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Chapter 16Coordination in the Supply ChainTrue/False1. Supply chain coordination improves if all stages of the chain take actions that together decrease total supply chain profits.Answer: FalseDifficulty: Easy2. Supply chain coordination requires each stage of the supply chain to take into account the impact its actions have on other stages.Answer: TrueDifficulty: Easy3. A lack of coordination occurs either because different stages of the supply chain have objectives that conflict or because information moving between stages gets delayed and distorted.Answer: TrueDifficulty: Moderate4. Information is distorted as it moves within the supply chain because complete information is not shared between stages.Answer: TrueDifficulty: Easy5. The bullwhip effect enables different stages of the supply chain to have a consistent estimate of what demand looks like.Answer: FalseDifficulty: Moderate6. The bullwhip effect results in improved supply chain coordination.Answer: FalseDifficulty: Easy7. The bullwhip effect negatively impacts performance at every stage and thus hurts the relationships between different stages of the supply chain.Answer: TrueDifficulty: Moderate8. The bullwhip effect leads to increased trust between different stages of the supply chain and enhances any potential coordination efforts.Answer: FalseDifficulty: Moderate9. The bullwhip effect moves a supply chain away from the efficient frontier by increasing cost and decreasing responsiveness.Answer: TrueDifficulty: Easy10. The bullwhip effect reduces the profitability of a supply chain by making it simpler to provide a given level of product availability.Answer: FalseDifficulty: Easy11. Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits.Answer: True Difficulty: easy12. Incentives that focus only on the local impact of an action result in decisions that minimize total supply chain profits.Answer: FalseDifficulty: Hard13. Improperly structured sales force incentives are a significant obstacle to coordination in the supply chain.Answer: TrueDifficulty: Moderate14. Measuring performance based on sell-through is often justified on the grounds that the manufacturers sales force does not control sell-in.Answer: FalseDifficulty: Hard15. Information processing obstacles refer to situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain.Answer: TrueDifficulty: Easy16. The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results in an increase in forecast accuracy as we move up the supply chain from the retailer to the manufacturer.Answer: FalseDifficulty: Moderate17. The lack of information sharing between the retailer and manufacturer leads to a large fluctuation in manufacturer orders.Answer: TrueDifficulty: Easy18. Information processing obstacles refer to actions taken in the course of placing and filling orders that lead to an increase in variability.Answer: FalseDifficulty: Moderate19. Pricing obstacles refer to situations in which the pricing policies for a product lead to an increase in variability of orders placed.Answer: TrueDifficulty: Easy20. Lot size based quantity discounts reduce the bullwhip effect within the supply chain.Answer: FalseDifficulty: Moderate21. Trade promotions and other short-term discounts offered by a manufacturer result in large orders during the promotion period followed by very small orders after that.Answer: TrueDifficulty: Easy22. Behavioral obstacles are often related to the way the supply chain is structured and reduce the bullwhip effect.Answer: FalseDifficulty: Moderate23. Managers can improve coordination within the supply chain by aligning goals and incentives such that every participant in supply chain activities works to maximize total supply chain profits.Answer: TrueDifficulty: Moderate24. Sharing of POS data helps reduce the bullwhip effect because it allows each stage of the supply chain to use orders from the previous stage to forecast future demand.Answer: FalseDifficulty: Moderate25. Without collaborative planning, sharing of POS data does not guarantee coordination.Answer: TrueDifficulty: Moderate26. When a single stage controls replenishment decisions for the entire chain, the problem of multiple forecasts is magnified and coordination within the supply chain follows.Answer: FalseDifficulty: Moderate27. A reduction in replenishment lead time helps dampen the bullwhip effect by reducing the underlying uncertainty of demand.Answer: TrueDifficulty: Moderate28. A reduction of lot sizes increases the amount of fluctuation that can accumulate between any pair of stages of a supply chain, thus increasing the bullwhip effect.Answer: FalseDifficulty: Moderate29. Tying allocation to past sales removes any incentive a retailer may have to inflate orders, as a result dampening the bullwhip effect.Answer: TrueDifficulty: Easy30. Managers can encourage the bullwhip effect by devising pricing strategies that encourage retailers to order in smaller lots and reduce forward buying.Answer: FalseDifficulty: Easy31. Cooperation and trust within the supply chain help improve performance for a variety of reasons.Answer: TrueDifficulty: EasyMultiple Choice1. Supply chain coordinationa. improves if all stages of the chain take actions that together increase total supply chain profits.b. requires each stage of the supply chain to take into account the impact its actions have on other stages.c. cannot be achieved in real world applications.d. all of the above e. a and b onlyAnswer: eDifficulty: Easy2. A lack of coordination occurs either becausea. different stages of the supply chain have objectives that conflict.b. the policies of most firms are contrary to cooperation.c. information moving between stages gets delayed and distorted.d. all of the abovee. a and c onlyAnswer: eDifficulty: Hard3. Information is distorted as it moves within the supply chain becausea. complete information is shared between stages.b. complete information is not shared between stages.c. firms try to be too accurate.d. all of the abovee. b and c onlyAnswer: eDifficulty: Moderate4. Information distortion is exaggerated by the fact that a. supply chains today produce a large amount of product variety.b. supply chains today produce a small amount of product variety.c. the telephone effect is extreme in situations where technology is in use.d. different stages of supply chains send excessive data.e. none of the aboveAnswer: aDifficulty: Moderate5. 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 asa. market fluctuations.b. the whiplash effect.c. the bullwhip effect.d. lack of visibility.e. none of the aboveAnswer: cDifficulty: Moderate6. The bullwhip effect causesa. a loss of supply chain coordination.b. distortion of demand information within the supply chain.c. different stages of the supply chain to have a very different estimate of what demand looks like.d. all of the abovee. a and b onlyAnswer: dDifficulty: Moderate7. The lack of coordination within a supply chain will result in a decrease in a. manufacturing cost.b. inventory cost.c. replenishment lead time.d. level of product availability.e. transportation cost.Answer: dDifficulty: Moderate8. The lack of coordination within a supply chain will result in an increase ina. profitability.b. inventory accuracy.c. replenishment lead time.d. level of product availability.e. transportation cost.Answer: cDifficulty: Moderate9. The bullwhip effecta. positively impacts performance at every stage.b. hurts the relationships between different stages of the supply chain.c. enhances the relationships between different stages of the supply chain.d. none of the abovee. both a and cAnswer: bDifficulty: Moderate10. The bullwhip effect moves a supply chaina. away from the efficient frontier by increasing cost and decreasing responsiveness.b. away from the efficient frontier by decreasing cost and increasing responsiveness.c. toward the efficient frontier by increasing cost and decreasing responsiveness.d. toward the efficient frontier by increasing cost and increasing responsiveness.e. none of the aboveAnswer: aDifficulty: Easy11. Situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits are referred to as a. incentive obstacles.b. information processing obstacles.c. operational obstacles.d. pricing obstacles.e. behavioral obstacles.Answer: aDifficulty: Easy12. Incentives that focus only on the local impact of an action result in decisions thata. do not maximize total supply chain profits.b. maximize total supply chain profits.c. minimize total supply chain profits.d. minimize total supply chain cost.e. none of the aboveAnswer: aDifficulty: Moderate13. Improperly structured sales force incentivesa. help create stable demand.b. have very little effect on the timing of customer orders.c. tend to create spikes in customer orders.d. ensure that orders are quickly and accurately entered and communicated to other affected supply chain processes.e. none of the aboveAnswer: cDifficulty: Easy14. The sales typically measured by a manufacturer area. the quantity sold to final customers (sell-through).b. the quantity sold to distributors or retailers (sell-in).c. the quantity reported by the salesperson.d. all of the abovee. none of the aboveAnswer: bDifficulty: Moderate15. Situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain are referred to asa. incentive obstacles.b. information processing obstacles.c. operational obstacles.d. pricing obstacles.e. behavioral obstacles.Answer: bDifficulty: Easy16. The fact that each stage in a supply chain forecasts demand based on the stream of orders received from the downstream stage results ina. forecasts based on actual consumer demand patterns.b. a reduction in demand as we move up the supply chain from the retailer to the manufacturer.c. a magnification of fluctuations in demand as we move up the supply chain from the retailer to the manufacturer.d. an increase in forecast accuracy.e. none of the aboveAnswer: cDifficulty: Moderate17. The lack of information sharing between the retailer and manufacturera. magnifies the bullwhip effect.b. minimizes the fluctuation in manufacturer orders.c. leads to a large fluctuation in manufacturer orders.d. all of the abovee. a and c onlyAnswer: eDifficulty: Moderate18. Actions taken in the course of placing and filling orders that lead to an increase in variability are referred to asa. incentive obstacles.b. information processing obstacles.c. operational obstacles.d. pricing obstacles.e. behavioral obstacles.Answer: cDifficulty: Moderate19. When a firm places orders in lot sizes that are much larger than the lot sizes in which demand arises,a. variability of orders is minimized up the supply chain.b. variability of orders is magnified up the supply chain.c. suppliers gain better visibility of consumer demand.d. suppliers gain a more stable demand pattern.e. none of the aboveAnswer: bDifficulty: Easy20. Rationing schemes that allocate limited production in proportion to the orders placed by retailersa. result in a game in which retailers try to increase the size of their orders to increase the amount supplied to them.b. lead to a magnification of the bullwhip effect.c. lead to the manufacturer being left with a surplus of product and capacity.d. all of the above e. b and c onlyAnswer: dDifficulty: Moderate21. Situations in which the pricing policies for a product lead to an increase in variability of orders placed are referred to asa. incentive obstacles.b. information processing obstacles.c. operational obstacles.d. pricing obstacles.e. behavioral obstacles.Answer: dDifficulty: Easy22. Lot size based quantity discountsa. decrease the lot size of orders placed within the supply chain.b. increase the lot size of orders placed within the supply chain.c. magnify the bullwhip effect.d. a and c onlye. b and c onlyAnswer: eDifficulty: Easy23. Forward buying results ina. a stabilized buying pattern.b. small orders during the promotion period followed by very small orders after that.c. small orders during the promotion period followed by large orders after that.d. large orders during the promotion period followed by very small orders after that.e. none of the aboveAnswer: dDifficulty: Moderate24. Problems in learning within organizations that contribute to the bullwhip effect are referred to asa. incentive obstacles.b. information processing obstacles.c. operational obstacles.d. pricing obstacles.e. behavioral obstacles.Answer: eDifficulty: Moderate25. Behavioral obstacles to supply chain coordination are often related toa. the communication between different stages.b. pricing and operational decisions.c. the way the supply chain is structured.d. all of the above e. a and c onlyAnswer: eDifficulty: Hard26. Which of the following managerial actions in the supply chain will not increase total supply chain profits and moderate the bullwhip effect?a. aligning of goals and incentivesb. increasing information inaccuracyc. improving operational performanced. designing pricing strategies to stabilize orderse. building partnerships and trustAnswer: bDifficulty: Moderate27. Aligning goals and incentives within the supply chain will a. improve coordination within the supply chain.b. encourage every participant in supply chain activities to maximize total supply chain profits.c. reduce demand uncertainty.d. all of the abovee. a and b onlyAnswer: eDifficulty: Moderate28. Which of the following is not an approach to improve coordination within the supply chain by aligning goals and incentives?a. aligning incentives across functionsb. sharing point of sales (POS) datac. pricing for coordinationd. altering sales force incentives from sell-in to sell-throughe. none of the aboveAnswer: bDifficulty: Moderate29. Which of the following is not an approach to achieve coordination by improving the accuracy of information available to different stages in the supply chain?a. sharing point of sales (POS) datab. implementing collaborative forecasting and planningc. designing single stage control of replenishmentd. pricing for coordinatione. none of the aboveAnswer: dDifficulty: Moderate30. Sharing point of sales (POS) data across the supply chain can help reduce the bullwhip effect becausea. each stage of the supply chain uses orders from the previous stage to forecast future demand.b. all supply chain stages can forecast future demand based on final customer demand.c. all stages can respond to the same change in customer demand.d. all of the abovee. b and c onlyAnswer: dDifficulty: Hard31. Different stages of the supply chain must forecast and plan jointly if complete coordination is to be achieved, becausea. just the sharing of POS data does not guarantee coordination.b. the manufacturer must be aware of the retailers promotion plans to achieve coordination.c. successful coordination requires that the entire supply chain is operating to a common forecast.d. all of the abovee. a and b onlyAnswer: dDifficulty: Hard32. When a single stage controls replenishment decisions for the entire chain, coordination is achieved becausea. the problem of multiple forecasts is eliminated.b. each stage views its role as one of replenishing orders placed by the next stage.c. the manufacturer is aware of the retailers promotion plans to achieve coordination.d. all of the abovee. a and b onlyAnswer: aDifficulty: Hard33. Reducing the replenishment lead time can help dampen the bullwhip effect becausea. it will decrease the uncertainty of demand during the lead time.b. the manufacturer is aware of the retailers promotion plans to achieve coordination.c. it discourages retailers from artificially inflating their orders in the case of a shortage.d. all of the abovee. none of the aboveAnswer: aDifficulty: Easy34. Operational improvements that reduce lot sizes can dampen the bullwhip effect by a. decreasing the uncertainty of demand during the lead time.b. decreasing the amount of fluctuation that can accumulate between any pair of stages of a supply chain.c. discouraging retailers from artificially inflating their orders in the case of a shortage.d. allocating the available supply based on past retailer sales.e. none of the aboveAnswer: bDifficulty: Moderate35. To diminish the bullwhip effect, managers can design rationing schemes thata. decrease the uncertainty of demand during the lead time.b. discourage retailers from artificially inflating their orders in the case of a shortage.c. allocate the available supply based on past retailer s
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