Course: Managing Supply Chain

Chapter No 7 Demand and Forecasting

A) aggregate forecasts tend to have a larger standard deviation of error relative to the mean.

B) aggregate forecasts tend to have a smaller standard deviation of error relative to the mean.

C) disaggregated forecasts tend to have a smaller standard deviation of error relative to the mean.

D) disaggregated forecasts tend to have a less standard deviation of error relative to the mean.

Answer: B

2) In general, the further up the supply chain a company is (or the further they are from the
consumer)

A) the greater the distortion of information they receive.

B) the smaller the distortion of information they receive.

C) the information they receive is more accurate.

D) the information they receive is more useful.

Answer: A

3) Forecasting methods that use historical demand to make a forecast are known as

A) qualitative forecasting methods. B) time series forecasting methods.

C) causal forecasting methods. D) simulation forecasting methods.

Answer: B

4) Forecasting methods that assume that the demand forecast is highly correlated with certain
factors in the environment (e.g., the state of the economy, interest rates, etc.) to make a forecast
are known as

A) qualitative forecasting methods. B) time series forecasting methods.

C) causal forecasting methods. D) simulation forecasting methods.

Answer: C

5) Forecasting methods that imitate the consumer choices that give rise to demand to arrive at a
forecast are known as

A) qualitative forecasting methods. B) time series forecasting methods.

C) causal forecasting methods. D) simulation forecasting methods.

Answer: D

6) Qualitative forecasting methods are most appropriate when

C) forecasting demand into the near future. D) experts do not have critical market intelligence.

Answer: B

7) Which forecasting methods are the simplest to implement and can serve as a good starting
point for a demand forecast?

A) Qualitative forecasting methods B) Time series forecasting methods

C) Causal forecasting methods D) Simulation forecasting methods

Answer: B

8) The goal of any forecasting method is to

A) predict the random component of demand and estimate the systematic component.

B) predict the systematic component of demand and estimate the random component.

C) predict the seasonal component of demand and estimate the random component.

D) predict the random component of demand and estimate the seasonal component.

Answer: B

9) ________ forecasting methods assume that the demand forecast is highly correlated with
certain factors in the environment (the state of the economy, interest rates, etc.).

A) Qualitative B) Time-series C) Causal D) Simulation

Answer: C

1O) ________ forecasting methods are primarily subjective and rely on human judgment.

A) Qualitative B) Time-series C) Causal D) Simulation

Answer: A
 Chapter No 12 Inventory Management
MCQs
1) Which of the following is a function of inventory?

A) to decouple or separate parts of the production process

B) to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a
selection for customers

C) to take advantage of quantity discounts

D) All of above

Answer: D

2) Which of the following would not generally be a motive for a firm to hold inventories?

A) to decouple or separate parts of the production process

B) to provide a stock of goods that will provide a selection for customers

D) to minimize holding costs

Answer: D

3) All of the following statements about ABC analysis are true except

A) inventory may be categorized by measures other than dollar volume

B) it categorizes on-hand inventory into three groups based on annual dollar volume

C) it is an application of the Pareto principle

D) it states that all items require the same degree of control

Answer: D

4) inventory investment and customer service.

A) market demand and customer experience.

B) customer experience and customer demand.

C) inventory investment and customer service.

D) inventory management and inventory investment

Answer: C

5) The main function of inventory management is to

A) the sufficient amount and type of input products and minimizing costs by keeping them at an
optimal level.

B) products in process and finished products

C) determine facilitating production and sales operations

Answer: D

6) As a rule of thumb, the safety stock amount should be

A) the amount of inventory used per day multiplied by the lead time in days.

B) the amount of inventory used per year multiplied by the lead time in days

C) the amount of inventory used per minute multiplied by the lead time in days

D) All of the above.

Answer: A

7) The optimal level depends on several factors, including

A) inventory velocity B) current and future demand

C) sales volume and supplier lead times D) All of the above

Answer: D

8) Items like tires inventoried by an automobile manufacturer for use in the production of
automobiles have a demand

A) Independent B) Dependent

C) Dependent for some time and independent of other D) Both a and b

Answer: B

9) Among the following demands which need to be forecasted

A) Independent B) Dependent

C) None of these D) Both a and b

Answer: A

1O) requirements for dependent demand are calculated from the

A) Qualitative items B) Casual items C) independent items D) Dependent items

Answer: C
 Topic: Strategic Alliances
MCQs
Question 1
Which of the following is NOT a strategic alliance?
a) Joint marketing campaign b) Cooperative product development
c) Joint venture d) Merger
Answer: D

Question 2
What is the most frequent internal motive for a strategic alliance?
a) Resource need b) Risk limitation
c) Cost minimization d) Current poor performance
Answer: A

Question 3
A partnership between companies in different lines of business, is called:
a) Vertical integration alliance b) Diversification alliance
c) Shared supply alliance d) International expansion alliance
Answer: B

Question 4
An alliance between a supplier and a buyer that agree to use and share skills and capabilities in
the supply chain, is called:
a) Diversification alliance b) Shared supply alliance
c) Complementary alliance d) Vertical integration alliance
Answer: D

Question 5
What is the most important criterion for selecting an alliance partner?
a) Alliance partner must help the company towards a competitive advantage.
b) Alliance partner must be a multinational firm with a global market presence.
c) Alliance partner must come from the same culture.
d) Alliance partner must have similar assets.
Answer: A

Question 6
An optimal business partner in a successful international strategic alliance should have two key
qualities:
a) Corporate culture fit and national culture fit
b) Partner-related criteria and task-related criteria
c) Cultural fit and trust
d) Strategic fit and cultural fit
Answer: D

Question 7
Why do alliances between a large Western multinational firm and an emerging economy firm
often fail?
a) The cultural gap between partners is too large.
b) The partner objectives are very divergent.
c) The company size of partners is very different.
d) The organizational cultures of partners are different.
Answer: B

Question 8
What is "strategic control"?
a) Control over the production process within an organization, in the sense of determining how the
employees of an organization perform their work.
b) The process by which one entity influences, to varying degrees, the behaviour and output of
another entity through informal mechanisms.
c) Control over the means and methods on which the whole conduct of an organization depends.
d) Control over the production process within an organization, in the sense of determining how
informal practices are performed.
Answer: C

Question 9
The average life span for a strategic alliance is about:
a) 10 years b) 3 years c) 7 years d) 5 years
Answer: C

Question 10
What advantage comes from trust between alliance partners?
a) Trust enables partners to enter into detailed formal contracts.
b) Trust makes partners more willing to share information.
c) Trust increases relational risks.
d) Trust causes partners to cheat on each other.
Answer: B
 Topic: Aggregate Planning
MCQs
Question 1
_________________ is a method for developing an overall manufacturing plan that ensures
uninterrupted production at a facility.
a) Strategic Alliance b) Cooperative product development
c) Inventory Management d) Aggregate planning
Answer: D

Question 2
The period of aggregate production planning typically is applied to.
a) 3- to 18-month period b) 3- to 12-month period
c) 5- to 22- month period d) 1 – to – 2 year
Answer: A

Question 3
The goal of aggregate planning is to:
a) Minimize production cost b) Minimize operating cost
c) Maximize sales d) Maximize production
Answer: B

Question 4
How does the aggregate planning minimizes the operating cost:
a) by matching production demand with production capacity
b) by matching sales demand with production capacity
c) by matching market demand with production capacity
d) by matching aggregate demand with production capacity
Answer: A

Question 5
Characteristics of aggregate planning include
a) Considers a "planning horizon" from about 310 18 months, with periodic updating.
b) Looks at aggregate product demand stated in common terms.
c) Looks at aggregate quantities, stated in common terms.
d) All of the above
Answer: D

Question 6
The quantitative assessment of the requirement for all goods and services at a given price level for
a specific period.
a) Aggregate Planning
b) Aggregate Capacity
c) Aggregate Demand
d) Aggregate Strategy
Answer: C
Question 7
The process of planning and managing the overall capacity of an organization's resources.
a) Aggregate Planning
b) Aggregate Capacity
c) Aggregate Demand
d) Aggregate Strategy
Answer: B

Question 8
The cost of changing production and workforce levels between periods.
a) Level Strategy b) Smoothing
c) Bottleneck problem d) Chase Strategy
Answer: B

Question 9
The firms embracing the just-in-time production concept as an approach to aggregate planning,
utilize which type of Strategy?
a) Level Strategy b) Smoothing
c) Bottleneck problem d) Chase Strategy
Answer: D

Question 10
Inability to respond to sudden changes in demand as a result of capacity restrictions; may it be
high demand in one period or breakdown of a vital piece of equipment is known as:
a) Level Strategy b) Smoothing
c) Bottleneck problem d) Chase Strategy
Answer: C