Matrix Analysis for Cost Reduction in Product Management
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Questions and Answers

According to the text, what is one way to define 'competitive advantage'?

  • Companies that deliver more customer value than their competitors (correct)
  • Companies that have more innovative products than their competitors
  • Companies that have lower costs than their competitors
  • Companies that have a larger market share than their competitors

    • According to the text, which of the following is NOT a constituent element of the customer value ratio?

  • Convenience (correct)
  • Quality
  • Cost
  • Service

    • According to the text, what is the role of customer service in the transfer of goods and services between buyer and seller?

  • To provide written statements of service policy
  • To provide time and place utility (correct)
  • To provide product warranty and repair service
  • To provide product and delivery reliability

    • According to the text, what is the impact of out-of-stock cost penalty on manufacturers and retailers?

    <p>They incur additional costs</p> Signup and view all the answers

    Which quadrant in the matrix represents products that are frequently demanded and more profitable?

    <p>Quadrant 2</p> Signup and view all the answers

    According to the 80/20 rule, what percentage of customers buying 20% of the products contributes to 80% of the total profit?

    <p>60%</p> Signup and view all the answers

    What is the elapsed time from customer order to delivery called?

    <p>Order cycle time</p> Signup and view all the answers

    What is the error rate on invoices, delivery notes, and other customer communications called?

    <p>Documentation quality</p> Signup and view all the answers

    According to the text, what is the formula to calculate the actual perfect order achievement?

    <p>$90% × 80% × 70% = 50.4%</p> Signup and view all the answers

    According to the text, what is the appropriate level and mix of service based on?

    <p>Customer type</p> Signup and view all the answers

    According to the text, what does the steeply rising curve depict?

    <p>The relationship between the level of service and the cost</p> Signup and view all the answers

    According to the text, what is the service level achieved by setting the stock level two standard deviations greater than the mean?

    <p>Approximately 98%</p> Signup and view all the answers

    Which of the following is a key factor in creating a market-driven supply chain?

    <p>Designing from the 'customer backwards'</p> Signup and view all the answers

    What is the concept of 'power by the hour' in the context of Rolls-Royce's business model?

    <p>The guarantee of performance for customers</p> Signup and view all the answers

    What is the lifetime value of a customer calculated as?

    <p>Average transaction value × Yearly frequency of purchase × Customer 'life expectancy'</p> Signup and view all the answers

    What is the main focus of most organizations' marketing efforts?

    <p>Increasing market share</p> Signup and view all the answers

    Which of the following factors has contributed to the growing importance of customer service as a competitive weapon?

    <p>Both the increase in customer expectations and the transition towards 'commodity' type markets</p> Signup and view all the answers

    What is customer value defined as?

    <p>The perceived benefits that flow from a purchase or a relationship</p> Signup and view all the answers

    Which costs are included in the 'total cost of ownership'?

    <p>Both all costs that will arise as a result of the purchase decisions and inventory carrying costs, maintenance costs, running costs, disposal costs, etc.</p> Signup and view all the answers

    What does Figure 2.1 illustrate about the total costs of ownership?

    <p>The immediate purchase price is the only aspect of cost that is visible</p> Signup and view all the answers

    Which of the following is the first step in identifying the key components of customer service?

    <p>Identify the key sources of influence upon the purchase decision</p> Signup and view all the answers

    What is one way to determine the importance a customer attaches to each element of customer service?

    <p>Using a form of rating scale to assign weights to each component</p> Signup and view all the answers

    What is the purpose of supply chain management and logistics?

    <p>To provide customers with the level and quality of service they require</p> Signup and view all the answers

    What is the measure of service defined as in the context of supply chain management and logistics?

    <p>The percentage of occasions on which the customer's requirements are met in full</p> Signup and view all the answers

    Which of the following is a key area of concern in the text?

    <p>Claims procedure</p> Signup and view all the answers

    What does 'order completeness' refer to?

    <p>The proportion of orders that are delivered complete</p> Signup and view all the answers

    What does 'technical support' refer to?

    <p>The support provided to customers after the sale</p> Signup and view all the answers

    What does 'order status information' refer to?

    <p>The ability to inform customers about the status of their order</p> Signup and view all the answers

    What is the trend in claims according to the text?

    <p>Not mentioned</p> Signup and view all the answers

    How quickly do we deal with complaints and claims according to the text?

    <p>Not mentioned</p> Signup and view all the answers

    True or false: Logistics management can impact both the numerator and the denominator of the customer value ratio.

    <p>True</p> Signup and view all the answers

    True or false: Caterpillar has developed a world-class reputation for customer support, including 48-hour availability of parts.

    <p>True</p> Signup and view all the answers

    True or false: The role of customer service is to provide 'time and place utility' in the transfer of goods and services between buyer and seller.

    <p>True</p> Signup and view all the answers

    True or false: A high priority must be placed on delivering superior customer service to become a preferred supplier in any industry.

    <p>True</p> Signup and view all the answers

    True or false: Marketing is the management of the 'Four Ps' - product, price, promotion, and place?

    <p>True</p> Signup and view all the answers

    True or false: Customer value is the difference between the perceived benefits and the total costs incurred?

    <p>True</p> Signup and view all the answers

    True or false: The growing importance of customer service is primarily driven by the transition towards 'commodity' type markets?

    <p>True</p> Signup and view all the answers

    True or false: The 'iceberg' effect of total costs of ownership suggests that the immediate purchase price is the only aspect of cost that is visible?

    <p>False</p> Signup and view all the answers

    True or false: The core product is the basic product as it leaves the factory?

    <p>True</p> Signup and view all the answers

    True or false: Customer service and logistics are the only activities that add value to a product?

    <p>False</p> Signup and view all the answers

    True or false: The concept of 'servitisation' focuses on converting a service into a product?

    <p>False</p> Signup and view all the answers

    True or false: Rolls-Royce's 'power by the hour' arrangement guarantees the performance of their engines?

    <p>True</p> Signup and view all the answers

    True or false: The actual perfect order achievement can be calculated by multiplying the percentages of on-time, full, and error-free performance.

    <p>True</p> Signup and view all the answers

    True or false: The appropriate level and mix of customer service will vary by customer type.

    <p>True</p> Signup and view all the answers

    True or false: The probability of a given value occurring can be easily calculated if the mean and standard deviation are known.

    <p>True</p> Signup and view all the answers

    True or false: Safety stock is required only when demand exceeds the average.

    <p>True</p> Signup and view all the answers

    True or false: Measures of productivity always reflect the things the customer values.

    <p>False</p> Signup and view all the answers

    True or false: The first step in identifying the key components of customer service is to understand the service needs of customers through detailed research.

    <p>True</p> Signup and view all the answers

    True or false: Cluster analysis is a computer-based method used to match respondents across as many dimensions as possible.

    <p>True</p> Signup and view all the answers

    True or false: The measure of service in supply chain management and logistics is defined as the percentage of occasions on which the customer's requirements are met in full.

    <p>True</p> Signup and view all the answers

    Claims procedure is the main cause of service failures.

    <p>True</p> Signup and view all the answers

    The trend in claims is increasing.

    <p>False</p> Signup and view all the answers

    Complaints and claims are dealt with quickly.

    <p>True</p> Signup and view all the answers

    Service recovery procedures are in place.

    <p>True</p> Signup and view all the answers

    Order completeness refers to delivering complete orders with no back orders or part shipments.

    <p>True</p> Signup and view all the answers

    Technical support is provided to customers after the sale.

    <p>True</p> Signup and view all the answers

    True or false: Quadrant 1 in the matrix represents products that have high volume and low profit contribution.

    <p>True</p> Signup and view all the answers

    True or false: Quadrant 2 in the matrix represents products that are frequently demanded and less profitable.

    <p>False</p> Signup and view all the answers

    True or false: Quadrant 3 in the matrix represents products that should be regularly appraised for deletion from the range.

    <p>True</p> Signup and view all the answers

    True or false: Quadrant 4 in the matrix represents products that are highly profitable and sell at a relatively slow rate.

    <p>True</p> Signup and view all the answers

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