Part I: True/False

1. Supply chains are referred to as value chains because they reflect the concept that value is added as goods and services progress through the chain.

2. Delayed differentiation is a means of increasing product variety at low setup costs and transportation costs.

3. One important use of inventories in manufacturing is to decouple operations.

4. A two bin system is an example of a perpetual inventory system.

5. Using the EOQ model, the higher an item's carrying costs, the more frequently it will be ordered.

6. An operations management strategy toward the JIT philosophy should recognize that conversion to a JIT system requires a total and unconditional commitment from the outset.

7. JIT purchasing requires frequent contract bidding by multiple sources to ensure the buyer of competitive prices.

8. JIT systems typically require that suppliers be able to provide large lots at regular intervals.

9. The primary purpose of statistical process control is to detect a defective product before it is shipped to a customer.

10. Continuous improvement is a philosophy that seeks to make improvements whenever a process is creating problems.

11. A company's supply chain involves the flow of materials and information from suppliers, through production, to the end users.

12. The goal of supply chain management is to synchronize supply and demand of all of the entities of the chain.

13. The faster material passes through the supply chain, the higher the inventory costs will be, and the faster products and services will be delivered to the customer.

14. Optimization of the supply chain is achieved by maximizing the velocity of information transfer.

15. Non-random variation is likely whenever all observations are between the lower (LCL) and upper (UCL) control limits.

16. An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

17. A basic requirement for operating with low inventories in Lean systems is that major system problems must already have been solved.

18.  In a "pull system" accumulated inventory in front of a workstation indicates problems at that workstation.

19.  The major difference between kanban and management resource planning (MRP) in scheduling the products to be built is that kanban is primarily a manual system.

20. Lean systems are primarily designed for repetitive manufacturing operations, and have limited application to services.

21. JIT II is a philosophy that involves empowering suppliers to assume some of the responsibilities ordinarily done by a company's own buyers.

22. The materials in a supply chain flow toward the end of the chain and the information moves toward the beginning of the chain.

23. Design of a supply chain and partnering are examples of operating issues of a supply chain.

24. Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease.

25.  The optimization of the supply chain is to determine the optimal number of business organizations to be included in the chain.

Part II Multiple Choice: Answer each of the Following:

1) Which of the following is not usually a characteristic of successful high-volume systems?

a. Smooth workflow through the system

b. Customized output

c. Rapid repair of breakdowns

d. Minimal quality problems

e. Reliable supply schedules

2) The JIT concept:

a. Was developed by the Japanese

b. Was operational at Henry Ford's complex in the 1920's

c. Is a production planning and control system

d. Is an inventory control system

e. All of the above

3) JIT systems typically use layouts which:

a. Are based on processing requirements

b. Enable moving parts in large lots

c. Facilitate handling dissimilar product

d. All of the above

e. None of the above

4) A basic requirement for operating with low inventories in JIT systems is:

a. Inventory space must be saved

b. Inventory investment must be saved

c. Major problems must be uncovered

d. Major problems must have been solved

e. Inventories must be reduced rapidly.

5) Which of the following is not a requirement for effective inventory management?

a. A priority system

b. A demand forecast

c. Estimates of carrying and ordering costs

d. Variability of usage and/or lead times

e. All of the above are necessary

6) Supply chain response time is a measure of performance regarding:

a. Reliability

b. Flexibility

c. Expenses

d. Utilization

e. None of the above

7) Successful continuous improvement must have:

a. Support and involvement of management

b. Significant changes in organizational culture

c. Grass roots participation

d. All of the above

e. None of the above

8) Which of the following is not a measure of the reliability of a supply chain?

            a. Supply chain response time

            b. On-time delivery

            c. Fill rate

            d. All of the above are measures

            e. None of the above is a measure

9) Which of the following is not on a list of relevant costs of inventory?

a. Shortage

b. Carrying

c. Order

d. Holding

e. Overtime

10) An operations strategy toward the JIT philosophy of production should recognize that JIT:

a. is most suited for non-repetitive manufacturing 

b. cannot be implemented sequentially

c. requires a wholesale commitment from the outset 

d. may provide a competitive advantage

e. all of the above 

11) Which of the following is not one of the building blocks that are the foundation of JIT?

            a. product design

            b. process design

            c. personnel/organizational elements

            d. manufacturing planning and control

            e. Kanban

12) Which of these would not be a factor in determining the reorder point?

            a. the EOQ

            b. the lead time

            c. the variability of demand

            d. the demand or usage rate

            e. all are factors

13)  In a two bin inventory system, the amount contained in the second bin is equal to the:

a. ROP

b. EOQ

c. Amount in the first bin

d. Optimum stocking level

e. Safety stock

14) Which of the following is not an assumption of the basic EOQ model?

            a. The usage rate is constant

            b. Only one product is involved

            c. Holding costs are independent of price

            d. Each order is received in a single delivery

            e. There are no quantity discounts

15) Which is not included in order costs?

            a. Typing up invoices

            b. Moving delivered goods to temporary storage

            c. Inspecting incoming goods for quantity

            d. Taking an inventory to determine how much is needed

            e. Temporary storage of delivered goods

Part III: Short Answer Questions.

Answer the following short answer essay questions and discuss in detail.

1. What is the Bullwhip effect and what are the principal causes as to why it occurs in a supply chain? What are the most important strategies that can mitigate its effects? Be specific and provide examples.

2. In what ways has technology improved the ability to manage supply chains? What tradeoffs are involved in sharing information with other organizations in a supply chain? Be specific and provide examples.

3. What are the three principal components of a Lean transformation? Discuss in detail and provide examples.

4. What is a Lean system intended to accomplish (philosophically) in a manufacturing or service setting and what are some of the main obstacles that must be overcome in converting from a traditional system to Lean? Be specific and provide examples.