11) The basic trade-off to consider during overbooking is between having wasted capacity (or inventory) because of few cancellations or having a shortage of capacity (or inventory) because of excessive cancellations. Answer: TRUE FALSE

12) The goal when making the overbooking decision is to maximize supply chain profits by minimizing the cost of wasted capacity and the cost of capacity shortage. Answer: TRUE FALSE

13) The amount of the asset reserved for the higher price segment is such that the expected marginal revenue from the higher priced segment is less than the price to the lower price segment. Answer: TRUE FALSE

14) The small lot-sizing policy works well in a situation where both holding costs and setup costs are high. Answer: TRUE FALSE

15) A real advantage of lean philosophy is the reduction of co-ordination effort required. Answer: TRUE FALSE

16) Which of the following is not a benefit of small lot sizes in lean systems? A. In-process inventory is considerably less. B. Each product is produced less frequently. C. Carrying costs are reduced.

D. There is less clutter in the workplace.

17) Online sales increase ________ when compared to the performance of traditional brick and mortar retail stores. A) outbound transportation costs B) the inventory holding cost

C) the cost of building and maintaining facilities in a supply chain network D) overall supply chain costs

18) The situation in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers is known as A) market fluctuations. B) the whiplash effect.

C) the bullwhip effect. D) lack of visibility.

19) The lack of coordination within a supply chain will result in an increase in A) profitability. B) inventory accuracy. C) replenishment lead time.

D) level of product availability.

20) If demand is uncertain, a manufacturer can incentivize retailers to provide high levels of product availability by using A) high fixed costs. B) buyback contracts.

C) low fixed costs. D) zero-cost contracts.

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21) Mickey the manager reviewed his company's customers' orders for the past year and compared the variability of those orders with the variability of the orders he placed with his suppliers. This comparison allowed him to estimate his own company's contribution to A) the forecast.

B) supply chain surplus. C) market demand. D) the bullwhip effect.

22) Trade promotions lead to a significant ________ in lot size and cycle inventory because of forward buying by the ________. A) decrease, retailer B) increase, retailer

C) decrease, supplier D) increase, supplier

23) The retailer can justify the forward buying when A) they have inadvertently built up a lot of excess inventory. B) the forward buy allows the manufacturer to smooth demand by shifting it from peak to low- demand periods. C) it decreases his total cost. D) A and C only

24) Quite often in a VMI system, the inventory is A) owned by the retailer before it is shipped by the supplier. B) owned by the supplier until it is sold by the retailer. C) sold by the supplier before it is owned by the retailer. D) sold by the retailer before it is shipped by the supplier.

25) The decision to have a third party perform a supply chain function is called A) insourcing. B) outsourcing. C) offshoring.

D) onshoring.

26) The decision to move a production facility outside of domestic boundaries and still maintain ownership is called A) insourcing. B) outsourcing.

C) offshoring. D) onshoring.

27) Scoring the performance of suppliers in terms of replenishment lead time thus allows the firm to evaluate the impact each supplier has on A) the cost of holding cycle inventory. B) the cost of holding replacement inventory.

C) the purchase price of material. D) the cost of holding safety inventory.

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28) Quantity discounts lower the unit cost A) but tend to increase the required batch size and as a result, reduce the cycle inventory. B) but tend to increase the required batch size and as a result the cycle inventory. C) and tend to reduce the required batch size and as a result the cycle inventory. D) and tend to reduce the required batch size and as a result, increase the cycle inventory.

29) Revenue management may be defined as A) the use of differential costing based on product or capacity availability to decrease supply

chain cost.

B) the use of differential costing based on customer segment, time of use, and product or capacity

availability to increase profitability.

C) the use of differential pricing based on customer segment, time of use, and product or capacity

availability to decrease supply chain surplus.

D) the use of differential pricing based on customer segment, time of use, and product or capacity

availability to increase supply chain surplus.

30) In most instances of differential pricing, demand from the segment paying the lower price A) arises earlier in time than demand from the segment paying the higher price. B) arises later in time than demand from the segment paying the higher price. C) arises about the same time as demand from the segment paying the higher price.

D) arises both earlier and later in time than demand from the segment paying the higher price.