CHAPTER 7: DEMAND MANAGEMENT, ORDER MANAGEMENT

AND CUSTOMER SERVICE

1. The creation across the supply chain and its markets of a coordinated flow of demand is the definition of
demand management
2. Make-to-stock refers to finished goods that are produced prior to receiving a customer order.
3. Make-to-order refers to finished goods that are produced after receiving a customer order.
4. Which of the following is not a basic type of demand forecasting model? exponential smoothing
5. Surveys and analog techniques are examples of judgmental forecasting.
6. An underlying assumption of time series forecasting is that future demand is dependent on past demand.
7. Which forecasting technique assumes that one or more factors are related to demand and that this relationship
can be used to estimate future demand? cause and effect
8. Which forecasting technique tends to be appropriate when there is little or no historical data? judgmental
9. Collaborative planning, forecasting, and replenishment (CPFR) concept suggests that supply chain
partners will be working from a collectively agreed-to single demand forecast number as opposed to each
member working off its own demand forecast projection.
10. Order management refers to the management of various activities associated with the order cycle.
11. The order cycle is also called the replenishment cycle
12. The order cycle is composed of each of the following except: order retrieval.
13. Which of the following statements is false? Order management is synonymous with order cycle.
14. Order transmittal is the series of events that occurs between the time a customer places an order and the
time the seller receives the order
15. In general, there are five possible ways to transmit orders.
16. Fax and electronic ordering are order transmittal techniques that have emerged over the last 30 years.
17. What is the second phase of the order cycle?order processing
18. Order processing refers to the time from when the seller receives an order until an appropriate location is
authorized to fill the order.
19. Classifying orders according to pre-established guidelines so that a company can prioritize how orders are to
be filled refers to order triage
20. Order picking and assembly is the order cycle component that follows order processing
21. The text suggests that order picking and assembly often represents the best opportunity to improve the
effectiveness and efficiency of an order cycle.
22. Which of the following is not a characteristic of contemporary voice-based order picking systems? easily
disrupted by other noises
23. Which of the following is not a benefit of voice-based order picking? fewer employee accidents
24. The final phase of the order cycle is called order delivery
25. The time span within which an order must arrive refers to delivery window
26. A commonly used rule of thumb is that it costs approximately five times as much to get a new customer as it
does to keep an existing customer.
27. An unhappy customer will tell nine other people about her/his unhappiness.
28. The ability of logistics management to satisfy users in terms of time, dependability, communication, and
convenience is the definition of customer service
29. The order cycle is an excellent example of the time dimension of customer service.
30. The percentage of orders that can be completely and immediately filled from existing stock is the order fill
rate.
31. What component of customer service focuses on the ease of doing business with a seller? convenience
32. What are multichannel marketing systems? separate marketing channels that serve an individual
customer
33. Objectives should be SMARTthat is, specific, measurable, achievable, realistic, and timely.
34. Which of the following statements is false? Objectives should be specific, measurable, achievable, and
responsive.
35. Benchmarking refers to a process that continuously identifies, understands, and adapts outstanding
processes inside and outside an organization.
36. Control is the process of taking corrective action when measurements indicate that the goals and objectives
of customer service are not being achieved.
37. Which statement about measuring customer service is true? It is possible for organizations to use only one
customer service metric.
38. Customer profitability analysis refers to the allocation of revenues and costs to customer segments or
individual customers to calculate the profitability of the segments or customers.
39. Which of the following statements is false?A set formula that companies should follow for service
recovery exists.
.

True-False Questions

1. Demand management is important because efficient and effective supply chains have learned to match both
supply and demand. (True)
2. In make-to-order situations, finished goods are produced after receiving a customer order. (True)
3. Simple moving averages and weighted moving averages are examples of judgmental forecasting. (False)
4. Judgmental forecasting is appropriate when there is little or no historical data. (True)
5. Forecasting accuracy refers to the relationship between the actual and forecasted demand. (True)
6. Demand chain management is where supply chain partners share planning and forecasting data to better
match up supply and demand. (False)
7. In general terms, order management refers to management of the various activities associated with the order
cycle. (True)
8. The order cycle is usually the time from when a customer places an order to when the firm receives the order.
(False)
9. There are four possible ways to transmit orders. (False)
10. Order information is checked for completeness and accuracy in the order processing component of the order
cycle. (True)
11. The order triage function refers to correcting mistakes that may occur with order picking. (False)
12. A commonsense approach is to fill an order from the facility location that is closest to the customer, with the
idea that this should generate lower transportation costs as well as a shorter order cycle time. (True)
13. Order processing often represents the best opportunity to improve the effectiveness and efficiency of the
order cycle. (False)
14. Travel time accounts for a majority of an order pickers total pick time. (True)

15. Pick-to-light technology is an order picking technique that has grown in popularity in recent years. (True)
16. Order retrieval is the final phase of the order cycle. (False)
17. A key change in the order delivery component of the order cycle is that more and more shippers are
emphasizing both the elapsed transit time and transit time variability. (True)
18. It costs about five times as much to get a new customer as it does to keep an existing customer. (True)
19. Consumers are demanding about the same levels of service today as in years past. (False)
20. The increased use of vendor quality-control programs necessitates higher levels of customer service. (True)
21. Customer service can be defined as the ability of logistics management to satisfy users in terms of quality,
dependability, communication, and convenience. (False)
22. Dependability consists of consistent order cycles, safe delivery, and complete delivery. (True)
23. Companies today will not accept slower order cycles in exchange for higher order cycle consistency. (False)
24. Order fill rate is the percentage of orders that can be completely and immediately filled from existing stock.
(True)
25. Text messaging and the Internet have lessened the need for telephone interaction and face-to-face contact
between seller and customer. (False)
26. The convenience component of customer service focuses on the ease of doing business with a seller. (True)
27. Todays customer likes to have multiple purchasing options at her/his disposal, and organizations have
responded by developing hybrid marketing channelsthat is, separate marketing channels to serve an
individual customer. (False)
28. Goals are the means by which objectives are achieved. (False)
29. Objectives should be specific, measurable, achievable, realistic, and timely. (True)
30. Continuous improvement refers to a process that continuously identifies, understands, and adapts outstanding
processes found inside and outside an organization. (False)
31. Benchmarking should only involve numerical comparisons of relevant metrics. (False)
32. The nature of the product can affect the level of customer service that should be offered. (True)
33. A product just being introduced needs a different level of service support than one that is in a mature or
declining market stage. (True)
34. Leadership is the process of taking corrective action when measurements indicate that the goals and
objectives of customer service are not being achieved. (False)
35. The customer service metrics that are chosen should be relevant and important from the customers
perspective. (True)
36. It is possible for organizations to use only one customer service metric to measure customer service. (True)
37. Customer profitability analysis explicitly recognizes that all customers are not the same and that some
customers are more valuable than others to an organization. (True)
38. Customer profitability analysis is grounded in traditional accounting cost allocation methods. (False)
39. cost U.S. business in excess of $75 billion per year. (False)

40. In the service recovery paradox, a customer holds the responsible company in higher regard after the service
than if a service failure had not occurred in the first place. (True)