CPIM MODULE 8 V, W, X
When materials are for the same order Rationale Storing materials together for the same order increases picking efficiency while having little effect on storage.
A backlog in a make-to-order company contains a large number of orders of many unique items. In which of the following situations would selection of a random storage location most likely reduce overall efficiency? Answers When zoning is not a consideration When materials are for the same order When two loads can be consolidated into one When load size prevents consolidation
different strategies for the two different types of products. Rationale When deciding how to distribute product to customers, operations should deploy different strategies for functional/low variety products and innovative/high variety products.
A company has both functional/low variety products and innovative/high variety products. The distribution deployment should include: Answers shipping all products consistently. different strategies for the two different types of products. shipping products to customers in the same manner as the competition. shipping products from regionally positioned distribution warehouses.
Total distribution network inventory will increase because of the additional location, though demand will be unchanged. Rationale Any additional facility will introduce extra inventory into the network given that faster customer deliveries and fewer stockouts are desired.
A company has made a decision to locate a new distribution center in an area that is currently serviced only by the manufacturing warehouse in order to improve customer service levels with faster deliveries and fewer item stockouts. Which of the following results should they expect? Answers Total distribution network inventory will increase because of the additional location, though demand will be unchanged. Delivery time to existing distribution centers will increase, because of the delay in delivering to the new distribution center. Total distribution network safety stock will decrease, because there is more inventory in the distribution network. Faster customer deliveries from all locations will enable inventory turns to increase.
Finished goods inventory turns Rationale Since the focus of the company is on internet sales, issues relating to facilities locations, growth rates, and capacities are not of the first importance. However, inventory turns is of critical importance to validate the new internet sales strategy.
A company owns a large number of retail stores and obtains products from manufacturers worldwide. Only a few new stores are planned to be opened within the next five years in key geographic areas. The company is focusing on internet ordering as an alternative to an aggressive new store growth strategy. All stores and projected internet demand will be adequately served by existing distribution centers for at least the next seven years. Which of the following is the most important consideration in the development of this strategy? Answers Geographic location of new stores Capacity of current distribution centers Existing store growth rate Finished goods inventory turns
See that the true suppliers of raw material realize a higher price for their efforts. Rationale A popular coffee roasting company purchases about 29% of its coffee directly from farmers, cutting out the intermediaries. This has allowed the company to see that farmers realize a higher price for their efforts.
A company purchases almost 30% of its raw material directly from farmers, cutting out wholesalers and distributors. What does this allow the company to do? Answers See that the true suppliers of raw material realize a higher price for their efforts. Promote the farmers to tier one suppliers, facilitating tighter controls. Reduce the costs associated with an entire echelon, thus driving its profit margins up. Increase its hold on the farmers by eliminating an echelon.
the distribution route, from raw materials through consumption, that a product travels. Rationale A distribution channel is the distribution route, from raw materials through consumption, along which products travel
A distribution channel is defined as: Answers the routes between the production facility and the distribution centers. the distribution route, from raw materials through consumption, that a product travels. the path a product travels through the distribution center from receipt to shipment. the distribution route from the production facility to the consumer.
Engineering standards and work center output Rationale If cycle time has improved, lead times and output are most likely to have changed.
A highly engineered product was introduced a few years ago, with standards defined, bills of material and routings finalized, and work centers set up to minimize material handling. Major improvements in cycle time have been made. What information is most likely to need to be changed? Answers Bills of material and routings Routings and work center capacity Engineering standards and work center output Cycle time and bills of material
cycle time. Rationale Cycle time is the time between completion of two units.
A product can be produced at a rate of two per minute. This is known as: Answers cumulative lead time. delivery time. cycle time. lead time.
Reducing the maximum duration of the order cycle Rationale While reducing the average duration of the order cycle is also a useful improvement, it is the lead times that miss the target by the largest number of days that have the most chance of being significant to these customers.
A stated goal of a continuous improvement project related to the order cycle is to significantly reduce the number of customers who are lost due to unacceptably long lead times. Which improvement would help most with this? Answers Reducing the average duration of the order cycle Reducing the maximum duration of the order cycle Eliminating the order processing step Regularly expediting orders with a chance of being late
an increase in the number of transactions for manufacturers. Rationale Natural results of reducing the complexity of transactions between manufacturers and customers include a decrease in the number of transactions for retailers, a decrease in transportation costs, and a reduction in number of shipments from manufacturers. Transportation costs will also decrease as manufacturers ship to fewer customers (the distributor) and retailers buy from fewer suppliers.
Adding a distributor as a channel between manufacturers and retailers will result in all of the following except Answers a reduction in number of shipments from manufacturers. an increase in the number of transactions for manufacturers. a decrease in the number of transactions for retailers. a decrease in transportation costs.
50 percent Rationale If demand for items is stable and continuous, then stock level will draw down steadily and the average level will only be 50 percent. Because its space is reserved, other items cannot be stored there.
Assuming demand is stable and continuous, approximately what percentage of storage space will be occupied by goods in a distribution center at any given time if it uses a fixed-location system? Answers 90 percent 100 percent 50 percent 80 percent
S&OP and master scheduling Rationale Material requirements planning (MRP), strategic planning, business planning, and master scheduling are all incorrect because strategic planning and MRP are too early and too late, respectively, to plan distribution logistics at the product family or end-item level. Distribution logistics planning at the product family and end-item levels occurs during S&OP and master scheduling.
Distribution planning plans logistics capacity at the product family and end-item level at which of the following planning levels? Answers Strategic planning and MRP S&OP and master scheduling Master scheduling and MRP Business planning and MRP
Make-to-stock product; multilevel distribution network Rationale DRP is most beneficial in a make-to-stock environment and where the distribution network is more complex.
Distribution requirements planning (DRP) is most beneficial in environments that possess which of the following product and distribution network characteristics? Answers Make-to-stock product; single-level distribution network Make-to-stock product; multilevel distribution network Make-to-order product; single-level distribution network Make-to-order product; multilevel distribution network
manufacturing planning. Rationale Ultimately, planned orders from a warehouse become gross requirements in the master production schedule of either external or internal manufacturing during DRP.
Distribution requirements planning (DRP) is used for: Answers sales and operations planning. purchasing planning. manufacturing planning. transportation planning.
manufacturing planning. Rationale Ultimately, planned orders from a warehouse become gross requirements in the master production schedule of either external or internal manufacturing during DRP.
Distribution requirements planning (DRP) is used for: Answers transportation planning. manufacturing planning. sales and operations planning. purchasing planning.
current and future shipping requirements. Rationale DRP can convert the schedule of planned orders into transportation data elements such as weight, volume, and number of pallets.
Distribution requirements planning (DRP) provides transportation planners with: Answers backhauling information. current and future shipping requirements. load optimization information. locations for scheduling deliveries.
inventory. Rationale Carrying more inventory may improve customer service, but it increases the cost of holding inventory and so must be balanced with customer service.
Effective distribution planning requires balancing customer service with the costs of warehousing, transportation, and: Answers overhead. ordering. changing capacity. inventory.
benchmark daily activities and guide continuous improvement. Rationale The objective of setting standards and measuring performance is to provide a baseline for performance and determine areas of improvement.
Establishing standards and performance measurements for warehousing is important in order to: Answers base compensation on achievement of standards. report performance to the central supply warehouse management. eliminate disagreements on what utilization and efficiency should be. benchmark daily activities and guide continuous improvement.
Offset in gross requirements Rationale Just as material requirements planning offsets the lead time from the planned order release by the lead time, DRP offsets the in-transit time. The planned shipment to the receiving warehouse is the gross requirement for the supply warehouse.
How is in-transit time accounted for in distribution requirements planning (DRP)? Answers Built into delivery time Offset in gross requirements As safety stock As safety capacity
Assistance in maintaining true dates of need for open orders Rationale The TPOP technique provides planners with the ability to view supply and demand within a user-defined planning horizon. By providing a simulation of possible future supply and demand for an item, TPOP enables the planner to maintain the true dates of need for all orders, to use future supply requirements to plan for future capacities, and to see component demand requirements and capacity for future lumpy demand.
If a company implements the time-phased order point (TPOP) technique rather than the order point technique, which of the following is a benefit that likely will be achieved? Answers Availability of future planned orders for current capacity planning Planning of end items but not capacity for future lumpy demand Historical data to determine the optimum time to reorder Assistance in maintaining true dates of need for open orders
Flow-through Rationale Flow-through also emphasizes throughput, but it involves using some or all of a shipment to immediately replenish a picking area. In this case, cross-docking is not appropriate because of the online order fulfillment business model being used.
In a warehouse that primarily does a lot of small order fulfillment of online orders, what is the best thing the warehouse can implement if storage capacity is becoming an issue? Answers Floating inventory Honeycombing Flow-through Cross-docking
Random-location storage Rationale Random-location storage is a stocking technique in which parts are placed in any space that is empty when they arrive at the storeroom.
In which stocking technique are parts placed in any space that is empty when they arrive at the storeroom? Answers Automated storage and retrieval Dedicated-location storage Random-location storage Warehousing
On-time delivery, delivery consistency, cost of service Rationale KPIs that are often used to measure transportation performance include on-time delivery, quality of service, cost of service, on-time loading, delivery consistency, claims for loss and damage, and freight bill accuracy. The backorder rate, units per transaction, and inventory turnover are not transportation metrics.
Most organizations build a scorecard using key performance indicators (KPIs) to track and share information on transportation performance. What are some of these KPIs? Answers Inventory turnover, delivery consistency, backorder rate Delivery consistency, cost of service, units per transaction On-time delivery, delivery consistency, cost of service On-time delivery, delivery consistency, backorder rate
To drive unnecessary costs out of the supply chain Rationale Waste hierarchy policies help organizations and their suppliers be more efficient and drive unnecessary costs out of the supply chain. While avoiding being held responsible for a supplier's sustainability choices is also a good answer, it is less important to this organization since it has no public awareness and likely does not need any to continue operating due to the nature of the industry. A buyer cannot be held legally liable for the actions of a separate legal entity.
Neither an organization nor its suppliers have much public awareness or exposure due to the nature of the industry. What is a reason this organization may want to set waste hierarchy policies for its suppliers? Answers To build public awareness for the industry and the organization To drive unnecessary costs out of the supply chain To avoid being held responsible for suppliers' sustainability choices To avoid being held liable for suppliers' waste hierarchy choices
cross-docking. Rationale Cross-docking involves packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination.
Packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments based on final destination is known as: Answers break-pointing. load-splitting. load-sorting. cross-docking.
distribution network structure. Rationale The distribution network structure is the planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer.
Planned channels of inventory disbursement from one or more sources to field warehouses is the: Answers economic infrastructure. distribution network structure. network chain. supply chain network.
order picking. Rationale Order picking is selecting, or "picking," the required quantity of specific products for movement to a packaging area (usually in response to one or more shipping orders) and documenting that the material was moved from one location to shipping.
Selecting the required quantity of specific products for movement to a packaging area and documenting that the material was moved from one location to shipping is known as: Answers order extraction. order picking. order allocation. order validation.
planned channels of inventory flow to the point of the customer interface. Rationale The bill of distribution, synonymous with distribution network structure, by definition encompasses the planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customers.
The bill of distribution defines the: Answers planned channels of inventory flow to the point of the customer interface. departments and relationships in the distribution functions of the firm. communication channels between the distribution centers and the customer locations. linkage between master schedule items and the stock keeping units.
transportation. Rationale Transportation concerns activities relating to the movement of inventories into and out of an organization. Distribution is concerned only with the movement of goods out of an organization. Inventory control refers to those activities and techniques of maintaining the desired levels of items. Supply chain management is described as the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.
The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization is known as: Answers supply chain management. transportation. distribution. inventory control.
intermodal transport. Rationale Intermodal transport refers to shipments moved by different types of equipment in order to benefit from the best features of each mode.
The movement of shipments using different types of equipment and combining the best features of each mode is called: Answers freight brokerage. combined transport. line-haul transport. intermodal transport.
at the least total cost. Rationale Least total cost means that the total of all distribution costs should be at a minimum while providing the required level of customer service.
The objective of distribution management is to provide the required level of customer service: Answers at the least total cost. to delight the customer. as conformance to requirements. for the lowest cost.
ways Rationale Ways are the paths over which a carrier operates, including right-of-way, roadbed, tracks, and other physical facilities. These may be owned by the government, privately held by the carrier, or provided by nature.
The paths over which a carrier operates, including right-of-way, roadbed, tracks and other physical facilities, are: Answers toll paths. channels. routes. ways.
cube utilization. Rationale Since a floating-location storage system enables the storage of goods wherever there is appropriate space for them, it maximizes warehouse space cube utilization.
The primary objective of a floating-location storage system is to improve: Answers cross-docking. cube utilization. distribution. kitting.
at the point closest to the customer. Rationale The best information to drive the planning would come from the point closest to the customer, whether that be direct information from the customer or from the distribution center closest to the customer.
The top level of the distribution requirements planning record should be: Answers at the master production schedule level. at the distribution center. at the point closest to the customer. at the manufacturing facility.
carrying in-transit inventory. Rationale Larger shipments cause larger carrying costs but fewer transportation costs and vice versa. The tradeoff between these two elements must be considered.
The total cost tradeoff for distribution transportation costs compares the cost of transportation with the cost of Answers loading and unloading. carrying in-transit inventory. regulatory compliance for each type of transportation. dealing with multiple transportation nodes.
When the overload exceeds rated capacity Rationale If load exceeds rated capacity, the work center cannot produce the desired load.
Under which of the following conditions is it most necessary to perform bottom-up replanning of an overloaded key work center? Answers When the overload exceeds rated capacity When the overload exceeds standard hours When the overload is due to efficiency When the overload is due to utilization
logistics. Rationale Logistics is the process of obtaining, producing, and distributing material and product in the proper place and the proper quantities.
"Getting the right goods or services to the right place at the right time and in the desired condition" best defines: Answers logistics. operations management. supply chain management. procurement.
fewer echelons.
Unlike the forward supply chain, a reverse supply chain typically has Answers more warehouses. simple planning requirements. fewer echelons. little impact on costs.
cubic volume used to cubic volume available. Rationale The utilization of assets in distribution can be measured by the ratio of space used to space available.
Utilization of assets in distribution can be measured by the ratio of: Answers floor space used to floor space available. rack space used to rack space available. cubic volume used to cubic volume available. vehicle space used to vehicle space available.
unit load concept. Rationale The unit load concept refers to waiting for a container or pallet to be filled before the material is moved.
Waiting to fill a pallet before moving it through distribution is known as the: Answers palletization concept. full pallet concept. full truck concept. unit load concept
Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities Rationale Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities is the best example of a green reverse logistics operation. The other options include green initiatives but don't feature reverse logistics.
What action by a company would indicate that it is conducting a green reverse logistics operation? Answers Purchasing all electricity from green sources, such as solar or wind energy Purchasing carbon offsets to compensate for emissions produced by its manufacturing process Using vehicles and machinery with electric motors instead of combustion engines Accepting dead batteries and ensuring that they are properly disposed of at manufacturing facilities
Locations in the product structure or distribution network where inventory is placed to create independence between processes or entities Rationale Decoupling points are the locations in the product structure or distribution network where inventory is placed to create independence between processes or entities.
What are decoupling points? Answers Locations in the product structure or distribution network where inventory is placed to create independence between processes or entities Locations in a distribution network where demand is not passed up the supply chain Broken links with a supply chain where demand is lost Cross docks used to transfer goods from one trailer to another while in transit to their final destination
Activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer Rationale Distribution is the action or process of supplying goods to stores and other businesses that sell to consumers.
What does the term "distribution" refer to? Answers Action of transporting someone or something or the process of being transported Art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities General flow of merchants shipping between two departure/terminal areas Activities associated with the movement of material, usually finished goods or service parts, from the manufacturer to the customer
Increased visibility to demand for scheduling Rationale DRP provides demand directly to the master production schedule and the subsequent planning systems.
What is a benefit of distribution requirements planning (DRP) for subsequent planning cycles? Answers Improved forecast accuracy Increased visibility to demand for scheduling Shorter delivery lead times Decentralization of inventory
Lower capital investment Rationale Public warehouses require less investment up front
What is a benefit of using public warehouses rather than private warehouses for distribution centers? Answers Better tax breaks Lower capital investment Less inventory More qualified personnel
Check inventory levels and planned production schedules to determine availability and location. Rationale Other functional areas will perform the administrative functions of processing an order. Planning and inventory management professionals can be involved in a support function by checking inventory levels and planned production schedules to determine availability and location.
What is a likely role for a planning and inventory management professional during the order processing stage of the order cycle? Answers Administratively process the order. Check inventory levels and planned production schedules to determine availability and location. Validate that the customer performed the order processing correctly. Assess whether the most efficient equipment is being used to assemble the order.
Need to relocate inventory based on poor planning Rationale All of these may be slight risks, but the most potentially costly is having to relocate inventory to another distribution center based on poor planning.
What is a potential area of risk for distribution inventory? Answers Being located near other distribution centers Not having enough trained personnel Need to relocate inventory based on poor planning Running out of warehouse space
Create transportation partnerships with carriers. Rationale Creating transportation partnerships increases operational flexibility and enables long-term contracts and closer control.
What is one method for improving transportation responsiveness within the supply chain? Answers Maintain a private fleet for all deliveries. Minimize transportation costs by using common carriers. Create transportation partnerships with carriers. Increase lead times so shipments will not be late.
The distribution channel is concerned with the route of goods; the transaction channel is concerned with the transfer of ownership. Rationale The distribution channel is the distribution route, from raw materials through consumption, along which products travel. The transaction channel deals with the change of ownership of goods and services.
What is the distinction between the distribution channel and the transaction channel? Answers The distribution channel is concerned with the route of goods; the transaction channel is concerned with the costs. The distribution channel is concerned with the route of goods; the transaction channel is concerned with the transfer of ownership. The distribution channel is concerned with warehouses; the transaction channel is concerned with transportation nodes. There is no distinction.
Maximize the weight of individual shipments. Rationale By increasing the weight of individual shipments, creating more TL shipments, there will be fewer shipments during a particular time period and therefore lower terminal handling, pickup and delivery, and billing and collecting costs.
What is the key to reducing the organization's overall terminal handling costs for a time period? Answers Maximize the number of shipments handled by the same carrier. Use a customs broker. Use the air transportation mode more often. Maximize the weight of individual shipments.
To maintain a balanced inventory in the distribution system Rationale The primary goal of DRP is to maintain a well-balanced inventory across the distribution network.
What is the primary goal of a distribution requirements planning (DRP) implementation for a multiple-level distribution network? Answers To maintain a balanced inventory in the distribution system To balance transportation and warehousing costs To increase production efficiencies To minimize the inventory at the central warehouse
Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment Rationale The inventory investment report portion of the LRRP projects aggregate inventory levels and the related supply chain costs over a planning horizon, based on product-family level replenishment, shipping costs, and inventory balances.
What is the purpose of the inventory investment report as part of the logistics resource requirements plan (LRRP)? Answers States actual item-level inventory costs for a past period based in part on shipping costs and inventory balances Determines product family storage profiles for inventory based on product dimensions Projects aggregate inventory levels and related supply chain costs over a planning horizon based in part on product-family level replenishment Projects item-level inventory costs for a weekly planning horizon based in part on shipping costs and inventory balances
Pallet positions Rationale Pallet positions involve the calculation of the space needed to store a certain number of pallets.
What is the term for the calculation of the space needed to store a certain number of pallets? Answers Palletized storage Pallet positions Pallet capacity Pallet loading
ETO/MTO Rationale Generally a direct/internal channel with low distribution intensity, high product variety, and low channel dependency would support an ETO/MTO environment. Answers including ATO and MTS are incorrect because these environments tend to require high distribution intensity, low product variety, and high channel dependency.
What manufacturing environment would best support the distribution channel attributes of low distribution intensity, high product variety, and low channel dependency? Answers ETO/MTO MTS ATO/MTS ATO
Whether to consider designing packaging for returns Rationale Packaging for returns may need to be considered along with packaging for forward shipping. This would best be done during product design. Speed of returns is not as important as lowering the cost of returns, such as by using design for sustainability.
What needs to be considered during new product introductions to ensure that the reverse supply chain is as cost-effective as possible? Answers Whether returns will be processed internally or through a 3PL How to ensure that the reverse product receiving area layout is compatible Whether to consider designing packaging for returns How to design the product for speed of returns
Cross-docking Rationale Cross-docking is packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments.
What process of sorting and packing products eliminates the need for storage? Answers Floating inventory Honeycombing Cross-docking Split delivery
Cross-docking Rationale Cross-docking is packing products on incoming shipments so they can be easily sorted at intermediate warehouses or for outgoing shipments.
What process of sorting and packing products eliminates the need for storage? Answers Honeycombing Split delivery Floating inventory Cross-docking
Cost and delivery performance Rationale The two primary factors for measuring the performance of purchased transportation are the cost or purchase price of the transportation and the delivery performance.
What should performance measurements for purchased transportation focus on? Answers Accuracy of paperwork and customer service Customer service and delivery performance Cost and accuracy of paperwork Cost and delivery performance
Unitization Rationale In warehousing, unitization is the consolidation of several units into larger units for fewer handlings.
What term is used for consolidating several units in a warehouse into larger units? Answers Unit loads Containerization Unitization Palletization
Distribution channel Rationale A distribution channel is the distribution route, from raw materials through consumption, along which products travel.
What term is used for the distribution route, from raw materials through consumption, along which products travel? Answers Logistics channel Transaction channel Distribution channel Marketing channel
Speed, dependability, capability Rationale The six factors to be considered are speed, completeness, dependability, capability, frequency, and cost.
When determining the transportation mode for servicing distribution warehouses, which of the following factors should be considered? Answers Cost, dependability, customer service Capability, customer service, frequency Speed, dependability, capability Speed, proximity of headquarters, dependability
Aggregate master schedules for all related items. Rationale When multiple products use the same resources over the same time horizon, the organization must aggregate the schedules before performing capacity checks.
When multiple products are produced using the same resources over the same time horizon, what must an organization do prior to checking capacity? Answers Aggregate master schedules for all related items. Set up new resources so the production processes do not conflict. Remove the competing products from production. Prioritize production of one product over the others.
an increase in transportation costs. Rationale More service centers will increase transportation costs because there will be more less-than-truckload (LTL) miles.
When the number of a company's distribution centers serving a geographical area increases but the level of customer service remains the same, the result is generally: Answers a decrease in the company's investment in real property. an increase in transportation costs. an increase in delivery lead times. a decrease in aggregate inventory levels.
Reducing in-transit time Rationale Reducing in-transit time typically requires using faster modes of transport, which will raise transportation cost.
Which choice can conflict with a desire to minimize transportation costs? Answers Reducing in-transit time Shipping in full truckloads Using a consolidation center Ensuring on-time delivery
Centralizing returned products in a single location Rationale When handling returns, the organization must first assess and categorize returned items based on their condition and status. To do so, returned products are first centralized in a single location. This helps meet disposition goals because the items can be consolidated. For example, shipments for recycling could be consolidated into a full truckload to save money.
Which disposition process decision will promote policy, cost, sustainability, quality, and supply goals? Answers Empowering the echelon closest to the customer to do disposition Adding reverse logistics to the existing forward supply chain without modifying either process Centralizing returned products in a single location Providing refunds to customers and having them dispose of the products themselves
Number of order lines picked vs. standard for number of order lines to be picked Rationale In distribution, the standard measure of order lines picked would be compared to the actual order lines picked.
Which efficiency measurement is applied to distribution for calculating capacity? Answers Number of order lines picked vs. standard for number of order lines to be picked Number of pallets received vs. number of pallets shipped Number of trucks that have been unloaded Number of trucks that have been loaded
Highly perishable goods Rationale Highly perishable goods with a short shelf life are often shipped by air, for example, fresh seafood. Air is also best for light, non-bulky, valuable goods and for emergency shipments.
Which factor favors air transport? Answers Inexpensive goods Highly perishable goods Normal operating conditions Dense goods
Dispersed market Rationale Road is best suited for moving goods to a dispersed market because they can provide door-to-door service so long as there is a suitable road.
Which factor favors use of the road mode of transport over other modes? Answers High capital cost Lowest carrying cost Low variable costs Dispersed market
Protective packaging Rationale The activities of physical distribution include transportation, distribution inventory, warehousing, material handling, and protective packaging.
Which is a function of physical distribution? Answers Physical supply Production control Purchasing Protective packaging
Rail is less expensive than road because most of rail's operating cost is a fixed cost. Rationale Most of the operating cost for a railway is fixed; therefore, large volume can be moved at very reasonable prices per carrying capacity.
Which is less expensive for long-distance line haul of large, bulky loads and why? Answers Rail is less expensive than road because rail does not need to add as much packaging. Road is less expensive than rail because road does not need to add pickup and delivery cost. Rail is less expensive than road because most of rail's operating cost is a fixed cost. Road is less expensive than rail because most of road's operating cost is a variable cost.
Adding battery-powered radio frequency identification (RFID) units to all containers shipped there Rationale For shipping lines, terminal-handling charges are the costs of paying container terminals for unloading and loading during shipment. The use of bar codes or other automated identification methods (such as RFID) also reduces costs.
Which is most likely to reduce terminal-handling charges at an international shipping port that specializes in container ship loading and unloading? Answers Billing and collecting from the carriers on a more timely basis Shipping multiple containers on the same container ship rather than the same number of containers spread across multiple ships Removing pallets and shipping units in containers that use the full floor-to-ceiling volume for the maximum number of units Adding battery-powered radio frequency identification (RFID) units to all containers shipped there
Assemble-to-order goods can be postponed to the distribution center (DC) level for business-to-consumer (B2C) sales. Rationale A complex channel is used when it is necessary. The correct answer lists one possible reason why such a channel would be necessary. Such a channel is much more likely to be needed in B2C sales than in B2B sales. The ability to postpone final assembly to the DC level is a reason to maintain these DCs so as to help minimize total inventory.
Which is the best reason listed for an organization to maintain a complex supply channel with many echelons? Answers Assemble-to-order goods can be postponed to the distribution center (DC) level for business-to-consumer (B2C) sales. Each echelon adds more costs than the value they add. Engineer-to-order goods are produced rapidly for business-to-business (B2B) sales. Key competitors use a complex supply chain model with many echelons.
Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet. Rationale If B2B customers can order only in full pallet increments, this will reduce the amount of material handling for you and for them. For example, the customer will be able to unload the delivery using a forklift rather than manual labor, which would be the case if they ordered, say, a pallet and a half of goods, which is what could occur if only the minimum order size were specified. Since the customers generally sell between one and three pallets per order period, requiring orders of full truckloads would necessitate that some of these pallets being moved into storage and then moved out over time, so this would increase their material-handling costs. Cross-docking may reduce the organization's material-handling costs, but it would not affect the customer's material-handling costs.
Which is the best way listed to reduce material-handling costs for B2B customers who normally sell one to three pallets of units in a given order cycle? Answers Change the unit load size and order increment requirement to equal the number of units that can fit on a single pallet. Change the minimum order size to be the number of units to fill one pallet and allow any number of units to be ordered above this amount. Use cross-docking to immediately build unit loads for all B2B customers upon receipt of finished goods. Set the unit load size and order increment requirement to equal one full truckload of pallets.
Distance moved Rationale Total line haul costs vary with the distance moved, which is why this is the correct answer. Line haul costs are not dependent on packaging, customer discounts, nor the perishability of the goods in question.
Which is the factor that primarily determines by how much total line haul costs will vary? Answers Perishability of goods Distance moved Packaging Customer discounts
Variable cost per mile or kilometer Rationale Line-haul costs are variable, depending on the distance traveled and the cost per mile or kilometer. For this scenario, since the distance is predetermined, the primary consideration is the cost per mile or kilometer. Total line-haul costs do not depend primarily on weight. Vehicle weight is usually the majority of the total weight, so an empty vehicle will bear most of the same costs as a full one.
Which is the primary consideration listed for total line-haul costs when viable options for shipping include rail and road modalities and the shipping and receiving locations will always be the same? Answers Variable cost per mile or kilometer Total weight Distance shipped Pickup and delivery costs
Receiving goods from suppliers Rationale Supplier shipments, both internal and external, are received at the warehouse, and the system is updated.
Which of the following activities is part of the physical distribution system? Answers Performing work at an alternate work center Receiving goods from suppliers Ordering components for production Handling material between work centers
Material handling, transportation, warehouses, distribution inventory control, reverse logistics Rationale According to the APICS Dictionary, distribution planning is, "The planning activities associated with transportation, warehousing, inventory levels, materials handling, order administration, site and location planning, industrial packaging, data processing, and communications networks to support distribution." It includes all activities related to physical distribution as well as the return of goods to the manufacturer (reverse logistics).
Which of the following are among the major activities of a distribution planning system? Answers Material handling, transportation, warehouses, distribution inventory control, reverse logistics Order administration, communication network, material handling, transportation, marketing, warehouses, operations Reverse logistics, material handling, transportation, warehouses, sales and operations planning, distribution inventory control Material handling, transportation, distribution inventory control, operations management, reverse logistics
Asset protection and operational profitability Rationale Two risks associated with international distribution are asset protection and operational profitability.
Which of the following are two risks associated with international distribution? Answers Global competition and cultural issues Cultural issues and operational profitability Asset protection and global competition Asset protection and operational profitability
Complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling Rationale Reverse logistics is a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.
Which of the following best defines reverse logistics? Answers Items returned to the manufacturer as defective, obsolete, overages, etc. Distribution network that deals with change of ownership of goods and services, including the activities of negotiation, selling, and contracting Function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization Complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling
Picking lists with locations Rationale Pickers will not necessarily know the location or picking rules, so the logic must be computerized.
Which of the following computerized system components is most necessary with a random location storage system? Answers Picking lists with locations Random locator report Exception identification report Storage selection during put-away
Accounts payable department Rationale The accounts payable department is responsible for processing the payment once an invoice is approved.
Which of the following functions is responsible for paying an invoice once it is approved? Answers Warehouse Accounts receivable department Cost accounting department Accounts payable department
Active Rationale Cycle time is the time from receipt to the time of shipping.
Which of the following inventory classifications most contributes to cycle time? Answers Active Obsolete Inactive Excess
Increased customer service levels Rationale Distribution requirements planning allows for the stocking of inventory at multiple locations for servicing customers.
Which of the following is a benefit of distribution requirements planning? Answers Increased transportation costs Decreased safety stock Increased customer service levels Decreased planning time fences
Terminal Rationale A terminal is a location where carriers load and unload goods to and from vehicles. It is also used to make connections.
Which of the following is a location where carriers load and unload goods to and from vehicles? Answers Depot Port Dock Terminal
Time-phased order point Rationale Time-phased order point is a planning logic for independent demand items where gross requirements come from a forecast, not via explosion.
Which of the following is a planning logic for independent demand items where the planned order releases are input to the master schedule? Answers Final assembly scheduling Distribution resources planning Time-phased order point Distribution planning
Time-phased order point Rationale Time-phased order point is a planning logic for independent demand items where gross requirements come from a forecast, not via explosion.
Which of the following is a planning logic for independent demand items where the planned order releases are input to the master schedule? Answers Time-phased order point Distribution planning Final assembly scheduling Distribution resources planning
A manufacturer stocks flammable goods in a designated area. Rationale In a zoned inventory storage location system, goods are stored in a designated area of the warehouse based on their physical characteristics or frequency of use.
Which of the following is a zoned inventory storage location system? Answers A work cell team stores the tools that are routinely use in a work cell in or near the cell. A manufacturer stocks flammable goods in a designated area. A manufacturer stocks finished goods in an automated storage and retrieval system (AS/RS). A manufacturer stores component parts near the cell that will be using them.
Distribution requirements planning Rationale Distribution requirements planning is the function of determining the need to replenish inventory at branch warehouses.
Which of the following is the best solution for coordinating the flow of goods through a network consisting of warehouses, distribution centers, and a production facility? Answers Material requirements planning Distribution requirements planning Advanced planning and scheduling Transportation management systems
Efficient, timely service with minimal inventory investment Rationale This is the overall goal of a distribution system. The other answers are incorrect because customer service is an important goal but not the complete goal. Customer service must, however, be a factor, which is why the other two answers (maximum distribution efficiency at lowest cost, and minimum inventory investment and lowest-cost distribution) are incorrect.
Which of the following is the overall goal of a distribution system? Answers Customer service Minimum inventory investment and lowest-cost distribution Efficient, timely service with minimal inventory investment Maximum distribution efficiency at lowest cost
Maintaining a well-balanced inventory at all appropriate locations within the network Rationale The primary goal of DRP is to ensure that inventory is available in the right quantities and in the right places in the distribution channel.
Which of the following is the primary goal of distribution requirements planning (DRP)? Answers Decoupling the distribution plan from the production plan Delivering products on schedule in the quantities requested by the customer Accurately feeding the gross requirements into the master production schedule Maintaining a well-balanced inventory at all appropriate locations within the network
Product identification errors are reduced. Rationale Bar codes are a series of alternating bars and spaces printed on parts, containers, and labels, representing encoded information that can be read by electronic readers. Bar coding facilitates timely and accurate input of data to a computer system, reducing errors.
Which of the following is typically a significant benefit of using bar-coded labels to identify parts and storage locations? Answers The data entered is more complete. Stockroom employee morale is improved. The cost of labeling is transferred to the supplier. Product identification errors are reduced.
Product mixing Rationale Product mixing deals with the grouping of different items into an order and the economies that warehouses can provide in doing this. Without a distribution center, customers would have to order and pay LTL transport from each source. Using a distribution center, orders can be placed and delivered from a central location.
Which of the following roles of a finished goods warehouse deals with the grouping of different items into an order? Answers Service Kitting Product mixing Transportation consolidation
Marshalling the shipment Rationale In marshalling, goods making up a single order are brought together and checked for omissions or errors. Order records are updated. Picking is the process of selecting items from storage and bringing them to a marshalling area. Dispatching goods to storage is the process of sorting goods upon receipt and placing them in a storage area. Dispatching the shipment is the process of order packing, preparing shipping documents, and loading items on the correct transport vehicles.
Which of the following warehouse activities involves bringing goods together and checking for omissions or errors in the order? Answers Dispatching goods to storage Picking goods Dispatching the shipment Marshalling the shipment
Distribution channel Rationale The distribution channel is concerned with the transfer or delivery of goods or services to the customer.
Which of the following warehouse roles deals with grouping different items into an order? Answers Transaction channel Manufacturing channel Physical supply channel Distribution channel
Sort Rationale The sort step involves logging in the returned products, inspecting them, and sorting them. The data collected at this point can be used for reporting purposes, such as the weight of the material recycled.
Which step of the reverse logistics process would be most helpful in supporting an organization's sustainable waste hierarchy claims? Answers Retrieve Transport Dispose Sort
Shipping by full truckload rather than less-than-truckload Rationale Full truckload shipments require less handling than less-than-truckload; cross-docking reduces handling at the distribution centers of smaller orders assembled for delivery to the next level in the distribution system.
Which would reduce materials handling costs? Answers Shipping directly to customers rather than using a break-bulk center Using traditional warehousing rather than cross-docking Shipping by full truckload rather than less-than-truckload Manually moving materials near at hand rather than going to get a forklift
Inventory is pushed to distribution centers from a central location. Rationale Inventory is pushed to where it is needed from a central location.
Why does distribution requirements planning have characteristics of a push system? Answers Inventory transit systems push the material between docks. Customer orders push demand to the distribution centers. Distribution centers push demand to a master production schedule. Inventory is pushed to distribution centers from a central location.
Reputation risk Rationale Setting policies for suppliers related to the waste hierarchy is important because the organization can be held responsible for its supply chain partners' activities in terms of public opinion. Enforcement of efficiency-related policies can also help drive unnecessary costs out of the supply chain. Liability and regulatory compliance are risks for the supplier, not the buyer.
Why is it important for an organization to consider setting waste hierarchy policies for its suppliers? Answers Reputation risk Liability risk Regulatory compliance risk It is worth the added expense.
Number of order lines picked vs. standard for number of order lines to be picked Rationale In distribution, the standard measure of order lines picked would be compared to the actual order lines picked.
hich efficiency measurement is applied to distribution for calculating capacity? Answers Number of order lines picked vs. standard for number of order lines to be picked Number of pallets received vs. number of pallets shipped Number of trucks that have been unloaded Number of trucks that have been loaded
