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Chapter3SupplyChainDriversandObstaclesTrue/FalseThemajordriversofsupplychainperformancearefacilities,inventory,transportation,andinformation.Answer:TrueDifficulty:ModerateThemajordriversofsupplychainperformancearecustomers,facilities,inventory,transportation,andinformation.Answer:FalseDifficulty:ModerateThetwomajortypesoffacilitiesareproductionsitesandstoragesites.Answer:TrueDifficulty:ModerateThetwomajortypesoffacilitiesaredistributionsitesandstoragesites.Answer:FalseDifficulty:ModerateInventoryisanimportantsupplychaindriverbecausechanginginventorypoliciescandramaticallyalterthesupplychain'sefficiencyandresponsiveness.Answer:TrueDifficulty:ModerateInformationispotentiallythebiggestdriverofperformanceinthesupplychainasitdirectlyaffectseachoftheotherdrivers.Answer:TrueDifficulty:EasyInformationispotentiallythebiggestdriverofperformanceinthesupplychaineventhoughithaslittleimpactoneachoftheotherdrivers.Answer:FalseDifficulty:EasyAfacilitywithlittleexcesscapacitywilllikelybemoreefficientperunitofproductitproducesthanonewithalotofunusedcapacity.Answer:TrueDifficulty:EasyAfacilitywithlittleexcesscapacitywilllikelybenomoreorlessefficientperunitofproductitproducesthanonewithalotofunusedcapacity.Answer:FalseDifficulty:EasyThehighutilizationfacilitywillhavedifficultyrespondingtodemandfluctuations.Answer:TrueDifficulty:EasyThehighutilizationfacilitywillhavenomoredifficultyrespondingtodemandfluctuationsthanonewithalotofunusedcapacity.Answer:FalseDifficulty:EasyStockkeepingunit(SKU)storageisthewarehousingmethodologythatusesatraditionalwarehousetostoreallofonetypeofproducttogether.Answer:TrueDifficulty:ModerateWarehouseunitstorageisthewarehousingmethodologythatusesatraditionalwarehousetostoreallofonetypeofproducttogether.Answer:FalseDifficulty:ModerateThecomponentsofinventorydecisionsincludecycleinventory,safetyinventory,seasonalinventory,andsourcing.Answer:TrueDifficulty:EasyThecomponentsofinventorydecisionsincludecapacity,cycleinventory,safetyinventory,seasonalinventory,andsourcing.Answer:FalseDifficulty:EasyCycleinventoryisinventorythatisbuiltuptocounterpredictablevariabilityindemand.Answer:FalseDifficulty:EasySeasonalinventoryisinventorythatisbuiltuptocounterpredictablevariabilityindemand.Answer:TrueDifficulty:ModerateCompaniesusingseasonalinventorywillbuildupinventoryinperiodsoflowdemandandstoreitforperiodsofhighdemandwhentheywillnothavethecapacitytoproduceallthatisdemanded.Answer:TrueDifficulty:ModerateCompaniesusingseasonalinventorywillmaintainalevelinventoryincreaserateofproductionforperiodsofhighdemand.Answer:FalseDifficulty:EasyAcompany'sabilitytofindabalancebetweenresponsivenessandefficiencythatbestmatchestheneedsofthecustomeritistargetingisthekeytoachievingstrategicfit.Answer:TrueDifficulty:ModerateManyobstacles,suchasgrowingproductvarietyandshorterlifecycles,havemadeitincreasinglydifficultforsupplychainstoachievestrategicfit.Answer:TrueDifficulty:ModerateMultipleChoiceWhichofthefollowingisnotamajordriverofsupplychainperformance?FacilitiesInventoryTransportationInformationAlloftheabovearemajordriversofsupplychainperformance.Answer:eDifficulty:EasyWhichofthefollowingisnotamajordriverofsupplychainperformance?CustomersFacilitiesInventoryTransportationInformationAnswer:aDifficulty:ModerateTheplacesinthesupplychainnetworkwhereproductisstored,assembled,orfabricatedareknownasrmation.customers.Answer:aDifficulty:EasyAllrawmaterials,workinprocess,andfinishedgoodswithinasupplychainareknownrmation.customers.Answer:bDifficulty:EasyMovinginventoryfrompointtopointinthesupplyisknownrmation.customers.Answer:cDifficulty:EasyThedataandanalysisconcerningfacilities,inventory,transportation,andcustomersthroughoutthesupplychainisknownasa.rmation.customers.Answer:dDifficulty:EasyThetwomajortypesoffacilitiesaredistributionsitesandstorageductionsitesanddistributionductionsitesandstoragesites.retailsitesanddistributionsites.distributionsitesandinventorysites.Answer:cDifficulty:ModerateWhichcomponentofthesupplychaindecision-makingframeworkwouldbeestablishedfirst?CustomerstrategySupplychainstrategySupplychainstructureCompetitivestrategyReplenishmentstrategyAnswer:dDifficulty:ModerateWhichcomponentofthesupplychaindecision-makingframeworkwouldbeestablishedsecond?CustomerstrategySupplychainstrategySupplychainstructureCompetitivestrategyReplenishmentstrategyAnswer:bDifficulty:ModerateWhichcomponentofthesupplychaindecision-makingframeworkwouldbeusedtoreachtheperformanceleveldictatedbythesupplychainstrategy?CustomerstrategySupplychainstrategySupplychainstructureCompetitivestrategyReplenishmentstrategyAnswer:cDifficulty:EasyWhichofthefollowingisnotacomponentoffacilitiesdecisions?LocationCapacityOperationsmethodologyWarehousingmethodologyAlloftheabovearecomponentsoffacilitiesdecisions.Answer:eDifficulty:ModerateWhichofthefollowingisnotacomponentoffacilitiesdecisions?WarehousingmethodologyForecastingmethodologyOperationsmethodologyCapacityLocationAnswer:bDifficulty:ModerateWhichofthefollowingstatementsconcerningdecisionsregardinglocationoffacilitiesisfalse?Decidingwhereacompanywilllocateitsfacilitiesconstitutesalargepartofthedesignofasupplychain.Abasictrade-offhereiswhethertocentralizetogaineconomiesofscaleordecentralizetobecomemoreresponsivebybeingclosertothecustomer.Companiesmustalsoconsiderahostofissuesrelatedtothevariouscharacteristicsofthelocalareainwhichthefacilitymaybesituated.Allofthesestatementsaretrue.Noneofthesestatementsaretrue.Answer:dDifficulty:ModerateWhichofthefollowingisnotanissuecompaniesneedtoconsiderinfacilitylocationdecisions?qualityofworkersproductdevelopmentproximitytocustomersandtherestofthenetworkcostoffacilitytaxeffectsAnswer:bDifficulty:ModerateWhichofthefollowingisnotanissuecompaniesneedtoconsiderinfacilitylocationdecisions?qualityofworkersavailabilityofinfrastructureproximitytocustomersandtherestofthenetworkcostoffacilityAlloftheaboveareissuescompaniesneedtoconsiderinfacilitylocationdecisions.Answer:eDifficulty:ModerateExcesscapacityallowsafacilitytobeveryflexibleandtorespondtowideswingsinthedemandsplacedonit.costsmoneyandthereforecandecreaseefficiency.requiresproximitytocustomersandtherestofthenetwork.d.bothaandballoftheaboveAnswer:dDifficulty:ModerateWhichofthefollowingisacharacteristicofafacilitywithexcesscapacity?willlikelybemoreefficientperunitofproductitproducesthanonewithalotofunusedcapacitywouldbeveryflexibleandtorespondtowideswingsinthedemandsplacedonitwouldbeconsideredahighutilizationfacilitywillhavedifficultyrespondingtodemandfluctuationse.noneoftheaboveAnswer:aDifficulty:EasyAfacilitywithlittleexcesscapacitywilllikelybemoreefficientperunitofproductitproducesthanonewithalotofunusedcapacity.wouldbeconsideredahighutilizationfacility.willhavedifficultyrespondingtodemandfluctuations.Alloftheabovearetrue.Noneoftheabovearetrue.Answer:dDifficulty:ModerateWhichofthefollowingwouldbeacharacteristicofafacilitywithlittleexcesscapacity?a.allowsafacilitytobeveryflexibleandtorespondtowideswingsinthedemandsplacedonitcostsmoneyandthereforecandecreaseefficiencyrequiresproximitytocustomersandtherestofthenetworkwilllikelybemoreefficientperunitofproductitproducesnoneoftheaboveAnswer:dDifficulty:ModerateWhichofthefollowingisnotawarehousingmethodology?WarehouseunitstorageStockkeepingunit(SKU)storageJoblotstorageCross-dockingAlloftheabovearewarehousingmethodologies.Answer:aDifficulty:ModerateThewarehousingmethodologythatusesatraditionalwarehousetostoreallofonetypeofproducttogetheriswarehouseunitstorage.stockkeepingunit(SKU)storage.joblotstorage.cross-docking.noneoftheaboveAnswer:bDifficulty:ModerateThewarehousingmethodologyinwhichallthedifferenttypesofproductsneededtoperformaparticularjoborsatisfyaparticulartypeofcustomerarestoredtogetherisa.warehouseunitstorage.stockkeepingunit(SKU)storage.joblotstorage.cross-docking.noneoftheaboveAnswer:cDifficulty:ModerateThefollowingwarehousingmethodologyisoneinwhichgoodsarenotactuallywarehousedinafacility.Instead,trucksfromsuppliers,eachcarryingadifferenttypeofproduct,delivergoodstoafacility.Theretheinventoryisbrokenintosmallerlotsandquicklyloadedontostore-boundtrucksthatcarryavarietyofproducts,somefromeachofthesuppliertrucks.warehouseunitstoragestockkeepingunit(SKU)storagejoblotstoragecross-dockingnoneoftheaboveAnswer:dDifficulty:ModerateAllofthefollowingarecomponentsofinventorydecisionsexceptcycleinventory.safetyinventory.seasonalinventory.sourcing.Alloftheabovearecomponentsofinventorydecisions.Answer:eDifficulty:EasyAllofthefollowingarecomponentsofinventorydecisionsexceptcapacity.cycleinventory.safetyinventory.seasonalinventory.sourcing.Answer:aDifficulty:EasyTheaverageamountofinventoryusedtosatisfydemandbetweenreceiptofsuppliershipmentsisreferredtoascycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:aDifficulty:ModerateTheinventorythatisbuiltuptocounterpredictablevariabilityindemandiscalleda.cycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:cDifficulty:ModerateTheinventoryheldincasedemandexceedsexpectationinordertocounteruncertaintyiscalledcycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:bDifficulty:ModerateThesetofbusinessprocessesrequiredtopurchasegoodsandservicesisknownasa.cycleinventory.safetyinventory.seasonalinventory.sourcing.noneoftheaboveAnswer:dDifficulty:EasyCycleinventorydecisionsinvolvehowmuchtoorderforreplenishment.howoftentoplaceorders.abasictrade-offbetweenthecostofholdinglargerlotsofinventoryandthecostoforderingproductfrequently.alloftheaboveaandbonlyAnswer:dDifficulty:ModerateCycleinventoryisusedbecausetheworldisperfectlypredictable.demandisuncertainandmayexceedexpectations.itinvolvesmakingatrade-offbetweenthecostsofhavingtoomuchinventoryandthecostsoflosingsalesduetonothavingenoughinventory.itfocusesonprocessesthatareexternaltothefirm.itfocusesonprocessesthatareinternaltothefirm.Answer:bDifficulty:ModerateSeasonalinventoryshouldbeusedwhenacompanycanrapidlychangetherateofitsproductionsystemataverylowcost.changingtherateofproductionisexpensive(e.g.,whenworkersmustbehiredorfired).adjustingtoaperiodoflowdemandwithoutincurringlargecosts.theworldisperfectlyductionrateisflexible.Answer:aDifficulty:HardSourcinginvolvesdecidingthetasksthatwillbeoutsourcedandthosethatwillbeperformedwithinthefirm.decidingwhethertosourcefromasinglesupplieroraportfolioofsuppliers.identifyingthesetofcriterionthatwillbeusedtoselectsuppliersandmeasuretheirperformance.selectingsuppliersandnegotiatingcontractswiththem.alloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingarekeycomponentsoftransportationdecisionswhendesigningandoperatingasupplychain?ModeoftransportationRouteandnetworkselectionIn-houseoroutsourcealloftheabovenoneoftheaboveAnswer:dDifficulty:ModerateWhichofthefollowingarekeycomponentsoftransportationdecisionswhendesigningandoperatingasupplychain?SoftwareselectionModeoftransportationSourceselectionWarehouseselectionnoneoftheaboveAnswer:bDifficulty:EasyWhichofthefollowingarekeycomponentsofinformationthatmustbeanalyzedtoincreaseefficiencyandimproveeffectivenessinasupplychain?PushversuspullCoordinationandinformationsharingForecastingandaggregateplanningPricingandrevenuemanagementalloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingarekeycomponentsofinformationthatmustbeanalyzedtoincreaseefficiencyandimproveeffectivenessinasupplychain?SoftwareselectionSourceselectionWarehouseselectionForecastingandaggregateplanningnoneoftheaboveAnswer:dDifficulty:ModerateWhenallthedifferentstagesofasupplychainworktowardtheobjectiveofmaximizingtotalsupplychainprofitability,ratherthaneachstagedevotingitselftoitsownprofitabilitywithoutconsideringtotalsupplychainprofit,itisknownassupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:aDifficulty:EasyTheartandscienceofmakingprojectionsaboutwhatfuturedemandandconditionswillbeissupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:bDifficulty:EasyTransformingforecastsintoplansofactivitytosatisfytheprojecteddemandisknownassupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:cDifficulty:EasyTheprocessbywhichafirmdecideshowmuchtochargecustomersforitsgoodsandservicesissupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:eDifficulty:EasyTheuseofdifferentialpricingovertimeorcustomersegmentstomaximizeprofitsfromalimitedsetofsupplychainassetsissupplychaincoordination.forecasting.aggregateplanning.revenuemanagement.pricing.Answer:dDifficulty:ModerateWhichofthefollowingaretechnologiesthatshareandanalyzeinformationinthesupplychain?ElectronicDataInterchange(EDI)InternetEnterpriseResourcePlanning(ERP)SupplyChainManagement(SCM)softwarealloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingaretechnologiesthatshareandanalyzeinformationinthesupplychain?InternetEnterpriseDataPlanning(EDP)ElectronicResourceInterchange(ERI)ChainManagement(CM)softwarenoneoftheaboveAnswer:aDifficulty:ModerateWhichofthefollowingareobstaclestoachievingstrategicfit?IncreasingvarietyofproductsDecreasingproductlifecyclesIncreasinglydemandingcustomersFragmentationofsupplychainownershipalloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingareobstaclestoachievingstrategicfit?DifficultyexecutingnewstrategiesGlobalizationIncreasinglydemandingcustomersFragmentationofsupplychainownershipalloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingisnotanobstacletoachievingstrategicfit?a.Increasingvarietyofproductsb.DecreasingproductlifecyclesIncreasinglydemandingcustomersConsolidationofsupplychainownershipnoneoftheaboveAnswer:dDifficulty:ModerateEssay/ProblemsListanddefinethefourmajordriversofsupplychainperformance.Answer:Facilitiesaretheplacesinthesupplychainnetworkwhereproductisstored,assembled,orfabricated.Thetwomajortypesoffacilitiesareproductionsitesandstoragesites.Inventoryisallrawmaterials,workinprocess,andfinishedgoodswithinasupplychain.Inventoryisanimportantsupplychaindriverbecausechanginginventorypoliciescandramaticallyalterthesupplychain'sefficiencyandresponsiveness.Transportationentailsmovinginventoryfrompointtopointinthesupplychain.Transportationcantaketheformofmanycombinationsofmodesandroutes.Informationconsistsofdataandanalysisconcerningfacilities,inventory,transportation,andcustomersthroughoutthesupplychain.Informationispotentiallythebiggestdriverofperformanceinthesupplychainasitdirectlyaffectseachoftheotherdrivers.Difficulty:ModerateExplainthesupplychaindecision-makingframeworkandtheroleofthefourmajordrivers.Answer:Thegoalofasupplychainstrategyistostrikethebalancebetweenresponsivenessandefficiency,resultinginastrategicfitwiththecompetitivestrategy.Toreachthisgoal,acompanyusesthefoursupplychaindriversdiscussedearlier.Foreachoftheindividualdrivers,supplychainmanagersmustmakeatrade-offbetweenefficiencyandresponsiveness.Thecombinedimpactofthesefourdriversthendeterminestheresponsivenessandefficiencyoftheentiresupplychain.Mostcompaniesbeginwithacompetitivestrategyandthendecidewhattheirsupplychainstrategyoughttobe.Thesupplychainstrategydetermineshowthesupplychainshouldperformwithrespecttoefficiencyandresponsiveness.Thesupplychainmustthenusethesupplychaindriverstoreachtheperformancelevelthesupplychainstrategydictates.Difficulty:ModerateExplainthebasictrade-offbetweenresponsivenessandefficiencyforeachofthemajordriversofsupplychainperformance.Answer:Thefundamentaltrade-offwhenmakingfacilitiesdecisionsisbetweenthecostofthenumber,location,andtypeoffacilities(efficiency)andthelevelofresponsivenessthatthesefacilitiesprovidethecompany'scustomers.Thefundamentaltrade-offwhenmakinginventorydecisionsisbetweenresponsivenessandefficiency.Increasinginventorywillgenerallymakethesupplychainmoreresponsivetothecustomer.Thischoice,however,comesatacostastheaddedinventorydecreasesefficiency.Therefore,asupplychainmanagercanuseinventoryasoneofthedriversforreachingthelevelofresponsivenessandefficiencythecompetitivestrategytargets.Thefundamentaltrade-offfortransportationisbetweenthecostoftransportingagivenproduct(efficiency)andthespeedwithwhichthatproductistransported(responsiveness).Thetransportationchoiceinfluencesotherdriverssuchasinventoryandfacilities.Whensupplychainmanagersthinkaboutmakingtransportationdecisions,theyframethedecisionintermsofthistrade-off.Goodinformationsystemscanhelpafirmimprovebothitsresponsivenessandefficiency.Theinformationdriverisusedtoimprovetheperformanceofotherdriversandtheuseofinformationisbasedonthestrategicpositiontheotherdriverssupport.Accurateinformationcanhelpafirmimproveefficiencybydecreasinginventoryandtransportationcosts.Accurateinformationcanimproveresponsivenessbyhelpingasupplychainbettermatchsupplyanddemand.Difficulty:ModerateExplaintheroleofeachofthemajordriversofsupplychainperformance.Answer:Facilitiesarethewhereofthesupplychainifwethinkofinventoryaswhatisbeingpassedalongthesupplychainandtransportationashowitispassedalong.Theyarethelocationstoorfromwhichtheinventoryistransported.Withinafacility,inventoryiseitherprocessedortransformedintoanotherstate(manufacturing)oritisstoredbeforebeingshippedtothenextstage(warehousing).Inventoryexistsinthesupplychainbecauseofamismatchbetweensupplyanddemand.Animportantrolethatinventoryplaysinthesupplychainistoincreasetheamountofdemandthatcanbesatisfiedbyhavingproductreadyandavailablewhenthecustomerwantsit.Anothersignificantroleinventoryplaysistoreducecostbyexploitinganyeconomiesofscalethatmayexistduringbothproductionanddistribution.Inventoryisspreadthroughoutthesupplychainfromrawmaterialstoworkinprocesstofinishedgoodsthatsuppliers,manufacturers,distributors,andretailershold.Inventoryisamajorsourceofcostinasupplychainandithasahugeimpactonresponsiveness.Thelocationandquantityofinventorycanmovethesupplychainfromoneendoftheresponsivenessspectrumtotheother.Inventoryalsohasasignificantimpactonthematerialflowtimeinasupplychain.MaterialflowtimeisthetimethatelapsesbetweenthepointatwhichAnotherimportantareawhereinventoryhasasignificantimpactisthroughput.Inventoryandflowtimearesynonymousinasupplychain.Managersshoulduseactionsthatlowertheamountofinventoryneededwithoutincreasingcostorreducingresponsiveness,becausereducedflowtimecanbeasignificantadvantageinasupplychain.Transportationmovesproductbetweendifferentstagesinasupplychain.Liketheothersupplychaindrivers,transportationhasalargeimpactonbothresponsivenessandefficiency.Fastertransportation,whetherintheformofdifferentmodesoftransportationordifferentamountsbeingtransported,allowsasupplychaintobemoreresponsivebutreducesitsefficiency.Thetypeoftransportationacompanyusesalsoaffectstheinventoryandfacilitylocationsinthesupplychain.Informationcouldbeoverlookedasamajorsupplychaindriverbecauseitdoesnothaveaphysicalpresence.Information,however,deeplyaffectseverypartofthesupplychain.Itsimpactiseasytounderestimateasinformationaffectsasupplychaininmanydifferentways.Informationservesastheconnectionbetweenthesupplychain'svariousstages,allowingthemtocoordinateandbringaboutmanyofthebenefitsofmaximizingtotalsupplychainprofitability.Informationisalsocrucialtothedailyoperationsofeachstageinasupplychain.Forinstance,aproductionschedulingsystemusesinformationondemandtocreateaschedulethatallowsafactorytoproducetherightproductsinanefficientmanner.Awarehousemanagementsystemusesinformationtocreatevisibilityofthewarehouse'sinventory.Thecompanycanthenusethisinformationtodeterminewhetherneworderscanbefilled.Difficulty:HardExplaintheroleofeachofthemajordriversofsupplychainperformanceinthecompetitivestrategy.Answer:Facilitiesandtheircorrespondingcapacitiestoperformtheirfunctionsareakeydriverofsupplychainperformanceintermsofresponsivenessandefficiency.Forexample,companiescangaineconomiesofscalewhenaproductismanufactured

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