LSU ISDS 3115 FINAL EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
True/False: Operations managers are finding online auctions a fertile area for disposing of
discontinued inventory. - Answers True
True/False: The key to effective supply chain management is to get many suppliers to compete with
each other, in order to drive down prices. - Answers False
True/False: Even though a firm may have a low cost strategy, supply chain strategy can select
suppliers primarily on response or differentiation. - Answers False
True/False: The supply chain for a brewery would include raw ingredients such as hops and barley but
not the manufactured goods such as bottles and cans. - Answers False
True/False: Supply chain management faces additional challenges, such as those related to quality
production and distribution systems, when companies enter growing global markets. - Answers True
True/False: McDonald's was able to utilize existing plants and transportation systems in preparing the
supply chain for opening its stores in Moscow. - Answers False
True/False: When using the low-cost strategy for supply chain management, the firm should invest
aggressively to reduce production lead time. - Answers False
True/False: Savings in the supply chain exert more leverage as the firm has a lower net profit margin. -
Answers True
True/False: A reduction in inventory costs is one reason for making rather than buying. - Answers
False
True/False: Outsourcing refers to transferring a firm's activities that have traditionally been internal to
external suppliers. - Answers True
True/False: Outsourcing is a form of specialization that allows the outsourcing firm to focus on its
critical success factors. - Answers True
True/False: Supply chain decisions are not generally strategic in nature, because purchasing is an
ordinary expense to most firms. - Answers False
True/False: The objective of the make-or-buy decision is to help identify the products and services
that can be obtained externally. - Answers True
True/False: Because service firms do not acquire goods and services externally, their supply chain
management issues are insignificant. - Answers False
True/False: Because the supply chain has become so electronic and automated, opportunities for
unethical behavior have been greatly reduced. - Answers False
True/False: With the many-suppliers strategy, the order usually goes to the supplier that offers the
best quality. - Answers False
True/False: Developing long-term, "partnering" relationships with a few suppliers is a long-standing
American purchasing strategy. - Answers False
True/False: Vertical integration, whether forward or backward, requires the firm to become more
specialized. - Answers False
True/False: A fast-food retailer that acquired a spice manufacturer would be practicing backward
integration. - Answers True
True/False: Keiretsus offer a middle ground between few suppliers and vertical integration. - Answers
True
True/False: In several industries, online exchanges have been created by buyers. - Answers True
True/False: The bullwhip effect refers to the increasing fluctuations in orders that often occur as
orders move through the supply chain. - Answers True
True/False: Vendor Managed Inventory is a form of outsourcing. - Answers True
True/False: In the vendor evaluation phase, most companies will use the same list of criteria and the
same criteria weights. - Answers False
True/False: One classic type of negotiation strategy is the market-based price model. - Answers True
True/False: Drop shipping results in time and shipping cost savings. - Answers True
True/False: The supply chain management opportunity called postponement involves delaying
deliveries to avoid accumulation of inventory at the customer's site. - Answers False
True/False: Channel assembly, which sends components and modules to be assembled by a
distributor, treats these distributors as manufacturing partners. - Answers True
True/False: Blanket orders are a long-term purchase commitment to a supplier for items that are to
be delivered against short-term releases to ship. - Answers True
,True/False: Bar code and radio frequency technology, like that used to track UPS or FedEx packages
on their global journeys, can also be used to track objects within the boundaries of a warehouse or
shop. - Answers True
True/False: Waterways are an attractive distribution system when speed is more important than
shipping cost. - Answers False
True/False: Logistics management can provide a competitive advantage through improved customer
service. - Answers True
True/False: With the growth of just-in-time practices, railroads have made large gains in the share of
the nation's transport that they haul. - Answers False
True/False: Improvements in security, especially regarding the millions of shipping containers that
enter the U.S. each year, are being held back by the lack of technological advances. - Answers False
True/False: Benchmark firms have driven down costs of supply chain performance. - Answers True
The three major variations of online catalogs are
a. catalogs by vendors, catalogs by intermediaries, and exchanges provided by buyers
b. EDI, ERP, and ASN
c. cost-based, market-based, and competitive bidding
d. drop shipping, channel assembly, and postponement
e. all auction-based - Answers a. catalogs by vendors, catalogs by intermediaries, and exchanges
provided by buyers
Visibility throughout the supply chain is a requirement among supply chain members for
a. mutual agreement on goals
b. mutual trust
c. compatible organizational cultures
d. local optimization
e. the bullwhip effect - Answers b. mutual trust
Which of the following is not a concern of the supply chain?
a. warehousing and inventory levels
b. credit and cash transfers
c. suppliers
d. distributors and banks
e. maintenance scheduling - Answers e. maintenance scheduling
What type of negotiating strategy requires the supplier to open its books to the purchasers?
a. cost-based price model
b. market-based price model
c. competitive bidding
d. price-based model
e. none of the above - Answers a. cost-based price model
Which of the following statements is true regarding the leverage of supply chain savings?
a. Supply chain leverage is about the same for all industries.
b. Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales.
c. Supply chain savings exert more leverage as the firm has a lower net profit margin.
d. Supply chain leverage depends only upon the percent of sales spent in the supply chain.
e. None of the above is true. - Answers c. Supply chain savings exert more leverage as the firm has a
lower net profit margin.
One dollar saved in purchasing is
a. equivalent to a dollar earned in sales revenue
b. worth even more than a dollar earned in sales revenue
c. worth slightly more than a dollar earned because of taxes
d. worth from 35% in the technical instrument industry to 70% in the food products industry
e. only worthwhile if you are in the 50% tax bracket and still have a low profit margin - Answers b.
worth even more than a dollar earned in sales revenue
Which one of the following statements about purchasing is true?
a. The cost of purchases as a percent of sales is often small.
b. Purchasing provides a major opportunity for price increases.
c. Purchasing is always more efficient than making an item.
d. Purchasing has an impact on the quality of the goods and services sold.
, e. Competitive bidding is a major factor in long-term cost reductions. - Answers d. Purchasing has an
impact on the quality of the goods and services sold.
In the make-or-buy decision, one of the reasons for making is
a. to reduce inventory costs
b. to obtain technical or management ability
c. inadequate capacity
d. reciprocity
e. to assure adequate supply in terms of quantity - Answers e. to assure adequate supply in terms of
quantity
In the make-or-buy decision, which of the following is a reason for making an item?
a. management can focus on its primary business
b. lower production cost
c. inadequate capacity
d. reduce inventory costs
e. None of the above is a reason for making an item. - Answers b. lower production cost
In the make-or-buy decision, one of the reasons for buying is
a. to assure adequate supply
b. to obtain desired quality
c. to remove supplier collusion
d. inadequate capacity
e. to maintain organizational talents - Answers d. inadequate capacity
In the make-or-buy decision, which of the following is not a reason for buying?
a. inadequate capacity
b. to obtain desired quality
c. patents or trade secrets
d. lower inventory costs
e. All of the above are reasons for buying. - Answers b. to obtain desired quality
Outsourcing
a. transfers traditional internal activities to outside vendors
b. utilizes the efficiency which comes with specialization
c. lets the outsourcing firm focus on its critical success factors
d. None of the above are true of outsourcing.
e. All of the above are true of outsourcing. - Answers e. All of the above are true of outsourcing.
The transfer of some of what are traditional internal activities and resources of a firm to outside
vendors is
a. a standard use of the make or buy decision
b. not allowed by the ethics code of the Supply Management Institute
c. offshoring
d. outsourcing
e. keiretsu - Answers d. outsourcing
The Institute for Supply Management
a. establishes laws and regulations for supply management
b. is an agency of the United Nations charged with promoting ethical conduct globally
c. publishes the principles and standards for ethical supply management conduct
d. prohibits backward integration into developing economies
e. All of the above are true. - Answers c. publishes the principles and standards for ethical supply
management conduct
In supply chain management, ethical issues
a. are particularly important because of the enormous opportunities for abuse
b. may be guided by company rules and codes of conduct
c. become more complex the more global is the supply chain
d. may be guided by the principles and standards of the Institute for Supply Management
e. All of the above are true. - Answers e. All of the above are true.
Keeping a product generic as long as possible before customizing is known as
a. postponement
b. keiretsu
c. channel assembly
, d. forward integration
e. backward integration - Answers a. postponement
Which one of the following is not a supply chain strategy?
a. negotiation with many suppliers
b. vertical integration
c. keiretsu
d. short-term relationships with few suppliers
e. virtual companies - Answers d. short-term relationships with few suppliers
A disadvantage of the "few suppliers" strategy is
a. the risk of not being ready for technological change
b. the lack of cost savings for customers and suppliers
c. possible violations of the Sherman Antitrust Act
d. the high cost of changing partners
e. All of the above are disadvantages of the "few suppliers" strategy. - Answers d. the high cost of
changing partners
The purchasing approach that holds the suppliers responsible for maintaining the necessary
technology, expertise, and forecasting ability plus cost, quality, and delivery competencies is
a. few suppliers
b. many suppliers
c. Keiretsu
d. vertical integration
e. virtual companies - Answers b. many suppliers
Which of the following is not an advantage of the "few suppliers" concept?
a. suppliers' willingness to participate in JIT systems
b. trust
c. vulnerability of trade secrets
d. creation of value by allowing suppliers to have economies of scale
e. suppliers' willingness to provide technological expertise - Answers c. vulnerability of trade secrets
Which of the following supply chain strategies creates value by allowing suppliers to have economies
of scale?
a. suppliers becoming part of a company coalition
b. vertical integration
c. long-term partnering with a few suppliers
d. negotiating with many suppliers
e. developing virtual companies - Answers c. long-term partnering with a few suppliers
Which of the following is not a condition that favors the success of vertical integration?
a. availability of capital
b. availability of managerial talent
c. required demand
d. small market share
e. All of the above favor the success of vertical integration. - Answers d. small market share
Which of the following best describes vertical integration?
a. to sell products to a supplier or a distributor
b. to develop the ability to produce products which complement the original product
c. to produce goods or services previously purchased
d. to develop the ability to produce the specified good more efficiently than before
e. to build long-term partnerships with a few suppliers - Answers c. to produce goods or services
previously purchased
A fried chicken fast-food chain that acquired feed mills and poultry farms has performed
a. horizontal integration
b. forward integration
c. backward integration
d. current transformation
e. job expansion - Answers c. backward integration
Vertical integration appears particularly advantageous when the organization has
a. a very specialized product
b. a large market share
True/False: Operations managers are finding online auctions a fertile area for disposing of
discontinued inventory. - Answers True
True/False: The key to effective supply chain management is to get many suppliers to compete with
each other, in order to drive down prices. - Answers False
True/False: Even though a firm may have a low cost strategy, supply chain strategy can select
suppliers primarily on response or differentiation. - Answers False
True/False: The supply chain for a brewery would include raw ingredients such as hops and barley but
not the manufactured goods such as bottles and cans. - Answers False
True/False: Supply chain management faces additional challenges, such as those related to quality
production and distribution systems, when companies enter growing global markets. - Answers True
True/False: McDonald's was able to utilize existing plants and transportation systems in preparing the
supply chain for opening its stores in Moscow. - Answers False
True/False: When using the low-cost strategy for supply chain management, the firm should invest
aggressively to reduce production lead time. - Answers False
True/False: Savings in the supply chain exert more leverage as the firm has a lower net profit margin. -
Answers True
True/False: A reduction in inventory costs is one reason for making rather than buying. - Answers
False
True/False: Outsourcing refers to transferring a firm's activities that have traditionally been internal to
external suppliers. - Answers True
True/False: Outsourcing is a form of specialization that allows the outsourcing firm to focus on its
critical success factors. - Answers True
True/False: Supply chain decisions are not generally strategic in nature, because purchasing is an
ordinary expense to most firms. - Answers False
True/False: The objective of the make-or-buy decision is to help identify the products and services
that can be obtained externally. - Answers True
True/False: Because service firms do not acquire goods and services externally, their supply chain
management issues are insignificant. - Answers False
True/False: Because the supply chain has become so electronic and automated, opportunities for
unethical behavior have been greatly reduced. - Answers False
True/False: With the many-suppliers strategy, the order usually goes to the supplier that offers the
best quality. - Answers False
True/False: Developing long-term, "partnering" relationships with a few suppliers is a long-standing
American purchasing strategy. - Answers False
True/False: Vertical integration, whether forward or backward, requires the firm to become more
specialized. - Answers False
True/False: A fast-food retailer that acquired a spice manufacturer would be practicing backward
integration. - Answers True
True/False: Keiretsus offer a middle ground between few suppliers and vertical integration. - Answers
True
True/False: In several industries, online exchanges have been created by buyers. - Answers True
True/False: The bullwhip effect refers to the increasing fluctuations in orders that often occur as
orders move through the supply chain. - Answers True
True/False: Vendor Managed Inventory is a form of outsourcing. - Answers True
True/False: In the vendor evaluation phase, most companies will use the same list of criteria and the
same criteria weights. - Answers False
True/False: One classic type of negotiation strategy is the market-based price model. - Answers True
True/False: Drop shipping results in time and shipping cost savings. - Answers True
True/False: The supply chain management opportunity called postponement involves delaying
deliveries to avoid accumulation of inventory at the customer's site. - Answers False
True/False: Channel assembly, which sends components and modules to be assembled by a
distributor, treats these distributors as manufacturing partners. - Answers True
True/False: Blanket orders are a long-term purchase commitment to a supplier for items that are to
be delivered against short-term releases to ship. - Answers True
,True/False: Bar code and radio frequency technology, like that used to track UPS or FedEx packages
on their global journeys, can also be used to track objects within the boundaries of a warehouse or
shop. - Answers True
True/False: Waterways are an attractive distribution system when speed is more important than
shipping cost. - Answers False
True/False: Logistics management can provide a competitive advantage through improved customer
service. - Answers True
True/False: With the growth of just-in-time practices, railroads have made large gains in the share of
the nation's transport that they haul. - Answers False
True/False: Improvements in security, especially regarding the millions of shipping containers that
enter the U.S. each year, are being held back by the lack of technological advances. - Answers False
True/False: Benchmark firms have driven down costs of supply chain performance. - Answers True
The three major variations of online catalogs are
a. catalogs by vendors, catalogs by intermediaries, and exchanges provided by buyers
b. EDI, ERP, and ASN
c. cost-based, market-based, and competitive bidding
d. drop shipping, channel assembly, and postponement
e. all auction-based - Answers a. catalogs by vendors, catalogs by intermediaries, and exchanges
provided by buyers
Visibility throughout the supply chain is a requirement among supply chain members for
a. mutual agreement on goals
b. mutual trust
c. compatible organizational cultures
d. local optimization
e. the bullwhip effect - Answers b. mutual trust
Which of the following is not a concern of the supply chain?
a. warehousing and inventory levels
b. credit and cash transfers
c. suppliers
d. distributors and banks
e. maintenance scheduling - Answers e. maintenance scheduling
What type of negotiating strategy requires the supplier to open its books to the purchasers?
a. cost-based price model
b. market-based price model
c. competitive bidding
d. price-based model
e. none of the above - Answers a. cost-based price model
Which of the following statements is true regarding the leverage of supply chain savings?
a. Supply chain leverage is about the same for all industries.
b. Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales.
c. Supply chain savings exert more leverage as the firm has a lower net profit margin.
d. Supply chain leverage depends only upon the percent of sales spent in the supply chain.
e. None of the above is true. - Answers c. Supply chain savings exert more leverage as the firm has a
lower net profit margin.
One dollar saved in purchasing is
a. equivalent to a dollar earned in sales revenue
b. worth even more than a dollar earned in sales revenue
c. worth slightly more than a dollar earned because of taxes
d. worth from 35% in the technical instrument industry to 70% in the food products industry
e. only worthwhile if you are in the 50% tax bracket and still have a low profit margin - Answers b.
worth even more than a dollar earned in sales revenue
Which one of the following statements about purchasing is true?
a. The cost of purchases as a percent of sales is often small.
b. Purchasing provides a major opportunity for price increases.
c. Purchasing is always more efficient than making an item.
d. Purchasing has an impact on the quality of the goods and services sold.
, e. Competitive bidding is a major factor in long-term cost reductions. - Answers d. Purchasing has an
impact on the quality of the goods and services sold.
In the make-or-buy decision, one of the reasons for making is
a. to reduce inventory costs
b. to obtain technical or management ability
c. inadequate capacity
d. reciprocity
e. to assure adequate supply in terms of quantity - Answers e. to assure adequate supply in terms of
quantity
In the make-or-buy decision, which of the following is a reason for making an item?
a. management can focus on its primary business
b. lower production cost
c. inadequate capacity
d. reduce inventory costs
e. None of the above is a reason for making an item. - Answers b. lower production cost
In the make-or-buy decision, one of the reasons for buying is
a. to assure adequate supply
b. to obtain desired quality
c. to remove supplier collusion
d. inadequate capacity
e. to maintain organizational talents - Answers d. inadequate capacity
In the make-or-buy decision, which of the following is not a reason for buying?
a. inadequate capacity
b. to obtain desired quality
c. patents or trade secrets
d. lower inventory costs
e. All of the above are reasons for buying. - Answers b. to obtain desired quality
Outsourcing
a. transfers traditional internal activities to outside vendors
b. utilizes the efficiency which comes with specialization
c. lets the outsourcing firm focus on its critical success factors
d. None of the above are true of outsourcing.
e. All of the above are true of outsourcing. - Answers e. All of the above are true of outsourcing.
The transfer of some of what are traditional internal activities and resources of a firm to outside
vendors is
a. a standard use of the make or buy decision
b. not allowed by the ethics code of the Supply Management Institute
c. offshoring
d. outsourcing
e. keiretsu - Answers d. outsourcing
The Institute for Supply Management
a. establishes laws and regulations for supply management
b. is an agency of the United Nations charged with promoting ethical conduct globally
c. publishes the principles and standards for ethical supply management conduct
d. prohibits backward integration into developing economies
e. All of the above are true. - Answers c. publishes the principles and standards for ethical supply
management conduct
In supply chain management, ethical issues
a. are particularly important because of the enormous opportunities for abuse
b. may be guided by company rules and codes of conduct
c. become more complex the more global is the supply chain
d. may be guided by the principles and standards of the Institute for Supply Management
e. All of the above are true. - Answers e. All of the above are true.
Keeping a product generic as long as possible before customizing is known as
a. postponement
b. keiretsu
c. channel assembly
, d. forward integration
e. backward integration - Answers a. postponement
Which one of the following is not a supply chain strategy?
a. negotiation with many suppliers
b. vertical integration
c. keiretsu
d. short-term relationships with few suppliers
e. virtual companies - Answers d. short-term relationships with few suppliers
A disadvantage of the "few suppliers" strategy is
a. the risk of not being ready for technological change
b. the lack of cost savings for customers and suppliers
c. possible violations of the Sherman Antitrust Act
d. the high cost of changing partners
e. All of the above are disadvantages of the "few suppliers" strategy. - Answers d. the high cost of
changing partners
The purchasing approach that holds the suppliers responsible for maintaining the necessary
technology, expertise, and forecasting ability plus cost, quality, and delivery competencies is
a. few suppliers
b. many suppliers
c. Keiretsu
d. vertical integration
e. virtual companies - Answers b. many suppliers
Which of the following is not an advantage of the "few suppliers" concept?
a. suppliers' willingness to participate in JIT systems
b. trust
c. vulnerability of trade secrets
d. creation of value by allowing suppliers to have economies of scale
e. suppliers' willingness to provide technological expertise - Answers c. vulnerability of trade secrets
Which of the following supply chain strategies creates value by allowing suppliers to have economies
of scale?
a. suppliers becoming part of a company coalition
b. vertical integration
c. long-term partnering with a few suppliers
d. negotiating with many suppliers
e. developing virtual companies - Answers c. long-term partnering with a few suppliers
Which of the following is not a condition that favors the success of vertical integration?
a. availability of capital
b. availability of managerial talent
c. required demand
d. small market share
e. All of the above favor the success of vertical integration. - Answers d. small market share
Which of the following best describes vertical integration?
a. to sell products to a supplier or a distributor
b. to develop the ability to produce products which complement the original product
c. to produce goods or services previously purchased
d. to develop the ability to produce the specified good more efficiently than before
e. to build long-term partnerships with a few suppliers - Answers c. to produce goods or services
previously purchased
A fried chicken fast-food chain that acquired feed mills and poultry farms has performed
a. horizontal integration
b. forward integration
c. backward integration
d. current transformation
e. job expansion - Answers c. backward integration
Vertical integration appears particularly advantageous when the organization has
a. a very specialized product
b. a large market share
