Deck 15: Purchasing Transportation Services

Question 1

Shippers and carriers also must observe _____________. They must consider the implications of legal constraints on each movement under the final contractual agreement.

A) state laws and regulations
B) local laws and regulations
C) contractual provisions
D) corporate policies and procedures
E) antitrust restrictions

Answer 1

E

Question 2

Selecting the incorrect _____________ mode can easily jeopardize a firm's operational efficiency because it may lead to higher costs and lower service levels.

A) production
B) transportation
C) financing
D) organizing
E) planning

Answer 2

B

Question 3

Submitting rate quotations to __________ involves a complex process. The complexity is the result of the millions of different commodities that are shipped, but also the numerous origins and destinations over which these commodities might move, as well as alternative routes that might be used in moving between any two specific origin-destination combinations.

A) buyers
B) carriers
C) traffic managers
D) shippers
E) suppliers

Answer 3

D

Question 4

Once a relationship between a shipper and a third party is established, an agreement, the third-party contract, should be executed by the shipper and the third party.

Question 5

There are numerous factors that are included in rate determination for a particular commodity. These factors include the following:
Shipping weight per cubit foot.Liability for damage.Perishability.Liability for damage to other commodities being transported.Liability for spontaneous combustion or explosion.Susceptibility to theft.Value per pound in comparison with other articles.ase or difficulty in loading and unloading.xcessive weight.xcessive length.are or attention necessary in loading and transporting.Trade conditions.Value of service.ompetition with other commodities transported.Quantity offered as a single consignment.

Question 6

Many firms require certain indemnification clauses to be included with any third-party agreement with suppliers. The indemnification clause protects the _________ from liability caused by the action or lack of action by the third party on issues not under the control of the _________.

A) carrier / manufacturer
B) supplier / supplier
C) shipper / supplier
D) carrier / shipper
E) shipper / buyer

Question 7

The choice of transportation mode is the most important element in ________________.

A) production management
B) operations management
C) distribution management
D) supply chain management
E) strategic management

Question 8

Government regulation has given carriers more pricing freedom; negotiating skills have become very important for both carriers and shippers.

Question 9

The __________ of transportation services is determined in two ways, depending on whether federal regulation applies.

A) development
B) scheduling
C) structure
D) pricing
E) supervision

Question 10

The first step (in establishing a third-party relationship) is to pre-qualify a set of _____________ that will be offered an opportunity to be considered as a third-party provider. Only those third parties that can meet certain minimum service levels will be offered an opportunity to negotiate.

A) warehouses
B) carriers
C) companies
D) distribution centers
E) investors

Question 11

Negotiation activities are influenced by the characteristics of ____________.

A) the current business environment
B) the organization
C) the individuals
D) all of the above
E) "A" and "B" only

Question 12

The majority of commodities shipped via _________ are semi-processed materials, fuel, oil, coal, chemicals, minerals, and petroleum products.

A) motor carriers
B) air carriers
C) rail carriers
D) express carriers
E) water carriers

Question 13

The original purpose of _____________ involvement (in transportation) was to protect both the customer and the carrier from unhealthy competition. In today's business environment, this involvement is criticized.

A) federal government
B) executive management
C) state agency
D) department of commerce
E) the Consumers' Union

Question 14

In many instances, the negotiation process in transportation has become more formalized. The negotiation process should be based on a __________ strategy.

A) long-term
B) win-win
C) short-term
D) strategic competitive
E) win-lose

Question 15

The list of factors considered in rating freight is compounded by the specific commodity that is being shipped. The basic steps involved in the determination of the applicable rates are listed below, with one exception. Which is the exception?

A) Use the classification to look up the commodity being shipped and determine its rating.
B) Select the appropriate tariff and determine the rate basis number that applies to the origin-destination combination of the shipment.
C) Cross-reference the rating and the rate base number in the section of the tariff that gives class rates in cents per 100 pounds shipped.
D) Verify with the Department of Commerce that the appropriate rate and classification are being applied.

Question 16

There are several challenges that buyers face in order to transfer logistics activities to ___________. The decision must include all of the parties that will be affected by the _____________.

A) another location / new location
B) another company / transfer
C) a second party / new party arrangement
D) another party / new agreement
E) a third party / third-party relationship

Question 17

In developing a negotiation strategy, the __________ must identify the type of relationship desired with the third party. As with any other buying situation, the ________ must establish a set of desires (costs) and demand (services) expected from the carrier.

A) buyer / buyer
B) producer / producer
C) shipper / shipper
D) carrier / supplier
E) supplier / shipper

Question 18

The most important criteria to consider for ______________ are competitive rates, customer service, transit time reliability, pick-up and delivery service, availability of equipment, loss and damage claims, electronic data interchange (EDI), geographic coverage, problem resolution, insurance coverage, and billing accuracy.

A) carrier selection
B) supplier selection
C) strategic planning
D) business analysis
E) supply chain management

Question 19

Total supply chain costs can vary from 1 percent, for heavy equipment, to approximately 35 percent, for perishable food products, of the recommended _________ for the specific item or product.

A) gross margin
B) discount price
C) cost
D) profit margin
E) selling price

Question 20

__________ are used to transport low-valued, nonperishable products such as oil, diesel fuel, jet fuel, kerosene, and natural gas.

A) Trucks
B) Rail cars
C) Pipelines
D) Barges
E) Water carriers

Question 21

General commodity carriers usually specialize in either truckload (TL) or less-than-truckload (LTL) operations. Truckload shipments are defined by the ICC as loads in excess of 10,000 pounds. Currently, there are more than 40,000 small truckload carriers. These companies have been typically _____________.

A) moderately priced and highly organized
B) low-cost and nonunion
C) low-cost and unionized
D) high priced and nonunion
E) reliable and low-cost

Question 22

_________ means that the title to the merchandise passes at the time and place of pick up.

A) F.O.B. origin
B) F.O.B. destination

Question 23

eregulation has allowed the railroad carriers to integrate into ________________.

A) more competitive markets
B) other markets
C) other modes of transportation
D) more competitive rates
E) more diverse markets

Question 24

__________________ means that there is a shipper's prepayment portion of the freight and the consignee is responsible for the balance of the payment.

A) Third-party
B) Prepaid/collect beyond
C) COD
D) FOB
E) COB

Question 25

ach of the (transportation) modes has specific operating and cost characteristics and the buying professional must weigh them in selecting the most appropriate transportation mode. The most basic selection decision is the trade-off between _______________.

A) quality, flexibility, and price
B) cost, flexibility, and speed
C) flexibility, reliability, and speed
D) cost, reliability, and speed
E) efficiency, cost, and speed

Question 26

____________ is often the most costly and time-consuming component of purchasing management.

A) Negotiating
B) Bidding
C) Transportation
D) Analyzing
E) Organizing

Question 27

Shipping documentation such as the ___________ must be prepared. This serves as the basic contract between the carrier and shipper and specifies the commodities and quantities shipped, routing, rates, and carrier liability.

A) freight bill
B) invoice
C) bill of lading
D) purchase order
E) bill of trucking

Question 28

_____________ the trucking industry has dramatically changed not only the outcome of the industry but also how it operates.

A) Federal deregulation of
B) State regulation of
C) Competitive rates in
D) Centralized management of
E) State deregulation of

Question 29

In many cases, most Fortune 500 firms use a variety of transportation modes depending on their aggregate transportation needs. The "model split" is usually determined by cost pressures, the packaging, the final shipment destination, and competitive trucking firms.

Question 30

___________ convey the freight terms and act both as a contract for carriage and a receipt for delivery.

A) Shipping orders
B) Bills of trucking
C) Bills of lading
D) Freight bills
E) Purchase orders

Question 31

s the size of a shipment increases, the transportation charge per unit of weight will fall. To take advantage of these rate economies, the carrier should attempt to consolidate shipments. Instead of shipping each day, the shipments are accumulated for several days and then shipped.

Question 32

The initial (transportation) decision requires the ________ firm to select the appropriate shipment mode.

A) buying
B) selling
C) shipping
D) freight
E) trucking

Question 33

____________ establishes that neither the consignor nor the consignee owns the payment process function.

A) Third-party
B) Prepaid/collect beyond
C) FOB
D) COD
E) COB

Question 34

The legal payment function may or may not belong to the third party. The obligation is determined from the parties indicated on the __________. Unless the payment party is a party to the ______________, it has no responsibility for payment and no legal obligation.

A) purchase order / purchase order
B) freight bill / freight bill
C) bill of trucking / bill of trucking
D) invoice / invoice
E) bill of lading contract / bill of lading contract

Question 35

___________ involves facilitating the movements of raw materials and component parts from suppliers through the firm's manufacturing process to the ultimate customers.

A) Production
B) Processing
C) Production management
D) Process management
E) Transportation

Question 36

The ____________ is composed of a large number of for-hire and private carriers. The for-hire category includes both regulated carriers and non-regulated carriers.

A) (railroad) industry
B) (express) industry
C) (airline) industry
D) (barge) industry
E) (trucking) industry

Question 37

Rail transportation is generally less expensive than air and truck modes. Rail cargo is usually shipped from terminal to terminal; therefore, flexibility is not an attribute.

Question 38

nother special ICC category is the parcel delivery service and limited shipment size category. _________ is the largest carrier in this sector.

A) UPS
B) FedEx
C) DHL
D) USPS
E) UES

Question 39

____________ means that the shipper advances the charges to the carrier and then bills the beneficiary an amount that approximates or equals the actual freight charges.

A) Prepaid
B) Prepay and collect
C) Freight on board
D) Paid in Advance
E) Prepay and add

Question 40

___________ means that the title to the merchandise passes at the time and place of delivery.

A) F.O.B. origin
B) F.O.B. destination

Question 41

Only premium and emergency goods are shipped via the air because air is clearly the ___________ shipping mode.

A) most flexible
B) most reliable
C) lowest cost
D) preferred
E) highest-cost

Question 42

The truck mode is used to transport a variety of perishable consumer goods, such as fresh meats, frozen meats, dairy products, baked goods, and beverages. The primary advantages of this mode are _______________.

A) reliability and low cost
B) flexibility and versatility
C) low cost and versatility
D) flexibility and low cost
E) on time delivery and low cost

Question 43

Water carriers are an excellent transportation shipping mode for low-valued bulk commodities in large quantities. Speed is not a critical criterion for those raw materials.

Question 44

There is also strong rate competition between owner-operators engaged in exempt commodity movements and railroads. Most of the owner-operators compete on a ______ basis.

A) deregulated
B) regulated
C) differentiated
D) reliability
E) cost

Question 45

The competition in the trucking industry is fierce, so in order to be successful, a carrier must provide the shipper with ___________________.

A) low costs and flexibility
B) reliability and high service
C) versatility and flexibility
D) high service and low costs
E) reliability and low costs

Question 46

ompanies with a significant presence in the (air mode) market are Federal Express and all of the following with one exception. Which is the exception?

A) UPS
B) KKLM
C) Airborne
D) DHL
E) U.S. Postal Service

Question 47

In contrast, in long-haul volume movements of bulk commodities, ___________ are typically unable to quote ____________ rates.

A) air carriers / motor-competitive
B) water carriers / air-competitive
C) truckers / air-competitive
D) motor carriers / rail-competitive
E) rail carriers / truck-competitive

Question 48

These average prices are misleading when selecting one mode over another. However, it is safe to suggest that, in general, _______ rates are lower than _____ rates on small shipments and on high-valued commodities.

A) air / truck
B) water / rail
C) truck / rail
D) truck / water
E) air / rail

Question 49

With the movement toward high customer service, ________ (has/have) become an integral strategic weapon for firms that compete on a fast-delivery, low-inventory strategy.

A) air cargo
B) trucking
C) rail carriers
D) water transport
E) UPS