Supply Chain Management Operations & Supply Chain Management 3 — Questions and Answers
Question 1: Which queuing theory metric represents the average time a customer spends waiting in line before being served?
- Throughput rate
- Service time
- Queue waiting time (Wq) (Correct answer)
- System utilization
Correct answer: Queue waiting time (Wq)
Wq (waiting time in queue) is the average time a unit spends waiting before service begins, a key output of queuing models.
Question 2: In Total Quality Management (TQM), the Plan-Do-Check-Act (PDCA) cycle is also known as the:
- Six Sigma cycle
- Deming cycle (Correct answer)
- Kaizen blitz
- Value stream map
Correct answer: Deming cycle
PDCA is called the Deming cycle (or Shewhart cycle) after W. Edwards Deming, who popularized it as a framework for continuous improvement.
Question 3: Which supply chain model describes five key management components—Plan, Source, Make, Deliver, Return—as a framework for performance measurement?
- SCOR (Supply Chain Operations Reference) model (Correct answer)
- Porter's value chain model
- Balanced scorecard
- CPFR framework
Correct answer: SCOR (Supply Chain Operations Reference) model
The SCOR model, developed by APICS, provides a standardized framework and metrics across five supply chain processes for benchmarking and improvement.
Question 4: A retailer and its suppliers share real-time sales data and jointly create a single demand forecast. This describes:
- Vendor-managed inventory (VMI)
- Collaborative Planning, Forecasting, and Replenishment (CPFR) (Correct answer)
- Electronic Data Interchange (EDI)
- Consignment inventory
Correct answer: Collaborative Planning, Forecasting, and Replenishment (CPFR)
CPFR is a collaborative approach where trading partners jointly develop forecasts and replenishment plans using shared point-of-sale and inventory data.
Question 5: Which type of plant layout arranges equipment by the type of function or process performed, grouping all lathes together, all presses together, etc.?
- Product layout
- Process layout (Correct answer)
- Fixed-position layout
- Cellular layout
Correct answer: Process layout
A process layout (functional layout) groups similar machines or functions together, offering flexibility for varied job types but requiring more material movement.
Question 6: Economic Order Quantity (EOQ) minimizes the total of which two cost categories?
- Transportation costs and insurance costs
- Ordering costs and holding costs (Correct answer)
- Setup costs and stockout costs
- Purchase price and quality inspection costs
Correct answer: Ordering costs and holding costs
EOQ balances the trade-off between ordering costs (per order) and holding costs (per unit per period) to find the optimal order quantity.
Question 7: A factory that produces 500 units/day runs 8 hours/day with a customer demand rate of 450 units/day. What is the capacity utilization?
- 56%
- 90% (Correct answer)
- 110%
- 80%
Correct answer: 90%
Capacity utilization = (demand rate / production capacity) × 100 = (450 / 500) × 100 = 90%.
Supply Chain Management Operations & Supply Chain Management 3
Which queuing theory metric represents the average time a customer spends waiting in line before being served?