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| 1 | |
Consider the following statements regarding supply-chain management: 1. Supply-chain management describes the processes of streamlining supply chains by managing costs. 2. Supply-chain management describes the processes of streamlining supply chains by accelerating the time-to-market of new products. 3. Supply-chain management describes the processes of streamlining supply chains by creating close relationships with suppliers and customers.
Which statement is correct? |
| | A) | 1 only. |
| | B) | 2 only. |
| | C) | 3 only. |
| | D) | 1, 2 and 3. |
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| 2 | |
The number of orders that will be submitted each year when the economic order quantity is used for making purchases is given by which formula? |
| | A) | Economic order quantity ÷ reorder point. |
| | B) | Reorder point ÷ economic order quantity. |
| | C) | Total annual requirement ÷ economic order quantity. |
| | D) | Economic order quantity ÷ safety stock. |
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| 3 | |
Which of the following is not a cost of the total cost of ownership? |
| | A) | Costs of purchasing. |
| | B) | Materials and supplies costs. |
| | C) | Inventory holding costs. |
| | D) | Costs of poor quality. |
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| 4 | |
Signature Industries manufactures and sells products directly to customers, as well as to retail stores. To produce their products, the company purchases raw materials and components from a range of suppliers. Currently, Signature is focusing its attention on the two suppliers of a basic component of their product. The suppliers are MetalCo and Brass Ltd. Signature has been dealing with these suppliers for several years and uses the two suppliers for the one component. MetalCo is used for most orders and charges only $5 per component, whereas Brass Ltd charges $5.25 per component. In the past year, Signature has purchased 25 000 components from MetalCo and 10 000 components from Brass Ltd. The activities and the activity costs for the suppliers are detailed below:
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| Number of activities | Activity | Cost per unit of activity driver | MetalCo | Brass Ltd | Place purchase order | $125 per order | 10 | 5 | Receive a delivery | $90 per delivery | 100 | 25 | Inspect material | $45 per delivery | 100 | 25 | Store inventory | $15 per unit stored per year | 70 | 16 | Rework product due to poor quality material | $5 per unit reworked | 200 | 2 | Downtime due to poor quality material | $50 per hour of downtime | 24 | 1 | Receive and inspect late deliveries | $350 per late delivery | 20 | 2 |
The total purchase price plus total cost of ownership per unit for MetalCo was: |
| | A) | $0.50 |
| | B) | $5 |
| | C) | $5.75 |
| | D) | $6 |
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| 5 | |
Signature Industries manufactures and sells products directly to customers, as well as to retail stores. To produce their products, the company purchases raw materials and components from a range of suppliers. Currently, Signature is focusing its attention on the two suppliers of a basic component of their product. The suppliers are MetalCo and Brass Ltd. Signature has been dealing with these suppliers for several years and uses the two suppliers for the one component. MetalCo is used for most orders and charges only $5 per component, whereas Brass Ltd charges $5.25 per component. In the past year, Signature has purchased 25 000 components from MetalCo and 10 000 components from Brass Ltd. The activities and the activity costs for the suppliers are detailed below:
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| Number of activities | Activity | Cost per unit of activity driver | MetalCo | Brass Ltd | Place purchase order | $125 per order | 10 | 5 | Receive a delivery | $90 per delivery | 100 | 25 | Inspect material | $45 per delivery | 100 | 25 | Store inventory | $15 per unit stored per year | 70 | 16 | Rework product due to poor quality material | $5 per unit reworked | 200 | 2 | Downtime due to poor quality material | $50 per hour of downtime | 24 | 1 | Receive and inspect late deliveries | $350 per late delivery | 20 | 2 |
The total purchase price plus total cost of ownership per unit for Brass Ltd was: |
| | A) | $0.50 |
| | B) | $5 |
| | C) | $5.75 |
| | D) | $6 |
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| 6 | |
Signature Industries manufactures and sells products directly to customers, as well as to retail stores. To produce their products, the company purchases raw materials and components from a range of suppliers. Currently, Signature is focusing its attention on the two suppliers of a basic component of their product. The suppliers are MetalCo and Brass Ltd. Signature has been dealing with these suppliers for several years and uses the two suppliers for the one component. MetalCo is used for most orders and charges only $5 per component, whereas Brass Ltd charges $5.25 per component. In the past year, Signature has purchased 25 000 components from MetalCo and 10 000 components from Brass Ltd. The activities and the activity costs for the suppliers are detailed below:
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| Number of activities | Activity | Cost per unit of activity driver | MetalCo | Brass Ltd | Place purchase order | $125 per order | 10 | 5 | Receive a delivery | $90 per delivery | 100 | 25 | Inspect material | $45 per delivery | 100 | 25 | Store inventory | $15 per unit stored per year | 70 | 16 | Rework product due to poor quality material | $5 per unit reworked | 200 | 2 | Downtime due to poor quality material | $50 per hour of downtime | 24 | 1 | Receive and inspect late deliveries | $350 per late delivery | 20 | 2 |
The supplier performance index (SPI) for MetalCo was: |
| | A) | 0.20 |
| | B) | 0.167 |
| | C) | 0.095 |
| | D) | 5.0 |
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| 7 | |
Signature Industries manufactures and sells products directly to customers, as well as to retail stores. To produce their products, the company purchases raw materials and components from a range of suppliers. Currently, Signature is focusing its attention on the two suppliers of a basic component of their product. The suppliers are MetalCo and Brass Ltd. Signature has been dealing with these suppliers for several years and uses the two suppliers for the one component. MetalCo is used for most orders and charges only $5 per component, whereas Brass Ltd charges $5.25 per component. In the past year, Signature has purchased 25 000 components from MetalCo and 10 000 components from Brass Ltd. The activities and the activity costs for the suppliers are detailed below:
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| Number of activities | Activity | Cost per unit of activity driver | MetalCo | Brass Ltd | Place purchase order | $125 per order | 10 | 5 | Receive a delivery | $90 per delivery | 100 | 25 | Inspect material | $45 per delivery | 100 | 25 | Store inventory | $15 per unit stored per year | 70 | 16 | Rework product due to poor quality material | $5 per unit reworked | 200 | 2 | Downtime due to poor quality material | $50 per hour of downtime | 24 | 1 | Receive and inspect late deliveries | $350 per late delivery | 20 | 2 |
The supplier performance index (SPI) for Brass Ltd was: |
| | A) | 0.20 |
| | B) | 0.167 |
| | C) | 0.095 |
| | D) | 5.0 |
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| 8 | |
Supplier performance measures may include: |
| | A) | the percentage of orders delivered on time |
| | B) | the percentage of orders rejected |
| | C) | the percentage of orders processed through electronic means |
| | D) | all of the given answers |
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| 9 | |
Each year, Eldorado Company works 50 weeks and uses 50 000 grams of gold to produce jewellery. The cost of placing an order is $100. The annual cost of holding one gram of gold is $10. It currently places a total of 20 orders annually, with an order lead time of two weeks, and each order is for 2500 grams of gold. Eldorado has decided to use the economic order quantity as the order size. <BR><BR>
The annual cost of Eldorado’s current inventory policy is: |
| | A) | $2000 |
| | B) | $12 500 |
| | C) | $14 500 |
| | D) | $25 000 |
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| 10 | |
Each year, Eldorado Company works 50 weeks and uses 50 000 grams of gold to produce jewellery. The cost of placing an order is $100. The annual cost of holding one gram of gold is $10. It currently places a total of 20 orders annually, with an order lead time of two weeks, and each order is for 2500 grams of gold. Eldorado has decided to use the economic order quantity as the order size. <BR><BR>
The economic order quantity for Eldorado is: |
| | A) | 100 grams |
| | B) | 707 grams |
| | C) | 1000 grams |
| | D) | 2500 grams |
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