If implementing EDI with suppliers permitted more frequent orders and more frequent communication about them, a company could be more effective by using EDI to:
Answer(s): A
A well-managed company seeks to minimize the sum of the costs of holding and ordering inventory. An EDI system reduces the costs of ordering, thereby permitting the company to order more frequently. More frequent ordering reduces inventory and the associated holding costs.
Two major retail companies, both publicly traded and operating in the same geographic area, have recently merged. The companies are approximately the same size and have audit departments. Company A has little EDI experience. Company B has invested heavily in information technology and has EDI connections with its major vendors.Which of the following is the least important risk factor considering the ability to integrate the two companies' computer systems?
The number of systems personnel employed may reflect differences in operating philosophy (outsourcing vs. in-house development of applications). However, the number of personnel in each company is a less serious concern than the compatibility of hardware and software.
After implementing EDI with suppliers, a company discovered a dramatic increase in the prices it paid the single supplier of some special materials for its primary product line. After consulting with the supplier, the company determined that the supplier had assumed the risk of not having inventory and raised its prices accordingly since the company was the only buyer for the special materials. The best approach for managing inventory in this situation is for the company to:
If the company gives the supplier more information about use of the materials, the supplier may be able to plan its production more effectively. It could then reduce its inventory of the materials and its inventory costs, thus permitting it to charge a lower price.
Electronic data interchange EDI) offers significant benefits to organizations, but it is not without certain major obstacles. Successful EDI implementation begins with which of the following?
Marked benefits arise when EDI is tied to strategic efforts that alter, not mirror, previous practices. Applying EDI to an inefficient process results in continuing to do things the wrong way, only faster. Hence, the initial phase of EDI implementation includes understanding the organization's mission and an analysis of its activities as part of an integrated solution to the organization's needs.
The best approach for minimizing the likelihood of software incompatibilities leading to unintelligible messages is for a company and its customers to:
Answer(s): B
EDI entails the exchange of common business data converted into standard message formats. Thus, two crucial requirements are that the participants agree on transaction formats and that translation software be developed to convert messages into a form understandable by other companies. Thus, if one company changes its software, its trading partners must also do so.
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