Test Database
Chapter 9 – Replenishment in a Multiechelon Channel
Environment
True or False
1.
A distribution environment is classified as either a “push” or a “pull” system
depending on whether demand is initiated in response to or in anticipation of
customer orders.
a. True
b. False
2.
A “push” process is considered as a reactive process for channel resupply.
a. True
b. False
3.
If facilities have lower fixed costs, the creation of a distribution network with
many facilities is preferred because this helps to lower transportation costs.
a. True
b. False
4.
Inventory and facility costs decrease as the number of facilities in a distribution channel increase
a. True
b. False
5.
A business may increase the number of facilities beyond the point that minimizes total logistics costs to improve the response time to its customers.
a. True
b. False
6.
Outbound transportation costs per unit tend to be higher than inbound costs
because inbound lot sizes are typically larger.
a. True
b. False
7.
A significant disadvantage of a “push” channel inventory system is that if
channel sales are irregular, inventory imbalances among channel facilities can
occur.
a. True
b. False
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8.
When distribution requirements planning (DRP) is referred to being priority
sequenced, this means that the demand delivery dates drive supply replenishment actions.
a. True
b. False
9.
When a distribution requirements planning (DRP) planned replenishment order is generated in a satellite warehouse fed by a manufacturing plant, the order will end up in the plant’s master schedule.
a. True
b. False
10. Distribution integrative intensity determines the number of intermediaries
needed to bring products to the customer.
a. True
b. False
Multiple Choice
11.
Pull systems of planning and control in a distribution environment
a. Allow each distribution center to manage its own inventory.
b. Centralize inventory management.
c. Rely on replenishment orders from the stocking locations closest to the
production facilities.
d. Are centralized at the first level in distribution and the first level in production.
12. Adding a distributor as a channel intermediary between manufacturers and retailers will result in all but the following.
a. A decrease in the number of transactions for retailers
b. A decrease in transportation costs
c. An increase in the number of transactions for manufacturers
d. A reduction in the number of shipments from manufacturers
13. Distribution requirements planning (DRP) schedules a planned order receipt
when
a. A gross requirement exists.
b. A net requirement exists.
c. An exception is generated.
d. Safety stock is zero.
14. Creating a distribution channel affects inventory in that each facility in each
echelon acts as an inventory
a. Transportation point
b. Safety stock point.
c. Decoupling point.
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d.
Gross requirements point.
15. Which of the following is an advantage of a “pull” system?
a. Inventory can be positioned in the distribution channel to meet anticipated customer requirements.
b. A single channel inventory plan is created to remove the inaccuracies
arising in local replenishment decision making.
c. The total working capital necessary to stock the channel is reduced by
leveraging buying (discounting) and transportation economies of scale.
d. Standard reorder point and distribution requirements planning (DRP)
computer systems enable the planning systems of the entire supply chain
to be integrated.
16. Which of the following is an advantage of a “push” system?
a. No need to perform complex channel inventory analysis.
b. A single channel inventory plan is created to remove the inaccuracies
arising in local replenishment decision making.
c. Local control enables ordering exactly the stock that is needed.
d. Local control removes excess pools of inventory in the channel.
17. A manufacturing company would use which type of computer system to manage manufacturing inventories?
a. Reorder point
b. Distribution requirements planning (DRP)
c. Materials requirements planning (MRP)
d. Min/max system
18. The distribution inventory management system that forecasts when the various
demands will be made by the system on central supply is called:
a. Pull system
b. Push system
c. Distribution requirements planning
d. Inventory replenishment
19. Pull systems of planning and control in a distribution environment
a. Allow each distribution center to manage its own inventory
b. Centralize inventory management
c. Rely on replenishment orders from the stocking locations closest to the
production facilities
d. Are centralized at the first level in distribution and the first level in production, and are decentralized at every other point
20. What is the logical connecting point between the supply system and the distribution system?
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a.
b.
c.
d.
Bill of distribution (BOD)
Master production schedule (MPS)
Reorder point
Material requirements planning (MRP)
21. Estimating demand at each final distribution center based on historical demand and summing the total is forecasting by which of the following?
a. Aggregation
b. Allocation
c. Intermediary
d. Channel
22. The net requirement row on the DRP grid is calculated as:
a. In-transit orders minus gross requirements for each time period
b. Gross requirements minus in transit orders for each time period
c. In-transit orders plus beginning inventory minus gross requirements for
each time period
d. Open orders minus gross requirements minus planned orders for each
time period
23. In a DRP system, the generated planned order quantity
a. Should always equal the net requirements
b. Should always equal some form of economic order quantity (EOQ)
c. Should following the order rule attached to the item
d. Should equal the negative projected available balance
24. All of the following are elements used in a DRP system EXCEPT
a. Reorder point
b. Item forecast by distribution center
c. Lead time
d. Current available inventory
25. The use of a fair share allocation techniques would most likely be used in
which of the following types of distribution system?
a. Pull system
b. DRP system
c. MRP system
d. Push system
26. Inventory management in a distribution network using a pull system would be
characterized as
a. Centralized
b. Decentralized
c. Based on allocations
d. Using a consolidated product forecast
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27. A company with an extensive distribution network would most likely choose
a DRP system because:
a. It has a network of remote distribution facilities.
b. It has a multiechelon supply channel.
c. It produces the finished goods it sells to the marketplace.
d. It needs to determine accurate order quantities for the channel facilities.
28. Which one of these statements is an advantage of a pull system
a. Central planning
b. Centralization of safety stock
c. Reduction in total working capital
d. Increased inventory turnover
29. In a base stock system
a. Each branch warehouse would have a double reorder point
b. Inventory would be managed using periodic review
c. Inventory is calculated as warehouse demand plus stock at all upstream
warehouses
d. Each warehouse is replenished based on the bill of distribution
30. A simple model to use to stock multiechelon supply channels is
a. Square root rule
b. Multiechelon push system allocation
c. Least-cost redistribution
d. Selective stocking
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Answer Key
1. T
2. F
3. T
4. F
5. T
6. T
7. T
8. T
9. T
10. F
11. a
12. c
13. b
14. c
15. d
16. b
17. c
18. c
19. a
20. b
21. a
22. c
23. c
24. a
25. d
26. b
27. c
28. d
29. c
30. d