1. Which of the following best describes vertical integration?

A) building long-term partnerships with a few suppliers

B) producing goods or services previously purchased

C) developing the ability to produce the specified good more efficiently than before

D) selling products to a wholesaler or a distributor

2. The phrase "Quality is defined by the customer" is

A) a process-based definition of quality

B) a manufacturing-based definition of quality

C) an unrealistic definition of quality

D) the definition proposed by the American Society of Quality

E) a user-based definition of quality

3. In supply chain management, ethical issues

A) may be guided by the principles and standards of the institute for Supply Management

B) may be guided by company rules and codes of conduct

C) are particularly important because of the enormous opportunities for abuse

D) become more complex the more global is the supply chain

E) All of the above are true

4. A firm wants to develop a production schedule where the batch size for a particular item is 320 units per batch (2 days of demand). To make this the economical (lowest cost) production strategy, what must the setup time be equal to?

Annual demand: 40,000 units

Holding cost: $100 per unit per year

Setup labor cost: $150 per hour

Daily production rate: 500 units

Daily demand rate: 160 units

A) 58 minutes

B) 35 minutes

C) 68 minutes

D) 87 minutes

E) 27 minutes

5. A good description of "source inspection" is inspecting

A) the goods as soon as a problem occurs

B) one's own work, as well as the work done at the previous work station

C) the goods at the production facility before they reach the customer

D) material upon delivery by the supplier

E) goods at the supplier's plant