op chapter 11 Logistics Management

Logistics customer service benefits include: Availability B) Lead-time performance C) Service reliability D) All of the above E) None of the above

All of the above

There are _____ basic transportation modes or methods of transporting items.

Five

part 2

part 2

Bill's glass store needs to ship an order of 10 chandeliers to a builder about 1,000 miles away. The chandeliers cost about $10,000 each, and Bill will be paid upon delivery. Bill plans to ship the order by truck at a cost of $1,000. The delivery will take 10 days. Bill uses a 30 percent annual inventory carrying cost. What will be the approximate total shipping and transit inventory carrying cost of the shipment? A. $633.33 B. $821.92 C. $1,000 D. $1,821.92

$1,000 + ($100,000 × 10/365 × .3) = $1,821.92

Generally, the most expensive transportation mode (from among the following choices) is A. Air. B. Water. C. Truck. D. Rail.

A. Air. Air is generally the most expensive mode of transportation.

One function of warehouses or distribution centers is "consolidation." This means that the warehouse/distribution center is used to: A. Group small inbound loads into larger outbound loads. B. Collect products/packaging materials that are sent back for disassembly, reclamation, or disposal. C. Hold inventory to buffer the system from variability in either in supply or demand. D. All of these.

A. Group small inbound loads into larger outbound loads. This is the definition of the consolidation role of warehouses/distribution centers.

In determining the number of facility locations, the lowest total cost is typically: A. Not the lowest cost of either transportation or inventory. B. Typically the lowest cost of either transportation or inventory. C. Not related to transportation or inventory. D. Difficult to generalize.

A. Not the lowest cost of either transportation or inventory.

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

A. Public When warehousing needs for a company are short-term, public warehousing is generally the best option.

With respect to the following operating service characteristics of the modes of transportation, which combination is CORRECTLY specified? A. Speed: air is best; pipeline is worst. B. Availability: air is best; pipeline is worst. C. Capability: rail is best; air is worst. D. Dependability: pipeline is best; truck is worst.

A. Speed: air is best; pipeline is worst. Air is the fastest mode, pipeline is the slowest. Air is low in availability (location of airports). Water can handle more different types/sizes of shipments than rail. Truck is more dependable than rail or air.

A company finds the following information about its customers and their locations: The center of gravity is: A. X* = 52.5; Y* = 57.5 B. X* = 58.33; Y* = 65 C. X* = 56.66; Y* = 61.66 D. Cannot be determined.

A. X* = 52.5; Y* = 57.5

Zanda Corporation's CEO watched in amazement and frustration as workers handled and loaded individual products onto trucks. She felt handling the individual items was very cumbersome. She should investigate the possibility of: A. Using RFID. B. Containerization. C. AS/RS. D. None of these.

B. Containerization. Containerization creates larger containers out of smaller units to facilitate handling.

Richard's Rollerskate Company relies on Simon's Trucking to transport all of their products. Simon's Trucking is the only shipping company for RRC, and all products are shipped in trucks that look like giant roller skates with Richard's Rollerskate branding on the trucks. Richard's Rollerskate is likely using which carrier type? A. Common carrier. B. Contract carrier. C. Private carrier. D. None of these.

B. Contract carrier. When the carrier takes on the identity of a shipper, it is typically a contract carrier.

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

B. It requires more investment than contract warehousing. The disadvantage is the investment required. Private warehousing provides more control and operational flexibility

Miller Corp. can make three individual deliveries to three different customers at a transportation cost of $600 each or can consolidate them into one shipment with a transportation cost of $1,200 and a stop-off charge of $100 per stop. Should Miller Corp. consolidate the shipments? A. Yes, it will save $100. B. Yes, it will save $300. C. No, it will increase cost by $100. D. It doesn't matter based on cost.

B. Yes, it will save $300. Nonconsolidated cost = $600(3) = $1,800. Consolidated cost = $1,200 + $100(3) = $1,500. Consolidation saves $300

A company has determined the ideal number of locations by looking at the trade-offs described the text. It decides to open more warehouse locations than this "ideal." This decision would most likely result in ___________ and ___________. A. Poorer service to customers and higher cost B. Better service to customers and less cost C. Better service to customers and higher cost D. Poorer service to customers and lower cost

C. Better service to customers and higher cost

Suppose you are shipping 1,000 pounds of product to a customer location that is 500 miles away from you. The customer calls you and increases the order size to 10,000 pounds. Which of the following is NOT LIKELY to occur as a result of this change? A. The cost per pound of transportation for the order will decrease. B. The total cost of transportation for the order will increase. C. Both of these are likely to occur.

C. Both of these are likely to occur. This consolidation is likely to both decrease the cost per pound of transportation and increase the total cost.

With respect to the following operating service characteristics of the modes of transportation, which combination is INCORRECTLY specified? A. Speed: air is best; pipeline is worst. B. Availability: truck is best; pipeline is worst. C. Capability: pipeline is best; water is worst. D. Dependability: pipeline is best; air is worst.

C. Capability: pipeline is best; water is worst. Only C is incorrect. For capability, pipeline is worst, water is best.

The center-of gravity method of determining a facility location: A. Requires that demand be estimated in terms of the dollar sales revenue in each market. B. Requires that cost be measured in dollars of transportation cost. C. Does not require that qualitative factors be considered in location decisions. D. All of these.

C. Does not require that qualitative factors be considered in location decisions.

Zanda Corp. had established a production plant in Thailand. Recently it decided to close the plant and move production to Mexico. This decision was likely made after Zanda: A. Conducted a spend analysis. B. Conducted a make-or-buy analysis. C. Examined total landed cost. D. Evaluated consolidation strategies.

C. Examined total landed cost. Total landed cost requires examination of all product- and logistics-related costs. This type of examination may result in decisions regarding the lowest-cost place for manufacturing

Zanda Corp. can make three individual deliveries to three different customers at a cost of $500 each or can consolidate them into one shipment with a cost of $1,300 and a stop-off charge of $100 per stop. Should Zanda do this? A. Yes, it will save $100. B. Yes, it is simpler to do. C. No, it will increase cost by $100. D. It doesn't matter based on cost.

C. No, it will increase cost by $100. $1,300 + 3($100) = 1,600, an increase in cost of $100.

Jones Company learned that several other shippers in its hometown had customers located in the same markets that it serves. With this information, Jones should investigate the possibility of: A. Market area consolidation. B. Scheduled delivery consolidation. C. Pooled delivery consolidation. D. All of these.

C. Pooled delivery consolidation. Because other shippers are involved in this question, pooled delivery consolidation is the most appropriate answer.

Jones Company has decided to limit deliveries to selected areas to specific days of the week to obtain transportation savings. This is an example of: A. Market consolidation. B. Pooled delivery consolidation. C. Scheduled delivery consolidation. D. Transportation consolidation. E. Poor planning.

C. Scheduled delivery consolidation This is the definition of scheduled delivery consolidation

Which of the following best describes the concept of total landed cost? A. The sum of all logistics costs related to a product. B. The lowest logistics cost for a product. C. The sum of all product- and logistics-related costs. D. None of these. Total landed cost is the sum of all product- and logistics-related costs.

C. The sum of all product- and logistics-related costs.

_____ combines break-bulk and consolidation activities.

Cross-docking

___________ is achieved by combining several small shipments from one shipper that are going to the same market area into one shipment.

D) Market area consolidation

You are shipping 200 diamonds to one customer located 2,000 miles away. The value of a diamond is $1,500. You can ship via air for $500 and the diamonds will arrive in two days, or you can ship via a specialty ground carrier for $250 and the diamonds will arrive in four days. You figure your inventory carrying cost is 25 percent. Your customer will immediately transfer funds to your bank account on receipt of the shipment. Using the air carrier would save approximately how much money in total cost? Use 365 days as the number of days in a year. A. Nothing, it would actually cost more. B. $150.00 C. $247.95 D. $160.96

D. $160.96 Cost of air = $500 + ($300,000 × 2/365 × .25) = $910.96 Cost of ground = $250 + ($300,000 × 4/365 × .25) = $1,071.92.Air will save $1,071 - $910.96 = $160.96.

Zanda Corp. made a decision to use a more expensive mode of transportation to deliver orders to customers. This decision was likely made after an examination of A. Cost-to-cost tradeoffs. B. Consolidation strategies. C. Product availability problems. D. Cost-to-service trade-offs.

D. Cost-to-service trade-offs. Increasing cost to improve service performance represents a cost-to-service trade-off.

Random Corp. offers logistics services such as storage, transportation, and information processing to its customers. Random is known in industry as a(n): A. Contract warehouse. B. Common carrier. C. Public warehouse with benefits. D. Integrated service provider.

D. Integrated service provider.

With respect to transportation regulation today in the United States: A. There is no economic regulation of transportation. B. There is more economic regulation than ever before. C. There is very little safety/social regulation. D. There is more safety/social regulation than ever before.

D. There is more safety/social regulation than ever before. There is still a small amount of economic regulation, but safety and social regulation has increased dramatically.

The total landed cost A) Is the sum of all product-related costs B) Is the sum of all logistics-related costs C) Is the most important strategic decision companies should consider D) Can affect the decision of where to locate manufacturing plants E) All of the above

E) All of the above

______ are companies that own and operate transportation equipment to transport their own products.

Private carriers

In ____________, inbound shipments are received and unloaded from the transportation vehicles.

Receiving and unloading

_______ refers to establishing specific times when deliveries will be made to customers.

Scheduled delivery consolidation

Stockpiling stores inventories in warehouses to protect against

Seasonality in both supply and demand

________ involves verifying that the assembled orders are correct and the actual loading of the transportation vehicles occurs.

Shipping