OPMA 317 Final Exam Practice Questions
Verified Solutions | Grade A+ | Operations & Supply Chain
Management
Question 1
What is the "bullwhip effect" in supply chain management?
A) A strategy to increase inventory levels across the supply chain
B) The distortion and amplification of information (orders) as it moves back through the supply chain
C) A method for reducing supplier costs
D) A type of transportation mode
Answer: B
Explanation: The bullwhip effect describes how small fluctuations in demand at the retail level cause
progressively larger fluctuations in orders as you move up the supply chain to wholesalers, distributors,
and manufacturers .
Question 2
Which of the following is a primary cause of the bullwhip effect?
A) Excessive communication between supply chain partners
B) Lack of communication/cooperation and long lead times
C) Short manufacturing lead times
D) Stable customer demand patterns
,Answer: B
Explanation: The bullwhip effect is caused by (1) lack of communication and cooperation leading to
guessing of customer demand, and (2) long lead times that cause panic ordering when inventory doesn't
arrive instantly .
Question 3
In the Beer Distribution Game, what consistent result was observed regardless of culture or business
experience?
A) Inventory levels remained stable throughout
B) The bullwhip effect occurred consistently
C) Customer demand was always predictable
D) Lead times had no impact on orders
Answer: B
Explanation: The Beer Game demonstrated that the bullwhip effect occurs consistently regardless of
participants' culture, business experience, or industry—you cannot simply "blame customer demand" .
Question 4
What are the consequences of the bullwhip effect? (Select all that apply)
A) Stockouts leading to lost profit
B) Excess inventory with holding costs
C) Reduced overtime costs
D) Expediting and rush transportation costs
,Answer: A, B, D
Explanation: The bullwhip effect leads to stockouts (lost profit), excess inventory (holding costs,
obsolescence), overtime costs, layoff/rehiring costs, and expediting/rush transportation costs .
Question 5
What two primary strategies can improve supply chain performance?
A) Increase prices and reduce quality
B) Communication/cooperation and shortening lead times
C) Outsourcing everything and increasing inventory
D) Reducing suppliers and eliminating technology
Answer: B
Explanation: The two main strategies to improve supply chains are (1) communication and cooperation to
determine actual demand, and (2) shortening lead times to allow faster response .
Question 6
How can communication and cooperation be encouraged in a supply chain?
A) By keeping demand forecasts secret from suppliers
B) Through incentives to share information and Vendor Managed Inventory (VMI)
C) By increasing the number of suppliers
D) By reducing order frequency
Answer: B
, Explanation: Incentives like lower unit costs for sharing actual demand data, and VMI where vendors
manage customer inventory, encourage cooperation. Canadian Tire reduced lead time from 46 to 15 days
using VMI .
Question 7
What is Vendor Managed Inventory (VMI)?
A) Customers manage their own inventory levels
B) Vendors (manufacturers) manage the customer's inventory of the products they supply
C) A third-party logistics company manages all inventory
D) Inventory is eliminated entirely
Answer: B
Explanation: VMI means vendors manage the customer's inventory including ordering and stocking
shelves. Benefits include less admin for customers and better demand visibility for vendors .
Question 8
What are the benefits of VMI for the customer (retailer)?
A) Higher ordering costs and more stockouts
B) Less administration, lower chance of stockout
C) Increased need for inventory staff
D) Higher unit costs
Answer: B
Verified Solutions | Grade A+ | Operations & Supply Chain
Management
Question 1
What is the "bullwhip effect" in supply chain management?
A) A strategy to increase inventory levels across the supply chain
B) The distortion and amplification of information (orders) as it moves back through the supply chain
C) A method for reducing supplier costs
D) A type of transportation mode
Answer: B
Explanation: The bullwhip effect describes how small fluctuations in demand at the retail level cause
progressively larger fluctuations in orders as you move up the supply chain to wholesalers, distributors,
and manufacturers .
Question 2
Which of the following is a primary cause of the bullwhip effect?
A) Excessive communication between supply chain partners
B) Lack of communication/cooperation and long lead times
C) Short manufacturing lead times
D) Stable customer demand patterns
,Answer: B
Explanation: The bullwhip effect is caused by (1) lack of communication and cooperation leading to
guessing of customer demand, and (2) long lead times that cause panic ordering when inventory doesn't
arrive instantly .
Question 3
In the Beer Distribution Game, what consistent result was observed regardless of culture or business
experience?
A) Inventory levels remained stable throughout
B) The bullwhip effect occurred consistently
C) Customer demand was always predictable
D) Lead times had no impact on orders
Answer: B
Explanation: The Beer Game demonstrated that the bullwhip effect occurs consistently regardless of
participants' culture, business experience, or industry—you cannot simply "blame customer demand" .
Question 4
What are the consequences of the bullwhip effect? (Select all that apply)
A) Stockouts leading to lost profit
B) Excess inventory with holding costs
C) Reduced overtime costs
D) Expediting and rush transportation costs
,Answer: A, B, D
Explanation: The bullwhip effect leads to stockouts (lost profit), excess inventory (holding costs,
obsolescence), overtime costs, layoff/rehiring costs, and expediting/rush transportation costs .
Question 5
What two primary strategies can improve supply chain performance?
A) Increase prices and reduce quality
B) Communication/cooperation and shortening lead times
C) Outsourcing everything and increasing inventory
D) Reducing suppliers and eliminating technology
Answer: B
Explanation: The two main strategies to improve supply chains are (1) communication and cooperation to
determine actual demand, and (2) shortening lead times to allow faster response .
Question 6
How can communication and cooperation be encouraged in a supply chain?
A) By keeping demand forecasts secret from suppliers
B) Through incentives to share information and Vendor Managed Inventory (VMI)
C) By increasing the number of suppliers
D) By reducing order frequency
Answer: B
, Explanation: Incentives like lower unit costs for sharing actual demand data, and VMI where vendors
manage customer inventory, encourage cooperation. Canadian Tire reduced lead time from 46 to 15 days
using VMI .
Question 7
What is Vendor Managed Inventory (VMI)?
A) Customers manage their own inventory levels
B) Vendors (manufacturers) manage the customer's inventory of the products they supply
C) A third-party logistics company manages all inventory
D) Inventory is eliminated entirely
Answer: B
Explanation: VMI means vendors manage the customer's inventory including ordering and stocking
shelves. Benefits include less admin for customers and better demand visibility for vendors .
Question 8
What are the benefits of VMI for the customer (retailer)?
A) Higher ordering costs and more stockouts
B) Less administration, lower chance of stockout
C) Increased need for inventory staff
D) Higher unit costs
Answer: B
