MKTG Chapter 14 set 14.5

The reorder point is computed by multiplying the service standard by the order lead time. True False

False To calculate the reorder point, the marketer must know the order lead time, the usage rate, and the amount of safety stock required.

What is the reorder point if the usage rate is 20 units per day, the order lead time is 8 days, and the safety stock is 60? a.220 b.500 c.1,208 d.88

a.220 The reorder point = (Order lead time × Usage rate) + Safety stock. In this example, (8 × 20) + 60 = 220.

Which two modes of transportation are used when containers are shipped by fishyback? a.Water carriers and trucks b.Water carriers and pipelines c.Water carriers and railroads d.Pipelines and railroads

a.Water carriers and trucks Fishyback refers to using truck trailers and water carriers to transport products. Intermodal shipping such as this has gained popularity as transportation costs have increased.

A private warehouse is a _______. a.company-operated facility for storing and shipping products b.business that leases storage space to other firms c.company that offers storage and transportation services d.facility specially designed for rapid flow of products

a.company-operated facility for storing and shipping products A private warehouse is a company-owned facility for storing and shipping products. It is useful for firms that require special handling and storage and want control of the design and operation of the warehouse.

Halloween Center is a specialty costume store that operates a retail location from late August through early November. The company needs some warehouse space to store its costumes. Because of the seasonality of its operations, they are most likely looking to lease a _______. a.public warehouse b.private warehouse c.temporary warehouse d.bonded warehouse

a.public warehouse The Halloween Center is most likely looking for a public warehouse. A public warehouse is a storage space that can be leased for a shorter length of time.

Inditex, the parent company of fast-fashion retailer Zara, is an expert at using technology to track items. For instance, Zara has small bits of this technology attached to its fashion products' security tags. This technology uses signals to keep track of inventory and inform the retailer when more products need to be ordered. It also helps with shipment tracking. This technology is called _______. a.radio frequency identification (RFID) b.vertical marketing system (VMS) c.electronic data interchange (EDI) d.digital distribution

a.radio frequency identification (RFID) Radio frequency identification (RFID) uses radio waves to identify and track tagged materials. Firms are discovering that RFID technology has very broad applications, from tracking inventory to paying for goods and services, asset management, and data collection.

When the Quaker Oats Company manufactures its Quaker Chewy Bars, it places several boxes of the bars into larger shipping boxes that are then stacked onto pallets. These pallets can then be easily moved around using forklifts in a process called _______. a.unit loading b.containerization c.piggybacking d.warehousing

a.unit loading Unit loading is the process of putting one or more boxes on a pallet or skid that can then be loaded efficiently using mechanical means such as forklifts, trucks, or conveyer systems.

When a firm has an inventory stockout, it can result in _______. a.increased risk of damage to inventory b.brand switching among customers c.increased warehousing costs d.higher materials handling costs

b.brand switching among customers When too few products are carried in inventory, the result is a shortage of products referred to as a stockout. Stockouts can result in customer dissatisfaction that leads to lower sales, and even loss of customers and brand switching.

If a retailer is reviewing its inventory and notices that the usage rate for one of the products it stocks has decreased, the retailer should _______. a.increase the amount of safety stock b.decrease its reorder point c.increase the order lead time of the product d.decrease safety stock

b.decrease its reorder point In inventory management, the reorder point = (order lead time × usage rate) + safety stock. If usage rate decreases, then the reorder point should also decrease.

Product managers for Green Giant are meeting to discuss ways so that they can improve the packaging of their frozen foods to reduce damage and make loading and transportation more efficient. This is an attempt to improve _______. a.order processing b.materials handling c.inventory management d.warehousing

b.materials handling Materials handling is the physical handling of tangible goods, supplies, and resources. Packaging goods correctly can help prevent damage or breakage during handling and transportation and make loading and transportation more efficient.

Freight transportation companies that have the ability to transport products in many different ways including ships, rails, trucks, and air service are known as _______. a.air-land-sea carriers b.megacarriers c.shipping experts d.freight forwarders

b.megacarriers Megacarriers are freight transportation companies that offer several shipment methods, including ships, rails, trucks, and air service. Prior to the development of megacarriers, transportation companies generally only specialized in one mode.

David is reviewing proposals from different shipping companies to see whether he can improve _______ of his company's products. a.order entry b.order delivery c.order accuracy d.order handling

b.order delivery David is improving his company's order delivery. This occurs once the order has been assembled and packed for shipment. During order delivery, the customer is sent an invoice, inventory records are adjusted, and the order is delivered.

Taco Bell developed a smartphone app that allows customers to place orders by their phones rather than by speaking to an employee at the store. Customers can choose whether to pick up their food in the drive-thru lane or inside the restaurant. The app has given Taco Bell the opportunity to improve its _______. a.transportation b.order processing c.warehousing d.materials handling

b.order processing Taco Bell has improved its order processing. This has been done by automating order entry and allowing customers to select an order delivery option.

Becky has started a company selling homemade cookies online. As the company has grown, Becky has decided to hire a third party to handle her logistics tasks so that she can focus on serving existing customers and attracting new ones. She has been using _______ for logistics of the cookies. a.retailers b.outsourcing c.order processors d.wholesalers

b.outsourcing Becky has been outsourcing the task of logistics. Outsourcing is the contracting of tasks to a third party. She has outsourced the logistics tasks to firms that have special expertise in the area of shipping, so she can free up resources for other tasks.

Mercury Toy Store has two types of warehouses that it uses. The first is a _______ that it operates and uses exclusively to store inventory year-round. In the months leading up to the holiday season, when the company knows the demand for toys will increase, it gets a short-term lease on a _______ that helps it store the excess inventory it will need during the holiday shopping season. a.main warehouse; leased warehouse b.private warehouse; public warehouse c.private warehouse; distribution center d.primary warehouse; secondary warehouse

b.private warehouse; public warehouse The first warehouse is a private warehouse, which is a company-operated facility for storing and shipping products. The second is a public warehouse, which is a storage space that can be leased by companies.

Jeep wants to transport new vehicles from its plant in Toledo, Ohio, to the dealers in Southern California. Which of the following methods would be the cheapest for transporting this cargo? a.Airplanes b.Birdyback c.Railroads d.Trucks

c.Railroads Of the viable routes from Toledo to Southern California, railroads provide the cheapest mode of transportation.

FedEx provides overnight shipping of packages across the United States. If a customer in San Francisco wants a package to be delivered to Atlanta the following morning, speed is very important, and the customer is willing to pay a higher price for the speed. FedEx would most likely use _______ for transporting the overnight package from San Francisco to Atlanta. a.trucks b.waterways c.airplanes d.pipelines

c.airplanes Airplanes offer very fast speed, allowing the shipment to arrive by the following morning. The cost associated with this mode of transportation is also very high.

The Mini Roadster is manufactured in England. For cars sold in the United States, they are placed into large boxes that are 8-feet wide, 8-feet high, and 10- to 40-feet long. This way, they can be stacked and shipped on ships and barges across the Atlantic Ocean. This process is referred to as _______. a.piggybacking b.warehousing c.containerization d.unit loading

c.containerization Containerization is the consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination. The containers are uniform in size so that they can be stacked and shipped via train, barge, or ship. Once they arrive at their destination, they can have wheel assemblies added to be transported by truck.

Jackie works for a custom bicycle manufacturer and is analyzing the order fulfillment process. She wants to shorten the time between receiving an order online and having the order picked up by UPS while maintaining customer service and cost. Jackie is focusing on improving her company's _______ as a way of increasing customer satisfaction. a.turnaround time b.fulfillment time c.cycle time d.shipping time

c.cycle time

Companies have been using computer technology to integrate order processing with production, inventory, accounting, and transportation in a system referred to as _______. a.expected data input b.inventory management c.electronic data interchange (EDI) d.just-in-time (JIT) delivery

c.electronic data interchange (EDI) An electronic data interchange (EDI) is a computerized means of integrating order processing with production, inventory, accounting, and transportation.

Richland Technologies produces smartphone accessories. In order to have enough capital to manufacture its latest batch of accessories, Richland Technologies secured a loan with its inventory as collateral. Instead of moving the collateral to a warehouse, the bank making the loan hired a company to set up a _______ to provide security over the collateral at Richland Technologies' facility. a.secured warehouse b.private warehouse c.field public warehouse d.public warehouse

c.field public warehouse This is a field public warehouse. Many public warehouses furnish security for products used as collateral for a loan. A field public warehouse is established by the public warehouse at the owner's inventory location. In this example, the field public warehouse was established at Richland Technologies' facility to protect the inventory used as collateral.

Courtney is a transportation coordinator for Nike. She has a large shipment of shoes arriving from plants in Asia and plans on using waterways, railroads, and trucks to transport the containers. Using these different transportation methods will allow Nike to take advantage of the benefits offered by each type of carrier. Using different types of carrier is referred to as _______. a.freight forwarding b.container shipping c.intermodal transportation d.cost-based transportation

c.intermodal transportation Courtney is using intermodal transportation. Intermodal transportation involves using multiple transportation methods to take advantage of the benefits offered by each type of carrier.

JanSport offers a line of backpacks in a variety of styles and sizes. The company needs to make sure that it has an adequate assortment of backpacks available to meet customer demand as part of the _______ stage of logistics. a.warehousing b.transportation c.inventory management d.materials handling

c.inventory management Having an adequate assortment of backpacks available to meet customer needs is part of inventory management. Companies need to make sure they do not have either a shortage of products or too big of a surplus.

Brandon works for Redwood Enterprises in Washington State. As the furniture company expands beyond the Pacific Northwest, Brandon has been asked to find a warehouse to lease in California to serve the company's new markets. This warehouse will be a _______ and will only store furniture manufactured by Redwood Enterprises to be distributed in California and the Southwestern United States. a.public warehouse b.distribution center c.private warehouse d.bonded warehouse

c.private warehouse This will be a private warehouse. A private warehouse is a company-operated facility that is designed for storing and shipping products.

Walmart has begun requiring that its suppliers add _______ to their shipments. The shipments can then be tracked using radio waves to help Walmart and its suppliers make the supply chain more efficient. a.mobile scanners b.UV chips c.radio frequency identification (RFID) tags d.LED trackers

c.radio frequency identification (RFID) tags Radio frequency identification (RFID) tags allow firms to use radio waves to track tagged materials. The technology has broad applications, including tracking inventory, paying for goods and services, asset management, and data collection.

Anne-Marie is the manager of a department store. She has read predictions that the coming winter is going to be very cold and is concerned that there will be a lot of demand for winter coats. To help avoid stockouts, she is keeping _______. a.excess inventory b.just-in-time inventory c.safety stock d.private warehouses

c.safety stock The extra inventory she is keeping on hand is referred to as safety stock. It is designed to protect against above-average usage rates and/or longer-than-expected lead times.

Ryder describes itself as a firm "that delivers outstanding execution from deep expertise in your industry. Our proven supply chain management and transportation solutions, LEAN guiding principles and an established network across NAFTA and Asia help us customize the right solution to meet your business' needs." Due to its specialized expertise, many firms outsource its logistics activities to Ryder. Ryder is most likely a(n) _______. a.distribution center b.manufacturers' agent c.third-party logistics (3PL) firm d.industrial distributor

c.third-party logistics (3PL) firm Third-party logistics (3PL) firms have special expertise in core logistics activities such as warehousing, transportation, inventory management, and information technology and can often perform these activities more efficiently.

A wholesaler of produce wants to create a shipping plan for a variety of fruits and vegetables. The managers of the wholesaler want to use _______ because it has the most flexible schedules and routes of all transportation modes. a.pipelines b.airplanes c.trucks d.waterways

c.trucks Trucks provide the most flexible schedule and routes of all major transportation modes because they can go almost anywhere. They do not have to conform to a set schedule and can move goods from warehouse to customer wherever there are roads.

A medical supply wholesaler has seen growth in its business recently and has decided to open a new facility designed for moving the products being sold. It will combine shipments received from manufacturers and ship them to medical facilities almost immediately. This new facility would be best classified as which of the following? a.Public warehouse b.Private warehouse c.Bonded warehouse d.Distribution center

d.Distribution center The medical supply wholesaler is most likely looking for a distribution center. Distribution centers are large facilities used for receiving, warehousing, and redistributing products to stores or customers. They are specially designed for rapid flow of products and are usually one-story buildings with access to transportation networks, such as major highways and/or railway lines.

After appearing on a national talk show to discuss her line of bracelets and rings, Natalie expected sales volume to increase. Unfortunately, the sales volume was higher than expected and her company had $250,000 in lost sales because it did not have enough inventory. The $250,000 represents which of the following inventory management costs? a.Safety stock b.Carrying c.Shortage d.Stockout

d.Stockout When too few products are carried in inventory, the result is a shortage of products referred to as a stockout. Stockouts can result in customer dissatisfaction that leads to lower sales, and even loss of customers and brand switching.

A firm that consolidates shipments from many smaller firms into efficient lot sizes is known as a _______. a.megacarriers b.logistics optimization engineer c.freight consolidator d.freight forwarder

d.freight forwarder Freight forwarders consolidate shipments from many smaller firms into efficient lot sizes. They are able to get the smaller firms better rates on shipping since the shipments will be combined with those of other firms. Freight forwarders may even reduce delivery time and the likelihood of damage.

Alicia is a product manager for a computer manufacturer and has decided to improve its inventory management. She is working with suppliers to wait to purchase materials just right before they are needed in production so that she can keep the levels of inventory low. She is suggesting a(n) _______ approach. a.safety stock b.ordering minimization c.inventory reduction d.just-in-time (JIT)

d.just-in-time (JIT) Alicia has recommended a just-in-time approach. The company's supplies arrive just as they are needed for use in production. It maintains low inventory levels and purchase materials in small quantities only when needed.

Precision Equipment is updating the way it ships its products. Specifically, it is improving _______ by adding electronic ordering to its system, adding automated machines to move items in the warehouse, and partnering with UPS to ensure priority shipping with the carrier. a.warehousing b.logistics c.inventory management d.order processing

d.order processing Precision Equipment is improving its order processing system, which includes three main tasks: order entry, order handling, and order delivery. Electronic ordering improves the order entry process, the machines improve order handling, and the partnership with UPS improves order delivery.

Cook Right Pans has two types of warehouses that it uses. The first is a _______ that it leases to store excess inventory during times when its production output is greater than the demand for its pots and pans. The second is a _______ that is used to coordinate the shipping of completed products and is designed for quickly shipping products rather than for storage. a.private warehouse; public warehouse b.preassembly warehouse; postproduction warehouse c.private warehouse; distribution center d.public warehouse; distribution center

d.public warehouse; distribution center Public warehouses lease storage space and related logistics facilities to other companies. Distribution centers are large facilities used for receiving, warehousing, and redistributing products to stores or customers. They are specially designed for rapid flow of products.