DBA Operations Management and Supply Chain Strategy 2 — Questions and Answers
Question 1: What does 'vertical integration' mean in a supply chain strategy?
- Aligning all processes on a single vertical axis
- Expanding company ownership to include upstream suppliers or downstream distributors (Correct answer)
- Outsourcing all non-core supply chain functions
- Combining horizontal business units
Correct answer: Expanding company ownership to include upstream suppliers or downstream distributors
Vertical integration means a company controls more stages of its supply chain — backward integration acquires suppliers; forward integration acquires distribution channels.
Question 2: In project management, what does the Critical Path Method (CPM) identify?
- The most expensive path through a project network
- The longest sequence of dependent tasks that determines the minimum project duration (Correct answer)
- The shortest path to project completion
- The path with the highest risk activities
Correct answer: The longest sequence of dependent tasks that determines the minimum project duration
The critical path is the longest chain of dependent activities in a project network; any delay on this path directly delays the project's completion date.
Question 3: Which supply chain risk mitigation strategy involves maintaining extra inventory to buffer against supply disruptions?
- Lean inventory management
- Safety stock (Correct answer)
- Drop shipping
- Cross-docking
Correct answer: Safety stock
Safety stock is buffer inventory held above forecast demand to protect against stockouts caused by demand variability or supply disruptions.
Question 4: What is 'demand forecasting' and why is it critical in supply chain management?
- Predicting competitor sales to gain market advantage
- Estimating future customer demand to align supply, production, and inventory planning (Correct answer)
- Forecasting macroeconomic conditions for financial planning
- Predicting employee turnover rates
Correct answer: Estimating future customer demand to align supply, production, and inventory planning
Demand forecasting uses historical data, market intelligence, and quantitative methods to estimate future demand, enabling proactive supply chain planning.
Question 5: In the context of US operations, what is 'process reengineering' (BPR)?
- Gradual, continuous improvement of existing processes
- Radical redesign of core business processes to achieve dramatic improvements in performance (Correct answer)
- Routine maintenance and updating of production equipment
- Standardizing processes across international subsidiaries
Correct answer: Radical redesign of core business processes to achieve dramatic improvements in performance
Business Process Reengineering (Hammer & Champy, 1993) involves fundamentally rethinking and radically redesigning processes to achieve dramatic improvements in cost, quality, speed, and service.
Question 6: What is the primary purpose of an 'Enterprise Resource Planning' (ERP) system in large US organizations?
- Managing social media presence
- Integrating core business processes (finance, HR, supply chain, manufacturing) into a single unified system (Correct answer)
- Providing customer-facing e-commerce platforms
- Replacing human resources with automation
Correct answer: Integrating core business processes (finance, HR, supply chain, manufacturing) into a single unified system
ERP systems integrate and automate core business processes across departments into a unified platform, improving data visibility, coordination, and decision-making.
DBA Operations Management and Supply Chain Strategy 2
What does 'vertical integration' mean in a supply chain strategy?