Deck 4: Designing Distribution Networks and Applications to E-Business

Question 1

Companies in the same industry often select very different distribution networks,because the choice of the distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness.

Answer 1

True

Question 2

The main advantage of a distribution network with local storage is that it can lower the delivery cost and provide a faster response than other networks.

Answer 2

True

Question 3

Outbound transportation costs per unit tend to be lower than inbound costs,because inbound lot sizes are typically larger.

Answer 3

False

Question 4

Only niche companies will end up using a single distribution network.

Question 5

As long as inbound transportation economies of scale are maintained,increasing the number of facilities decreases total transportation cost.

Question 6

Distribution is a key driver of the overall profitability of a firm because

A) the addition of distributors only adds cost to the supply chain.
B) it directly impacts both the supply chain cost and the customer experience.
C) it slows down the responsiveness of the supply chain.
D) it cannot be developed as a part of supply chain strategy.
E) Distribution is not a key driver of profitability.

Question 7

Companies in the same industry should always select similar distribution networks,because their objectives will be similar.

Question 8

A distribution network designer needs to consider product characteristics as well as network requirements when deciding on the appropriate delivery network.

Question 9

Customers always want the highest level of performance along all the dimensions response time,product variety and returnability.

Question 10

A customer does not necessarily want the highest level of performance along all dimensions of customer service,including response time,product variety,product availability,customer experience,order visibility,and returnability.

Question 11

A decrease in the response time customers desire increases the number of facilities required in the network.

Question 12

Distribution occurs between every pair of stages in the supply chain.

Question 13

The steps taken to move and store a product from the supplier stage to a customer stage in the supply chain is referred to as

A) transportation.
B) retailing.
C) wholesaling.
D) distribution.
E) manufacturing.

Question 14

Distributors add value to a supply chain between a supply stage and a customer stage if there are many small players at the customer stage,each requiring a small amount of the product at a time.

Question 15

Transportation costs are high with drop-shipping because the average outbound distance to the end consumer is large and package carriers are used to shipping the product.

Question 16

The major disadvantage of a distribution network with local storage is the increased inventory and facility costs.

Question 17

The main advantage of a distribution network with local storage is that it can lower the inventory and facility costs.

Question 18

Firms that target customers who can tolerate a long response time require only a few locations that may be far from the customer.

Question 19

The choice of the distribution network can be used to achieve supply chain objectives such as

A) low cost.
B) high responsiveness.
C) high cost.
D) high responsibility.
E) A and B only

Question 20

The main advantage of in-transit merge over drop-shipping is the somewhat lower transportation cost and improved customer experience.

Question 21

Which of the following are measures of customer service that are influenced by the structure of the distribution network?

A) Returnability
B) Order visibility
C) Customer experience
D) Product availability
E) all of the above

Question 22

Which of the following is not a measure of customer service that is influenced by the structure of the distribution network?

A) Returnability
B) Customer experience
C) Customer maturity
D) Product availability
E) All of the above are measures of customer service.

Question 23

The ability of the customer to track their order from placement to delivery is

A) customer experience.
B) order visibility.
C) product availability.
D) response time.
E) returnability.

Question 24

As the number of facilities in a supply chain increases

A) the inventory and resulting inventory costs also increase.
B) the inventory and resulting inventory costs decrease.
C) the inventory increases and resulting inventory costs decrease.
D) the inventory decreases and resulting inventory costs increase.
E) the inventory and resulting inventory costs remain the same.

Question 25

As the response time desired by the customer decreases,the required number of facilities in the distribution network

A) decreases.
B) remains the same.
C) increases.
D) increases and then decreases.
E) none of the above

Question 26

Companies in the same industry often select very different distribution networks because

A) some companies are poorly run.
B) different companies try to avoid using the same approach.
C) different companies have different objectives for their supply chain.
D) all of the above
E) none of the above

Question 27

Which of the following would not be the result of a poor/inappropriate distribution network?

A) High profitability
B) Low level of customer service
C) High cost
D) Poor profitability
E) None of the above are true.

Question 28

The ease with which the customer can place and receive their order as well as other aspects of value that the sales staff provides is

A) customer experience.
B) order visibility.
C) product availability.
D) response time.
E) returnability.

Question 29

As the number of facilities in a supply chain increases,total facility costs

A) decrease.
B) remain the same.
C) increase.
D) increase to a point and then decrease.
E) decrease to a point and then increase.

Question 30

Which of the following are measures of customer service that are influenced by the structure of the distribution network?

A) Response time
B) Product variety
C) Product availability
D) Customer experience
E) all of the above

Question 31

The probability of having a product in stock when a customer order arrives is

A) response time.
B) product variety.
C) product availability.
D) customer experience.
E) order visibility.

Question 32

As the number of facilities in a supply chain increases,total transportation cost

A) decreases.
B) remains the same.
C) increases.
D) increases to a point and then decreases.
E) decreases to a point and then increases.

Question 33

Outbound transportation costs per unit tend to be

A) about the same as inbound costs.
B) higher than inbound costs.
C) lower than inbound costs.
D) neither higher or lower than inbound costs.
E) none of the above

Question 34

As the number of facilities in a supply chain network increases,total logistics costs will

A) decrease.
B) decrease at first and then increase.
C) increase.
D) increase at first and then decrease.
E) neither increase or decrease.

Question 35

On which dimensions should the performance of a distribution network be evaluated at the highest level?

A) Profitability of individual supply chain components
B) Efficiency of overall supply chain network
C) Customer needs that are met
D) Cost of meeting customer needs
E) C and D only

Question 36

The costs incurred in bringing material into a facility are

A) sourcing transportation costs.
B) outbound transportation costs.
C) crossbound transportation costs.
D) inbound transportation costs.
E) none of the above

Question 37

A poor/inappropriate distribution network can

A) lead to high profitability.
B) hurt the level of service customers receive while increasing cost.
C) have a significant negative impact on the profitability of a firm.
D) all of the above
E) B and C only

Question 38

Total logistics costs for a supply chain network are a sum of

A) inventory and facility costs.
B) inventory, facility, and distributor costs.
C) facility, transportation, and distributor costs.
D) inventory, transportation, and facility costs.
E) none of the above

Question 39

The costs incurred in sending material out of a facility are

A) sourcing transportation costs.
B) outbound transportation costs.
C) crossbound transportation costs.
D) inbound transportation costs.
E) none of the above

Question 40

The number of different products/configurations that a customer desires from the distribution network is

A) response time.
B) product variety.
C) product availability.
D) customer experience.
E) order visibility.

Question 41

Which distribution network design is being used when inventory is stored locally at retail stores and customers walk into the retail store or place an order online or on the phone and pick it up at the retail store?

A) Manufacturer storage with direct shipping
B) Manufacturer/distributor storage with customer pickup
C) Distributor storage with package carrier delivery
D) Distributor storage with last mile delivery
E) Retail storage with customer pickup

Question 42

Which distribution network design is being used when the distributor/retailer delivers the product to the customer's home instead of using a package carrier?

A) Manufacturer storage with direct shipping
B) Manufacturer/distributor storage with customer pickup
C) Distributor storage with package carrier delivery
D) Distributor storage with last mile delivery
E) Retail storage with customer pickup

Question 43

Which distribution network design is being used when inventory is not held by manufacturers at the factories,but is held by distributors/retailers in intermediate warehouses and package carriers are used to transport products from the intermediate location to the final customer?

A) Manufacturer storage with direct shipping
B) Manufacturer storage with direct shipping and in-transit merge
C) Distributor storage with package carrier delivery
D) Distributor storage with manufacturer pickup
E) Retail storage with customer pickup

Question 44

Which distribution network is also referred to as drop-shipping with product delivered directly from the manufacturer to the customer location?

A) Manufacturer storage with direct shipping
B) Manufacturer storage with direct shipping and in-transit merge
C) Distributor storage with package carrier delivery
D) Distributor storage with last mile delivery
E) Manufacturer/distributor storage with customer pickup

Question 45

Which of the following is a disadvantage of distributor storage with last mile delivery?

A) Transportation cost is higher than any other distribution option.
B) Information cost is similar to distributor storage with package carrier delivery.
C) Customer experience is very good, particularly for bulky items.
D) Returnability is easier to implement than other options.
E) Order traceability is less of an issue and easier to implement than manufacturer storage or distributor storage with package carrier delivery.

Question 46

Which of the following are key decisions in the design of a distribution network?

A) Will product be delivered to the customer location or picked up from a pre-ordained site?
B) Will product flow through a production facility?
C) Will product flow through an intermediary (or intermediate location)?
D) all of the above
E) A and C only

Question 47

Which of the following is a disadvantage of manufacturer/distributor storage with customer pickup?

A) Customer experience is lower than other options because of the lack of home delivery.
B) Response time is similar to package carrier delivery with manufacturer or distributor storage.
C) Returnability is somewhat easier given that pickup location can handle returns.
D) Product availability is similar to other manufacturer or distributor storage options.
E) Facilities costs are lower if existing facilities are used.

Question 48

Which of the following is not a distinct distribution network design that may be used to move products from factory to customer?

A) Manufacturer storage with direct shipping
B) Manufacturer storage with direct shipping and in-transit merge
C) Distributor storage with package carrier delivery
D) Distributor storage with manufacturer pickup
E) Retail storage with customer pickup

Question 49

Which of the following is an advantage of manufacturer/distributor storage with customer pickup?

A) Facility costs can be very high if new facilities have to be built.
B) Transportation cost is lower than the use of package carriers, especially if using an existing delivery network.
C) Order visibility is difficult but essential.
D) Product variety is similar to other manufacturer or distributor storage options.
E) Significant investment in information infrastructure required.

Question 50

Which distribution network design is being used when inventory is stored at the manufacturer or distributor warehouse but customers place their orders online or on the phone and then come to designated pickup points to collect their orders?

A) Manufacturer storage with direct shipping
B) Manufacturer/distributor storage with customer pickup
C) Distributor storage with package carrier delivery
D) Distributor storage with last mile delivery
E) Retail storage with customer pickup

Question 51

Which of the following is an advantage of manufacturer storage with direct shipping?

A) Transportation costs are low because the average outbound distance to the end consumer is small and package carriers are used to shipping the product.
B) Supply chains save on the fixed cost of facilities, because the need for other warehousing space in the supply chain has been eliminated.
C) Response times tend to be small because the order has to be transmitted from the retailer to the manufacturer.
D) Order tracking is easy to implement because of the complete integration of information systems at both the retailer and the manufacturer.
E) The handling of returns is likely to be simple and inexpensive, improving customer satisfaction.

Question 52

Which of the following is an advantage of distributor storage with carrier delivery?

A) Inventory cost is higher than with manufacturer storage.
B) Product variety is lower than with manufacturer storage.
C) Order visibility for the customer is easier than with manufacturer storage.
D) Higher cost to provide the same level of product availability as manufacturer storage.
E) Cost of facilities and handling is somewhat higher than manufacturer storage.

Question 53

Which of the following is not a distinct distribution network design that may be used to move products from factory to customer?

A) Manufacturer storage with direct shipping
B) Manufacturer storage with distributor pickup
C) Distributor storage with package carrier delivery
D) Distributor storage with last mile delivery
E) Manufacturer/distributor storage with customer pickup

Question 54

The major disadvantage of in-transit merge compared to drop-shipping is

A) transportation costs are high because the average outbound distance to the end consumer is large and package carriers are used to shipping the product.
B) response times tend to be large because the order has to be transmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer's centralized site.
C) order tracking becomes harder to implement because it requires complete integration of information systems at both the retailer and the manufacturer.
D) the additional effort during the merge itself.
E) the handling of returns is likely to be difficult and more expensive, hurting customer satisfaction.

Question 55

Which distribution network design is similar to pure drop-shipping,except that pieces of the order coming from different locations are combined so that the customer gets a single delivery?

A) Manufacturer storage with direct shipping
B) Manufacturer storage with direct shipping and in-transit merge
C) Distributor storage with package carrier delivery
D) Distributor storage with manufacturer pickup
E) Retail storage with customer pickup

Question 56

The main advantage of in-transit merge over drop-shipping is

A) the ability to reduce cost of inventory by centralizing inventories at the manufacturer.
B) supply chains save on the fixed cost of facilities, because the need for other warehousing space in the supply chain has been eliminated.
C) somewhat lower transportation cost and improved customer experience.
D) order tracking is easy to implement because of the complete integration of information systems at both the retailer and the manufacturer.
E) the handling of returns is likely to be simple and inexpensive, improving customer satisfaction.

Question 57

Which of the following is a disadvantage of distributor storage with carrier delivery?

A) Information infrastructure is simpler than manufacturer storage.
B) Response time is faster than with manufacturer storage.
C) Returnability is easier than with manufacturer storage.
D) Product variety is lower than with manufacturer storage.
E) Transportation cost is lower than with manufacturer storage.

Question 58

Which of the following would be a disadvantage of manufacturer storage with direct shipping?

A) The ability to reduce cost of inventory by centralizing inventories at the manufacturer.
B) The manufacturer has to postpone customization until after the customer order has been placed.
C) Supply chains have to eliminate other warehousing space to save on the fixed cost of facilities.
D) Response times tend to be large because the order has to be transmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer's centralized site.
E) Provides a good customer experience when a single order containing products from several manufacturers is delivered in partial shipments.

Question 59

Which of the following is an advantage of distributor storage with last mile delivery?

A) More expensive to provide product availability than any other option except retail stores.
B) Inventory cost is higher than distributor storage with package carrier delivery.
C) Response time is very quick ranging from same day to next day delivery.
D) Transportation cost is higher than any other distribution option.
E) Returnability is harder and more expensive than a retail network.

Question 60

In which distribution network design is product shipped directly from the manufacturer to the end customer,bypassing the retailer (who takes the order and initiates the delivery request)?

A) Manufacturer storage with direct shipping
B) Manufacturer storage with direct shipping and in-transit merge
C) Distributor storage with package carrier delivery
D) Distributor storage with last mile delivery
E) Manufacturer/distributor storage with customer pickup

Question 61

Facility costs decrease as the number of facilities is reduced.Which company employs a network design like this?

A) Barnes and Noble
B) Books-A-Million
C) Starbucks
D) Amazon

Question 62

Explain the measures of customer service that are influenced by the structure of the distribution network.

Question 63

Which of the following is a disadvantage of retail storage with customer pickup?

A) Returnability is easier than other options given that pickup location can handle returns.
B) Inventory cost is higher than all other options.
C) Transportation cost is lower than all other options.
D) Facilities and handling costs are lower than other options.
E) Product variety is higher than all other options.

Question 64

Explain how the design of the distribution network affects the cost of the four supply chain drivers.

Question 65

Distributors add value to a supply chain between a supply stage and a customer stage

A) if there is a small number of customers requiring a large amount of product.
B) if there is a large number of customers requiring a large amount of product.
C) if there are many small players at the customer stage, each requiring a small amount of the product at a time.
D) if there are a few large players at the customer stage, each requiring a large amount of the product at a time.
E) Distributors do not add value to a supply chain.

Question 66

Which is NOT considered a primary part of Total Logistics Costs for a supply chain network?

A) Inventory
B) Manufacturing
C) Transportation
D) Facility cost

Question 67

Total logistics costs are the sum of inventory,transportation,and facility costs for a supply chain network.What occurs as the number of facilities increases?

Question 68

________ is the amount of time it takes for a customer to receive an order.

A) Time to market
B) Product Availability
C) Returnability
D) Response Time

Question 69

Explain how distributors add value to a supply chain and improve its performance.

Question 70

________ is a cost factor performance characteristic of Manufacturer or Distributor Storage with Customer Pickup that is lower than the use of package carriers,especially if using an existing delivery network.

A) Transportation
B) Inventory
C) Information
D) Facilities and Handling

Question 71

Improvement in supply chain performance at the result of distributors occurs for which of the following reasons?

A) Reduction in transportation cost because of LTL shipments from manufacturers to distributor.
B) Reduction in outbound transportation cost because the distributor combines products from many customers into a single outbound shipment.
C) Reduction in inventory costs because distributor disaggregates safety inventory rather than aggregating at each retailer.
D) A more stable order stream from distributor to manufacturer (compared to erratic orders from each retailer) allows manufacturers to lower cost by planning production more effectively.
E) By carrying inventory closer to the point of sale, manufacturers are able to provide a better response time than distributors can.

Question 72

Which of the following statements about distribution networks is true?

A) The ownership structure of the distribution network can have as big an impact as the type of distribution network.
B) The choice of a distribution network has very long-term consequences.
C) The choice of an exclusive distribution strategy may be advantageous.
D) All of the above are true.
E) None of the above are true.

Question 73

________ is a cost factor performance characteristic of Retail Storage at Consumer Pickup Sites that is higher than all other options.

A) Transportation
B) Inventory
C) Information
D) Facilities and Handling

Question 74

Changing the distribution network design DOES NOT affect the following supply chain costs

A) transportation.
B) inventories.
C) information.
D) sourcing.

Question 75

Explain the six distinct distribution network designs that may be used to move products from factory to customer.

Question 76

Which of the following is an advantage of retail storage with customer pickup?

A) Inventory cost is higher than all other options.
B) Transportation cost is lower than all other options.
C) Facilities and handling costs are higher than other options.
D) Product variety is lower than all other options.
E) Product availability is more expensive to provide than all other options.

Question 77

________ is a service factor performance characteristic of Manufacturer or Distributor Storage with Customer Pickup that is lower than other options because of the lack of home delivery.Experience is very sensitive to capability of pickup location.

A) Response time
B) Product variety
C) Customer experience
D) Time to market

Question 78

________ is a service factor performance characteristic of Retail Storage at Consumer Pickup Sites that is lower than all other options.

A) Response time
B) Product variety
C) Product availability
D) Time to market