Section A: True or False Questions 1 Continuous search for potential suppliers is considered as part of procurement process. 2 Improper product quality can be categorized as reputational risk. 3 Vendor Managed Inventory (VMI) requires suppliers to maintain maximum inventory levels to satisfy customers at all time. 4 Material costs are affected by fluctuations in demand and subsequently by fluctuations in manufacturing 5 Major factor in deciding which type of inventory system to use is the level of technology available. 6 The accounting of costs needs to coincide with the movement of units out the door under FIFO. 7 Radio-frequency identification (RFID) systems are considered as one of bar coding systems 8 The Malcolm Baldrige National (US) Quality Award is designed to motivate US companies to improve quality and productivity. 9 Private warehouse requires higher and constant volume to justify the fixed cost nature. 10 Transportation and loss of sale costs will go up when number of warehouses are increases. 11 Centralize warehouse enhances customer service as employees are more focus. Pull approach of inventory management belongs to "proactive system". 13 INCOTERMS do not apply to contracts for services. 14 Tendency to minimize legitimate differences in requirements is considered as advantage in Centralized Supply Structure. 15 Critical mass is considered as advantage in Decentralized Supply Structure. 16 Hybrid organizational structure attempts to capture benefits of both centralized and decentralized structures. 17 Confidentiality is a major obstacle to supplier participation for new product design. 18 Consortia would induce supply costs reduction. 19 Efficiency metrics is normally on the quantitative side. 20 Supplier councils are used by large firms to manage supplier relationships. 21 Demand for finished products is normally constant 23 Material costs are affected by fluctuations in demand and subsequently by fluctuations in manufacturing 24 Partially completed goods are called work in progress inventory 25 Goods-in-transit (FOB) to warehouses or customers are NOT considered as inventory 26 The effect of LIFO will lead to favorable revenue results in financial statement 27 Radio-frequency identification (RFID) systems are considered as the most advanced bar- coding systems 28 Public warehousing costs mostly are variable. 1/760 Minimize warehouse cost is a major focus on Supply Management. 61 Design to maximize knowledge and capabilities of Supply Chain members is considered as Supply Chain Support Strategy.29 Private warehouse is best used for high customer service demand. Public warehouse is best choice for multiple use requirements. 31 The Square Root Law is used to reduce inventory at multiple locations. 32 Inventory increases in the same ratio as the growth in warehouse facilities. 33 Effectiveness metrics attempt to measure how well something is done 34 Efficiency metrics compare ratios with similar figures for previous periods 35 POS used in Circle K convenient stores is considered as "Perpetual Inventory System" 36 "Equitable competition for bidding process" is disadvantageous for buying with Specifications 37 Purchases of primary materials by method of "Description by Market Grades" are normally satisfactory to all buyers. 38 Standard / budget costs variances are commonly used in target setting of Key Performance Metrics to determine results. 39 Contingency protection is one of strategic value-adding roles warehousing plays in the SC System. 40 Transportation consolidation is one of strategic value-adding roles warehousing plays in the SC System. 41 Product mixing is one of strategic value-adding roles warehousing plays in the SC System. 42 Service is one of strategic value-adding roles warehousing plays in the SC System. 43 Smoothing is one of strategic value-adding roles warehousing plays in the SC System. 44 Public warehousing costs mostly are variable 45 Public warehousing costs mostly are of fixed nature 46 Private warehousing costs have a higher fixed cost component. 47 Private warehousing costs have a higher variable cost component. 48 Centralized warehouse is best used to stored high value products. 49 Centralized warehouse is used to for diverse products line. 50 Customer service is considered low for centralized warehouse operation. 51 Customer service is considered high for centralized warehouse operation. 52 Allowance for growth is paramount in warehouse layout and design. 53 Moving goods in a straight line is a critical principle in designing warehouse layout. 54 Maximize utilization of a warehouse's cubic capacity is one of warehouse design principles. 55 Minimize aisle space is one of warehouse design principles. 56 Relationship between Inventory and Customer Service Level is of adverse nature. 57 Collaboration might be viewed as anticompetitive by U.S. Department of Justice's Antitrust Division and/or the Federal Trade Commission. 58 Strong suppliers may resist participating in consortium arrangements. 59 Value for money spent to search for competitive advantage is one of the Supply Chain objectives. 2/7