Distribution and Logistics Management
Exam Answer Key
Course Introduction
Distribution and Logistics Management explores the critical processes and strategies involved in efficiently moving goods and services from producers to end consumers. The course covers key topics such as supply chain design, inventory management, transportation modes, warehousing, order fulfillment, and the integration of technology in logistics operations. Students analyze case studies and industry practices to understand how effective distribution and logistics management can enhance customer satisfaction, reduce costs, and create competitive advantage in both domestic and global markets. Emphasis is placed on decision-making, sustainability, risk management, and the ethical considerations faced by logistics professionals.
Recommended Textbook
Supply Chain Management Strategy Planning and Operation 6th Edition by Sunil Chopra
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Chapter 1: Understanding the Supply Chain
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Sample Questions
Q1) The objective of every supply chain is to
A) minimize the overall cost generated.
B) maximize the overall value generated.
C) minimize the cost to the manufacturer.
D) maximize the profit of the manufacturer.
Answer: B
Q2) The cycle view of the supply chain is useful when considering operational decisions, because
A) it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders.
B) it specifies the roles and responsibilities of each member of the supply chain.
C) processes are identified as either reactive or speculative.
D) it focuses on processes that are external to the firm.
Answer: B
Q3) The replenishment cycle occurs at the retailer/distributor interface.
A)True
B)False
Answer: True
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3
Chapter 2: Supply Chain Performance: Achieving Strategic
Fit and Scope
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Sample Questions
Q1) A supply chain strategy involves decisions regarding all of the following except A) inventory.
B) transportation.
C) new product development.
D) operating facilities.
Answer: C
Q2) Concerns related to the environment and sustainability
A) are becoming less important to the consuming public.
B) are sometimes dictated by regulations and sometimes by perception.
C) result in increased cost for the supply chain.
D) are relevant to only the retail member of each supply chain.
Answer: B
Q3) The value chain emphasizes the close relationship between all the functional strategies within a company.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Supply Chain Drivers and Metrics
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Sample Questions
Q1) Cycle inventory is inventory that is built up to counter predictable variability in demand.
A)True
B)False
Answer: False
Q2) The most significant sourcing decision for a firm is
A) whether to locate a plant close to customers or locate a plant close to sources of raw materials or suppliers.
B) whether to use highly automate processes or manual labor.
C) whether to use traditional inventory methods or adopt a just in time approach to stocking.
D) whether to perform a task in-house or outsource it to a third party.
Answer: D
Q3) Which component of the supply chain decision-making framework would be established first?
A) Customer strategy
B) Supply chain strategy
C) Supply chain structure
D) Competitive strategy
Answer: D
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Chapter 4: Designing Distribution Networks and Applications to e-Business
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Q1) An online grocery store has a distinct advantage over a traditional model in the area of
A) Processing costs
B) Transportation costs
C) Facility costs
D) Information costs
Q2) Which distribution network design is being used when inventory is stored locally at retail stores and customers walk into the retail store or place an order online or on the phone and pick it up at the retail store?
A) Manufacturer storage with direct shipping
B) Distributor storage with package carrier delivery
C) Distributor storage with last mile delivery
D) Retail storage with customer pickup
Q3) It is much easier to return a product to an online retailer than to a traditional bricks and mortar seller.
A)True
B)False
Q4) Explain the six distinct distribution network designs that may be used to move products from factory to customer.
Chapter 5: Network Design in the Supply Chain
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Sample Questions
Q1) A facility built because of tax incentives, local content requirement, tariff barriers, or high logistics cost to supply the region from elsewhere with the objective to supply the market where it is located is
A) an offshore facility.
B) a source facility.
C) a server facility.
D) a contributor facility.
Q2) A firm may increase the number of facilities beyond the point that minimizes total logistics cost to improve the response time to its customers.
A)True
B)False
Q3) A facility located primarily to obtain access to knowledge or skills that may exist within a certain region is
A) an offshore facility.
B) a source facility.
C) a server facility.
D) an outpost facility.
Q4) Explain the two situations in which managers use network design models.
Q5) Explain how supply chain network design decisions are classified.
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Chapter 6: Designing Global Supply Chain Networks
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Sample Questions
Q1) Flexibility should be valued by taking into account uncertainty in demand and economic factors. In general, flexibility will tend to
A) decrease in value with a decrease in certainty.
B) increase in value with an increase in uncertainty.
C) decrease in value with an increase in uncertainty.
D) increase in value with an increase in certainty.
Q2) The appropriate discount rate used in decision tree methodology
A) should be risk-adjusted and risk may vary by period and decision node.
B) should be risk-adjusted and risk may not vary by period and decision node.
C) should not be risk-adjusted and risk may vary by period and decision node.
D) should not be risk-adjusted and risk may not vary by period and decision node.
Q3) Decisions made during the supply chain design phase regarding significant investments in the supply chain, such as the number and size of plants to build, the number of trucks to purchase or lease, and whether to build or lease warehouse space, cannot be altered in the short term.
A)True
B)False
Q4) Summarize the steps in the decision tree analysis methodology.
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Page 8
Chapter 7: Demand Forecasting in a Supply Chain
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Sample Questions
Q1) Qualitative forecasting methods are most appropriate when A) there is good historical data available.
B) there is little historical data available.
C) experts do not have critical market intelligence.
D) forecasting demand into the near future.
Q2) The ________ is a good measure of forecast error when the underlying forecast has significant seasonality and demand varies considerably from one period to the next.
A) MAD
B) MSE
C) MKE
D) MAPE
Q3) ________ forecasting methods are primarily subjective and rely on human judgment.
A) Qualitative
B) Time-series
C) Causal
D) Simulation
Q4) Explain the basic, six-step approach to help an organization perform effective forecasting.
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Chapter 8: Aggregate Planning in a Supply Chain
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Sample Questions
Q1) Use the information from Scenario 8.1 to determine the number of constraints in this scenario.
A) 12
B) 15
C) 20
D) 24
Q2) How many units are produced using overtime in the optimal aggregate plan developed to address Scenario 8.2?
A) 360
B) 200
C) 400
D) 280
Q3) Formulate the aggregate plan using linear programming and solve it using Solver.
Q4) Use the information from Scenario 8.1 to determine the number of decision variables in this scenario.
A) 10
B) 15
C) 20
D) 24
Q5) Discuss key issues to be considered when implementing aggregate planning.
Page 10
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Chapter 9: Sales and Operations Planning: Planning Supply and Demand
in a Supply
Chain
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Sample Questions
Q1) Faced with predictable variability of demand, a company's goal is to respond in a manner that maximizes profitability.
A)True
B)False
Q2) As the product margin declines, promoting during the peak demand period becomes
A) less profitable.
B) more profitable.
C) less of a risk.
D) more desirable.
Q3) Scheduling the workforce so that the available capacity better matches demand is using time flexibility from the workforce.
A)True
B)False
Q4) The pricing and promotion decisions are often made by
A) marketing and sales.
B) marketing and operations.
C) operations and sales.
D) marketing, operations, and sales.
Q5) Discuss the impact of promotion on demand within a supply chain.
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Chapter 10: Coordination in a Supply Chain
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Sample Questions
Q1) Improperly structured sales force incentives are a significant obstacle to coordination in the supply chain.
A)True
B)False
Q2) The lack of coordination within a supply chain will result in a decrease in
A) manufacturing cost.
B) inventory cost.
C) replenishment lead time.
D) level of product availability.
Q3) What is the impact of lack of coordination on the performance of the supply chain?
Q4) Situations where demand information is distorted as it moves between different stages of the supply chain, leading to increased variability in orders within the supply chain are referred to as
A) incentive obstacles.
B) information processing obstacles.
C) operational obstacles.
D) behavioral obstacles.
Q5) What is the bullwhip effect and how does it relate to lack of coordination in the supply chain?
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Chapter 11: Managing Economies of Scale in the Supply
Chain: Cycle Inventory
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Sample Questions
Q1) All costs that do not vary with the size of the order but are incurred each time an order is placed are referred to as
A) the material cost and are denoted by C.
B) the fixed ordering cost and are denoted by S.
C) the holding cost and are denoted by H.
D) the purchase price and are denoted by P.
Q2) Trade promotions lead to a significant ________ in lot size and cycle inventory because of forward buying by the ________.
A) decrease, retailer
B) increase, retailer
C) decrease, supplier
D) increase, supplier
Q3) Suppose the annual demand is 8,000 units and the cost per can is $3 with a holding cost of 10%. What is the required order cost per lot?
A) 32 cents
B) $3.20
C) $32
D) $1.44
Q4) Discuss the characteristics of a successful multi-echelon supply chain.
Page 13
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Chapter 12: Managing Uncertainty in a Supply Chain: Safety Inventory
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Sample Questions
Q1) Which approach to aggregation has the goal of moving product differentiation as close to the pull phase of the supply chain as possible?
A) Information centralization
B) Specialization
C) Product substitution
D) Postponement
Q2) Carrying excessive inventory can help counter demand volatility when new products come on the market.
A)True
B)False
Q3) For the same safety inventory, an increase in lot size increases the fill rate but not the cycle service level.
A)True
B)False
Q4) What is the expected shortage per cycle under this policy?
A) 1 phone
B) 2.2 phones
C) 4.5 phones
D) 9.8 phones
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Chapter 13: Determining the Optimal Level of Product Availability
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Sample Questions
Q1) Explain the relationship between product availability and supply chain profitability.
Q2) Suppose the taco stand manager could wake up a little earlier and borrow his buddy's full size pickup to transport tacos to campus. If time and capacity were not an issue, how many total tacos should he bring to campus each day?
A) 2500
B) 3000
C) 5041
D) 5500
Q3) An increase in forecast accuracy
A) decreases both the overstocked and understocked quantity and decreases a firm's profits.
B) decreases both the overstocked and understocked quantity and increases a firm's profits.
C) increases both the overstocked and understocked quantity and decreases a firm's profits.
D) increases both the overstocked and understocked quantity and increases a firm's profits.
Q4) Describe the approaches a manager can use to reduce demand uncertainty.
15
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Chapter 14: Transportation in a Supply Chain
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Sample Questions
Q1) Suppose that a highway is governed by a use fee charged to motorists that is based on congestion, operation and maintenance. The total traffic t is used to determine the cost of 5t² + 7t. What is the average cost per motorist?
A) 12
B) 5t + 7
C) 10
D) 10t + 7
Q2) The most common problems in the use of IT in transportation relate to A) cross-enterprise collaboration.
B) network security.
C) vibration-resistant hardware.
D) maintaining an Internet connection while in motion.
Q3) Transportation plays a key role in every supply chain because products are usually produced and consumed in the same location.
A)True
B)False
Q4) Milk runs reduce outbound transportation costs by consolidating large shipments.
A)True
B)False
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Chapter 15: Sourcing Decisions in a Supply Chain
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Sample Questions
Q1) Sales efforts and orders peak near the end of any month, quarter, or other evaluation period. This is commonly referred to as
A) the hockey stick phenomenon.
B) the student syndrome.
C) Murphy's Law.
D) the Central Limit Theorem.
Q2) Effective sourcing processes within a firm can
A) improve profits for the firm and total supply chain surplus.
B) reduce profits for the firm and total supply chain surplus.
C) reduce total supply chain surplus.
D) reduce profits for the firm.
Q3) Unless adding a supplier with a unique and valuable capability clearly adds to total cost, the firm's supply base may be too small.
A)True
B)False
Q4) What are some of the benefits of effective sourcing decisions?
Q5) What factors should be considered when making sourcing decisions?
Q6) Why should on-time performance be considered in supplier selection decisions?
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Chapter 16: Pricing and Revenue Management in a Supply Chain
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Sample Questions
Q1) The two forms of supply chain assets are
A) capacity and inventory.
B) capacity and revenue.
C) inventory and revenue.
D) inventory and warehouse space.
Q2) An order from a lower price buyer should be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer.
A)True
B)False
Q3) The basic trade-off to consider during overbooking is between having wasted capacity (or inventory) because of few cancellations or having a shortage of capacity (or inventory) because of excessive cancellations.
A)True
B)False
Q4) Explain how differential pricing can benefit a firm.
Q5) Unused capacity from the past is extremely valuable.
A)True
B)False
Q6) How can firms address the problem of perishable assets?
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Chapter 17: Sustainability and the Supply Chain
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Sample Questions
Q1) In the context of greenhouse gas emission, the GHG protocol initiative defines levels of scope. This level refers to indirect emissions from grid-sourced electricity and other utility services of heat, steam and cooling.
A) Scope 1
B) Scope 2
C) Scope 3
D) Scope 4
Q2) Reducing greenhouse gas emissions was most cost effectively achieved by
A) rejecting the model of maximization of shareholder wealth as the firm objective.
B) adherence to ISO 14000 standards.
C) subsidizing companies that
D) charging for emissions.
Q3) The goal of every supply chain should be to track its
A) landfill inventory.
B) transportation utilization.
C) water consumption.
D) packaging materials.
Q4) Discuss the role of sustainability supply chains.
Q5) Discuss the factors driving an increased focus on sustainability.
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