Chapter 16 Lean Supply Chain Management

Chapter 16 -- Lean Supply Chain Management 1. According to Shook, lean is a philosophy that seeks to shorten the time between when the customer order and the shipment to the customer by eliminating waste. a. True b. Fals e ANSWER: True 2. In a pull system, an upstream work center or operation will create output regardless whether a downstream center directly requests that output. a. True b. Fals e ANSWER:False 3. Anything less than perfect quality leads to waste. a. True b. Fals e ANSWER: True 4. WIP is incomplete – it has not yet been transformed to a saleable finished good. a. True b. Fals e ANSWER: True 5. If WIP builds up at a workstation, a scheduler should not have to reroute the flow of material to another work center. a. True b. Fals e Chapter 16 -- Lean Supply Chain Management ANSWER: False 6. A higher-than-anticipated finished-goods inventory level may mean that a increase in customer demand is occurring. a. True b. Fals e ANSWER: False 7. When firms produce goods in anticipation of future customer orders, they are operating in a just-in-time environment. a. True b. Fals e ANSWER: False 8. The most basic and the easiest inventory-related cost to quantify and track is unit cost. a. True b. Fals e ANSWER: True 9. Ordering costs are a composite of the costs associated with the release of a material order. a. True b. Fals e ANSWER: True Chapter 16 -- Lean Supply Chain Management 10. Carrying costs do not vary with the level of inventory, which makes these costs fixed. a. True b. Fals e ANSWER: False 11. It is often difficult to quantify the total costs associated with ordering and carrying physical inventory. a. True b. Fals e ANSWER: True 12. Most cost accounting systems are capable of identifying and assigning the true costs related to maintaining physical inventory. a. True b. Fals e ANSWER: False 13. From the financial accounting perspective, inventory has historically been considered a current asset. a. True b. Fals e ANSWER: True NOTES: 3 14. Even in an era of just-in-time production, almost all firms hold some level of preproduction inventory. a. True b. Fals e ANSWER: True Chapter 16 -- Lean Supply Chain Management 15. Production inventory consumes a minor portion of inventory investment. a. True b. Fals e ANSWER: False 16. The true cost of MRO inventory often goes unnoticed because firms fail to track these items with the same intensity as production inventory. a. True b. Fals e ANSWER: True 17. Supply chains are insensitive to changes in markets, including changes in the availability of material supply as well as price changes. a. True b. Fals e ANSWER: False 18. Suppliers seldom offer quantity discounts to encourage larger orders from purchasers. a. True b. Fals e ANSWER: False Chapter 16 -- Lean Supply Chain Management 19. Unnecessary inventory usually results from one thing: uncertainty. a. True b. Fals e ANSWER: True 20. It is harder to increase a material release by 10 percent or carry safety stock to cover supplier quality problems than to correct the root cause of a problem. a. True b. Fals e ANSWER: False 21. Suppliers that cannot meet delivery schedules create delivery uncertainty. a. True b. Fals e ANSWER: True 22. Purchasers should not accept any of the blame for delivery uncertainty. a. True b. Fals e ANSWER: False 23. A major step toward eliminating delivery uncertainty is a commitment to stable release schedules with realistic (but not overly generous) supplier lead times. a. True b. Fals Chapter 16 -- Lean Supply Chain Management ANSWER: True 24. The ability to plan material requirements accurately increases as order-cycle time lengthens. a. True b. Fals e ANSWER: False 25. Specifying customized parts when standardized parts are available adversely affects material inventory because customized parts are usually more expensive. a. True b. Fals e ANSWER: True 26. Most inventory waste results from underlying problems that blue collar workers have failed to correct. a. True b. Fals e ANSWER: False 27. The underlying emphases of lean– to eliminate all forms of uncertainty and waste – are relevant to all organizations, regardless of the specific planning and control tools that are used. a. True b. Fals e ANSWER: True Chapter 16 -- Lean Supply Chain Management 28. Continuous improvement involves small, daily improvements that ensure that the process in moving forward. a. True b. Fals e ANSWER: True 29. According to JIT, inspection is a waste of both time and personnel caused by defects. a. True b. Fals e ANSWER: True 30. Lean is an easy approach to implement. a. True b. Fals e ANSWER: False 31. Decisions in lean must be based on the opinions or preferences of influential individuals, as well as on facts and data. a. True b. Fals e ANSWER: False 32. A logical place to begin when managing inventory investment is to make sure there is agreement between physical and electronic inventory. Chapter 16 -- Lean Supply Chain Management a. True b. Fals e ANSWER: True 33. Record integrity exists when the physical inventory on hand exceeds the electronic record on hand, regardless of the quantity of inventory. a. True b. Fals e ANSWER: False 34. The advantage of consignment to the buyer is the ability to defer ownership and avoid committing working capital and incurring carrying charges. a. True b. Fals e ANSWER: True 35. Very few organizations use distributors to provide at least some portion of their inventory requirements, particularly maintenance, repair, and operating supplies. a. True b. Fals e ANSWER: False 36. Shortening the material pipeline in terms of time between suppliers and a buyer can reduce the average amount of inventory in a system. a. True b. Fals Chapter 16 -- Lean Supply Chain Management ANSWER: True 37. Using a RFID system, if supplier quality and lead times are reliable, planners can time the arrival of components just before production of the final part number. a. True b. Fals e ANSWER: False 38. _____ means that inventory moves through the supply chain continuously with minimal queueing or non-value-adding activity being performed. a. Pull b. WIP c. MRO d. Flow e. Push ANSWER: d 39. _____ means that customer orders start the work process, which ripples down through the supply chain. a. Make-to-stock b. Push c. MRP d. DRP e. Pull ANSWER: a 40. _____ means that supply chains must have perfect quality. Chapter 16 -- Lean Supply Chain Management a. DRP b. Flow c. Pull d. Push e. Striving for excellence a ANSWER: 41. All of the following are categories of inventory except _____. a. lean inventory b. raw material and semifinished item inventory c. work-in-process inventory d. MRO supplies inventory e. pipeline/in-transit inventory a ANSWER: 42. _____ inventory includes the items purchased from suppliers or produced internally to directly support production requirements. a. Work-in-process b. Finished-goods c. MRO suppliers d. Pipeline/in-transit e. Raw material and semifinished items a ANSWER: 43. Which of the following is an example of WIP inventory? a. Waiting to be moved to another process. b. Currently being worked on at a work center. c. Lining up at a processing center due to a capacity bottleneck or machine breakdown. d. All of the above. e. None of the above. Chapter 16 -- Lean Supply Chain Management ANSWER: a 44. _____ inventory includes completed items or products that are available for shipment or future customer orders. a. WIP b. Finished-goods c. MRO d. Pipeline/in-transit e. Raw materials and semifinished items ANSWER: b 45. When firms produce goods in anticipation of future customer orders, they are operating in a/an _____ environment. a. assemble-to-order b. make-to-order c. make-to-stock d. just-in-time e. None of the above. ANSWER: c 46. When firms produce goods in response to a customer order, they are operating in a/an _____ environment. a. make-to-order b. make-to-stock c. make-to-forecast d. WIP e. None of the above. ANSWER: a 47. _____ inventory includes the items used to support production and operations and are not physically part of Chapter 16 -- Lean Supply Chain Management a finished product. a. Raw materials b. WIP c. Semifinished items d. MRO e. Pipeline/in-transit ANSWER: d 48. _____ represents the funds committed to operating a business, including the purchase and holding of inventory. a. Pipeline inventory b. WIP c. MRP d. Working capital e. None of the above. d ANSWER: 49. Which of the following is a component of carrying cost? a. Cost of capital. b. Cost of storage. c. Cost of obsolescence, deterioration, and loss. d. All of the above. e. None of the above. ANSWER: d 50. _____ are calculated as Average Inventory in Units x Unit Price x Carrying Cost per Year. a. Quality costs b. Ordering costs c. Inventory carrying costs d. MRO costs Chapter 16 -- Lean Supply Chain Management e. Cycle counting costs c ANSWER: 51. All of the following are considered to be the right reasons for investing in inventory except _____. a. avoid disruptions in operational performance b. Unreliable supplier delivery c. support customer service requirements d. hedge against marketplace uncertainty e. take advantage of order quantity discounts b ANSWER: 52. Which of the following is not one of the wrong reasons for investing in inventory? a. Poor quality and material yield. b. Extended order-cycle times from global sourcing. c. Hedge against marketplace uncertainty. d. Specifying custom items for standard applications. e. Inefficient manufacturing processes. ANSWER: c 53. Which of the following is not one of the key principles of the lean concept? a. Maximize the use of people. b. Simplify first, and only then apply new technology. c. Focus on gradual, but continuous, improvement. d. Minimize waste (including poor quality). e. All of the above. ANSWER: a Chapter 16 -- Lean Supply Chain Management 54. All of the following are important barriers to lean supply except _____. a. large warehouses b. dispersed supply base c. historic buyer-supplier relationships d. number of suppliers e. supplier quality performance ANSWER: a 55. _____ involves frequent deliveries of smaller quantities directly to the point of use at the purchaser. a. Lean supply b. Lean transportation c. Lean warehousing d. Lean ordering e. None of the above. ANSWER: b 56. A repeatable lean transportation schedule, also called a _____, moves goods from supplier to purchaser and then from purchaser back to supplier with return material. a. MRO system b. pull system c. push system d. closed-loop system e. None of the above. ANSWER: d 57. A _____ system is a production control approach that uses containers, cards, or visual cues to control the production and movement of goods through the supply chain. a. MRP b. DRP c. lean supply d. JIT kanban Chapter 16 -- Lean Supply Chain Management e. lean transportation d ANSWER: 58. All of the following are common signaling methods used in a kanban system except _____. a. single-card system b. color coding of containers c. designated storage spaces d. computerized bar coding systems e. verbal notification ANSWER: a 59. _____ of inventory refers to the amount of inventory that a firm owns at any given time. a. Volume b. Velocity c. Value d. Vigor e. None of the above. ANSWER: a 60. _____ of inventory refers to how quickly raw material and work-in-process inventory transform into finished goods that the customer accepts. a. Volume b. Velocity c. Value d. Vigor e. None of the above. ANSWER: b Chapter 16 -- Lean Supply Chain Management 61. _____ of inventory pertains to the unit cost of the inventory. a. Volume b. Velocity c. Value d. Virtue e. None of the above. ANSWER: c 62. Record integrity is the result of various activities and procedures designed to ensure that the amount of _____ is equal to the computerized record of _____. a. MRP….kanban b. DRP….MRP c. ROH….POH d. POH….ROH e. None of the above. ANSWER: d 63. The downside of poor forecasting includes all of the following except _____. a. higher inventory volumes b. poor customer service as inventory is misallocated across locations and products c. higher inventory carrying charges d. excessive safety stock levels e. decreased customer service costs a ANSWER: 64. Which of the following is not one of the benefits of simplified designs? a. Fewer suppliers. b. Increased number of manual transactions. c. Reduced transactions to support the inventory. Chapter 16 -- Lean Supply Chain Management d. Fewer part numbers. e. Lower inventory management costs. ANSWER: b 65. Which of the following is not one of the policies used to improve design simplification and reduce complexity? a. Increase the number of suppliers. b. Establish premium pricing for customization. c. Establish geographic-specific options and standards. d. Do not eliminate frequently requested options. e. Utilize business modeling and TCO tools to support complexity reduction decisions. ANSWER: a 66. According to the APICS Dictionary, _____ is defined as the process of a supplier placing goods at a customer location without receiving payment until after the buyer uses the goods. a. Kanban b. Just-in-time c. Consignment d. MRO e. None of the above. c ANSWER: 67. All of the following action support reduced order-cycle time with suppliers except _____. a. expanded global sourcing b. expanded electronic capability c. supplier development support d. order-cycle time measurement e. focus on second- and third-tier suppliers ANSWER: a Chapter 16 -- Lean Supply Chain Management 68. The _____ is one that is delivered on time, accurately, and in perfect condition. a. kanban order b. MRO order c. consignment order d. perfect order e. MRP order ANSWER: d 69. In _____, demand for an item is not directly dependent upon the demand for any other item that is produced. a. dependent demand b. independent demand c. codependent demand d. Six Sigma e. just-in-time b ANSWER: 70. A/An _____ system takes a period-by-period set of master production schedule requirements (anticipated or booked customer orders) and produces a time-phased set of material, component, and subassembly requirements timed to support an expected build schedule. a. kanban b. DRP c. just-in-time d. perfect order e. MRP ANSWER: a Chapter 16 -- Lean Supply Chain Management 71. A _____ details the components or subassemblies and the quantity required to produce a final part number or end item. a. kanban b. perfect order c. bill of material file d. DRP system e. RFID system c ANSWER: 72. Which of the following is not one of the functions of a distribution resource planning system? a. Forecasting finished-goods inventory requirements. b.Establishing correct inventory levels at each stocking location. c. Determining the timing and replenishment of finished-goods inventories. d.Producing a time-phased set of material, component, and subassembly requirements timed to support an expected build schedule. e. Transportation planning and vehicle load scheduling. ANSWER: d 73. _____ inventory is in transit to a customer or is located throughout distribution channels. a. Pipeline/in-transi b. MRO c. WIP d. Raw materials and semifinished items e. Just-in-time a ANSWER: