Test Bank For Supply Chain Management: A Logistics Perspective, 9th Edition

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-1© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.CHAPTER 1TEST QUESTIONSTrue-False1.The last decade of the twentieth century was a period of rapid change for organizations, especiallybusinesses.ANSWER: True2.A key element in Wal-Mart's ability to discount brand name products was an understanding of thecriticality of efficiency in its logistics and supply chain system.ANSWER: True3.Globalization has had little effect on consumers.ANSWER:False4.Supply and demand has become less volatile as managers become more adept at controlling theelements.ANSWER:False5.Outsourcing is a fairly new concept.ANSWER:False6.SAB should examine their off-shore purchasing policy, even though the products are sourced from theU.S.ANSWER: True7.The world economy still favors the United States and European countries, even though China andIndia can participate in the global economy much more readily.ANSWER:False8.The U.S. transportation system was deregulated in the 1930s and 1940s in response to economicconditions and World War 2.ANSWER:False9.Even though there are references to supply chain management in the 1980s, SCM did not capture theattention of senior-level management until the 1990s.ANSWER: True10.Supply chain managers no longer need to worry about suboptimization in light of today's technology.ANSWER:False

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-2© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Multiple Choice11.Most retailers are essentially supply chain companies sincea.they dominate the consumer market.b.own their warehouses and trucks.c.they buy products produced by others.d.engage in off-shore sourcing.ANSWER: c12.Which of the below is not one of the external forces driving the rate of change and shaping oureconomic and political landscape?a.Government policyb.Technologyc.Environmental concernsd.GlobalizationANSWER: c13.Outsourcing involvesa.moving company facilities away from the home office.b.hiring foreign nationals to manage parts of the business.c.obtaining materials, parts, and products from other companies.d.building a factory in another country.ANSWER: c14.Some individuals describe the current consumer as the "click here" generation becausea.we all have Internet access.b.we no longer wait for information to be "pushed out" to us.c.we buy so much merchandise on line.d.we take little time to make purchasing decisions.ANSWER: b15.The demographics of our society has changed becausea.the "Baby Boom" generation is now turning 60.b.of the increase in two-career families and single-parent households.c.of immigration.d.birth rates have changed.ANSWER: b

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-3© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.16.The Supply Chain Concepta.is very new and considered cutting edge technology.b.is highly dependent of computerization.c.not always well understood by senior managers.d.developed from the previous Physical Distribution concept.ANSWER: d17.Logistics, in its simplest form,a.is a military term, as it was developed originally to supply the battlefield.b.combines inbound logistics with the outbound logistics of physical distribution.c.is another term for transportation management.d.does not involve customer service or other related functions.ANSWER:b18.One of the major challenges of supply chain management isa.forward buying.b.maintaining the visibility of inventory.c.building safety-stock inventory.d.Pushing inventory back to vendors.ANSWER:b19.Which of these flows only one way as illustrated in the figure below?

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-4© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.a.informationb.products and servicesc.financialsd.None of these answersANSWER:d20.Traditionally, information has been viewed as flowing in the opposite direction of products, that is,from the market/customer back to the wholesalers, manufacturers, and vendors.a.This is still true and has not changed.b.Computerization has greatly increased the flow of information from the source.c.The "Big Box" stores have developed their own sources.d.None of these answersANSWER:d21.The challenge to develop and sustain an efficient and effective supply chain(s) requires organizationsto address a number of issues. Which is not included?a.complexityb.inventory deploymentc.inventory carrying costsd.technologyANSWER: c22.Which of the following is not part of the Supply Chain network?a.plantsb.storesc.terminalsd.distribution centersANSWER:b23.Complexity in the supply chain is caused bya.the number of SKUs.b.locations of customers and suppliers.c.transportation requirements.d.All of these answers.ANSWER:d24.Cost/Value refers toa.getting the best value for the money spent.b.U.S. firms competing in the global arena.c.the importance of cost and value at the very end of the supply chain.d.product variety.ANSWER: c

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-5© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.25.Performance measurement is important becausea.it allows firms to rate competitors.b.without it, managers would not know how the global economy is doing.c.companies presently operating in the European Economic Community need to understandhow its competitors are doing.d.lower-level metrics in an organization must connect directly to the high-level performanceto achieve goals.ANSWER:d26.A critical outcome of the supply chain is to delivera.profits.b.the right product to the right place.c.cost/value.d.on management's expectations.ANSWER:bESSAY27.What is the significance of Globalization in Supply Chain Management?ANSWER:Arguably, globalization is the most frequently cited change factor by business leaders, and it hasreplaced the post-World War II "cold war" as the dominant driving force for world economics. Theconcept of the "global marketplace" or global economy has taken on new meaning for all enterprises(profit and nonprofit; small, medium, and large) and for individual consumers during the last twodecades.Overall, globalization has led to a more competitively intense economic and geopolitical environment.This environment manifests itself in opportunities and threats, both economic and political. Someindividuals have implied that there is no "geography" in the current global environment (figurativelyspeaking) or perhaps more aptly that time and distance have been compressed.28.What is Vendor Managed Inventory?ANSWER:Essentially, vendor-managed inventory (VMI) usually means that the manufacturer will manage theinventory of its products and possibly related products at the retailer's warehouse(s) and reorder asappropriate for customer fulfillment. The manufacturer may also have a representative at thedesignated retail warehouse locations to assure accurate and timely delivery. The retailer shouldexperience lower costs associated with inbound logistics, and the manufacturer should be able to offsetits cost with increased sales (fewer stockouts, more complete orders, etc.).

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-6© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.29.Explain how today's consumers are empowered and how they impact Supply ChainManagement.ANSWER:Today's consumers are more enlightened, educated, and empowered than ever before by theinformation they have at their disposal from the Internet and other sources. Their access to supplysources has expanded dramatically beyond their immediate locale by virtue of catalogs, the Internet,and other media. They have the opportunity to compare prices, quality, and service. Consequently,they demand competitive prices, high quality, tailored/customized products, convenience, flexibility,and responsiveness.They tend to have a low tolerance level for poor quality in products and/or services. Consumers alsohave increased buying power due to higher income levels. They demand the best quality at the bestprice and with the best service. These demands place increased challenges and pressure on the varioussupply chains for consumer products.30.Describe the flows in the figure below.ANSWER:Supply chain management can be viewed as a pipeline or conduit for the efficient and effective flow ofproducts/materials, services, information, and financials from the supplier's suppliers through thevarious intermediate organizations/companies out to the customer's customers. It is the system ofconnected networks between the original vendors and the ultimate final consumer. The extendedenterprise perspective of supply chain management represents a logical extension of the logisticsconcept, providing an opportunity to view the total system of interrelated companies for increasedefficiency and effectiveness.

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter1Test Bank1-7© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.31.Discuss how globalization and consolidation in supply have increased complexity.ANSWER:Globalization and consolidation in supply chains have caused an increased complexity fororganizations in terms of SKUs, customer/supplier locations, transportation requirements, traderegulations, taxes, etc. Companies need to take steps to simplify, as much as possible, the variousaspects of their supply chains. For example, the number of SKUs has expanded for many companies,which exacerbates problems for inventory management and order fulfillment. Consequently,companies have been rationalizing SKUs to eliminate the slow movers and/or items that do notcontribute to profitability. Locations also need to be analyzed to eliminate high-cost operations.Customer service levels need to be rationalized, as do vendors or suppliers. Layers of complexitydevelop and may seem necessary, but organizations need to continually evaluate those areas ofcomplexity.32.Discuss how Performance Measurement can affect Supply Chain Management.ANSWER:Most organizations have measures of performance or metrics in place to analyze and evaluate theirefficiency and progress over different time periods. Sometimes, such measures are used for settingbaseline performance objectives or expected outcomes, e.g., orders filled and shipped per day.Measurement is important, and at this juncture, it is important to recognize that lower-level metrics inan organization must connect directly to the high-level performance measures of the organization andthe supply chain. Typical metrics include net profit, return on investment, or assets and cash flow. Insome instances, metrics are set that appear logical for the subunit of the organization but aresuboptimal for the overall organization or supply chain. For example, the warehouse manager who ismeasured by the cost per cubic foot of units stored will be motivated to fill the warehouse to theceiling.33.What is the role of Transportation Management in connection with Supply Chains?ANSWER:Transportation can be viewed as the glue that holds the supply chain model together. The criticaloutcomes of the supply chain are to deliver the right product, at the right time, in the right quantity andquality, at the right cost, and to the right destination. Transportation plays an important role in makingthese "rights" happen. Another aspect of the importance of transportation is related to some of thestrategies that are being used by companies to remain competitive in today's economy--for example,just-in-time inventory, lean logistics and manufacturing, scheduled deliveries, etc. The challenge hasbeen exacerbated by economic changes among transportation providers; shortages of drivers, higherfuel costs, and changes in driver hour's regulations have led to what some individuals have called atransportation crisis or the "perfect storm." Transportation has gone from being a readily available"commodity" to potential users, especially in the 1990s, to being scarce in some current market areas.

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-1© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.CHAPTER2TEST QUESTIONSTrue-False1.The utility created through the basic marketing activities is known as place utility.ANSWER: False2.Transportation is the physical movement or flow of goods.ANSWER: True3.During the 1990s and 2000s, logistics costs as a percentage of gross national product declined.ANSWER: True4.Logistics systems having a very heavy inbound flow and a very simple outbound flow are reversesystems.ANSWER: False5.Acme Battery distributes its batteries to warehouses, where they are stored until ordered by a retailer.The warehouses are located close by the retail markets served. This is the logistics channel approach tologistics.ANSWER: True6.In a logistics system, warehousing should be optimized at the expense of related logistics activities,such as transportation and procurement.ANSWER: False7.The mathematical calculation of the point of equality between systems under analysis is used forshort-run/static analysis.ANSWER: False8.To hold down distribution cost, the lowest cost carrier should always be used.ANSWER: False9.Theinverse relationship that exists between the cost of lost sales and inventory costs is the inventoryeffect.ANSWER: True

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-2© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.Multiple Choice10.Ensuring the availability of the right product, in the right quantity, and the right condition, at the rightplace, at the right time, for the right customer at the right cost, is which definition of logistics?a.Seven Rsb.Council of Logistics Managementc.Society of Logistic Engineersd.supply chain logisticsANSWER: a11.Logistics is the process of anticipating customer needs and wants; acquiring the capital, materials,people, technologies, and information necessary to meet those needs and wants; optimizing the goods-or service-producing network to fulfill customer requests; and utilizing the network to fulfill customerrequests in a timely manner. This is aa.definition from an inventory perspective.b.general definition.c.definition offered by the Society of Logistics Engineers.d.a definition provided by the Council of Logistics Management.ANSWER: b12.All four subdivisions of logistics have some common characteristics. Which of the below does notbelong in the list:a.transportationb.marketingc.schedulingd.forecastingANSWER: b13.The value that is added to a good through a manufacturing, production, or assembly process is:a.form utilityb.place utilityc.time utilityd.possession utilityANSWER: a

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-3© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.14.A product's form utility is created when value is added to the product through a manufacturing,production or assembly process. However, logistics activity can provide form utility also. Which is anexample of the creation of form utility by a logistics activity?a.when lumber is cut and made into a chairb.when a firm's finance manager approves customer purchases on a credit basisc.when bulk computer disks in different colors are packed in three-color assortments for saleto computer usersd.the breaking bulk and repackaging at a distribution centerANSWER: d15.The utility that is created by moving goods from surplus points to points where demand exists isreferred to as:a.formb.placec.timed.possessionANSWER: b16.Which is created when a product or service is at a point when demanded by customers?a.form utilityb.place utilityc.time utilityd.possession utilityANSWER: b17.Time utility depends ona.when the carrier picks up the shipment.b.transportation companies delivering on time.c.proper forecasting.d.having the product available when the user wants it.ANSWER: d18.What is often the largest component of logistics costs?a.inventory costsb.transportation costsc.shipper-related costsd.administrative costsANSWER: b

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-4© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.19.Materials handling is concerned witha.inventory levels.b.breaking bulk.c.scheduling trade-offs.d.short distance movement.ANSWER: d20.Marketers have begun to recognize the strategic value of place in the marketing mix, as well as thebenefits resulting from high-quality logistical services. As a result, which has been recognized as theinterface activity between marketing and logistics?a.productb.promotionc.priced.customer serviceANSWER: d21.Celebrated Products is introducing a new line of celebrity signature sunglasses. The sales managerwants a media blitz to make customers aware of the line and create early sales typical of a "pull"pattern. Which will be a likely result of the marketing manager's plan?a.a stable demand patternb.emergency shipmentsc.an erratic demand patternd.strain on the logistics systemANSWER: c22.What activity is described as the movement of goods into a warehouse, the placement of goods in awarehouse, and the movement of goods from storage to order picking areas and eventually to dockareas for transportation out of the warehouse?a.materials handlingb.physical distributionc.business logisticsd.order fulfillmentANSWER: a23.A(n) ____ relationship exists between the cost of lost sales and inventory cost.a.reverseb.proportionalc.inversed.non linearANSWER: c

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-5© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.24.Water Cruisers is located in Jacksonville, Florida, and makes small yachts and luxury pontoon boatsfor customers on the East coast of the United States. Each boat requires thousands of parts purchasedfrom over 1,000 vendors. A number of boats are in production at any one time, so a large number ofparts constantly arrive and are stored. Once a boat is finished, it is sailed up the coast to a convenientport for customer delivery. Which type of logistics system does Water Cruisers use?a.balanced systemb.heavy inboundc.heavy outboundd.reverse systemANSWER: b25.A number of product-related factors affect the cost and importance of logistics. Which is not one ofthese factors?a.valueb.densityc.stock keeping unitsd.risk of damageANSWER: c26.When a specific point in time, or level of production, is chosen and costs are developed for the variouslogistics cost centers, it is calleda.least cost analysis.b.short run analysis.c.cost center analysis.d.link node analysis.ANSWER: b27.A ____ analysis examines a logistics system over a long time period or range of output.a.cost center analysisb.dynamicc.link node analysisd.least cost analysisANSWER: b28.A balanced system isa.one where all four management systems are equalb.logistics expenses are equal to cost of goods soldc.another name for supply chain managementd.inbound and outbound flows are nearly equalANSWER: d29.What are established spatial points where goods stop for storage or processing?a.nodesb.links

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-6© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.c.cost centersd.fulfillment centersANSWER: aESSAY30.What is the primary challenge of logistics?ANSWER:The challenge is to manage the entire logistics system in such a way that order fulfillment meets andperhaps exceeds customer expectations. At the same time, the competitive marketplace demandsefficiency--controlling transportation, inventory, and other logistics-related costs. Cost and servicetradeoffs have to be considered when evaluating customer service levels and the associated total costof logistics; but both goals--efficiency and effectiveness--are important to an organization in today'scompetitive environment.31.What is the definition of logistics which the authors choose and what group had formulated it?ANSWER:The definition offered by the Council of Supply Chain Management Professionals is: "The art andscience of management, engineering, and technical activities concerned with requirements, design, andsupplying and maintaining resources to support objectives, plans, and operations."32.The text mentions four subdivisions of logistics. Pick one, define and discuss.ANSWER:•Business logistics: That part of the supply chain process that plans, implements, and controls theefficient, effective flow and storage of goods, service, and related information from point of use orconsumption in order to meet customer requirements.•Military logistics: The design and integration of all aspects of support for the operational capabilityof the military forces (deployed or in garrison) and their equipment to ensure readiness, reliability, andefficiency.•Event logistics: The network of activities, facilities, and personnel required to organize, schedule,and deploy the resources for an event to take place and to efficiently withdraw after the event.•Service logistics: The acquisition, scheduling, and management of the facilities/assets, personnel,and materials to support and sustain a service operation or business.

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-7© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.33.There are five principal types of economic utility that add value to a product or service. Namefour of the five and pick one to discuss in more detail.ANSWER:The five principal types of economic utility that add value to a product or service. Included are form,time, place, quantity, and possession. Generally, production activities are credited with providing formutility; logistics activities with time, place, and quantity utilities; and marketing activities withpossession utility.34.The logistics definitions discussed indicate 14 activities for which the logistics manager might beresponsible. Name at least eight and briefly discuss any two in detail.ANSWER:•Transportation•Warehousing and storage•Industrial packaging•Materials handling•Inventory control•Order fulfillment•Demand forecasting•Production planning/scheduling•Procurement•Customer service•Facility location•Return goods handling•Parts and service support•Salvage and scrap disposal35.Another dimension of logistics is the micro perspective which examines the relationshipsbetween logistics and other functional areas in an organization. What are these other functions?Select one and discuss how it interacts with logistics.ANSWER:Another dimension of logistics is the micro-perspective, which examines the relationships betweenlogistics and other functional areas in an organization--marketing, manufacturing/operations, financeand accounting, and others. Logistics, by its nature, focuses on processes that cut across traditionalfunctional boundaries, particularly in today's environment with its emphasis on the supply chain.Consequently, logistics interfaces in many important ways with other functional areas.

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CoyleManaging Supply Chains: A Logistics Approach, 9thEditionChapter2Test Bank2-8© 2013 Cengage Learning. All Rights Reserved. This edition is intended for use outside of theU.S. only, with content that may be differentfrom the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.36.What are the 4 "PHs"? Select one, and discuss how it affects logistics.ANSWER:Logistics is sometimes referred to as the other half of marketing. The rationale for this definition isthat the physical distribution or outbound side of an organization's logistics system is responsible forthe physical movement and storage of products for customers and thus plays an important role inselling a product. In some instances, physical distribution and order fulfillment might be the keyvariables in selling a product; that is, the ability to provide the product at the right time to the rightplace in the right quantities might be the critical element in making a sale.This section briefly discusses the interfaces between logistics and marketing activities in each principalarea of the marketing mix. The material is organized according to the four Ps of marketing--price,product, promotion, and place. In addition, recent trends in the interface between logistics andmarketing will be discussed.37.What is ROA? Discuss how it can impact logistics.ANSWER:While manufacturing and marketing are probably the two most important internal, functionalinterfaces for logistics in a product-oriented organization, there are other important interfaces. Thefinance area has become increasingly important during the last decade. The impact that logistics canhave upon return on assets (ROA) or return on investment (ROI) is very significant. ROA is defined asfollows:ROA = Revenue−Expenses/AssetsOrROA = Gross Profit/AssetsLogistics can positively impact ROA in several ways. First, inventory is both an asset on the balancesheet and an expense on the income statement. Reducing inventory levels reduces the asset base aswell as the corresponding variable expenses, thus having a positive impact on ROA. Second,transportation and warehousing costs can also influence ROA. If an organization owns its warehousesand transportation fleet, assets will be increased. If these assets are reduced or eliminated, ROA willincrease. Similarly, if an organization utilizes third parties for warehousing and transportation, variableexpenses will be incurred. Reducing these expenses will also have a positive impact on ROA. Finally,the focus on customer service can increase revenue. As long as the incremental increase in revenue islarger than the incremental increase in the cost of customer service, ROA will increase.

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