PART 1: MULTIPLE CHOICES

CHAPTER 1: AN OVERVIEW OF LOGISTICS

1. Logistics clearly contributes to ___________ and ___________ utility.

a. time; place

b. form; time

c. place; form

d. possession; time

e. none of the above

2. ___________ utility refers to the value or usefulness that comes from a

customer being able to take possession of a product.

a. Time

b. Place

c. Form

d. Possession

3. ___________ utility refers to having products available where they are

needed by customers.

a. Possession

b. Time

c. Place

d. Form
4. All of the following are types of economic utility, except:

a. Time

b. Production

c. Place

d. Possession

e. All of the above are types of economic utility

5. “How well a company does what it says it’s going to do” represents
___________.

a. efficiency

b. productivity

c. leading edge logistics

d. effectiveness

6. What concept refers to “how well company resources are used to achieve
what a company promises it can do?”

a. Efficiency

b. Productivity

c. Reengineering

d. Effectiveness
7. ____ refers to the removal of intermediaries between producer and
consumer.
a. direct channels
b. market demassification
c. consolidation

d. disintermediation

8. ____ are stores with large amounts of both floor space and product for sale.

a. mass merchandisers
b. power retailers
c. big-box retailers
d. do-it-yourself (DIY) retailers

9. The ____ approach indicates that a company’s objectives can be realized by

recognizing the mutual interdependence of major functional areas.

a. supply chain

b. systems

c. interfunctionality

d. rhochrematics

10. The movement and storage of materials into a firm refers to:

a. physical distribution

b. materials management

c. supply chain management

d. materials handling
11. Which concept refers to the storage of finished product and movement to
the customer?

a. supply chain management

b. business logistics

c. physical distribution

d. materials management

12. Logistics managers use the ____ approach to coordinate materials

management and physical distribution in a cost-efficient manner.

a. total cost

b. supply chain

c. interfunctional logistics

d. intrafunctional logistics

13. A cost trade-off is a situation where:

a. all costs react according to their individual degrees of inflation in the

economy

b. all costs are reflected as a percentage variation from standard costs

c. some costs increase and some costs decrease

d. some costs are eliminated by efficient management controls

14. The ____ department often measures inventory in terms of its cost or value
in dollars, whereas ____ tends to measure inventory in terms of units.

a. marketing; logistics

b. finance; production

c. marketing; production

d. finance; logistics

15. Landed costs refer to:

a. the costs of a product shipped via surface transport

b. the costs of a product that is quoted cash on delivery (COD)

c. the costs of a prepaid shipment

d. a price that includes both the cost of the product plus transportation
to the buyer

16. ____ refers to being out of an item at the same time there is demand for it.

a. intensive distribution

b. tailored logistics

c. stockout

d. supplier indifference

17. The most costly logistics activity in many firms is ____

a. industrial packaging

b. transportation management

c. order management

d. warehousing management
18 The four general types of economic utility are production, possession, time,
and place.

(False)

19. The current definition of logistics, as promulgated by the Council of Supply

Chain Management Professionals, suggests that logistics is part of the supply
chain process.

(True)

20. The purpose of logistics is to maximize customer service.

(False)
 CHAPTER 2: THE SUPPLY CHAIN MANAGEMENT
1. An underperforming supply chain is defined as one that exhibits poor service,
unproductive assets, or ____.

a. high variable operating costs

b. outdated information technology

c. poor communication

d. too many organizations (companies)

2. The supply chain management concept originated in what discipline?

a. marketing

b. operations

c. logistics

d. production

3. What concept can be viewed as a combination of processes, functions,

activities, relationships, and pathways along which products, services,
information, and financial transactions move in and between enterprises from
original producer to ultimate end user or consumer?

a. logistics

b. supply chain

c. marketing channel

d. interorganizational coordination
4. Although nearly any organization can be part of a supply chain, supply chain
management requires ____.

a. the involvement of third-party logistics companies

b. the participation of world-class organizations

c. at least one organization to be a multinational company

d. companies to adopt an enterprise-to-enterprise point of view

5. The two most prominent supply chain management process frameworks are
the Supply Chain Operations Reference (SCOR) Model and the ____.

a. Supply Chain Efficiency (SCE) Model

b. Process Classification Framework (PCF)

c. Global Supply Chain Forum (GSCF) Model

d. Council of Supply Chain Management Professionals (CSCMP) Model

6. Which organizational function is not a focus of the Supply Chain Operations

Reference (SCOR) model?

a. marketing

b. logistics

c. operations

d. procurement

e. all of the above are a focus in the SCOR Model

7. Which of the following is not one of the processes in the Supply Chain
Operations Reference (SCOR) model?

a. source

b. plan

c. make

d. enable

e. all of the above are processes in the SCOR Model

8. The current Global Supply Chain Forum (GSCF) model identifies ____ key
processes associated with supply chain management.

a. five

b. six

c. seven

d. eight

9. Contemporary supply chains are increasingly required to be fast and ____.

a. lean

b. agile

c. interactive

d. relevant
10. Which of the following is not a potential outcome from a supply chain’s
failure to be fast and agile?

a. dissatisfied customers

b. reduced profitability

c. decreased market share

d. lower stock price

e. all of the above are potential outcomes

11. What is a perfect order?

a. simultaneous achievement of relevant customer metrics

b. an order that arrives on time

c. an order that arrives undamaged

d. an order that is easy for the receiver to fill

12. What concept refers to the variability in demand orders among supply chain
participants?

a. min-max fluctuation

b. the bullwhip effect

c. order fluctuation

d. the boomerang effect

13. Which of the following is not a way to reduce inventory levels?

a. smaller, more frequent orders

b. use of premium transportation

c. supply-push replenishment
 d. elimination of slower-moving products

e. all of the above are ways to reduce inventory levels

14. Which of the following is not an attribute of relational exchanges?

a. trust

b. commitment

c. dependence

d. joint investment

e. all of the above are attributes of relational exchanges

15. Cooperative supply chain relationships developed to enhance the overall

business performance of both parties is a definition of:

a. third-party logistics

b. supply chain collaboration

c. dovetailing

d. relationship marketing

16. Two key factors, ____ and ____, have sparked much of the technological
change affecting supply chains.

a. electronic data interchange; enterprise resource planning

b. computing power; Internet

c. Internet, electronic data interchange

d. computing power; enterprise resource planning

17. The general idea behind ____ is that one company allows a specialist
company to provide it with one or more logistics functions.

a. supply chain management

b. multichannel marketing

c. third-party logistics

d. cross-organizational collaboration

18. Which of the following is not a barrier to supply chain management?

a. regulatory and political considerations

b. lack of top management commitment

c. reluctance to share, or use, relevant data

d. incompatible corporate cultures

e. all of the above are barriers

19. Which of the following is not a routine occurrence in global supply chains?

a. documentation errors

b. incomplete shipments

c. routing errors

d. packaging errors

e. all of the above are routine occurrences

20. Which concept refers to where one organization owns multiple participants
in the supply chain?

a. supply chain management

b. vertical integration
c. horizontal integration

d. intensive distribution
 CHAPTER 3: PROCUREMENT
1. ____ refers to the raw materials, component parts, and supplies bought from
outside organizations to support a company’s operations.

a. inbound logistics

b. procurement

c. materials management

d. supply management

e. none of the above

2. Procurement costs often range between ____ of an organization’s revenues.

a. 60-80%

b. 50-70%

c. 40-60%

d. 30-50%

3. Procurement and ____ are viewed as synonymous terms.

a. materials management

b. supply management

c. purchasing

d. inbound logistics

4. Which of the following is not a potential procurement objective?

a. minimizing procurement costs

b. supporting organizational goals and objectives

 c. managing the supply base

d. supporting operational requirements

e. all of the above are potential objectives

5. Buying the right products, at the right price, from the right source, at the
right specifications, in the right quantity, for delivery at the right time to the
right internal customer is associated with what procurement objective?

a. managing the supply base

b. managing the purchasing process effectively and efficiently

c. supporting operational requirements

d. supporting organizational goals and objectives

6. With respect to the supplier selection and evaluation process, ____ looks at
both the internal and external environment within which the supply decision is
to be made.

a. identify the need for supply

b. identify suppliers

c. situation analysis

d. evaluate suppliers

7. The text outlines a supplier selection and evaluation process that consists of
____ steps.

a. 4

b. 5

c. 6
 d. 7

8. What is the final step in the supplier selection and evaluation process?

a. provide feedback

b. select suppliers

c. implement decision

d. evaluate decision

9. Multiple sourcing uses more than one supplier in hopes of increased

competition, improved market intelligence, and ____

a. greater supply risk mitigation

b. lower costs per unit

c. increased cooperation

d. increased communication

10. Single sourcing consolidates purchase volume with a single supplier in hopes
of increasing cooperation and communication in the supply relationship as well
as ____.

a. greater supply risk mitigation

b. increased amounts of competition

c. improved market intelligence

d. lower costs per unit

11. Kraljic’s Portfolio Matrix ____.

a. provides a framework for evaluating warehousing decisions

b. is used by many managers to classify corporate purchases in terms of

their importance and supply complexity

c. allows managers to evaluate whether to add, or not add, product lines

d. is synonymous with the total cost of ownership

12. Which of the following is not a category associated with Kraljic’s Portfolio
Matrix?

a. bottleneck

b. leverage

c. noncritical

d. strategic

e. all of the above are categories associated with Kraljic’s Portfolio

Matrix

13. A degree of aggressive procurement involvement not normally encountered

in supplier selection refers to ____.

a. supply management

b. supplier development

c. materials management

d. physical supply
14. Supplier development is synonymous with ____.

a. supplier selection and evaluation

b. procurement

c. materials management

d. reverse marketing

15. What is the first step in a global sourcing development model?

a. planning

b. specification

c. situation analysis

d. problem recognition

16. Which of the following is not a dimension associated with socially

responsible procurement?

a. profit

b. safety

c. the environment

d. human rights

e. all of the above are dimensions associated with socially responsible

procurement
17. ____ identifies opportunities to recover revenues or reduce costs associated
with scrap, surplus, obsolete, and waste materials.

a. recycling

b. reuse

c. reverse logistics

d. investment recovery

18. ____ materials refer to stock that exceeds the reasonable requirements of
an organization.

a. waste

b. excess

c. obsolete

d. scrap

19. ____ materials are no longer serviceable, have been discarded, or are a by-
product of the production process.

a. waste

b. obsolete

c. scrap

d. excess

20. ____ materials have no economic value.

a. waste
b. scrap
c. obsolete
d. excess
 CHAPTER 4: 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 ____.

a. order cycle

b. order management

c. demand management

d. supply chain management

2. Which of the following is not a basic type of demand forecasting model?

a. exponential smoothing

b. cause and effect

c. judgmental

d. time series

e. all of the above are basic types of forecasting models

3. Surveys and analog techniques are examples of ____ forecasting.

a. cause and effect

b. time series

c. exponential smoothing

d. judgmental
4. An underlying assumption of ____ forecasting is that future demand is
dependent on past demand.

a. trial and error

b. time series

c. judgmental

d. cause and effect

5. Which forecasting technique assumes that one or more factors are related to
demand and that this relationship can be used to estimate future demand?

a. exponential smoothing

b. judgmental

c. cause and effect

d. time series

6. Which forecasting technique tends to be appropriate when there is little or

no historical data?

a. exponential smoothing

b. judgmental

c. time series

d. cause and effect

7. ____ refers to the management of various activities associated with the order
cycle.

a. logistics

b. order processing

c. demand management

d. order management

8. The order cycle is ____.

a. the time that it takes for a check to clear

b. the time that it takes from when a customer places an order until the selling
firm receives the order

c. also called the replenishment cycle

d. also called the vendor cycle

9. The order cycle is composed of each of the following except:

a. order retrieval

b. order delivery

c. order picking and assembly

d. order transmittal

10. Order transmittal is ____.

a. the same thing as an order cycle

b. the series of events that occur between the time a customer places an
order and the time the seller receives the order
 c. the series of events that occur between the time a customer perceives the
need for something and the time the seller receives the order

d. the series of events between the time a customer places an order and the
time the order cycle begins

11. In general, there are ____ possible ways to transmit orders.

a. three

b. four

c. five

d. six

12. Which of the following is not a possible method of order transmittal?

a. in-person

b. mail

c. fax

d. electronic

e. all of the above are methods of order transmittal

13. ____ refers to the time from when the seller receives an order until an
appropriate location is authorized to fill the order.

a. order processing

b. order cycle

c. order management

d. order transmittal
14. Order picking and assembly is:

a. the final stage of the order cycle

b. the most important component of the order cycle

c. the order cycle component that follows order processing

d. the order cycle component that follows order transmittal

15. The text suggests that ____ often represents the best opportunity to improve
the effectiveness and efficiency of an order cycle.

a. order transmittal

b. order picking and assembly

c. order delivery

d. order processing

16. The final phase of the order cycle is called order ____.

a. picking and assembly

b. delivery

c. receiving

d. replenishment

17. An unhappy customer will tell ____ other people about her/his unhappiness.

a. seven

b. nine

c. twelve

d. fifteen
18. The ability of logistics management to satisfy users in terms of time,
dependability, communication, and convenience is the definition of ____.

a. customer service

b. the order cycle

c. a perfect order

d. customer satisfaction

19. What component of customer service focuses on the ease of doing business
with a seller?

a. convenience

b. dependability

c. time

d. communication

20. ____ refers to the allocation of revenues and costs to customer segments or
individual customers to calculate the profitability of the segments or customers.

a. customer profitability analysis

b. net present value

c. customer lifetime value

d. activity-based costing
 CHAPTER 5: INVENTORY MANAGEMENT
1. ____ refers to stocks of goods and materials that are maintained for many
purposes, the most common being to satisfy normal demand patterns.

a. logistics

b. supply chain management

c. inventory

d. production

2. Holding high levels of inventory result in ____ inventory carrying costs and
____ stockout costs.

a. high; high

b. high; low

c. low; high

d. low; low

3. ____ stock refers to inventory that is needed to satisfy normal demand during
the course of an order cycle.

a. base

b. speculative

c. pipeline

d. safety
4. ____ stock refers to inventory that is held in addition to cycle stock to guard
against uncertainty in demand and/or lead time.

a. base

b. pipeline

c. speculative

d. buffer

5. ____ stock refers to inventory that is en route between various nodes in a logistics
system.

a. base

b. safety

c. speculative

d. cycle

e. none of the above

6. ____ stock refers to inventory that is held for several reasons, to include
seasonal demand, projected price increases, and potential shortages of product.

a. base

b. safety

c. pipeline

d. speculative

7. ____ stock is carried to stimulate demand.

a. base
b. psychic
c. speculative
 d. attractive
e. none of the above
8. Inventory shrinkage ____.

a. is another name for inventory turnover

b. refers to the fact that more items are recorded entering than leaving
warehousing facilities

c. refers to situations where the size and/or volume of inventory is decreased

over time

d. refers to a technique of stabilizing unit loads by using shrink wrap

packaging

9. Each of the following is a component of inventory carrying cost except:

a. accounting cost

b. storage cost

c. shrinkage cost

d. interest cost

e. all of the above are components

10. Which of the following is not a component of ordering (order) costs?

a. costs of preparing invoices

b. costs of receiving orders

c. costs of verifying inventory availability

d. costs of conducting a credit check

e. all are components of ordering (order) costs

11. Which of the following situations is likely the most damaging (costly) with
respect to a stockout?

a. the customer buys a substitute product that yields a higher profit for the
seller

b. the customer buys a substitute product that yields a lower profit for the
seller

c. the customer goes to a competitor for a purchase

d. the customer says, “Call me when it’s in”

12. The economic order quantity (EOQ) deals with calculating the proper order
size with respect to ____ costs and ____ costs.

a. ordering; stockout

b. stockout; carrying

c. accounting; carrying

d. carrying; ordering

13. The economic order quantity (EOQ) determines ____.

a. the point at which a company should reorder

b. the point at which carrying costs equal ordering costs

c. the point at which the sum of carrying costs and ordering costs is maximized

d. the relevant inventory flow for a particular time period

e. none of the above

14. Which of the following is not an assumption associated with the basic
economic order quantity (EOQ) model?

a. no inventory in transit

b. an infinite planning horizon

c. stockouts are permitted

d. a constant and known replenishment or lead time

e. all are basic assumptions with the basic EOQ model

15. Concerning the EOQ model, if demand or annual usage increases by 10%,
then the EOQ will ____.

a. it depends on the particular product

b. increase

c. decrease

d. stay unchanged

16. Concerning the EOQ model, if the ordering costs increase by 10% and the
product value increases by 10%, then the EOQ will ____.

a. stay unchanged

b. increase

c. decrease

d. it depends on the particular product

17. ____ recognizes that all inventories are not of equal value to a firm and thus
all inventories should not be managed in the same way.

a. vendor-managed inventory

b. suboptimization

c. marginal analysis

d. ABC analysis of inventory

18. Inventory turnover can be calculated by ____.

a. dividing the cost of goods sold by average inventory

b. dividing average inventory by the costs of goods sold

c. multiplying average inventory by 1.5

d. adding beginning and ending inventory and then dividing by two

e. none of the above

19. Which of the following is not an example of a lean inventory approach?

a. just-in-time

b. collaborative planning, forecasting, and replenishment

c. efficient consumer response

d. quick response

e. all of the above are lean inventory approaches

20. Which of the following statements about the lean approach and JIT is false?

a. JIT tends to focus on product movement from manufacturer to retailer

b. organizations should give careful consideration before adopting a lean

philosophy
c. the lean approach views inventory as waste

d. trucking is an important mode of transportation in JIT systems

e. all of the above are true

 CHAPTER 6: WAREHOUSING MANAGEMENT
1. Warehousing and ____ are substitutes for each other.

a. transportation

b. materials handling

c. packaging

d. inventory management

e. none of the above

2. ____ and ____ refer to adjustments associated with the quantity of product.

a. allocating; assorting

b. accumulating; allocating

c. sorting out; accumulating

d. sorting out; assorting

3. ____ involves bringing together similar stocks from different sources.

a. bulk-breaking

b. assorting

c. accumulating

d. sorting out
4. ____ refers to building up a variety of different products for resale to
particular customers.

a. accumulating

b. allocating

c. sorting out

d. assorting

5. ____ refers to separating products into grades and qualities desired by

different target markets.

a. assorting

b. sorting out

c. allocating

d. accumulating

6. Warehouses emphasize ____ and their primary purpose is to maximize ____.

a. rapid movement of product; usage of available storage space

b. rapid movement of product; throughput

c. product storage; usage of available storage space

d. product storage; throughput

7. Distribution centers emphasize ____ and their primary purpose is to

maximize ____.

a. rapid movement of product; throughput

b. product storage; throughput

c. product storage; usage of available storage space

 d. rapid movement of product; usage of available storage space

8. Throughput refers to ____.

a. storage capacity of a warehousing facility

b. volume through a pipeline

c. inventory turnover in a one-month period

d. amount of product entering and leaving a facility in a given time period

9. ____ refers to a process where a product is received in a facility, occasionally

married with product going to the same destination, and then shipped at the
earliest time, without going into longer-term storage.

a. just-in-time

b. cross-docking

c. accumulation

d. agglomeration

10. Which of the following is not a characteristic of public warehousing?

a. requires no capital investment from user

b. users have a fairly exact determination of their warehousing costs

c. good for companies dealing with large volumes of inventory

d. lack of control by user

e. all of the above are characteristics

11. What is considered to be the biggest drawback to public warehousing?

a. high fixed cost to user

b. lack of safety regulation

c. lack of locational flexibility

d. lack of control by the user

12. ____ warehousing is owned or occupied on a long-term lease by the firm

using them.

a. private

b. public

c. contract

d. multiclient

13. All are characteristics of private warehousing, except ____.

a. generates high fixed costs for the user

b. feasible when demand patterns are irregular

c. users have a great deal of control

d. may reduce an organization’s flexibility

e. all of the above are characteristics

14. Multiclient warehousing mixes attributes of ____ and ____ warehousing.

a. private; contract

b. common; private

c. public; common

d. public; contract
15. Trade-offs must be made among space, labor, and ____ with respect to
warehousing design.

a. cost

b. construction materials

c. mechanization

d. speed

16. A key advantage of fixed slot locations in a warehouse is ____.

a. improved employee morale

b. knowledge of where specific products are located

c. better materials handling

d. increased space utilization

17. A key advantage of variable slot locations in a warehouse is ____.

a. increased space utilization

b. better materials handling

c. ease of record keeping

d. more logical and simple product layout

18. As one builds higher, building costs ____, while warehousing equipment
costs tend to ____.

a. increase; decrease

b. increase; increase

c. decrease; decrease

d. decrease; increase
19. Which of the following is not an example of warehouse automation?

a. radio frequency identification

b. narrow aisle forklifts

c. automated guided vehicles

d. automated storage and retrieval systems

e. all of the above are examples of warehouse automation

20. In general, warehousing security can be enhanced by focusing on people,

____, and ____.

a. building; equipment

b. buildings; cost

c. cost; processes

d. facilities; processes
CHAPTER 7: FACILITY LOCATION, PACKAGING AND
MATERIALS HANDLING
1. The general trend in recent years has been for companies to do what with
their distribution networks?

a. maintain the status quo

b. relocate their facilities

c. slightly increase the number of facilities

d. reduce the number of facilities

2. A pure material ____.

a. is one that loses no weight in manufacturing

b. cannot be mixed with other materials

c. is soluble in water

d. comes from the ocean

e. none of the above

3. The processing point for a pure material ____.

a. should be near its source

b. should be near the final market

c. can be anywhere in the world

d. can be anywhere near the source and the market

4. The processing point for a weight-losing raw material ____.

a. can be anywhere near the source and the market

b. should be near its source

c. should be near the final market

d. should be equidistant between the source and the market

5. The processing point for a weight-gaining raw material ____.

a. can be anywhere near the source and the market

b. should be near its source

c. should be near the final market

d. should be equidistant between the source and the market

6. Over the past quarter century, discussion of natural resources and facility
location has increasingly factored in ____ considerations.

a. cost

b. supply chain

c. diversity

d. environmental

7. A free trade zone refers to an area ____.

a. that is home to businesses that are owned and operated by large

concentrations of a particular ethnic group

b. in which products can be stored, exhibited, or processed without being

subjected to duties and quotas unless they enter the customs territory of the
zone country
 c. in which the federal government disregards all import and export quotas for
products coming from, or destined to, “favored” nations

d. an area outside the legal jurisdiction of federal, state, and/or local

governments

e. none of the above

8. Which of the following statements regarding perishable products is false?

a. they require special storage

b. they require special monitoring

c. they require special loading

d. they require special packaging

e. all of the above are true

9. The building blocks concept is associated with which logistics function?

a. warehousing

b. packaging

c. materials handling

d. inventory management

10. ____ refers to materials used for the containment, protection, handling,
delivery, and presentation of goods.

a. materials management

b. materials handling

c. procurement

d. packaging
11. As a general rule, labeling requirements and enforcement tends to be more
stringent in ____ countries than in ____ countries.

a. larger; smaller

b. older; younger

c. economically developed; economically developing

d. smaller; larger

12. Over 80% of customers view packaging as ____.

a. irrelevant to the purchase decision

b. one of the least important logistics activities

c. deceptive

d. a major environmental issue

13. Which of the following is not a logistical consequence of packaging

inefficiency?

a. increased loss

b. increased damage

c. higher storage costs

d. slower materials handling

e. all of the above are logistical consequences

14. What organization regulates the packaging of international air shipments?

a. International Air Transport Association

b. United Nations

c. World Trade Organization

 d. International Chamber of Commerce

15. The ____ has established six international pallet size standards.

a. World Trade Organization

b. International Chamber of Commerce

c. International Standards Organization

d. United Nations

16. The basic unit in unit loading is a ____.

a. box

b. crate

c. pallet

d. container

17. A major drawback to metal and plastic pallets is their ____.

a. lifespan

b. price

c. weight

d. incompatibility with existing forklifts

18. ____ refers to the short distance movement that usually takes place within
the confines of a building such as a plant or distribution center and between a
building and a transportation service provider.

a. physical distribution
b. materials management
c. warehousing
d. materials handling
19. It is important that the materials handling equipment be aligned with an
organization’s objectives, customers, and ____.

a. suppliers

b. top management

c. products

d. stakeholders

20. The total cost of ownership is associated with which of the 10 materials
handling principles?

a. life cycle cost principle

b. planning

c. system

d. standardization

e. none of the above

 CHAPTER 8: TRANSPORTATION
1. ____ is the actual, physical movement of goods and people between two
points.

a. logistics

b. transportation

c. materials handling

d. materials management

2. There are ____ modes of transportation.

a. three

b. four

c. five

d. six

3. Rail gauge refers to ____.

a. the allowable speed on a particular segment of track

b. the thickness of rail track

c. the length of rail track

d. the distance between the inner sides of two parallel rail tracks

4. ____ is generally the fastest form of transportation for shipments exceeding

600 miles.

a. less-than-truckload motor carriers

b. air

c. parcel carriers
 d. truckload motor carriers

5. Consignees are ____.

a. extremely large less-than-truckload carriers

b. shippers of freight

c. receivers of freight

d. preferred suppliers

6. Dimensional weight ____.

a. considers a shipment’s density

b. only applies to air transportation

c. is associated with commodity rates

d. does not impact transportation rates

7. Which of the following is not likely to move by air transportation?

a. wearing apparel

b. fruits and vegetables

c. cut flowers

d. auto parts

e. all are likely to move by air

8. Less-than-truckload motor carriers ____.

a. serve only regional markets

b. operate through a series of terminals

c. are exempt from hours-of-service regulations

 d. carry the shipment directly from shipper to consignee

9. The primary advantage for motor carriers is ____.

a. reliability

b. speed

c. capability

d. flexibility

10. ____ is the most reliable form of transportation.

a. rail

b. motor carrier

c. pipeline

d. air

e. water

11. ____ pipelines carry crude oil from gathering-line concentration points to
the oil refineries.

a. product

b. trunk

c. arterial

d. collection

12. ____ have a level of market concentration and dominance that is not found
in the other modes.

a. railroads

b. pipelines
 c. airlines

d. motor carriers

13. Which mode is not the “best” or “worst” on any of the six attributes (e.g.,
capability, flexibility, etc.) that were used to compare the modes?

a. railroads

b. water carriers

c. pipelines

d. motor carriers

14. The predominant commodity moved by barge transportation is ____.

a. grain

b. coal

c. iron ore

d. petroleum

15. ____ transportation occurs when two or more modes work closely together
in an attempt to utilize the advantages of each mode while at the same time
minimizing their disadvantages.

a. intermodal

b. bifurcated

c. intramodal

d. collaborative
16. What container size is often used to rank water ports and measure
containership capacity?

a. 48 foot container

b. 40 foot container

c. 20 foot container

e. 10 foot container

17. The primary advantage to land bridge service is ____.

a. less loss and damage

b. reduced transit times

c. lower transportation cost

d. improved reliability

18. Freight forwarders ____.

a. are the same as shippers’ associations

b. consolidate the shipments of several carriers

c. represent the consignees’ interests

d. consolidate the shipments of several shippers

19. Shippers’ associations ____.

a. are the same as a freight forwarder

b. function in a manner similar to freight forwarders

c. specialize in truckload shipments

d. are used only for agricultural products

20. A transportation broker _____.

a. looks to match a shipper’s freight with a carrier to transport it

b. deals only with agricultural products

c. is the same as a freight forwarder

d. tends to be spun off from carriers or management consulting firms

 PART 2: ESSAY
A. THEORETICAL QUESTIONS

CHAPTER 1: AN OVERVIEW OF LOGISTICS

1. How does logistics contribute to time and place utility?
- Logistics contributes to time utility by recognizing that different products
have different sensitivities to time.
- As for place utility, logistics facilitates products being moved from points of
lesser value to points of greater value.
2. What is the systems approach to problem solving? How is this
concept applicable to logistics management?
- The systems approach to problem solving suggests that a company’s
objectives can be realized by recognizing the mutual interdependence of the
major functional areas such as marketing, production, finance, and logistics.
- As such, decisions made by one functional area can have important
implications for the other functional areas.
- With respect to logistics, the systems approach suggests that one should
recognize the mutual interdependence of the various activities that constitute
the logistics function. Thus, a transportation decision may impact inventory,
warehousing, and packaging, among others.
3. Distinguish between materials management and physical
distribution.
Materials management refers to the movement and storage of materials into a
firm while physical distribution refers to the storage of finished product and
movement to the customer.

4. Discuss five activities that might be part of a company’s logistics

department.

STT Activity Main tasks

• Find suitable suppliers

• Negotiate terms & conditions

• Organize delivery
1 Procurement/Purchasing • Arrange insurance & payment

• Link importantly with upstream

activities

→ To get materials into the organization

• Select the type of transport

• Find the best transport operator

• Design a route
2 Inward Transport
• Meet all safety & legal requirements

• Get deliveries on time & at reasonable

cost
 → To get materials from suppliers to the
organization

• Acknowledge receipt

• Unload delivery vehicles

3 Receiving • Inspect materials for damage & sort them

→ To make sure materials delivered

correspond to the order

• Store special materials (frozen food,

drugs, alcohol, chemicals, animals,
dangerous goods)
Warehouse
• Store materials in the right conditions,
4 Management/
treatment and packaging
Warehousing/Storing
→ To keep materials in good condition &
make sure that materials can be available
quickly

• Consider the materials to store, overall

investment, customer service, stock
levels, order sizes, order timing
Inventory
• Three costs that logisticians should
5 Management/Stock
consider: (i) the cost of carrying
Control
(holding) product, (ii) the cost of
ordering product, (iii) the cost of being
out of stock
 → To set the policies for inventory

• Locate, identify, check, remove

materials
Order Management/
6 • Consolidate into a single load
Order Picking
• Wrap and move to a departure area

→ To find and remove materials from stores

• Move materials through the operations

within an organization

• Use appropriate equipment with little

damage
7 Materials Handling
• Use special packaging and handling
where needed

→ To give efficient movements, with short

journeys

• Select the type of transport

• Find the best transport operator

• Design a route

• Meet all safety & legal requirements

8 Outward Transport
• Get deliveries on time & at reasonable
cost

→ To take materials from the departure

area and delivers them to customers
 • To be aligned with marketing
Physical Distribution • Link importantly with downstream
9
Management activities

→ To deliver finished goods to customers

• Deal with problems in delivered

materials (faulty, wrong type,…)

• Pallets, delivery boxes, containers are

Reverse Logistics/ returned to suppliers for reusing
10 Recycling, Returns and • Metals, glass, paper, plastics, oils are
Waste Disposal returned to suppliers for recycling

→ To return/recycle materials back to an

organization (reverse logistics/reverse
distribution)

• Move stocks of finished goods nearby

warehouses

11 Location • Put into stores nearer to customers

→ To find the best locations for activities of

logistics

• Link all parts of the supply chain

Communication
12 • Pass information about products,
customer demands, materials to be
 moved, timing, stock levels, availability,
problems, costs, service levels,…

→ To combine the physical flow of materials

and flow of information

• Make sure that the right person receives

Customer Service the right product in the right quantity
13
at the right place at the right time in the
right condition and at the right price

• Estimate product demand in a future time

Demand Forecasting period
14
→ To reduce inventory levels in a supply
chain

• Refer to the logistics activities associated

with goods that are sold across national
International Logistics
15 boundaries.

• Be more costly and challenging than

domestic logistics.
 CHAPTER 2: THE SUPPLY CHAIN
MANAGEMENT
1. Discuss the differences between logistics management and
supply chain management.
Logistics management is that part of supply chain management that plans,
implements, and controls the efficient, effective, forward and reverse flow and
storage of goods, services, and related information between the point of origin and
point of consumption in order to meet customers’ requirements.

A supply chain can be viewed as a combination of processes, functions, activities,

relationships, and pathways along which products, services, information, and
financial transactions move in and between enterprises from original producer to
ultimate end user or customer. Supply chains are not a new concept in the sense that
through the years organizations have been dependent on suppliers and organizations
have served customers. Although any organization can be part of a supply chain,
supply chain management requires overt management efforts by the organizations
in the supply chain. Moreover, supply chain management cannot be successful
unless the participating companies adopt an enterprise-to-enterprise perspective as
well as to apply the systems approach across all organizations in the supply chain.

2. Discuss the SCOR model of supply chain management

The SCOR model identifies six key processes—plan, source, make, deliver, return,
and enable—associated with supply chain management. Each of the six processes
indicates the important role of logistics in supply chain management.
 3. Discuss the GSCF model of supply chain management
There are eight relevant processes in the GSCF model—customer relationship
management, customer service management, demand management, order
fulfillment, manufacturing flow management, supplier relationship management,
product development management, and returns management. Logistics also plays
an important role in the supply chain processes in the GSCF model.

4. What is the difference between a lean and an agile supply chain?

Under which circumstances is each an appropriate supply chain
approach to pursue?
An agile supply chain focuses on an organization’s ability to respond to changes in
demand with respect to volume and variety. Lean supply chains are focused on
eliminating all waste, including time, and to ensure a level schedule. An agile supply
chain may be most appropriate in contexts where customer demand is volatile and
their requirements for variety are high. In cases where customer demand is relatively
stable and variety is low, establishing a lean supply chain may be a more appropriate
goal.
 CHAPTER 3: PROCUREMENT
1. What is procurement? What is its relevance to logistics?
Procurement refers to the raw materials, component parts, and supplies bought from
outside organizations to support a company’s operations.

It is closely related to logistics since acquired goods and services must be entered
into the supply chain in the exact quantities and at the precise time they are needed.

Procurement is also important because its costs often range between 60 and 80
percent of an organization’s revenues.

2. Name and describe the steps in the supplier selection and

evaluation process
Identify the need for supply => can arise from the end of an existing supply
agreement or the development of a new product.

Situation analysis looks at both the internal and external environment within which
the supply decision is to be made.

Identify and evaluate potential suppliers delineates sources of potential

information, establishes selection criteria, and assigns weights to selection criteria.

Select supplier(s) is where an organization chooses one or more companies to

supply the relevant products.

Evaluate the decision involves comparison of expected supplier performance to

actual supplier performance.
 3. Distinguish between a single sourcing approach and a multiple
sourcing approach?
A single sourcing approach consolidates purchase volume with a single supplier in
the hopes of enjoying lower costs per unit and increased cooperation and
communication in the supply relationship.

Multiple sourcing proponents argue that using more than one supplier can lead to
increased amounts of competition, greater supply risk mitigation, and improved
market intelligence.

4. Describe Kraljic’s Portfolio Matrix. What are the four

categories of this segmentation approach?
Kraljic’s Portfolio Matrix is used by many managers to classify corporate purchases
in terms of their importance and supply complexity with a goal of minimizing supply
vulnerability and getting the most out of the firm’s purchasing power.

The matrix delineates four categories: noncritical (low importance, low

complexity), leverage (high importance, low complexity), strategic (high
importance, high complexity), and bottleneck (low importance, high complexity).
 CHAPTER 4: DEMAND MANAGEMENT, ORDER
MANAGEMENT AND CUSTOMER SERVICE
1. What is the relationship between demand management, order
management, and customer service?
There is a key link between order management and demand forecasting, in that a
firm does not simply wait for orders to arrive in order to learn what is happening.
Forecasts are made of sales and of the inventories that must be stocked so that the
firm can fill orders in a satisfactory manner. There is also a key link between order
management and customer service because many organizations analyze customer
service standards in terms of the four stages of the order cycle.

2. Define and describe the order cycle. Why is it considered an

important aspect of customer service?
The order cycle is the elapsed time from when a customer places an order until the
customer receives the order. It is an important aspect of customer service in part
because the order cycle is frequently used to determine the parameters of customer
service goals and objectives. The order cycle is also being used by some firms as a
competitive weapon (generally the shorter the better), and technological advances
now make it extremely easy (and fast) for customers to determine the exact status of
their order(s).
 3. List and discuss the three elements of the dependability
dimension of customer service.
The three elements are consistent order cycles, safe delivery, and complete delivery.
Quite simply, inconsistent order cycles necessitate higher inventory requirements.
Safe delivery brings loss and damage considerations into play; lost or damaged
product can cause a variety of negative ramifications for a customer, such as an out-
of-stock situation. One way of measuring the completeness of delivery involves the
order fill rate or the percentage of orders that can be completely and immediately
filled from existing stock; incomplete deliveries generally translate into unhappy
customers.
 CHAPTER 5: INVENTORY MANAGEMENT
1. Distinguish among cycle, safety, pipeline, and speculative stock.
Cycle (base) stock refers to inventory that is needed to satisfy normal demand during
the course of an order cycle. Safety (buffer) stock refers to inventory that is held in
addition to cycle stock to guard against uncertainty in demand and/or lead time.
Pipeline (in-transit) stock is inventory that is en route between various nodes in a
logistics system, while speculative stock is inventory that is held for several reasons
to include seasonal demand, projected price increases, and potential product
shortages.

2. What are ordering costs, and what is the trade-off between

inventory carrying costs and ordering costs?
Ordering costs refer to those costs associated with ordering inventory, such as order
costs and set up costs. Order costs include, but are not limited to, the costs of
receiving an order (e.g., the wages of the person who takes orders by telephone),
conducting a credit check, verifying inventory availability, entering orders into the
system, preparing invoices, and receiving payment. The trade-off that exists
between carrying and ordering costs is that they respond in opposite ways to the
number of orders or size of orders. That is, an increase in the number of orders leads
to higher order costs and lower carrying costs.
 3. Explain the logic of the EOQ model.
The logic of the EOQ model is as follows: determining an order quantity requires a
company to balance two costs: the costs of carrying the inventory and the costs of
ordering it. Inventory carrying costs are in direct proportion to order size; that is, the
larger the order, the greater the inventory carrying costs. Ordering costs, by contrast,
tend to decline with order size but not in a linear fashion. The EOQ attempts to find
the point (quantity) at which ordering costs equals carrying costs.

4. Discuss what is meant by ABC analysis of inventory. What are

several measures that can be used to determine ABC status?
ABC analysis is an approach that recognizes all inventories are not of equal value to
a firm and, as a result, all inventory should not be managed in the same way.
Measures that can be used to determine ABC status include sales volume in dollars,
sales volume in units, the fastest selling items, item profitability, or item importance.
 CHAPTER 6: WAREHOUSING MANAGEMENT
1. Explain the four ways that warehousing facilitates the
regrouping function.
Regrouping involves rearranging the quantities of products as they move through
the supply chain and it takes four forms: accumulating (also referred to as bulk-
making), allocating (also referred to as bulk-breaking), assorting, and sorting.
Accumulating involves bringing together similar stocks from different sources,
while allocating involves breaking larger quantities into smaller quantities.
Assorting refers to building up a variety of different products for resale to particular
customers, while sorting out refers to separating products into grades and qualities
desired by different target markets.

2. Distinguish among warehouses, distribution centers, and cross-

docking facilities.
Warehouses emphasize the storage of products and their primary purpose is to
maximize the use of storage space. In contrast, distribution centers emphasize the
rapid movement of products through a facility and thus attempt to maximize
throughput (the amount of product entering and leaving a facility in a given time
period). The increased emphasis on time reduction in supply chain has led to the
growth of cross docking, which can be defined as the process of receiving product
and shipping it out the same day or overnight without putting it into storage.
 3. What are the advantages and disadvantages of private
warehousing?
One disadvantage to private warehousing is that it is characterized by high fixed
costs—which necessitates high and steady demand volumes. In addition, a high
fixed cost alternative becomes less attractive in times of high interest rates because
it is more costly to secure the necessary financing. Private warehousing may also
reduce an organization’s flexibility with respect to responding to changes in the
external environment.

As for advantages, private warehousing offers users a great deal of control over their
storage needs. More specifically, private warehouses can be constructed to meet user
specifications and companies can also control product placement within a facility.
In addition, private warehousing offers access to products when an organization
needs or wants them.
 CHAPTER 7: FACILITY LOCATION,
PACKAGING AND MATERIALS HANDLING
1. How does a raw material’s status as pure, weight-losing, or weight-
gaining influence the facility location decision?
A pure raw material is one that loses no weight in manufacturing and, because of
this, the processing point can be anywhere near the raw material source and the
market. Weight-losing products lose weight during processing; the processing point
should be near their source in order to avoid payment of unnecessary transportation
charges. Weight-gaining products gain weight during processing; the processing
point should be close to the market.

2. Discuss how population can be viewed as both a market for goods

and a source of labor.
With respect to a market for goods, attributes of current and potential customers are
important. Things such as changes in population size as well as changes in
population characteristics are important. With respect to population characteristics,
for example, longer life spans can increase the demand for health-related products
such as prescription medicines.

There are myriad concerns associated with population as a source of labor, to include
the size of the workforce; the unemployment rate; the age profile; its skills and
education; prevailing wage rates; and union status.
3. What are the three general functions of packaging? How might
they come into conflict?
Packaging serves three general functions: to promote, to protect, and to identify
(label) the relevant product. As an example of how they might come into conflict,
while attractive packaging might encourage consumers to purchase a product, the
attractive packaging might increase the chances of a product being stolen.
 CHAPTER 8: TRANSPORTATION
1. What are freight forwarders? How do they function? What
services do they perform?
Freight forwarders can best be thought of as consolidators of freight. They function
by consolidating shipments from small shippers, buying transportation in volume
rates, and then charging shippers a rate somewhere between the non-volume rate and
the volume rate. The forwarder typically offers pickup and delivery services, but
not linehaul service. In addition, forwarders can specialize in certain cargoes, such
as garment forwarders and forwarders that relocate house pets.

2. How do truckload operations differ from less-than-truckload

operations?
Less-than-truckload (LTL) shipments range from about 150 – 10,000 pounds;
truckload (TL) carriers focus on shipments of greater than 10,000 pounds although
the exact weight depends on the product. LTL shipments are often too big to handle
manually, do not fill a truck and LTL carriers transport shipments of many customers
simultaneously. Whereas LTL shipments are routed through terminals, TL
shipments tend to move directly from the shipper’s location to the consignee’s
location.
 3. How do containers help to facilitate intermodal transportation?
Containers—a large reusable steel box used for intermodal shipments—are moved
by mechanical devices such as container cranes and companies need only handle a
container and not the freight inside of it, which provides a dramatic reduction in
freight handling costs. Because the container is interchangeable among rail, truck,
and water carriers, containers can be used in intermodal applications and provide the
advantages offered by each of several modes.

B. CALCULATION
Students should review some equations like:

1. When to order?
Reorder Point (ROP) calculations:

ROP = DD x RC under certainty

ROP = (DD x RC) + SS under uncertainty

Where DD = daily demand

RC = length of replenishment cycle

SS = safety stock

2. How much to order?

• Economic order quantity (EOQ) in dollars:
Where:

EOQ = the most economic order size, in dollars

A = annual usage, in dollars

B = administrative costs per order of placing the order

C = carrying costs of the inventory (%)

• Economic order quantity (EOQ) in units:

Where:

EOQ = the most economic order size, in units

D = annual demand, in units

B = administrative costs per order of placing the order

C = carrying costs of the inventory (%)

I = dollar value of the inventory, per unit