APIC CLTD

According to Ross, the most effective customer service strategy is one that addresses which parties?

3-63 - shareholders - customers - members of the supply chain - employees

What metric is closely tied to the customer service ratio?

3-66 stock out frequency

What category includes performance metrics for on-time delivery, total order cycle time,and response to emergency requirements?

3-69 Process

A manufacturer has determined that 8,000 parts are needed during a 20 day production cycle. It takes 5 days to receive parts. What is the inventory order point? Answer: 8000/20 x 5 = 2000 4-30 The manufacturer described in question 24 decides to maintain safety stock at 1,200 parts. What is the inventory order point now?

3200 4-31 Order Point = (D) x (L) + (SS) 2000 + 1200 = 3200

What is considered and external supplier who performs part of or all logistics functions that are not performed by and in-house logistics department?

3PL 5-24

A master carton is 40 x 40 x 40 centimeters. What would be the best carton size for smaller goods of the options provided?

40 x 20 x 20 4-186

List the four basic functions that inventory serves in a business?

- serve demand - smooth impact of fluctuations in supply and demand - buffer against uncertainty - create cost-savings opportunities 4-9

What is the characteristic role of warehousing in a production or assembly facility?

- store finished product - store WIP

What would be considered a value-added warehouse service?

- storing valuable goods in a secure and monitored area. - providing customer visibility of goods in transit.

customer service is

- the ability of a company to address needs, inquiries, and requests from customers. - a measure of the delivery of a product to the customer at the time the customer specifies. 3-52

which of the following documents is signed by the exporter's chamber of commerce?

certificate of origin 6-46

RedBox kiosks and commercial tire casing retreads are both examples of

closed-loop supply chains. 8-13

Reach truck

counterbalanced to extend into a pallet rack.

which of the following is not a common term or condition included in an international sales contract?

designation of a particular carrier for shipping is not a common term or condition. these are: - conditions for incentives and penalties - designation of the legal entity governing the agreement. - security requirements about confidential information. 6-65

Disposition refers to

determining if a returned product should be donated to charity, liquidated, or recycled. 8-9

U.S. roads received a grade of A from the U.S. Transportation Secretary.

false 6-15

Names on the BIS Entity List are those approved to purchase exports of any type without an export licences.

false 6-38

The customs clearance process is standardized across all nations.

false 6-57

All countries use the same Harmonized Tariff Schedule.

false 6-59

International trade contracts are always written in English since it's the universal language of business.

false 6-65.

Once a returned product is shipped to the return center, its value remains stable.

false 8-17

International shipping of hazardous cargo need only meet the requirements of the exporter's and importer's country.

false 8-47

49CFR refers to which of the following?

A federal code regarding the transport of hazardous materials 6-32

time series forecasting

A forecasting method that projects historical data patterns into the future. It involves the assumption that the near-term future will be like the recent past.

heuristics

A form of problem solving in which the results or rules have been determined by experience or intuition instead of by optimization

short-sea shipping

A form of water transportation that does not cross an ocean, but instead utilizes coastal and inland waterways to move shipments from maritime ports to their destination.

freight claim

A formal legal claim filed by the transportation buyer that the carrier failed to protect the freight properly, seeking monetary compensation for damaged freight, delayed or incorrect deliveries, overcharges, or other service failures.

freight bill

A freight carrier's invoice for a shipment.

rail waybill

A freight document that indicates goods have been received for shipment by rail. The shipper receives a copy as a receipt for acceptance.

cube rate

A freight rate calculated on cargo volume rather than weight.

bribes

A gift, money, or a favor given by one person to another intending to influence the person's decision, judgment, or conduct.

work in process (WIP)

A good or goods in various stages of completion throughout the plant, including all material from raw material that has been released for initial processing up to completely processed material awaiting final inspection and acceptance as finished goods inventory.

private carrier

A group that provides transportation exclusively within an organization. Ant: common carrier.

customs trade partnership against terrorism (C-TPAT)

A joint government-business endeavor for imports (not exports) to increase the security of supply chains and U.S. borders.

stockout

A lack of materials, components, or finished goods that are needed.

container

A large box in which commodities to be shipped are placed.

Which is likely the most efficient warehouse layout given the tradeoffs involved?

A layout that minimizes order picking time at the cost of slightly slower put-away 1-3

balanced scorecard

A list of financial and operational measurements used to evaluate organizational or supply chain performance.

customer relationship management (CRM)

A marketing philosophy based on putting the customer first. The collection and analysis of information designed for sales and marketing decision support (as contrasted to enterprise resources planning information) to understand and support existing and potential customer needs.

vendor-managed inventory (VMI)

A means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer.

carbon footprint

A measure of carbon emissions from a person, organization, building, or operation.

twenty-foot equivalent unit (TEU)

A measurement used to describe the carrying capacity of a cargo ship or a terminal's handing capacity. One TEU equals a standard 20ft x 8ft x 8ft (length x width x height) shipping container.

kanban

A method of Just-in-Time production that uses standard containers or lot sizes with a single card attached to each. It is a pull system in which work centers signal with a card that they wish to withdraw parts from feeding operations or suppliers.

first in, first out (FIFO)

A method of inventory valuation for accounting purposes. The accounting assumption is that the oldest inventory (first in) is the first to be used (first out), but there is no necessary relationship with the actual physical movement of specific items.

open account payment

A method of payment for goods shipped in advance of of payment in which the buyer or importer sends the seller or exporter an invoice requesting payment by a certain date.

center-of-gravity approach

A methodology for locating distribution centers at approximately the location representing the minimum transportation costs between the plants, the distribution centers, and the markets, in order to maximize revenue.

six sigma

A methodology that furnishes tools for the improvement of business processes. The intent is to decrease process variation and improve product quality.

Global Reporting Initiative (GRI)

A network-based organization that pioneered the world's most widely used sustainability reporting framework.

recalls

A step in the reverse logistics process where parts or products are returned due to a product defect or potential hazard due to government regulations or liability concerns.

activity-based costing (ABC)

A system that recognizes the relationship between costs, activities and products, and through this relationship, it assigns indirect costs to products less arbitrarily than traditional methods.

duty

A tax levied by a government on the importation, exportation, or use and consumption of goods.

harmonized system classification codes

An internationally standardized description of goods that uses a system of numbers to provide increasingly detailed classification and descriptions.

cycle counting

An inventory accuracy audit technique where inventory is counted on a cyclic schedule rather than once a year.

commercial invoice

An official document indicating the names of the seller and buyer, the product being shipped, and its value. The document is provided by the seller.

tariff

An official schedule of taxes and fees imposed by a country on imports or exports.

perfect order

An order in which the "seven R's" are satisfied: the right product, the right quantity, the right condition, the right place, the right time, the right customer, the right cost.

backorder

An unfilled customer order or commitment.

waste

Any activity that does not add value to the good or service in the eyes of the consumer.

What is a key benefit that better visibility for anticipated shipping requirements can give to transportation planners in the medium term?

Arranging more aggregate capacity 2-33

At what point would the delivery mode be specified with a supplier?

As part of the master contract terms and conditions 2-110

When doing an economic cost justification of a break-bulk center, what costs need to be summed and compared to the processing and direct freight costs of the average shipment?

Average volume shipment, average shipment DC cost, and average shipment local delivery cost. 7-17

Which party determines the exchange rate for valuation?

Customs 6-59

In which process does a business count all items but at different times and intervals?

Cycle counting

free/foreign trade zone (FTZ)

Designated areas within a country which are considered to be outside of the country. Material in the zone is not subject to duties and taxes until the material is moved outside the zone for consumption.

Truck transport is second to rail in terms of weight shipped and miles traveled per year.

False 5-45

T or F? CRM does not attempt to understand potential customer needs.

False 3-4

Scheduling is the sequence in which orders are to be delivered?

False 5-170

Road and rail share fixed and variable cost structures.

False 5-8

In which of the following are some buyers paying more and others paying less?

Single-zone delivered pricing 5-186

procurement

The business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations.

demurrage

The carrier charges and fees applied when rail freight cars and ships are retained beyond a specified loading or unloading time.

Within the U.S., there are about 250 FTZs operating.

True

Sustainability reporting like that of the GRI is an important tool for a supply chain strategy.

True 8-32

The goal of a CSM strategy is to provide a given service level while minimizing costs.

True 3-60

T or F? Major operation decisions for fleet operators focus on potential savings, typically in the ares of equipment, leasing, organization, controlling, and regulations.

True 5-18

The FAST program is an initiative of which organization?

U.S. Customs and Border Protection 5-53

Which is the most important measure of road infrastructure?

Usability 6-15

associative forecasting

Uses one or more variables that are believed to affect demand in order to forecast future demand.

Once the purpose of the forecast is determined along with its aggregation level and time horizon, what should be done next?

Visualize the data. 2-12

What kind of waste would be easiest to identify by studying the bottom portion of a value stream map?

Waiting 1-163

Which parts of logistics might be grouped together as one unit to enable close integration with other areas of logistics?

Warehousing, materials handling, and packaging 1-25

hazardous waste

Waste, such as chemicals or nuclear material, that is hazardous to humans or animals and requires special handling.

inventory accuracy

When the on-hand quantity is within an allowed tolerance of the recorded balance. This important metric usually is measured as the percent of items with inventory levels that fall within tolerance.

What is the earliest point at which packaging might start to be added?

While the product is WIP inventory,,

In a bicycle manufacturing facility, completed frames are placed in inventory. As orders are filled, the frames will be retrieved, and braking and gear-shifting systems and other features will be added. What type of inventory do the bicycle frames represent?

Work in process (WIP) 4-4

Determine the center of gravity point for the following data set. The x and y coordinates of each location are noted on the map below as (x, y). What should the X coordinate be? Round to nearest .X position. What should the Y coordinate be? Round to nearest .X position. Chicago (7,3) St Louis (5.2, 1.6) Atlanta (3,5) New York (6.5, 10.2) Chicago Volume = 100,000 St. Louis Volume = 75,000 Atlanta Volume = 120,000 New York Volume = 148,000

X coordinate should be: The correct answer is [[7 x 100,000] + [5.2 x 75,000] + [3 x 120,000] + [6.5 x 148,000]] / [100,000 + 75,000 + 120,000 + 148,000 ] = 5.4 y coordinate should be: The correct answer is [[3 x 100,000] + [1.6 x 75,000] + [5 x 120,000] + [10.2 x 148,000]] / [100,000 + 75,000 + 120,000 + 148,000 ] = 5.7

Lifetime customer value is

a prediction of the net present value of future profits. 3-7

Which risk response would be appropriate when the cost of the best possible response would be less than the cost if the risk were to occur but greater than the risk-adjusted cost?

accept or avoid 7-50

A merger is about to occur between two organizations. When is the best time to redesign the logistics network?

before the merger, so it can be part of the cost analysis. 7-6

What may be a necessary compromise when finalizing the to-be state of a logistics network?

finding ways to leverage some existing assets. 7-8

What provides information about how responsibilities are divided between exporter and importer?

incoterms trade terms 6-36

which of the following is not a benefit of using an automated routing and scheduling system?

increased driver compliance 5-175

Which might be considered to be a form of waste under lean?

performing quality control on incoming raw materials. 1-157

Which of the following is also defined as a satellite or end-of-the-line terminal?

pickup and delivery (PUD) terminal 5-12

Which is not a method of entry into a global market?

stevedore 6-34

According to Incoterms® trade terms, who bears the risk of loss of goods that are in transit?

the seller does, until it has fulfilled its obligation to delver the goods. 7-41

Which type of inventory might be relatively higher than normal in an agile system?

work-in-process 1-166

Which of the following is typically the single greatest expense for logistics?

xTransportation-related costs 3-31

Last year a manufacturer of outdoor grills had to limit production when a new supplier suspended operations for a month. Learning that a similar suspension is planned again, the manufacturer's inventory manager increases the amount of orders beyond what is needed to meet the current production schedule. What is this type of inventory called?

Anticipation inventory 4-11

What is at least four types of specialized warehouses and a challenge or need each faces because of that specialization.

Automated - high construction costs, security. Cold storage - high construction and operation costs, worker health issues. Climate-controlled - expensive heating, cooling, ventilation system. Bonded - security and documentation. Hazardous materials storage - special systems to monitor and control releases, worker health and safety. Records archive - avoiding climate-related damage (dust, mold), security, connectivity, equipment.

Boom conveyor

Capable of extending into cargo area facilitate loading/unloading

decoupling

Creating independence between supply and use of material. Commonly denotes providing inventory between operations so that fluctuations in the production rate of the supplying operation do not constrain production or use rates of the next operation.

What are the components of average inventory?

Cycle stock and safety stock

____________________ is a fee a customer pays for retaining a container, rail car, or trailer longer than the specified loading or unloading time, often to store goods temporarily.

Demurrage

0 rings are carried in inventory because they are specified in the manufacturing of faucet cartridges. What type of demand does this illustrate?

Dependent demand 4-28

A cross-docking warehouse uses contractor drivers for outbound shipments. What is the best strategy for using the driver during the loading process?

Direct the driver to a lounge or waiting area.

What is being described? " A tool used to calculate the amount of an item to purchase or manufacture at one time."

Economic order quantity 4-38

What is the key distinction between FEFO and FIFO methods of inventory control in warehouses?

FEFO is more sensitive to lot distinctions in the same SKU.

A transportation company sees an upward trend in diesel prices and contracts for twice as much fuel as it usually purchases for the coming period. What does this illustrate?

Hedge inventory 4-15

stock keeping unit (SKU)

In a distribution system, an item at a particular geographic location. For example, one product stocked at the plant and at six different distribution centers would represent seven SKUs.

safety stock

In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply.

A new inventory manager reviews levels of buffer stock throughout the production process and cuts inventory quantities at several points. What concern may be driving this interest?

Inefficient risk management practices 4-13

April demand was 500 units, May was 550 units, and June was 610 units. If a weighted moving average is used, with weights of 1, 2, and 4 and with higher weightings on more recent months, what is the July forecast?

((1*500)+(2*550)+(4*610))/(1+2+4)=577 rounded 2-17

Last period's demand was 2,340 units, and last period's forecast was 2,100 units. The alpha smoothing constant is 0.4. What is the exponential smoothing forecast for the next period?

(0.4 * 2,340) + ((1 - 0.4) * 2,100) = 2,196 new forecast = ( a * Last period's Demand) + ((1 - a) * Last Period's Forecast) 2-18

DC A has coordinates of (10, 90) and shipping volume of 5,000 units. For DC it is (50, 30) and 3,000 units. For DCC, it is (70, 100) and 9,000 units. What is the center of gravity related to distance and shipping volume as expressed in (x-y) map coordinates?

(49, 85) 7-30

AGV

. Equipped with storage platform and guided by sensors

An organization indicates that a risk probability might be rare (10%), unlikely (20%), possible (40%), likely (60%), or certain (80%). It creates impact levels of insignificant (10%), minor (20%), moderate(40%), major (60%), and extreme (80%). What is the rating for a risk that is considered possible and major?

0.4 X 0.6 = 24% 7-48

A forecast has an error of 9 percent, or 18 units. What is the forecast curacy?

1 - .09 = 91 percent. forecast accuracy = 1 - forecast Error as a Percentage. example 1 - 0.11 = 0.89 = 89 percent.

1. Last month your forecast was 1,200 units and actual demand was 1,000. What is your forecast error? 2. Using the same data as above, what is your Forecast Error as a Percentage? Please answer in .xx% 3. Using the same data as above, what is your Forecast Accuracy? Please answer in .xx%

1. (1200-1000) = 200 2. (1200 - 1000) / 1000 = .2 = 20 % 3, 1 - .2 = 80 %

Which of the following are elements of CSM?

3-54 x Reputation, consistency, dependability, information

You are a warehouse manager for a distribution company. Your boss wants to meet with you today to review why your warehouse labor costs are escalading over the budgeted amount. 1. You have 10 employees in your warehouse that each work 40 hours a week. Reports have determined that their efficiency is 90% and their utilization is 60%. What are the total actual direct hours they are providing service in a week? 2. After reviewing the calculation above, you an your boss realize that something needs to be done about the utilization %. It is too low. After some research, it was determined that some employees were leaving work early and taking extra long breaks. This was causing the rest of the employees to work overtime and causing total labor costs to rise. You decided to meet with the team to review these issues. 2 weeks later, you reviewed the reports and it looks like the utilization rate is now 80%. What are the total hours of service they are providing now?

1. (40 hours * 10 employees) *.90 * .60 = 216 2. (40 hours * 10 employees) *.90 * .80 = 288

Following is some past sales history for product XYZ at your company. History January 1,100 Feburary 1,200 March 1,000 April 1,300 May 900 June 1,100 1. What would be the 4 month moving average forecast for July? 2.What would the 3 month weighted moving average be for July with the following weighting facors: April = 1; May = 2; June = 3? Please round to the nearest whole number. 3. Last months sale history was 1,100 units and forecast was 1,300 units. What is the Exponentil Smoothing forecast for next month is we use a smoothing constant of .4? 4. Government data shows that orders for durable goods for January were $200 billion. Your next months sales of your product line shows the alpha intecept value is $2,500,000 and the bata slope value is $.00062. What is the simple regression forecast for Feburary?

1. 1,000 + 1300 + 900 + 1,100/4 = 1075 2. ((1 * 1300) + (2 * 900) + (3 * 1100))/6 = 1067 rounded 3. ( .4 * 1100) + ((1 - .4) * 1300) = 1220 4. 2,5000,000 + ( .00062 * 200000000000) = 126,500,000

You are the Logistics Director for a large distribution company that operates regionally in the US. After meeting with the sales team in your weekly meeting, you learned that your company captured a new market in the North West where you currently do not have a distribution network. You need to analyze if the company should buy or lease a facility to support the new business. 1. It is determined that is will cost US$20 million to acquire a facility and associated assets with an average storage cost of $8 a unit. After some research, you have found a suitable 3rd party warehousing firm that can also meet your needs. However, there average cost to serve is $16 per unit. What is the Break Even Point in this case? 2. After meeting with the sales team to show then your analysis, you learned that they have a new forecast on the proposed business in the North West. New sales projections are now 3 million average units annually. Would you suggest to 1) acquire a facility (BUY) or 2) work with a 3rd party to lease a facility (LEASE)? Please insert "Buy" or "Lease" in the box to the right.

1. 20,000,000 / (16-8) = 2,500,000 2. The correct anwser is Buy. Since the new sales forecast is above the 2.5 million unit Break Even point, it makes more sense to buy.

In our new warehouse we have warehouse labor costs of $300,000 a year for our warehouse item pickers. If these employees make 75,000 picks a year, how much will it cost us to make each pick? Again, after reviewing similar rates at other warehouses in our company, that cost turns out to be too high for the customers in our market. Through some special focus groups, we were able to make some process improvements and increase their annual picks to 100,000. What is the cost per pick after these improvements have been made?

1. 300,000/75,000 = 4 2. 300,000/100,000 = 3

If you have a warehouse that has $600,000 in fixed costs and 3,000 pallet positions, what would be the allocated fixed costs for each pallet position? After reviewing the number above, you realize that the calculated cost is too high compared to your sister warehouses in other locations. You decided to go through an optimization process and now you can hold 33% more pallet positions or 4,000. What are the allocated fixed costs per pallet position after this improvement?

1. 600,000/3,000 = $200.00 2. 600,000/4,000 = 150

Approximately what percentage of customers provide little or no profit?

3-6 70 to 80 percent

What is the first step in the process of developing a CSM strategy?

3-60 Analyze the current relationship with customers.

see image for week 4 formulas 1. Given the data on the master scheduling grid above, what would be the PAB in period 2? 2. Given the data on the master scheduling grid above, what would be the PAB in period 4? 3. Given the data on the master scheduling grid above, what would be the ATP in period 1? 4. Given the data on the master scheduling grid above, what would be the ATP in period 3?

1. The correct answer is PAB in period 2 = 60 + 0 - 40 = 20. PAB prior to DTF = Prior Period PAB + MPS - Customer Orders 2. The correct answer is PAB in period 4 = 80 + 0 - 70 = 10. PAB after DTF = Prior Period PAB + MPS - Greater of Forecast or Customer Orders 3. The correct answer is ATP in period 1 = 100 + 0 - (40 + 40) = 20. Period 1 ATP = Inventory On Hand + MPS - Sum of Customer Orders Before Next MPS 4. The correct answer is ATP in period 3 = 120 - (60 + 50) = 10. Period 3 ATP = MPS - Sum of Customer Orders Before Next MPS

The company you are working for is having some cash flow issues. The management team is looking at the metrics associated with the "Cash-to-Cash Cycle Time" and wants to see where they currently stand. Step 1: Your annual company revenue is $50 million and your customer invoice receivables are $10 million. What are your Days Sales Outstanding? Step 2: Your current cost of inventory is reported at $2 million and your Annualized COGS (Cost of Goods Sold) is $20 million. What is your Inventory Days of Supply? Please round up to the nearest whole number. Step 3: Your current suppliers payable amount is $3.5 million with a cost of sales of $20 million. What is your Days Payables Outstanding? Please round up to the nearest whole number. Step 4: Now that you have all the correct data, what is your current Cash-to-Cash Cycle Time in days? As manager of logistics, the only thing you can directly control in this calculation is inventory levels. If you want to improve the Cash-to-Cash Cycle Time would inventory levels need to go up or down? Please respond UP or DOWN.

1. The correct answer is [$10,000,000 / $50,000,000] X 365 = 73 Days 2. The correct answer is [$2,000,000 / $20,000,000] X 365 = 37 Days 3. The correct answer is [$3,500,000 / $20,000,000] X 365 = 64 Days 4. The correct answer is 73 + 37 - 64 = 46 Days 5. down

Which quadrant in the attribute matrix describes a situation in which an organization performs poorly on an attribute that the customer ranks highly?

3-62 Competitive vulnerability

1. Your company has supply chain revenue of $5,500,000, COGS of $3,800,000, supply chain management costs of $750,000 with supply chain fixed assets of $2,900,000. What is your company's Return on Supply Chain Fixed Assets? Please enter answer in .XX rounded to nearest hundredth position. 2. Your company has an average inventory of $8,000,000, accounts receivable of $3,000,000, and accounts payable of $2,000,000. What is your company's return on working capital? Please enter answer in .XX rounded to nearest hundredth position.

1. The correct answer is [$5,500,000 - $3,800,000 - $750,000] / $2,900,000 = 33%. 2. The correct answer is [$5,500,000 - $3,800,000 - $750,000] / [$8,000,000 + $3,000,000 - $2,000,000] = 11%

An organization is considering moving from five to six warehouses. It currently has 100,000 units of safety stock in the aggregate. Using the square root rule, approximately what will be the new aggregate safety stock lever at six ware houses?

109,500(with rounding) 7-13

Government data show that orders for durable goods for November were US$238.8 billion. Analysis shows that, for the next month's sales of a company's family of machine presses, the alpha intercept value is US$2,530,500 and the beta slope value is US$0.00056. What is the simple regression forecast for December?

2,530,500 + (0.00056 * 238,800,000,000) = 136,258.500 2-19 y= a + Beta *

The demand for December was 11300 units. December's seasonal index is 1.25. What is the depersonalized demand for December?

2-16 11,300/1.25 = 9,040

What type of forecast data does demand management provide to the sales and operations planning process?

2-48 Aggregate data by product family

Procurement involves which of these activities?

3-16 Inventory control Salvage operations Outsourcing logistics service providers xAll of the above

Procurement generates ____ , from which _____ are created, and then logistics uses those to create ____ _

3-18 Purchase orders, work orders, shipping orders

Which of the following are not receiving practices?

3-20 PO status monitoring is not. - product verification and inspection. - shipment unloading. - forwarding of urgently needed items to production.

which of the following is a tool that logistics uses to manage shipments between points?

3-31 Routing guide

The greater the variability of the order cycle, the greater the amount of ____ the buyer must have on hand

3-34 Safety stock

which of the following is the term commonly used by logistics to describe any problem or issue that arises with a customer order?

3-40 Exception

Warehouse 1 has fixed costs of 300,000 Euro and variable cost of 100 Euro per unit. Warehouse 2 has fixed costs of 500,000 Euro and variable costs of 50 Euro per unit. What is the crossover point in units where warehouse 2 will be more cost-effective?

4000 500,000 - 300,000/100-50 = 4000 units. 7-27

What percentage of U.S. exports went to free trade agreement partners in 2014?

47 percent 6-24

VLCC refers to what?

5-110 Particular carrier's size and cargo

Which of the following is not likely cargo on a barge?

5-111 Containerized furniture

Which of the following pairs is not a likely intermodal combination?

5-137 Rail-pipeline

Which of the following is the same concept as demurrage?

5-207 Detention

"In bond" is a U.S. Customs designation that identifies carriers who have passed customs inspections.

5-45 False

The operating ratio describes how much operating revenue is spent on operating expenses.

5-55 true

Global trade doubled between 2002 and 2012.

6-2 true

What is the primary purpose of the Commerce Control List?

6-38 To identify the products of concern if sold to other countries

Which is not a true statement about the Logistics Performance Index?

6-4 Its results from 2014 showed that Somalia was the most logistics-friendly nation.

which is a false statement about an international bill of lading?

6-53 It specifies the duty owed.

freight settlement

A document that compares the freight order invoice as received to the invoice as expected and authorizes payment if the documents are consistent.

modes of transportation

A basic method of moving items including road, rail, air, water, pipeline, intermodal, and courier or parcel services.

bill of lading (house) (B/L)

A bill of lading that is issued by a Non-Vessel-Operating Common Carrier (NVOCC), consolidator or freight forwarder. It indicates the carrier's name and lists the master bill of lading.

bill of lading (master) (B/L)

A bill of lading that is issued by a carrier who are vessel owners, also known as a steamship company.

bill of lading

A bill of lading used in international trade to help ensure exporters are paid and importers receive the promised goods.

certificate of free sale

A certificate that attests that the goods can be legally sold in the country of export. The intent is to prevent defective products from being exported.

certificate of manufacture

A certificate that attests that the goods were manufactured in the exporter's country. It is provided and signed by the exporter's chamber of commerce.

certificate of insurance

A certificate, required under some terms of trade, that attests that a particular shipment has insurance coverage. It is provided by the exporter's insurance company.

reverse logistics

A complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.

strategic sourcing

A comprehensive approach for locating and sourcing key material suppliers, which often includes the business process of analyzing total-spend-for-material spend categories. There is a focus on the development of long-term relationships with trading partners who can help the purchaser meet profitability and customer satisfaction goals.

non-vessel-operating common carrier (NVOCC)

A consolidator of ocean freight shipments that operates similarly to a freight forwarder and issues its own bills of lading, thus acting as a carrier even though it does not own the means of transportation being used.

ocean bill of lading

A contract between an ocean carrier and a shipper arranging for carriage of freight. It provides evidence of the carrier's receipt of the cargo, lists the origin and destination ports, rates, quantities, weight, and any special handling requirements. The shipper is responsible for all losses other than for negligence on the part of the ocean carrier.

master contract / master service agreement

A contract that lays out the general provisions of a long-term agreement and governs most of the details of future individual contracts or purchase orders for a period of time. This is also called a master service agreement.

certificate of origin

A document attesting to a shipment's country of origin

export license

A document received from a governmental agency authorizing a certain quantity of an export to be sent to a given country.

continuous replenishment

A process by which a supplier is notified daily of actual sales or warehouse shipments and commits to replenishing these sales (by size, color, and so on) without stockouts and without receiving replenishment orders. The result is a lowering of associated costs and an improvement in inventory turnover.

customer service management (CSM)

A process that enables a business to offer post-purchase service and information to the customer.

collaborative planning, forecasting, and replenishment (CPFR®)

A process whereby supply chain trading partners can jointly plan key supply chain activities from production and delivery of raw materials to production and delivery of final products to end customers.

postponement

A product design or supply chain strategy that deliberately delays final differentiation (i.e., assembly, production, packaging, tagging, etc.) until the latest possible time in the process.

assemble-to-order (ATO)

A production environment where a good or service can be assembled after receipt of a customer's order.

make-to-order

A production environment where a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer.

make-to-stock

A production environment where products can be and usually are finished before receipt of a customer order. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks.

bills of exchange payment

A promissory note that the importer uses to formally acknowledge its debt to the exporter. Also called a draft.

life cycle analysis

A quantitative forecasting technique based on applying past patterns of demand data covering introduction, growth, maturity, saturation, and decline of similar products to a new product family.

commodity rate

A rate to ship a specific commodity between a specific origin-destination pairing.

Supply Chain Operations Reference (SCOR®) model

A reference model that describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, and return. Use of the model includes analyzing the current state of a company's processes and goals, quantifying operational performance, and comparing company performance to benchmark data.

strategic alliance

A relationship formed by two or more organizations that share information (proprietary), participate in joint investments, and develop linked and common processes to increase the performance of both companies.

seasonality

A repetitive pattern of demand from year to year (or other repeating time interval) with some periods considerably higher than others.

recovery

A reverse logistics strategy for the activities involved in the collection of used and discarded products, components and materials. It focuses on reuse, repair, refurbishment, remanufacturing, recycling, or disposal.

master production schedule (MPS)

A schedule that represents what the company plans to produce expressed in specific configurations, quantities, and dates.

barge

A self-propelled, pushed, or pulled flat-bottomed ship for use in inland waterways used to transport bulk commodities.

ISO 14000 Series Standards

A series of generic environmental management standards developed by the International Organization of Standardization, which provide structure and systems for managing environmental compliance with legislative and regulatory requirements and affect every aspect of a company's environmental operations.

Incoterms®

A set of rules that provides internationally recognized rules for the interpretation of the most commonly used trade terms in foreign trade and are routinely incorporated in the contracts for the sale of goods worldwide to provide guidance to all parties involved in the transaction.

material requirements planning (MRP)

A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material.

road waybill

A shipping document used to control shipments of goods for road transport. The document travels with the shipment and serves as a receipt for goods and evidence of the contract of carriage.

routing guide

A shipping tool used to manage logistics activities for shipments between two points. It contains mode and carrier information, freight rates and service requirements.

trailer on a flatcar (TOFC)

A specialized form of containerization in which motor and rail transport coordinate. Also called piggyback.

Which is a core lean principle that relies on relinquishing hierarchical authority?

Culture of continuous improvement 1-162

United Nations Global Compact

A voluntary initiative whereby companies embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anticorruption.

carbon offsets

A way to compensate for an organization's carbon dioxide emissions, either by reducing carbon dioxide emissions elsewhere in the business or by funding projects intended to improve the environment, such as renewable energy or forest conservation.

Company XYZ needs to determine the value of two customers, according to their operating profit contribution. Customer A has placed orders over the last 12 months with a gross profit of $250,000, with 100 invoices at an average cost to serve the customer of $600 per invoice. Customer B has placed orders over the last 12 months with a gross profit of $200,000, with 10 invoices at an average cost to serve the customer of $100 per invoice. What is the operating profit contribution of Customer A? What is the operating profit contribution of Customer B?

A. The correct answer is $250,000 - (100 invoices x $600 cost per invoice) = $190,000 B. The correct answer is $200,000 - (10 invoices x $100 cost per invoice) = $199,000

ISO 50001

An international standard that defines the requirements for designing, implementing, and maintaining an energy management system. It includes documentation, reporting, and procurement guidance.

Which risk response would be appropriate when the cost of the best possible response would be less than the cost if the risk were to occur but greater than the risk-adjusted cost?

Accept or avoid

optimization

Achieving the best possible solution to a problem in terms of a specified objective function.

what type of technology can provide information on the location of container in transit?

Active RFID tags 4-184

sustainability

Activities that provide present benefit without compromising the needs of future generations.

What is the best thing for a B2C e-commerce seller to do when supply is below demand for certain items?

Adjust prices or delivery lead times. 2-43

Which type of supply strategy would be best for an organization that sells products with short supply lead times but that has highly predictable demand?

Agile 1-154 supply Methods Segmented by lead time and dmand predictability learn photo on page 1-154

cost of goods sold (COGS)

An accounting classification useful for determining the amount of direct materials, direct labor, and allocated overhead associated with the products sold during a given period of time.

container security initiative (CSI)

An agreement that allows U.S. customs agents in foreign ports to identify and inspect high-risk containers prior to their being loaded on a ship bound to a U.S. port.

SWOT analysis

An analysis of the strengths, weaknesses, opportunities, and threats of and to an organization. Useful in developing strategy.

triple bottom line (TBL)

An approach that measures the economic, social, and environmental impact of an organization's activities with the intent of bringing value for both its shareholders and society.

qualitative forecasting techniques

An approach to forecasting that is based on intuitive or judgmental evaluation.

quantitative forecasting techniques

An approach to forecasting where historical demand data are used to project future demand. Extrinsic and intrinsic techniques are typically used.

letter of credit (L/C)

An assurance by a bank that payment will be made as long as the sales terms agreed to by the buyer and seller are met. This method of payment for sales contracts provides a high degree of protection for the seller.

advance ship notice (ASN)

An electronic data interchange (EDI) notification of shipment of product.

bullwhip effect

An extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain.

import license

An importing country's government document that provides an importer with the express authorization to import a particular product.

cash-to-cash cycle time

An indicator of how efficiently a company manages its assets to improve cash flow. Inventory days + accounts receivable days - accounts payable days = cash-to-cash cycle time.

remanufacturing

An industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced.

A salesperson wants to sell kits of full aquariums with fish by shipping all the fish together in plastic vessel filled with water and the aquarium on the side. What should the logistics person say?

Bags with just a little water will make the process more cost-effective. 4-172

Which of the following is not an approach to effectively using reactive consolidation?

Base-point delivery 5-205

business-to-consumer sales (B2C)

Business being conducted between businesses and final consumers largely over the internet. It includes traditional brick and mortar businesses that also offer products online and businesses that trade exclusively electronically.

business-to-business commerce (B2B)

Business conducted over the internet between businesses. The implication is that this connectivity will cause businesses to transform themselves via supply chain management to become virtual organizations─reducing costs, improving quality, reducing delivery lead time, and improving due-date performance.

What can make up for an organization's COz emissions?

Carbon offset 8-42

detention

Carrier charges and fees applied when truck trailers are retained beyond a specified loading or unloading time.

truckload (TL) carriers

Carriers that deliver/charge only for full truckload shipments.

Which production method might leave some equipment deliberately idle at times?

Chase 2-53

An independent analysis shows that one supplier has a large amount of available capacity. What should the organization do next?

Check them for risk of financial failure. 7-45

benchmarking

Comparing products, processes, and services to another organization thought to have superior performance.

Which costs can be added to product valuation in the U.S.?

Cost of transportation in the exporting country Cost of packaging 6-59

Which type of contract minimizes the risk to the supplier at the expense of the buyer but may be needed to deal with significant uncertainty?

Cost-plus contract 2-107

setup costs

Costs such as scrap costs, calibration costs, downtime costs, and lost sales associated with preparing the resource for the next product.

Regional carriers often provide which of the following services? (Choose two.)

Deliveries to local businesses Deliveries to destinations within 500 miles 5-148

If the relevant Incoterms® trade terms for a contract specify that the other shipper obtain insurance, what should the purchasing party do?

Determine if this is sufficient coverage for the value of the goods. 5-189

Which might be part of your job as a logistics professional if your organization adopts lean manufacturing?

Determining an efficient way to customize a logistics service for one customer. 1-156

Which of the phases of the product life cycle would be the best time to add new warehouse capacity by building a warehouse?

Development or introduction It takes time to build a warehouse, so it should be done in advance of need. 1-100

Which will help ensure that the end result of network design will support overall organizational and supply chain/logistics strategy?

Directly link strategy to objectives and objectives to measurable requirements.7-5

Which type of product is usually bought using strategic sourcing because there may be considerable difficulty sourcing it even though the end user doesn't place much value on it?

Distinctives 2-99

What is the primary benefit of a maquiladora?

Duty-free components 6-24

Which of the following is one of the three main principles of transportation?

Economy of Scale 5-4

An organization is considering outsourcing its outbound logistics to a 3PL. After interviewing customers and benchmarking competitors, it believes outbound logistics is a core competency. What should it do next in its make-or-buy analysis?

End the analysis by choosing "make." 1-87

Which are the components of the triple bottom line?

Environment, social, economic 8-27

Which are dimensions of social responsibility for logistics?

Ethics and diversity safety and human rights 8-25

The first trade bloc, the _______________________, was created in 1958.

European Union 6-25

outbound logistics

Every process that is involved in the shipping and holding of products after they are completed until they are received by the customer.

key performance indicator (KPI)

Financial and nonfinancial measures that are used to define and assess progress toward specific organizational goals and are typically tied to an organization's strategy and business stakeholders.

When selecting which currency to make payment in for an international trade, which factors are important?

Fluctuation risk Convertibility of chosen currency

Which is the biggest demand risk of the options listed?

Forecasting primarily at the SKU level 7-40

demand forecasting

Forecasting the demand for a particular good, component, or service.

enterprise resources planning (ERP)

Framework for organizing, defining, and standardizing the business processes necessary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage.

Methods for monitoring and measuring sustainability efforts include.

GRI G4 reporting IS) 14001 SCOR standards 8-48,49

What are the outputs of an audit of the as-is network?

Gap analysis and measurable objectives that should close gaps if met.7-8

Which is the best way to approach metrics related to supplier performance?

Get the supplier to participate in setting metrics. 2-116

An organization is considering using slip sheets instead of the wood pallets currently in use. What is a necessary prerequisite?

Getting all customers to agree to get the right forklift modifications

Which is the lowest risk in motor carrier selection among the options listed?

Getting longer total lead time than competitors could offer xPaying too high a rate Dealing with significant lead time variability Receiving damaged goods 7-42

What provides a structure and systems for managing environmental compliance with legislative and regulatory requirements.

ISO 140001 8-38

logistics

It is the subset of supply chain management that controls the forward and reverse movement, handling, and storage of goods between origin and distribution points.

What does CIP mean?

It mean: - Carriage and insurance paid to - seller pays the insurance - seller pays for main carriage 6-68

customer service ratio

In a make-to-order company, it is usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) compared with the number of jobs or dollars that were supposed to be shipped in that time period.

tracing

In activity-based cost accounting, connecting resources to activities to cost objects using underlying causal drivers to understand how costs occur during normal business activities.

gatekeeping

In logistics, the vetting of return materials and issuing of return material authorizations (RMAs) in accordance with the organization's returns policy. The intent is to minimize returns and return costs while managing customer interactions and expectations to maintain intended customer service levels.

cycle time

In materials management, it refers to the length of time from when material enters a production facility until it exits.

closed-loop systems

In reverse logistics, a system that accounts for the return flow of products for reuse, asset recovery, or recycling in a way that is cost-effective and maximizes returns.

total cost of ownership (TCO)

In supply chain management, it is the sum of all the costs associated with every activity of the supply stream.

Which is a way that logistics professionals can meaningfully contribute to product price discussions?

Indicate the minimum weight that qualifies for a full truck or container load. 1-17

business intelligence

Information collected by an organization on customers, competitors, products or services, and processes. It provides organizational data in such a way that the organizational knowledge filters can easily associate with this data and turn it into information for the organization.

pipeline stock

Inventory in the transportation network and the distribution system, including the flow through intermediate stocking points. The flow time through the pipeline has a major effect on the amount of inventory required in the pipeline.

A product is sturdy, and its consumer packaging is sturdy. How sturdy should the master carton be?

It can be less sturdy 4-174

What is one benefit of taking the time to diagram your logistics network using a series of nodes and links?

It could identify areas of unnecessary complexity. 1-81

advanced planning and scheduling (APS)

It describes any computer program that uses advanced mathematical algorithms or logic to perform optimization or simulation on finite capacity scheduling, sourcing, capital planning, resource planning, forecasting, demand management, and others.

If net profit margin and net sales stay the same and fixed and current assets are reduced, what happens to return on assets?

It gets better. 1-144

Which is a good reason to adopt activity-based costing?

It is a fairer way to distribute costs among customers. 1-61

What is a good decision criterion for a customer request for a customized set of services?

It should provide a positive contribution margin. 2-59

How does the WCO's SAFE Framework facilitate security?

It standardizes the points of information countries require for ASNs. 7-51

maintenance, repair, and operating (MRO) supplies

Items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations.

Which describes the United Nations Global Compact?

Its 10 principles cover anti-corruption, environment, labor, and human rights. 8-31

Product manufacturers can predict that the greatest number of returns occurs typically during which months?

January to March 8-20

Which is the best example of bias as it is defined in forecasting?

June through October forecasts were all a little lower than actual demand. 2-5

Which freight classification is defined as an individual shipment that is too small to be shipped as a full container?

LCL 5-37

Which is a warehousing decision that would be made at the tactical decision level (a 6- to 12-month time frame)?

Layout and design 1-69

On an economic cost map that shows warehouse costs plus concentric rings from each warehouse showing increasing cost zones, what determines which warehouse gets a zone that overlaps with another warehouse's zone?

Least cost 7-11

Which is the best design for a cross-docking center?

Long and narrow 2-38

Which is a trade off of pursuing responsiveness that postponement tries to mitigate?

Loss of economies of scale from having shorter production runs 1-167

inventory shrinkage

Losses of inventory resulting from scrap, deterioration, pilferage, and so forth.

Which of the following are the 5 Ms of vehicle costing?

Manpower, machinery, materials, money, minutes 5-15

Which network is best for shipping products with unpredictable demand and high value?

Manufacturer storage with drop ship 3-44

What should the output of the demand planning meeting in S&OP include?

Marketing and sales agreement on a request for product from production 2-64

scrap

Material outside of specifications and possessing characteristics that make rework impractical.

A production unit has a released load of 5,000 units and a planned load of 4,000 units. If maximum capacity is 8,000 units, what might be done?

Produce 1,000 units in an earlier week if there is available capacity. 2-55

motor carrier

Motor vehicles that use the road mode of transportation.

What is a good option if high fuel costs are making a product's landed cost higher than the price consumers will likely pay?

Move operations to a location closer to the primary areas of demand. 1-39

Which is a good use of a heuristic model?

Narrowing down a long list of locations to a set of finalists 7-25

Which of the following is a benefit of an FTZ?

No duty or quota payments are due on re-exported materials. 6-79

Which choice can make any effort at CPFR impossible?

Not to share data with external supply chain partners 2-69

What is a good use of a long-term forecast when planning capacity requirements for a cross-docking facility?

Number of receiving docks 2-38

What might a company do when it has a zero returns policy? (Choose all that apply.)

Offer a return rate allowance to retailers. Provide discounts to retailers in lieu of taking a return 8-6

cycle stock

One of the two main conceptual components of any item inventory. This component depletes gradually as customer orders are received and is replenished cyclically when supplier orders are received.

Which is an area where logistics is most directly involved in demand management?

Order management 2-43

How might shipper association members manage inventory volumes?

Order small quantities frequently. 5-31

Which of the following is the term for the ability to locate and identify the status of a customer order in real time?

Order visibility 3-26

Which logistics role was developed in the 1970s to begin integrating the activities of warehousing, transportation, inventory, order management, materials handling, and packaging?

Outbound physical distribution manager 1-3

cash in advance payment

Payment by the importer to the exporter before the exporter ships the goods, providing the maximum protection to the exporter and no protection to the importer.

Which part of logistics might be called a process value chain?

Physical supply 1-21

Which functions are often seen as the core of logistics? (Choose two.)

Physical supply Distribution 1-7

Which mode calculates rates on a point-to-point basis?

Pipeline 5-196

Which transport mode is most restricted in terms of cargo variety?

Pipeline 5-126

business continuity planning

Plans to ensure the organizational capability of continuing to deliver products or services at acceptable predefined levels following a disruptive incident.

Pareto analysis

Principle in prioritizing or ranking a range of items to separate the vital few from the trivial many.

Which can speed up purchasing from an administrative standpoint and helps suppliers get paid faster?

Procurement cards 2-115

multisourcing

Procurement of a good or service from more than one independent supplier.

salvage

Property that, because of its worn, damaged, deteriorated, or incomplete condition or specialized nature has no reasonable prospect of sale or use as serviceable property without major repairs or alterations, but that has some value in excess of its scrap value.

For which of the following is the Department of Homeland Security responsible?

Protecting transportation systems Coordinating vehicle crossings at the Canadian border Protecting international shipment containers All of the above 6-30

What is a good way to improve the cube utilization of a product?

Provide an online manual rather than a printed one.

Which is the most reliable method of capturing data on incoming products?

RFID readers for items on a conveyor belt 4-186

Which of these is one of the most environmentally friendly modes of transportation?

Railroad 8-44

Reverse logistics involves which of the following activities?

Recycling Refurbishing Repackaging 8-3

Which location decision factor would be irrelevant for a warehouse that will be located in a free trade zone?

Regional tax rates 7-22

Which process is used to extend the life of machine tools, automobile engines, and mobile phones?

Remanufacturing 8-11

Which of the processes in the SCOR model includes post-delivery customer support as one of its functions?

Return 1-130

Which might still be needed in a supply chain that uses "leagile" due to long lead times and highly unpredictable demand?

Safety stock 1-168

When calculating a threshold service level (minimum cost network), what needs to be a fixed assumption during this phase of the analysis?

Safety stock levels 7-10

order picking

Selecting or "picking" the required quantity of specific products for movement to a packaging area and documenting that the material was moved from one location to shipping.

supplier

Seller with whom the buyer does business, as opposed to vendor, which is a generic term referring to all sellers in the marketplace.

Who can authorize changes in production inside the demand time fence (in the frozen zone)?

Senior management 2-27

What should you use if you want to determine how changes in just transportation labor costs would affect the logistics network total costs?

Sensitivity analysis 7-12

What is the advantage of shipping something like peanut butter in a large pallet-sized master carton rather than in individual retail sale-size containers?

Shipping less air 4-186

A trend is relatively flat, but there are occasional random or irregular shifts in demand. Which forecasting method would work well in this situation?

Simple moving average 2-17

Which receives a stronger emphasis in supply chain management than in logistics?

Strategic planning 1-35

Which is a factor in deciding whether a traditional fulfillment center or a cross-dock center is best.

Supplier and customer partnership maturity needs to be high for cross-docking. 7-24

An organization tells buyers that cost and environmental sustainability are key goals for materials ordered. Buyers are given bonuses only if they meet cost-of-goods-sold targets. What is the likely effect of this?

Sustainability will be ignored whenever it has a cost impact. 1-69

What is one of the top priorities of lATA?

Switch to paperless, electronic air freight documentation 6-26

simulation

Technique of using representative or artificial data to reproduce in a model various conditions that are likely to occur in the actual performance of a system. It is frequently used to test the behavior of a system under different operating policies.

Which of the following is not part of order management?

Testing for contaminants in a batch order is not. - Entering the customer order - Working with a routing guide - developing relationships with suppliers 3-2

What does receiving compare with the packing slips when orders arrive?

The PO and the invoice 2-96

agile supply chain/manufacturing

The ability to respond quickly to unpredictable changes in customer needs by reconfiguring operations.

order to cash cycle

The activities and processes that take place from the time an order is placed by a customer until payment is received and credited. The goal is to translate sales into financial benefit as rapidly as possible.

inventory planning

The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

return

The activities associated with the reverse flow of goods. Detail activities encompass identification of the need to return, disposition decision making, scheduling of the return, and shipment and receipt of the returned goods.

order processing

The activity required to administratively process a customer's order and make it ready for shipment or production.

value added

The actual increase of utility from the viewpoint of the customer as a part is transformed from raw material to finished inventory. It is the contribution made by an operation or a plant to the final usefulness and value of a product, as seen by the customer.

A retailer plans a sales promotion for an already popular item but doesn't tell the distributor. What can this action increase?

The bullwhip effect 2-8

forecasting

The business function that attempts to predict sales and use of products so they can be purchased or manufactured in appropriate quantities in advance.

Your manager likes the high inventory turns on this part; however, she is more concerned about the inventory turns for the entire organization. If your annual COGS is $20,000,000 with an average inventory value of $2,500,000, what are the inventory turns for your organization? Please round up or down to nearest whole number.

The correct answer is $20,000,000 / $2,500,000 = 8 Turns.

Using the data above, what is the expected monetary value (EMV) if the monetary impact is suggested to be $9,000,000? Please round to the nearest whole number.

The correct answer is $9,000,000 x .05 = $450,000

What is the Risk Rating for a warehouse located in an area known for earthquakes? The impact amount is assumed to be 50% and the probability amount is assumed to be 5%. Please round to the .xx position.

The correct answer is .50 X .05 = 3%

You just placed your first order with a new supplier and need to set up your order point. Supplier lead time is 6 days and you use 500 units a day. What should your order point be? Please round up or down to nearest whole number.

The correct answer is 500 X 6 = 3,000.

You just placed your first order with a new supplier and need to set up your order point. Supplier lead time is 6 days and you use 500 units a day. What should your order point be? Please round up or down to nearest whole number. After you placed your order, the supplier called and said there was a miscommunication and that their lead time is actually 8 days. What should your new order point be? Please round up or down to nearest whole number.

The correct answer is 500 X 8 = 4,000.

Children's juice bottles occupy 980 cubic inches and ship in a box that measures 12" wide x 12" long x 10" high. What is the carton efficiency? Round to the nearest .XX position.

The correct answer is 980 / [12 x 12 x 10] = 68%.

Determine the load factor for the following. Round to the nearest whole number. Cargo Space = 8,000 cubic feet Cargo Volume of Items Being Shipped = 7,500 cubic feet

The correct answer is [ 7,500 / 8,000 ] x 100 = 94%.

You manage a DC on the East coast of Japan. Although you were not affected by the 2011 tsunami, your boss wants you to perform a VAR (Value at Risk) analysis of your DC. After a several attempts you and your team came up with some preliminary information and what might affect your business. The odds of another tsunami destroying your $10 million facility is 0.25%. You have 1 product line that has some engineering flaws in its design. Total sales are $1 million and the return probability is 8.00%. Finally, new regulations might be passed that all DC will need to invest in solar power on top their roofs. This would have a total cost (including savings) of $2 million and has a 15.00% chance of being accepted as law. What is your total VAR?

The correct answer is [$10,000,000 x .0025] + [1,000,000 x .08] + [2,000,000 x .15] = $405,000 VAR

It is time to select a new carrier for your operation. One of the many factors that your company reviews is the carrier's Operating Ratio. Carrier A has Operating expenses of $16,000,000 and Operating Revenue of $20,000,000. What is their Operating Ratio? Please round to the nearest whole number.

The correct answer is [$16,000,000 / $20,000,000] x 100 = 80%.

You are a production manager for a company that uses the level production planning strategy and you need to calculate the monthly production rate. The forecast for the twelve-month period is 15,000 units, the beginning inventory is 2,000 units, and the desired ending inventory is 2,600 units. What would be the monthly production rate?

The correct answer is [(2,600 - 2,000) + 15,000] / 12 = 1,300

You operate a 3PL warehouse and have just determined all pallet configurations for a full truck load of outbound products making multiple stops. Per your contract with your supply chain partner, you have to determine transport costs for each stop using the fair share method by cube. Stop 1 contains only one pallet of goods. Including the pallet, it measures 48" wide x 40" long x 83" high. On this particular trailer, the maximum height is 96" high. What is the pallet load efficiency for this stop? Round to the nearest .XX position.

The correct answer is [48 x 40 x 83] / [48 x 40 x 96] = 86%

order management

The planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders.

You just placed your first order with a new supplier and need to set up your order point. Supplier lead time is 6 days and you use 500 units a day. What should your order point be? Please round up or down to nearest whole number. After you placed your order, the supplier called and said there was a miscommunication and that their lead time is actually 8 days. What should your new order point be? Please round up or down to nearest whole number. Realizing the this is a very important part that goes into every finished good you make, you thought you should add in some additional Safety Lead Time to ensure there are no delays with the inbound shipments of these parts. You decided that an extra 2 days of Safety Lead Time would be sufficient. What is your adjusted order point? Please round up or down to nearest whole number.

The correct answer is [500 X 8] + [ 500 x 2] = 5,000.

You are a logistics manager for a large retail distribution company. In a strategic planning meeting, the CEO talks about an opportunity to acquire an additional 10 DCs from a company that is going out of business. For customer service, this might be a good choice; however, your finance director is unsure because she knows this will raise overall inventory levels and cash flow is tight. In order to move forward in the meeting, you remember that there is a quick formula to estimate how much inventory will increase on average when you add more DCs. You currently have 45 DCs. What % will your inventory need to increase if you acquire these additional 10 DCs? Round to .XX%.

The correct answer is [Square root of 55] / [Square root of 45] X 100 = 111%.

Children's juice bottles occupy 980 cubic inches and ship in a box that measures 12" wide x 12" long x 10" high. What is the carton efficiency? Round to the nearest .XX position. The correct answer is 980 / [12 x 12 x 10] = 68%. The packaging engineers realized this was an expensive way to handle and ship these products. They went through a 5S event to change the packaging of the juice boxes. The new packaging will be juice boxes that measure 4" wide x 4" long x 5" high. This new design will fit 18 in a carton. What is the new carton efficiency? Round to the nearest .XX position.

The correct answer {[4 x 4 x 5 ] x 18} / 1440 = 100%.

carrying or holding cost

The cost of holding inventory, usually defined as a percentage of the dollar value of inventory per unit of time (generally one year).

asset recovery

The cost-effective classification and recovery of usable raw materials from product returns, obsolete or excess goods, or scrap and waste.

The amount of a duty owed is based on which factors?

The country from which the products are imported The type of goods being imported The classification of the goods being imported 6-58

network design

The design of a supply chain's sourcing, manufacturing, and distribution facilities and information flows to meet the organization's strategic goals ( being efficient, responsive, customer-focused, or some other mix of priorities).

supply chain management

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.

dwell

The duration of time between when cargo arrives in a terminal's in-transit storage area and when it is shipped out by clearance transportation.

order delivery

The duration of time between when the transportation carrier picks up a shipment and when it is received by the customer.

What can be a problem with starting with one DC in a country and then adding them one by one?

The first DC may no longer be optimally located once more DCs are used. 7-20

distribution requirements planning (DRP)

The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements on the supplying source.

transportation

The function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization.

demand management

The function of recognizing all demands for goods and services to support the marketplace. It involves prioritizing demand when supply is lacking.

risk management

The identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate event or to maximize the realization of opportunities.

globalization

The interdependence of economies globally that results from the growing volume and variety of international transactions in goods, services, and capital, and also from the spread of new technology.

inventory turnover

The number of times that an inventory cycles, or "turns over," during the year. A frequent method to compute inventory turnover is to divide the average inventory level into the annual cost of sales.

Which is a best practice for minimizing the number of warehouses?

The number should still be able to maintain target customer service levels. 1-77

Which might be a good reason to allow procurement costs for commodities to be higher than the minimum cost that can be achieved for a selected quality level?

The organization uses lean. 2-92

terms of trade

The portion of a contract of sale that specify the responsibilities of the seller or exporter and the responsibilities of the buyer or importer, especially the point at which one party's responsibilities end and the other party's responsibilities begin including the point at which title to the goods is transferred.

line haul

The portion of a transportation journey that moves between two transportation terminals. It is distinguished from and excludes the pickup and delivery portions of a journey used to acquire or distribute LTL freight.

exception management

The practice of responding only to issues or events that fall outside a predetermined threshold. Managers are prompted to respond to these critical matters first.

sales and operations planning (S&OP)

The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans.

demand planning

The process of combining statistical forecasting techniques and judgment to construct demand estimates for products or services (both high and low volume; lumpy and continuous) across the supply chain from the suppliers' raw materials to the consumer's needs.

kitting

The process of constructing and staging kits.

strategic planning

The process of developing a strategic plan.

sourcing

The process of identifying a company that provides a needed good or service.

data mining

The process of studying data to search for previously unknown relationships. This knowledge is then applied to achieving specific business goals.

order cycle

The progression used by a company starting with receipt of a customer's order and ending with delivery to that customer.

purchase order

The purchaser's authorization used to formalize a purchase transaction with a supplier.

throughput

The rate at which the system generates "goal units." Because this is a rate, it is always expressed for a given time period—such as, per month, week, day, or even minute. If the goal units are money, this will be an amount of money per time period.

recycle

The reintroduction of partially processed product or carrier solvents from one operation or task into a previous operation. Or, a recirculation process.

rail gauge

The spacing of the width of the rails on a railway track, measured between the inner sides of the rails. This can vary between countries and cause compatibility issues.

product life cycle

The stages a new product goes through from beginning to end (i.e., the stages that a product passes through from introduction through growth, maturity, and decline).

logistics social responsibility

The subset of corporate social responsibility that relates to logistics, including minimizing negative impacts, monitoring and controlling, reporting, and continuously improving in social responsibility areas that include the environment, health and safety, and labor issues related to warehousing, transportation, and other logistics areas.

order transmittal

The time interval between a customer placing an order to when the seller receives it.

available-to-promise (ATP)

The uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising.

electronic commerce (e-commerce)

The use of computer and telecommunication technologies to conduct business via electronic transfer of data and documents.

intermodal transport

The use of two or more different carrier modes in the through movement of a shipment.

Which theory refers to a country's ability to produce a certain good more efficiently than another country?

Theory of absolute advantage 6-11

What factors influence international logistics in significant ways?

Theory of pricing Transportation demand Substitute products All of the above 6-6

Which statement is not true regarding Incoterms® trade terms?

They were last updated in the 1960s. 6-66

landed cost

This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees.

What would happen if an organization decided to implement lean with operational stability components, jidoka, and the lean goals but decided not to add JIT?

This would no longer be a lean initiative. 1-160

inventory

Those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts).

What is the main reason a load of pillows might be vacuum-packed prior to shipment?

To minimize cubic space 4-175

expedite

To rush or chase production or purchase orders that are needed in less than the normal lead time.

repurpose

To take something and use it for something else not originally intended. The materials may be repaired, reconditioned and repackaged for resale or used in a different manner, through remanufacturing, recycling, or salvage.

What is the importance of knowing rail gauge?

Transport through adjacent countries may require a mode switch.

The long-term forecast for an organization that owns its own truck fleet shows that shipping requirements will be greater than outbound shipping capacity in the coming year. What is the first thing they should considers?

adding another driver shift 2-36

The purpose of hedging is to protect a company from

fluctuations in the exchange rate of a particular currency. 6-78

What is a for-profit business that takes small shipments from a variety of customers and combines them into one bulk shipment for transport?

freight forwarder 5-28

Which of the following does not describe the convention on contracts fro the international sale of goods?

helps buyers and sellers resolve domestic trade disputes. 6-64 The Convention on Contracts for the International Sale of Goods - created by the UN - Has been ratified by 84 countries - Established in 1980

An organization decides to set a basic service level for all customers. What should be the earliest step this organization performs when following this process?

identify customer segments 1-75

What is a method of storage used when there is a space shortage problem at a receiver's warehouse?

in-transit storage 5-23

Which can prevent specialized optimization software from finding the mathematically optimum solution to a network design problem?

inaccurate data 7-31

What needs to be included in contracts with suppliers so that contract termination can be avoided when there are problems?

incentives and penalties 2-111

Customer service levels should

include qualitative measures. include quantitative metrics. not strive for a 100 percent service level. x All of the above are true. 3-9

Which of the following is not included on a commercial invoice?

insurance costs 6-46

which of the following statements about transfer pricing is not true?

it increases the tax liability in countries with lower tax rates is not true. These are true: - It is very common among multinational companies. - it is considered by many to be a tax avoidance tool. - it does not price products according to the at arm's-length concept. 6-79

Which is the primary reason for selection a particular distribution channel?

it is where customers expect to find the product. 2-47

What two payment methods are best for high-risk international trade?

letter of credits and cash in advance 6-70

Which is not a component of the transportation infrastructure?

lock and dams 6-13

Which is an objective of lean?

make products and services with perfect quality. 1-1-555

What is a key input logistics professionals can provide to aid negotiations on price during supplier selection?

minimum order size 2-114

batch

multiple orders are picked at the same time.

which method of payment carries virtually no risk to the importer?

open account 6-73 all the risk is to the exporter

Which is primarily a national or regional location selection factor?

port throughput 7-23

weight times ______________ equals the transportation charge.

rate 5-191

OFAC and ITAR both

restrict particular products from being sold to certain countries. 6-38

Other than landed cost and value factors like capability and capacity, what is another category of criteria for supplier selection?

risks like lead time variability 2-102

What is most likely to happen when the number of warehouses in a network increases?

safety stock levels will increase. 7-18

Which is one red flag that generally indicates that a logistics network needs to be updated?

the network has been working fine without changes for years. 7-6

What is the overall goal of transportation management?

to reduce transportation costs and increase delivery reliability. 5-158

Net inventory, product condition, and delivery alternatives are types of?

transaction variables. 3-3

_____________________ is the most important business for a developing country.

transportation 6-12

The two primary groups of performance indicators for carriers are service quality and efficiency.

true 3-31

Stowability refers to the simplicity of packing a shipment into a load.

true 5-166

The shortest route may not always be the best route?

true 5-170

A master bill of lading is issued by the carrier.

true 5-200

crossing borders between countries will not cause a transfer of cargo to another mode or carrier.

true 6-28

A pro forma invoice is a quote provided by a seller informing the buyer of the details of the shipment.

true 6-46

Nearly half of companies have not implemented a reverse logistics process.

true 8-3

What is an important last thing to do once the organization has completed its network design process?

use lessons learned to refine the process for next time. 7-3

As a warehouse manager, you were just informed that you have acquired some new customers and will need to re-evaluate your warehouse space needs due to the increase in volume. How much space will you need in your receiving area, based on the new data you received below? 1) Warehouse receives 50 shipments a day. 2) Typical inbound shipment holds 30 48"x 40" pallets on a 52' trailer. 3) Each shipment takes 1 hour to clear the receiving area. 4) Length of shift is 8 hours.

((50 x 1)/8)x(30 x (48 x 40) = 360,000 Square inches.

What is the demonstrated capacity for the following data? Week 1 = 1,008 Week 2 = 954 Week 3 = 1,043 Week 4 = 986 Week 5 = 1,099

(1008 + 954 + 1043 + 986 + 1099)/5 = 1018

List three basic inventory costs.

- Acquisition - carrying - stockout

What are three ways to improve efficiency in the warehouse receiving process?

- Coordinate packing to warehouse needs and specifications - coordinate means of delivery with warehouse equipment. - ensure security of pallets. - use clear and easy-to-read labels. - use labels that can be scanned into the warehouse management system. - catch shipment errors befor shipments areeive.

What is one advantage and disadvantage of private warehouses for their owners.

- advantages - greater control over warehouse resources, appreciations and tax benefits, flexibility for future plans. - disadvantages - ties up capital; difficulty in adapting existing physical space to new business plans; less competitiveness due to increased inventory carrying costs; risk exposure.

What typical functions does a warehouse management system perform?

- applying advanced shipping notices to managing inbound resources. - monitoring warehouse inventory. - issuing required shipping documents.

What are at least three examples of waste in warehouses and warehouse processes?

- correcting errors in labeling or put-away - poor layout for storage and picking crews that increases travel time. - using paper tools(instead of electronic tools). - space taken up by dead stock. - wasteful storage designs.

What are three examples of changes in warehouse management caused by organizations' implementation of sustainable practices?

- increasing energy efficiency of warehouse buildings and systems. - switching from carbon-intensive fuels for warehouse equipment. - using environmentally friendly and recycled materials. - recycling warehouse waste.

What are the major challenges of a fulfillment warehouse?

- large number of items - need to track and eliminate slow sellers - seasonal demand for many items - low order value, which requires greater efficiency - customer expectations for rapid response

List at least three examples of costs created by inventory stockout.

- lost revenue - erosion in customer relationship - damage to business reputation - loss of future sales to competitors

A warehouse planning team is estimating required space for the warehouse loading/unloading areas. They know the number of loads received every day and ho long it takes to clear a load from the area. They also know the length of a shift. What else do they need to know to estimate space requirements?

- size of a typical load in pallets - distance between inbound and outbound areas

In its definition of the term "inventory," the dictionary mentions three basic uses for inventory stock. What are they?

- support production - support activities (e.g., maintenance and repair) - provide customer service 4-4

what are four basic principles of warehouse layout design discussed in the text?

- use space efficiently - use labor and equipment efficiently. - protect investments and resources. - design in availability and flexibility.

What are three example of a goods-to-picker system?

-Carousels - mini loads - pallets to pickers. - shelves to pickers - dynamic pick faces.

What are tree ways in which warehouse management has responded to the challenge of ensuring worker health and safety?

-training to avoid repetitive stress injuries and common warehouse injuries. - analysis and redesign of warehouse processes to improve safety. - monitoring of warehouse environment for hazarded. - auditing for compliance with safety requirements.

What is the total warehouse capacity if it is 1,000 feet long, 1,500 feet wide and is 22 feet high? Please round to nearest whole number.

1,000 x 1500 x 22 = 33,000,000 cubic feet.

It is month end and it is time to review your metrics. If your actual output hours are 1,000 hours and your standard hours are 1,100 hours, what is your efficiency rate? Round to the hundredths decimal place (.XX). Answer: 91 If your team worked 950 hours when available hours were 1,000, what would your utilization rate be? Round to the hundredths decimal place (.XX). Answer: 95 Based on the above information and answers to the questions, what would your rated capacity in hours be? Round to nearest whole number.

1000 x .91 x .95 = 865 Hours

Due to fire code, sprinkler, and HVAC duct restrictions, the top 2 feet of the warehouse is not useable. What is the actual capacity? Please round to nearest whole number.

1000 x 1500 x 20 = 30,000,000 cubic feet.

It is month end and it is time to review your metrics. If your actual output hours are 1,000 hours and your standard hours are 1,100 hours, what is your efficiency rate? Round to the hundredths decimal place (.XX).

1000/1100 = 91%

a grocery distribution center orders 1000 cases of a cereal brand, acquired at a cost of $12/case. It cost $50 to process orders, and it uses a carrying cost of 25 percent. calculate the economic order quantity.

183 cases EOQ formula is: √2AS/IC A=annual usage in units S=Ordering(or setup) costs in a currency amount I= Annual carrying cost presented as a percentage C=Unit cost A = 1000, S=$50, I = .25 and C = $12 per case, the result is 182.6 rounded up to 183 p. 4-40

As a warehouse manager, you were just informed that you have acquired some new customers and will need to re-evaluate your warehouse space needs due to the increase in volume. How much space will you need in your receiving area, based on the new data you received below? 1) Warehouse receives 50 shipments a day. 2) Typical inbound shipment holds 30 48"x 40" pallets on a 52' trailer. 3) Each shipment takes 1 hour to clear the receiving area. 4) Length of shift is 8 hours. Answer is: ((50 x 1)/8)x(30 x (48 x 40) = 360,000 Square inches. What does this equate to in square feet?

360,000 Square inches/(12 x 12) = 2,500 Square Feet.

A lawn mower manufacturer lists its revenue at US$2.2 billion, its net costs at US$1.4 billion, and its net inventory at US$275 million. What is its inventory turn?

5.1 4-52 Inventory turns = COGS/Average inventory

a bicycle manufacturer has set a maximum inventory level for 1000 hand-brake systems per cycle and a minimum inventory level of 300, which includes 100 units of safety stock. During an inventory review, inventory level is identified as 450. What will be the amount of the next order?

550 4-42

If your team worked 950 hours when available hours were 1,000, what would your utilization rate be? Round to the hundredths decimal place (.XX).

950/1000 = 95%

ABC classification

A classification of items usually in groups of 10%, 20%, and 70% by sales dollars, volume, or other atribute that helps analyist better group and understand data.

hedge inventory

A form of inventory buildup to buffer against some event that may not happen and usually involves speculation related to potential labor strikes, price increases, unsettled governments, and events that could severely impair a company's strategic initiatives.

Which statement correctly describes the effect of inventory on the return on assets(ROA) ratio if income remains the same?

A higher investment in inventory will decrease the ROA. 4-6

What is the effect of applying the ABC principle to safety stock levels?

A items will have the highest level of safety stock. 4-25

picker-to-part system

A materials handling approach for order picking, where the picker goes to where the product is located (e.g., forklift, order picking trucks, etc.).

pick-to-voice system

A method of performing order-picking activities in a warehouse or distribution center using verbal commands.

just in time (JIT)

A philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity. The primary element is to have only the required inventory when needed.

pick-to-light

A pick system that uses software to light up displays at each pick location and determines how much needs to be picked. The picker uses this as their requirement to pull for that particular order to set of orders.

buffer

A quantity of materials awaiting further processing. It can refer to raw materials, semifinished stores or hold points, or a work backlog that is purposely maintained behind a work center.

software-as-a-service (SaaS)

A software licensing and distribution model that provides access to applications via the internet on a subscription basis.

overstock

A supply or quantity of inventory in excess of demand or requirements.

economic order quantity (EOQ)

A type of fixed order quantity model that determines the amount of an item to be purchased or manufactured at one time. The intent is to minimize the combined costs of acquiring and carrying inventory.

anticipation inventories

Additional inventories above basic pipeline stock to cover projected trends of increasing sales, planned sales promotion programs, seasonal fluctuations, plant shutdowns, and vacations.

What should a prospective purchaser be particularly aware of when inspecting an existing warehouse for use as a cross-docking facility? (Check all that apply.)

Adequate maneuvering space for anticipated warehouse traffic Location of docks

What is the best definition of decoupling?

Aligning inventory supply to the needs of different stages of production

What is the purpose of a dock leveler?

Allowing loading equipment to drive into cargo area

Discrete order

An entire order is picked, from first to last line.

describe the two-bin system of inventory review.

Inventory is carried in two bins. A replenishment quantity is orders when the first bin (working) is empty. During the replenishment lead time, material is used from the second bin. When the material is received, the second bin (which contains a quantity to cover demand during lead time plus some safety stock_ is refilled and the excess is put into the working bin. At this time, stock is drawn from the first bin until it is again exhausted. 4-47

What statement about inventory carrying costs is true?

It includes the cost of interest paid on money borrowed to buy goods. 4-19

Narrow aisle turret

Lifts load and cab vertically and loads in both directions.

Jib crane

Lifts vertically and swings in an arch horizontally.

What is the key distinction between public and contract warehouses?

Number of customers

What is the best definition of cube utilization?

Percentage of available storage space used for that purpose

What is a key characteristic of inventory management for a business operating on lean manufacturing principles?

Small and frequent replenishment of inventory

A yard management system can be seen as software that links the warehouse management system and the ___________________.

TMS

a distributor needs 100 refrigerators of a particular model to satisfy 30 days of retailer demand. Replenishment requires 5 days. Over the preceding 10 order cycles, the sum of absolute deviations in demand was 50. Maintaining its retailer relationships is important, and the distributor has set a service safety factor of 95 percent. refer to the table of service levels in exhibit 4-16 and calculate the order point using the mean absolute deviation.

The MAD is the sum of deviations (50) divided by the number of periods (10), or, in the form of and equation, 50/10=MAD of 5. Using the safety factor table, you multiply 5 (the MAD units) by 2.06 (for a 95 percent service level) to identify necessary safety stock as 10.3 units. So, demand (100) multiplied by lead time (5) plus safety stock equals 510 (rounded downward). 4-38

warehousing

The activities related to receiving, storing, and shipping materials to and from production or distribution locations.

cross-docking

The concept of packing products on the incoming shipments so they can easily sorted at intermediate warehouses or for outgoing shipments based on final destination. The items are carried from the incoming vehicle docking point to the outgoing vehicle docking point without being stored in inventory at the warehouse.

DIO (days' inventory outstanding) is one of the three important parts of measuring the Cash-to-Cash cycle time. For your best-selling item you have 1,200 units on hand with an annual sales volume of 20,000 units. If we assume that there are 365 days in the year, what is the DIO for this item? Please round up or down to nearest whole number.

The correct answer is 1,200 / [ 20,000 / 365 ] = 22 DIO.

DIO (days' inventory outstanding) is one of the three important parts of measuring the Cash-to-Cash cycle time. For your best-selling item you have 1,200 units on hand with an annual sales volume of 20,000 units. If we assume that there are 365 days in the year, what is the DIO for this item? Please round up or down to nearest whole number. What are your inventory turns on this item? Please round up or down to nearest whole number.

The correct answer is 365 / 22 = 17 Turns.

What is the EOQ for the following item? The item has an annual volume of 15,000 units. Ordering costs are $75 and carrying costs are 18%. Each unit costs $28.00. Please round up or down to nearest whole number.

The correct answer is SQRT[[2 X 15,000 X $75] / [.18 X $28]] = 668 units.

What is the EOQ for the following item? The item has an annual volume of 15,000 units. Ordering costs are $75 and carrying costs are 18%. Each unit costs $28.00. Please round up or down to nearest whole number. The correct answer is SQRT[[2 X 15,000 X $75] / [.18 X $28]] = 668 units. Due to changes in the market, you supplier just increased the cost of the item you were buying. The new cost is $35 each. What is the new EOQ? Please round up or down to nearest whole number.

The correct answer is SQRT[[2 X 15,000 X $75] / [.18 X $35]] = 598 units.

ordering cost

The costs that increase as the number of orders placed increases. It includes costs related to the clerical work of preparing, releasing, monitoring, and receiving orders, the physical handling of goods, inspections, and setup costs, as applicable.

What situation would be most favorable for a vendor-managed approach to inventory control?

The customer has provided clear terms for order points and quantities. 4-44

outsourcing

The process of having suppliers provide goods and services that were previously provided internally.

dekitting

The removal of accessories or parts kits from a product and returning the kit to the store or main product without the kit to the store.

warehouse automation

The utilization of mechanical or electronic devices to complete tasks related to storing, retrieving and moving inventory as a substitute for labor resources.

What is the best way to describe the relationship between a business's corporate strategy and its warehouse strategy?

The warehouse strategy deploys assets to support the corporate strategy and goals.

What is a correct feature of cross-docking warehouses?

They are equipped to store product with special characteristics. xThey may store little inventory. The receiving and shipping docks may be combined for more rapid transit. They are laid out with very narrow aisles.

Why is the ABC principle applied to inventory management?

To assign a degree of inventory control based on value

True or false? There are offsetting costs to space added by narrowing warehouse aisles.

True

distribution center (DC)

Typically a finished goods warehouse designed for demand-driven rapid distribution to retailers (retail distribution centers), wholesalers, or direct shipments to customers (order fulfillment centers).

A business decides to increase its inventory holding costs to take advantage of a volume discount offered for certain items. What does this situation describe?

Using economies of scale 4-15

__________________ is the amount of an item that is ordered as a standard quantity to support production needs?

cycling stock 4-10

What is the primary distinction between fixed order quantity and fixed order period inventory control?

fixed order quantity inventory orders may vary by the length of intervals between orders. 4-29

What is an accurate statement about the picking process?

in a distribution center, it can reflect the largest share of the labor budget.

Zone

one or more orders are picked in only one area before proceeding to another area.

wave

orders are combined and released at the same time.

What is the correct term for a quantity of stock held in inventory to protect fluctuation in supply and demand.

safety stock 4-14

_______________ helps align supply and demand by locating seasonal stock near its markets.

spot stocking

Which option for storage location provides the most benefits for picking crews?

xFixed-location Random-location