Industrial Engineering Supply Chain Management Answer Key Part 1

1. A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users. TRUE Flow of materials and information are the central focus of supply chain management. 2. In supply chain organizations, functions must operate independently of each other. FALSE Functions should be integrated. 3. In purchasing, one's only ethical obligation is to one's suppliers. FALSE Purchasing personnel have ethical obligations with regard to a variety of stakeholders, primarily the organizations that employ them. 4. Using third-party logistics involves using your organization's logistics function to ship to customers that aren't officially part of the supply chain. FALSE Using third-party logistics involves outsourcing the logistics function. 5. Every business organization is part of at least one supply chain. TRUE Either the business organization is a complete supply chain or it is a player in a supply chain. 6. Frequent deliveries of small shipments can reduce inventory but also result in an increase in the transportation cost per unit. TRUE This is one of the tradeoffs inherent in supply chain management. 7. The materials in the supply chain flow toward the end of the chain, while the information and the dollars move toward the beginning of the chain. FALSE Material flows toward the final consumer and information and dollars flow upstream. 8. Managing supply chain visibility involves making sure that potential supply chain partners are aware of your organization's needs. FALSE Supply chain visibility has to do with making sure that current trading partners have access to needed data in real time. 9. The goal of supply chain management is to synchronize supply and demand of all of the organizations that are part of the chain. TRUE Synchronizing multiple organizations is one of the difficulties of supply chain management. 10. The need for supply chain management increases as globalization increases. TRUE As globalization increases supply chain management is becoming more important. 11. The design of the supply chain and establishing partnerships with vendors and distributors are examples of operating issues in a supply chain. FALSE These are tactical responsibilities. 12. Traffic management refers to truck movement within our parking areas. FALSE Traffic management is the management of the shipment of incoming and outgoing goods. 13. One of the major reasons for a company to adopt third-party logistics is to concentrate on one's core business. TRUE Outsourcing logistics to third parties enables a company to focus on its core business. 14. E-commerce refers to the use of electronic technology to facilitate business transactions. TRUE E-commerce is a growing trend in supply chain management. 15. E-commerce involves business-to-business (B2B) interaction only. FALSE E-commerce can also involve business-to-consumer (B2C) interactions. 16. Disintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain. TRUE Disintermediation involves reducing one or more steps in a supply chain by cutting out intermediaries. 17. Most people working for a business organization are somehow involved with the supply chain of that business. TRUE Most people working for a business organization are involved in the flow of materials, money or information. 18. Strategic partnering is encouraged when two or more business organizations have complementary products or services that would benefit the others. TRUE Complementarity is key to successful strategic partnering. 19. Forming strategic partnerships is beneficial for two or more business organizations that have the same products or services. FALSE Complementarity is key to successful strategic partnering. 20. Inventory velocity refers to the average speed (in miles/hour) of material handling equipment in a warehouse. FALSE Velocity refers to the rate at which goods pass through a supply chain. 21. Global supply chains make purchasing easier because of more options. FALSE Global purchasing is more complex because of the variety of issues and risks that must be considered. 22. Centralized or decentralized purchasing is directly related to the size of an organization. FALSE The use of centralized or decentralized purchasing is independent of organization size. 23. The optimization of the supply chain uses a mathematical model to determine the optimal number of business organizations to be included in the chain. FALSE Optimizing a supply chain through mathematical models is typically not feasible. 24. Information technology is the key to success of global supply chains. TRUE Global supply chains are made possible by the use of information technology. 25. Bullwhip effect refers to a phenomenon that demand variations that exist at the customer end of the supply chain are magnified as orders are generated back through the supply chain. TRUE The effect of demand variations grows as it works its way back through the supply chain. 26. Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease. FALSE Safety stock might increase, but batch sizes won't. 27. Scheduling and maintaining equipment are operational decisions. TRUE Maintenance would be a form of corrective or preventative action to ensure the continued availability of capacity. 28. To prevent temporary storage in a warehouse, cross docking can be used. TRUE In cross-docking, inbound goods are moved directly onto outbound trucks. 29. Delayed differentiation is a means of increasing product variety without building the customized product from scratch or keeping large inventories of custom products. TRUE Delayed differentiation is used to create customized output without large inventories. 30. Returned goods are part of reverse logistics. TRUE Reverse logistics involves managing the flow of goods back up the supply chain.