Pasted below are the 3 lecture videos that I have sent in previous emails just in case you missed class or need to hear it again. https://www.youtube.com/watch?v=MrBN_T9ogao&t=424shttps://www.youtube.com/watch?v=Ay2orDXjP8o&t=8shttps://www.youtube.com/watch?v=T5SD4ugLMks&t=107sPasted below are practice exam questions (with the answers provided). Note, you will not see these exact same questions on your exam (that would make it way too easy). However, if you know the correct answer for the questions AND know why it is the correct answer, then you will be very OK on this material for the exam).My advice: learn and understand the answer, and do not just memorize the answer.____True/False: According to me, a commodity is something that others can do better, faster, and cheaper than you can.Answer: TrueTrue/False: Competitive bidding is used when you have only a few suppliers to choose from.Answer: FalseTrue/False: A supplier has the option not to submit a cost breakdown in response to an RFQ.Answer: TrueTrue/False: A cost breakdown typically includes direct material, direct labor, and overhead costs.
Answer: TrueTrue/False: Professor Sime argues that the best price from suppliers is usually obtained through multiple rounds of bidding.Answer: FalseTrue/False: The competitive bidding process usually leads to the best price after several rounds.Answer: FalseTrue/False: Offering suppliers only one chance to bid typically results in them providing their best price.Answer: TrueTrue/False: Competitive bidding can sometimes lead to padded supplier quotes.
Answer: TrueTrue/False: Suppliers rarely submit their best prices in the first round of competitive bidding.Answer: TrueTrue/False: Professor Sime suggests that asking for a cost breakdown from suppliers is unethical.Answer: FalseTrue/False: Direct labor and direct material costs make up the majority of the cost in producing a commodity.
Answer: TrueTrue/False: Tactical supply chain tasks have been largely replaced by technology, according to Professor Sime.Answer: TrueTrue/False: Total landed cost does not include factors like insurance and freight.
Answer: FalseTrue/False: The best way to help suppliers reduce their prices is by cutting their margins.
Answer: FalseTrue/False: A company should expect cost savings when giving long-term contracts to suppliers.
Answer: TrueTrue/False: Reopening a contract allows buyers to renegotiate prices at any time for competitive reasons.
Answer: TrueTrue/False: John Deere helps its suppliers by buying raw materials in bulk to reduce costs.Answer: TrueTrue/False: Long-term contracts typically do not consider future productivity gains.
Answer: FalseTrue/False: Double-digit profit margins for commodities are generally considered excessive.
Answer: TrueTrue/False: Direct material costs make up the majority of costs for most physical products.
Answer: TrueWhat is a commodity, according to Professor Sime?
a) A specific type of material like rubber or plastics
b) A product or service that can be done better, faster, and cheaper by others
c) A unique, high-engineered itemAnswer: bWhat are the three main performance dimensions suppliers typically compete on?a) Price, design, and efficiency
b) Quality, service, and flexibility
c) Speed, cost, and technology
Answer: bWhy might suppliers pad their quotes in the first round of bidding?a) To ensure they win the contract immediately
b) Because they anticipate multiple rounds of bidding
c) To inflate their profit margins significantly
Answer: bWhich of the following is an example of overhead costs?
a) Wages of workers directly assembling a product
b) The cost of raw materials
c) General administrative expenses
Answer: cWhat does RFQ stand for?
a) Request for Quality
b) Request for Quotation
c) Request for Quick Pricing
Answer: bWhy does Professor Sime recommend giving suppliers only one chance to bid?
a) To avoid padded quotes
b) To increase the number of suppliers
c) To extend the bidding processAnswer: aWhat are the three main types of costs associated with making a product?
a) Direct material, direct labor, overhead
b) Marketing, distribution, and labor
c) Indirect labor, overhead, and shipping
Answer: aWhat happens when buyers focus only on cutting suppliers’ margins?
a) Suppliers are more motivated to improve their services
b) Suppliers’ ROI and competitiveness decrease
c) The buyer receives better quality products
Answer: bWhat is one way buyers can help suppliers reduce their direct costs?
a) Reopen the contract for negotiation
b) Assist suppliers in improving their production processes
c) Cut the number of suppliers to create competition
Answer: bAccording to Professor Sime, what percentage of a product’s cost typically comes from direct material in manufacturing?
a) 10-20%
b) 30-40%
c) 50-70%
Answer: cWhat does Professor Sime recommend as an alternative to competitive bidding for long-term cost savings?
a) Negotiating lower wages
b) Helping suppliers reduce their direct costs
c) Using fewer suppliers
Answer: bWhat is Professor Sime’s suggestion for buyers who notice they’re paying the same price for multiple years?
a) Negotiate a new contract
b) Ignore it, as it’s common practice
c) Have suppliers rebid on the business
Answer: aWhat is a potential drawback of suppliers agreeing to lower prices through competitive bidding?
a) They lose interest in working with the buyer
b) They improve their ROI
c) They start delivering lower-quality products
Answer: aWhy is business analytics important in supply chain management, according to Professor Sime?
a) To replace human decision-making
b) To automate all supply chain tasks
c) To improve decision-making with better data and analysis
Answer: cWhat did Professor Sime say technology replaced in supply chain management?
a) Inventory forecasting
b) Tactical jobs like material placement
c) Supplier relationship management
Answer: bWhen does Professor Sime suggest competitive bidding might be a “quick fix”?a) During times of economic growth
b) During recessions when cost-cutting is necessary
c) When hiring new suppliers
Answer: bWhat is the main advantage of bulk-buying raw materials for suppliers, as mentioned in the example with John Deere?a) It reduces transportation costs
b) It improves profit margins significantly
c) It lowers the cost per unit due to economies of scale
Answer: cIn supply chain management, what does TCO stand for?
a) Total Cost Ownership
b) Technology Cost Optimization
c) Tactical Cost Operation
Answer: aWhy is it important to look at indirect material costs in a cost breakdown?
a) It forms a small part of the cost structure
b) It can offer opportunities for major cost reductions
c) It typically does not affect overall costsAnswer: bWhat is a common issue with reopening contracts and using competitive bidding repeatedly?
a) Suppliers start increasing their bids
b) The same supplier often wins the contract but with lower margins
c) It results in better long-term relationships
Answer: bWhen is the best time to focus on long-term supplier relationships, according to Professor Sime?
a) During times of high economic pressure
b) During times of profitability and stable margins
c) After cutting costs as much as possible
Answer: bWhat does Professor Sime believe companies should focus on when choosing suppliers?a) Only the lowest price
b) Strategic long-term benefits
c) Immediate short-term savings
Answer: bWhich skill does Professor Sime highlight as increasingly important in supply chain management?
a) Automation expertise
b) Contract negotiation skills
c) Social media management
Answer: bWhat impact does reducing a supplier’s margins have, according to Professor Sime?
a) It motivates the supplier to improve quality
b) It decreases the supplier’s competitiveness
c) It encourages the supplier to innovate
Answer: bWhy might a supplier have high overhead costs in a cost breakdown?
a) They are inefficient or have excessive infrastructure
b) They have optimized production processes
c) They are operating in a highly competitive industry
Answer: aWhat is an alternative to reducing supplier margins for cost savings?
a) Reopen contracts for more competitive bidding
b) Help suppliers reduce their direct costs
c) Increase the volume of ordersAnswer: bAccording to Professor Sime, what percentage of a car’s cost is typically from direct material purchases?a) 10%
b) 20%
c) 60-80%
Answer: cWhat does Professor Sime suggest doing if a buyer finds they’ve been paying the same price for several years?
a) Close the contract and find new suppliers
b) Reopen the contract and renegotiate for better terms
c) Accept the price and maintain the contract
Answer: bWhy are long-term contracts beneficial for both buyers and suppliers?a) They guarantee suppliers high profit margins
b) They allow suppliers to increase costs over time
c) They provide opportunities for cost-saving improvements over time
Answer: cWhy is it important to include a cost breakdown in an RFQ?
a) It helps buyers understand where the price is coming from
b) It simplifies the negotiation process
c) It allows suppliers to hide overhead costs
Answer: aWhich of the following is a strategic way to manage suppliers, as described by Professor Sime?
a) Cutting prices without helping suppliers reduce costs
b) Reopening contracts frequently
c) Collaborating with suppliers to lower their direct costs
Answer: cWhat effect does competitive bidding typically have on suppliers’ margins?a) It increases margins significantly
b) It often reduces their margins
c) It has no effect on supplier margins
Answer: bWhat is the ultimate goal of supply chain management, according to Professor Sime?
a) Reducing costs at all stages (this is not the answer)
b) Developing strategic partnerships
c) Minimizing production times
Answer: bIn which situation is competitive bidding NOT effective, according to Professor Sime?
a) When there are many suppliers
b) When only two or three suppliers exist for a product
c) When suppliers refuse to submit cost breakdowns
Answer: bWhy might companies consider cutting suppliers’ direct material costs rather than their margins?
a) It helps improve the supplier’s production efficiency
b) It increases the buyer’s profit margins
c) It leads to better competition between suppliersAnswer: aWhat kind of savings does helping a supplier reduce their direct labor costs lead to?
a) Small, short-term savings
b) Significant long-term savings
c) Marginal improvements in performance
Answer: bWhy might a buyer decide not to use competitive bidding in a strategic partnership?
a) It could damage the long-term relationship with the supplier
b) Competitive bidding is too time-consuming
c) Competitive bidding always results in higher prices
Answer: aWhat does a buyer risk if they rely solely on competitive bidding to reduce costs?a) They may not get the best price initially
b) They will damage the supplier’s margins permanently
c) They might lose access to quality suppliers
Answer: aWhat does Professor Sime recommend as the best long-term strategy for buyers?
a) Always opt for the lowest cost option available
b) Work collaboratively with suppliers to reduce costs
c) Use competitive bidding to continually drive down prices
Answer: bWhat kind of costs are most suppliers able to reduce with buyer assistance?
a) Overhead costs
b) Direct material costs
c) Profit marginsAnswer: b