Deck 10: Sourcing and Supply Management

Question 1

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)Private transportation.

Answer 1

Containerization.

Question 2

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.

Answer 2

Examined total landed cost.

Question 3

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.

Answer 3

Scheduled delivery consolidation.

Question 4

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 5

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 6

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)Public carrier.

Question 7

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 8

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

Question 9

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.

Question 10

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)The difference between product-related and logistics-related costs.

Question 11

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 12

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 13

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)Hold inventory needed because of seasonal requirements.

Question 14

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 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

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

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

Question 17

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)Traffic consolidation.

Question 18

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 19

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 20

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.

Question 21

All of the following are safety and security regulations EXCEPT:

A)C-TPAT.
B)Restrictions on truck driver hours.
C)Restrictions on who can form a logistics company.
D)Controls on hazardous materials transportation.

Question 22

Logistics management is important to an organization because:

A)Typically, 50% to 75% of an organization's costs are attributed to logistics.
B)Logistics affects customer service.
C)Offshoring of services is increasing.
D)It primary role is managing inbound logistics.

Question 23

Stock-outs are very costly for a medical device company.The logistics manager has decided to hold more inventory to reduce stock-outs.This is an example of:

A)Cost-to-cost tradeoffs.
B)Market consolidation strategy.
C)Value density.
D)Cost-to-service trade-offs.

Question 24

The increasing size of container ships is being driven by:

A)Economies of scale.
B)Total cost of ownership.
C)Market consolidation.
D)Economies of distance.

Question 25

Which of the following is LEAST likely to be considered when determining total landed costs?

A)Raw material costs.
B)Currency exchange rates.
C)The cost of inventory held as safety stock.
D)Product warranty costs.

Question 26

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 27

Which of the following is an example of economic regulation?

A)Restrictions on shipping hazardous materials.
B)C-TPAT.
C)Restrictions on truck driver hours.
D)Restrictions on the type of logistics services a provider can offer.

Question 28

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.

Question 29

Which of the following is NOT a role of logistics management?

A)Planning the forward flow of materials.
B)Controlling the storage of goods.
C)Designing the reverse flow of goods.
D)Selecting suppliers for parts and components.

Question 30

Inventory levels:

A)Are not affected by the choice of transportation mode.
B)Are higher when rail rather than truck transportation is used.
C)Increase when air rather than truck transportation is used.
D)Are not affected by the number of warehouses used.

Question 31

The sum of all product and logistics related cost is:

A)Total landed costs.
B)Total cost of ownership.
C)Cost-to-cost tradeoffs.
D)Cost-to-service trade-offs.

Question 32

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 33

Logistics is responsible for all of the following EXCEPT:

A)Determining how much inventory to hold.
B)Setting product quality standards.
C)Determining where to hold inventory in the supply chain.
D)Selecting the mode of transportation used to ship products.

Question 34

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.

Question 35

Stock-outs are very costly for a medical device company.The logistics manager has decided to hold more inventory to reduce stock-outs.This is an example of:

A)Fuel costs.
B)Product liability costs.
C)Insurance.
D)Supply chain risk.

Question 36

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 37

The Smith Company has decided to change its shipping mode from truck to rail.Its inventory levels will:

A)Increase
B)Decrease
C)Not change.
D)More information is needed to determine the change in inventory levels.

Question 38

Which of the following is NOT a role of logistics management?

A)Transportation management.
B)Selecting raw material suppliers.
C)Order processing.
D)Determining the number and locations of warehouses.

Question 39

As the shipping distance increases

A)Variable costs are spread over more miles.
B)The shipping costs per pound increases.
C)Economies of scale are achieved.
D)The cost per unit of distance decreases.

Question 40

Which of the following is an example of economic regulation?

A)Reduce service innovation.
B)Increase safety.
C)Increase efficiency.
D)Reduce security.

Question 41

What is the center of gravity using the following information?

A)X =55, Y = 29.1.
B)X = 14.4, Y=28.8.
C)X =53.3, Y =26.7.
D)X =160, Y = 80.

Question 42

The process of removing products for storage and assembling them into appropriate quantities and assortments to fill customer orders is:

A)Consolidation.
B)Order picking.
C)In-storage handling.
D)Staging.

Question 43

Products are received, sorted, sequenced, and selected into loads at a:

A)Stockpiling center.
B)Product support warehouse.
C)Transshipment point.
D)Reverse logistics center.

Question 44

Cross-docking:

A)Sorts items for production support.
B)Stores inventory to support seasonal demand.
C)Combines break-bulk and consolidation activities.
D)Supports reverse logistics.

Question 45

Which of the following transportation modes has relatively low fixed costs but high variable costs?

A)Is only used for international shipments
B)Achieves economies of distance.
C)Achieves economies of scale and service availability.
D)Always combines transportation by truck and rail.

Question 46

You company needs to ship two large machines which cost about $75,000 each to a customer across the country.The machines will be shipped by rail at a cost of $2,000.Shipping will take 14 days.Your company uses 15% to determine the annual inventory carrying cost.What are the approximate total costs of shipping and in-transit inventory?

A)$2,000.
B)$863.
C)$2,863.
D)$2,026.

Question 47

The Williams Co.combines all of its orders going to Tokyo Japan during the month into a single shipment.This is an example of:

A)Market area consolidation.
B)Pooled delivery consolidation.
C)Economies of distance.
D)Schedule delivery consolidation.

Question 48

Your company needs to ship 10 heart pacemakers which cost $10,000 each from Indianapolis IN to Miami FL.Which transportation mode should you use?

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

Question 49

You company needs to ship large piece of construction equipment which costs about $500,000 to a customer across the country.Shipping by rail costs $3,000 and will take 8 days.Your company uses 20 % to determine the annual inventory carrying cost.What are the approximate total costs of shipping and in-transit inventory?

A)$3,000.
B)$2,192.
C)$5,192.
D)$10,000.

Question 50

Which transportation mode has the higher level of green-house gas emissions per ton?

A)Air.
B)Rail.
C)Long-haul truck.
D)Light duty delivery truck.

Question 51

Bowling Green Manufacturing Co.has three orders to be shipped to different customers located in Seattle WA.The weights of each order are: 13,000 pounds, 9,000 pounds, and 10,000 pounds.The cost to ship each order individually is $17 per hundred weight.The shipments can be consolidated into a single order for a cost of $14 per hundred weight with an additional change of $250 per stop.Should the shipments be consolidated?

A)It does not matter the cost is the same.
B)No, the cost is $210 higher with consolidation.
C)Yes, the cost is $210 lower with consolidation.
D)Yes, the cost is $750 lower with consolidation.

Question 52

Splitting shipments into individual orders and arranging them for local delivery to customers is:

A)Stockpiling.
B)Cross-docking.
C)Break-bulk.
D)Reverse logistics.

Question 53

Which of the following transportation modes has relatively low fixed costs but high variable costs?

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

Question 54

Computer controlled systems that use robots for materials handling activities are:

A)Is an example of the use of RFID.
B)Increases material handling costs.
C)Is an example of unitization.
D)Increases the complexity of materials handling.

Question 55

In the United States, the majority of freight shipped is by:

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

Question 56

A trucking company which provides shipping services to the public is a:

A)Common carrier.
B)Contract carrier.
C)LTL carrier.
D)Private carrier.

Question 57

Returned products are generally handled at a warehouse that provides:

A)Stockpiling.
B)Cross-docking.
C)Production support.
D)Reverse logistics support.

Question 58

What is the center of gravity using the following information?

A)X = 21.7, Y = 50.
B)X = 15, Y= 65.6.
C)X = 65, Y = 150.
D)X = 6.9, Y = 3.

Question 59

Falcon Enterprises has four orders to be shipped to different customers located in Houston Texas.The weights of each order are: 4,000 pounds, 5,000 pounds, 8,000 pounds, and 6,000 pounds.The cost to ship each order individually is $12 per hundred weight.The shipments can be consolidated into a single order for a cost of $10 per hundred weight with an additional change of $200 per stop.Should the shipments be consolidated?

A)It does not matter the cost is the same.
B)No, the cost is $340 higher with consolidation.
C)Yes, the cost is $700 lower with consolidation.
D)No, the cost is $700 higher with consolidation.

Question 60

Computer controlled systems that use robots for materials handling activities are:

A)RFID.
B)AS/RS.
C)Unitization.
D)Value-added systems.