Deck 11: Logistics Management

Question 1

Miller Corp. can make three individual deliveries to three different customers at a transportation cost of $600 each or can consolidate them into one shipment with a transportation cost of $1,200 and a stop-off charge of $100 per stop. Should Miller Corp. consolidate the shipments?

A)Yes, it will save $100.
B)Yes, it will save $300.
C)No, it will increase cost by $100.
D)It doesn't matter based on cost.

Answer 1

Yes, it will save $300.

Question 2

Bill's glass store needs to ship an order of 10 chandeliers to a builder about 1,000 miles away. The chandeliers cost about $10,000 each, and Bill will be paid upon delivery. Bill plans to ship the order by truck at a cost of $1,000. The delivery will take 10 days. Bill uses a 30 percent annual inventory carrying cost. What will be the approximate total shipping and transit inventory carrying cost of the shipment?

A)$633.33
B)$821.92
C)$1,000
D)$1,821.92

Answer 2

$1,821.92

Question 3

With respect to the following operating service characteristics of the modes of transportation, which combination is CORRECTLY specified?

A)Speed: air is best; pipeline is worst.
B)Availability: air is best; pipeline is worst.
C)Capability: rail is best; air is worst.
D)Dependability: pipeline is best; truck is worst.

Answer 3

Speed: air is best; pipeline is worst.

Question 4

Zanda Corp. can make three individual deliveries to three different customers at a cost of $500 each or can consolidate them into one shipment with a cost of $1,300 and a stop-off charge of $100 per stop. Should Zanda do this?

A)Yes, it will save $100.
B)Yes, it is simpler to do.
C)No, it will increase cost by $100.
D)It doesn't matter based on cost.

Question 5

Zanda Corporation's CEO watched in amazement and frustration as workers handled and loaded individual products onto trucks. She felt handling the individual items was very cumbersome. She should investigate the possibility of:

A)Using RFID.
B)Containerization.
C)AS/RS.
D)None of these.

Question 6

Jones Company has decided to limit deliveries to selected areas to specific days of the week to obtain transportation savings. This is an example of:

A)Market consolidation.
B)Pooled delivery consolidation.
C)Scheduled delivery consolidation.
D)Transportation consolidation.
E)Poor planning.

Question 7

Generally, the most expensive transportation mode (from among the following choices) is

A)Air.
B)Water.
C)Truck.
D)Rail.

Question 8

Zanda Corp. had established a production plant in Thailand. Recently it decided to close the plant and move production to Mexico. This decision was likely made after Zanda:

A)Conducted a spend analysis.
B)Conducted a make-or-buy analysis.
C)Examined total landed cost.
D)Evaluated consolidation strategies.

Question 9

With respect to the following operating service characteristics of the modes of transportation, which combination is INCORRECTLY specified?

A)Speed: air is best; pipeline is worst.
B)Availability: truck is best; pipeline is worst.
C)Capability: pipeline is best; water is worst.
D)Dependability: pipeline is best; air is worst.

Question 10

Richard's Rollerskate Company relies on Simon's Trucking to transport all of their products. Simon's Trucking is the only shipping company for RRC, and all products are shipped in trucks that look like giant roller skates with Richard's Rollerskate branding on the trucks. Richard's Rollerskate is likely using which carrier type?

A)Common carrier.
B)Contract carrier.
C)Private carrier.
D)None of these.

Question 11

Suppose you are shipping 1,000 pounds of product to a customer location that is 500 miles away from you. The customer calls you and increases the order size to 10,000 pounds. Which of the following is NOT LIKELY to occur as a result of this change?

A)The cost per pound of transportation for the order will decrease.
B)The total cost of transportation for the order will increase.
C)Both of these are likely to occur.

Question 12

Which of the following best describes the concept of total landed cost?

A)The sum of all logistics costs related to a product.
B)The lowest logistics cost for a product.
C)The sum of all product- and logistics-related costs.
D)None of these.

Question 13

Jones Company learned that several other shippers in its hometown had customers located in the same markets that it serves. With this information, Jones should investigate the possibility of:

A)Market area consolidation.
B)Scheduled delivery consolidation.
C)Pooled delivery consolidation.
D)All of these.

Question 14

One function of warehouses or distribution centers is "consolidation." This means that the warehouse/distribution center is used to:

A)Group small inbound loads into larger outbound loads.
B)Collect products/packaging materials that are sent back for disassembly, reclamation, or disposal.
C)Hold inventory to buffer the system from variability in either in supply or demand.
D)All of these.

Question 15

With respect to transportation regulation today in the United States:

A)There is no economic regulation of transportation.
B)There is more economic regulation than ever before.
C)There is very little safety/social regulation.
D)There is more safety/social regulation than ever before.

Question 16

A company finds the following information about its customers and their locations: The center of gravity is:

A)X^* = 52.5; Y^* = 57.5
B)X^* = 58.33; Y^* = 65
C)X^* = 56.66; Y^* = 61.66
D)Cannot be determined.

Question 17

Suppose you were the logistics manager for Way-Off Manufacturing and Marketing, a manufacturer of mosquito repellant. Further suppose that Way-Off markets its products in the entire United States. However, in each geographic region of the country, Way-Off only needs to warehouse products for two months during each year. Way-Off probably would use what type of warehousing?

A)Public
B)Private
C)Contract
D)Common

Question 18

A major disadvantage of private warehousing is:

A)It offers less control than contract warehousing.
B)It requires more investment than contract warehousing.
C)It has less flexibility in operating policies than contract warehousing.
D)All of these are disadvantages of private warehousing.

Question 19

Zanda Corp. made a decision to use a more expensive mode of transportation to deliver orders to customers. This decision was likely made after an examination of

A)Cost-to-cost tradeoffs.
B)Consolidation strategies.
C)Product availability problems.
D)Cost-to-service trade-offs.

Question 20

You are shipping 200 diamonds to one customer located 2,000 miles away. The value of a diamond is $1,500. You can ship via air for $500 and the diamonds will arrive in two days, or you can ship via a specialty ground carrier for $250 and the diamonds will arrive in four days. You figure your inventory carrying cost is 25 percent. Your customer will immediately transfer funds to your bank account on receipt of the shipment. Using the air carrier would save approximately how much money in total cost? Use 365 days as the number of days in a year.

A)Nothing, it would actually cost more.
B)$150.00
C)$247.95
D)$160.96

Question 21

A company decides to reduce its number of warehouse locations (logistically postpone). This decision would result in ___________ or ___________.

A)Poorer service to customers or higher transportation cost
B)Better service to customers or less transportation cost
C)Better service to customers or higher transportation cost
D)Confusion for customers or for the company

Question 22

A company has determined the ideal number of locations by looking at the trade-offs described the text. It decides to open more warehouse locations than this "ideal." This decision would most likely result in ___________ and ___________.

A)Poorer service to customers and higher cost
B)Better service to customers and less cost
C)Better service to customers and higher cost
D)Poorer service to customers and lower cost

Question 23

In determining the number of facility locations, the lowest total cost is typically:

A)Not the lowest cost of either transportation or inventory.
B)Typically the lowest cost of either transportation or inventory.
C)Not related to transportation or inventory.
D)Difficult to generalize.

Question 24

The center-of gravity method of determining a facility location:

A)Requires that demand be estimated in terms of the dollar sales revenue in each market.
B)Requires that cost be measured in dollars of transportation cost.
C)Does not require that qualitative factors be considered in location decisions.
D)All of these.

Question 25

Random Corp. offers logistics services such as storage, transportation, and information processing to its customers. Random is known in industry as a(n):

A)Contract warehouse.
B)Common carrier.
C)Public warehouse with benefits.
D)Integrated service provider.