Chapter 10

Question 1

Information distortion is exaggerated by the fact that

Answer 1

supply chains today produce a large amount of product variety.

Question 2

The situation in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers is known as

Answer 2

the bullwhip effect.

Question 3

The bullwhip effect causes

Answer 3

different stages of the supply chain to have a very different estimate of what demand looks like.

Question 4

The lack of coordination within a supply chain will result in a decrease in

Answer 4

level of product availability
and
replenishment lead time.

Question 5

Long term boom and bust cycles that mimic the bullwhip effect include

Answer 5

memory chips for personal computers.

Question 6

The bullwhip effect decreases

Answer 6

product availability.
and
profitability.

Question 7

The bullwhip effect

Answer 7

hurts the relationships between different stages of the supply chain.

Question 8

The bullwhip effect moves a supply chain

Answer 8

away from the efficient frontier by increasing cost and decreasing responsiveness.

Question 9

Situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits are referred to as

Answer 9

incentive obstacles.

Question 10

Incentives that focus only on the local impact of an action result in decisions that

Answer 10

do not maximize total supply chain profits.

Question 11

The lack of supply chain coordination on various measures of performance has costs associated with it. Which of the following is one of these costs?

Answer 11

Manufacturing

Question 12

The lack of supply chain coordination on various measures of performance has costs associated with it. Which of the following is one of these costs?

Answer 12

Quality

Question 13

The impact of the lack of coordination on supply chain processes decreases for the following measure:

Answer 13

level of product availability.

Question 14

The sales typically measured by a manufacturer are

Answer 14

the quantity sold to distributors or retailers (sell-in).

Question 15

Situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain are referred to as

Answer 15

information processing obstacles.

Question 16

The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in

Answer 16

a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.

Question 17

The lack of information sharing between the retailer and manufacturer

Answer 17

leads to a large fluctuation in manufacturer orders.

Question 18

Actions taken in the course of placing and filling orders that lead to an increase in variability are referred to as

Answer 18

operational obstacles.

Question 19

When a firm places orders in lot sizes that are much larger than the lot sizes in which demand arises,

Answer 19

variability of orders is magnified up the supply chain.

Question 20

Situations in which the pricing policies for a product lead to an increase in variability of orders placed are referred to as

Answer 20

pricing obstacles.

Question 21

Forward buying results in

Answer 21

large orders during the promotion period followed by very small orders after that.

Question 22

Problems in learning within organizations that contribute to the bullwhip effect are referred to as

Answer 22

behavioral obstacles.

Question 23

Operational improvements that reduce lot sizes can dampen the bullwhip effect by

Answer 23

decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain.

Question 24

Managers can improve coordination within the supply chain by

Answer 24

aligning goals and incentives.

Question 25

All transportation decisions should be evaluated based on their effect on

Answer 25

total costs.

Question 26

Coordination requires every stage of the supply chain to focus on

Answer 26

supply chain surplus.

Question 27

A manufacturer with significant market power should use

Answer 27

two-part tariffs and volume discounts to achieve coordination.

Question 28

If demand is uncertain, a manufacturer can incentivize retailers to provide high levels of product availability by using

Answer 28

buyback contracts.

Question 29

One appropriate measure to reduce replenishment lead times is to

Answer 29

order electronically.

Question 30

Which method would serve to reduce the information distortion in a supply chain consisting of a fabricator, manufacturer, supplier, and a retailer?

Answer 30

Make the manufacturer responsible for all decisions regarding product inventories at the retailer.

Question 31

In a continuous replenishment program, the wholesaler or manufacturer replenishes a retailer regularly based on

Answer 31

the POS data of the retailer.

Question 32

In most instances, CRP systems are driven by

Answer 32

the withdrawals of inventory from retailer warehouses.

Question 33

The replenishment decision in a VMI system is owned by the

Answer 33

manufacturer.

Question 34

Quite often in a VMI system, the inventory is

Answer 34

owned by the supplier until it is sold by the retailer.

Question 35

In a VMI system, the ________ must share demand information with the ________.

Answer 35

retailer, manufacturer

Question 36

If retailers sell products from competing manufacturers in a VMI system,

Answer 36

inventory at the retailer will be higher than optimal.

Question 37

What is the responsibility of a designated category leader?

Answer 37

The category leader manages purchasing decisions for all retailers.

Question 38

A fundamental aspect of successful collaboration is

Answer 38

identification and resolution of exceptions.

Question 39

Successful collaborative planning, forecasting and replenishment must be built on a foundation of

Answer 39

data synchronization and established standards for exchanging information.

Question 40

The most common form of collaboration observed in practice is

Answer 40

distribution center replenishment.

Question 41

Trading partners collaborate on store-level POS forecasts in

Answer 41

store replenishment collaboration.

Question 42

A high fashion retailer should rely on

Answer 42

interpretation of industry trends and customer tastes to forecast next season’s demand.

Question 43

The local hominy man is anticipating a bumper crop this year, so he arranges with a chain of grocery stores to stock up on his hominy as part of a Homina Homina Hominy campaign to lure customers in to the stores during September for cans of the divinely salty, yet nutritious vegetable. This approach is an example of

Answer 43

retail event collaboration.

Question 44

Retailers of all sizes can explore CPFR as a strategic option, but in order to be scalable, ________ is needed.

Answer 44

technology

Question 45

Mickey the manager reviewed his company’s customers’ orders for the past year and compared the variability of those orders with the variability of the orders he placed with his suppliers. This comparison allowed him to estimate his own company’s contribution to

Answer 45

the bullwhip effect.

Question 46

One of the best ways to solve coordination problems is

Answer 46

through teams comprised of different members of the supply chain.

Question 47

The full benefit of coordination is achieved when

Answer 47

the entire supply chain network is coordinated.