CHAPTER 1: OVERVIEW LOGISTICS AND SUPPLY CHAIN

1. “Some companies use suitable mode of transportation with an acceptable cost

to meet customer delivery requirements as well as increase satisfaction for the
customer”. As such, the company could be considered______
a. Productivity but not effective.
b. Efficient but not effective.
c. Effective but not efficient.
d. Reengineering but not productivity
"Some companies use premium transportation to meet customer delivery
requirements". ( cách hỏi khác)
2. Which one includes in order processing activity?
a. Negotiate terms and conditions
b. Select suitable material handling equipment
c. Checking the status of orders.
d. Choose the best location for warehouse establishment.

3. The _____department often measures inventory in terms of its cost or value

in dollars, whereas_______tends to measure inventory in terms of units.
a. production; sales
b. marketing; logistics
c. sales; finance
d. financial ; logistics

4. The _______approach mentions all relevant cost items are considered

simultaneously when making a decision.
a. interfunctionality
b. total cost
c. systems
d. rhochrematics

5. The _______approach indicates that a company's objectives can be realized

by recognizing the mutual interdependence of major functional areas.
a. interfunctionality
b. systems
c. rhochrematics
d. supply chain

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

a. some costs are eliminated by efficient management controls
b. all costs are reflected as a percentage variation from standard costs.
c. some costs increase and some costs decrease.
d. all costs react according to their individual degrees of inflation in the economy.
7. A cost trade-off is a situation where:
a. some costs increase and some costs remain constant
b. all costs are reflected as a percentage variation from standard costs.
c. The firm accepts for using premium transportation to release more products
in their warehouse.
d. some costs are eliminated by efficient management controls

8. ________utility refers to the value or usefulness that comes from a customer

being able to take possession of a product.
a. Form
b. Time
c. Place
d. Possession
9. "How well a company does what it says it's going to do" represents_____
a. leading edge logistics
b. efficiency
c. productivity
d. effectiveness
10. Logistics costs in Vietnam as a percentage of GDP were estimated at........ in
2020.
a. 8.9%
b. 33.3% 6
c. 16.8%
d. 57.6%
11. Which does include in warehousing activity?
a. Estimate product demand in the future
b. Select the carrier who can provide lower freight for the firm
c. Use appropriate equipment to load unload the products
d. Basing on featured characteristics of product, the firm' will select the suitable
method to store product.
12. Which concept refers to the storage of raw materials and movement to the
producer?
a. materials management
b. supply chain management
c. physical distribution
d. inbound logistics

13. Which of the below does belong to logistics cost?

a. Capital costs
b. costs from procurement activity
c. Labour costs
d. Costs paid for buying machinery
14. _____refers to an item that the firm holds with a very large amount of
quantity at the same time there is no demand for it.
a. Overstock
b. Intensive distribution
c. Stockout
d. Tailored logistics

15. Logistics costs of bubble manufacturing industry will be____compare with

logistics costs of automobile manufacturing industry
a. higher
b. lower
c. not different
d.equal
16. In transportation activity, how companies can do to increase the satisfaction
of customers?
a. Return goods policy Issuance
b. Design transportation route with very short delivery time.
c. Reply quickly demand for product fixing from customers
d. Question A & C are correct.
17. In the past, which field does logistics not connect with?
a. cooper
b. army
c. soldiery
d. traveling

18. Process management occurs from placing order of customers, checking the
status of products, make announcement for customer about availability of product,
packaging the product and delivery the product to customer refers to______
a. Materials Handling
b. Procurement management
c. Warehousing location
d. Order processing

19. Which of the following mentions to contribution of logistics to place utility?

a. Procter and Gamble of General Mills repackage products during distribulion into special
sizes, sample packs, or multi-packs.
b. Online retailers like Amazon.com and Alibaba.com delivery products directly to
your home or office
c. The firm brings a variety of payment methods for the customer such as by cash, money
transfer, electronic wallet.
d. Four-day late delivery of apples likely has more serious results than a four-day late
delivery of a box of paper
20. Beverages sold in small size presentations are perfects to fit the needs of
consumers that are occasionally thirsty, as opposed to big-size presentation that are
more suitable for family gatherings or group meetings” is considered for the
example of_____
a. possession utility
b. time utility
c. place utility
d. form utility

21. How many modes of transportation?

a. 2
b. 4
c. 3
d. 5
22. Which of the below is the most difficult to control in 7R’s?
a. right quantity
b. right time
c. right place
d. right product

23. Which of the below does not belong to logistics cost?

A. Labour costs
B. Transport costs
C. Inventory costs
D. Storage costs

24. Which concept refers to the storage of the final product and movement to the
customer?
A. materials management
B. supply chain management
C. inbound logistics
D. physical distribution

25. Which of the following mentions to contribution of logistics to time utility?

a. Online retailers like Amazon.com and Alibaba.com delivery products directly to your
home or office.
b. The firm brings a variety of payment methods for the customer such as by cash, money
transfer, electronic wallet.
c. Four-day late delivery of apples likely has more serious results than a four-day late
delivery of a box of paper.
d. Procter and Gamble or General Mills repackage products during distribution into special
sizes, sample packs, or multi-packs.
 KAHOOT CHƯƠNG OVERVIEW LOGISTICS AND SUPPLY CHAIN

1. Logistics clearly contributes to____ and ____ utility.

A. Time, place
B. Place, form
C. Possession, time
D. Form, time

2. Which of the following is not a reason for the increased importance of

logistics?
A. Reduction in economic regulation
B. Growing power of manufacturers
C. Technological advance
D. Globalization of trade

3. 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

4. ______ are stores with large amounts of both floor space and product for sale
A. Mass merchandisers
B. Big-box retailers
C. Power retailers
D. Do-it-yourself (DIY) retailers

5. The four general types of economic utility are production, possession, time
and place
A. True
B. False

6. Logistics is only concerned with forward flows, that is, those directed towards
the points of consumption.
A. True
B. False

7. Transportation represents the costliest logistics activity in many

organizations
A. True
B. False
8. The movement and storage of materials into a firm refers to:
A. Physical distribution
B. Materials management
C. Supply chain management
D. Materials handling
9. “Logistics is the function responsible for controlling the flow of materials
from_________”
A. Supplier to producer, and then out to customer
B. Producer to customer
C. Producer to wholesaler and retailer
D. Supplier to producer

10. The overall aim of logistics is to:

A. Achieve high customers satisfaction
B. High quality service
C. Acceptable cost
D. All answers are right

CHAPTER 8: INVENTORY MANAGEMENT

1. Which of the following industries should apply the theory of lean supply chain?
A. Gasoline in ustry
B. Technological products
C. Fashionable goods
D. Automobile industry

2. Which one of the following statements regarding the Economic Order Quantity
(EOQ) is true?
A. If an order quantity is smaller than the EOQ, the annual holding cost is higher than
the annual ordering cost.
B. The EOQ model assumes a variable lead time.
C. Quantity discounts are possible.
D. If an order quantity is smaller than the EOQ, the annual holding cost is lower
than the annual ordering cost.

If an item is ordered at its economic order quantity, the annual carrying cost should
be:
A. equal to the annual ordering cost.
B. slightly less than the annual ordering cost.
C. twice the annual purchase price.
D. the square root of the annual ordering cost.
3. 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..............order costs and............carrying costs.
A. higher; lower
B. higher; higher
C. lower; higher
D. lower; lower
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 decrease in the
number of orders leads to............order costs and.............carrying costs.
A. higher; lower
B. lower; lower
C. lower; higher
D. higher; higher
4. The purchase cost of a widget is $10, and the holding rate is 50% of purchase cost;
cost of processing an order is $25, annual demand is for 400 widgets, and supply
and usage patterns are stable. What is the economic order quantity (EOQ)?
A. 73.45
B. 63.24
C. 33.24
D. 87.62

5. 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. interorganizational coordination
B. logistics
C. operations
D. supply chain

6. All of the following are suggestions for dealing with dead stock (inventory),
except____:
A. aggressive marketing
B. donate to charities
C. throw it away
D. All answers are correct
8. When demand and delivery lead time are known and constant, and demand is nine
per day, and purchase lead time is four days, the reorder point is:
A. 13
B. 8
C. 32
D. 36

9. Which of the following is the reason that companies hold a supply of inventory?
A. Companies would like to purchase in bulk to take advantage of quantity
discounts
B. Companies would like to increase inventory costs
C. Companies would like to increase production change
D. Companies would like to increase setup costs

10. There are some of the ways that inventory can be reduced in the supply chain
except from:
A. the use of premium transportation
B. smaller, more frequent orders
C. Supply-push
D. the elimination or consolidation of slower-moving products

11. Use this information below to calculate the optimal order quantity:
- Annual demand for backpacks is 45,000 units
- The cost to place an order is $250
- The per unit cost of the item is $30.00
- The annual holding rate is 27.5%
A. 1651 units
B. 834 units
C. 920 units
D. 711 units
12. "The wages of the person who takes orders by telephone" is considered
as...............
A. storage costs
B. obsolescence costs
C. shrinkage costs
D. order costs
13. Which organizational function is not a focus of the Supply Chain Operations
Reference (SCOR) model?
A. warehousing
B. logistics
C. procurement
D. operations
14. Which of the following is an example of a carrying cost for products purchased
from a supplier?
A. the cost of pilferage while in storage
B. the cost associated with processing the invoice
C. the cost of transmitting the order
D. the cost of clerical staff for preparing the purchase
Which of the following is an example of an ordering cost for products purchased from
a supplier?
A. The cost of clerical staff for preparing the purchase
B. The cost of pierogi while in storage
C. The cost associated with damaged products due to out of date
D. The cost of buying insurance
15. Which of the following are characteristics of an agile supply chain?
A. an organization's ability to respond to changes in demand with respect to
volume and variety.
B. eliminating all waste, including time, and to ensure a level schedule
C. an organization's ability to respond to o changes in demand with respect to
quantity and quality.
D. apply when customer demand is relatively stable and variety is low
16. Dead inventory refers to a product for which there is no sales during a____period.
A. 12 month
B. 9 month
C. 3 month
D. 6 month

17. What is meant by ABC analysis of inventory?

A. ABC analysis of inventory is o synonymous with vendor-managed inventory
B. All inventories are not of equal value to a firm and, as a result, all inventory
should not be managed in the same way.
C. All inventories are equal value to a firm O and, as a result, all inventory should be
managed in the same way.
D. ABC analysis of inventory is an alternative to the EOQ model.
18. The order of product flow in the supply chain is as follows:
A. Component manufacturer, raw material supplier, retailer, wholesale distributor,
end product manufacturer, end-product consumer
B. Raw material supplier, retailer, component manufacturer, wholesale distributor,
end product manufacturer, end-product consumer
C. Raw material supplier, component manufacturer, end product
manufacturer, wholesale distributor, retailer, end-product consumer
D. Raw material supplier, component manufacturer, retailer, wholesale distributor,
end product manufacturer, end-product consumer.
19. Which of the following is FALSE?
A. The boomerang effect refers to variability in demand orders among supply
chain members.
B. The supply chain concept originated in the logistics literature.
C. The SCOR model identifies six key processes including plan, source, make,
deliver, return, and enable associated with supply chain management.
D. Supply chain disruptions (e.g., terrorist attacks, natural disasters) have caused
some supply chains to reassess their emphasis on inventory reduction.
20. Holding low levels of inventory result in ___ inventory carrying costs and some
____ stockout costs.
A. High, low.
B. Constant, low.
C. Low, high.
D. High, constant.
21. Which of the following is NOT a reason that companies hold a supply of
inventory?
A. Companies would like to increase inventory costs
B. Companies would like to get more profit when buying the product at lower price
and selling at higher price
C. Companies would like to purchase in bulk to take advantage of quantity discounts
D. Companies would like to meet an increasing demand of customer

22. Which of the following method that the firm can apply to reduce inventory
through the supply chain?
A. Break orders with smaller quantities, and place frequently
B. Supply-push
C. The use of poor transportation
D. The firm does not deal with slower - moving products
23. Which of the following is FALSE?
A. The bullwhip effect refers to variability in demand orders among supply chain
members.
B. Supply chain disruptions (eg, terrorist attacks, natural disasters) have caused some
supply chains to reassess their emphasis on inventory reduction
C. The supply chain concept originated in the marketing literature.
D. The SCOR model identifies six key processes including plan, source, make,
deliver, return, and enable associated with supply chain management.

24. The purchase cost of a widget is $8, and the holding rate is 20% of purchase cost;
cost of processing an order is $30, annual demand is for 300 widgets, and supply
and usage patterns are stable. What is the economic order quantity (EOQ)
A. 106.06
B. 87.62
C. 63.24
D. 73.45

KAHOOT CHƯƠNG INVENTORY MANAGEMENT

1. _________refers to stocks of goods and materials that are maintained for
many purposes.
A. Inventory
B. Supply chain management
C. Logistics
D. Production

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

A. Accounting cost
B. Shrinkage cost
C. Storage cost
D. Interest cost

3. Safety stock is also referred to as cycle stock.

A. False
B. True
4. The higher the average cost of a stockout, the more likely a company is going
to want to hold safety stock.
A. True
B. False

5. The higher the average cost of a stockout, the more likely a company is going
to want to hold safety stock.
A. True
B. False

6. Lean manufacturing focuses on the elimination of waste.

A. True
B. False
7. Service parts logistics has decreased in importance in recent years.
A. False
B. True

8. __________ products refer to those that customers view as being able to fill the
same need or want as another product.
A. Substitute
B. Me-too
C. Copycat
D. Co-branded

9. _________stock refers to inventory that is needed to satisfy normal demand during

the course of an order cycle.
A. cycle (base)
B. safety
C. speculative
D. pipeline
10. Holding high levels of inventory result in______ inventory carrying costs and
________stockout costs.
A. high – low. B. low – low C. low – high D. high - high
 CHƯƠNG 10 WAREHOUSING

1. What is the biggest advantage of public warehousing?

A. offers users a great deal of control over their storage needs
B. can be constructed to meet user specifications and companies can also control product
placement within a facility.
C. offers access to products when an organization needs or wants them.
D. users can save money because there is no capital investment

2. Which of the following is not one of the common causes of warehousing fires?
A. cutting or welding too close to combustibles
B. heat source too close to combustibles
C. lightning strikes
D. electrical failure or malfunction

3. As aisle space............., the storage capacity of a facility......................

a. decreases; remains constant
b. increase; remains constant
c. increases; decreases
d. remains constant; decreases

4. Which of the following is true?

a. consolidation of several units into smaller units to increase shipping costs
b. the unit load is of limited value to shippers that deal in larger quantities
c. the unit load allows mechanical devices to be replaced for manual labor
d. unit loads may encourage pilferage

5. Which of the following statements is true?

a. clean and sanitary warehousing facilities can increase employee turnover
b. contract warehousing simultaneously mitigates the negative aspects and
accentuates the positive aspects of public and private warehousing.
c. contract warehousing is owned or occupied on a long-term lease by the firm using them
d. assorting refers to separating products into grades and qualities desired by different
target markets.

6. The theft usually takes place in the warehouse that shows poor...............................
a. warehousing safety
b. Warehousing productivity
c. warehousing cleanliness and sanitation
d. warehousing security
7. A major drawback to metal and plastic pallets is their ____.
A. weight
B. lifespan
C. incompatibility with existing forklifts
D. price

8. What's meaning of the following label?

A. keep temperature
B. keep frozen
C. keep freezing
D. keep cold
9. A unit load involves ____.
A. loading an entire vehicle with shipments from three or fewer shippers
B. the usage of a pallet rack system of storage
C. convoy of rail cars carrying the same product
D. consolidation of several units into larger units to improve efficiency in handling
and to reduce shipping costs
10. What's kind of goods that should be stored in cold warehouse?
A. camping equipment
B. Technological devices
C. cement
D. flower
11. Which of the following statements regarding perishable products is true?
A. perishable products require normal packaging as they move from source to customer
B. these goods are not sensitive to time.
C. there is no special requirement for loading goods.
D. they require temperature storage

12. Which of the following is the principle which should be considered by the firm
when loading the fuel drums on the vessel?
A. The firm should place heavy items on fuel drums
B. The firm should place heavy items under fuel drums
C. The firm should use dunnage to fulfill all blank spaces and fix fuel drums in the
container
D. A & C are correct.
13. "Facilities may have walls and doors that can withstand several hours of intense
fire as well as have proper sprinkling systems as well as excellent ventilation". These
are design elements which should be considered when storing............................
A. Automobile
B. hazardous materials
C. Technological goods
D. FMCG products

14. Which of the following is not an example of warehouse automation?

A. radio frequency identification
B. automated guided vehicles
C. carts are pushed/pulled by stevedores.
D. automated storage and retrieval systems

15. What's meaning of the following label?

A. Keep dry
B. Do not drop
C. Hand with care
D. This side up

16. In cross-docking facility, facility should be as...........as possible.

A. capacious
B. larger
C. narrow
D. wider
17. What's following element which requires for consolidated shipping?
A. Destination points of all shipments have to be the same.
B. Characteristics of goods have to be the same.
C. A forwarder will be responsible for collecting shipments from all shippers.
D. All answers are right.

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

A. container B. crate C. pallet D. box
19. Which of the following statements regarding hazardous products is true?
A. hazardous products should be placed together with foodstuff.
B. no need to install fire protection equipment for warehouse which is used to storage
dangerous goods.
C. chemical drums are piled up as high as possible to maximize storage spacing.
D. users need to install warning boards/signals at the storing area of dangerous goods.

20. Which of the following statements is false?

A. Buildings that store hazardous materials often have walls and doors that can withstand
several hours of intense fire.
B. A one-dock warehouse layout, in contrast to a two-dock layout, increases the space
needed for storage docks.
C. Radio frequency identification is an example of warehouse automation.
D. Narrower aisles can increase the space utilization of a facility.

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

A. Common; private
B. Private; contract
C. Public; contract
D. Public; common

22. Which of the following is the advantage of unit load?

A. it enables mechanical devices to be substituted for manual labor.
B. the mechanical devices, such as a forklift, that can be substituted for manual labor can
be very expensive and need to routine maintenance.
C. It represents a larger quantity of an item than a single box and may be of limited value
to organizations that deal in small quantities.
D. a lack of standardization of pallet sizes

23. The Globally Harmonized System of Classification and Labeling of Chemicals

(GHS) was developed by the ____.
A. World Trade Organization
B. United Nations
C. World Bank
D. International Chamber of Commerce

24. Which of the following is not a characteristic of private warehousing?

A. requires capital investment from user
B. good for companies dealing with large volumes of inventory
C. warehouses can be constructed to meet user specifications and companies can also
control product placement within a facility.
D. lack of control by user
25. Which of the following pairs of goods are incompatible when storing in the
warehouse?
A. candy - snack
B. T-shirt - Trousers
C. green bean - fresh potatoes
D. refrigerator - television

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

A. United Nations
B. International Chamber of Commerce
C. International Air Transport Association
D. World Trade Organization

27. Which of the following statements is false?

A. Narrower aisles can increase the space utilization of a facility.
B. Radio frequency identification is an example of warehouse automation.
C. Buildings that store hazardous materials often have walls and doors that can withstand
several hours of intense fire.
D. A one-dock warehouse layout, in contrast to a two-dock layout, increases the space
needed for storage docks.

28. What's the meaning of the following label?

A. Do not stack
B. Use no hooks
C. Maximum stack
D. Do not drop

29. Which of the following pairs of goods are incompatible when storing in the
warehouse?
A. fabric - clothes
B. mangosteen - mango
C. cotton - foam
D. cement - electronic devices
30. What's the meaning of the following label?
(NẾU HÌNH LÀ GẠCH CHÉO 2 THÙNG)
A. Minimum stack
B. Do not drop
C. Maximum stack
D. Do not stack

31. Why are labels important?

A. labels clarify handling requirements for a package, making shipping and handling
dangerous goods a safer process.
B. hazmat labels help carriers determine stowage and segregation on board planes, trucks
and vessels.
C. emergency responders use hazard labels for accident clean-up and potential
evacuations.
D. all answers are correct.

32. ......................packaging tends to be cheaper, more versatile, and more consumer-

friendly than.............packaging.
A. mental; glass
B. wooden; mental
C. glass; wooden
D. plastic; paper

33. What's the meaning of the following label?

A. perishable goods inside the carton
B. environmental friendly products
C. hazardous waste for the environment
D. seafood products

34. Which of the following is false?

A. carts and cranes are examples of handling equipment.
B. racks and bins are examples of storage equipment.
C. materials handling 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.
D. container is used for transporting the cargo by airway, waterway (including
seaway and inland waterway), railway and roadway.

35. Which of the following is bulk cargo?

A. Machinery
B. Spirits
C. Coal
D. Shampoo
36. Which of the following is a logistical consequence of packaging inefficiency?
A. decreased damage
B. slower materials handling
C. lower storage costs
D. decreased loss

37. Why milk boxes are rectangle?

A. Milk needs to be refrigerated. Rectangular boxes occupy less shelf space, and less
shelf space is more valuable when that shelf space has to be cooled.
B. maximize storing space and all boxes can piled up with many layers.
C. The ability to comfortably hold the rectangle box in one's hand
D. All answers are correct.
38. Which of the following is dangerous goods?
A. vinegar
B. curry powder
C. paints
D. monosodium glutamate
39. Which of the following is right when mentioning to compression packaging
testing?
A. is designed to evaluate how much weight a package can withstand, and is
particularly relevant to those in the distribution chain and those producing the
packaging raw material.
B. The test can be performed as a single test or as a series of impact tests to evaluate
the packaging's ability to perform in environments with a horizontal impact hazard.
C. aims to simulate the types of vibrations that packages suffer during handling,
transportation, and shipping.
D. is a simulation of the falls that a package holding goods may experience during
shipping and handling.
40. All are characteristics of private warehousing, except_______
A. feasible when demand patterns are irregular
B. users have a great deal of control
C. generates high fixed costs for the user
D. may reduce an organization's flexibility
41. Which of the following is the example of the product's ability to withstand some
elements?
A. metal pails can be used for the packaging of liquids
B. ice cream can be exposed to freezing conditions while vaccine cannot.
C. weight of foam is lighter than steel.
D. sugar should be packaged in bags.
42. Which of the following pair of goods are incompatible when storing in the
warehouse?
A. green bean - fresh potatoes
B. candy - snack O
C. T-shirt - Trousers
D. refrigerator - television

KAHOOT CHƯƠNG WAREHOUSING

1.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
2. ___ is process where a product is received in a facility and shipped at the earliest
time, without storage.
A. Just in time
B. Accumulation
C. Agglomeration
D. Cross-docking
3. ___ warehousing is owned or occupied on a long-term lease by the firm using them.
A. Private
B. Public
C. Contract
D. Multiclient

4. ___ is bringing together similar stocks from different sources.

A. Accumulating
B. Assorting
C. Sorting out
D. Allocating
5. ___ refer to breaking a homogeneous supply into smaller lots.
A. Sorting out
B. Allocating
C. Accumulating
D. Assorting

6. 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

7. 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

8. The warehousing function that combines the several small shipments to a specific
market area is ____ .
A. Break bulk function
B. Operational function
C. Stockpiling function
D. Consolidation function

9. _____ focuses on ensuring products reach the consumers through a network of

distributors, warehouses and retailers.
A. Supply
B. Manufacturing
C. Distribution
D. Inventory
10. Distribution centres 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
 KAHOOT CHƯƠNG 11 PACKAGING

1. __________ is the science, art and technology of enclosing or protecting

products for distribution, storage, sale and use.
A. Logistics
B. Packaging
C. Warehousing
D. Inventory

2. Which of the following is the wrong definition of TEU?

A. TEU stands for Twenty-foot Equivalent Unit
B. 40ft long container measure 2TEUs
C. It is method of calculating vessel load or capacity
D. TEU is also understood as ton

3. Which of the given reasons is NOT a valid reason for packaging of food
items?
A. Security and portion control
B. Marketing and convenience
C. Protection and information transmission
D. Increase the weight of goods

4. What of the following is false?

A. Package labeling is usually done at the end of the assembly line
B. Labeling regulations may differ from country to country
C. Pictures are preferable to words for labeling a product
D. Labeling requirements may differ from state to state

5. Each of the following is a shipping hazard that a package may be exposed to

except
A. Retraction
B. Vibration
C. Rough handling
D. Compression

6. What is dunnage?
A. Material is used to block and brace products inside carrier equipment
B. A slang term for a particular type of ocean liner
C. A type of packaging material that is placed inside of boxes
D. Additional transportation fees that are charged to small shippers
7. ________ are required when a continuous flow of material/product operating
over a long period
A. Conveyors
B. Pallets
C. Forklifts
D. Containers

8. Package on the pallets can be moved using_______

A. A lorry
B. A forklift
C. A van
D. Conveyors

9. The vast majority of pallets are made of__________

A. Wood
B. Fiberboard
C. Plastic
D. Metal

10. Which one of the following is NOT classified as a manual handling activity?
A. Throwing
B. Pushing
C. Carrying
D. Pulling

11. Conveyor belts facilitate continuous movement of material over a……….

route.
A. Fixed
B. Safe
C. Rotational
D. Flexible

12. The major advantage of the unit load is that it enables mechanical devices to
be substituted for manual labor.
A. True
B. False

13. Product destiny refers to a product’s

A. Weight per volume
B. Weight
C. Volume
D. Fregility
14. ________refers to materials used for the containment, protection, handling,
delivery, and presentation of goods.
A. Packaging
B. Procurement
C. Materials handling
D. Materials management

15. _________refers to the short distance movement that takes place within a
plant, distribution or warehouse.
A. Materials handling
B. Physical distribution
C. Materials management
D. Warehousing

KAHOOT CHƯƠNG 12 TRANSPORTATION

1. _________is generally the fastest form of transportation for shipments exceeding

600 miles.
A. Air
B. Less – than – truckload motor carriers
C. Parcel carriers
D. Truckingload motor carriers

2. Consignees are_______
A. receivers of freight
B. extremely large less-than-truckload carriers
C. shippers of freight
D. preferred suppliers

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

A. wind power propeller
B. wearing apparel
C. cut flowers
D. fruits and vegetables

4. The primary advantage for motor carriers is_______

A. flexibility (linh hoạt)
B. reliability
C. speed
D. capability
5. ________is the most reliable (đáng tin cậy) form of transportation.
A. pipeline
B. rail
C. motor carriers
D. air

6. ___________ pipelines carry crude oil from gathering-line concentration points to

the oil refineries.
A. trunk
B. product
C. arterial
D. collection

7. _________ _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

8. What container size is often used to rank water ports and measure containership
capacity?
A. 20 foot container
B. 48 foot container
C. 40 foot container
D. 10 foot container

9. Shipper’s associations________
A. function in a manner similar to freight forwarders
B. are the same as a freight forwarder
C. specialize in truckload shipments
D. are used only for agricultural products

10. A transportation broker_______

A. looks to match a shipper's freight with a carrier to transport it
B. is the same as a freight forwarder
C. deals only with agricultural products
D. tends to be spun off from carriers or management consulting firms
 10 CÂU HỎI TRONG CUỘC THI LOGISTICS

1. Which mode of transport is considered the most expensive according to the

unit price of a shipment ?
A. Air freight
B. Rail freight
C. Sea freight
D. Road freight

2. This is the type of warehouse that most businesses, especially small- and
medium-sized companies, choose to store their goods because they cannot afford to
have their own warehouse due to financial constraints.
A. Public warehouse
B. Private warehouse
C. Customs warehouse
D. Refrigerated warehouse

3. Which of the following modes of transport is capable of carrying the most

payload ?
A. Sea freight
B. Road freight
C. Rail freight
D. Air freight

4. _________stands for a number (usually eight alphanumeric digits) that

retailers assign to products to keep track of stock levels internally.

A. UPC
B. FTL
C. SKU
D. Both A and B
5. What of the following is NOT the advantage of rail freight ?
A. High degree of flexibility
B. Capable of hauling large loads
C. Capable of hauling large loads
D. Burn less fuel per ton-mile than trucks

6. When choosing a mode of transport, in terms of the maximum transport

capacity and the cheapest price, which method should you choose?
A. Water way
B. Air way
C. Railway
D. Trucking
7. Which of the following is a methodology that focuses on minimizing waste
within manufacturing systems while simultaneously maximizing productivity?
A. Lean manufacturing
B. Kaizen approach
C. Reverse logistics
D. Green logistics

8. MRO inventory refers to the equipment, tools and activities associated with
the daily operations of a business. It doesn't include materials, products and services
that are directly used in production, but rather the glue that holds everything
together. MRO stands for____________
A. Maintenance, repair, operating supplies
B. Maintenance, repair, optimization
C. Maintenance, renew, operating supplies
D. Maintenance, renew, optimization

9. Which of the following functions is not included in the seaway bill?

A. Confirm an insurance policy
B. Claims ownership for goods
C. Confirm the receipt of goods on board
D. Confirm a contract of carriage

10. 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

ĐỀ THI KỲ TRƯỚC

1. Which of the following statements about a one-dock layout is FALSE?

A. Each and every dock can be used for both shipping and receiving
B. Product may sometimes be reloaded in the vehicle that delivered it
C. Goods move in a straight configuration
D. It requires carriers to pick up and deliver at specific times

2. The economic order quantity (EOO) determines_______

A. the relevant inventory flow for a particular time period
B. the point at which carrying costs equal ordering costs
C. the point at which a company should reorder
D. the point at which the sum of carrying costs and ordering costs is maximized
3. _______offers the opportunity to buy direct from the supplier with reduced costs
and shorter cycle.
A. Contramediation
B. Disintermediation
C. Reintermediation
D. Countermediation

4. Which of the following is not an environmentally-friendly packaging strategy that

firms might adopt?
A. increase the amount of packing materials used
B. use more environmentally - friendly packaging materials
C. use reusable containers
D. retain or support services that collect the used package and recycle it

5. Which of the following statements is true?

A. Supply chain is a subset of logistics
B. Transportation and logistics are the same
C. Logistics and supply chain are the same
D. Logistics is a subset of supply chain

6. Less-than-truckload motor carriers______

A. carry the shipment directly from shipper to consignee
B. are exempt from hours - of - service regulations
C. serve only regional markets
D. operate through a series of terminals

7. Choose the WRONG answer. Humanitarian logistics represents______

A. a branch of logistics which specializes in organizing the delivery and warehousing of
supplies during natural disasters or complex emergencies to the affected area and people
B. the process of planning, implementing and controlling the efficient, cost - effective flow
and storage of goods and materials, as well as related information, from the point of
origin to the point of consumption for the purpose of alleviating the suffering of
vulnerable people
C. an emerging application of logistics to only - for - profit organizations,
D. a sector to deliver emergency relief more effectively , and help organizations to make a
difference in disaster response

8. The department often measures inventory in terms of its cost or value in dollars,
whereas tends to measure inventory in terms of units.
A. finance ; logistics
B. marketing ; logistics
C. finance; production
D. marketing ; production
9. Choose the WRONG answer. Tailored logistics is applied when_______
A. customer needs vary, and companies can tailor their logistics systems to serve their
customers better and more profitably
B. companies use one logistics approach to target all their customers as well as all their
partners
C. groups of customers with similar logistical needs and wants are provided with logistics
service appropriate to these needs and wants
D. companies want to use various logistics approaches to target various groups of their
customers

10. Pipeline transport characteristics include_______

A. Cost optimization and environmental - impact optimization by means of the piggy -
back system with railway, utilization of vehicles specific to the volume of goods
B. High mass - transport capacity , high network - forming capability, high reliability
and thus plan ability, environmentally friendly by avoiding emissions , limited
products' type
C. Especially suited for long - haul and intercontinental transport, suited for almost any
type of goods, transport of large volumes of goods possible
D. Relatively low network density and thus limited possibilities for door - to - door
transport, strict adherence to timetables and allocated train lengths

11. _______refers to being out of an item at the same time there is demand for it.
A. Stockout
B. Intensive distribution
C. Supplier indifference
D. Tailored logistics
12. Holding high levels of inventory result in______ inventory carrying costs and
________stockout costs.
A. high - low
B. low - low
C. low – high
D. high - high
13. Each of the following is a shipping hazard that a package may be exposed to
except______
A. rough handling
B. compression
C. retraction
D. vibration
14. Which of the given reasons, is NOT a valid reason for packaging of food items?
A. Increase the weight of goods
B. Protection and information transmission
C. Marketing and convenience
D. Security and portion control
15. Why warehouses are different with distribution centres?
A. Because warehouses are larger than distribution centres
B. Because warehouses are only for storage while distribution centres are for both
storage and distributing
C. Because warehouses can be distribution centres while distribution centres cannot be
warehouses
D. Because warehouses store product in a short period while distribution centres store
product in a long period
16. Many organizations hold safety stocks as part of their inventory. Which of the
following is a reason for holding safety stocks?
A. To improve stock accuracy levels
B. To improve stock holding levels
C. To cater for demand forecast errors
D. To cater for a large storage capacity
17. Which of the following is not exactly a goods handling equipment?
A. Rubber tyred gantry crane
B. Conveyors
C. Reach stacker
D. Industrial trucks
18. Logistics historically grew from the function of supplying troops in the field.
A. Military
B. Commerce
C. Airforce.
D. Distribution
19. _______refers to the removal of intermediaries between producer and consumer.
A. Disintermediation
B. Direct channels
C. Market demassification
D. Consolidation
20. 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
21. ABC analysis of inventory______
A. applies activity - based costing to managing inventory
B. is synonymous with vendor - managed inventory
C. is an alternative to the EOQ model
D. recognizes that inventories are not of equal value to a firm
22. Which of the following is a reverse logistics activity?
A. Delivering finished goods to your customer
B. Recycling products and components
C. Developing a collaborative relationship with your supplier
D. Managing the quality of products
23. _______refers to breaking a homogeneous supply into smaller lots.
A. allocating
B. accumulating
C. sorting out D. assorting
24. Which of the following statements is right about Fixed Order Quantity?
A. A hybrid inventory system in which the inventory analyst reviews the inventory
position at fixed time periods .
B. This system easily let the company facing the stock - out situations .
C. The two important parameters here are the order quality and the reorder point
D. An inventory management system in which replenishment stock is ordered when the
stock reaches a reorder point and the replenishment quantity is kept fixed irrespective
of external circumstances
25. Which of the following is WRONG about Intermodal transportation?
A. Intermodal transportation is the use of two or more modes, or carriers, to transport
goods (freight ) from shipper to consignee
B. Intermodal transportation concerns the movements of passengers or freight from an
origin to a destination relying on several modes of transportation
C. Intermodal transportation service makes use of a combination of different
transportation modes to smoothly transfer containers from one transportation mode to
another, ensuring cargo is delivered safely to its final destination .
D. Intermodal freight consists of products and raw materials that are transported in a
container by a variety of the same

26. Cathkidston is a store which mainly sells fashionable bags and clothes. This store
wants to calculate the ordering cost per year and the carrying cost per order for
their next business year based on the number of items that the store expects to sell.
They expect to sell 1200 items every month, their ordering cost per order is $80. The
average value of an item is $160. The carrying cost is 26% of the value of an item. If
Cathkidston calls for orders every week, how much will the ordering cost for a year
and the carrying cost for an order be? Note: 1 year has 52 weeks and assuming 1
month has 4 weeks.
A. Co = $4160 and Ch = $ 24, 960
B. Co = $ 3200 and Ch = $ 2080
C. Co = $ 4160 and Ch = $ 6240
D. Co = $ 3200 and Ch = $ 3565.7
Cách làm:
Co= $80
Cc= 26%x $160 = 41.6 $
Annual ordering cost: 80x52 = 4160$
1200 items/months => 1200/4 = 300 items/week
C(h)= (41.6 x 300) / 2 = 6240$
27. Intexshop specializes in selling computer hardware equipment. They purchase
their inputs with the price at $35 per item and they plan to sell 8,000 items every
year. The ordering cost is $22 per arder and their annual inventory carrying cost is
26% of the price of an item. What is the economic order quantity? How much is
their total inventory cost?
A. EOQ » 82 items and TC = $ 282, 519. 4
B. EOQ » 197 items and TC = $ 281 , 898 . 6
C. E0Q » 197 items and TC = $ 281, 789. 8
D. E0O » 82 items and TC = $ 283, 298. 4
Cách làm:
D = 8000 P = 35$ Co = $22
Cc = 26% x 35$ = 9.1 $
EOQ = căn 2xCoxD / Cc = căn 2x22x8000/9.1 = 197
TC = CoxD/Q + CcxQ/2 + PxD = 22x8000/197 + 9.1x197/2 + 35x8000 = 281,789.8
28. Nissan is a brand that has been absolutely famous for manufacturing and selling
forklifts to their retailers. In their report last year, they publish that they always
sold out 9,000 forklifts every 3 months. According to their data last year, every time
they place a new order, it always takes 7 days to receive the forklifts. Consequently,
Nissan has to save minimum 250 forklifts in their storage for serving unexpected
demands. Nissan wants to know the proper time for making a new order. Let's help
Nissan determine the reorder point. Assuming that a month has 30 days.
A. ROP = 63 , 250 forklifts
B. ROP = 950 forklifts
C. ROP = 2350 forklifts
D. ROP = 21 . 250 forklifts
Cách làm:
SS = 250
D = 9000/3 months
L=7
=> d = 9000/90 = 100 forklifts/day
R = dL + SS = 100x7 + 250 = 950 forklifts
29. Following the fixed transporting schedule of carriers is the common characteristic
of which transportation modes?
A. Sea freight, inland water transport, pipeline
B. Air freight , sea freight , rail freight
C. Road freight, inland water transport, air freight
D. Rail freight, inland pipeline, road freight

30. The order cycle is_____

A. also called the vendor cycle
B. the time that it takes for a check to clear
C. also called the replenishment cycle
D. the time that it takes from when a customer places an order until the selling firm
receives the order

31. A supply chain is a sequence of firms that perform activities required:

A. To create synergy in their training programs
B. To support the acquisition of raw materials
C. To create and deliver goods to consumers
D. To facilitate wholesalers inventory selections

32. Packaging testing methods include:

A. compression , vibrations, rough handling, horizontal impacts, dropping, overexposure
to extreme temperatures moisture
B. vibrations, vertical impacts, horizontal impacts, rough packaging , pushing , stacking ,
Immersing in water
C. immersing in water, horizontal throwing, lifting up , vibrations, overexposure to
extreme temperatures or moisture
D. stacking, pouring water over , drying , rough handling , lifting up , compressing,
horizontal pushing , vertical droppin molstening, spinning around
33. Which of the following is not a characteristic of sea freight?
A. Suited for transporting almost any type of goods
B. In long - haul transport abroad, this freight transport is often used for the first and
the last transport stages
C. Possibly transport the largest volume of goods compared to other modes
D. Suited for long - haul and intercontinental transports

34. Inventory shrinkage____

A. is another name for inventory turnover
B. refers to situations where the size and / or volume of inventory is decreased over time
C. refers to the fact that more items are recorded entering than leaving warehousing
facilities
D. refers to a technique of stabilizing unit loads by using shrink wrap packaging

35. Every customer getting the same type and level of logistics service refers to______
A. Humanitarian logistics
B. Tailored logistics
C. Mass logistics
D. Green logistics

36. 7Rs in Logistics stand for:

A. Right product, Right quantity , Right condition or quality , Right place , Right time ,
Right people , Right cost or price
B. Right product, Right service , Right procedure , Right machine, Right workers , Right
management, Right materials
C. Right supply chain , Right transportation, Right warehouse , Right packaging , Right
inventory , Right handling , Right distribution centers
D. Right production, Right marketing , Right finance , Right accounting, Right human
resource , Right estate , Right operations
37. Which of the following statements is FALSE?
A. A product's chemical characteristics have little to no influence on the way the product
is handled .
B. Perishable products require special packaging as they move from source to customer
C. Some products might be exposed to freezing weather ; others might not
D. The various properties of goods must be made known to consumers to help them make
the correct buying decision and
properly care for the product

38. _____refers to the removal of intermediaries between producer and consumer.

A. Consolidation
B. Disintermediation
C. Direct channels
D. Market demassification
CHAPTER 1: AN OVERVIEW OF LOGISTICS

Multiple Choice Questions (correct answers are bolded)

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?”

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

 a. Efficiency
b. Productivity
c. Reengineering
d. Effectiveness

7. Every customer getting the same type and level of logistics service refers to
___________.

a. tailored logistics
b. mass logistics
c. effectiveness
d. efficiency

8. Which of the following is not a reason for the increased importance of logistics?

a. growing power of manufacturers

b. reduction in economic regulation
c. globalization of trade
d. technological advances
e. all of the above are reasons

9. Widespread reductions in economic regulation of US transportation carriers occurred

in ____.

a. 1960s and 1970s

b. 1970s and 1980s
c. 1980s and 1990s
d. only the 1990s

10. The ____ concept suggests that the customer desires a product offering that is highly
tailored to the customer’s exact preferences.

a. market demassification
b. relationship marketing
c. customized customer
d. niche marketing

11. Approximately ____ percent of US adult women are currently in the workforce.

a. 70
b. 60
c. 50
d. 40

12. ____ refers to the removal of intermediaries between producer and consumer.

©2011 Pearson Education, Inc. publishing as Prentice Hall 2

 a. direct channels
b. market demassification
c. consolidation
d. disintermediation

13. ____ 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

14. World trade grew at an average annual rate of approximately ____ percent between
1991 and 2011.

a. 5.5
b. 4.5
c. 3.5
d. 2.5

15. 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

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

a. physical distribution
b. materials management
c. supply chain management
d. materials handling

17. 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

18. Logistics managers use the ____ approach to coordinate materials management and
physical distribution in a cost-efficient manner.

©2011 Pearson Education, Inc. publishing as Prentice Hall 3

 a. total cost
b. supply chain
c. interfunctional logistics
d. intrafunctional logistics

19. 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

20. 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

21. A common interface between production and logistics involves:

a. the types of material handling equipment

b. the length of production runs
c. the use of plastic versus wood pallets
d. the mode of transportation

22. ____ refers to the delay of value-added activities such as assembly, production, and
packaging to the latest possible time.

a. building blocks
b. lean manufacturing
c. deferral
d. postponement

23. The four basic components of the marketing mix include all of the following except:

a. price
b. production
c. place
d. promotion

24. Co-branding allows customers to purchase products from two or more name-brand
retailers at one store location. Which of the following statements about co-branding is
false?

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

 a. they offer potential customers convenience by satisfying needs at one place
b. they boost brand awareness
c. they create relatively few logistical challenges
d. they increase customer spending per transaction
e. all of the above are true

25. 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

26. ____ 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

27. Which of the following is not part of the marketing channel?

a. the logistics channel

b. the negotiations channel
c. the promotion channel
d. the finance channel
e. all are part of the marketing channel

28. The ownership channel consists of all parties except:

a. customers
b. manufacturers
c. wholesalers
d. retailers

29. Which channel covers the movement of title to the goods?

a. promotions
b. logistics
c. finance
d. ownership

30. ____ is bringing together similar stocks from different sources.

©2011 Pearson Education, Inc. publishing as Prentice Hall 5

 a. accumulating
b. assorting
c. auditing
d. allocating

31. ____ refers to breaking a homogeneous supply into smaller lots.

a. sorting out
b. allocating
c. accumulating
d. assorting

32. Channel intermediaries:

a. assume temporary ownership of the goods

b. tend to lack focus
c. fill niches
d. tend to disappear as the market becomes organized

33. Brokers are intermediaries that are commonly associated with the ____ channel.

a. promotions
b. finance
c. ownership
d. negotiation

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

a. industrial packaging
b. transportation management
c. order management
d. warehousing management

35. U.S. News & World Report suggests that logistics employment should increase by
____ percent through 2018.

a. 10
b. 15
c. 20
d. 25

True-False Questions

©2011 Pearson Education, Inc. publishing as Prentice Hall 6

1. Absolute and relative logistics costs in relation to Gross Domestic Product vary from
country to country. (True)

2. The four general types of economic utility are production, possession, time, and place.
(False)

3. Logistics clearly contributes to time and form utility. (False)

4. 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)

5. Logistics is only concerned with forward flows, that is, those directed towards the
point of consumption. (False)

6. The purpose of logistics is to maximize customer service. (False)

7. In mass logistics, groups of customers with similar logistical needs and wants are
provided with logistics services appropriate to those wants and needs. (False)

8. Humanitarian logistics represents an emerging application of logistics to not-for-profit

organizations. (True)

9. Reductions in economic regulation allowed individual transportation companies

flexibility in pricing and service. (True)

10. Market demassification suggests that the customer desires a product offering that is
highly tailored to her/his exact preference. (False)

11. Disintermediation refers the removal of intermediaries between producer and

consumer. (True)

12. Superior logistics is an essential component of corporate strategies for many big-box
retailers. (True)

13. Logistics has played a minor role in the growth of global trade. (False)

14. The systems approach indicates that a company’s objectives can be realized by
recognizing the mutual interdependence of the major functional areas of a firm. (True)

15. Physical distribution is synonymous with materials management. (False)

16. Interfunctional logistics attempts to coordinate materials management and physical

distribution in a cost efficient manner that supports an organization’s customer service
objectives. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall 7

17. The key to the total cost approach is that all relevant cost items are considered
simultaneously when making a decision. (True)

18. The finance department tends to measure inventory in terms of units while logistics
tends to measure inventory in terms of its cost / value. (False)

19. Long production runs sometimes result in excessive inventory of products with
limited demand for them. (True)

20. Postponement is the delay of value-added activities such as assembly, production, and
packaging to the latest possible time. (True)

21. Logistics offers many companies an important route for creating marketing
superiority. (True)

22. Dual distribution refers to an alliance that allows customers to purchase products
from two or more name-brand retailers at one store location. (False)

23. Landed costs refer to the price of a product at its source. (False)

24. Stockouts refer to a situation where a company is out of an item at the same time that
there is demand for that item. (True)

25. Logistical decisions tend not to be impacted by marketers’ growing emphasis on

offering sustainable products. (False)

26. Many promotional decisions, such as pricing campaigns that lower the price of
certain items, require close coordination between marketing and logistics. (True)

27. The ownership channel is the one where buy and sell agreements are reached. (False)

28. The financing channel handles a company’s credit and payment for goods. (True)

29. There is no linkage between the promotions and logistics channels. (False)

30. The most significant contribution that the logistics channel makes to the overall
channel process is the sorting function. (True)

31. The sorting function has four steps. (True)

32. The sorting function takes place between retailers and the consumer. (False)

33. Intermediaries assume ownership of goods while they’re in the marketing channel.
(False)

©2011 Pearson Education, Inc. publishing as Prentice Hall 8

34. A broker is a type of intermediary often associated with the negotiations channel.
(True)

35. A commonly used logistical intermediary is the freight forwarder. (True)

36. Demand forecasting is not considered to be a logistics-related activity. (False)

37. Packaging can have both a marketing and logistical dimension. (True)

38. Transportation represents the most costly logistics activity in many organizations.
(True)

39. It is better for a logistics manager to be a generalist rather than a specialist. (False)

40. U.S. News & World Report has highlighted logistician as one of the 50 best careers.
(True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 9

©2011 Pearson Education, Inc. publishing as Prentice Hall 10
CHAPTER 2: LOGISTICS AND INFORMATION TECHNOLOGY

Multiple Choice Questions (correct answers are bolded)

1. Which of the following is not a benefit to utilizing information in logistics?

a. greater knowledge and visibility across the supply chain

b. greater awareness of customer demand via point-of-sale data
c. better coordination of manufacturing, merchandising, and distribution through
ERP tools
d. more streamlined order processing and reduced lead time
e. all of the above are benefits

2. How do data and information differ?

a. data are a body of facts in a format suitable for decision making, while
information is simply facts
b. they are the same
c. data are simply facts; information is a body of facts in a format suitable for
decision making
d. data are associated with decision support systems; information is associated
with ERP systems

3. ____ refers to the collection of large amounts of near-real-time data collected through
a variety of sources such as sensors and smart phones, among others.

a. cloud computing
b. big data
c. data warehousing
d. decision support systems

4. ____ provide effective ways to process organizational business data, to perform

calculations, and to create documents.

a. enterprise resource planning systems

b. transaction processing systems
c. decision support systems
d. office automation systems

5. The most relevant general software package for logisticians is ____.

a. spreadsheets
b. word processing
c. presentation packages
d. email

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

6. Which of the following is not considered a general software package?

a. spreadsheets
b. presentation packages
c. word processing
d. database management
e. all are general software packages

7. ____ help various stakeholders—employers, suppliers, customers—work together by

interacting and sharing information in many different forms.

a. decision support systems

b. communication systems
c. office automation systems
d. transaction processing systems

8. What has emerged as the measuring stock for logistics information technology in the
21st century?

a. Facebook
b. the Internet
c. wireless communication
d. enterprise resource planning systems

9. ____ refers to a network of satellites that transmits signals that pinpoint the exact
location of an object.

a. global positioning systems

b. geographic information systems
c. the National Security Agency
d. electronic data interchange

10. Electronic data interchange represents what general type of information management
system?

a. communication system
b. transaction processing system
c. decision support system
d. office automation system

11. ____ refers to the computer-to-computer transmission of business data in a structured

format.

©2011 Pearson Education, Inc. publishing as Prentice Hall 2

 a. big data
b. enterprise resource planning systems
c. electronic data interchange
d. data mining

12. Which of the following statements about EDI is not true?

a. EDI can have high setup costs

b. EDI can result in increased inventory carrying costs
c. EDI can lead to increased billing accuracy
d. the Internet is likely a complement to, rather than substitute for, EDI

13. Automatic identification systems are an essential component in ____.

a. every warehouse
b. point-of-sale systems
c. a logistics information system
d. dual distribution

14. The most popular automatic identification system currently in use is ____

a. voice-data entry
b. radio-frequency identification
c. magnetic strips
d. bar code scanners

15. Which of the following statements about radio-frequency identification (RFID) is

false?

a. RFID only offers read capabilities

b. Walmart has been a major catalyst for RFID usage in logistics
c. RFID can store large quantities of data
d. RFID has helped to reduce the occurrence of inventory stockouts
e. all of the above are true

16. A logistics information system begins with:

a. a logistics manager requesting information

b. a good computer system
c. lots of money
d. a customer order

17. All of the following statements about logistics information systems are true, except:

a. “timely” can refer to the up-to-date status of information

©2011 Pearson Education, Inc. publishing as Prentice Hall 3

 b. internal sources of logistics information are relatively plentiful
c. “timely” can refer to how quickly a manager receives requested information
d. a LIS must be concerned with the nature and quality of data
e. all of the above are true

18. The primary advantage of ____ is that enables a firm to test the feasibility of
proposed changes at relatively little expense.

a. data mining
b. expert systems
c. simulation
d. artificial intelligence

19. Which of the following is not a logistics-related decision support system?

a. simulation
b. application-specific software
c. transportation management systems
d. electronic data interchange
e. all of the above are logistics-related decision support systems

20. Warehouse management systems represent an example of what general type of

information management system?

a. communication system
b. transaction processing system
c. decision support system
d. office automation system

21. Which of the following is not a potential benefit of transportation management

systems?

a. fewer stockouts
b. reduced fuel consumption
c. decreased empty vehicle miles
d. reduced transportation expenditures
e. all of the above are benefits

22. ____ refers to the application of mathematical tools to large bodies of data in order to
extract correlations and rules.

a. fuzzy logic
b. factor analysis
c. data mining
d. linear regression

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

23. Efficient data mining is dependent upon ____.

a. good forecasting tools

b. top management commitment
c. high-speed technology
d. data warehouses

24. ____ create and maintain consistent data processing methods and an integrated
database across multiple business functions.

a. logistics information systems

b. enterprise systems
c. decision support systems
d. transaction processing systems

25. The origins of contemporary ERP systems can be traced back to logistics and ____.

a. manufacturing
b. marketing
c. purchasing
d. finance

26. Which of the following statement about ERP is false?

a. In recent years, ERP vendors have begun to provide high-quality application-

specific logistic capabilities
b. ERP implementation costs can easily reach tens of millions of dollars
c. ERP’s origins can be traced back to finance and manufacturing
d. ERP glitches often have a logistical component to them
e. all of the above are true

27. All of the following are potential costs associated with ERP implementation, except:

a. employee training
b. system testing
c. data conversion
d. upgraded computer hardware
e. all of the above are costs

28. Approximately ____ percent of the world’s population currently uses the Internet.

a. 45
b. 35
c. 25
d. 15

©2011 Pearson Education, Inc. publishing as Prentice Hall 5

29. The return rates for online purchases is approximately ____ percent

a. 20
b. 25
c. 30
d. 35
e. none of the above

30. Which of the following statements is false?

a. orders associated with online retailing tend to be for smaller quantities than in-
store retailing
b. online retailing is characterized by open-case, rather than full-case, picking
c. online retailers are challenged by last-mile considerations
d. online retailing and in-store retailing experience similar rates of product
return

31. The worldwide public cloud services market grew by approximately ____ percent
between 2011 and 2012?

a. 20
b. 15
c. 10
d. 5

32. What has emerged as the most popular application of on-demand logistics software
(cloud computing)?

a. warehouse management systems

b. transportation management systems
c. inventory optimization
d. collaborative forecasting

33. Which of the following is not a type of benefits that comes from electronic
procurement?

a. transactional benefits
b. management information benefits
c. compliance benefits
d. production benefits
e. all of the above are benefits

34. In a reverse auction, ____.

a. multiple sellers invite bids from multiple buyers

©2011 Pearson Education, Inc. publishing as Prentice Hall 6

 b. one buyer invites bids from one seller
c. one buyer invites bids from multiple sellers
d. multiple sellers invite bids from one buyer

35. ____ has been identified as the biggest information technology challenge that
companies face today.

a. software viruses
b. information security
c. the cost of technology
d. employee resistance

True-False Questions

1. The effective and efficient use of information allows organizations to either reduce
costs or improve customer satisfaction. (False)

2. “Data” and “information” are synonymous terms. (False)

3. Big data refers to large amounts of near-real-time data collected through a variety of
sources such as sensors and smart phones, among others. (True)

4. Office automation systems provide effective ways to process personal and

organizational business data, to perform calculations, and to create documents. (True)

5. A transaction processing system helps people work together by interacting and sharing
information in many different forms. (False)

6. The Internet has emerged as the measuring stick for logistics information technology
during the first decade of the 21st century. (False)

7. Transportation companies that have implemented global positioning systems have

reported increased worker productivity, reduced operating costs, and improved customer
relations. (True)

8. Global positioning implementations often pay for themselves within six months.
(False)

9. EDI is an example of a logistics-related transaction processing system. (True)

10. EDI is no longer an important logistics technology in the 21st century. (False)
11. The idea behind point-of-sale systems is to provide data to guide and enhance
managerial decision making. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 7

12. Radio-frequency identification is the most popular automatic identification system
currently in use. (False)

13. One prominent drawback to radio-frequency identification (RFID) involves privacy

concerns. (True)

14. A logistics information system begins with a logistics manager requesting

information and ends with the manager receiving regular and customized reports. (True)

15. Internal sources of logistics information are not always as plentiful as might be
desired. (True)

16. “Timely” information can refer to its nature and quality. (False)

17. The primary advantage of simulation is that it enables a firm to test the feasibility of
proposed changes at relatively little expense. (True)

18. Application-specific software is a type of decision support system. (True)

19. One benefit to transportation management systems is fewer stockouts. (False)

20. Activities that can be controlled by a warehouse management system include

inventory management, determination of storage locations, and order shipping. (True)

21. Correlation analysis uses sophisticated quantitative techniques to find “hidden”

patterns in large volumes of data. (False)

22. Wal-Mart and its vendors make extensive use of data mining to improve supply chain
efficiency and effectiveness. (True)

23. The attractiveness of ERP systems comes from their potential for lower costs as well
as increased productivity and customer satisfaction. (True)

24. The origin of ERP systems can be traced back to finance and manufacturing. (False)

25. There are suggestions that consultant fees for ERP implementations may be three
times as costly as the software itself. (True)

26. A general rule of thumb is that the actual time to implement an ERP system may
range from 1 ½ to 2 times longer than the time period specified by the ERP vendor.
(False)

27. In recent years, ERP vendors have begun to provide high-quality application-specific
logistical capabilities. (True)

28. About 25 percent of the world’s population currently uses the Internet. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall 8

29. There are few logistical similarities between online and in-store retailing. (False)

30. The smaller order quantities occasioned by online retailing tend to favor transport
companies with extensive delivery networks and expertise in parcel shipments. (True)

31. The return rates associated with e-commerce are quite similar to those associated with
other kinds of retailing. (False)

32. The worldwide public market for cloud computing grew nearly 20 percent between
2011 and 2012. (True)

33. One reason for the popularity of on-demand software is that is pay-per use formula
allows customers to avoid high capital investment costs. (True)

34. Cloud-based software allows for a great deal of customization. (False)

35. The Internet is the primary transaction medium for cloud-based software. (True)

36. Electronic procurement uses the Internet to make it easier, faster, and less expensive
for an organization to purchase goods and services. (True)

37. In a reverse auction, one seller invites bids from multiple buyers. (False)

38. Information technology should be regarded as a tool to help managers address

organizational problems. (True)

39. Software viruses are viewed as the most important information technology issue that
companies face today. (False)

40. People-related factors such as employee resistance have been identified as a major
cause of information technology implementation failure. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 9

©2011 Pearson Education, Inc. publishing as Prentice Hall 10
CHAPTER 3: STRATEGIC AND FINANCIAL LOGISTICS

Multiple Choice Questions (correct answers are bolded)

1. Depending on industry and product type, reverse logistics costs as a percent of revenue
can range between ____ and ____ percent.

a. 5; 10
b. 4; 8
c. 3; 6
d. 2; 4

2. Which of the following is not a level at which strategy can be formulated?

a. corporate
b. business unit
c. functional
d. all of the above are levels at which strategy can be formulated

3. ____ strategy is focused on determining the goals for the company, the types of
businesses in which the company should compete, and the way the company will be
managed.

a. functional-level
b. business unit-level
c. divisional-level
d. corporate-level

4. Strategy at a ____ level is primarily focused on the products and services provided to
customers and on finding ways to develop and maintain a sustainable competitive
advantage with these customers.

a. functional
b. business unit
c. divisional
d. corporate

5. Which of the following is not one of the generic strategies that can be pursued by an
organization, as identified by strategist Michael Porter?

a. value enhancement
b. differentiation
c. cost leadership
d. focus
e. all of the above are generic strategies

©2011 Pearson Education, Inc. publishing as Prentice Hall

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6. A ____ strategy entails an organization developing a product and/or service that offers
unique attributes that are valued by customers and that the customer perceives to be
distinct from competitor offerings.

a. focus
b. differentiation
c. value enhancement
d. market orientation

7. Which generic strategy concentrates an organization’s effort on a narrowly defined

market to achieve either a cost leadership or differentiation strategy?

a. hybrid
b. market orientation
c. tailored
d. focus

8. A(n) ____ entails the functional units of an organization providing input into the other
levels of strategy formulation.

a. supply chain
b. interfunctional cooperation
c. hierarchy of strategy
d. enterprise resource system

9. Which of the following represents the preferred hierarchy of strategy (i.e., from the
first strategy to be developed to the last to be developed)?

a. corporatebusiness unitfunctional
b. functionalbusiness unitcorporate
c. corporatebusiness unitdivisional
d. business unitdivisionalfunctional

10. ____ strategy decisions involve issues such as the number and location of warehouses
and the selection of appropriate transportation modes.

a. marketing
b. production
c. finance
d. logistics

11. Which of the following is not a potential type of logistics strategy decisions?

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 a. investments in technology that support logistics activities
b. selecting appropriate transportation modes
c. deployment of inventory
d. number and location of warehouses
e. all of the above are potential logistics strategy decisions

12. When developing logistics strategy, a ____ strategy refers to the management of
logistics activities with a focus on costs.

a. market
b. process
c. command and control
d. information

13. The ____ shows revenues, expenses, and profit for a period of time.

a. balance sheet
b. current ratio
c. income statement
d. annual report

14. In general, the ____ measures the profitability of the products and/or services
provided by a company.

a. balance sheet
b. strategic profit model
c. balanced scorecard
d. income statement

15. The ____ reflects the assets, liabilities, and owners’ equity at a given point in time.

a. balanced scorecard
b. balance sheet
c. income statement
d. annual report

16. The balance sheet reflects the assets, liabilities, and____ at a given point in time.

a. costs of goods sold

b. net income
c. owners’ equity
d. asset turnover

17. Which of the following does not appear on the balance sheet?

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 a. assets
b. owners’ equity
c. liabilities
d. net income
e. all of the above appear on the balance sheet

18. The current ratio is calculated by dividing ____ by ____.

a. total current assets; total current liabilities

b. total current liabilities; total current assets
c. total assets; total liabilities
d. total liabilities; total assets

19. Which of the following is a common measure of organizational financial success?

a. quick ratio
b. the income statement
c. current ratio
d. return on investment

20. What provides the framework for conducting return on assets analysis by
incorporating revenues and expenses to generate net profit margin, as well as inclusion of
assets to measure asset turnover?

a. the Balanced Scorecard

b. the Strategic Profit Model
c. microfinancing
d. Supply Chain Operations Reference Model

21. Return on assets equals:

a. current assets divided by total assets

b. return on investment divided by return on net worth
c. net profit margin times asset turnover
d. total assets divided by costs of goods sold

22. Suppose that a logistics manager is able to eliminate some unnecessary inventory,
which reduces the value of current assets as well as total asset value. What is the
corresponding impact on inventory turnover and return on assets?

a. both inventory turnover and return on assets will increase

b. inventory turnover increases, while return on assets decreases
c. inventory turnover decreases, while return on assets increases
d. both inventory turnover and return on assets will decrease

23. Which of the following is false?

©2011 Pearson Education, Inc. publishing as Prentice Hall

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 a. the Strategic Profit Model (SPM) can assist the logistics manager in the
evaluation of cash flows and asset utilization decisions
b. the SPM fails to consider the timing of cash flows
c. the SPM is subject to manipulation in the short run
d. the SPM fails to recognize assets that are dedicated to specific relationships
e. all of the above are true

24. What is the formula for net profit margin?

a. gross profit minus interest expenses

b. sales divided by costs of goods sold
c. total sales divided by total assets
d. net profit divided by sales
e. none of the above

25. With respect to net profit margin, the most relevant categories for logistics managers
to consider are:

a. sales, costs of goods sold, asset turnover

b. accounts receivable, costs of goods sold, total expenses
c. sales, costs of goods sold, total expenses
d. inventory, accounts receivable, total expenses

26. What is the formula for asset turnover?

a. total sales divided by total assets

b. net profit divided by total assets
c. return on assets divided by total assets
d. return on investment divided by return on net worth

27. With respect to asset turnover, ____ is typically the most relevant logistics asset.

a. warehousing
b. inventory
c. transportation equipment
d. materials handling equipment

28. The balanced scorecard approach is based on the belief that management should
evaluate their business from ____ distinct perspectives.

a. two
b. three
c. four
d. five

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29. Which of the following is not one of the perspectives evaluated in the balanced
scorecard approach?

a. customers
b. internal business processes
c. learning and growth
d. financial
e. all of the above are perspectives in the balanced scorecard approach

30. Logistics measurement systems have been traditionally designed to include

information on how many types of performance?

a. two
b. three
c. four
d. five

31. Performance measurement in ____ is used to identify design and operations options
that provide benefits in terms of increased speed or reduced costs.

a. materials handling
b. warehousing
c. packaging
d. order management

32. ____ looks at how long an organization’s cash is tied up in receivables, payables, and
inventory.

a. cash-to-cash cycle
b. cash flow
c. gross margin return on investment
d. current ratio

True-False Questions

1. Depending on the industry and product type, reverse logistics costs as a percentage of
revenues can range between 2 and 4 percent. (False)

2. Logistics performance is important for achieving competitive advantage for many

firms. (True)

3. Strategy can be formulated at a corporate level, a business unit level, and a functional
level. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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4. Strategy at a business unit level is primarily focused on the types of businesses in
which the company should compete and the way the company should be managed.
(False)

5. Strategist Michael Porter identified three generic strategies that can be pursued by an
organization, namely, cost leadership, differentiation, and value enhancement. (False)

6. A differentiation strategy entails an organization developing a product and/or service

that offers unique attributes that are valued by customers and that customers perceive to
be distinct from competitor offerings. (True)

7. The hierarchy of strategy entails the functional units of an organization providing input
into the other levels of strategy formulation. (True)

8. Functional-level strategies exist in marketing and production, but not in logistics.

(False)

9. Marketing goals in areas such as product availability, desired customer service levels,
and packaging design have limited influence on logistics decisions. (False)

10. A process strategy refers to management of logistics activities across business units
with a focus on reducing complexity for customers. (False)

11. Research indicates a positive benefit to aligning functional strategies such as

marketing or logistics with the overall corporate strategy. (True)

12. An understanding of financial terminology can help logisticians to manage logistical

activities to improve their company’s financial performance. (True)

13. The income statement is the same thing as the balance sheet. (False)

14. In general, the income statement measures the profitability of the products and/or
service provided by a company. (True)

15. Superior logistics service can have a positive influence on an organization’s financial
performance. (True)

16. The balance sheet reflects the assets, liabilities, and costs of goods sold at a given
point in time. (False)

17. Long-term assets have a useful life of more than two years. (False)

18. Owners’ equity is the difference between what a company owns and what it owes at
any particular point in time. (True)

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19. The current ratio is calculated by dividing total current liabilities by total current
assets. (False)

20. A common measure of organizational financial success is return on investment.

(True)

21. Return on assets equals net profit margin times asset turnover. (True)

22. The balanced scorecard provides the framework for conducting return on assets
analysis by incorporating revenues and expenses to generate net profit margin, as well as
inclusion of assets to measure asset turnover. (False)

23. A reduction in inventory would increase inventory turnover, which means an increase
in that organization’s return on assets (ROA). (True)

24. Operationally, net profit margin is net profit divided by cost of goods sold. (False)

25. With respect to net profit margin, the most relevant categories for logistics managers
to consider are sales, costs of goods sold, and asset turnover. (False)

26. The primary influence of logistics activities on sales would be through the
improvement of customer service. (True)

27. Asset turnover is computed by dividing return on assets by total assets. (False)

28. With respect to asset turnover, inventory is typically the most relevant logistics asset.
(True)

29. A decision to invest in an electronic data interchange system that would increase
invoice accuracy should result in a lower amount of accounts receivable. (True)

30. The balanced scorecard is based on the belief that management should evaluate their
business from five different perspectives. (False)

31. According to the balanced scorecard approach, the financial perspective is considered
the best indicator of whether or not logistics strategy is being properly implemented and
executed. (False)

32. The measures associated with the balanced scorecard can be at a strategic or tactical
level. (True)

33. Best in Class companies tend to use transportation scorecards less frequently than
other companies. (False)

34. The cash-to-cash cycle looks at how long an organization’s cash is tied up in
receivables, payables, and inventory. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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35. When applying performance measures to logistics activities, determination of the key
measures should be tailored to the individual organization and level of decision making.
(True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 4: ORGANIZATIONAL AND MANGERIAL ISSUES IN LOGISTICS

Multiple Choice Questions (correct answers are bolded)

1. ____ and ____ are the two basic organizational structures associated with logistics.

a. centralized; hierarchical
b. fragmented; centralized
c. fragmented; unified
d. unified; hierarchical

2. In a ____ logistics structure, logistics activities are managed in multiple departments

throughout an organization.

a. unified
b. fragmented
c. decentralized
d. matrix

3. One problem with a ____ logistics structure is that because logistics activities are
scattered throughout a firm, they likely remain subservient to the objectives of the
department in which they are housed.

a. fragmented
b. matrix
c. decentralized
d. hierarchicial

4. In a ____ logistics structure, multiple logistics activities are combined into, and
managed as, a single department.

a. hierchical
b. centralized
c. matrix
d. unified

5. A ____ logistics organization implies that the corporation maintains a single logistics
department that administers the related activities for the entire company from the home
office.

a. centralized
b. hierarchical
c. unified
d. command-and-control

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

6. A ____ logistics organization means that logistics-related decisions are made
separately at the divisional or product group level.

a. fragmented
b. decentralized
c. flexible
d. agile

7. A primary advantage of ____ logistics is its relative efficiency, whereas a primary

advantage of ____ logistics is its customer responsiveness.

a. unified; fragmented
b. unified; decentralized
c. centralized; decentralized
d. fragmented; centralized

8. Which of the following is an advantage of a decentralized logistics organization?

a. less expensive than a centralized organization

b. good opportunities for freight consolidation
c. better control over company data
d. can be responsive to customer service requirements

9. Which of the following is an advantage of a centralized logistics organization?

a. less expensive than a decentralized organization

b. good opportunities for freight consolidation
c. can be responsive to customer service requirements
d. easier to manage than a decentralized organization

10. ____ organizational design has its foundations in the command-and-control military
operation, where decision-making and communication often follow a top-down flow.

a. centralized
b. unified
c. matrix
d. hierarchical

11. A ____ organizational design attempts to create an organization that is responsive to

the parameters of the contemporary business environment.

a. matrix
b. network
c. decentralized
d. unified

©2011 Pearson Education, Inc. publishing as Prentice Hall 2

12. A key attribute of network organizational design is a shift from ____ to ____.

a. function; process
b. centralization; decentralization
c. process; function
d. decentralization; centralization

13. ____ refers to satisfying current and emerging customer needs.

a. responsiveness
b. flexibility
c. relevancy
d. accommodation

14. ____ can be defined as an organization’s ability to address unexpected operational

situations.

a. relevancy
b. flexibility
c. accommodation
d. responsiveness

15. ____ refers to the amount of output divided by the amount of input.

a. control
b. monitoring
c. productivity
d. input-output analysis

16. Productivity improvement efforts in logistics are often directed towards ____.

a. reducing input while increasing output

b. increasing output by a greater percentage than inputs are increased
c. reducing input while holding output constant
d. increasing output while holding input constant

17. What is the most important purpose of warehouse work rules?

a. to control pilferage
b. to keep employees from engaging in unproductive and potentially
destructive activities
c. to protect companies from union grievance procedures
d. to give managers control over warehouse workers

©2011 Pearson Education, Inc. publishing as Prentice Hall 3

18. A ____ is a device used to monitor and control the actions taken by a driver and
his/her vehicle.

a. tachograph
b. tachometer
c. speedometer
d. regulator

19. ____ is a set of generic standards used to document, implement, and demonstrate
quality management and assurance systems.

a. benchmarking
b. Six Sigma
c. ISO 9000
d. ISO 14000

20. ____ refers to the integration of Six Sigma and the Lean approach.

a. ISO 9000
b. quality management
c. supply chain management
d. Lean Six Sigma

21. What is a key difference between IS0 9000 and the Baldrige Quality Award?

a. only the Baldrige Award focuses on quality

b. the Baldrige Award is more externally focused than is ISO 9000
c. ISO 9000 is more externally focused than the Baldrige Award
d. ISO 9000 focuses more on lean practices than does the Baldrige Award

22. The ____ has been established to identify uncertainty sources that can affect the risk
exposure for logistics activities.

a. Logistics Uncertainty Index

b. Logistics Uncertainty Pyramid Model
c. Logistics Risk Consortium
d. Logistics Risk Factor

23. From a logistics perspective, two of most important government agencies

incorporated into the Department of Homeland Security were the Transportation Security
Agency and ____.

a. Department of Transportation
b. Federal Maritime Commission
c. Surface Transportation Board
d. Customs and Border Protection

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

24. The ____ is responsible for the security of the U.S. transportation system.

a. Department of Commerce
b. Department of Transportation
c. Transportation Security Administration
d. U.S. State Department

25. The Importer Security Filing (ISF) rule requires importers to file ____ pieces of
information and carriers to file ____ pieces of information.

a. 10; 2
b. 5; 5
c. 2; 10
d. 4; 8

26. All of the following are reasons why logisticians should be concerned about theft,
except:

a. stolen products may reappear to compete with other products

b. the time and costs associated with theft aren’t always covered by insurance
c. some organizations will avoid locating their facilities in areas characterized by
high crime rates
d. theft can lead to stockouts in the distribution channel
e. all of the above are reasons to be concerned about theft

27. The materials stolen in ____ are usually for the employee’s own use.

a. theft
b. demurrage
c. non-monetary compensation
d. pilferage

28. What is the primary difference between pilferage and theft?

a. there is no difference between the two

b. pilferage involves a firm’s own employees, while theft involves efforts from
outsiders
c. theft refers to stolen merchandise worth more than $500
d. pilferage refers to stolen merchandise worth more than $500

29. The concept of logistics social responsibility, or corporate social responsibility issues
that relate directly to logistics, did not emerge until which decade?

a. 1970-1979
b. 1980-1989

©2011 Pearson Education, Inc. publishing as Prentice Hall 5

 c. 1990-1999
d. 2000-2009

30. The two areas in logistics systems where most energy costs occur are ____ and ____.

a. warehousing; transportation
b. packaging; transportation
c. materials handling; packaging
d. warehousing; materials handling

31. With respect to the design of warehouses, one suggestion for energy savings is to
make sure that dock doors are not placed on the ____ of a building.

a. west
b. east
c. north
d. south

32. Transportation accounts for approximately ____ of all petroleum consumption in the
United States.

a. three-quarters
b. two-thirds
c. one-half
d. one-third

33. Which of the following is not one of the three critical factors associated with the
process of managing returned goods?

a. why products are returned

b. whether returned goods should be managed internally or outsourced to a third
party
c. how to optimize reverse logistics
d. how many products are returned

34. ____ complexity refers to the growing number nodes and the associated changes to
the links in the logistics system.

a. process
b. range
c. network
d. system

©2011 Pearson Education, Inc. publishing as Prentice Hall 6

35. ____ complexity centers on the implications associated with the increasing number of
products that most companies continue to face in an effort to differentiate themselves
with their customers.

a. process
b. range
c. network
d. system

True-False Questions

1. The organization of logistics activities within a firm depends on a number of factors,

including the number and location of customers and an organization’s size. (True)

2. In a decentralized logistics structure, logistics activities are managed in multiple

departments throughout an organization. (False)

3. One problem with a fragmented logistics structure is because logistics activities are
scattered throughout the firm, they likely remain subservient to the objectives of the
departments in which they are housed. (True)

4. In a unified logistics structure, multiple logistics activities are combined into, and
managed as, a single department. (True)

5. A centralized logistics organization generally results in better customer responsiveness

than a decentralized logistics organization. (False)

6. A decentralized logistics organization means that logistics-related decisions are made

at the divisional or product group level and often in different geographic areas. (True)

7. The majority of Fortune 500 companies employ a chief logistics officer. (False)

8. Societal changes are relatively easy to accommodate in a hierarchical, or functional,

organizational design. (False)

9. A matrix organizational design can be very responsive to customer requirements.

(True)

10. From a logistics perspective, a network organizational design in logistics is

manifested in terms of relevancy, responsiveness, and flexibility. (True)

11. Responsiveness refers to satisfying current and emerging customer needs. (False)

12. The postponement of product assembly and labeling until exact customer
requirements are known is an example of responsiveness. (False)

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13. Productivity can be defined as the amount of output divided by the amount of input.
(True)

14. Productivity efforts in logistics are often directed at increasing the amount of output
while holding input constant. (True)

15. Union work rules are often very specific in the sense that job descriptions spell out
the responsibilities associated with a particular job. (True)

16. As a general rule, the same types of supervision can be used for both warehouse
workers and truck drivers. (False)

17. The odometer is a recording instrument that produces a continuous, timed record of
the truck, its speed, and its engine speed. (False)

18. Wireless communications, global positioning systems, and graphical information

systems offer tremendous opportunities to improve driver productivity. (True).

19. Excess capacity, or unused available space, can be unproductive because it may
result in the purchase of additional equipment or space. (True)

20. Logistics service quality relates to a firm’s ability to deliver products, materials and
services without defects or errors to both internal and external customers. (True)

21. ISO 14000 is a set of generic standards used to document, implement, and
demonstrate quality management and assurance systems. (False)

22. The integration of Six Sigma with the Lean approach refers to Lean Six Sigma.
(True)

23. ISO 9000 involves organizations benchmarking themselves against organizations

from outside their particular industry. (False)

24. The Logistics Uncertainty Index has been established to identify uncertainty sources
that can affect the risk exposure for logistics activities. (False)

25. Terrorism can be viewed as an illegal use of or threat of force or violence made by a
group or an individual against a person, a company, or somebody’s property with a goal
of menacing the target, often grounded in politics or ideology. (True)

26. From a logistical perspective, the Transportation Security Administration and the
Department of Transportation are two of the most important government entities that
were incorporated into the Department of Homeland Security. (False)

27. The Transportation Worker Identification Credential (TWIC) uses biometric data to
exclude certain workers from secure areas at ports and terminals. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 8

28. Customs and Border Protection is responsible for securing U.S. borders to protect the
American people and the U.S. economy. (True)

29. Companies that participate in the Customs Trade Partnership Against Terrorism are
exempt from all import tariffs and all import quotas. (False)

30. The Importer Security Filing (ISF) rule requires carriers to file 10 pieces of
information and importers to file two pieces of information. (False)

31. Experts recommend that the best pilferage policy should be based on zero tolerance.
(True)

32. One of the most effective methods of protecting goods from theft or pilferage is to
keep them moving through the system. (True)

33. Logistics does not have an inherent connection to sustainability. (False)

34. Potential logistics social responsibility dimensions include the environment, diversity,
safety, and philanthropy, among others. (True)

35. Warehousing and packaging are the two areas in logistics systems where the most
energy costs occur. (False)

36. Roof color is often overlooked as an area for warehousing energy control. (True)

37. Transportation accounts for about one-half of all petroleum consumption in the
United States. (False)

38. Reverse logistics can be four to five times more expensive than forward logistics.
(True)

39. Network complexity refers to the growing number of nodes and the associated
changes to the links in logistics systems. (True)

40. System complexity centers on the implications associated with the increasing number
of products that most companies continue to face in an effort to differentiate themselves
with their customers. (False)

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©2011 Pearson Education, Inc. publishing as Prentice Hall 10
CHAPTER 5: THE SUPPLY CHAIN MANAGEMENT CONCEPT

Multiple Choice Questions (correct answers are bolded)

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

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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. An organization’s ability to respond to changes in demand with respect to volume and
variety refers to ____.

a. responsiveness
b. leanness
c. agility
d. relevancy

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

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 a. dissatisfied customers
b. reduced profitability
c. decreased market share
d. lower stock price
e. all of the above are potential outcomes

12. 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

13. ____ refers to focusing part of one’s supply chain on a timely response to fluctuating
customer orders and/or product variety and another part of the supply chain on leveling
out the planning requirements to smooth production output.

a. supply chain management

b. flexibility
c. responsiveness
d. leagility

14. 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

15. 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

16. 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

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17. 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

18. Supply chain collaboration can be classified as transactional, strategic, or ____ in

nature.

a. operational
b. superorganizational
c. managerial
d. tactical information sharing

19. ____ collaborations offer the best opportunity for improving supply chain
performance.

a. transactional
b. tactical information sharing
c. strategic
d. operational

20. Tailored business relationships between two supply chain members refer to:

a. supply chain partnership

b. supply chain management
c. coopetition
d. tailored logistics

21. Which of the following are not an attribute of supply chain partnerships?

a. mutual trust
b. increased willingness to share information
c. buying decisions based on value as opposed to cost or price
d. compatible goals
e. all of the above are attributes of supply chain partnerships

22. According to the text, ____has been at the center of the changes taking place that
affect the supply chain.

a. economic malaise
b. logistics
c. customer power
d. technology

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23. 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

24. 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

25. Which of the following statements is true?

a. third-party logistics companies demand only a few activities from third-party

logistics providers
b. the decision to use third-party logistics can only be strategic in nature
c. third-party logistics is synonymous with fourth-party logistics
d. a common cause of third-party logistics failure is unreasonable and
unrealistic expectations
e. all of the above are false

26. What is a fourth-party logistics provider?

a. a company that ensures that various third-party logistics companies are

working toward the relevant supply chain goals and objectives
b. a third-party logistics provider that has achieved ISO 9000 certification
c. a logistics intermediary that specializes in one logistics activity such as
warehousing or transportation
d. a third-party logistics provider that has been in existence for at least 25 years

27. Which of the following is false?

a. top management commitment is essential if supply chain efforts are to have any
chance of success
b. some companies are uncomfortable with the concept of customer power in
supply chains
c. senior management commitment to supply chain management occurs in
one of every two organizations
d. some companies are hesitant to enter into long-term relationships because such
relationships might be perceived as limiting a company’s operational flexibility

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 e. all of the above are true

28. ____ combines technology with manual employee effort to identify trends, perform
comparisons, and highlight opportunities in supply chain processes, even when large
amounts of data are involved.

a. data mining
b. supply chain analytics
c. benchmarking
d. environmental scanning

29. In a (n) ____ approach, all relevant software applications are provided by a single
vendor.

a. single integrator
b. captive customer
c. customer centric
d. information outsourcing

30. 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

31. ____ refers to “how we do things around here” and reflects an organization’s vision,
values, and strategic plans.

a. supply chain management

b. organizational behavior
c. a mission statement
d. corporate culture

32. 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

33. Which of the following is not a name/term for a long-term mutually beneficial supply
chain agreement?

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 a. partnerships
b. third-party arrangements
c. coopetition
d. contract logistics
e. all of the above are names for a long-term mutually beneficial supply chain
agreement

34. 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

35. There are three primary methods that organizations can pursue when attempting to
integrate their supply chains. Which of the following is not one of them?

a. informal agreements
b. formal contracts
c. vertical integration
d. intensive distribution

True-False Questions

1. Research on underperforming supply chains suggests that logistics can be crucial to

achieving desired levels of supply chain performance. (True)

2. The supply chain concept originated in the logistics literature. (True)

3. Supply chains are a new concept in the sense that they were first identified in the 1970s
and 1980s. (False)

4. Customers are not included as a component of supply chains. (False)

5. Supply chain management requires companies to adopt an enterprise-to-enterprise

point of view. (True)

6. The two prominent supply chain management frameworks are the Supply Chain
Operations Reference (SCOR) model and the Process Classification Framework (PCF).
(False)

7. The Supply Chain Operations Reference (SCOR) model identifies five key processes
associate with supply chain management. (False)

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8. The Global Supply Chain Forum (GSCF) Model identifies eight relevant processes
associated with supply chain management. (True)

9. Because customer needs and wants change relatively quickly, supply chains should be
fast and lean. (False)

10. With respect to supply chains, relevancy focuses on an organization’s ability to

respond to changes in demand with respect to volume and variety. (False)

11. A perfect order simultaneously achieves relevant customer metrics. (True)

12. Leagility refers to a supply chain that combines the lean and agile paradigms. (True)

13. The boomerang effect refers to variability in demand orders among supply chain
members. (False)

14. Supply chain disruptions (e.g., terrorist attacks, natural disasters) have caused some
supply chains to reassess their emphasis on inventory reduction. (True)

15. Relational changes cannot be successful without information sharing among various
participants. (True)

16. Big-box retailers have been at the center of changes taking place that affect the supply
chain. (False)

17. A primary objective of supply chain management is to optimize the performance of

the supply chain as a whole. (True)

18. Coopetition refers to cooperative relationships between members of a supply chain to

enhance the overall business performance of all parties. (False)

19. Tactical information sharing offers the best opportunity for improving supply chain
performance. (False)

20. A willingness to share information and buying decisions based on value rather than
cost or price are two characteristics of supply chain partnerships. (True)

21. The Internet has been referred to as the greatest force of commodization known to
man, for both goods and services. (True)

22. Enhanced communications across organizations in a supply chain is only dependent

on the technological capabilities of the organizations (False)

23. The general idea behind third-party logistics is that one company allows a specialist
company to provide it with one or more logistics functions. (True)

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24. The decision to use third-party logistics companies can be driven by strategic or
tactical considerations. (True)

25. A fourth-party logistics provider is a supply chain facilitator that has achieved ISO
9000 certification. (False)

26. Regulatory considerations represent a bigger obstacle than political considerations to

supply chain management. (False)

27. The overall global climate for business has shifted toward allowing more cooperation
among firms—which should help supply chain management. (True)

28. Top management is sometimes hesitant to fully commit to supply chain management.
(True)

29. Actual senior management commitment to supply chain management occurs in one of
every two organizations. (False)

30. One cause of the bullwhip effect is asymmetrical information among supply chain
participants. (True)

31. Supply chain analytics combines technology with manual employee effort to identify
trends, perform comparisons, and highlight opportunities in supply chain processes, even
when large amounts of data are involved. (True)

32. Although customer loyalty programs can provide highly detailed data to companies,
there are some who believe that these programs potentially violate a customer’s right to
privacy. (True)

33. Today, computer hardware is a larger barrier than computer software to

interorganizational collaboration. (False)

34. A best-of-breed approach chooses the best software application for a particular
function. (True)

35. Corporate cultures should not be considered when designing a supply chain. (False)

36. Supply chain integration tends to be more challenging in global, as opposed to

domestic, supply chains. (True)

37. An individual firm can only be involved in one supply chain at a time. (False)

38. Supply chain agreements should be designed to reward all participants when
collaborative ventures are successful and all participants should share the consequences
when these ventures are less successful than desired. (True)

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39. Horizontal integration refers to where one organization owns multiple participants in
a supply chain. (False)

40. Broadly speaking, organizations can pursue three primary methods—vertical

integration, formal contracts, informal agreements—when attempting to integrate their
supply chains. (True)

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 6: PROCUREMENT

Multiple Choice Questions (correct answers are bolded)

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’s historical focus in many organizations was to ____.

a. incur minimal supply disruptions

b. use a limited number of suppliers
c. minimize loss and damage
d. achieve the lowest possible cost

4. Procurement and ____ are viewed as synonymous terms.

a. materials management
b. supply management
c. purchasing
d. inbound logistics

5. Which of the following is not a potential benefit associated with procurement cards (p-
cards)?

a. a reduced number of invoices

b. users can make purchases in a more timely fashion
c. suppliers can be paid in a more timely fashion
d. ability to use them in non-domestic markets
e. all of the above are potential benefits

6. Which of the following is not a potential challenge of using procurement cards (p-
cards) in non-domestic markets?

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 a. currency differences
b. cultural issues
c. difference in card acceptance policies
d. availability of technology
e. all of the above are challenges

7. 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

8. A focus on satisfying internal customers is associated with which procurement

objective?

a. managing the supply base

b. supporting operational requirements
c. supporting organizational goals and objectives
d. managing the purchasing process effectively and efficiently

9. 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

10. 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

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

a. 4
b. 5
c. 6

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 d. 7

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

a. provide feedback
b. select suppliers
c. implement decision
d. evaluate decision

13. 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

14. 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

15. Which of the following statements is false?

a. supplier selection and evaluation generally involves multiple criteria

b. the evolution of business practices and philosophies may require new supplier
selection criteria
c. selecting suppliers is the final step of the supplier selection and evaluation
process
d. some supplier selection criteria may be contradictory

16. 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

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

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 a. bottleneck
b. leverage
c. noncritical
d. strategic
e. all of the above are categories associated with Kraljic’s Portfolio Matrix

18. 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

19. Supplier development is synonymous with ____.

a. supplier selection and evaluation

b. procurement
c. materials management
d. reverse marketing

20. Which of the following is not a reason for why purchasers are adopting a more
proactive and aggressive role in the procurement process?

a. there are myriad inefficiencies associated with suppliers initiating marketing efforts
towards purchasers
b. achieving competitive advantage in the supply chain
c. an excess number of suppliers currently exist
d. purchasers may be aware of important benefits that are not known to the supplier
e. all of the above are reasons

21. Which of the following is false?

a. in the factor-input strategy, an organization is seeking low costs or high quality

sources of supply
b. global procurement refers to buying components and inputs anywhere in the world
c. planning is the first step in global procurement
d. global procurement is driven by the factor-input and the market-access strategies
e. all of the above are true

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

a. planning
b. specification
c. situation analysis
d. problem recognition

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23. ____ is often a major shortcoming to many global procurement plans.

a. monitoring and improving

b. specification
c. implementation
d. evaluation

24. What concept refers to when firms consider all the costs that can be assigned to the
acquisition, use, and maintenance of a purchase?

a. activity-based costing
b. cost trade-offs
c. the systems approach
d. total cost of ownership

25. Procuring products from suppliers close to one’s own facilities refers to ____.

a. agglomeration
b. near-sourcing
c. dovetailing
d. outsourcing

26. 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

27. With respect to gift giving and gift receiving, ____ refers to money paid before an
exchange.

a. a kickback
b. agglomeration
c. a bribe
d. dovetailing

28. With respect to gift giving and gift receiving, ____ refers to money paid after an
exchange.

a. a kickback
b. agglomeration
c. a bribe

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 d. dovetailing

29. ____ 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

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

a. waste
b. excess
c. obsolete
d. scrap

31. ____ 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

32. ____ materials have no economic value.

a. waste
b. scrap
c. obsolete
d. excess

True-False Questions

1. Procurement refers to the raw materials, component parts, and supplies bought from
outside organizations to support a company’s operations. (True)

2. Procurement’s costs often range between 40 – 60% of an organization’s revenues.

(False)

3. Procurement’s historical focus in many organizations was to minimize the total

number of outside suppliers. (False)

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4. A contemporary procurement manager might have responsibility for reducing cycle
times and for generating additional revenues by collaborating with the marketing
department. (True)

5. Procurement and purchasing are viewed as synonymous terms. (True)

6. A reduction in the number of invoices is one benefit to procurement cards. (True)

7. One benefit to procurement cards is that they are easily used outside their domestic
market. (False)

8. First and foremost, procurement’s objectives must manage the purchasing process
effectively and efficiently. (False)

9. One of procurement’s most important responsibilities involves supplier selection and

evaluation. (True)

10. The first step in supplier selection and evaluation is situation analysis. (False)

11. Trade shows, trade publications, and the Internet are sources that can be used to
identify possible suppliers. (True)

12. A benefit to multiple sourcing is increased cooperation and communication in a

supply relationship. (False)

13. Single sourcing consolidates purchase volume with a single supplier with the hopes of
enjoying lower costs per unit. (True)

14. The final step of the supplier selection process is to evaluate the decision. (True)

15. Supplier scorecards can involvement assessments of a supplier’s structure, resources,

technology, health, and responsibility. (False)

16. Supplier scorecards can be categorical, weighted point, or cost based in nature. (True)

17. Supplier selection and evaluation generally involve multiple criteria, and these
criteria can vary in both number and importance, depending on the particular situation.
(True)

18. The Optimal Cost Reliability Model is used by many managers to classify corporate
purchases in terms of their importance and supply complexity. (False)

19. Bottleneck refers to the low importance, low complexity category of Kraljic’s
Portfolio Matrix. (False)

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20. Leverage refers to the high importance, low complexity category of Kraljic’s
Portfolio Matrix. (True)

21. Supply management refers to a degree of aggressive procurement not normally

encountered in supplier selection. (False)

22. Supplier development is synonymous with reverse marketing. (True)

23. One reason for the growth of the supplier development concept is that achieving
competitive advantage in the supply chain is predicated on purchasers adopting a more
aggressive approach. (True)

24. Global procurement refers to buying components and inputs anywhere in the world.
(True)

25. Global procurement is primarily driven by the input-output and market-access

strategies. (False)

26. Problem recognition is the first step in global procurement. (False)

27. Because global sourcing increases the distance that components and inputs must be
moved, managers must consider the tradeoff between transportation and holding costs.
(True)

28. Implementation is often a major shortcoming of many global procurement plans.

(True)

29. When taking an activity-based costing approach, firms consider all the costs that can
be assigned to the acquisition, use, and maintenance of a purchase. (False)

30. Dovetailing refers to procuring products from suppliers closer to one’s own facilities.
(False)

31. Sustainable procurement refers to the integration of social and environmental

considerations into all stages of the purchasing process. (True)

32. Diversity and philanthropy are two dimensions of socially responsible procurement.
(True)

33. With respect to gift giving and gift receiving, bribes refer to money paid after an
exchange. (False)

34. The relevance, importance, and challenges associated with socially responsible
procurement are likely to lessen in the coming years. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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35. Investment recovery identifies opportunities to recover revenues or reduce costs
associated with scrap, surplus, obsolete, and waste materials. (True)

36. Investment recovery is often the responsibility of the finance manager. (False)

37. Excess materials refer to stock that exceeds the reasonable requirements of an
organization. (True)

38. Scrap materials are no longer serviceable, have been discarded, or are a by-product of
the production process. (True)

39. Obsolete materials have no economic value. (False)

40. The ways that organizations manage the investment recovery for excess, obsolete,
scrap, and waste materials should be influenced by the materials’ classification. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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PART IV
CASE SOLUTIONS

©2011 Pearson Education, Inc. publishing as Prentice Hall

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CHAPTER 7: DEMAND MANAGEMENT, ORDER MANAGEMENT
AND CUSTOMER SERVICE

Multiple Choice Questions (correct answers are bolded)

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

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

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. Which of the following is true?

a. computer software for demand forecasting dates back over 40 years

b. one challenge to collaborative planning, forecasting, and replenishment is
getting supply chain partners to share data
c. the Excel software package generates forecasts that have very little error
d. SAP is the most widely used software package for demand forecasting
e. all of the above are true

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

a. logistics
b. order processing
c. demand management
d. order management

9. 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

10. 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

11. Which of the following is false?

a. some organizations have expanded the order management concept to include

the length of time it takes an organization to receive payment for an order
b. the order cycle should be analyzed in terms of total cycle time and cycle time
variability

©2011 Pearson Education, Inc. publishing as Prentice Hall 2

 c. order management has been profoundly impacted by advances in information
systems
d. the various activities associated with an order cycle are not uniformly agreed
upon
e. all of the above are true

12. 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

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

a. three
b. four
c. five
d. six

14. 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

15. ____ 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

16. Classifying orders according to pre-established guidelines so that a company can

prioritize how orders are to be filled refers to ____.

a. ABC analysis
b. order management
c. order processing
d. order triage

©2011 Pearson Education, Inc. publishing as Prentice Hall 3

17. 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

18. 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

19. Which of the following is not a characteristic of contemporary voice-based order

picking systems?

a. easily disrupted by other noises

b. better voice quality than earlier systems
c. more powerful than earlier systems
d. less costly than earlier systems
e. all of the above are characteristics of voice-based order picking systems

20. Which of the following is not a characteristic of advances in order pick technology?

a. fewer picking errors

b. higher pick rates
c. reduced employee turnover
d. fewer employee accidents
e. all of the above are characteristics

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

a. picking and assembly

b. delivery
c. receiving
d. replenishment

22. The time span within which an order must arrive refers to ____.

a. transit time reliability

b. order delivery
c. delivery window
d. transit time

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

23. A commonly used rule of thumb is that it costs approximately ____ times as much to
get a new customer as it does to keep an existing customer.

a. three
b. four
c. five
d. six

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

a. seven
b. nine
c. twelve
d. fifteen

25. 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

26. Which of the following is not a dimension of customer service?

a. time
b. convenience
c. dependability
d. communication
e. all of the above are dimensions

27. The percentage of orders that can be completely and immediately filled from existing
stock is the ____ rate.

a. optimal inventory
b. order cycle
c. perfect order
d. order fill

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

a. convenience
b. dependability
c. time

©2011 Pearson Education, Inc. publishing as Prentice Hall 5

 d. communication

29. What are multichannel marketing systems?

a. channels that have multiple intermediaries between the producer and the
consumer
b. separate marketing channels that serve an individual customer
c. channels that do business in multiple countries
d. channels that combine horizontal and vertical marketing systems

30. Which of the following statements is false?

a. goals tend to be broad, generalized statements regarding the overall results that
the firm is trying to achieve
a. objectives are more specific than goals
c. a central element to the establishment of customer service goals and objectives
is determining the customer’s viewpoint
d. goals should be specific, measurable, achievable, and cost effective
e. all of the above statements are true

31. ____ refers to a process that continuously identifies, understands, and adapts
outstanding processes inside and outside an organization.

a. environmental scanning
b. quality management
c. benchmarking
d. continuous improvement

32. ____ is the process of taking corrective action when measurements indicate that the
goals and objectives of customer service are not being achieved.

a. benchmarking
b. leadership
c. control
d. managing

33. Which statement about measuring customer service is true?

a. firms should choose those aspects of customer service that are easiest to
measure
b. firms should choose those aspects of customer service that they think are most
important
c. firms should use as many customer service measures as they can
d. it is possible for organizations to use only one customer service metric
e. all of the above are false

©2011 Pearson Education, Inc. publishing as Prentice Hall 6

34. ____ 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

35. Which of the following statements is false?

a. good or excellent service recovery can actually result in increased customer

loyalty
b. approximately 40% of customers who experience a problem with
purchases of less than $5 will not do business with that company again
c. one service recovery guideline involves fair treatment for customers
d. service recovery refers to a process for returning a customer to a state of
satisfaction after a service or product has failed to live up to expectations
e. all of the above are true

True-False Questions

1. Demand management is important because efficient and effective supply chains have
learned to match both supply and demand. (True)

2. In make-to-order situations, finished goods are produced after receiving a customer

order. (True)

3. Simple moving averages and weighted moving averages are examples of judgmental
forecasting. (False)

4. Judgmental forecasting is appropriate when there is little or no historical data. (True)

5. Forecasting accuracy refers to the relationship between the actual and forecasted
demand. (True)

6. To date, most implementations of collaborative planning, forecasting, and

replenishment (CPFR) have resulted in increased sales revenues and increased safety
stock. (False)

7. In general terms, order management refers to how a firm handles incoming orders.
(True)

8. The order cycle is usually the time from when a customer places an order to when the
firm receives the order. (False)

9. There are four possible ways to transmit orders. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall 7

10. Order information is checked for completeness and accuracy in the order processing
component of the order cycle. (True)

11. The order triage function refers to correcting mistakes that may occur with order
picking. (False)

12. A commonsense approach is to fill an order from the facility location that is closest to
the customer, with the idea that this should generate lower transportation costs as well as
a shorter order cycle time. (True)

13. Order processing often represents the best opportunity to improve the effectiveness
and efficiency of the order cycle. (False)

14. Travel time accounts for a majority of an order picker’s total pick time. (True)

15. Pick-to-light technology is an order picking technique that has grown in popularity in
recent years. (True)

16. Order retrieval is the final phase of the order cycle. (False)

17. A key change in the order delivery component of the order cycle is that more and
more shippers are emphasizing both the elapsed transit time and transit time variability.
(True)

18. It costs about five times as much to get a new customer as it does to keep an existing
customer. (True)

19. Unhappy customers tell six people about their unhappiness. (False)

20. Consumers are demanding about the same levels of service today as in years past.
(False)

21. The increased use of vendor quality-control programs necessitates higher levels of
customer service. (True)

22. Dependability consists of consistent order cycles, safe delivery, and consistent
delivery. (True)

23. Companies today will not accept slower order cycles in exchange for higher order
cycle consistency. (False)

24. Order fill rate is the percentage of orders that can be completely and immediately
filled from existing stock. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 8

25. Text messaging and the Internet have lessened the need for telephone interaction and
face-to-face contact between seller and customer. (False)

26. The convenience component of customer service focuses on the ease of doing
business with a seller. (True)

27. Today’s customer likes to have multiple purchasing options at her/his disposal, and
organizations have responded by developing hybrid marketing channels, that is, separate
marketing channels to serve an individual customer. (False)

28. Goals are the means by which objectives are achieved. (False)

29. Objectives should be specific, measurable, achievable, and cost effective. (True)

30. Continuous improvement refers to a process that continuously identifies, understands,

and adapts outstanding processes found inside and outside an organization. (False)

31. Benchmarking should only involve numerical comparisons of relevant metrics.

(False)

32. The nature of the product can affect the level of customer service that should be
offered. (True)

33. A product just being introduced needs a different level of service support than one
that is in a mature or declining market stage. (True)

34. Leadership is the process of taking corrective action when measurements indicate that
the goals and objectives of customer service are not being achieved. (False)

35. The customer service metrics that are chosen should be relevant and important from
the customer’s perspective. (True)

36. It is possible for organizations to use only one customer service metric to measure
customer service. (True)

37. Customer profitability analysis explicitly recognizes that all customers are not the
same, and some customers are more valuable than others to an organization. (True)

38. Customer profitability analysis is grounded in traditional accounting cost allocation

methods. (False)

39. About 25% of customers who experience a problem with purchases of less that $5
will not do business with that company again. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall 9

40. Satisfactory service recovery tends to increase a customer’s willingness to
recommend the offending organization; unsatisfactory service recovery magnifies the
initial failure. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 10

©2011 Pearson Education, Inc. publishing as Prentice Hall 11
EXAMINATION QUESTIONS

CHAPTER 8: INVENTORY MANAGEMENT

Multiple Choice Questions (correct answers are bolded)

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

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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 costs in the United States in the twenty-first century represent approximately
____ of total logistics costs.

a. one-fifth
b. one-fourth
c. one-third
d. one-half

9. All of the following statements are true, except:

a. the importance of individual carrying costs factors (categories) is generally

consistent from product to product
b. inventory carrying costs consist of a number of different components or factors
c. in general, companies prefer to carry less inventory as carrying costs increase
d. in general, inventory carrying costs are expressed in percentage terms
d. all of the above are true

10. Inventory carrying costs in the United States in the twenty-first century have ranged
between ____ and ____ percent.

a. 4; 9
b. 9; 14
c. 14; 19
d. 19; 24

11. Inventory shrinkage ____.

a. is another name for inventory turnover

©2011 Pearson Education, Inc. publishing as Prentice Hall

2
 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

12. 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

13. In the United States, ____has traditionally provided a convenient starting point when
estimating the interest charges associated with maintaining inventory.

a. Gross Domestic Product growth

b. Consumer Price Index
c. the prime rate of interest
d. the yield on US Treasury bills

14. 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

15. 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”

16. Which of the following statements is false?

a. with respect to stockouts, a delayed sale is virtually costless to a company

because of the customer’s brand loyalty
b. the higher the average cost for a stockout, the more inventory (safety stock) that
should be held
c. tradeoffs exist between carrying costs and stockout costs
d. stockouts can be more costly than having too many items in stock

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 e. all of the above are true

17. Under conditions of certainty, a reorder point is equal to ____.

a. average daily demand times the length of the replenishment cycle

b. safety stock plus an EOQ
c. base stock plus safety stock
d. base stock minus safety stock

18. 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

19. 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

20. 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

21. 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

22. 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

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 b. increase
c. decrease
d. it depends on the particular product

23. Inventory flow diagrams illustrate that safety stock can prevent two problem areas,
____ and ____.

a. decreased rate of demand; longer-than-normal replenishment

b. increased rate of demand; shorter-than-normal replenishment
c. decreased rate of demand; shorter-than-normal replenishment
d. increased rate of demand; longer-than-normal replenishment

24. ____ 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

25. ABC analysis of inventory ____.

a. applies activity-based costing to managing inventory

b. recognizes that inventories are not of equal value to a firm
c. is synonymous with vendor-managed inventory
d. is an alternative to the EOQ model

26. Dead inventory (dead stock) refers to a product for which there is no sales during a
____ month period.

a. three
b. six
c. twelve
d. twenty-four

27. All of the following are suggestions for dealing with dead stock (inventory), except
____.

a. aggressive marketing
b. donate to charities
c. make to order
d. throw it away
e. all of the above are suggestions

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28. 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

29. ____ items refer to those that are used or distributed together.

a. me-too
b. substitute
c. co-branded
d. complementary

30. ____ products refer to those that customers view as being able to fill the same need or
want as another product.

a. copycat
b. me-too
c. substitute
d. co-branded

31. 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

32. 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

33. Which of the following statements about service parts logistics is false?

a. customer expectations for service parts logistics continues to increase

b. some organizations outsource their service parts logistics to companies that
specialize in this area
c. service parts logistics creates a variety of potential challenges for logisticians

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 d. the worldwide economic slowdown of 2008 and 2009 caused a decreased
emphasis on service parts logistics
e. all of the above are true

34. Under ____, the size and timing of replenishment orders are the responsibility of the
manufacturer.

a. quick response
b. supply chain management
c. vendor-managed inventory
d. efficient consumer response

35. Which of the following is not a potential benefit to vendor-managed inventory?

a. reduced order errors

b. improved demand forecasts
c. reduced inventories
d. fewer stockouts
e. all are VMI benefits

True-False Questions

1. Inventories are stocks of goods and materials that are maintained for many purposes.
(True)

2. Different organizational functions, such as marketing and production, tend to have

similar inventory management objectives. (False)

3. Inventory carries its greatest costs after value has been added through manufacturing
and processing. (True)

4. Buffer stock is also referred to as cycle stock. (False)

5. Safety stock refers to inventory that is held in addition to cycle stock to guard against
uncertainty in demand and/or lead time. (True)

6. Pipeline stock is inventory that is en route between various fixed facilities in a logistics
system. (True)

7. Psychic stock is associated with retail stores. (True)

8. Inventory tends to be one of the largest assets (in terms of dollar value) on a
company’s balance sheet. (True)

9. As a general rule, companies prefer to carry less inventory as the carrying cost
percentage decreases. (False)

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10. The range of inventory carrying costs in the United States in the twenty-first century
has been between 22 and 27 percent. (False)

11. Inventory shrinkage refers to the fact that products lose value through time. (False)

12. Obsolescence costs are one component of inventory carrying costs. (True)

13. The trade-off that exists between carrying costs and ordering costs is that they
respond in opposite ways to the number of orders or size of orders. (True)

14. Not having enough items can be as bad as, and sometimes worse than, having too
many items. (True)

15. The higher the average cost of a stockout, the more likely a company is going to want
to hold some amount of inventory (safety stock) to protect against stockouts. (True)

16. A reorder point is equal to average daily demand divided by the length of the
replenishment cycle. (False)

17. One requirement of a fixed order quantity system is that the inventory must be
constantly monitored. (True)

18. A fixed order quantity system is more susceptible to stockouts than is a fixed order
interval system. (False)

19. The EOQ is the point at which carrying costs equal ordering costs. (True)

20. One assumption of the basic EOQ model is a continuous, constant, and known rate of
demand. (True)

21. The EOQ can only be calculated with respect to the number of units to be ordered.
(False)

22. Inventory flow diagrams graphically depict the demand for, and replenishment of,
inventory. (True)

23. Safety stock can prevent against two problem areas: An increased rate of demand and
longer-than-normal replenishment. (True)

24. Marginal analysis recognizes that all inventories should not be managed in the same
way. (False)

25. In terms of ABC analysis of inventory, no more than 25% of items should be
classified as “A’s.” (False)

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26. Dead stock (inventory) refers to product for which there is no sales during a 12-month
period. (True)

27. One way of dealing with dead stock (inventory) is for companies to simply throw it
away. (True)

28. The number of times that inventory is sold in one year is referred to as average
inventory. (False)

29. Inventory turnover can be calculated by dividing costs of goods sold by average
inventory. (True)

30. High inventory turnover indicates that a company is taking longer to sell its
inventory. (False)

31. Complementary products can be defined as inventories that can be used or distributed
together, such as razor blades and razors. (True)

32. Many grocery chains target in-stock rates of 90 percent for individual stores so that
sufficient substitutes exist for a customer to purchase a substitute item rather than go to a
competing store. (False)

33. Lean manufacturing focuses on the elimination of waste. (True)

34. Because of smaller, more frequent orders and closer supplier location, trucking tends
to be an important mode of transportation in the just-in-time approach. (True)

35. Efficient consumer response (ECR) and collaborative planning, forecasting, and
replenishment (CPFR) are examples of lean inventory approaches. (False)

36. A confluence of events, such as increasing global sourcing, suggests that

organizations should carefully consider the potential trade-offs before adopting a lean
inventory philosophy. (True)

37. Service parts logistics has decreased in importance in recent years. (False)

38. One logistical challenge with service parts logistics is that it can be extremely
difficult to forecast the demand for the necessary parts. (True)

39. In vendor-managed inventory, the size and timing of replenishment orders are the
responsibility of the manufacturer. (True)

40. Vendor-managed inventory can only be applied to consumer, and not industrial,
products. (False)

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 9: DISTRIBUTION CENTER, WAREHOUSE, AND PLANT
LOCATION

Multiple Choice Questions (correct answers are bolded)

1. The initial focus in facility location is on a ____.

a. city
b. county
c. state or province
d. region

2. Which of the following statements is false?

a. the initial focus in facility location is on a region

b. because manufacturing plants and warehousing can be very expensive to lease
or build, companies are hesitant to close them
c. poorly located facilities do not impact logistical effectiveness
d. poorly located facilities negatively impact logistical efficiency
e. all of the above are true

3. ____ is the most popular location for near-sourcing among companies that do business
in North America.

a. Canada
b. Mexico
c. Puerto Rico
d. Brazil
e. none of the above

4. In 2010, the three most populous U.S. states were located in the West, Southwest, and
____.

a. Northeast
b. Southeast
c. Midwest
d. Southwest

5. What two countries account for approximately one-third of the world’s population?

a. China and Indonesia

b. India and the United States
c. China and India
d. the United States and China

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6. A locavore strategy ____.

a. is based on the agglomeration concept

b. refers to purchasing locally grown or produced foods
c. focuses on hiring local workers
d. is associated with reducing inventory turnover
e. none of the above

7. 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

8. 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

9. 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

10. 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

11. 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
12. Over the past quarter century, discussion of natural resources and facility location has
increasingly factored in ____ considerations.

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 a. cost
b. supply chain
c. diversity
d. environmental

13. Which of the following is false?

a. pure materials lose no weight in processing

b. with weight-gaining products the processing point should be close to the
market
c. water is a requirement for the location of many facilities
d. a 250,000 square foot distribution center might require at least 50 acres of land
for construction purposes
e. all of the above are true

14. Labor force ____ are a key locational determinant as supply chains become more
global in nature.

a. wage rates
b. size
c. skills
d. age

15. ____ plants, which are located just south of the U.S.-Mexican border, provide much
needed jobs to Mexican workers and allow for low-cost, duty-free production so long as
all goods are exported from Mexico.

a. industry cluster
b. locavore
c. maquiladora
d. free trade zone

16. Which of the following is not a key shortcoming of the sweatshops associated with
the electronics industry?

a. violations of working hours

b. poor workplace ventilation
c. violations of wage agreements
d. discriminatory practices based on age
e. all of the above are key shortcomings

17. Right-to-work laws refer to a situation where ____.

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 a. worker strikes are illegal
b. every person who wants a job is guaranteed a job
c. each state provides employment to those people receiving public assistance
d. an individual cannot be compelled to join a union as a condition of
employment

18. All of the following are true except ____.

a. countries with low labor costs often have a multitude of sweatshops

b. there has been a decrease in maquiladoras in recent years
c. a workforce’s union status may be a key locational determinant for some
organizations
d. expatriate work assignments can be costly
e. all of the above are true

19. An expatriate refers to a person who ____.

a. is sent to work in other countries for extended periods of time

b. holds dual citizenship
c. has been stripped of citizenship
d. is ineligible to work outside his (her) home country

20. Turnover rates for expatriate workers current run between ____ percent.

a. 10 and 20
b. 15 and 25
c. 20 and 40
d. 25 and 45

21. From a business perspective, ____ taxes are analogous to the personal property taxes
paid by individuals.

a. sales
b. real estate
c. inventory
d. corporate franchising

22. A general rule of thumb is that the services received represent only about ____
percent of the taxes paid.

a. 60
b. 50
c. 40
d. 30

23. Which of the following statements is false?

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 a. the accessibility of highway transportation often ranks as one of the most
important criteria in facility location
b. transportation considerations are a key aspect of facility location decisions
c. a poor facility location can increase transportation costs as well as negatively
impact customer service
d. a centralized facility location can maximize a facility’s service area
e. all of the above are true

24. The existence of transportation competition, whether intermodal or intramodal, tends

to ____.

a. have both cost and service benefits to a user

b. have cost, but not service, benefits to a user
c. have both cost and service benefits to a user
d. have neither cost nor service benefits to a user

25. ____ refers to the net advantages that can be gained by a sharing of common
locations by various enterprises.

a. supplier development
b. coopetition
c. supplier relationship management
d. agglomeration

26. Supplier parks are a concept that developed around ____ and their suppliers in
Europe.

a. supermarkets
b. apparel makers
c. computer makers
d. automakers

27. With respect to commodity flows, logisticians are especially interested in ____ and
____.

a. what is being produced; where it is being shipped

b. how much is being produced; where it is being produced
c. how much is being produced; where it is being shipped
d. what is being produced; where it is being produced

28. The European Union’s expansion into Central and Eastern European countries has
resulted in the Czech Republic and ____ becoming favored distribution sites because of
their relatively central location.

a. Poland

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 b. Hungary
c. Switzerland
d. Austria

29. Which of following is not a possible quality of life consideration in facility location?

a. cost of living
b. crime rate
c. educational opportunities
d. the weather
e. all of the above are quality of life considerations

30. A brownfield is ____.

a. a term for where crushed boxes are stored before recycling

b. a term that refers to a potential site that has no trees needing to be cleared
before construction
c. a property for which use and redevelopment is complicated by past use
d. an airport that lacks paved runways
e. none of the above

31. 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

32. The center-of-gravity approach to location analysis minimizes ____.

a. labor costs
b. warehousing costs
c. real estate taxes
d. distance to existing facilities

33. How does the weighted center-of-gravity approach to location analysis differ from the
center-of-gravity approach to location analysis?

a. the weighted approach considers real estate taxes

b. the weighted approach is less complicated
c. the weighted approach considers shipment volume

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 d. the weighted approach considers tapering rates

34. The Worker Adjustment and Retraining Notification (WARN) Act mandates that
employers give ____ days’ notice about plant closings and mass layoffs.

a. 30
b. 60
c. 90
d. 120
e. none of the above

35. Which of the following is not a possible reason for a facility closing?

a. eliminating redundant capacity in mergers and acquisitions

b. poor planning
c. improving supply chain efficiency
d. insufficient volume of business
e. all of the above are possible reasons

True-False Questions

1. Facility location is a logistics/supply chain activity that has evolved from a tactical
decision to one of tremendous strategic importance in numerous organizations. (True)

2. The initial focus in facility location is on a region of the world. (True)

3. Poorly located facilities, such as manufacturing plants and warehouses, negatively

impact logistical effectiveness, but have little impact on logistical efficiency. (False)

4. The five most populous states in the United States were the same in 1980 and 2010.
(False)

5. China and India account for approximately one-third of the world’s population. (True)

6. A locavore strategy focuses on hiring local workers. (False)

7. An early step in the facility location decision should involve determining the total
number of facilities that a firm should operate. (True)

8. A pure material is one that is totally water soluble. (False)

9. The processing point for a weight-losing raw material can be anywhere between the
source and the market. (False)

10. The processing point for a weight-gaining raw material should be close to the market.
(True)

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11. Over the past quarter century, discussion of natural resources and facility location has
increasingly factored in environmental and sustainability considerations. (True)

12. Population can be viewed as both a market for goods and a potential source of labor.
(True)

13. Population size is an irrelevant consideration in the facility location decision. (False)

14. Labor wage rates appear to be a key locational determinant as supply chains become
more global in nature. (True)

15. The United States has the highest hourly compensation rates in the world. (False)

16. Maquiladora plants have experienced a resurgence in recent years because of a focus
on manufactured products that depend on fast time to market. (True)

17. Sweatshops are organizations that exploit workers and that do not comply with fiscal
and legal obligations towards employees. (True)

18. Right-to-work laws mean that every person who wants a job is guaranteed a job.
(False)

19. An expatriate is a person who is not allowed to work outside his (her) home country.
(False)

20. Turnover rates for expatriate workers currently range between 20% and 40%. (True)

21. Inventory taxes have become increasingly difficult to collect in part because of a lack
of agreement as to what is meant by inventory. (True)

22. A general rule of thumb is that the services received from business taxes represent
only about 50% of the taxes that were paid. (True)

23. Intermodal competition refers to the number of carriers within a particular mode of
transportation. (False)

24. A poor facility location can increase transportation costs, but has minimal impact on
customer service. (False)

25. Centralized facilities tend to minimize total transit distances, which likely results in
minimum transportation costs. (True)

26. Agglomeration refers to the net advantages that can be gained by a sharing of
common locations by various enterprises. (True)

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27. Supplier parks refer to places where main component makers locate in specially
created industrial complexes adjacent to assembly plants. (True)

28. With respect to commodity flows, logisticians are especially interested in what is
being produced and where it is being produced. (False)

29. The development and implementation of multicountry trade agreements has had
profound impacts on trade patterns. (True)

30. The European Union’s expansion into Central and Eastern European countries has
seen Hungary become a favored distribution site because of its relatively central
geographic location. (False)

31. Quality of life considerations play a limited role in facility location decisions. (False)

32. Government considerations such as the relevant legal system, political stability, and
protectionism are important when companies are thinking of facility location in non-
domestic countries. (True)

33. A community can encourage or discourage business activity through changes in the
zoning classifications of land. (True)

34. Brownfields refer to a place where flattened cartons are stored until they are recycled.
(False)

35. Free trade zones must be adjacent to a port or an airport. (False)

36. Grid systems are important to locational analysis because they allow one to analyze
spatial relationships with relatively simple mathematical tools. (True)

37. The idea behind a weighted center-of-gravity approach is that a prospective

warehousing facility will be located closer to the existing sites with the greatest current
demand. (True)

38. Facility relocation is associated with business growth, while facility closing is
associated with business contraction. (True)

39. The Worker Adjustment and Retraining Notification (WARN) Act mandates that
employers give 90 days’ notice about plant closings and mass layoffs. (False)

40. Communication with employees is more important for facility closings than for
facility relocations. (False)

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 10: WAREHOUSING MANAGEMENT

Multiple Choice Questions (correct answers are bolded)

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

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 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. Warehousing labor safety practices in the United States are monitored by which
federal government agency?

a. Warehousing Safety Administration

b. Department of Commerce
c. Food and Drug Administration
d. Consumer Product Safety Commission
e. none of the above

11. 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

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

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 a. high fixed cost to user
b. lack of safety regulation
c. lack of locational flexibility
d. lack of control by the user

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

a. private
b. public
c. contract
d. multiclient

14. 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

15. With respect to contract warehousing, ____ to ____ year contracts appear to allow
sufficient time for the warehousing provider to learn the client’s business while allowing
the client some flexibility in case the agreement fails to produce acceptable results.

a. 1; 2
b. 2; 3
c. 3; 5
d. 5; 7

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

a. private; contract
b. common; private
c. public; common
d. public; contract

17. One of the best pieces of advice with respect to the design of warehousing facilities is
to ____.

a. automate whenever possible

b. build up rather than out
c. avoid consultants
d. use common sense
18. Trade-offs must be made among space, labor, and ____ with respect to warehousing
design.

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 a. cost
b. construction materials
c. mechanization
d. speed

19. 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

20. 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

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

a. increase; decrease
b. increase; increase
c. decrease; decrease
d. decrease; increase

22. Which of the following statements about a one-dock layout is false?

a. each and every dock can be used for both shipping and receiving
b. it requires carriers to pick up and deliver at specific times
c. goods move in a straight configuration
e. product may sometimes be reloaded in the vehicle that delivered it
e. all of the above statements are true

23. Narrow aisles can store ____ to ____ percent more product than conventional width
aisles.

a. 30; 40
b. 20; 25
c. 15; 20
d. 10; 15

24. Which of the following is not an example of warehouse automation?

a. radio frequency identification

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 b. narrow aisle forklifts
c. automated guided vehicles
d. automated storage and retrieval systems
e. all of the above are examples of warehouse automation

25. Which of the following is not a trade-off in warehousing design?

a. two-dock versus single-dock layout

b. build up versus build out
c. order picking versus order taking functions
d. degree of warehouse automation
e. all of the above are trade-offs in warehousing design

26. One estimate suggests that only approximately ____ percent of a facility’s cubic
capacity is actually occupied by product.

a. 10
b. 25
c. 40
d. 50

27. Which of the following is not a potential measure of warehousing productivity?

a. average warehouse capacity used

b. order fill rate
c. pallets shipped per person
d. cases shipped per person
e. all of the above are potential measures of warehousing productivity

28. What is the most frequent source of injuries among warehousing personnel?

a. heart attacks
b. assault by other warehousing personnel
c. leg wounds from forklifts
d. back and shoulder injuries

29. What is dunnage?

a. a slang term for a particular type of ocean liner

b. a type of packaging material that is placed inside of boxes
c. material that is used to block and brace products inside carrier equipment
d. additional transportation fees that are charged to small shippers

30. Which of the following is not one of the common causes of warehousing fires?

a. electrical failure or malfunction

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 b. lightning strikes
c. heat source too close to combustibles
d. cutting or welding too close to combustibles
e. all of the above are common causes

31. According to the Occupational Safety and Health Administration, approximately

____ employees are killed each year while operating forklifts in warehousing facilities.

a. 100
b. 250
c. 500
d. 1,000
e. none of the above

32. A safety data sheet (SDS) is required for ____.

a. all finished goods stored in a warehouse

b. each hazardous product to be stored in a facility
c. all raw materials brought into a firm
d. any product imported into the United States

33. Which of the following is not one of the four questions associated with effective
management of hazardous materials storage?

a. what material is being stored

b. why is it being stored
c. what is the material’s source
d. where is it being stored
e. each of the above is one of the four questions

34. In general, warehousing security can be enhanced by focusing on people, ____, and
____.

a. building; equipment
b. buildings; cost
c. cost; processes
d. facilities; processes

35. Which of the following statements is false?

a. clean and sanitary warehousing facilities can have a positive impact on morale
b. one suggestion for warehouse sanitation is to clean the facility at least once a
day
c. warehousing cleanliness and sanitation can be facilitated by putting product at
the back of a facility where it is out of the way
d. clean and sanitary warehousing facilities can reduce employee turnover

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 e. all of the above are true

True-False Questions

1. Many well-run companies view warehousing as a strategic consideration and as a

potential source of competitive advantage. (True)

2. Materials handling has been referred to as transportation at zero miles per hour. (False)

3. Warehousing is needed because patterns of production and consumption may not

coincide. (True)

4. Assorting and sorting refer to adjustments associated with the quantity of product.
(False)

5. Accumulating involves bringing together similar stocks from different sources. (True)

6. Assorting involves breaking larger quantities into smaller quantities. (False)

7. Warehouses emphasize the rapid movement of products through a facility and attempt
to maximize throughput. (False)

8. Throughput is the amount of product entering and leaving a warehousing facility in a

given period of time. (True)

9. One drawback of cross-docking is that it increases the amount of necessary

warehousing space. (False)

10. With public warehousing the user rents space as needed, thus avoiding the cost of
unneeded space. (True)

11. In the United States, the Warehousing Safety Administration has primary
responsibility for warehousing safety practices. (False)

12. Perhaps the biggest drawback to public warehousing is the inability to provide
specialized services. (False)

13. Private warehousing tends to be feasible when demand patterns are relatively stable.
(True)

14. Private warehousing offers potential users a great deal of control over their storage
needs. (True)

15. Public warehousing has embraced value-adding activities such as customization and
reverse logistics to a greater degree than has contract warehousing. (False)

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16. Three-to-five year contracts appear to allow sufficient time for contract warehouses to
learn their client’s business while at the same time allowing clients some flexibility.
(True)

17. In essence, multi-client warehousing mixes attributes of private and contract

warehousing. (False)

18. Common sense should not be ignored with respect to the design of warehousing
facilities. (True)

19. A storage facility with low rates of product turnover should be laid out in a manner
that maximizes utilization of the cubic capacity of the storage facility. (True)

20. Trade-offs must be made among space, labor, and mechanization with respect to
warehousing design. (True)

21. A variable slot location warehousing system may result in low space utilization.
(False)

22. A general rule of thumb is that it is cheaper to build up than build out. (True)

23. A one-dock warehouse layout, in contrast to a two-dock layout, increases the space
needed for storage docks. (False)

24. Narrower aisles can increase the space utilization of a facility. (True)

25. Radio frequency identification is an example of warehouse automation. (True)

26. Recent estimates suggest that only approximately 25% of a warehousing facility’s
cubic capacity is actually occupied by product. (False)

27. Motivation of warehousing employees can be difficult because of the somewhat

repetitive nature of the operation. (True)

28. Increases in warehousing productivity require significant investment in technology or

mechanized or automated equipment. (False)

29. One low-cost suggestion for improving warehousing productivity is to play music, if
conditions permit. (True)

30. Forklift operators in the United States must be recertified every five years. (False)

31. Back and shoulder injuries are the most frequent injuries among warehousing
personnel. (True)

32. Dunnage refers to charges for accessorial transportation service. (False)

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33. Fires are a constant threat in warehousing. (True)

34. Approximately 10% of all warehousing fires in recent years were sent intentionally.
(False)

35. In the United States, approximately 95,000 employees are injured every year while
operating forklifts in warehousing facilities. (True)

36. Government regulations require organizations to create a safety data sheet (SDS) for
each imported item that is stored in a warehousing facility. (False)

37. Buildings that store hazardous materials often have walls and doors that can
withstand several hours of intense fire. (True)

38. Potential threats to warehousing security include theft, pilferage, heat and humidity,
and fire, among others. (True)

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

and information. (False)

40. Clean and sanitary warehousing facilities can have a positive impact on employee
safety, morale, and productivity. (True)

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 11: PACKAGING AND MATERIALS HANDLING

Multiple Choice Questions (correct answers are bolded)

1. Product density refers to a product’s ____.

a. volume
b. weight
c. weight per volume
d. fragility
e. none of the above

2. Which of the following statements is false?

a. a product’s chemical characteristics have little to no influence on the way

the product is handled
b. some products can be exposed to freezing weather; others cannot
c. the various properties of goods must be made known to consumers to help them
make the correct buying decision and properly care for the product
d. perishable products require special packaging as they move from source to
customer
e. all of the above are true

3. 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

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

a. warehousing
b. packaging
c. materials handling
d. inventory management

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

a. materials management
b. materials handling
c. procurement
d. packaging

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

6. Each of the following is a shipping hazard that a package may be exposed to except
____.

a. retraction
b. vibration
c. compression
d. rough handling
e. all of the above are shipping hazards for a package

7. Which of the following is false?

a. package labeling is usually done at the end of the assembly line

b. pictures are preferable to words for labeling a product
c. labeling regulations may differ from country to country
d. labeling requirements within a particular country can vary from state to state
(province to province)
e. all of the above are true

8. 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

9. The Globally Harmonized System of Classification and Labeling of Chemicals (GHS)

was developed by the ____.

a. International Chamber of Commerce

b. World Trade Organization
c. World Bank
d. United Nations

10. Which of the following is not a key piece of classification and labeling information
provided by the Globally Harmonized System of Classification and Labeling of
Chemicals (GHS)?

a. a signal word (e.g., “danger”)

b. a picture of the chemical or hazardous material
c. a symbol
d. a hazard statement (e.g., “severe projection hazard”)
e. all of the above are key pieces of GHS information

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

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 a. irrelevant to the purchase decision
b. one of the least important logistics activities
c. deceptive
d. a major environmental issue

12. Biodegradable plastics cost ____ as much as conventional plastics.

a. two times
b. three times
c. four times
d. five times

13. Which of the following is not a characteristic of plastic packaging?

a. lack of versatility
b. takes a long time to biodegrade
c. plastic is dependent on petroleum
d. plastic litter can kill marine animals
e. all of the above are characteristics of plastic packaging

14. Which of the following is not an environmentally-friendly packaging strategy that

firms might adopt?

a. reduce the amount of packing materials used

b. use more environmentally-friendly packaging materials
c. use reusable containers
d. retain or support services that collect the used package and recycle it
e. all of the above are strategies

15. ____ systems consider the reverse flow of products, their reuse, and the marketing
and distribution of recovered products.

a. eco-
b. open-loop
c. closed-loop
d. dynamic

16. How many countries in the world do not currently use the metric system of
measurement?

a. five
b. three
c. two
d. zero

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17. 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

18. What has been described as the “last frontier” of logistics savings opportunities?

a. information technology
b. transportation consolidation
c. packaging inefficiencies
d. inventory management
e. none of the above

19. A “box-maker’s certificate” ____.

a. refers to what box makers receive upon finishing their training

b. is given in recognition of superior box making ability
c. assures that boxes are free from any visible defects
d. assures railroads and motor carriers that boxes are sufficiently sturdy to
meet their handling requirements

20. 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

21. A unit load involves ____.

a. a convoy of rail cars carrying the same product

b. loading an entire vehicle with shipments from three or fewer shippers
c. the usage of a pallet rack system of storage
d. consolidation of several units into larger units to improve efficiency in
handling and to reduce shipping costs

22. A major advantage of the unit load is ____.

a. its environmental friendliness

b. mechanical devices can be substituted for manual labor
c. its value to companies that deal in small quantities
d. that it simplifies transportation requirements

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

23. Which of the following is false?

a. the unit load is of limited value to shippers that deal in smaller quantities
b. unit loads may discourage pilferage
c. the unit load allows mechanical devices to be substituted for manual labor
d. pallets suffer from a lack of standardized sizes, particularly in the U.S.
e. all of the above are true

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

a. World Trade Organization

b. International Chamber of Commerce
c. International Standards Organization
d. United Nations

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

a. box
b. crate
c. pallet
d. container

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

a. lifespan
b. price
c. weight
d. incompatibility with existing forklifts

27. ____ pounds is the approximate weight at which there is a noticeable increase in
injuries, particularly back injuries, from manual handling.

a. 25
b. 40
c. 50
d. 60
e. none of the above

28. From a space utilization perspective, one pallet occupies ____ times more space than
a plastic slip sheet.

a. 80
b. 60
c. 40
d. 20

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29. ____ 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

30. With respect to density, a vehicle loaded with ____ is most likely to cube out (cubic
capacity is filled before reaching its weight capacity).

a. grain
b. coal
c. soybeans
d. gravel

31. A dry bulk material’s ____ is important for determining the quantity that can be
stored in a given location.

a. viscosity
b. specific gravity
c. angle of repose
d. market value
e. none of the above

32. ____ refers to the interaction between workers and workplace conditions.

a. rhochrematics
b. labor relations
c. human resource management
d. ergonomics

33. 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

34. It is important that the materials handling equipment be aligned with an

organization’s objectives, customers, and ____.

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 a. suppliers
b. top management
c. products
d. stakeholders

35. Which of the following is false?

a. racks and bins are examples of storage equipment

b. automation refers to equipment that complements, rather than replaces,
human contact
c. forklifts can be dangerous
d. in a part-to-picker system, the pick location is brought to the picker
e. all of the above are true

True-False Questions

1. Packaging and materials handling decisions can be made in isolation from other
logistics activities. (False)

2. The physical characteristics of some goods change while they are moving in the
logistics channel. (True)

3. Certain products should not, for safety or health reasons, be packaged together. (True)

4. Procurement can be thought of in terms of the building-blocks concept. (False)

5. One general function of packaging is to identify the relevant product. (True)

6. The severity of the distribution environment is the primary consideration in properly

designing a protective packaging system. (False)

7. When new products or new packaging techniques are about to be introduced, it is

somewhat advisable to have the packages pretested. (True)

8. Shipping hazards include vibrations, dropping, rough handling, and overexposure to

extreme temperatures. (True)

9. Most package labeling takes place at the end of the assembly line. (True)

10. As a general rule, labeling requirements and enforcement tend to be more stringent in
larger countries (based on population) than in smaller countries. (False)

11. Failure to comply with labeling guidelines can result in surcharges, administrative
fees, or penalty charges. (True)

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12. The International Chamber of Commerce developed the Globally Harmonized
System of Classification and Labeling of Chemicals (GHS). (False)

13. Approximately 50% of consumers view packaging as a major environmental issue.

(False)

14. Biodegradable plastics cost approximately three times as much as conventional

plastics. (False)

15. Plastic packaging tends to be cheaper, more versatile, and more consumer-friendly
than paper packaging. (True)

16. Polyvinyl chloride (PVC), commonly referred to as vinyl, is considered a friendly

plastic because it has few, if any, potential side effects. (False)

17. Reusable containers work best in a closed-loop system. (True)

18. The United States is the only country in the world that does not currently use the
metric system of measurement. (False)

19. Transportation consolidation has been described as the “last frontier” of logistics
savings opportunities. (False)

20. Carriers’ tariffs and classifications influence the type of packaging and packing
methods that must be used. (True)

21. A “box maker’s certificate” assures that boxes are free from any visible defects.
(False)

22. When a unit load is secured to a pallet, it is more difficult for pilferage to take place.
(True)

23. The major advantage of the unit load is that it enables mechanical devices to be
substituted for manual labor. (True)

24. The World Trade Organization has established six international pallet size standards.
(False)

25. The retail package is the basic unit in unit loading. (False)

26. In the United States, the majority of pallets are made of wood. (True)

27. Plastic pallets tend to be less expensive than wooden or metal pallets. (False)

28. Fifty pounds is a significant weight in many logistics systems because it represents
the approximate weight at which there is a noticeable increase in injuries. (True)

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29. Advances in technology have created stronger plastics that can be used for slip sheets
and this has resulted in a corresponding decrease in damage rates. (True)

30. Load-planning software can be used to suggest how to load a container with different
sizes of cartons. (True)

31. “Weighing out” refers to a container that has been weighed prior to its departure from
a container yard. (False)

32. Materials handling deals with the short distance movement that usually takes place
within the confines of a building such as a plant or DC and between a building and a
transportation service provider. (True)

33. Iron ore is more likely than coal to cube out a vehicle (i.e., equipment’s cubic
capacity is filled before reaching its weight capacity). (False)

34. A material’s angle of repose refers to the size of angle that would be formed by the
side of a conical stack of that material. (True)

35. The “standardization principle” is generally regarded as the most important of the 10
material handling principles. (False)

36. The total cost of ownership is associated with the system principle of material
handling. (False)

37. Ergonomics refers to the interaction between workers and workplace conditions.
(True)

38. Automatic guided vehicles (AGVs) are an example of mechanized materials handling
equipment. (False)

39. It has been suggested that automation becomes economically viable only when a
facility handles at least 50,000 cartons a day. (True)

40. As a general rule, picker-to-part systems are preferable to part-to-picker systems.

(False)

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©2011 Pearson Education, Inc. publishing as Prentice Hall 10
CHAPTER 12: TRANSPORTATION (correct answers are bolded)

Multiple Choice Questions

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. A 3,047 meter (10,000 foot) runway is significant because it ____.

a. is generally viewed as adequate for accommodating the largest existing

wide-body aircraft
b. is the longest that can be used worldwide due to safety regulations
c. represents the longest runway in the world
d. is only found in economically developed countries
e. none of the above

4. 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

5. In the United States, ____ account for the largest share of ton-miles and ____ account
for the majority of freight revenues.

a. railroads; railroads
b. trucks; trucks
c. trucks; railroads
d. railroads; truck

6. ____ is generally the fastest form of transportation for shipments exceeding 600 miles.

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 a. less-than-truckload motor carriers
b. air
c. parcel carriers
d. truckload motor carriers

7. Consignees are ____.

a. extremely large less-than-truckload carriers

b. shippers of freight
c. receivers of freight
d. preferred suppliers

8. 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

9. 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

10. 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

11. Truckload carriers focus on shipments of greater than ____ pounds.

a. 10,000
b. 15,000
c. 17,500
d. 20,000
e. none of the above

12. Each of the following is true, except ____.

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 a. Schneider National is an example of a truckload carrier
b. in truckload shipments, the shipper loads and the consignee unloads the trailer
c. a truckload shipment involves only one customer
d. truckload carriers focus on shipments of greater than 10,000 pounds
e. all of the above are true

13. Hours-of-service (HOS) rules and speed limits have long been justified in the motor
carrier industry on the basis of ____.

a. cost efficiency
b. customer requirements
c. operational efficiency
d. safety concerns

14. The primary advantage for motor carriers is ____.

a. reliability
b. speed
c. capability
d. flexibility

15. ____ is the most reliable form of transportation.

a. rail
b. motor carrier
c. pipeline
d. air
e. water

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

a. product
b. trunk
c. arterial
d. collection

17. ____ 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

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18. 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

19. Inland waterways in the United States are dredged to a depth of ____ feet, which
tends to be the minimum depth required for most barges.

a. fifteen
b. twelve
c. nine
d. six

20. A ____ raises or lowers barges so that they can meet the river’s level as they move
upstream or downstream.

a. barge crane
b. lock
c. levee
d. towboat
e. none of the above

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

a. grain
b. coal
c. iron ore
d. petroleum

22. ____ 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

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

a. 48 foot container
b. 40 foot container

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 c. 20 foot container
e. 10 foot container

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

a. less loss and damage

b. reduced transit times
c. lower transportation cost
d. improved reliability

25. 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

26. 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

27. 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

28. Firms that specialize in carrying packages that weigh up to 150 pounds are called
____.

a. couriers
b. accessorial carriers
c. parcel carriers
d. expedited carriers

29. What is the largest transportation company (by revenues) in the United States?

a. FedEx
b. Union Pacific Railroad
c. United Parcel Service
d. United Airlines

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30. In the United States, commercial airline pilots must retire at age ____.

a. 70
b. 65
c. 62
d. 60
e. none of the above

31. The U.S. ____ is the federal government body with primary responsibility for
transportation safety regulation.

a. Interstate Commerce Commission

b. Department of Commerce
c. Department of Homeland Security
d. Department of Transportation

32. With respect to U.S. economic regulation, the ____ has primary responsibility for
resolving railroad rate and service disputes, reviewing potential rail mergers, and some
jurisdiction over motor carriers, domestic water transportation, and pipelines.

a. Surface Transportation Board

b. Interstate Commerce Commission
c. Federal Trade Commission
d. Department of Commerce

33. Common carriers of transportation have ____ obligations.

a. six
b. five
c. four
d. three
e. none of the above

34. Which of the following is not a legal classification of carriers?

a. exempt
b. contract
c. common
d. private
e. all of the above are legal classifications

35. Private transportation is most prevalent in the ____ industry.

a. pipeline
b. trucking
c. railroad

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 d. airline

True-False Questions

1. Transportation refers to the actual, physical movement of goods and people between
two points. (True)

2. There are four different modes of transportation. (False)

3. A 10,000 foot (3,047 meter) runway is viewed as adequate for accommodating the
largest existing wide-body aircraft. (True)

4. Rail gauge refers to the thickness of rail track. (False)

5. In the U.S., motor carriers have the largest share of ton-miles. (False)

6. Air is generally the fastest mode of transportation for shipments exceeding 600 miles.
(True)

7. Products that move by airfreight tend to be high in value and tend to require urgent
delivery. (True)

8. Less-than-truckload shipments range from about 150 to 10,000 pounds. (True)

9. Truckload freight moves through a carrier’s terminal(s). (False)

10. Hours-of-service rules and speed limits have generally been justified on the basis of
operational efficiency. (False)

11. The primary advantage for motor carriers is flexibility (the ability to deliver the
product to the customer). (True)

12. Pipelines are a unique mode of transportation because it is the only one without
vehicles. (True)

13. Railroads are considered the most reliable form of transportation. (False)

14. The U.S. railroad industry is dominated by four freight carriers. (True)

15. Twelve feet of water is the minimum depth required for most barges. (False)

16. A barge crane raises or lowers barges so they can meet the river’s level as they move
upstream or downstream. (False)

17. Barge transportation tends to be slow. (True)

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18. Of the modes with vehicles, railroads offer the greatest capacity, or volume, that can
be carried at one time. (False)

19. With intermodal transportation, 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. (True)

20. Airfreight containers are commonly referred to as “skids.” (False)

21. A commonly used metric for measuring container volumes is the TEU (twenty-foot
equivalent unit). (True)

22. Land bridge services involve the use of surface transportation—generally rail
transportation—between an origin and destination port. (True)

23. Freight forwarders are the same thing as freight brokers. (False)

24. Freight forwarders sell freight at a higher rate per pound than they pay carriers to haul
it. (True)

25. The main benefit of shippers’ association is one-stop shopping. (False)

26. A transportation broker looks to match a shipper’s freight with a carrier to transport
it. (True)

27. Parcels refer to packages weighing up to 100 pounds. (False)

28. U.S. commercial airline pilots face mandatory retirement at age 70. (False)

29. The level and degree of transportation regulation varies from country to country.
(True)

30. Environmental regulation of transportation is concerned with water, noise, and air
pollution. (True)

31. The U.S. Department of Homeland Security is the federal government body with
primary responsibility for transportation safety regulation. (False)

32. U.S. pipelines are so safe that there is no federal safety agency assigned to regulate
them. (False)

33. Economic regulation in transportation refers to control over business practices and
activities such as entry and exit; pricing; service; accounting and financial issues; mergers
and acquisitions. (True)

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34. The U.S. Department of Commerce has primary responsibility for resolving railroad
rate and service disputes as well as reviewing potential rail mergers. (False)

35. Since economic deregulation, transportation carriers are no longer constrained with
respect to the variety of service they can offer. (True)

36. Private carriers do not have to comply with environmental and safety regulations.
(False)

37. Common carrier transportation companies have four specific obligations. (True)

38. A contract carrier is under no obligation to render services to the general public.
(True)

39. Private transportation is most prevalent in the pipeline industry. (False)

40. One disadvantage to private transportation is that managerial costs are often ignored
or underestimated. (True)

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 13: TRANSPORTATION MANAGEMENT

Multiple Choice Questions (correct answers are bolded)

1. ____ refers to the buying and controlling of transportation services by either a shipper
or consignee.

a. transportation management
b. logistics management
c. routing
d. tracking

2. In general terms, ____ accounts for about 6% of U.S. gross domestic product.

a. warehousing
b. logistics
c. supply chain management
d. transportation

3. ____ signifies the price charged for freight transportation.

a. fare
b. tariff
c. rate
d. revenue

4. Which of the following is not one of the three primary factors that transportation rates
are based upon?

a. product
b. density
c. weight
d. distance

5. Weight times rate equals ____.

a. density
b. transportation cost
c. stowability
d. volume
e. none of the above

6. A(n) ____ rate refers to a specific rate for every possible combination of product,
weight, and distance.

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 a. exception
b. ad valorem
c. commodity
d. class

7. A(n) ____ rate simplifies each of the three primary rate factors—product, weight, and
distance.

a. class
b. ad valorem
c. exception
d. commodity

8. Which of the following is not a factor used to determine a product’s classification?

a. density
b. liability to damage and theft
c. stowability
d. ease of handling
e. all of the above are factors used to determine a product’s classification

9. The National Motor Freight Classification currently has 18 separate ratings, or classes,
that range for Class 50 to Class ____

a. 300
b. 400
c. 500
d. 600
e. none of the above

10. ____ refers to how heavy a product is in relation to its size.

a. stowability
b. volume
c. weight
d. density

11. ____ refers to how easy a commodity is to pack into a load.

a. recoupering
b. stowability
c. drayage
d. materials handling

12. Liability for loss and damage is one factor used to determine a product’s freight
classification. Which of the following is not a loss and damage consideration?

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 a. a commodity’s propensity to damage other freight
b. ability to load freight on top of a commodity
c. a commodity’s perishability
d. a commodity’s value
e. all of the above are loss and damage considerations

13. With respect to a commodity’s freight classification, shippers tend to prefer a ____
classification number and carriers tend to prefer a ____ classification number.

a. lower, lower
b. lower, higher
c. higher, lower
d. higher, higher

14. In the class rate system, freight rates are expressed in dollars or cents per ____.

a. hundredweight
b. pounds
c. kilograms
d. tons

15. Suppose that a particular item is Class 200 according to the National Motor Freight
Classification. What is the relationship between this item’s rate and the rate for an item in
Class 100?

a. the class 200 rate is lower than the class 100 rate
b. the rate relationship depends on other factors
c. the rates are identical
d. the class 200 rate is higher than the class 100 rate
e. there is insufficient information to answer the question

16. Which of the following is not a possible payment option (terms of sale) for U.S.
domestic shipments?

a. FOB origin, freight collect and charged back

b. FOB origin, freight collect
c. FOB origin, freight prepaid
d. FOB origin, freight prepaid and charged back
e. all of the above are possible payment options

17. With FOB destination, freight prepaid ____.

a. the buyer pays the freight charges, but the seller owns the goods in transit

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 b. the buyer pays the freight charges and owns the goods in transit
c. the seller pays the freight charges and owns the goods in transit
d. the seller pays the freight charges, but the buyer owns the goods in transit

18. Which of the following tends to be the most important factor in carrier selection?

a. pricing
b. loss and damage performance
c. transit time reliability
d. financial stability
e. none of the above

19. A(n) ____ refers to a transportation manager who purchases a prespecified level of
transportation service and is indifferent to the mode and carrier used to provide the
transportation service.

a. industrial transportation manager

b. certified logistics professional
c. third-party logistics shipper
d. amodal shipper

20. The most important single transportation document is the ____.

a. freight bill
b. bill of lading
c. commercial invoice
d. certificate of origin

21. Each of the following is true, except ____.

a. the bill of lading is the most important transportation document

b. the bill of lading adds to the complexity of the transportation manager’s
job
c. the straight bill of lading contains the name of the consignee
d. the order bill of lading does not contain the name of the consignee
e. all of the above are true

22. An order bill of lading is used ____.

a. for overseas shipments

b. when a shipment must be expedited
c. when a shipment is started before the buyer is known
d. to guard against disruptions in transit

23. An invoice submitted by the carrier requesting to be paid is ____.

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 a. a freight bill
b. a bill of lading
c. a carnet
d. dunnage

24. What is the time limitation within which a freight claim must be filed?

a. three months from delivery date

b. six months from delivery date
c. nine months from delivery date
d. twelve months from delivery date
e. none of the above

25. Which of the following is false?

a. freight claims must be filed within nine months of the delivery date
b. concealed loss and damage is a delicate area for shippers and carriers
c. the volume of freight claims activity has dropped since transportation
deregulation
d. shippers or carriers are entitled to a product’s full retail value when filing
a freight claim
e. all of the above are true

26. If a product destroyed or damaged in transit is intended to be placed into general

replacement inventory, then the retailer would likely receive ____.

a. nothing but an apology from the carrier

b. the wholesale price, plus 20%
c. the retail price, minus 20%
d. the wholesale price, plus freight if previously paid

27. Small shipments are defined as those that ____.

a. involve three or fewer cartons

b. are moved primarily by parcel carriers
c. weigh more than 150 pounds but less than 500 pounds
d. weigh more than 10 pounds but less than 100 pounds

28. Which of the following statements is false?

a. carriers may be reluctant to accept small shipments because they require a high
degree of manual labor
b. some carriers believe they lose money on small shipments
c. consolidating small shipments into larger ones could result in poorer service to
the final customer

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 d. consolidating small shipments into larger ones likely results in higher inventory
carrying costs
e. all of the above are true

29. Demurrage charges are collected by railroads, ____, and ____.

a. motor carriers, pipelines

b. water carriers, pipelines
c. motor carriers, water carriers
d. airlines, pipelines

30. Which of the following statements is false?

a. detention is similar to demurrage, except that detention applies to pipelines

b. demurrage is a penalty payment made to a railroad for keeping equipment
beyond the time it should be released
c. averaging agreements can be used with demurrage
d. carriers and shippers can negotiate demurrage / detention policies
e. all of the above are true

31. U.S. freight railroads currently allow ____ hours of free time for unloading railcars
and ____hours of free time for loading railcars.

a. 24, 24
b. 24, 48
c. 48, 24
d. 48, 48

32. ____ can be defined as the process of determining how a shipment will be moved
between origin and destination.

a. tracking
b. recoupering
c. transportation
d. routing

33. A ____ provides a variety of shipment information such as shipment preparation,

freight invoicing, a list of preferred carriers, and a list of which carrier or carriers to use
for shipments moving between two points.

a. freight book
b. routing guide
c. tariff
d. bill of lading

34. ____ refers to determining a shipment’s location during the course of its move.

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 a. expediting
b. recoupering
c. reparation
d. tracking

35. ____ refers to rapidly moving a shipment through a carrier’s system.

a. expediting
b. recoupering
c. fast logistics
d. cross-docking

True-False Questions

1. Today’s transportation manager can play an active role in blending the appropriate
pricing and service packages for his / her organization. (True)

2. Routing refers to the buying and controlling of transportation services by a shipper or

consignee. (False)

3. Freight transportation accounts for approximately 10% of U.S. gross domestic product.
(False)

4. A rate is the logistics term that signifies the price charged for freight transportation.
(True)

5. A transportation charge (the cost of transportation) can be calculated by multiplying a

product’s weight times the applicable rate. (True)

6. A commodity rate is very good for dealing with demand-specific situations. (True)

7. The class rate system simplifies with respect to three primary factors—density,
product, and distance. (False)

8. The National Motor Freight Classification has 18 separate classes, or ratings, from
Class 50 to Class 600. (False)

9. Ease of handling is one of the four factors used to determine a product’s freight
classification. (True)

10. Liability to damage and theft is viewed as the primary factor in setting a product’s
freight classification. (False)

11. Volume refers to how heavy a product is in relation to its size. (False)

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12. Stowability refers to how easy a commodity is to pack into a load. (True)

13. An item with a freight classification of Class 200 will be charged a higher rate than an
item with a freight classification of Class 100. (True)

14. With respect to a commodity’s freight classification, shippers tend to prefer a higher
classification number while carriers tend to prefer a lower classification number. (False)

15. The price and service trade-offs available to today’s transportation manager are
limited only by her / his creativity and ingenuity. (True)

16. With FOB origin pricing, the seller retains title and control of the shipment until it is
delivered. (False)

17. A disadvantage of FOB destination pricing from a seller’s perspective is that the
seller’s organization must have a thorough knowledge of transportation management.
(True)

18. Because transportation costs tend to be lower per unit of weight for larger shipments,
there is a natural motivation to consolidate smaller shipments into larger ones. (True)

19. The carrier selection procedure appears to be less straightforward than the procedure
for modal selection. (True)

20. Transit time reliability is the most important factor that shippers tend to use when
selecting carriers. (False)

21. An amodal shipper refers to the use of a logistics intermediary to make the relevant
transportation decisions. (False)

22. Transportation documentation serves both a practical function (e.g., what, where, and
how much is being transported) as well as potentially providing legal recourse if
something goes awry. (True)

23. The most important single transportation document is the bill of lading. (True)

24. An order bill of lading specifies the consignee. (False)

25. Order bills of lading can be used when faced with slow-paying customers. (True)

26. The bill of lading is an invoice, submitted by the carrier, requesting to be paid. (False)

27. Freight bill audits are designed to detect errors that result in overcharges and to
correct those errors in the future. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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28. A freight claim must be filed within six months of the shipment’s delivery date.
(False)

29. Suppose that a shipment of products destined for a particular retailer is lost or
damaged. If these products were going into general inventory replacement stock, then
the retailer is entitled to recover the wholesale price plus freight costs (if they were paid).
(True)

30. Concealed loss and damage claims are some of the most difficult for shippers and
carriers to handle. (True)

31. The volume of transportation freight claims has increased in recent years. (False)

32. Small shipments refer to those that can be handled relatively expeditiously and
inexpensively by a small package carrier. (False)

33. From a carrier perspective, there may be a reluctance to accept small shipments
because they tend to require a high degree of manual labor. (True)

34. Demurrage is a penalty payment associated with railroads, while detention is a

penalty payment associated with motor carriers. (True)

35. U.S. freight railroads currently allow 24 hours of free time for unloading rail cars and
48 hours of free time for loading rail cars. (False)

36. In demurrage-related averaging agreements, slow equipment returns can be offset by

fast equipment returns. (True)

37. A routing guide can provide a variety of shipment-related information such as

shipment preparation and a list of preferred carriers for shipment moving between two
points. (True)

38. Expediting refers to determining a shipment’s location during the course of its move.
(False)

39. Expedited shipments by motor carriage can sometimes provide faster and more
reliable service than expedited shipping involving air transportation. (True)

40. Some transportation managers utilize performance scorecards that contain a list of
relevant attributes and an evaluation of each carrier on every attribute. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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PART III
EXAMINATION QUESTIONS

CHAPTER 14: INTERNATIONAL LOGISTICS

Multiple Choice Questions (correct answers are bolded)

1. ____ refers to the sum of the gross domestic product of all countries.

a. net world product

b. world net income
c. gross world product
d. gross world income

2. ____ are taxes that governments place on the importation of certain items.

a. tariffs
b. surcharges
c. reciprocities
d. embargoes

3. Which of the following is not a political restriction on international trade?

a. embargoes
b. import quotas
c. barring certain types of shipments
d. tariffs
e. all of the above are political restrictions

4. What do we call a system of accounts that records a country’s international financial

transactions?

a. tariffs
b. balance of payments
c. import / export accounts
d. gross domestic product

5. Cargo preference rules ____.

a. are synonymous with embargoes

b. indicate how each shipment should be loaded into a transport vehicle
c. indicate a shipper’s preferred carrier(s)
d. require a certain percentage of traffic to move on a nation’s flag vessels
e. none of the above

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

6. When one country’s currency is weak relative to other currencies, ____.

a. it becomes more costly to import products to the country, but its exports
surge
b. both imports and exports surge
c. it becomes more costly to export products from the country, but its imports
surge
d. it becomes more costly to import and export products

7. Which of the following is not true of sachets?

a. they can be easier to lose

b. they are more prone to theft
c. different packaging is needed
d. they tend to be sold in higher-income countries
e. all of the above are true

8. A ____ is used in areas where dockworkers cannot read but need a method to keep
documents and shipments together.

a. RFID tab
b. shipper’s mark
c. shipment coordinator
d. bar code

9. Which of the following is not a cultural factor that can influence international
logistics?

a. language
b. time orientation
c. population
d. national holidays
e. all of the above are cultural factors

10. A ____ specifies the country (ies) in which a product is manufactured and can be
required by governments for control purposes or by an exporter to verify the location of
manufacture.

a. commercial invoice
b. waybill
c. certificate of origin
d. shipper’s export declaration

©2011 Pearson Education, Inc. publishing as Prentice Hall 2

11. A ____ is similar in nature to a domestic bill of lading and summarizes the entire
transaction.

a. certificate of origin
b. commercial invoice
c. shipper’s letter of instruction
d. shipper’s export declaration
e. none of the above

12. A ____ often serves as the basis for a country’s official export statistics.

a. shipper’s export declaration

b. carnet
c. certificate of origin
d. commercial invoice

13. Incoterms refer to ____.

a. standardized procedures for handling international shipments

b. standardized international trade terminology
c. a specific method of payment for international shipments
d. terms of sale for international shipments

14. Incoterms are generally revised approximately every ____ years.

a. 25
b. 20
c. 10
d. 5

15. ____ distinct international methods of payment exist.

a. 10
b. 8
c. 6
d. 4
e. none of the above

16. What international method of payment is issued by a bank and guarantees payment to
a seller provided that the seller has complied with applicable terms and conditions of the
particular transaction?

a. a bill of exchange
b. a letter of credit
c. forfaiting
d. an open account

©2011 Pearson Education, Inc. publishing as Prentice Hall 3

17. International freight forwarders can provide a number of functions. Which of the
following is not one of them?

a. booking space on carriers

b. preparing an export declaration
c. arranged for insurance
d. preparing and sending shipping notices and documents
e. all of the above are possible functions

18. Consular documents ____.

a. involve obtaining permission from the importing country for the goods to
enter
b. must be filed for every export shipment
c. can be used in place of a shipper’s export declaration
d. list the shipper, consignee, commodity (ies), and place of export
e. none of the above

19. Which of the following is not a source of income for international freight forwarders?

a. payment for freight pick up and delivery

b. buying space wholesale and selling it retail
c. commissions on shipping revenues generated for carriers
d. fees for document preparation and performing research
d. all of the above are sources of income

20. Which international logistics service provider is often confused with the international
freight forwarder?

a. customshouse broker
b. non-vessel operating common carrier
c. export management company
d. export trading company

21. ____ act the export sales department for a manufacturer.

a. international freight forwarders

b. shippers associations
c. export management companies
d. export trading companies

22. An ____ custom packs shipments when the exporter lacks the equipment or the
expertise to do so itself

a. export management company

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

 b. export trading company
c. international freight forwarder
d. export packer
e. none of the above

23. The cost of sending a shipment by air transportation from China to the United States
can be ____ times more expensive than sending a shipment by water transportation
between the two countries.

a. 2-4
b. 4-6
c. 6-8
d. 8-10

24. Approximately ____ of cross-border shipments move by water transportation.

a. 40%
b. 50%
c. 60%
d. 70%

25. As of 2012, ____ is the world’s busiest container port.

a. Singapore
b. Shanghai
c. Hong Kong
d. Shenzhen

26. ____ refer to major ports where thousands of containers arrive and depart each week.

a. load centers
b. break-bulk centers
c. consolidation points
d. hubs

27. Shipping conferences refer to ____.

a. annual meetings of large international shippers

b. international shippers’ associations
c. cartels of ocean vessel operators operating between certain trade areas
d. water ports that are located in the same geographic area

28. Ocean carrier alliances provide two primary benefits to participating members,
namely, the sharing of vessel space and ____.

a. anti-trust immunity

©2011 Pearson Education, Inc. publishing as Prentice Hall 5

 b. the ability to offer shippers a broader service network
c. lower rates
d. faster transit times
e. none of the above

29. Integrated air carriers ____.

a. perform transportation in tightly linked supply chains

b. are those that own several modes of transportation
c. utilize the services of scheduled airlines
d. own all their vehicles as well as pick up and delivery facilities

30. Which of the following is not open for negotiation in a bilateral air agreement?

a. the carriers that will service particular city pairs

b. the types of aircraft to be used
c. the number of flights between the two countries
d. the total number of seats to be offered
e. all of the above are open for negotiation

31. Which countries rank first, second, and third, respectively in terms of highway
mileage?

a. United States, China, India

b. China, India, United States
c. China, United States, India
d. Russia, United States, China

32. Which of the following statements is false?

a. in China, freight is often given lower priority than passengers in rail

transportation
b. China ranks first in the world in terms of highway mileage
c. highway freight transportation can be provided by animals and carts in some
countries
d. some countries limit a motor carrier’s operations to within a particular state’s
borders
e. all of the above are true

33. Short-sea shipping is widely accepted and practiced in ____.

a. North America
b. South America
c. Europe
d. Asia

©2011 Pearson Education, Inc. publishing as Prentice Hall 6

34. Which of the following statements about international inventory management is
false?

a. product return policies are a concern

b. inventory valuation is difficult because of continually changing exchange rates
c. safety stocks generally need to be larger
d. inventory for sale in one nation generally serves the needs of markets in
nearby nations
e. all of the above are true

35. The Logistics Performance Index ____.

a. was created in recognition of the importance of logistics in international

trade
b. measures a company’s logistics cost as a percentage of its total cost
c. compares inventory turnover for major retailers
d. applies the Balanced Scorecard approach to international logistics activities

True-False Questions

1. Gross world product refers to the sum of the gross domestic product of all countries.
(True)

2. The ratio of merchandise exports to gross world product is currently approximately

20%. (False)

3. Tariffs refer to taxes that governments place on the importation of certain items. (True)

4. The primary purpose of a nontariff barrier is to encourage exports. (False)

5. Embargoes are physical limits on the amount that may be imported from any one
country during a period of time. (False)

6. Some nations with weak balance-of-payment positions issue an import license on the
condition that the goods move on an aircraft or vessel flying that nation’s flag. (True)

7. Cargo preference rules indicate how each shipment should be loaded into a transport
vehicle. (False)

8. When one country’s currency is weak relative to other currencies, it is more costly to
import products into that country. (True)

9. Sachets (single-use packets) require different packaging and are easier to lose and
more prone to theft than products sold in larger quantities. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 7

10. Albania and Montenegro are currently candidates to be admitted to the European
Union. (False)

11. It might not be unusual for cargo handlers in some countries to be illiterate. (True)

12. National holidays have no impact on the effectiveness and efficiency of international
logistics. (False)

13. The documentation requirements for international shipments can act as a nontariff
barrier to trade. (True)

14. A certificate of origin specifies the country (ies) in which a product is manufactured.
(True)

15. A shipper’s letter of instruction contains relevant export transaction data such as the
transportation mode(s), transaction participants, and description of what is being
exported. (False)

16. Some free trade agreements have actually resulted in an increase in documentation
requirements. (True)

17. Incoterms 2010 now divides terms of sale into two groups, one of which applies to
any mode of transport and the other which applies to sea and inland water transport only.
(True)

18. The use of Incoterms is mandatory for international shipments. (False)

19. Four distinct international methods of payment (e.g., letters of credit) exist. (True)

20. An open account is of minimal risk to the seller and extremely risky to the buyer.
(False)

21. Consular documents involve obtaining permission from the importing country for
goods to enter. (True)

22. International freight forwarders’ income comes from two primary sources. (False)

23. From a shipper’s perspective, a non-vessel operating common carrier (NVOCC) is a

carrier; from an ocean carrier’s perspective, an NVOCC is a shipper. (True)

24. Export trading companies act as the export sales department for a manufacturer.
(False)

25. Export packers custom pack shipments when the exporter lacks the equipment or
expertise to do so itself. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 8

26. International transportation cannot be effective or efficient without fairly identical
handling equipment being in place at each end of the trip. (True)

27. Approximately 75% of cross-border shipments move by water transportation. (False)

28. In terms of container throughput, Shanghai is the world’s busiest container port.
(True)

29. Load centers refer to major ports where thousands of containers arrive and depart
each week. (True)

30. Shipping conferences refer to annual meetings of large international shippers. (False)

31. Ocean carrier alliances provide two primary benefits to participating members,
namely, the sharing of vessel space and lower rates. (False)

32. Integrated air carriers own all their vehicles and the facilities that fall in between.
(True)

33. Bilateral agreements liberalize international aviation opportunities and limit federal
government involvement. (False)

34. China ranks first in the world in terms of highway mileage. (False)

35. Some countries conduct inspections of trucks as they move from one state to another.
(True)

36. Drayage refers to ocean shipping, often along a region’s coast, rather than across
oceans. (False)

37. Because greater uncertainties, misunderstandings, and delays often arise in

international movements, safety stocks must be larger. (True)

38. Inventory valuation on an international scale is difficult because of continually

changing exchange rates. (True)

39. Germany ranked first in overall performance in the most recent Logistics
Performance Index. (False)

40. The Logistics Performance was created in recognition of the importance of logistics
in international trade. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 9

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