1.

Which of the following design strategies offers streamlined production and lower
purchasing costs with a possible tradeoff against reduced design flexibility and lower
quality?
A. Mass customization
B. Component commonality
C. Universality
D. Integral design
Answer :- B.
Explanation :- Using common components for a variety of purposes provides economies
of scale in purchasing and manufacture but can limit design flexibility and reduce quality.
2. Which of the following statements correctly identifies the major purpose of the sales
and operations plan (S&OP)?
A. S&OP represents the first pass at balancing sales and output of end items.
B. S&OP represents the mutual agreement of finance, sales, marketing, operations, and
senior management on a single set of supply/demand numbers.
C. S&OP represents the firm's essential planning document for use in securing startup
financing from bankers and investors.
D. S&OP represents the essence of a contract between sales and operations.
Answer :- B.
Explanation :- The sales and operations plan reconciles the business plans of all units of
the firm, including finance, sales and marketing, and operations; the unified set of
numbers has the approval of senior management. It is neither a contract between sales
and operations nor a balance of end item supply and demand.
3. Which of the following is true of contracts for partnerships?
A. Courts can become involved in conflicts in most Asian countries without long-term
detriment to a relationship.
B. Contracts should always be used in the negotiation process to keep relationships true
to the agreement.
C. Contracts should be fixed at the start of the relationship because alterations are
difficult to enact between multiple parties.
D. Cultural differences in contracts and problem resolution styles should be a primary
consideration when arranging formal contracts.
Answer :- D.
Explanation :- Contracts, policies and procedures, and informal conflict resolution must
be sensitive to cultural differences. While courts can become involved in conflicts in the
United States without long-term detriment, the opposite is true in most Asian countries.

4. Referring to the table below, calculate a forecast for April using the three-month
moving average method. Based on your calculation, which of the following statements
correctly relates the forecast to the actual April demand of 22?

A. Demand and forecast are the same.

B. Demand exceeds forecast by 1.
C. Demand exceeds forecast by 2.
D. Demand exceeds forecast by 3.
Answer :- C.
Explanation :- The average demand for the three months from January through March is
20 (21 + 17 + 22 = 60; 60 / 3 = 20), so the forecast for April is 20, which is two less than
the actual demand.

5. Which of the following is the nucleus firm responsible for even when they have
outsourced the majority of a product's creation and distribution to other parties?
A. Trust
B. Security
C. Commitment
D. Branding
Answer :- D.
Explanation :- Branding and brand equity continue to be the responsibility of the nucleus
firm, assuming that this firm is the one that has their name on the product or service.
They will get the benefits of a good market offering and suffer the consequences of
failure, regardless of whether they actually created the offering themselves.

6. Which of the following is true of the people or the metrics involved in supply chain
management?
A. Performance must be measured by ratios of profitability and velocity, not by a
checklist.
B. Current supply chain performance is better quantitatively benchmarked against the
firm's desired performance than qualitatively benchmarked.
C. Supply chain strategy and control of the related processes depend on having people
educated in functional rather than department thinking.
D. Supply chain management must be the responsibility of a department-level manager
who is equal in hierarchy to other department heads.
Answer :- B.
Explanation :- Numbers (quantitative) generally provide the most convincing supporting
evidence in the boardroom and investment analyst's office. If you're bragging about your
cash-to-cash cycle, for instance, you might say, "We've got it down from 50 days to 20,
and that's below the industry average."
7. In regard to technology, CPFR may be said to depend fundamentally upon which of
the following?
A. Shared data in any technological format
B. World Wide Web
C. Third-party host
D. Peer-to-peer network
Answer :- A
Explanation :- Although CPFR is enhanced by software, it is fundamentally a set of
business practices for synchronizing the operations of buyer and seller. It depends for
success upon a willingness to share data for forecasting, execution, assessments, and
other functions. The data may be shared on peer-to-peer networks, extranets, or thirdparty servers, and the Internet is generally involved as the medium for accessing the
shared data. But technology is not at the heart of the matter; sharing data in joint
operations is.
8. Which of the following could a telecommunications company use to get a directory of
common business processes and product and partner codes for its trading partners plus
a framework that packages, routes, and transports messages?
A. Service-oriented architecture (SOA)
B. UN/EDIFACT for EDI
C. RosettaNet
D. ebXML
Answer :- C.
Explanation :- RosettaNet is specific to the high-tech industry, including
telecommunications firms, and provides all of the features listed in the question.

9. A logistics manager might approach which one of the following intermediaries to

purchase cargo space that the firm purchased elsewhere and marked up for resale?
A. Non-vessel operating common carrier (NVOCC)
B. Export trading company (ETC)
C. Consolidator
D. Freight forwarder
Answer :- A.
Explanation :- An NVOCC (non-vessel operating common carrier) buys cargo space on a
carrier to resell to shippers.
10. A purchaser and its suppliers form an ongoing relationship in which they all
participate in improving the system. This best exemplifies which of the following
distinctions between traditional purchasing and strategic sourcing?
A. Boundary-specific versus realigned work processes and workflows
B. Limited visibility versus entire supply chain visibility
C. Transactional versus collaborative
D. Purchase price versus true cost
Answer :- C.
Explanation :- Traditional purchasing sees each purchase as a discrete transaction.
Since strategic sourcing involves ongoing relationships, there is opportunity for
collaboration between the purchaser and suppliers that can result in improving the
profitability of the supply chain and adding value to the final product or service.
11. "Crafting products/services to increase customer value, potential for added value,
competitive differentiation, and increased profit." This describes which component of a
CRM strategy?
A. Price
B. Promotion
C. Product
D. Placement
Answer :- C
Explanation :- The product component of a CRM strategy refers to all those actions
taken to craft products and services that relate to customer needs, opportunities to add
value in the supply chain and enhance competitive position, and still meet profit
objectives.

12. Which of the following modes of transportation is most appropriate for carrying small,
highly valuable, fragile or perishable cargo?
A. Rail
B. Water
C. Road
D. Air
Answer :- D.
Explanation :- Air transport is especially appropriate for high-value items because it is
relatively secure, smooth, and rapid.
13. A manager decides to source their key Just-in-Time (JIT) manufacturing goods from
a local producer even though an overseas producer sells identical goods for less, even
with the added cost of shipping. Which of the following is this manager most likely
emphasizing?
A. Quality
B. Positive supply chain contribution
C. Affordability
D. Availability
Answer :- D.
Explanation :- The availability of the good is being emphasized because the manager
needs a reliable supply of goods even if it costs more to get the good when it is needed
for the JIT process.
14. In which type of customer segmentation are customers grouped by income?
A. Segmentation by channel
B. Segmentation by value
C. Segmentation by demographics
D. Segmentation by need
Answer :- C.
Explanation :- Demographic segmentation groups customers by group characteristics
such as age, income, marital status, or family size.

15. Which of the following best describes a customer data warehouse (CDW)?
A. Data about customers, products, and marketplace extracted from internal and
external resources
B. Purchased data on specific customer segment
C. Repository of all data related to customer transactions
D. Current customer profiles stored in a database
Answer :- A.
Explanation :- A customer data warehouse (CDW) stores data about customers,
products, and market trends, consolidating it in a manner that can facilitate future
analysis to spot trends and relationships.
16. Supply chain participant priorities often conflict. Which of the following groups sets a
priority on flexible delivery times, large volumes, and consistent materials mixes?
A. Logistics managers
B. Warehouse managers
C. Suppliers
D. Retailers
Answer :- C.
Explanation :- Suppliers of raw materials typically prefer flexible delivery times, large yet
stable volume demands, and consistency in mix of materials.
17. Which of the following information levels is the most likely place in which specific
production, funding, capacity, and staffing levels would be decided?
A. Operational planning
B. Operational execution
C. Tactical
D. Strategic
Answer :- C.
Explanation :- The tactical level is where detailed production plans, sales plans, and
other types of functional plans are set to support the organization's strategic plan.

18. The core or standard functions of an ERP system are designed to do all of the
following except
A. Increase the internal speed and availability of information.
B. Reduce inventory due to better visibility.
C. Reduce cash-to-cash cycle due to streamlined processes.
D. Increase flexibility by allowing changes to the inherent conceptual models.
Answer :- D.
Explanation :- Core functions of ERP do not include the ability to change the inherent
business model, which may move quickly from a best practice to a hindrance to change.
The other functions are all possible with a traditional ERP system.
19. Which of the following are software agents or units of work that serve as the
endpoint connections for applications, have stand-alone functionality, and are governed
by standards such as WSDL?
A. Services
B. Electronic data interchange (EDI) ANSI X12
C. Thin clients
D. Simple Object Access Protocol (SOAP) wrappers
Answer :- A.
Explanation :- The question defines services used in the service-oriented architecture
(SOA).
20. In the CRM business model, strategic pricing
A. is calculated by a sliding scale based upon customers' ability to pay.
B. must be continually analyzed to ensure that it is attractive to customers but still
profitable to the business.
C. is calculated by adding a competitive profit margin to the total costs of creation, sales,
and overhead.
D. must be consistent across targeted customer segments.
Answer :- B.
Explanation :- Pricing is generally a strategic decision, based on competition, perceived
value, and brand identity. Strategic pricing must be carefully and frequently analyzed to
ensure that the pricing structure is attractive to customers but still profitable to the
business.

21. Which of the following statements about the role of SRM in the supply chain

model is correct?
A. It focuses on meeting demand.
B. It focuses on gaining information about customers.
C. It helps ensure the same profitability for all supply chain elements.
D. It measures success only by satisfaction of end customers.
Answer :- A.
Explanation :- SRM helps ensure that demand created by CRM can be fulfilled in
a manner profitable for all supply chain partners while maintaining customer
satisfaction. Success of supplier relationships may be measured by various
means, including time-to-market, cost efficiency, competitive advantage, and end
customer satisfaction.
22. Which of the following is true of e-business?
A. Hours of service and operations continues to be a constraint.
B. Globalization tends to increase the cash-to-cash cycle.
C. Few companies have a captive audience anymore.
D. The fewer nodes in the network, the greater the potential for value creation.
Answer :- C.
Explanation :- The customer has more power to search the globe for what they
want, and therefore few companies have a captive audience anymore.
23. Repeated transactions are funneled through an account manager and
regulated through medium-term contracts. This best exemplifies which of the
following types of business relationships?
A. Collaborations/strategic alliance
B. Ongoing relationship
C. Buy the market
D. Mergers and acquisitions
Answer :- B.
Explanation :- An ongoing relationship involves repeated transactions, perhaps
regulated through medium-term contracts. Communication is funneled through
an account manager, who adjusts in all interactions to the customer's culture and
way of doing business.

24. Where in the planning process does rough-cut capacity planning take place?
A. Business planning
B. Sales and operations planning
C. Resource requirements planning
D. Master production scheduling
Answer :- D.
Explanation :- Rough-cut capacity planning takes place as part of the master
production schedule and constitutes verification of early capacity estimates.
25. Which of the following is a reason some large firms resist using a consortiumbased exchange and instead form their own private exchanges?
A. Group purchases that consolidate buying power are available only on private
exchanges.
B. Private exchanges generate a larger supplier base than a consortium.
C. A consortium's pooling efforts reduce the firm's power in the industry.
D. Consortia entail greater setup expense than a private exchange.
Answer :- C.
Explanation :- Some large firms feel that the pooling of efforts that is integral to
consortium-based exchanges dilutes their industry influence, and they instead
form private exchanges to maintain their independence.
26. A tire producer partners with a natural rubber producer whose products are
becoming subject to more and more demand even as the product becomes more
rare. They also get old tires from a tire recycler. Which of the following
collaborative intensities would be appropriate for these partners?
A. Backward integration for the natural rubber producer and transactional and
information collaboration or higher for the tire recycler
B. Linked competitive vision and strategic alliance or higher for the natural rubber
producer and shared processes and partnership for the tire recycler
C. Arm's length relationship for the natural rubber producer and transactional and
no relationship with the tire recycler
D. Shared processes and partnership level or higher for the natural rubber
producer and arm's length for the tire recycler
Answer :- D.
Explanation :- Because the natural rubber is becoming more rare, the tire producer

should consider some form of alliance or better for this partner. The tire recycler
is not offering a unique value-added service but a commodity service, so these
transactions should be kept at arm's length.

27. In ERP system manufacturing modules, the results of master production

scheduling (MPS) are evaluated for constraints by which of the following?
A. Rough-cut capacity planning (RCCP)
B. Distribution requirements planning (DRP) and capacity requirements planning
(CRP)
C. Material requirements planning (MRP)
D. Distribution requirements planning (DRP) and material requirements planning
(MRP)
Answer :- A.
Explanation :- The output of MPS is a master production schedule that is

evaluated for constraints by rough-cut capacity planning (RCCP). The schedule

with constraints is adopted by the detailed scheduling systems: material
requirements planning (MRP) and capacity requirements planning (CRP).
28. Supply chain integration allows the reduction of safety stock levels, which
benefits participants by
A. lowering inventory levels and reducing costs.
B. improving the ability to anticipate needs and convey benefits.
C. enhancing demand.
D. shortening cycle times.
Answer :- A.
Explanation :- With shorter lead and cycle times, the level of safety stock may be
reduced, which leads to savings by reducing inventory levels and obsolescence
costs.
29. How does greater supply chain integration affect demand enhancement?
A. By reducing the need to retool product lines constantly
B. By improving the ability to anticipate needs and convey benefits
C. By standardizing prices across channels
D. By increasing the number of response channels available to consumers
Answer :- B.
Explanation :- When manufacturers and retailers collaborate by sharing
information, they develop products that are better able to meet the needs of the
customer and are also better able to communicate the benefits to those
customers. This may actually lead to premium prices for certain types of
deliveries.

30. Which of the following is an element of an e-business supply chain as

opposed to an element of a traditional supply chain?
A. A few long-term partnerships and a moderate number of commodity or
adversarial relationships
B. Fixed industry structures with suppliers limited by buyer relationships
C. Production focus on engineering competitive supply chains
D. Reactive customer service model
Answer :- C.
Explanation :- Instead of the production focus being on economies of scale and
scope, the new e-business model focuses production on engineering competitive
supply chains.
31. An organization sets a goal of reducing its lead time from four days to two
days because another firm in its industry can offer two-day lead time. This is an
example of which of the following?
A. Competitive benchmarking
B. Oliver Wight benchmarking
C. Process benchmarking
D. Best-in-class benchmarking
Answer :- A.
Explanation :- Setting a competitor's performance on a process as your goal for
the process in your organization is an example of competitive benchmarking.
32. If a firm locates a centralized procurement and processing facility in a low-tax
foreign country, which of the following tax rates will apply to income generated at
the facility?
A. The local country rate
B. A compromise rate between the local and home country rates
C. The rate in the country of the headquarters
D. A special international rate
Answer :- A.
Explanation :- In general, income streams are separately taxed, so a company
can lower its global tax liability by moving facilities to low-tax regions.

33. In a CRM context, a product and service agreement (PSA)

A. is part of a promotional strategy to win back customers.
B. is a type of customer communication.
C. aligns customer groups with certain service levels.
D. defines product or service specifications.
Answer :- C.
Explanation :- A product and service agreement does define specifications, but it
does so in the context of segmenting customer groups. Customers are mapped
and then aligned with different levels of customer service.

34. Which of the following is true advice for ensuring that one's supply chain is
agile and flexible?
A. Cost efficiencies and velocity must take precedence in the supply chain such
as always requiring that full truckloads are used.
B. A manufacturer's trends in demand are best monitored through visibility with
Tier 1 customers.
C. Mixing products to achieve full truckload shipments may be highly inefficient
for high-dollar, lightweight items.
D. When designing products for maximum supply chain flexibility, putting
customers on the design team will help create modular designs.

Answer :- C.
Explanation :- Develop multiple supply chains that are appropriate to each
product line. Some companies, to achieve those full truckload shipments, will mix
products. While that's a good strategy for speeding up delivery of some products
in the mix, it may be highly inefficient for others. Take the high-dollar, lightweight
items out of the truck, train, or container and fly them to their destinations.

35. Which one of the following is the most compelling reason for a manufacturer
to own its own warehouses rather than using a contractor's warehouses?
A. To increase flexibility of budgeting for warehousing expenses
B. To benefit from economies of scale in transportation
C. To increase flexibility to test new geographic markets
D. To increase control over warehouse design decisions

Answer :- D.

36.Company A has installed supply chain management (SCM) software to

achieve cross-functional integration. However, some members of the overall
value chain that are not directly part of the supply chain itself have not provided
the desired level of support for SCM initiatives. Which of the following
departments is most likely to be the one lacking in support?
A. Marketing and sales
B. Inbound logistics
C. Human resources
D. Customer service

Answer :- C.
Explanation :- Human resources is part of the value chain support activities that
sustain the supply chain. The incorrect answers are all directly part of the supply
chain. Managers from outside the supply chain often don't understand the
requirements of supply chain management, can't distinguish value chain from
supply chain, and consequently don't provide the SCM support required from
their areas.

37. Which of the following functions would be best performed by heuristic

algorithms instead of mathematical algorithms?
A. Locating real-world constraints on production capacity
B. Transportation optimization
C. Locating a plant producing materials better produced by an alternate plant
D. Determining reorder point

Answer :- A.
Explanation :- Heuristic algorithms are used where real-world judgment and the
reactions of real people are simulated. Mathematical algorithms are used for
optimizations and simulations where a mathematical sequence can clearly
represent the situation.

38. Which of the following statements about the role of purchasing in an SRM
model is correct?
A. Purchasing roles have become more layered between strategic management
and buying.
B. Strategic sourcing has greatly simplified the tasks associated with purchasing.
C. Under an SRM model, strategic decisions such as selection of alliance
partners are pushed down to subordinate purchasing roles.
D. SRM technology has greatly complicated the tasks of purchasing managers
and agents.

Answer :- A.
Explanation :- Purchasing has, in fact, become more complex with the use of
strategic sourcing. Roles have become more stratified, with senior-level
managers focusing on strategic decisions and lower-level managers focusing on
procurement and monitoring. They are aided by SRM technology, which has
automated and supported many of their new tasks, such as partner research and
contracting and invoice development.

39. A focus on quality, affordability, or availability indicates a focus on which of

the following?
A. Customer value
B. Financial value
C. Collaborative value
D. Social value

Answer :- A.
Explanation :- Depending upon the market being served, a supply chain may be
managed with an eye to delivering one or more of the following values to its end
customers: quality, affordability, availability, or service.

40. Before the holiday season, a manager wants to determine how many
permanent staff and how many temporary staff to hire, wanting to have just
enough permanent staff after the holidays to require no additional hiring but also
enough to handle anticipated seasonal demand. He also needs to ensure that
current staff morale will not be strained too much by staff changes. Because
these problems are annual, the manager can make a substantial investment in
the software. Which of the following would best help the manager make this
decision?
A. Simulation
B. Linear programming
C. Integer programming
D. Conceptual modeling
Answer :- A.

41. Which of the following processes includes the disaggregation of product

families?
A. Master production scheduling
B. Resource requirements planning
C. Operations planning
D. Sales planning

Answer :- A.
Explanation :- Disaggregation takes place during the development of the master
production schedule.

42. Which of the following finds ways to make use of loaded backhauls instead of
deadheading and offers deals to keep the carriers working efficiently such as by
using cargo space auctions?
A. Demand management
B. Supply management
C. Supply chain management
D. Product and service processing

Answer :- A.
Explanation :- Demand management provides all of the benefits listed in the
question.

43. Which of the following statements about purchased customer data is true?
A. They may be more useful in new customer acquisition.
B. They paint a picture of a business's own customers.
C. They are very useful in managing relationships with existing customers.
D. They can be very broad.

Answer :- A.
Explanation :- Data purchased from companies such as database marketing
companies provide information about customers outside a company's own
customer base. These data are useful in reaching new customers

44. An importer will often give which one of the following independent operators
power of attorney to pay import duties on its behalf?
A. Ship broker
B. Customs house broker
C. ETC
D. Foreign carrier
Answer :- B.
Explanation :- The customs house broker specializes in moving imported goods
through customs, expediting paperwork (which now takes place electronically),
and paying the import duties under a power of attorney from the importer.

45. Technological challenges facing supply chain integration efforts include which
of the following?
A. Underpowered, overly complex, or poorly designed solutions
B. Difficulty in accessing information
C. Open system infrastructures
D. Inability to customize off-the-shelf solutions

Answer :- A.
Explanation :- As with any technological solution, systems may be
underpowered, overly complex, poorly designed, or just not right for the job at
hand. In general, more systems today are designed to be open, information is
more accessible, and software solutions are more easily customized to specific
settings.

46. Which of the following best defines a virtual organization?

A. Potentially long-term relationship between separate business entities to
design, produce, and distribute a product
B. Short-term tactical alliance in which partnering companies remain distinct and
visible to end users
C. Merger of separate entities with common business values and goals to gain
better market position
D. Separate entities that collaborate to design and sell intangible products and
services

Answer :- A.
Explanation :- A virtual organization is best described as a short-term alliance of
independent businesses for a potentially long-term relationship. Businesses
cooperate to design, create, and distribute product (including services) based on
shared values and are perceived by third parties as a single entity.

47. If a firm has 25 days of accounts payables outstanding and 30 days invested
in inventory and their cash-to-cash cycle time is 80 days, how many days of
accounts receivables do they have?
A. 105 days
B. 80 days
C. 75 days
D. 50 days
Answer :- C.
Explanation :- The correct answer is 75 days: 80 days (cash to cash) + 25 days
(payables) - 30 days (inventory) = 75 days receivables. The cash-to-cash cycle
(or cash conversion cycle) is the number of days between the time a firm pays for
raw materials and the time it receives payment for finished goods. The equation
for calculating the cash-to-cash cycle is Cash-to-Cash Cycle Time = Average
Inventory Collection Period + Average Receivables Processing Period - Average
Payables Period; therefore, Days of Accounts Receivable = Cash-to-Cash Cycle
Time + Days of Accounts Payable - Days of Inventory.

48. Which of the following stages of supply chain development is usually the
minimum level at which online interfaces provide visibility but little interaction
aside from functions such as track and trace or role-based access to a separate
site for business transactions?
A. Stage 1, functional focus
B. Stage 2, internal integration
C. Stage 3, external integration
D. Stage 4, cross-enterprise collaboration and optimization
Answer :- B.
Explanation :- Companies at Stage 2 have a minimal electronic connectivity level
and Internet tools and sites that provide visibility and minimal interaction as listed
in the question.

49. All of the following are true of both an online bookseller and an online buildto-order, direct-to-customer high-technology seller, as compared to their
traditional models, except
A. Both have no retail outlets.
B. Both have higher outbound transportation costs.
C. Both aggregate inventory geographically.
D. Both experience downward price pressure.

Answer :- D.
Explanation :- Online booksellers experience downward price pressure because
buyers can get the same book instantly at a retail outlet but must wait for the
book to be shipped when purchased online and have to pay for shipping. While
high-technology items also face this difficulty, their prices are much higher, so
shipping consumes less of the profit margin.

50. A nucleus firm in the banking industry uses independent brokers to market
new stock issues and has been successful in this channel. After investing some
profits in the firm itself, they choose to reward their stockholders by distributing all
remaining profits in a special dividend even though independent brokers are
prohibited from owning these shares. Which of the following has this firm
forgotten to account for in its creation of financial value?
A. Tradeoffs must not be self-defeating.
B. Gains must be fairly distributed among stakeholders.
C. Independent brokers should be rewarded through social incentives and
reminded that shareholders must come first.
D. It takes money to make money.

Answer :- B.
Explanation :- Possibly the most common mistake in this regard is to send all
cost savings all the way to the consumers' end of the chain, which in this case is
the shareholders. And perhaps most challenging of all in a lateral supply chain is
the need for productive sharing of any financial gains. As noted earlier, a
powerful nucleus firm can gather in the benefits of an alteration in the placement
of inventory (or any other process change) at the expense of other stakeholders
such as the independent brokers.