ena*le orders to *e placed and deli+ered on schedule regardless of cost. Answer ( $iff Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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13) The role of sourcing planning and anal'sis is A) to anal'9e spending across +arious suppliers and component categories to identif' opportunities for decreasing the total cost. -) to anal'9e spending across +arious suppliers and component categories to identif' opportunities for increasing the total cost. () to ena*le orders to *e placed and deli+ered on schedule at the lowest possi*le o+erall cost. $) to ena*le orders to *e placed and deli+ered on schedule regardless of cost. Answer A $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 11) (ost of ;oods "old <(;") represents A) less than %3 percent of sales for most ma=or manu facturers. -) less than 53 percent of sales for most ma=or manufacturers. () well o+er 53 percent of sales for most ma=or manufacturers. $) well o+er 83 percent of sales for most ma=or manufacturers. Answer ( $iff Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1%) #ffecti+e sourcing processes within a firm can A) impro+e profits for the firm and total suppl' chain surplus. -) reduce profits for the firm and total suppl' chain surplus. () reduce total suppl' chain surplus. $) reduce profits for the firm. Answer A $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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1) >hich of the following is not a *enefit of effecti+e sourcing decisionsC A) -etter economies of scale can *e achie+ed if orders within a firm are aggregated. -) Bore efficient procurement transactions can significantl' reduce the o+erall cost of purchasing. () "e0uential design results in products that are easier to manufacture and distri*ute, resulting in lower o+erall costs. $) ;ood procurement processes can facilitate coordination with the supplier and impro+e forecasting and planning. Answer ( $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1) >hich of the following is not a *enefit of effecti+e sourcing decisionsC A) Appropriate supplier contracts can allow for the sharing of risk, resulting in higher profits for *oth the supplier and the *u'er. -) -etter economies of scale can *e achie+ed if orders within a firm are disaggregated. () $esign colla*oration can result in products that are e asier to manufacture and distri*ute, resulting in lower o+erall costs. $) Firms can achie+e a lower purchase price *' increasing competition through the use of auctions. Answer $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 15) >hen designing a sourcing strateg', it is important for a firm to A) de+elop a process that will procure materials at the lowest possi*le cost. -) maintain a record of all contracts, receipts, issues and other transactions in the e+ent of lawsuits. () ma?imi9e the profita*ilit' of the distri*utors within the suppl' chain. $) *e clear on the factors that ha+e the greatest influence on p erformance and target impro+ement on those areas. Answer $ $iff Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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16) >hich of the following is not a factor that must *e considered when scoring and assessing suppliersC A) Quoted price -) &eplenishment lead time () ntime performance $) "uppl' affa*ilit' Answer $ $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 17) >hich of the following is not a factor that must *e considered when scoring and assessing suppliersC A) "uppl' fle?i*ilit' -) "uppl' 0ualit' () 4n*ound transportation cost $) 4nformation instigation capa*ilit' Answer $ $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 18) >hich of the following is not a factor that must *e considered when scoring and assessing suppliersC A) Purchase pricing -) "ales performance () $esign colla*oration capa*ilit' $) #?change rates, ta?es, and duties Answer $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1:) "upplier performance must *e rated on man' different factors *ecause A) the' impact the total suppl' chain cost. -) the' minimi9e the suppl' chain in+ol+ement. () the' reduce the impact of price. $) the' ma?imi9e the suppl' chain price. Answer A $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 151 (op'right 2 %31 Pearson #ducation, 4nc. pu*lishing as Prentice all
%3) "coring the performance of suppliers in terms of replenishment lead time thus allows the firm to e+aluate the impact each supplier has on A) the cost of holding c'cle in+entor'. -) the cost of holding replacement in+entor'. () the purchase price of material. $) the cost of holding safet' in+entor'. Answer $ $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %1) ntime performance affects the +aria*ilit' of the lead time, *ecause A) a relia*le supplier has high +aria*ilit' of lead time. -) a relia*le supplier has low +aria*ilit' of lead time. () an unrelia*le supplier has high +aria*ilit' of lead time. $) - and ( Answer $ $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %%) The deli+er' fre0uenc' of a supplier can *e con+erted into the cost of holding A) c'cle in+entor'. -) safet' in+entor'. () *oth c'cle and safet' in+entor'. $) neither c'cle nor safet' in+entor'. Answer ( $iff Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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%) "ourcing a product o+erseas ma' ha+e A) higher product cost and will generall' incur a higher in*ound transportation cost. -) higher product cost *ut will generall' incur a lower in*ound transportation cost. () lower product cost and will generall' incur a lower in*ound transportation cost. $) lower product cost *ut will generall' incur a higher in*ound transportation cost. Answer $ $iff 1 Topic 15. sing Total (ost to "core and Assess "uppliers AA("- $'namics of the ;lo*al #conom' !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) Quantit' discounts lower the unit cost A) *ut tend to increase the re0uired *atch si9e and as a result, reduce the c'cle in+entor'. -) *ut tend to increase the re0uired *atch si9e and as a result the c'cle in+entor'. () and tend to reduce the re0uired *atch si9e and as a result the c'cle in+entor'. $) and tend to reduce the re0uired *atch si9e and as a result, increase the c'cle in+entor'. Answer $iff Topic 15. sing Total (ost to "core and Assess "uppliers AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %5) ;ood information coordination will not result in A) *etter replenishment planning. -) a decrease in the in+entor' carried as well as the sales lost *ecause of lack of a+aila*ilit'. () a decrease in the *ullwhip effect. $) a decrease in the sales lost *ecause of lack of a+aila*ilit'. Answer ( $iff Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %6) ;ood design colla*oration for manufactura*ilit' and suppl' chain can A) reduce product cost. -) increase re0uired in+entories. () increase transportation cost. $) decrease manufactura*ilit'. Answer A $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1515 (op'right 2 %31 Pearson #ducation, 4nc. pu*lishing as Prentice all
%7) The +ia*ilit' of suppliers is especiall' important for suppliers who A) pro+ide missioncritical products that would *e eas' to replace. -) pro+ide missioncritical products that would *e difficult to replace. () pro+ide noncritical products that would *e difficult to replace. $) pro+ide noncritical products that would *e eas' to replace. Answer $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %8) "upplier performance should *e compared *ased on A) purchase price alone. -) their impact on total cost. () the suppliers 0ualit' of material. $) the a*ilit' of the supplier to coordinate forecasting and planning. Answer $iff Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %:) "ingle sourcing for a product is used to A) guarantee the supplier sufficient *usiness when the supplier has to make a significant *u'er specific in+estment. -) ensure a degree of competition. () ensure the possi*ilit' of a *ackup should a source fail to deli+er. $) all of the a*o+e Answer A $iff 1 Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 3) The purpose of ha+ing multiple suppliers for a product is to A) guarantee the supplier sufficient *usiness when the supplier has to make a significant *u'er specific in+estment. -) ensure a degree of competition. () ensure the possi*ilit' of a *ackup should a source fail to deli+er. $) *oth - and ( Answer $ $iff 1 Topic 15.5 "upplier "electionAuctions and @egotiations AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 1516 (op'right 2 %31 Pearson #ducation, 4nc. pu*lishing as Prentice all
1) 4f each supplier of a firm does not ha+e a somewhat different role, it is +er' likel' that the firms suppl' *ase is A) too large. -) too small. () neither too large or too small. $) *oth too large and too small. Answer A $iff 1 Topic 15.5 "upplier "electionAuctions and @egotiations AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) 4f adding a supplier with a uni0ue and +alua*le capa*ilit' does not clearl' add to a firms total cost, the suppl' *ase ma' *e A) too large. -) too small. () neither too large or too small. $) *oth too large and too small. Answer $iff 1 Topic 15.5 "upplier "electionAuctions and @egotiations AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing ) To impro+e o+erall profits, the supplier must design a contract that A) encourages the *u'er to purchase more. -) increases the le+el of product a+aila*ilit'. () re0uires the supplier to share in some of the *u'ers demand uncertaint'. $) all of the a*o+e Answer $ $iff 1 Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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) >hich of the following is not a contract that will increase o+erall profits *' making the supplier share some of the *u'ers demand uncertaint'C A) -u'*ack or returns contracts -) Quantit' fle?i*ilit' contracts () &enewal contracts $) &e+enuesharing contracts Answer ( $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 5) A contract that allows a retailer to return unsold in+entor' up to a specified amount, at an agreed upon price is a A) *u'*ack or returns contract. -) re+enuesharing contract. () 0uantit' fle?i*ilit' contract. $) 0uantit' discount contract. Answer A $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 6) A contract where the *u'er pa's a minimal amount for each unit purchased from the supplier *ut shares a fraction of the re+enue for each unit sold is A) *u'*ack or returns contract. -) re+enuesharing contract. () 0uantit' fle?i*ilit' contract. $) 0uantit' discount contract. Answer $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 7) A contract that allows the *u'er to modif' the order
8) A contract that decreases o+erall costs *ut leads to higher lot si9es and thus higher le+els of in+entor' in the suppl' chain is a A) *u'*ack or returns contract. -) re+enuesharing contract. () 0uantit' fle?i*ilit' contract. $) 0uantit' discount contract. Answer $ $iff Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing :) A contract that is used to induce performance impro+ement from a supplier along dimensions, such as lead time, where the *enefit of impro+ement accrues primaril' to the *u'er, whereas the effort for impro+ement comes primaril' from the supplier is a A) *u'*ack or returns contract. -) re+enuesharing contract. () 0uantit' fle?i*ilit' contract. $) shared sa+ings contract. Answer $ $iff Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 3) A downside to which contract is that it leads to surplus in+entor' that must *e sal+aged or disposedC A) *u'*ack or returns contract -) re+enuesharing contract () 0uantit' fle?i*ilit' contract $) all of the a*o+e Answer A $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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1) >hich contracts result in the suppl' chain producing retailer orders rather than actual consumer demandC A) -u'*ack or returns contract -) &e+enuesharing contract () Quantit' fle?i*ilit' contract $) A and Answer $ $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing %) >hich contracts create information distortion that result in e?cess in+entor' in the suppl' chain and a greater mismatch of suppl' and demandC A) -u'*ack or returns contract -) &e+enuesharing contract () Quantit' fle?i*ilit' contract $) A and - onl' Answer $ $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing ) >hich t'pe of contract is used when agents act on *ehalf of a principal and the dealers margin is set to *e the same as the suppl' chain margin, and the dealer e?erts the right amount of effortC A) -u'*ack or returns contract -) &e+enuesharing contract () Quantit' fle?i*ilit' contract $) Twopart tariffs Answer $ $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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) >hich contract increases the margin for the dealer as sales cross certain le+elsC A) -u'*ack or returns contract -) &e+enuesharing contract () Quantit' fle?i*ilit' contract $) Threshold contracts Answer $ $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 5) The ke' themes that must *e communicated to suppliers as the' take greater responsi*ilit' for design are A) design for logistics. -) design for manufactura*ilit'. () design for the future. $) A and Answer $ $iff % Topic 15.7 $esign (olla*oration AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 6) >hich of the following is not a ke' principle used in design for manufactura*ilit'C A) Part commonalit' -) "'mmetrical parts () sing catalog parts rather than designing a new part $) All of the a*o+e are principles used in design for manufactura*ilit'. Answer $ $iff % Topic 15.7 $esign (olla*oration !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 7) The procurement process for direct materials should focus on A) impro+ing coordination and +isi*ilit' with the supplier. -) decreasing the transaction cost for each order. () consolidation of orders to take ad+antage of economies of scale and 0uantit' discounts. $) all of the a*o+e Answer A $iff % Topic 15.8 The Procurement Process AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 15%1 (op'right 2 %31 Pearson #ducation, 4nc. pu*lishing as Prentice all
8) The procurement process for indirect materials should focus on A) impro+ing coordination and +isi*ilit' with the supplier. -) decreasing the transaction cost for each order. () consolidation of orders to take ad+antage of economies of scale and 0uantit' discounts. $) all of the a*o+e Answer $iff % Topic 15.8 The Procurement Process AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing :) The procurement process for *oth direct and indirect materials should work on A) impro+ing coordination and +isi*ilit' with the supplier. -) decreasing the transaction cost for each order. () consolidation of orders to take ad+antage of economies of scale and 0uantit' discounts. $) all of the a*o+e Answer ( $iff % Topic 15.8 The Procurement Process AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 53) >hich of the following is a crossfunctional dri+er of sourcingC A) Transportation -) 4n+entor' () "ourcing $) Faciltities Answer ( $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 51) >hich of the following is a traditional logistics dri+er of sourcingC A) Pricing -) 4n+entor' () "ourcing $) 4nformation Answer $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 15%% (op'right 2 %31 Pearson #ducation, 4nc. pu*lishing as Prentice all
5%) The decision to ha+e a third part' perform a suppl' chain function is called A) insourcing. -) outsourcing. () offshoring. $) onshoring. Answer $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 5) The decision to mo+e a production facilit' outside of domestic *oundaries and still maintain ownership is called A) insourcing. -) outsourcing. () offshoring. $) onshoring. Answer ( $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 5) There are +arious mechanisms that third parties can use to grow the suppl' chain surplus. >hich of the following is not one of theseC A) (apacit' aggregation -) >arehousing decentrali9ation () 4n+entor' aggregation $) >arehouse aggregation Answer $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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55) An intermediar' can increase the suppl' chain surplus *' decreasing the num*er of relationships re0uired *etween multiple *u'ers and sellers. This is called A) capacit' aggregation. -) in+entor' aggregation. () warehouse aggregation. $) relationship aggregation. Answer $ $iff % Topic 15.1 The &ole of "ourcing in a "uppl' (hain !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 56) The main risks of mo+ing functions to a third part' would not include A) rising fuel costs. -) underestimation of the cost of coordination. () reduced customer/supplier contact. $) loss of internal capa*ilit'. Answer A $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 57) sing a third part' re0uires a firm to share demand information and in some cases intellectual propert'. This risk would *e descri*ed as A) leakage of sensiti+e data and information. -) underestimation of the cost of coordination. () reduced customer/supplier contact. $) loss of internal capa*ilit'. Answer A $iff 1 Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- Anal'tic "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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58) (onsidering the factors influencing total cost and supplier performance, which of the following is the !#A"T 0uantifia*le factorC A) "upplier price -) "upplier terms () "upport $) >arehousing cost Answer ( $iff % Topic 15. sing Total (ost to "core and Assess "uppliers !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 15. #ssa' Questions 1) >hat are some of the *enefits of effecti+e sourcing decisionsC Answer #ffecti+e sourcing processes within a firm can impro+e profits for the firm and total suppl' chain surplus in a +ariet' of wa's. 4t is important that the dri+ers of impro+ed profits *e clearl' identified when making sourcing decisions. "ome o f the *enefits from effecti+e sourcing decisions are the following D -etter economies of scale can *e achie+ed if orders within a firm are aggregated. D Bore efficient procurement transactions can significantl' reduce the o+erall cost of pu rchasing. This is most important for items where a large num*er of low+alue transactions occur. D $esign colla*oration can result in products that are easier to manufacture and distri*ute, resulting in lower o+erall costs. This factor is most important for supplier products that contri*ute a significant amount to product cost an d +alue. D ;ood procurement processes can facilitate coordination with the supplier and impro+e forecasting and planning. -etter coordination lowers in+entories and impro+es the matching of suppl' and demand. D Appropriate supplier contracts can allow for the sharing of risk, resulting in higher profits for *oth the supplier and the *u'er. D Firms can achie+e a lower purchase price *' increasing competition through the use of auctions. $iff Topic 15.1 The &ole of "ourcing in a "uppl' (hain AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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%) >hat factors should *e considered when making sourcing decisionsC Answer >hen designing a sourcing strateg', it is important for a firm to *e clear on the factors that ha+e the greatest influence on performance and target impro+ement on those areas. For e?ample, if most of the spending for a firm is on materials with onl' a few high+alue transactions, impro+ing the efficienc' of procurement transactions will pro+ide little +alue, whereas impro+ing design colla*oration and coordination with the supplier will pro+ide significant +alue. 4n contrast, when sourcing items with man' low+alue transactions, increasing the efficienc' of procurement transactions will *e +er' +alua*le. >hen scoring and assessing suppliers, the following factors other than 0uoted price must *e considered D &eplenishment lead time D ntime performance D "uppl' fle?i*ilit' D $eli+er' fre0uenc'/minimum lot si9e D "uppl' 0ualit' D 4n*ound transportation cost D Pricing terms D 4nformation coordination capa*ilit' D $esign colla*oration capa*ilit' D #?change rates, ta?es, and duties D "upplier +ia*ilit' "upplier performance must *e rated on each of these factors *ecause the' impact the total suppl' chain cost. $iff Topic 15.% 4nouse or utsource AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing ) >h' should replenishment lead time *e considered in supplier selection decisionsC Answer As the replenishment lead time from a supplier grows, the amount of safet' in+entor' that needs to *e held *' the *u'er also grows proportional to the s0uare root of the replenishment lead time. !ead time performance *' a supplier can directl' *e translated into the re0uired safet' in+entor'. "coring the performance of suppliers in terms of replenishment lead time thus allows the firm to e+aluate the impact each supplier has on the cost of holding safet' in+entor'. $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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) >h' should ontime performance *e considered in supplier selection d ecisionsC Answer ntime performance affects the +aria*ilit' of the lead time. A relia*le supplier has low +aria*ilit' of lead time, whereas an unrelia*le supplier has high +aria*ilit'. As the +aria*ilit' of lead time grows, the re0uired safet' in+entor' at the firm grows +er' rapidl'. ntime performance can *e translated into lead time +aria*ilit', which is con+erted to re0uired safet' in+entor'. A firm can e+aluate the impact of poor ontime performance *' a supplier on the cost of holding safet' in+entor'. $iff % Topic 15. sing Total (ost to "core and Assess "uppliers AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 5) >h' should suppl' 0ualit' *e considered in supplier selection decisionsC Answer A worsening of suppl' 0ualit' increases the +aria*ilit' of the suppl' of components a+aila*le to a firm. Qualit' affects the lead time taken *' the supplier to complete the replenishment order and also the +aria*ilit' of this lead time * ecause followup orders often need to *e fulfilled to replace defecti+e products. As a result, the firm will ha+e to carr' more safet' in+entor' from a low0ualit' supplier as compared to a high0ualit' supplier. nce a relationship *etween suppl' 0ualit', lead time, and lead time +aria*ilit' is esta*lished, each suppliers 0ualit' le+el can *e con+erted to the re0uired safet' in+entor' and the associated holding cost. The component 0ualit' also impacts customer satisfaction and product cost *eca use of rework, lost material, and the cost of inspection. $iff % Topic 15.6 (ontracts, &isk "haring, and "uppl' (hain Performance AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 6) >h' should design colla*oration capa*ilit' *e considered in supplier selection decisionsC Answer ;i+en that a large part of product cost is fi?ed at design, colla*oration capa*ilit' of a supplier is significant. ;ood design colla*oration for manufactura*ilit' and suppl' chain can also decrease re0uired in+entories and transportation cost. As manufacturers are increasingl' outsourcing *oth the design and manufacture of components, their a*ilit' to coordinate design across man' suppliers is critical to the ultimate success of the product and the speed of introduction. As a result, design colla*oration capa*ilit' of suppliers is *ecoming increasingl' important. $iff % Topic 15.7 $esign (olla*oration AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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7) ow does a firm know whether it has the correct num*er of suppliersC Answer A good test of whether a firm has the right num*er of suppliers is to anal'9e what impact deleting or adding a supplier will ha+e. nless each supplier has a somewhat different role, it is +er' likel' that the suppl' *ase is too large. 4n contrast, unless adding a supplier with a uni0ue and +alua*le capa*ilit' clearl' adds to total cost, the suppl' *ase ma' *e too small. $iff % Topic 15.5 "upplier "electionAuctions and @egotiations AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing 8) >hat issues need to *e considered when e+aluating capa*ilit' for design colla*orationC Answer Ee' themes that must *e communicated to suppliers as the' take greater responsi*ilit' for design are design for logistics and design for manufactura*ilit'. $esign for logistics attempts to reduce transportation, handling, and in+entor' costs during distri*ution *' taking appropriate actions during design. To reduce transportation and handling costs, the manufacturer must con+e' e?pected order si9es from retailers and the end consumer to the designer. Packages can then *e designed such that transportation cost is lowered and handling is minimi9ed. To reduce transportation cost, packaging is kept as compact as possi*le and is also designed to ensure eas' stacking. To reduce handling costs, package si9es are designed to minimi9e the need to *reak open a pack to fulfill an order. To reduce in+entor' costs, the primar' approach is to design the product for postponement and mass customi9ation. Postponement strategies aim to design a product and production process such that features that differentiate end products are introduced late in the manufacturing phase. $esign for manufactura*ilit' attempts to design products for ease of manufacture. "ome of the ke' principles used include part commonalit', eliminating righthand and lefthand parts, designing s'mmetrical parts, com*ining parts, using catalog parts rather than designing a new part, and designing parts to pro+ide access for other parts and tools. $iff % Topic 15.5 "upplier "electionAuctions and @egotiations AA("- &eflecti+e Thinking "kills !earning utcome (ompare and contrast different sourcing strategies including outsourcing and insourcing
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