The level of product availability
A) is also referred to as the customer service level.
B) is an important component of any supply chain’s responsiveness.
C) increases revenues for the supply chain by increasing sales.
D) Only A and B are true
D
A high level of product availability requires
A) large inventories and tends to raise costs for the supply chain.
B) large inventories and tends to reduce costs for the supply chain.
C) small inventories and tends to raise costs for the supply chain.
D) small inventories and tends to reduce costs for the supply chain
A
A high level of product availability requires __, which raises supply chain costs.
A) large inventories
B) increased revenues
C) reduced costs
D) understocking the product
A
A supply chain needs to achieve a balance between the level of availability and the cost of inventory that
A) maximizes supply chain revenues.
B) minimizes supply chain costs.
C) maximizes supply chain profitability.
D) maximizes supply chain availability
C
The level of product availability, also referred to as the __, is one of the primary measures of a supply chain’s responsiveness.
A) no stock out level
B) reliability level
C) customer service level
D) logistics measure
C
Whether the optimal level of product availability is high or low depends on where a particular company believes they can
A) minimize cost.
B) maximize revenue.
C) maximize profits.
D) maximize product availability
C
The level of product availability, also referred to as the __, is one of the primary measures of a supply chain’s responsiveness.
A) no stock out level
B) reliability level
C) customer service level
D) logistics measure
C
A high level of product availability requires __, which raises supply chain costs.
A) large inventories
B) increased revenues
C) reduced costs
D) understocking the product
A
The loss incurred by a firm for each unsold unit at the end of the selling season is
A) the cost of overstocking the product.
B) the cost of stocking the product.
C) the cost of understocking the product.
D) the cost of overselling the product
A
The margin lost by a firm for each lost sale because there is no inventory on hand is
A) the cost of overstocking the product.
B) the cost of stocking the product.
C) the cost of understocking the product.
D) the cost of overselling the product
C
The margin lost from current as well as future sales if the customer does not return should be included in
A) the cost of overstocking the product.
B) the cost of stocking the product.
C) the cost of understocking the product.
D) the cost of overselling the product
C
The costs of overstocking and understocking have a direct impact on
A) the optimal cycle service level but not profitability.
B) profitability but not the optimal cycle service level.
C) both the optimal cycle service level and profitability.
D) neither the optimal cycle service level nor profitability
C
Which of the following would be a strategy to decrease the margin lost in a stockout?
A) Arranging for backup sourcing
B) Discarding the unused material
C) Selling unsold product to an outlet store
D) Reducing the level of cycle inventory
A
As the ratio of the cost of overstocking to the cost of understocking gets smaller,
A) the optimal level of product availability becomes irrelevant.
B) the optimal level of product availability decreases.
C) the optimal level of product availability remains stable.
D) the optimal level of product availability increases
D
A company with multiple products that chooses to delay product differentiation until closer to the point of sale is using
A) tailored sourcing.
B) quick response.
C) postponement.
D) improved forecasting
C
A company that uses a more expensive short lead time supplier as a backup for a low cost, long lead time supplier is using
A) tailored sourcing.
B) quick response.
C) postponement.
D) improved forecasting
A
An increase in forecast accuracy
A) decreases both the overstocked and understocked quantity and decreases a firm’s profits.
B) decreases both the overstocked and understocked quantity and increases a firm’s profits.
C) increases both the overstocked and understocked quantity and decreases a firm’s profits.
D) increases both the overstocked and understocked quantity and increases a firm’s profits
B
Supply chain managers are able to
A) increase their forecast accuracy as lead times increase.
B) increase their forecast accuracy as lead times decrease.
C) decrease their forecast accuracy as lead times decrease.
D) decrease their forecast accuracy as lead times increase
B
As lead times decrease, supply chain managers are able to
A) better match supply with demand.
B) better match demand with supply.
C) increase supply chain cost.
D) decrease product availability
A
As the total quantity for the season is broken up into multiple smaller orders, the buyer is better able to
A) match supply and demand and increase cost.
B) match supply and demand and increase profitability.
C) match supply and demand and decrease profitability.
D) match supply and demand and decrease product availability
B
If quick response allows multiple orders in the season,
A) profits decrease and the overstock quantity decreases.
B) profits decrease and the overstock quantity increases.
C) profits increase and the overstock quantity decreases.
D) profits increase and the overstock quantity increases
C
Quick response is clearly advantageous to
A) a distributor in the supply chain.
B) a retailer in the supply chain.
C) a manufacturer in the supply chain.
D) every step in the supply chain
B
Quick response results in
A) the manufacturer making a lower profit in the long term if all else is unchanged.
B) the manufacturer making a lower profit in the short term if all else is unchanged.
C) the retailer making a lower profit in the short term if all else is unchanged.
D) the distributor making a lower profit in the short term if all else is unchanged
B
There is a cost associated with postponement because the production cost using postponement is typically
A) higher than the production cost without it.
B) lower than the production cost without it.
C) very stable.
D) equal to the production cost without it
A
Postponement is valuable for a firm that
A) sells a large variety of products with demand that is dependent and comparable in size.
B) sells a large variety of products with demand that is independent and comparable in size.
C) sells a small variety of products with demand that is dependent and comparable in size.
D) sells a small variety of products with demand that is independent and comparable in size
B
Postponement is
A) not very effective if a large fraction of demand comes from multiple products.
B) not very effective if a small fraction of demand comes from a single product.
C) only effective if a large fraction of demand comes from a single product.
D) effective even if a large fraction of demand comes from a single product
B
When a firm uses production with postponement to satisfy a part of its demand with the rest being satisfied without postponement, it is using
A) adjustable postponement.
B) flexible postponement.
C) managed postponement.
D) tailored postponement
D
Under tailored postponement, a firm produces the amount that is very likely to sell using
A) the lower cost production method with postponement and produces the portion of demand that is uncertain using postponement.
B) the lower cost production method without postponement and produces the portion of demand that is uncertain using postponement.
C) the higher cost production method with postponement and produces the portion of demand that is uncertain using postponement.
D) the higher cost production method without postponement and produces the portion of demand that is uncertain using postponement
B
In tailored sourcing, firms use a combination of two supply sources,
A) one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost.
B) one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty, but at a higher cost.
C) one focusing on cost but unable to handle uncertainty well, and the other focusing on flexibility to handle uncertainty at a lower cost.
D) one focusing on cost and able to handle uncertainty well, and the other focusing on flexibility to handle uncertainty at a lower cost
A
In product-based tailored sourcing,
A) low-volume products with uncertain demand are obtained from a flexible source.
B) high-volume products with less demand uncertainty are obtained from an efficient source.
C) high-volume products with less demand uncertainty are obtained from a flexible source.
D) A and B only
D
__ allows a firm to increase profits and better match supply and demand if the firm produces a large variety of products whose demand is unpredictable, not positively correlated, and is of about the same size.
A) Shortened forecasting window
B) Quick response
C) Postponement
D) Tailored sourcing
C
__ may reduce overall profits for a firm if a single product contributes the majority of the demand.
A) Shortened forecasting window
B) Quick response
C) Postponement
D) Tailored sourcing
C
In volume-based tailored sourcing,
A) the predictable part of a product’s demand is produced at an efficient facility.
B) the uncertain portion is produced at an efficient facility.
C) the predictable part of a product’s demand is produced at a flexible facility.
D) the predictable part of a product’s demand is outsourced
A
__ allows a firm to increase profits and better match supply and demand if the firm produces a large variety of products whose demand is unpredictable, not positively correlated, and is of about the same size.
A) Shortened forecasting window
B) Quick response
C) Postponement
D) Tailored sourcing
C
__ may reduce overall profits for a firm if a single product contributes the majority of the demand.
A) Shortened forecasting window
B) Quick response
C) Postponement
D) Tailored sourcing
C
In volume-based tailored sourcing,
A) the predictable part of a product’s demand is produced at an efficient facility.
B) the uncertain portion is produced at an efficient facility.
C) the predictable part of a product’s demand is produced at a flexible facility.
D) the predictable part of a product’s demand is outsourced
A
When ordering a single product, it is optimal for the buyer to order the minimum of the available capacity and the optimal order quantity. When ordering multiple products,
A) the buyer should treat each product as a unique purchase and optimize each on an individual basis.
B) the buyer must consider trade-offs between ordering more of one product than another.
C) the buyer should average the cost, procurement, and holding parameters and create a basket product that consists of equal ratios of all items.
D) the buyer should construct a weighted average based on all individual item demands and optimize this quantity
B
When setting optimal levels of product availability in practice, it is important to
A) obtain a reasonable estimate of the cost of stocking out.
B) obtain a very precise estimate of the cost of stocking out.
C) focus on the most responsive production method, even if it is not low cost.
D) develop a preset target of product availability
A
