MGT 431 Topics 1,2,3,12 cengage questions

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Calculate the expected cost per stockout with the following information: Probability of a back order is 67%, probability of a lost sale is 22%, and probability of a lost customer is 11%. The cost per incident of a back order is $50, and the cost of a lost customer is $65,000. The sales price of the item is $12 with a 20% profit margin. The average order is 50.

$7,209.90 $12,212.00 $10,351.50 $13,187.00 Answer: 7,209.90

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What is the most efficient way a company can grow top-line profitably?

Acquire new customers Assess whether the economy is actually growing Create new products Retain and increase sales to existing customers Answer: retain and increase sales to existing customers

Which of the following is a key tool for performing customer profitability analysis?

Activity-based costing Automatic data processing Return on investment Economic order quantity After receipt of order Answer: automatic data processing

What is the largest category of spending within logistics costs in the U.S. today?

Air freight cost Administrative costs Trucking cost Inventory cost Answer: Trucking cost

What is a Kaizen event?

An event you hold to introduce lean principles in order to improve processes A specific methodology used to introduce the idea of the eight wastes An important method for improving organizational sustainability All of the above Answer: An event you hold to introduce lean principles in order to improve processes

When considering product fragility, which of the following is not true?

As fragility increases, so does packaging cost As fragility increases, so does warehousing cost As fragility increases, so does pilferage cost As fragility increases, so does transportation costs Answer: As fragility increases, so does pilferage cost

Which of the following is true regarding the tradeoff between transportation costs and service?

As the money we spend on transportation goes up, the companies cost of lost sales generally goes down. It is always a good investment to spend more money on transport to achieve higher service levels. Companies should use whatever transportation is required to achieve the customer's desired service level. Companies should make the customer pay for transportation costs. Answer: As the money we spend on transportation goes up, the companies cost of lost sales generally goes down.

When comparing asset-based to non-asset-based 3PLS, which of the following is true?

Asset-based 3PLs lease assets from non-asset-based 3PLs. Asset-based 3PLs own assets, and non-asset-based 3PLs do not. Asset-based 3PLs own assets, and non-asset-based 3PLs lease them. Asset-based 3PLs are leaner on assets. Answer: Asset-based 3PLs own assets, and non-asset-based 3PLs do not.

Preparing all the grounds, facilities, and related needs for a big fundraiser is considered:

Business logistics Humanitarian logistics Event logistics Service logistics Answer: event logistics

Which manufacturing strategy supports an agile supply chain strategy?

Buy to order (BTO) Ship to stock (STS) Configure to order (CTO) Assemble to order (ATO) Make to order (MTO) Answer: make to order (MTO)

What does activity-based costing do for organizations?

Creates a synergy between customers and suppliers Gives accurate view of the costs of service Enables companies to build group P&L statements Develops a history of transactions for the customer Answer: gives accurate view of the costs of service

"Supermarket supply" refers to which of the following?

Discounts that salespeople issue to buyers of merchandise The inventory of grocery items stocked at a distribution center The assortment of goods that are pre-positioned in a supply chain The incentives used in supply chains to balance demand over the course of the year The weekly replenishment perishables in durable goods supply chains Answer: The assortment of goods that are pre-positioned in a supply chain

Transportation-oriented 3PLs include which of the following?

Drayage carriers Railroads Trucking companies All of the above Answer: all of the above

In the 5 S's, which of the following is another way to say simplify?

Eliminate unnecessary movement waste Standardize and develop repeatable processes There is a place for everything, and everything in its place Eliminate the things that are not being used Answer: There is a place for everything, and everything in its place

Some companies resolve service failures so successfully that customer satisfaction actually increases following a disruption. What is this known as?

Emergency relief system Service recovery paradox Efficiency planning Customer satisfaction paradigm Answer: Service recovery paradox

What does order transparency improve?

Evaluation, disregard, and neglect Execution, planning, and neglect Planning, execution, and evaluation Planning, evaluation, and disregard Answer: planning, execution, evaluation

Which of the following does not describe transportation waste?

Excess movement done by people Moving things by a more expensive mode than the customer needs. Buying things from distant locations instead of locally Transshipping orders Answer: Excess movement done by people

Which distribution strategy seeks to achieve the greatest reach in the market such that the product could be accessed by the most people possible?

Exclusive distribution Exhaustive distribution Central distribution Intensive distribution Selective distribution Answer: intensive

The closer you get to 100% perfection in customer order fulfillment, the more profitable your company will be.

False

As a result of improved logistics infrastructure in India:

Farmers have access to new markets. Transportation costs have increased dramatically Poverty has been eliminated. Taxes have been lowered Answer: farmers have access to new markets

A firm's operational or value-creation functions include:

Finance, sales, accounting Engineering, R&D, production Logistics is the only value-creation function Marketing, sales, R&D Supply, operations, and logistics Answer: supply, operations, and logistics

Which of the following are common reasons for outsourcing?

Free up capital Reduce operating expenses Shift risk to the 3PLS All of the above answer: all of the above

In considering the eight wastes, which of the following is an example of overproduction?

Giving the customer more product than ordered Holding excess inventory Cleaning more frequently than needed None of the above Answer: Giving the customer more product than ordered

A planning-based supply chain strategy is best for a product that:

Has low supplier reliability supporting it Has high variation in product type Has no safety stock backing it Experiences stable demand Experiences high demand volatility Answer: experience stable demand

What are the three types of distribution strategies?

Intensive, retentive, and shared Intensive, relaxed, and laissez-faire Selective, intensive, and exclusive Store, online, and home delivery Exclusive, retentive, and inclusive Answer: Selective, intensive, and exclusive

The Toyota Production system . . . ?

Is a one-time improvement process anyone can try at home. Uses the "Plan, Do, Check, Act" approach to waste reduction. Is a process that relies on top management incentives. Is based on the seven wastes. Answer: Uses the "plan, do, check, act" approach to waste production

The amount of money that is spent on logistics in the U.S. economy in dollar terms is which of the following?

Is flat Has increased over time Has decreased over time Not enough information to answer this question Answer: Has increased over time

What is an advantage of using a gain-sharing approach with 3PLs?

It is just super easy to do. It reveals lazy carriers very quickly and it is super easy to do It provides incentives for innovation and it creates a situation of mutual benefit. It just creates a situation of mutual benefit. Answer: It provides incentives for innovation and it creates a situation of mutual benefit.

Which of the following is not one of the eight wastes?

Kaizen events Inventory Defects Not utilizing staff talents Answer: Kaizen events

__________ creates possession utility.

Logistics Marketing Supply chain management Getting things where they are needed Answer: Marketing

Which business strategy tends to drive (influence) all others?

Logistics Production New product development Corporate Marketing Answer:

Which of the following is a reason companies don't outsource logistics?

Logistics can be a source of competitive advantage. Logistics can become an important revenue stream to sell to others. Outsourcing can free up capital. All of the above Answer: Logistics can be a source of competitive advantage.

Because of government regulations, a standardized trailer can weigh up to no more than 40,000 lbs. What type of tradeoff does this regulation affect?

Logistics vs. the value of an item Logistics vs. Weight Density Logistics vs. Susceptibility to loss and damage All of the above Answer: logistics vs. weight density

Customer alliances are built upon which of the following?

Long-term focus Senior leadership involvement Cross-organizational teams are widely employed Shared risks and rewards Open communication and linked information systems All of the above Answer: all of the above

Risks associated with logistics services outsourcing include:

Lose visibility into costs Costs are likely to be higher when outsourcing It is better to own assets yourself 3PLs are not trustworthy None of the above Answer: none of the above

Which business functions combine to form a company's supply chain strategy?

Marketing, production, and sales Logistics, operations and supply management Finance, accounting, and marketing Sales, logistics, and marketing New product development, forecasting, and logistics answer: logistics, operations, and supply management

What is one of the most important things for success regardless of the type of 3PL relationship?

Minimize cost Clearly define your expectations Let the 3PL know that it is always competing with the market Show year-over-year cost savings Answer: Clearly define your expectations

What is the waste of motion?

Moving goods multiple times Paying for a more expensive mode of transport than your customer needs Movement of materials or information that does not add value Movement of people that does not add value Answer: Movement of people that does not add value

What does humanitarian logistics involve?

Moving groups of people and supplies, setting up camps, replenishing supplies and people, breaking camp down again, and moving it out Focusing on B2B issues Planning the effective flow and storage of goods as well as the exchange of information to alleviate the suffering of people All of the above Answer: Planning the effective flow and storage of goods as well as the exchange of information to alleviate the suffering of people

Which product exemplifies an agile supply chain?

NikeID basketball shoes Cars produced for rental car agencies Office furniture Grocery items Office supplies Answer: nikeID basketball shoes

A good logistics strategy should:

Not make reference to the company's corporate strategy Be independent of other functional strategies around the corporation Prioritize logistics over marketing Focus on form utility and less so on time and place utilities Prioritize resources and set the direction for logistics planning and operations Answer: Prioritize resources and set the direction for logistics planning and operations

Integrated solutions include which of the following?

Order fulfillment management Transshipment Integrated business planning All of the above Answer: order fulfillment management

Which of the following are key reasons to build a strong order fulfillment (i.e., delivery) capability?

Out-of-stock occurrences do not affect customer satisfaction. Service failures cost retailers hundreds of billions of dollars every year. Fixing stockouts is easy to do, offering companies a quick and easy return on investment. All of the above Answer: Service failures cost retailers hundreds of billions of dollars every year.

What are some data management tools to assure product availability?

Point of sales information Integrated business planning Predictive analytics All of the above Answer: all of the above

Good customer service leads to customer satisfaction and loyalty. What are the operational targets your logistics system needs to provide?

Product availability Timely delivery Transparency Protection against disruption All of the above Answer: all of the above

What are the Four "P's" of marketing?

Product, price, promotion, and place People, promotion, products, and profit Promotion, paper, press, and prestige Product, promotion, profit, and payment Places, people, promotion, and passion Answer: Product, price, promotion, and place

What has improved logistics done for India?

Raised the standard of living for rural farmers Virtually eliminated poverty Eliminated hunger All of the above Answer: Raised the standard of living for rural farmers

Kenco logistics has done which of the following to become a sustainability leader?

Reduced solid waste and implemented improved lighting systems Adopted all alternative fuel vehicles and boycotted products that endanger wildlife Boycotted products that endanger wildlife and reduced solid waste Implemented improved lighting systems and adopted all alternative fuel vehicles Answer: Reduced solid waste and implemented improved lighting systems

What is the key to fulfilling current customer needs while maximizing long-term value co-creation?

Reducing unit costs that arise from an increase in production Launching hostile takeovers of companies with undervalued assets Defining the appropriate relationship intensity Avoiding companies such as military equipment manufacturers and firms that harm the environment Answer: defining the appropriate relationship intensity

Which of the following describes more developed economies?

Rely on rail as a primary means of freight transportion Spend more on logistics because their products tend to be imported and shipped greater distance Spend less on logistics costs because their logistics systems are more efficient Logistics costs are unrelated to an economy's stage of development Answer: Spend less on logistics costs because their logistics systems are more efficient

Why would your company pursue a selective distribution strategy?

Resource limitations Market constraints Product is only popular in specific geographic areas All of the above Answer: all of the above

Warehousing-oriented 3PLs include which of the following?

Reverse logistics, public warehousing and terminal operators Public warehousing, terminal operators and fulfillment services Terminal operators, fulfillment services and reverse logistics Fulfillment services, reverse logistics and public warehousing Answer: Fulfillment services, reverse logistics and public warehousing

Which of the following is not one of the 7 rights of logistics?

Right transportation Right place Right time Right cost Answer: Right transportation

What information drives supply chain execution in a planning-based supply chain?

Sales forecasts Customer orders Promotional strategies Cost advantages Supplier capacity Answer: sales forecasts

Moving groups of people and suppliers, setting up camps, replenishing supplies and people, and breaking camp and moving out describes which type of logistics?

Service logistics Military logistics Passenger logistics Humanitarian logistics Event logistics Answer: Military Logistics

Listening to employee suggestions for improvement is an example of which 5S methodology for eliminating waste?

Simplify Standardize Sort Sweep Sustain Answer: Sustain

Which of the following is not one of the 5 S's?

Sweep Source Sort Sustain Answer: Source

Which is true of specialist 3PLs?

Tend to do one thing very well Are usually non-asset based Are highly profitable All of the above Answer: tend to do one thing very well

What are service logistics?

The basis for customer service, which is the heart of logistics Focused on all the people, facilities, and supplies in place to effectively deliver services to customers The resources (facilities, people, and infrastructures) used to organized, deliver, and execute an event from initial schedule through teardown and clean-up All of the above Answer: Focused on all the people, facilities, and supplies in place to effectively deliver services to customers

Which situation exhibits supply chain resiliency?

The company limits its product line to avoid disruption Disruption is inevitable, but the company bounces back quickly from minor and major disruptions The company discontinues operations that experience disruption The supply chain is designed to minimize complexity and avoid disruption While slow, the company's ability to bounce back from disruption is faster than the competition Answer: The company limits its product line to avoid disruption Disruption is inevitable, but the company bounces back quickly from minor and major disruptions

As transportation speeds up, which of the following is true?

The cost of lost sales decreases. Total costs increase. The cost of transportation increases. Inventory increases Answer: The cost of lost sales decreases

Which of the following is true regarding the manufacturing and distribution of Toyota cars to a dealer?

The delivery of cars to dealers is a pure make-to-order approach. The delivery of cars to dealers combines the make-to-stock and make-to-order approaches. The delivery of cars to dealers is a pure make-to-stock approach. Custom-build cars employ a make-to-stock production strategy Answer: The delivery of cars to dealers combines the make-to-stock and make-to-order approaches.

Value can only be assessed from the standpoint of _______________?

The eyes of the customer Shareholder value A company's stock price None of the above Answer: The eye of the customer

In logistics, processing deals primarily with which of the following?

The flow of information and the visibility of shipments during movement and storage Reducing waste Managing paperwork The processing of payments quickly to improve cash flow Answer: The flow of information and the visibility of shipments during movement and storage

Referring to timely delivery, what does "speed" refer to?

The length of the order cycle How fast the trucks get from one destination to the other It is the acronym for self-programmed electronic equation delineator The rapidity of the operation Answer: the length of the order cycle

Which of the following describes event logistics?

The management of logistics to deliver relief after a disaster Very predictable because every event is vastly different The resources (facilities, people, and infrastructures) used to organize, deliver and execute an event from initial schedule through teardown and clean-up Focused on all the people, facilities, and supplies in place to effectively deliver services to customers Answer: The resources (facilities, people, and infrastructures) used to organize, deliver and execute an event from initial schedule through teardown and clean-up

When thinking about the various types of logistics, which of the following is true?

There is very little in common from one type to the other They are all virtually identical--only the names are changed The book focuses on service logistics Many of the key logistics principles discussed are applicable to all of the various types of logistics Answer: Many of the key logistics principles discussed are applicable to all of the various types of logistics

Which of the following is true about transactional relationships?

They are cost driven and arm's length. They are vital to profitability. They need and expect efficient service. They do not have resources to waste with inefficient transactions, processes, processes, or partners. All of the above Answer: all of the above

Which of the following is true regarding transactional relationships?

They are focused on long-term benefits They represent up to 80% of all relationships. They are not vital to profitability. They are largely unimportant. Answer: they represent up to 80% of all relationships

Which of the following are true regarding lean principles?

They have been implemented by almost every manufacturing company in the world. They were invented by the U.S. aerospace industry. They help reduce cost by meeting customer needs. They help improve efficiency by reducing waste. Answer: They help reduce cost by meeting customer needs

What is true about the 5 S's?

They were invented by Subaru as part of the Subaru philosophy They are an independent system to organize tools They remind us that resiliency matters They tell us there is no such thing as being too lean Answer: They remind us that resiliency matters

How does an agile supply chain seek to out-compete rivals that use other supply chain strategies?

Through low cost By producing products on a regional basis to meet local needs By providing a limited assortment of supply with minimal inventory investment Through speed to market By accommodating customers' specific preferences in product characteristics Answer: By accommodating customers' specific preferences in product characteristics

Which of the following is NOT an economic utility?

Time Electricity Form Place Possession Answer: electricity

Which utility is created primarily by marketing?

Time Form Price Place Possession Answer: possession

From weakest to strongest, relationships with 3PLs can be which of the following?

Transactional, cooperative, or strategic collaboration Transnational, co-opetitive, or strategic alliance Competitive, cooperative, or collaborative Co-opetitive, transactional, or strategic collaborative Answer: Transactional, cooperative, or strategic collaboration

In the 1980s, what was the largest category of logistics spending?

Trucking cost Administrative costs Air freight cost Inventory carrying cost Answer: Inventory carrying cost

Because product returns are typically much higher with online sales than with in-store sales, online retailers should:

Understand why customers return products and develop strategies for reducing the number of returns. Limit returns for online items or charge hefty restocking fees. Find ways to drive customers into shopping at bricks-and-mortar stores. All of the above Answer: Understand why customers return products and develop strategies for reducing the number of returns.

3PL pricing methods include which of the following?

Unit rate or transaction pricing Cost-plus Gain sharing All of the above Answer: all of the above

Which type of risk event occurs with common frequency and can be readily estimated in terms of likelihood and severity?

Unknown-known event Known-known event Known-unknown event Absolute known event Unknown-unknown event Answer: known-known event

Which of the following is an example of using data to improve product availability?

Walmart's use of Retail Link to share POS data with suppliers Kroger's use of loyalty cards to generate customer profiles Best Buy's use of weekly cadence calls to build a "single" consensus demand forecast All of the above Answer: All of the above

Which of the following is true regarding how a product's value influences logistics costs?

Warehousing cost is unaffected by the value as warehousing depends on the space something takes up Transportation is unaffected by value as it is based on space and weight Inventory costs go up because more valuable products tie up more cash All of the above Answer: Inventory costs go up because more valuable products tie up more cash

When considering logistics tradeoffs and what type of service level to emphasize, your company should consider which of the following?

What are the most important service characteristics to its customers How to be competitive based on price There are really no such thing as tradeoffs None of the above Answer: What are the most important service characteristics to its customers

Activity-based cost management enables you to identify customers' future growth potential.

false

Big 3PLS like Exel/DHL have a competitive advantage by providing standard, uniform service globally.

false

Growing your business by increasing sales with loyal customers is five times more expensive than finding and developing new customers.

false

India's logistics problems have largely been solved.

false

Speed refers to the length of your order cycle. Consistency means you deliver on time every time. That is, you are reliable. Agility means you are fast because you do things the same way all the time.

false

The saying that "the customer is always right" implies that it is impossible to offer too much service to a customer.

false

A back order occurs when you produce too much inventory and have to liquidate it by marking down the price, selling it through a reseller, or recycling.

fasle

Which company served as the inspiration of lean principles?

toyota

Brainstorming is a common activity in risk management for identifying risks and mitigating high-risk events.

true

It is a goal in 3PL relationships to both minimize costs and deliver maximum value.

true

Not all customers are created equal. Nor is every transaction equally important.

true

Order transparency improves planning, execution, and evaluation.

true

Outsourcing reduces logistics costs by 10% or more.

true

The most commonly outsourced types of logistics services are operational activities.

true


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