Question 1

Which of the following is not a key goal (from the manufacturer's perspective) of a trade promotion?

Accepted Answer

A)   Induce retailers to use price discounts, displays, or advertising to spur sales.
B)   Shift inventory from the manufacturer to the retailer and the customer.
C)   Shift inventory from the retailer to the customer.
D)   Defend a brand against competition.

Question 2

Aggregating across products,retailers,or suppliers in a single order allows for a reduction in lot size for individual products because fixed ordering and transportation costs are now spread across multiple products,retailers,or suppliers.

Accepted Answer

A) True 
 B)False

Question 3

________ is the practice whereby a firm charges differential prices to maximize profits.

Accepted Answer

A)   Optimal lot sizing
B)   Fixed pricing
C)   Nonperishable pricing
D)   Price discrimination

Question 4

For products where the firm has market power,two-part tariffs can be used to achieve coordination in the supply chain and maximize supply chain profits.

Accepted Answer

A) True 
 B)False

Question 5

Marginal unit quantity discounts have also been referred to as multi-block tariffs.

Accepted Answer

A) True 
 B)False

Question 6

Cycle inventory exists in a supply chain because different stages exploit economies of scale to lower total cost.

Accepted Answer

A) True 
 B)False

Question 7

A discount is volume-based if the discount is based on the total quantity purchased over a given period,regardless of the number of lots purchased over that period.

Accepted Answer

A) True 
 B)False

Question 8

A key to reducing lot size without increasing costs is to

Accepted Answer

A)   reduce the holding cost associated with each lot.
B)   reduce the fixed cost associated with each lot.
C)   reduce the material cost associated with each lot.
D)   reduce the manufacturing cost associated with each lot.
E)   increase the holding cost associated with each lot.

Question 9

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to

Accepted Answer

A)   exploit economies of scale and raise cost.
B)   exploit economies of scale and lower cost.
C)   exploit customers and lower cost.
D)   exploit customers and raise cost.
E)   none of the above

Question 10

When the retailer decides to pass through very little of the promotion to customers but purchase in greater quantity during the promotion period to exploit the temporary reduction in price,the result is

Accepted Answer

A)   a lowering of the price of the product for the end customer.
B)   increased purchases and thus increased sales for the entire supply chain.
C)   an increase in the amount of inventory held at the retailer.
D)   all of the above

Question 11

The optimal lot size is referred to as the economic order quantity (EOQ).It is denoted by Q * and is given by the equation: Q* = 2DS/hC.

Accepted Answer

A) True 
 B)False

Question 12

Which cost estimates the rate at which the value of the product being stored drops either because the market value of that product drops or because the product quality deteriorates?

Accepted Answer

A)   Cost of capital
B)   Obsolescence (spoilage)  cost
C)   Handling cost
D)   Occupancy cost

Question 13

For products where the firm has market power,coordination in the supply chain can be achieved and supply chain profits maximized through the use of

Accepted Answer

A)   two-part tariffs or volume based quantity discounts.
B)   marginal unit quantity discounts.
C)   all unit quantity discounts.
D)   basic quantity discounts.

Question 14

Cycle inventory is primarily held to

Accepted Answer

A)   take advantage of diseconomies of scale and increase cost within the supply chain.
B)   take advantage of diseconomies of scale and reduce cost within the supply chain.
C)   take advantage of economies of scale and increase cost within the supply chain.
D)   take advantage of economies of scale and reduce cost within the supply chain.

Question 15

Quantity discounts lead to

Accepted Answer

A)   a significant buildup of cycle inventory in the supply chain.
B)   a slight buildup of cycle inventory in the supply chain.
C)   a decrease in cycle inventory in the supply chain.
D)   minor fluctuations of cycle inventory in the supply chain.

Question 16

In a supply chain where each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit,

Accepted Answer

A)   supply chain profit is lower than a coordinated solution.
B)   supply chain profit is higher than a coordinated solution.
C)   supply chain profit is about the same as a coordinated solution.
D)   supply chain profit will be maximized.

Question 17

If demand increases by a factor of k,the optimal lot size decreases by a factor of k.

Accepted Answer

A) True 
 B)False

Question 18

Total ordering and holding costs

Accepted Answer

A)   are relatively stable.
B)   are relatively stable around the economic order quantity.
C)   are relatively unstable around the economic order quantity.
D)   are unstable.

Question 19

Total ordering and holding costs are unstable around the economic order quantity.

Accepted Answer

A) True 
 B)False

Question 20

The total annual cost is the sum of annual material cost,annual order cost,and annual holding cost,and is given as TC = CD + (D/Q)S + (Q/2)hC.

Accepted Answer

A) True 
 B)False

Exam 11: Managing Economies of Scale in the Supply Chain: Cycle Inventory

Total ordering and holding costs

Correct AnswerverifiedShow Answer

The total annual cost is the sum of annual material cost,annual order cost,and annual holding cost,and is given as TC = CD + (D/Q)S + (Q/2)hC.

Correct AnswerverifiedShow Answer

Aggregating across products,retailers,or suppliers in a single order allows for a reduction in lot size for individual products because fixed ordering and transportation costs are now spread across multiple products,retailers,or suppliers.

Correct AnswerverifiedShow Answer

The optimal lot size is referred to as the economic order quantity (EOQ).It is denoted by Q * and is given by the equation: Q* = 2DS/hC.

Correct AnswerverifiedShow Answer

If demand increases by a factor of k,the optimal lot size decreases by a factor of k.

Correct AnswerverifiedShow Answer

Marginal unit quantity discounts have also been referred to as multi-block tariffs.

Correct AnswerverifiedShow Answer

Cycle inventory exists in a supply chain because different stages exploit economies of scale to lower total cost.

Correct AnswerverifiedShow Answer

In a supply chain where each stage of the supply chain independently makes its pricing decisions with the objective of maximizing its own profit,

Correct AnswerverifiedShow Answer

A key to reducing lot size without increasing costs is to

Correct AnswerverifiedShow Answer

When the retailer decides to pass through very little of the promotion to customers but purchase in greater quantity during the promotion period to exploit the temporary reduction in price,the result is

Correct AnswerverifiedShow Answer

________ is the practice whereby a firm charges differential prices to maximize profits.

Correct AnswerverifiedShow Answer

Total ordering and holding costs are unstable around the economic order quantity.

Correct AnswerverifiedShow Answer

For products where the firm has market power,two-part tariffs can be used to achieve coordination in the supply chain and maximize supply chain profits.

Correct AnswerverifiedShow Answer

Cycle inventory is primarily held to

Correct AnswerverifiedShow Answer

For products where the firm has market power,coordination in the supply chain can be achieved and supply chain profits maximized through the use of

Correct AnswerverifiedShow Answer

A discount is volume-based if the discount is based on the total quantity purchased over a given period,regardless of the number of lots purchased over that period.

Correct AnswerverifiedShow Answer

Which cost estimates the rate at which the value of the product being stored drops either because the market value of that product drops or because the product quality deteriorates?

Correct AnswerverifiedShow Answer

Which of the following is not a key goal (from the manufacturer's perspective) of a trade promotion?

Correct AnswerverifiedShow Answer

Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply chain to

Correct AnswerverifiedShow Answer

Quantity discounts lead to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified