1

For many firms, purchasing spends the most money. 

Your Answer:

False

Correct Answer:

True

  INCORRECT. In most firms, purchasing is costly.

2. The 'bullwhip effect' occurs as orders are relayed from retailers, to wholesalers, to manufacturers. 

Your Answer:

False

Correct Answer: True

  INCORRECT. The bullwhip effect is the fluctuation increase that results from orders being relayed from retailers to wholesalers to manufacturers.

3. The supply chain suffers from distortions in the flow of inventory as a result of local optimization, incentives, and large lots.

Your Answer:

False

Correct Answer: True

  INCORRECT. Local optimization instead of

global optimization, large lots, and incentives can all cause distortions in the supply chain.

4. One reason for buying rather than making is to utilize surplus labor.

Your Answer:

True

Correct Answer: False

  INCORRECT. This is a reason to make.

5. A strategy of few suppliers implies looking for short-term attributes.

Your Answer:

True

Correct Answer: False

  INCORRECT. It implies looking for long-term relationships.

6. Forward integration suggests a firm purchase its suppliers.

Your Answer:

True

Correct Answer: False

  INCORRECT. This is backward integration.

7. In order to achieve a response strategy, a firm would seek to invest in excess capacity and flexible processes for its supply chain.

Your Answer:

False

Correct Answer: True

  INCORRECT. Excess capacity and flexible processes allow a supply chain to achieve a response strategy.

8. In order to be responsive to the market, supply chain members should seek to minimize inventory.

Your Answer:

False

Correct Answer: True

  INCORRECT. A supply chain that wants to be responsive should minimize outdated inventory.

9. Outsourcing is a make or buy decision that involves the transfer of tangible product. 

Your Answer:

True

Correct Answer: False

  INCORRECT. Outsourcing need not be tangible and is slightly different than a make or buy decision.

10. In general, members of a supply chain are not susceptible to ethical lapses.

Your Answer:

True

Correct Answer: False

  INCORRECT. Supply chain members are susceptible to such lapses and the opportunities for unethical behavior are enormous.

11. Most organizations are better off concentrating on their specialty and outsourcing functions that their supply chain partners do well.

Your Answer:

False

Correct Answer: True

  INCORRECT. Although exceptions do exist, it is increasingly difficult for one firm to perform all tasks at a world class level. By outsourcing certain tasks to supply chain partners, a company can combine its own strengths with its partners' strengths and compete more effectively.

12. Keiretsu networks are Japanese companies that form a temporary supply chain as a trial before

becoming one company that has achieved perfect vertical integration.

Your Answer:

True

Correct Answer: False

  INCORRECT. A keiretsu network is not true vertical integration.

13. The greater the number of days of supply, the greater the rate of inventory turnover.

Your Answer:

True

Correct Answer: False

  INCORRECT. These metrics move counter to each other. Days of supply is the inverse of turnover rate.