What is risk pooling in supply chain management

OPS Practice quiz

2. The benefits of risk pooling depend on the behavior of demand from one market relative to demand from another.

True

False

3. What is Supply Chain Management?

A set of approaches utilized to efficiently integrate suppliers, manufacturers, warehouses and stores so that merchandize is produced, distributed at the right quantities, to the right locations and at the right time in order to minimize system wide costs while satisfying service level requirements.

The management of the flow of goods and services.

Planning and organizing the vendors in the supply chain.

Managing the procurement of supplies and services.

4. A Local Optimization approach to inventory positioning..

Results in low turns

Results in inconsistent service levels

Results in expediting and increased transportation costs.

All of the Above

None of the Above

5. What are the types of relationships in a supply chain? Strategic, Non–strategic, Commodity

Partnerships and transactional.

Outsourced and Off Shored.

None of the Above

6. The levels of decision making in SCM are:

Outbound, Inbound, Internal.

Strategic and tactical.

Strategic, operational and tactical.

Plan, Source, Make and Deliver.

7. A Supply Chain Master Plan ...

Details quantities, shipments size, storage by product, location, time period.

Builds a feasible plan as an input to other planning processes.

Identifies bottlenecks early Has become Sales and Operations Planning

All of the Above

8. The Supply Chain Design (SCD) process ...

Establishes the supply chain network architecture.

Manages sourcing decisions.

Ensures that the components are aligned with corporate and supply chain strategy.

Ensures that our supply chains are as efficient and effective as required.

All of the Above

9. What is the impact of Impact of Centralized Information in the Supply Chain?

Provides each stage of Supply chain with complete information on the actual customer demand.

Centralizes the demand information, forecasting technique and inventory policy.

Variability is then a function of LT from retailer as you go back through the supply chain.

Bullwhip effect is reduced (but still exists)

All of the Above

10. The major challenge(s) in Supply Chain Management is/are:

Matching supply and demand.

Supplying / managing inventory from vendors.

Forecasting Demand uncertainty.

Risk (outsourcing, lean, etc.)

All of the above

11. What are the inventory filters in the Make to Stock environment? Back order and finished goods filters

Back order, Finished Goods, Production Flexibility and Material Inventory filters.

Work in Process and Finished Goods

Only Finished Goods.

12. What is a fast clock speed product?

A product that moves through the supply chain very fast.

A product with a very high turnover.

A product that is changing very often.

A product with a high forecast variation.

None of the Above

13. Why are supply contracts important?

There is a tremendous outsourcing trend – for both design and manufacturing.

Low cost country sourcing has increased over the last 10 years.

Vendors have had significant increases in capability and quality

All of the Above

14. Supply Contracts are a powerful tool to ..

Achieve global optimization.

Manage trade offs between costs and risks.

Motivate supply chain partners (information release).

Depend on relationship quality and Trust

All of the Above

15. What is inventory management?

The planning of finished goods inventory.

Using the "saw tooth" diagram Having the correct inventory at the right place, at the right time to minimize system costs while satisfying customer service levels.

Directing suppliers to have a certain level of safety stock.

16. Network planning is the process by which the firm structures and manages the supply chain in order to..

Find the right balance between inventory, transportation and manufacturing costs.

Match supply and demand under uncertainty by positioning and managing inventory effectively.

Utilize resources effectively by sourcing products from the most appropriate manufacturing facility.

All of the Above

None of the Above

17. What are the types of inventory?

Inbound, internal and finished goods.

Work in progress and safety stock.

Raw Material, Work in Process, Fished Product. Supplier, internal and customer

18. For Non-strategic components, what is a Portfolio Contract?

Buy in the open market, short term.

A forward or fixed commitment, reduces financial risks.

The buyer pays a reservation price and then an exercise price if executed.

The buyers execute a portfolio of contracts, share the risks between contracts.

None of the above

19. Warehouse Costs are:

Handling Costs – linked to annual flow.

Fixed Costs – linked to warehouse size by range.

Storage Costs – linked to average inventory levels.

All of the Above

20. TL and LTL are:

Short hand to describe transportation distance.

Describing the type of truck required.

Truck Load and Less Than Truck

Load Time Limited and Legal Time Limited

21. What are "Core Strengths"?

The best practices that make the company competitive.

Specific talents that differentiate the company from its competitors and give it an advantage in the eyes of its customers.

The strengths that make their supply chain perform.

The sum total of the strengths brought by their suppliers.

22. In Network Design, Model and Data Validation is answering the question(s):

Does it make sense?

Are the data consistent? Can the results be fully explained?

Did you perform a sensitivity analysis?

All of the Above

23. What type of planning makes decisions on the number, locations and size of plants, warehouses, assignment of retail outlets to warehouses, as well as major sourcing decisions (strategic relationships).

Inventory Planning

Demand Planning

Network Design

Product Design

None of the Above

24. What are the contracts with asymmetric information?

Capacity Reservation Contracts and Advance Purchase Contracts

Pay-Back Contracts and Cost Sharing Contracts

Long Term Contracts and Flexible or Option Contracts

All of the Above

25. Typical supply contracts contain:

Pricing and volume discounts

Minimum and maximum purchase quantities

Delivery lead times Product or material quality Product return policies

All of the Above

26. The "saw tooth diagram" is:

A visual representation of inventory levels, lead time, consumption and replenishment.

A visual view of the inventory levels in your supplier network.

A visual view of the inventory levels in your internal storage and supplier network.

A view of the Lead time across your supply chain.

None of the Above

27. A hybrid (Push-Pull) supply chain is:

Components are purchased from the forecast.

Are assembled by the customer order.

Use aggregate forecasts which are more accurate – less uncertainty – less safety stock.

Use postponement – delayed differentiation.

All of the Above

28. What are the types of Risk sharing contracts?

Buy back contracts and Sales Rebate Contracts

Quantity–Flexibility Contracts and Revenue sharing contracts

Global Optimization Contracts

All of the Above

29. What is the Development Chain?

It sets the demand of the supply chain.

It is run by different managers with different goals.

It intersects with other chains – reverse logistics, spare parts, etc.

All of the Above

30. The objective(s) of Network Design is /are:

Minimize system wide costs while achieving service level requirements.

Maximize throughput with minimal safety stock.

Maximizing service level requirements.

Minimize internal costs.

31. Data aggregation in forecasting reduces variability, improves accuracy.

True

False

32. Retailer-Supplier Partnerships (RSP) are:

Continuous Replenishment

Quick Response

Vendor-managed Inventory

All of the Above

None of the Above

33. The Benefit(s) of outsourcing is/are:

Economies of scale

Risk Pooling

Reduced (shared) capital investments

Allows a focus on core competencies Increased flexibility

All of the above

34. What are the impacts of Supply Chain Integration?

reducing costs

Increasing service level

Reducing the Bullwhip effect

Better utilizing resources and

Effectively responding to changes in the market place.

All of the Above

35. In a Make to Stock environment, the Order Insertion Point is:

Where the order is entered into the customers system.

When the order is placed with the supplier.

In the back order filter.

Where the order is acknowledged and accepted in the Deliver process.

36. Transportation rates are linear with distance not volume.

True

False

37. What is/are the type(s) of Network Planning?

Network Design

Inventory Positioning

Resource Allocation

All of the Above

None of the Above

38. What is an Inventory Policy? Strategy, approach or set of techniques used to determine how to manage inventory.

The safety stock rules.

The EOQ settings (amount and timing)

The strategy for setting up partial orders.

39. Uncertainty and risk are inherent in every supply chain.

True

False

40. Inventory positioning is:

Identifying stocking points.

Selecting facilities that will produce to stock and hold inventory.

Defining inventory strategies.

All of the Above

None of the Above

41. Why is inventory held?

For unexpected changes in customer demand (unplanned orders)

Uncertainty Lead times (variability)

Economies of scale from transportation

All of the Above

42. In Network Design, Mathematical Optimization techniques..

Find optimal or “good”solutions.

Evaluate design alternatives.

Find the right location for optimal safety stock Are the same as Simulation.

All of the Above

43. System Wide Cost Management is difficult to achieve because:

The supply chain is a complex network.

Different facilities in the supply chain have different, conflicting objectives

The supply chain is a dynamic system (evolves and changes constantly)

All of the Above

44. What is/are the type(s) of inventory control?

Economic Lot Size and Single Period Models

Continuous Review or Periodic Review

All of the Above

None of the Above

45. The four Forecasting methods discussed in Ch. 2 are:

Judgement, Market Research, Time Series and Casual.

Casual, Integrated, Time Series and Delphi.

Linear, Predictive, Historical and POS driven.

None of the Above

46. An very important success factor in selecting a Forecasting approach is:

Do you have good POS data.

How much does the data cost you.

How important is the past in estimating the future.

Do you have executive support.

None of the Above

47. The Inventory turnover ratio is:

Lower as you go closer to the customer.

Annual sales divided by average inventory levels.

A benchmarking number used to award the Malcolm Baldridge Award.

All of the Above

48. The increase in variability as we go up the supply chain is The Bullwhip Effect.

True

False

49. What is Risk Pooling?

A risk analysis technique where all risks are aggregated.

Gathering up your SC risks and mitigating them.

Aggregating demand across locations thus reducing demand variability and allows a decrease in safety stock.

The pooling of supplier risks across your supply chain and taking a group mitigation action.

50. The use of an outside company to perform all or part of the firm’s materials management and product distribution functions is...

Outsourcing to a low cost country.

On Shoring to respond to increased demand.

A strategic alliance to reduce inventory.

The use of an outside company to perform all or part of the firm’s materials management and product distribution functions.