TEST BANK

CHAPTER 5: THE SUPPLY CHAIN MANAGEMENT CONCEPT

Multiple Choice Questions (correct answers are bolded)

1. An underperforming supply chain is defined as one that exhibits poor service, unproductive
assets, or ___________.

a. high variable operating costs

b. outdated information technology
c. high fixed costs
d. transactional exchanges

[LO: Material at beginning of the chapter; Moderate; Synthesis; AACSB Category 3: Analytical
thinking]

2. The supply chain management concept originated in what discipline?

a. marketing
b. operations
c. logistics
d. production

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Application; AACSB Category 3: Analytical thinking]

3. The early to mid-___________ witnessed a growing recognition that there could be value in
coordinating various business functions within and across organizations.

a. 1960s
b. 1970s
c. 1980s
d. 1990s

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Application; AACSB Category 3: Analytical thinking]

4. What concept can be viewed as a combination of processes, functions, activities, relationships,

and pathways along which products, services, information, and financial transactions move in
and between enterprises from original producer to ultimate end user or consumer?

a. logistics
b. supply chain
c. marketing channel
d. interorganizational coordination

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Copyright © 2018 Pearson Education, Inc.
[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Concept; AACSB Category 3: Analytical thinking]

5. Although nearly any organization can be part of a supply chain, supply chain management
requires (SCM) ___________.

a. the involvement of third-party logistics companies

b. the participation of world-class organizations
c. at least one organization to be a multinational company
d. companies to adopt an enterprise-to-enterprise point of view

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

6. The two most prominent SCM process frameworks are the Supply Chain Operations
Reference (SCOR) Model and the ___________.

a. Supply Chain Efficiency (SCE) Model

b. Process Classification Framework (PCF)
c. Global Supply Chain Forum (GSCF) Model
d. Council of Supply Chain Management Professionals (CSCMP) Model

[LO 5.2: To summarize supply chain process frameworks; Moderate; Application; AACSB
Category 3: Analytical thinking]

7. Which organizational function is not a focus of the Supply Chain Operations Reference
(SCOR) Model?

a. marketing
b. logistics
c. operations
d. procurement

[LO 5.2: To summarize supply chain process frameworks; Moderate; Synthesis; AACSB
Category 3: Analytical thinking]

8. Source, plan, make, and enable are processes associated with the ___________.

a. Global Supply Chain Forum (GSCF) Model

b. Supply Chain Operations Reference (SCOR) Model
c. Process Classification Framework (PCF)
d. Supply Chain Efficiency (SCE) Model

[LO 5.2: To summarize supply chain process frameworks; Moderate; Application; AACSB
Category 3: Analytical thinking]

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Copyright © 2018 Pearson Education, Inc.
9. Which of the following is not one of the processes in the Supply Chain Operations Reference
(SCOR) Model?

a. source
b. plan
c. demand management
d. enable

[LO 5.2: To summarize supply chain process frameworks; Moderate; Application; AACSB
Category 3: Analytical thinking]

10. The current Global Supply Chain Forum (GSCF) Model identifies ___________ key
processes associated with supply chain management.

a. five
b. six
c. seven
d. eight

[LO 5.2: To summarize supply chain process frameworks; Moderate; Concept; AACSB
Category 3: Analytical thinking]

11. Customer relationship management, supplier relationship management, order fulfillment, and
returns management are processes associated with the ___________.

a. Global Supply Chain Forum (GSCF) Model

b. Process Classification Framework (PCF)
c. Supply Chain Efficiency (SCE) Model
d. Supply Chain Operations Reference (SCOR) Model

[LO 5.2: To summarize supply chain process frameworks; Moderate; Synthesis; AACSB
Category 3: Analytical thinking]

12. Contemporary supply chains are increasingly required to be fast and ___________.

a. lean
b. agile
c. interactive
d. relevant

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Application; AACSB Category 3: Analytical thinking]

13. An organization’s ability to respond to changes in demand with respect to volume and variety
refers to ___________.

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 a. responsiveness
b. leanness
c. agility
d. relevancy

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Easy;
Concept; AACSB Category 3: Analytical thinking]

14. Which of the following is not a potential outcome from a supply chain’s failure to be fast and
agile?

a. dissatisfied customers
b. reduced profitability
c. decreased market share
d. increased stock price

[LO 5.3 To illustrate potential enablers of supply chain management implementation; Moderate;
Synthesis; AACSB Category 3: Analytical thinking]

15. What is a perfect order?

a. simultaneous achievement of relevant customer metrics

b. order that arrives on time
c. order that arrives undamaged
d. order that is easy for the receiver to fill

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

16. ___________ refers to focusing part of one’s supply chain on a timely response to fluctuating
customer orders and/or product variety and another part of the supply chain on leveling out the
planning requirements to smooth production output.

a. Supply chain management

b. Flexibility
c. Responsiveness
d. Leagility

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

17. What concept refers to the variability in demand orders among supply chain participants?

a. unpredictability
b. bullwhip effect
c. order fluctuation

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Copyright © 2018 Pearson Education, Inc.
 d. agile supply chain

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

18. Which of the following is not a way to reduce inventory levels?

a. smaller, more frequent orders

b. use of premium transportation
c. supply–push replenishment
d. elimination of slower-moving products

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Difficult;
Synthesis; AACSB Category 3: Analytical thinking]

19. Which of the following is not an attribute of relational exchanges?

a. trust
b. dependence
c. joint investment
d. opportunism

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Difficult;
Synthesis; AACSB Category 3: Analytical thinking]

20. Cooperative supply chain relationships developed to enhance the overall business
performance of both parties is a definition of ___________.

a. third-party logistics
b. supply chain collaboration
c. leagility
d. relational exchanges

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

21. Supply chain collaboration can be classified as transactional, strategic, or ___________ in

nature.

a. operational
b. relational
c. managerial
d. tactical information sharing

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Application; AACSB Category 3: Analytical thinking]

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Copyright © 2018 Pearson Education, Inc.
22. ___________ collaborations offer the best opportunity for improving supply chain
performance.

a. Transactional
b. Tactical information sharing
c. Strategic
d. Operational

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Application; AACSB Category 3: Analytical thinking]

23. Tailored business relationships between two supply chain members refer to ___________.

a. supply chain partnership

b. supply chain management
c. relational exchanges
d. tailored logistics

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

24. Which of the following is not an attribute of supply chain partnerships?

a. mutual trust
b. increased willingness to share information
c. high independence among the partners
d. compatible goals

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

25. According to the text, ___________ has been at the center of the changes taking place that
affect the supply chain.

a. economic malaise
b. logistics
c. customer power
d. technology

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Application; AACSB Category 3: Analytical thinking]

26. Two key factors, ___________ and ___________, have sparked much of the technological
change affecting supply chains.

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 a. electronic data interchange; enterprise resource planning
b. computing power; Internet
c. Internet, electronic data interchange
d. computing power; enterprise resource planning

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

27. The general idea behind ___________ is that one company allows a specialist company to
provide it with one or more logistics functions.

a. supply chain management

b. multichannel marketing
c. third-party logistics
d. cross-organizational collaboration

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

28. Which of the following statements is true?

a. Third-party logistics companies demand only a few activities from third-party logistics
providers.
b. The decision to use third-party logistics can only be strategic in nature.
c. Third-party logistics is synonymous with fourth-party logistics.
d. A common cause of third-party logistics failure is unreasonable and unrealistic
expectations.

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Difficult;
Synthesis; AACSB Category 3: Analytical thinking]

29. What is a fourth-party logistics provider?

a. a company that ensures that various third-party logistics companies are working
toward the relevant supply chain goals and objectives
b. a third-party logistics provider that has achieved ISO 9000 certification
c. a logistics intermediary that specializes in one logistics activity, such as warehousing
or transportation
d. a third-party logistics provider that specializes in two or more logistics activities, such
as warehousing and transportation

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

30. Which of the following statements is false?

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 a. Top management commitment is essential if supply chain efforts are to have any
chance of success.
b. Some companies are uncomfortable with the concept of customer power in supply
chains.
c. Senior management commitment to supply chain management occurs in one of
every two organizations.
d. Some companies are hesitant to enter into long-term relationships because such
relationships might be perceived as limiting a company’s operational flexibility.

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Difficult;
Synthesis; AACSB Category 3: Analytical thinking]

31. ___________ combines technology with manual employee effort to identify trends, perform
comparisons, and highlight opportunities in supply chain processes, even when large amounts of
data are involved.

a. Data mining
b. Supply chain analytics
c. Benchmarking
d. Third-party logistics

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Easy;
Concept; AACSB Category 3: Analytical thinking]

32. A recent study of senior executives found that ___________ percent (within 2 percent) had
implemented analytics focused on supply chain activities.

a. 35
b. 25
c. 15
d. 5

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Application; AACSB Category 3: Analytical thinking]

33. In a(n) ___________ approach, all relevant software applications are provided by a single
vendor.

a. single integrator
b. best-of-breed approach
c. customer-centric
d. information outsourcing

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Concept; AACSB Category 3: Analytical thinking]

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34. Which of the following is not a barrier to supply chain management?

a. regulatory and political considerations

b. lack of top management commitment
c. reluctance to share, or use, relevant data
d. use of supply chain facilitators

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Synthesis; AACSB Category 3: Analytical thinking]

35. ___________ refers to “how we do things around here” and reflects an organization’s vision,
values, and strategic plans.

a. Supply chain management

b. Corporate strategy
c. Supply chain collaboration
d. Corporate culture

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Concept; AACSB Category 3: Analytical thinking]

36. Which of the following is not a term for a long-term mutually beneficial supply chain
agreement?

a. partnerships
b. third-party arrangements
c. coopetition
d. contract logistics

[LO 5.5: To compare optional approaches for supply chain integration; Moderate; Synthesis;
AACSB Category 3: Analytical thinking]

37. Which concept refers to the situation in which one organization owns multiple participants in
the supply chain?

a. supply chain management

b. vertical integration
c. horizontal integration
d. intensive distribution

[LO 5.5: To compare optional approaches for supply chain integration; Moderate; Concept;
AACSB Category 3: Analytical thinking]

38. There are three primary methods that organizations can pursue when attempting to integrate
their supply chains. Which of the following is not one of them?

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Copyright © 2018 Pearson Education, Inc.
 a. informal agreements
b. formal contracts
c. vertical integration
d. centralized organization

[LO 5.5: To compare optional approaches for supply chain integration; Moderate; Synthesis;
AACSB Category 3: Analytical thinking]

True-False Questions

1. Research on underperforming supply chains suggests that logistics can be crucial to

achieving desired levels of supply chain performance. (True)

[LO: Material at the beginning of the chapter; Easy; Synthesis; AACSB Category 3: Analytical
thinking]

2. The supply chain concept originated in the manufacturing literature. (False)

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

3. Supply chains are a new concept in the sense that they were first identified in the 1970s and
1980s. (False)

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

4. Customers can be a potential value co-creator of supply chain activities. (True)

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

5. Supply chain management requires companies to adopt an enterprise-to-enterprise point of

view. (True)

[LO 5.1: To explain the concept of supply chains and how the network of interorganizational
relationships is managed; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

6. The two prominent supply chain management frameworks are the Supply Chain Operations
Reference (SCOR) model and the Process Classification Framework (PCF). (False)

[LO 5.2: To summarize supply chain process frameworks; Moderate; Application; AACSB
Category 3: Analytical thinking]

7. The Supply Chain Operations Reference (SCOR) model identifies five key processes
associate with supply chain management. (False)

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Copyright © 2018 Pearson Education, Inc.
[LO 5.2: To summarize supply chain process frameworks; Easy; Concept; AACSB Category 3:
Analytical thinking]

8. The Global Supply Chain Forum (GSCF) model identifies eight relevant processes associated
with supply chain management. (True)

[LO 5.2: To summarize supply chain process frameworks; Easy; Concept; AACSB Category 3:
Analytical thinking]

9. Because customer needs and wants change relatively quickly, supply chains should be fast
and lean. (False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Application; AACSB Category 3: Analytical thinking]

10. With respect to supply chains, relevancy focuses on an organization’s ability to respond to
changes in demand with respect to volume and variety. (False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

11. A perfect order simultaneously achieves relevant customer metrics. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Easy;
Concept; AACSB Category 3: Analytical thinking]

12. Leagility refers to a supply chain that combines the lean and agile paradigms. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Easy;
Concept; AACSB Category 3: Analytical thinking]

13. The leagility effect refers to variability in demand orders among supply chain members.
(False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

14. Supply chain disruptions (e.g., terrorist attacks, natural disasters) have caused some supply
chains to reassess their emphasis on inventory reduction. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

15. Relational changes cannot be successful without information sharing among various
participants. (True)

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[LO 5.3: To illustrate potential enablers of supply chain management implementation;
Moderate; Application; AACSB Category 3: Analytical thinking]

16. Big-box retailers have been at the center of changes taking place that affect the supply chain.
(False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

17. A primary objective of supply chain management is to optimize the performance of the
supply chain as a whole. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

18. Coopetition refers to cooperative relationships between members of a supply chain to

enhance the overall business performance of all parties. (False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

19. Tactical information sharing offers the best opportunity for improving supply chain
performance. (False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

20. A willingness to share information and buying decisions based on value rather than cost or
price are two characteristics of supply chain partnerships. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Difficult;
Synthesis; AACSB Category 3: Analytical thinking]

21. The Internet has been referred to as the greatest force of commoditization known to man, for
both goods and services. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

21. Enhanced communications across organizations in a supply chain is only dependent on the
technological capabilities of the organizations. (False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

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Copyright © 2018 Pearson Education, Inc.
22. The general idea behind third-party logistics is that one company allows a specialist company
to provide it with one or more logistics functions. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation; Easy;
Concept; AACSB Category 3: Analytical thinking]

23. The decision to use third-party logistics companies can be driven by strategic or tactical
considerations. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Application; AACSB Category 3: Analytical thinking]

24. Two causes of failure in third-party logistics arrangements involve unreasonable expectations
and lack of flexibility. (True)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Synthesis; AACSB Category 3: Analytical thinking]

25. A fourth-party logistics provider is a supply chain facilitator that has achieved ISO 9000
certification. (False)

[LO 5.3: To illustrate potential enablers of supply chain management implementation;

Moderate; Concept; AACSB Category 3: Analytical thinking]

26. Regulatory considerations represent a bigger obstacle than political considerations to supply
chain management. (False)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Difficult;
Synthesis; AACSB Category 3: Analytical thinking]

27. The overall global climate for business has shifted toward allowing more cooperation among
firms—which should help supply chain management. (True)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Synthesis; AACSB Category 3: Analytical thinking]

28. Top management is sometimes hesitant to fully commit to supply chain management. (True)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Application; AACSB Category 3: Analytical thinking]

29. Actual senior management commitment to supply chain management occurs in one of every
two organizations. (False)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Application; AACSB Category 3: Analytical thinking]

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Copyright © 2018 Pearson Education, Inc.
30. One cause of the bullwhip effect is asymmetrical information among supply chain
participants. (True)
[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Synthesis; AACSB Category 3: Analytical thinking]

31. Supply chain analytics combines technology with manual employee effort to identify trends,
perform comparisons, and highlight opportunities in supply chain processes, even when large
amounts of data are involved. (True)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Concept; AACSB Category 3: Analytical thinking]

32. A recent survey of 1,000 senior executives indicated that approximately 30 percent of them
had implemented analytics focused on supply chain activities. (False)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Application; AACSB Category 3: Analytical thinking]

33. Today, computer hardware is a larger barrier than computer software to interorganizational
collaboration. (False)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Application; AACSB Category 3: Analytical thinking]

34. A best-of-breed approach chooses the best software application for a particular function.
(True)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Easy;
Concept; AACSB Category 3: Analytical thinking]

35. Corporate cultures should not be considered when designing a supply chain. (False)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Application; AACSB Category 3: Analytical thinking]

36. Supply chain integration tends to be more challenging in global, as opposed to domestic,
supply chains. (True)

[LO 5.4: To illustrate potential barriers to supply chain management implementation; Moderate;
Synthesis; AACSB Category 3: Analytical thinking

37. An individual firm can be involved in only one supply chain at a time. (False)

[LO 5.5: To compare optional approaches for supply chain integration; Moderate; Application;
AACSB Category 3: Analytical thinking]

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Copyright © 2018 Pearson Education, Inc.
38. Supply chain agreements should be designed to reward all participants when collaborative
ventures are successful and all participants should share the consequences when these
ventures are less successful than desired. (True)

[LO 5.5: To compare optional approaches for supply chain integration; Moderate; Synthesis;
AACSB Category 3: Analytical thinking]

39. Horizontal integration refers to where one organization owns multiple participants in a
supply chain. (False)

[LO 5.5: To compare optional approaches for supply chain integration; Moderate; Concept;
AACSB Category 3: Analytical thinking]

40. Broadly speaking, organizations can pursue three primary methods—vertical integration,
formal contracts, and informal agreements—when attempting to integrate their supply chains.
(True)

[LO 5.5: To compare optional approaches for supply chain integration; Difficult; Synthesis;
AACSB Category 3: Analytical thinking]

15
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