(Test Bank) Supply Chain Management: A Logistics Perspective

Coyle, 9

Business

Test Bank

9th Edition

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Author(s): Coyle

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Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank CHAPTER 1 TEST QUESTIONS True-False 1. The first decade of the twenty-first century was a period of rapid change for organizations, especially businesses. ANSWER: True, Page 5 2. A key element in Wal-Mart’s ability to discount brand name products was an understanding of the criticality of efficiency in its logistics and supply chain system. ANSWER: True, Page 6 3. Globalization has had little effect on consumers. ANSWER: False, Page 7 4. Supply and demand has become less volatile as managers become more adept at controlling the elements. ANSWER: False, Page 8 5. Outsourcing is a fairly new concept. ANSWER: False, Page 9 6. SAB should examine their off-shore purchasing policy, even though the products are sourced from the U.S. ANSWER: True, Page 9 ANSWER: False, Page 9 ANSWER: False, Page 10 ANSWER: True, Page 10 ANSWER: False, Page 12 ANSWER: True, Page 15It is expected that some or all of the BRIC countries (Brazil, Russia, India & china) will replace the so-called VISTA countries (Vietnam, Indonesia, S. Africa, Turkey and Argentina) as low cost producers of various products and services.7. The world economy still favors the United States and European countries, even though China and India can participate in the global economy much more readily. 8. It is predicted that social networks such as Facebook and Twitter will influence supply chains because of their impact on customer demand and the speed of information transfers.9. The U.S. transportation system was deregulated in the 1930s and 1940s in response to economic conditions and World War 210. Even though there are references to supply chain management in the 1980s, SCM did not capture the attention of senior-level management until the 1990s.11. 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: False, Page 19 Multiple Choice 13. Most retailers are essentially supply chain companies since A. they dominate the consumer market. ANSWER: c, Page 6 14. Which of the below is not one of the external forces driving the rate of change and shaping our economic and political landscape? ANSWER: c, Page 7 15. Outsourcing involves a. moving company facilities away from the home office. b. hiring foreign nationals to manage parts of the business. ANSWER: c, Page 9 16. Some individuals describe the current consumer as the “click here” generation because ANSWER: b, Page 10Supply chain managers no longer need to worry about suboptimization in light of today’s technology.12. own their warehouses and trucks. b. they buy products produced by others. c. engage in off-shore sourcing. d. Government policy a. Technology b. Environmental concerns c. Globalization d. obtaining materials, parts, and products from other companies. c. building a factory in another country. d. we all have Internet access. a. we no longer wait for information to be “pushed out” to us. b. we buy so much merchandise on line. c. we take little time to make purchasing decisions. d. The demographics of our society has changed because 17. the “Baby Boom” generation is now turning 60. a. 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: b, Page 12 18. The Supply Chain Concept ANSWER: d, Page 15 19. Logistics, in its simplest form, ANSWER: b, Page 16 20. One of the major challenges of supply chain management is ANSWER: b, Page18 a. information b. products and services ANSWER: d, Page 18of the increase in two-career families and single-parent households. b. of immigration. c. birth rates have changed. d. is very new and considered cutting edge technology. a. is highly dependent of computerization. b. is not always well understood by senior managers. c. developed from the previous Physical Distribution concept. d. is a military term, as it was developed originally to supply the battlefield. a. combines inbound logistics with the outbound logistics of physical distribution. b. is another term for transportation management. c. does not involve customer service or other related functions. d. forward buying. a. maintaining the visibility of inventory. b. building safety-stock inventory. c. Pushing inventory back to vendors. d. Which of these flows only one way as illustrated in Figure 1-4? 21. financials c. None of these answers d. Traditionally, information has been viewed as flowing in the opposite direction of products, that is, from the market/customer back to the wholesalers, manufacturers, and vendors. 22. 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: d, Page 21 ANSWER: d, page 23 a. complexity b. inventory deployment c. inventory carrying costs d. technology ANSWER: c, Page 25 25. Which of the following is not part of the Supply Chain network? ANSWER: b, Page 24 26. Complexity in the supply chain is caused by ANSWER: d, Page 24 27. Cost/Value refers toThis is still true and has not changed. a. Computerization has greatly increased the flow of information from the source. b. The “Big Box” stores have developed their own sources. c. None of these answers d. One of the four supply chain flows in Figure 1 – 8 that has received increased attention from supply chain managers due to the growth in technology is:23. Product flow x. Information flow y. Cash flow z. Demand flow aa. The challenge to develop and sustain an efficient and effective supply chain(s) requires organizations to address a number of issues. Which is not included?24. plants a. stores b. terminals c. distribution centers d. the number of SKUs. a. locations of customers and suppliers. b. transportation requirements. c. All of these answers. d. 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank a. getting the best value for the money spent. ANSWER: c, Page 25 28. Performance measurement is important because a. it allows firms to rate competitors. b. without it, managers would not know how the global economy is doing. ANSWER: d, Page 27 29. A critical outcome of the supply chain is to deliver ANSWER: b, Page 27 Essay 30. What is the significance of Globalization in Supply Chain Management? ANSWER: Arguably, globalization is the most frequently cited change factor by business leaders, and it has replaced the post-World War II Cold War as the dominant driving force in world economics. The concept of the global marketplace or global economy has taken on new meaning for all enterprises (profit and nonprofit; small, medium, and large; products or services) and for individual consumers during the last two decades. Overall, globalization has led to a more competitively intense economic and geopolitical environment. This environment manifests itself in opportunities and threats, both economic and political. Some individuals have implied that there is no “geography” in the current global environment (figuratively speaking) or, perhaps more aptly, that time and distance have been compressed. (Pages 7 - 8) 31. What is Vendor Managed Inventory? ANSWER: Essentially, vendor-managed inventory (VMI) usually means that the U.S. firms competing in the global arena. b. the importance of cost and value at the very end of the supply chain. c. product variety. d. companies presently operating in the European Economic Community need to understand how its competitors are doing.c. lower-level metrics in an organization must connect directly to the high-level performance to achieve goals.d. profits. a. the right product to the right place. b. cost/value. c. on management’s expectations. d. 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank manufacturer will manage the inventory of its products (and possibly related products) at the retailer’s warehouse(s) and reorder as appropriate for customer fulfillment. The manufacturer may also have a representative at the designated retail warehouse locations to assure accurate and timely delivery. The retailer should experience lower costs associated with inbound logistics, and the manufacturer should be able to offset its additional cost with increased sales (fewer stockouts, more complete orders, etc.), because of the more accurate and timely information of product orders at the store level. (Page 11) 32. Explain how today’s consumers are empowered and how they impact Supply Chain Management. ANSWER: Today’s consumers are more enlightened and educated, and they are empowered more than ever by the information that they have at their disposal from the Internet and other sources. Their access to supply sources has expanded dramatically beyond their immediate locale by virtue of catalogs, the Internet, and other media. They have the opportunity to compare prices, quality, and service. Consequently, they demand competitive prices, high quality, tailored or customized products, convenience, flexibility, and responsiveness. They tend to have a low tolerance level for poor quality in products and services. Consumers also have increased buying power due to higher income levels. They demand the best quality at the best price and with the best service. These demands place increased challenges and pressure on the various supply chains for consumer products. (Page 12) 1-7 ClS lChiM tALitiP ti9thEditiCoyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 1 Test Bank ANSWER: Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow of products, materials, services, information, and financials from the supplier’s suppliers through the various intermediate organizations or companies out to the customer’s customers, or a system of connected networks between the original vendors and the ultimate final consumer. The extended enterprise perspective of supply chain management represents a logical extension of the logistics concept, providing an opportunity to view the total system of interrelated companies for increased efficiency and effectiveness. (Page 17) 34. Discuss how globalization and consolidation in supply have increased complexity. ANSWER: Globalization and consolidation in supply chains have caused an increased complexity for organizations in terms of SKUs, customer and supplier locations, transportation requirements, trade regulations, taxes, and so forth. Companies need to take steps to simplify, as much as possible, the various aspects of their supply chains. For example, the number of SKUs has expanded for many companies, which exacerbates problems for inventory management and order fulfillment. Consequently, companies have been rationalizing SKUs to eliminate the slow movers and items that do not contribute to profitability. Locations also need to be analyzed to eliminate high-cost or duplicative operations. Customer service levels need to be rationalized, as do vendors or supplier alternatives. Layers of complexity develop and may seem necessary, but organizations need to continually evaluate those areas of complexity by evaluating processes, training people, and exploiting technology. (Pages 24 - 25) ANSWER: Most organizations have measures of performance or metrics in place to analyze and evaluate their efficiency and progress over different time periods. Sometimes, such measures are used for setting baseline performance objectives or expected outcomes, for instance, orders filled and shipped per day. Measurement is important, and at this juncture, it is important to recognize that lower-level metrics in an organization must connect directly to the high-level performance measures of the organization and the supply chain, which are usually net profit, return on investment, or assets and cash flow. In some instances, metrics are set that appear logical for the subunit of the organization but are suboptimal for the overall organization or supply chain. For example, the warehouse manager who is measured by the cost per cubic foot of units stored will be motivated to fill the warehouse to the ceiling. (Page 27) ANSWER: Transportation can be viewed as the glue that makes the supply chain model function. The critical outcomes of the supply chain are to deliver the right product, at the right time, in the right quantity and quality, at the right cost, and to the right destination. Describe the concept of an “integrated supply chain” that begins with the supplier’s supplier and ends with the final consumer.33. Discuss how Performance Measurement can affect Supply Chain Management. 35. What is the role of Transportation Management in connection with Supply Chains? 36. 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th EditionCoye Supp y Ca aage et: ogstcs espectve, 9 dto Chapter 1 Test Bank Transportation plays an important role in making these “rights” happen. Another aspect of the importance of transportation is related to some of the strategies that are being used by companies to remain competitive in today’s economy—for example, just-in-time inventory, lean logistics and manufacturing, and scheduled deliveries. The challenge has been exacerbated by economic changes among transportation providers; shortages of drivers, higher fuel costs, and changes in driver hours regulations have led to what some individuals have called a transportation crisis or the “perfect storm.” Transportation has gone from being a readily available commodity to potential users, especially in the 1990s, to today where transportation is scarce in some market areas. (Page 27) 1-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank CHAPTER 2 TEST QUESTIONS True-False 1. The utility created through the basic marketing activities is known as place utility. ANSWER: False, Page 40 2. Transportation is the physical movement or flow of goods. ANSWER: True, Page 42 3. During the 1990s and 2000s, logistics costs as a percentage of gross national product declined. ANSWER: True, Page 47 4. An aircraft manufacturer is a good example of an organization with a heavy inbound flow and a simple outbound flow. ANSWER: True, Page 63 5. Acme Battery distributes its batteries to warehouses, where they are stored until ordered by a retailer. The warehouses are located close by the retail markets served. This is the logistics channel approach to logistics. ANSWER: True, Page 66 6. In a logistics system, warehousing should be optimized at the expense of related logistics activities, such as transportation and procurement. ANSWER: False, Page 69 7. The mathematical calculation of the point of equality between systems under analysis is used for short-run/static analysis. ANSWER: False, Pages 61-62 8. To hold down distribution cost, the lowest cost carrier should always be used. ANSWER: False, Page 64 9. The inverse relationship that exists between the cost of lost sales and inventory costs is the inventory effect. ANSWER: True, Page 55 Multiple-Choice 10. Ensuring the availability of the right product, in the right quantity, and the right condition, at the right place, at the right time, for the right customer at the right cost, is which definition of logistics? Seven Rs a. Council of Logistics Management b. Society of Logistic Engineers c. 2-1 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: a, Page 37 inside Table 2.1 ANSWER: b, Pages 38-39 ANSWER: b, Page 38 ANSWER: a, Page 39 ANSWER: d, Page 39 15. The utility that is created by moving goods from production points to market points where demand exists is referred to as:supply chain logistics d. Logistics is the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods- or service-producing network to fulfill customer requests; and utilizing the network to fulfill customer requests in a timely manner. This is a11. definition from an inventory perspective. a. general definition. b. definition offered by the Society of Logistics Engineers. c. a definition provided by the Council of Logistics Management. d. All four subdivisions of logistics have some common characteristics. Which of the below does not belong in the list:12. transportation a. marketing b. scheduling c. forecasting d. The value that is added to goods through a manufacturing or assembly process is: 13. form utility a. place utility b. time utility c. possession utility d. Which of the answers below is an example of the creation of form utility by a logistics activity?14. when lumber is cut and made into a chair a. when a firm's finance manager approves customer purchases on a credit basis b. when Dell combines components with software to produce a computer to a customer’s specificationsc. the breaking bulk and repackaging at a distribution center d. 2-2 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: b, Page 40 16. Logistics creates which utility through production forecasting, production scheduling and inventory control? ANSWER: b, Page 40 17. Time utility depends on ANSWER: d, Page 40 18. What is often the largest component of logistics costs? ANSWER: b, Page 42 19. Materials handling is concerned with ANSWER: d, Page 43 20. Marketers have begun to recognize the strategic value of place in the marketing mix, as well as the benefits resulting from high-quality logistical services. As a result, which has been recognized as the interface activity between marketing and logistics?form a. place b. time c. possession d. form utility a. quantity utility b. time utility c. possession utility d. when the carrier picks up the shipment. a. transportation companies delivering on time. b. proper forecasting. c. having the product available when the user wants it. d. inventory costs a. transportation costs b. shipper-related costs c. administrative costs d. inventory levels. a. breaking bulk. b. scheduling trade-offs. c. short-distance movement. d. 2-3 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: d, Page 52 21. It can be argued that ? is the second language of logistics and supply chain management. ANSWER: c, Page 53 22. What activity is described as the movement of goods into a warehouse, the placement of goods in a warehouse, and the movement of goods from storage to order picking areas and eventually to dock areas for transportation out of the warehouse? ANSWER: a, Page 43 23. A(n) _______ relationship exists between the cost of lost sales and inventory cost. ANSWER: c, Page 55 24. Water Cruisers is located in Jacksonville, Florida, and makes small yachts and luxury pontoon boats for customers on the East coast of the United States. Each boat requires thousands of parts purchased from over 1,000 vendors. A number of boats are in production at any one time, so a large number of parts constantly arrive and are stored. Once a boat is finished, it is sailed up the coast to a convenient port for customer delivery. Which type of logistics system does Water Cruisers use?product a. promotion b. price c. customer service d. quality a. manufacturing b. finance c. sales d. materials handling a. physical distribution b. business logistics c. order fulfillment d. reverse a. proportional b. inverse c. non linear d. balanced system a. heavy inbound b. heavy outbound c. 2-4 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: b, Page 63 ANSWER: c, Page 56 26. When a specific point in time, or level of production, is chosen and costs are developed for the various logistics cost centers, it is called ANSWER: b, Page 60 ANSWER: b, Pages 61-62 28. What are fixed spatial points where goods stop for storage or processing? a. nodes ANSWER: a, Page 65 29. An important sustainability issue that has received much more scrutiny in recent years is the: a. focus on adequate inventory levelsreverse system d. The product’s dollar value typically affects the cost of logistics activities. Which is not one of these costs?25. warehousing costs a. transportation costs b. promotion costs c. packaging costs d. least cost analysis. a. short run analysis. b. cost center analysis. c. link node analysis. d. A ______ analysis examines a logistics system over a long time period or range of output. 27. cost center analysis a. dynamic b. link node analysis c. least cost analysis d. links b. cost centers c. fulfillment centers d. reduction in packaging waste by using alternate materials b. effort to move warehouse storage closer to consumers c. 2-5 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank ANSWER: b, Page 43 30. What technology has helped make the physical inventory-taking process more efficient and effective? a. advances in forecasting ANSWER: d, Page 44 Essay 31. What is the primary challenge of logistics? ANSWER: The challenge is to manage the entire logistics system in such a way that order fulfillment meets and perhaps exceeds customer expectations. At the same time, the competitive marketplace demands efficiency—controlling transportation, inventory, and other logistics-related costs. Cost and service tradeoffs must be considered when evaluating customer service levels and the associated total cost of logistics, but both goals—efficiency and effectiveness—are important to an organization in today’s competitive environment. (Page 36) 32. What is the definition of logistics which the authors choose and what group had formulated it? ANSWER: The definition offered by the Council of Supply Chain Management Professionals is: “That part of the supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption in order to meet customer requirements.” (Page 37) 33. The text mentions four subdivisions of logistics. Pick one, define and discuss. ANSWER: Business logistics: That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, service, and related information from point of origin to point of consumption in order to meet customer requirements. • Military logistics: The design and integration of all aspects of support for the operational capability of the military forces (deployed or in garrison) and their equipment to ensure readiness, reliability, and efficiency. • Event logistics: The network of activities, facilities, and personnel required to organize, schedule, and deploy the resources for an event to take place and to efficiently withdraw after the event.emphasis on materials handling and warehouse design d. transportation management systems b. just-in-time inventory c. scanning of bar-coded RFID tags d. 2-6 ClS lChiM tALitiP ti9thEditiCoyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 2 Test Bank • Service logistics: The acquisition, scheduling, and management of the facilities, assets, personnel, and materials to support and sustain a service operation or business. (Page 38) 34. There are five principal types of economic utility that add value to a product or service. Name four of the five and pick one to discuss in more detail. ANSWER: The five principal types of economic utility are form, time, place, quantity, and possession. Generally, production activities are credited with providing form utility; logistics activities with time, place, and quantity utilities; and marketing activities with possession utility. (Page 39) 35. The logistics definitions discussed indicate 14 activities for which the logistics manager might be responsible. Name at least eight and briefly discuss any two in detail. ANSWER: • Transportation • Warehousing and storage • Industrial packaging • Materials handling • Inventory control • Order fulfillment • Inventory forecasting • Production planning and scheduling • Procurement • Customer service • Facility location • Return goods handling • Parts and service support • Salvage and scrap disposal (Pages 41- 42) 36. The micro perspective of logistics examines the relationships between logistics and other functional areas in an organization. What are these other functions? Select one and discuss how it interacts with logistics. ANSWER: The micro perspective of logistics examines the relationships between logistics and other functional areas in an organization – including marketing, manufacturing or operations, finance and accounting. Logistics, by its nature, focuses on processes that cut across traditional functional boundaries, particularly in today’s environment with its emphasis on the supply chain. Consequently, logistics interfaces in many important ways with other functional areas since the logistics-related flows, as well as supply chain flows, tend to be horizontal in an organization, cutting across other functions. (Page 49) 37. What are the 4 “Ps” of marketing? Select one, and discuss how it interfaces with 2-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th EditionCoye Supp y Ca aage et: ogstcs espectve, 9 dto Chapter 2 Test Bank logistics. ANSWER: Logistics has an important relationship with marketing. The rationale for this strong relationship is that physical distribution, or the outbound side of an organization’s logistics system, plays an important role in the sale of a product. In some instances, physical distribution and order fulfillment may be the key variables in the continuing sales of products; that is, the ability to provide the product at the right time to the right place in the right quantities and the right cost might be the critical element in making a sale. (Pages 50- 52) 38. What is ROA? Discuss how it can impact logistics. ANSWER: Finance has become increasingly important to logistics and supply chain management during the last decade. The impact that logistics and supply chain management can have upon return on assets (ROA) or return on investment (ROI) is very significant. Logistics can positively impact ROA in several ways. First, inventory is both a current asset on the balance sheet and a variable expense on the income statement. Reducing inventory levels reduces the asset base as well as the corresponding variable expenses, thus having a positive impact on ROA. Second, transportation and warehousing costs can also influence ROA. If an organization owns its warehouses and transportation fleet, they are fixed assets on the balance sheet. If these assets are reduced or eliminated, ROA may increase. Similarly, if an organization utilizes third parties for warehousing and transportation, variable expenses will be incurred, which impact the profit margin. Finally, the focus on customer service can increase revenue. As long as the incremental increase in revenue is larger than the incremental increase in the cost of customer service, ROA will increase. (Page 53) 39. There are a number of product-related factors that can affect the cost and importance of logistics. Identify the factors, and pick one to discuss further. ANSWER: Among the more significant product-related factors that affect the cost and importance of logistics are dollar value, density, susceptibility to damage, and the need for special handling. (Page 56) 40. Spatial relationship is extremely significant to logistics. Discuss why this is true. ANSWER: “Spatial relationships” refers to the location of fixed points in the logistics system with respect to demand and supply points. Spatial relationships are very important to transportation costs, since these costs tend to increase with distance. The distance factor or spatial relationships might affect logistics costs in ways other than transportation costs. For example, a firm located far from one or more of its markets might need to use a market-oriented warehouse to make customer deliveries in a satisfactory time period. Therefore, distance can add to warehousing and inventory carrying costs. (Pages 59-60) 2-8 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank CHAPTER 3 TEST QUESTIONS True-False ANSWER: False, Page 77 2. The third era of globalization is said to have begun around the year 2000. The significant characteristic of this era is that it is being powered by individuals and smaller organizations in contrast to the countries of the first era and the large companies of the second era. ANSWER: True, Page 78 3. The supply chain should manage four important flows, namely, materials and products, information, financials, and demand. ANSWER: True, Page 79 4. Operating globally has become harder to accomplish for individuals and small companies. ANSWER: False, Page 81 5. The terms of a demise charter transfers full control of the chartered vessel to the charterer. ANSWER: True, Page 94 6. Customs Trade Partnership Against Terrorism (C-TPAT) is a mandatory program in which importers must participate. ANSWER: False, Page 89 7. The North American Free Trade Agreement has removed all trade barriers between the U.S., Canada, and Mexico. ANSWER: False, Page 90 8. A maquiladora plant can be located anywhere in South America. ANSWER: False, Pages 91-92 9. Ocean transportation offsets slower service with lower rates than other modes. ANSWER: True, Page 93 10. A firm using air transportation cannot use the same packaging for international shipping as for domestic shipping because many cargo aircraft are not pressurized. ANSWER: False, Page 95 11. A Foreign Freight Forwarder is unregulated by the government. ANSWER: False, Page 96 12. Export Trading Companies and Export Management Companies are essentially the same. ANSWER: False, Pages 97-98Globalization is not considered to be one of the external factors driving change in logistics. 1. 3-1 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank 13. An importer can store goods in a bonded warehouse for up to three years without paying duty. ANSWER: True, Page 99 ANSWER: False, Page 86 Multiple-Choice 15. Globalization was initially driven by countries ANSWER: c, Page 77 16. A critical ingredient for the Third Era of globalization is: ANSWER: b, Page 78 17. The Supply Chain should a. manage all aspects of transportation, selecting the least cost when possible. b. seek to maximize profits. c. use the same techniques internationally that it uses domestically. d. manage materials and products, information, financials, and demand. ANSWER: d, Page 79 18. In his book “The Wealth of Nations”, Adam Smith stated that economies and companies could improve their wealth by a. allowing specialization of tasks. b. ensuring that logistics is used to gain advantage in the marketplace. Soft issues such as social and cultural concerns should not present a challenge for supply chain managers, whose role is to focus on the physical side of supply chain execution. 14. seeking new territories. a. outside the U.S. seeking to establish plants in the U.S. b. seeking materials and goods not available in their own land. c. sponsoring trading missions. d. the global emphasis on tailoring products and marketing strategies to meet perceived local needsa. technological advances, especially in information technology and communications b. the global emphasis on profits and efficiency c. the global emphasis on the marketing mix and marketing functions d. 3-2 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank c. becoming multi-national. d. moving production off shore. ANSWER: a, Page 81 19. A demand-driven system is also known as a. a supply chain. b. a pull system. c. a marketing system. d. a multi-echelon system. ANSWER: b, Page 87 20. A maquiladora plant is a. a new type of flower. b. an entity created under NAFTA c. a U.S. plant performing manufacturing, processing, or assembly activity in Mexico. d. a factory owned by the Maquiladora Corporation. ANSWER: c, Pages 91-92 21. Focused production is a. a strategic decision to make only what the market desires. b. used by those firms not sure of the market demands. c. a strategy in which a given plant produces one or two items of the company’s total product line. d.` a trend in the electronics industry with manufacturing in China. ANSWER: c, Page 93 22. Which are the major modes of international transportation? ANSWER: a, Page 93 23. Which is a major category of ocean shipping?water and air a. water and rail b. rail and motor c. rail and air d. 3-3 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank ANSWER: d, Page 94 24. Which category of ocean shipping offers set schedules over specified sea routes? ANSWER: a, Page 94passenger travel a. common carriers b. exempt carriers c. charter vessels d. liner service a. charter vessels b. private vessels c. demise charter vessels d. 3-4 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank 25. Which is the main advantage of international air transport? ANSWER: c, Page 95 26. Which condition must be present before motor carriers and rail carriers can be used for international shipments? a. shipments must be in volume and in bulk b. the shipment must be between adjacent countries c. no customs barriers can be imposed d the shipment cannot pass through adjacent countries ANSWER: b, Page 96 27. These are designated by the U.S. secretary of the treasury for the purpose of storing, repacking, sorting or cleaning imported merchandise entered for warehousing without paying import duties while the goods are in storage. ANSWER: a, Page 99 28. Gemini products wishes to enter foreign markets but lacks the resources to do so. They evaluate their alternatives and approach Overseas Traders, LLC, a company that specializes in the foreign distribution of products of the type which Gemini manufacturers. Overseas purchases $50,000 of Gemini's products for sale on the international market. Overseas is which type of global logistics channel intermediary? ANSWER: c, Page 98 29. The global logistics channel intermediary that supervises the movement of goods through customs and ensures that the documentation accompanying a shipment is complete and accurate freight rates a. flexibility b. transit times c. accessibility d. Bonded warehouses a. Hold-on-dock storage b. In-transit storage areas c. Transit sheds d. NVOCC a. export packer b. export trading company c. customs house broker d. 3-5 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank is known as ANSWER: c, Page 98 30. Which type of global logistics channel intermediary enables goods to move through customs more easily by consolidating small shipments into more economical sizes? ANSWER: d, Page 97 31. Goods can be stored in a bonded warehouse ANSWER: a., Page 99 ANSWER: c, Page 79a foreign freight forwarder. a. an export packer. b. a customs house broker. c. a foreign trade specialist. d. customs house broker a. NVOCC b. export trader c. foreign freight forwarder d. for up to 3 years. a. until next year. b. Indefinitely. c. until the next shipment of the same product arrives. d. The biggest and best known example of a regional trade agreement (RTA) is the: 32. World Trade Organization (WTO) a. General Agreement on Tariffs and Trade (GATT) b. European Union (EU) c. Customs Trade Partnership Against Terrorism (C-TPAT) d. America’s ports are a key component of its global commerce. U.S. ports also play a vital role for the cruise industry. Which of these is not one of the top three departure ports for the cruise industry?33. Port Canaveral, Florida a. Cape Liberty, New Jersey b. Miami, Florida c. 3-6 ClS lChiM tALitiP ti9thEditiCoyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition Chapter 3 Test Bank ANSWER: b, Page 89 ANSWER: b, Page 92 Essay 35. What are the three phases of globalization? Pick one and discuss. ANSWER: Globalization was initially driven by countries (1400–1800) seeking materials and goods not available in their own land, but they also had imperialistic objectives of enhancing their economic and political power. The second era of globalization (1800–2000) was driven by companies seeking goods and materials, labor, economies of scale, and markets. This era produced multinational companies with global reach and enormous economic market power. In the second phase of globalization, companies headquartered in developed countries like the United States, Western Europe, and Japan had an advantage in terms of infrastructure, educational systems, and capital markets. It has been suggested that the world was, figuratively speaking, tilted in favor of the developed countries. The economic advantage was such that the citizenry of the less-developed countries tended to migrate to the more developed countries, especially the United States. The well-educated and skillful immigrants added to the advantages enjoyed by the developed countries. The third era of globalization is said to have begun around the year 2000. The significant characteristic of this era is that it is being powered by individuals and smaller organizations in contrast to the countries of the first era and the large companies of the second era. The critical ingredients for this new era have been the technological advances, especially in information technology and communications, that have connected the “four corners of the globe.” Thus, with the enabling of more broad-based participation in the global economy without some of the massive infrastructure previously required, the world has indeed become flat. (Pages 77-78) 36. Discuss how companies and economies can increase their wealth. ANSWER: Adam Smith who is credited with providing the economic rationale for capitalism in his famous book, Wealth of Nations, stated that division of labor or labor specialization is limited by the extent of the market or volume of demand. In other words, economies and companies could improve their wealth by allowing specialization of tasks. The automobile assembly line is a good example of specialization wherein each individual performs a small task relative to the total Ft. Lauderdale, Florida d. As market forces continue to exert pressure on companies to improve profitability, the quest for lower-cost manufacturing has been a factor in the relocation of manufacturing from Mexico to ________ ?34. South America a. Asia b. Russia c. Canada d. 3-7 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th EditionCoye Supp y Ca aage et: ogstcs espectve, 9 dto Chapter 3 Test Bank product, but the output per individual is higher than if individuals each assembled a complete car. Smith’s caveat, which is relevant here, indicates that the advantage is true as long as you can sell the increased volume that is produced. An important role of logistics is to help extend the market area of countries or companies through improved efficiency to lower the landed cost in new market areas. This logic is even more apropos for supply chains. It can be argued that supply chains help to establish the limits of what is competitively possible in the market. In other words, the cost and value at the end of the supply chain determine a firm’s ability to compete in a global marketplace. (Page 81) 37. Discuss how our trading partners have changed in relation to their amount of trade with the U.S. ANSWER: Table 3.1 presents trade data (total of imports and exports) for the top 10 U.S. trading partners. China is now our second largest trading partner, supplanting Mexico, which historically has been number two. The trade volume with China was 22.2 percent of the total of the top 10 for 2010, and it increased its trade volume by 25 percent from 2009 to 2010. In 2000, China was number four on the top-10 list following Canada, Mexico, and Japan, and its trade volume with the United States has nearly quintupled since that time ($457 billion vs. $94 billion). The total value of trade with these top 10 trading partners increased by 22.63 percent from 2009 to 2010, and since 2000 it has increased by about 288 percent in total value. Both of these percentage increases are reflective of the growing interdependence and the trade relationships with other countries. India does not appear in the top 10 countries listed in Table 3.1. India’s strength has been in the area of information technology services, which tends to understate its importance for global supply chains. In 2005, 59 percent of U.S. corporate spending (offshore) for information technology services was spent in India. Interestingly, China, which is known for manufacturing various types of products, is attracting U.S. companies to establish research centers. Microsoft and Intel established research centers in Beijing in 1998, Google in 2005, and Rohm & Haas and Dupont in Shanghai in 2006. The combined populations of China and India, which are in excess of two billion people, make them attractive as markets and as sources of imports. Consequently, it seems safe to conclude that global supply chain connections to both China and India will continue to grow. (Pages 82-83) 38. From a customer service perspective, global markets and strategy have four important characteristics. Name them and select one to discuss. ANSWER: First, companies attempt to standardize to reduce complexity, but they recognize that global markets need some customization. Second, global competition reduces the product life cycle since products can be copied or reengineered quickly by competitors. Third, traditional organizational structures and related business models frequently change since companies get more involved in outsourced manufacturing and some logistical activities such as transportation, warehousing, and order fulfillment. Fourth, globalization introduces more volatility and complexity. It is much more likely that supply chains will experience challenges with weather, terrorism, strikes, 3-8 Coyle Suppl y Chain Manage ment: A Logistics Perspective, 9th Edition h k