OPMA 317 CHAPTER 7 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026
What is a supply chain? - Answers A network of facilities that procures raw materials, transforms
them into intermediate goods then final products, and delivers them to customers through a
distribution system.
What are the inbound and outbound halves of a supply chain called? - Answers Inbound = Purchasing
/ Procurement; Outbound = Physical Distribution / Logistics.
What are the three uses of AI in supply chain management? - Answers 1) Finding alternative
suppliers; 2) Discovering what current suppliers can do; 3) Automating negotiations.
What are Walmart's 'tail-end' suppliers? - Answers They account for ~20% of Walmart's spending on
low-value items.
Why use AI on Walmart's 'tail-end' suppliers? - Answers AI negotiates with their salespeople, freeing
humans for higher-value work.
What is the main driver of going global for supplier/facility location? - Answers Reducing labour costs.
What is vertical integration? - Answers The proportion of the supply chain that a company owns.
Why would a company NOT outsource? - Answers To maintain control over strategic processes and
intellectual property.
What does the Arc'teryx ARC'One facility illustrate? - Answers Vertical integration.
Why do modest purchasing cost reductions matter? - Answers Purchasing is a large percentage of
sales, so small cuts produce large payoffs.
What are the four categories of criteria used in vendor selection? - Answers Company, Service,
Products, and Sustainability.
What is vendor development? - Answers Helping improve a supplier's operations/efficiency.
What are the positives of centralized purchasing? - Answers Purchasing power and oversight/control.
What are the negatives of centralized purchasing? - Answers Slower and less flexible.
What is stockless purchasing? - Answers The supplier delivers material directly to the production
area.
What is a blanket purchase order? - Answers A long-term commitment to buy items delivered as
needed.
What are the pros of a blanket purchase order for retailers? - Answers Unit-cost savings and lower
holding costs.
What is pre-purchase capacity? - Answers Reserving capacity 18-24 months ahead in generic units.
What is VMI in SCM? - Answers Vendor-Managed Inventory, where the vendor manages the
customer's inventory.
What is the lesson of supplier consolidation? - Answers Work closer with fewer suppliers.
What are the key traits of functional products? - Answers Predictable demand, life cycle >2 years, low
margin, low variety.
What are the key traits of innovative products? - Answers Unpredictable demand, life cycle 3-12
months, high margin, high variety.
What supply chain type fits functional products? - Answers Physically Efficient process.
What supply chain type fits innovative products? - Answers Market-Responsive process.
What are the three utilities that logistics provides? - Answers Time, Place, and Form.
Why consider 'all-inclusive' logistics costs? - Answers Because transport, inventory, packing, and
damage all count.
Rank the four transport modes by cost and speed. - Answers Air: very high cost, very fast.
What is intermodal shipping? - Answers Using the same container across boats, trains, and trucks.
What is cross-docking? - Answers Removing the storage step by distributing goods immediately after
receipt.
What is drop shipping? - Answers When a retailer is out of stock and has the supplier ship the item
directly to the customer.
What is postponement? - Answers Intentionally delaying supply chain activities to improve flexibility
and reduce inventory costs.
What is place-utility postponement? - Answers Avoid committing inventory down the chain as long as
possible.
What is form-utility postponement? - Answers Build a generic product and customize it late.
What is a supply chain? - Answers A network of facilities that procures raw materials, transforms
them into intermediate goods then final products, and delivers them to customers through a
distribution system.
What are the inbound and outbound halves of a supply chain called? - Answers Inbound = Purchasing
/ Procurement; Outbound = Physical Distribution / Logistics.
What are the three uses of AI in supply chain management? - Answers 1) Finding alternative
suppliers; 2) Discovering what current suppliers can do; 3) Automating negotiations.
What are Walmart's 'tail-end' suppliers? - Answers They account for ~20% of Walmart's spending on
low-value items.
Why use AI on Walmart's 'tail-end' suppliers? - Answers AI negotiates with their salespeople, freeing
humans for higher-value work.
What is the main driver of going global for supplier/facility location? - Answers Reducing labour costs.
What is vertical integration? - Answers The proportion of the supply chain that a company owns.
Why would a company NOT outsource? - Answers To maintain control over strategic processes and
intellectual property.
What does the Arc'teryx ARC'One facility illustrate? - Answers Vertical integration.
Why do modest purchasing cost reductions matter? - Answers Purchasing is a large percentage of
sales, so small cuts produce large payoffs.
What are the four categories of criteria used in vendor selection? - Answers Company, Service,
Products, and Sustainability.
What is vendor development? - Answers Helping improve a supplier's operations/efficiency.
What are the positives of centralized purchasing? - Answers Purchasing power and oversight/control.
What are the negatives of centralized purchasing? - Answers Slower and less flexible.
What is stockless purchasing? - Answers The supplier delivers material directly to the production
area.
What is a blanket purchase order? - Answers A long-term commitment to buy items delivered as
needed.
What are the pros of a blanket purchase order for retailers? - Answers Unit-cost savings and lower
holding costs.
What is pre-purchase capacity? - Answers Reserving capacity 18-24 months ahead in generic units.
What is VMI in SCM? - Answers Vendor-Managed Inventory, where the vendor manages the
customer's inventory.
What is the lesson of supplier consolidation? - Answers Work closer with fewer suppliers.
What are the key traits of functional products? - Answers Predictable demand, life cycle >2 years, low
margin, low variety.
What are the key traits of innovative products? - Answers Unpredictable demand, life cycle 3-12
months, high margin, high variety.
What supply chain type fits functional products? - Answers Physically Efficient process.
What supply chain type fits innovative products? - Answers Market-Responsive process.
What are the three utilities that logistics provides? - Answers Time, Place, and Form.
Why consider 'all-inclusive' logistics costs? - Answers Because transport, inventory, packing, and
damage all count.
Rank the four transport modes by cost and speed. - Answers Air: very high cost, very fast.
What is intermodal shipping? - Answers Using the same container across boats, trains, and trucks.
What is cross-docking? - Answers Removing the storage step by distributing goods immediately after
receipt.
What is drop shipping? - Answers When a retailer is out of stock and has the supplier ship the item
directly to the customer.
What is postponement? - Answers Intentionally delaying supply chain activities to improve flexibility
and reduce inventory costs.
What is place-utility postponement? - Answers Avoid committing inventory down the chain as long as
possible.
What is form-utility postponement? - Answers Build a generic product and customize it late.
