Transportation Management
Exam Answer Key
Course Introduction
Transportation Management examines the principles and practices involved in the efficient movement of goods and people across various modes such as road, rail, air, and sea. The course explores key topics including transportation systems, infrastructure planning, carrier selection, freight costing, regulatory frameworks, and technological innovations shaping the logistics industry. Students will develop an understanding of the strategic role transportation plays in supply chain management, sustainability considerations, and the tools used to optimize transportation operations. Practical case studies and real-world examples prepare students to address challenges in both local and global transportation contexts.
Recommended Textbook
Supply Chain Management Strategy Planning and Operation 6th Edition by Sunil Chopra
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Page 2
Chapter 1: Understanding the Supply Chain
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Sample Questions
Q1) Discuss the differences of push and pull supply chain processes.
Answer: Processes in a supply chain fall into one of two categories depending on the timing of their execution relative to end customer demand. With pull processes, execution is initiated in response to a customer order. With push processes, execution is initiated in anticipation of customer orders based on a forecast. Pull processes may also be referred to as reactive processes because they react to customer demand. Push processes may also be referred to as speculative processes because they respond to speculated (or forecasted) rather than actual demand. The push/pull boundary in a supply chain separates push processes from pull processes . Push processes operate in an uncertain environment because customer demand is not yet known. Pull processes operate in an environment in which customer demand is known. They are, however, often constrained by inventory and capacity decisions that were made in the push phase.
Q2) The objective of customer order entry is to maintain a record of product receipt and complete payment.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Supply Chain Performance: Achieving Strategic
Fit and Scope
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Q1) A company's supply chain strategy
A) defines the set of customer needs that it seeks to satisfy through its products and services.
B) specifies the portfolio of new products that it will try to develop.
C) specifies how the market will be segmented and how the product will be positioned, priced, and promoted.
D) determines the nature of procurement and transportation of materials as well as manufacture and distribution of the product.
Answer: D
Q2) Which of the following determines the nature of procurement of raw materials, transportation of materials to and from the company, manufacture of the product or operation to provide the service, and distribution of the product to the customer along with follow-up service?
A) Competitive strategy
B) Product development strategy
C) Marketing and sales strategy
D) Supply chain strategy
Answer: D
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Chapter 3: Supply Chain Drivers and Metrics
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Q1) Although faster transportation is more expensive, a firm receives which benefit as a result of the faster transportation?
A) Fewer rejects
B) Higher profit
C) Lower inventories
D) More warehouses
Answer: C
Q2) The ________ strategy results in a peak during the discount week, often followed by a steep drop in demand during the following weeks.
A) Everyday low pricing
B) High-low pricing
C) Fixed price
D) Menu pricing
Answer: B
Q3) The major drivers of supply chain performance are customers, facilities, inventory, transportation, and information.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Designing Distribution Networks and Applications to e-Business
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Q1) Which of the following is a disadvantage of distributor storage with carrier delivery?
A) Information infrastructure is simpler than manufacturer storage.
B) Response time is faster than with manufacturer storage.
C) Returnability is easier than with manufacturer storage.
D) Product variety is lower than with manufacturer storage.
Q2) Which of the following would be a disadvantage of manufacturer storage with direct shipping?
A) The ability to reduce cost of inventory by centralizing inventories at the manufacturer. B) The manufacturer has to postpone customization until after the customer order has been placed.
C) Supply chains have to eliminate other warehousing space to save on the fixed cost of facilities.
D) Response times tend to be large because the order has to be transmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer's centralized site.
Q3) Explain the six distinct distribution network designs that may be used to move products from factory to customer.
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Page 6
Chapter 5: Network Design in the Supply Chain
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Q1) ________ costs increase as the number of facilities in a supply chain increases.
A) Inventory
B) Transportation
C) Retail operation
D) Information
Q2) Supply chain network design decisions classified as market and supply allocation are concerned with
A) what processes are performed at each facility.
B) where facilities should be located.
C) how much capacity should be allocated to each facility.
D) what markets each facility should serve and which supply sources should feed each facility.
Q3) Capital, growth strategy, existing networks and global competition mostly affect which of the four Global Network Design Decisions?
A) Phase I - Supply Chain Strategy
B) Phase II - Regional Facility Configuration
C) Phase III - Desirable Sites
D) Phase IV - Location Choices
Q4) Describe the factors that influence supply chain network design decisions.
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Chapter 6: Designing Global Supply Chain Networks
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Q1) Among the sources of risk identified in global supply chains, the highest among these four is
A) shortage of skilled resources.
B) natural disasters.
C) inflexible supply chain technology.
D) customs delays.
Q2) The net present value (NPV) of a stream of cash flows is equal to
A) the sum of all cash flows for all periods being considered.
B) the sum of all cash flows for all periods being considered divided by the number of periods.
C) the average of all cash flows for all periods being considered multiplied by the number of periods.
D) the sum of all cash flows for all periods being considered discounted by the rate of return for each period.
Q3) In a complex decision tree, there are thousands of possible paths that may result from the first period to the last.
A)True
B)False
Q4) Summarize the steps in the decision tree analysis methodology.
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Chapter 7: Demand Forecasting in a Supply Chain
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Sample Questions
Q1) Calculate the MSE for this Table if the forecasts for periods 1-10 are in order, 176.6, 174.2, 176.1, 178.7, 160.4, 165.4, 177.7, 191.1, 191.0, and 175.2.
A) 216.60
B) 219.80
C) 210.40
D) 221.20
Q2) Use a simple moving average of three periods to forecast the demand for July. What is the forecast?
A) 67
B) 58
C) 48.5
D) 45.3
Q3) Aggregate forecasts are usually more accurate than disaggregate forecasts, as they tend to have a smaller standard deviation of error relative to the mean.
A)True
B)False
Q4) Discuss key issues of forecasting in practice.
Q5) Describe the basic characteristics of forecasts that managers should be aware.
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Chapter 8: Aggregate Planning in a Supply Chain
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Q1) The length of the planning horizon is usually between
A) one and three months.
B) three and eighteen months.
C) one and three years.
D) three and five years.
Q2) Given that forecasts are always wrong to some degree, the aggregate plan needs to have some flexibility built into it if it is to be useful.
A)True
B)False
Q3) The aggregate plan needs to
A) be a final product because changes are disruptive to the supply chain.
B) be considered fixed because forecasts are usually accurate.
C) have some flexibility built into it because forecasts are always wrong.
D) have some flexibility built into it because forecasts are usually right.
Q4) The goal of aggregate planning is to
A) dissatisfy customers in a way that maximizes profit.
B) dissatisfy customers in a way that minimizes profit.
C) satisfy demand in a way that maximizes profit.
D) satisfy demand in a way that minimizes profit.
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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Q1) Which of the following is an approach that firms can use when managing inventory to meet predictable demand variability?
A) Time flexibility from workforce
B) Use of seasonal workforce
C) Use of subcontracting
D) Using common components across multiple products
Q2) Predictable variability is
A) change in demand that can be forecasted.
B) change in demand that cannot be forecasted.
C) change in demand that has been planned.
D) change in demand that has been scheduled.
Q3) A firm that uses a temporary workforce during the peak season to increase capacity to match demand is using a seasonal workforce.
A)True
B)False
Q4) Discuss the importance of collaboration within a supply chain when performing aggregate planning.
Q5) Discuss the approaches that can be used to manage capacity to meet predictable variability of demand.
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Chapter 10: Coordination in a Supply Chain
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Q1) A manufacturer with significant market power should use
A) two-part tariffs and volume discounts to achieve coordination.
B) lot-size-based quantity discounts to achieve coordination.
C) forward-buying with retail coupons to achieve coordination.
D) liquidators and reverse-buying to achieve coordination.
Q2) Pricing obstacles refer to situations in which the pricing policies for a product lead to an increase in variability of orders placed.
A)True
B)False
Q3) The bullwhip effect
A) positively impacts performance at every stage.
B) hurts the relationships between different stages of the supply chain.
C) enhances the relationships between different stages of the supply chain.
D) results in improved on-time order delivery.
Q4) Supply chain coordination improves if all stages of the chain take actions that are aligned and together increase total supply chain surplus.
A)True
B)False
Q5) Describe the impact of behavioral obstacles on supply chain coordination.
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Chapter 11: Managing Economies of Scale in the Supply
Chain: Cycle Inventory
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Sample Questions
Q1) For products where the firm has market power, two-part tariffs can be used to achieve coordination in the supply chain and maximize supply chain profits.
A)True
B)False
Q2) 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.
Q3) Cycle inventory exists in a supply chain because different stages exploit economies of scale to lower total cost.
A)True
B)False
Q4) What is the optimal batch size to produce?
A) 8.36 loaves
B) 1.8 loaves
C) 5.56 slices
D) 8.36 slices
13
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Chapter 12: Managing Uncertainty in a Supply Chain: Safety Inventory
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Sample Questions
Q1) Safety inventory is carried because
A) demand forecasts are accurate.
B) demand forecasts are uncertain.
C) adequate supplies are available.
D) excess product was manufactured.
Q2) A reduction in supply can help dramatically reduce safety inventory required without hurting product availability.
A)True
B)False
Q3) 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
Q4) Safety inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period.
A)True
B)False
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Chapter 13: Determining the Optimal Level of Product Availability
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Q1) The cost of overselling is denoted by C<sub>O</sub> and is the loss incurred by a firm for each unsold unit at the end of the selling season.
A)True
B)False
Q2) An increase in forecast accuracy increases both the overstocked and understocked quantity and decreases a firm's profits.
A)True
B)False
Q3) Tailored sourcing may be volume-based or product-based depending on the source of uncertainty.
A)True
B)False
Q4) A high level of product availability requires
A) large inventories and tends to raise costs for the supply chain.
B) large inventories and tends to reduce costs for the supply chain.
C) small inventories and tends to raise costs for the supply chain.
D) small inventories and tends to reduce costs for the supply chain.
Q5) Explain how tailored sourcing can be used to improve profitability.
Q6) Discuss the advantages and disadvantages of quick response.
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Chapter 14: Transportation in a Supply Chain
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Q1) Discuss the relationship between transportation strategy and competitive strategy.
Q2) Investment decisions regarding the transportation infrastructure (rails, locomotives, trucks, airplanes, etc.) are the primary concern of
A) the shipper.
B) the supplier.
C) the manufacturer.
D) the carrier.
Q3) Which of these statements about use fees for a highway is best?
A) A flat rate results in lower use by most individuals.
B) A flat rate results in higher use by most individuals.
C) A flat rate has no impact on use by most individuals.
D) A fee based on congestion results in higher use by most individuals.
Q4) Which mode of transportation is used primarily for petroleum and natural gas?
A) Air
B) Truck
C) Water
D) Pipeline
Q5) Discuss the two key players involved in any transportation in the supply chain.
Q6) Explain why transportation systems should be tailored.
Page 16
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Chapter 15: Sourcing Decisions in a Supply Chain
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Sample Questions
Q1) Supplier performance must be rated on many different factors because
A) the factors impact the total supply chain cost.
B) the factors minimize the supply chain involvement.
C) the factors reduce the impact of price.
D) the factors maximize the supply chain price.
Q2) Single sourcing for a product is used to
A) guarantee the supplier sufficient business when the supplier has to make a significant buyer-specific investment.
B) ensure a degree of competition.
C) ensure the possibility of a backup should a source fail to deliver.
D) control all possible sources of supply in the market.
Q3) The difference between the values of the buyer and seller is referred to as the A) value discrepancy. B) spread.
C) bargaining surplus.
D) negotiation gap.
Q4) What factors should be considered when making sourcing decisions?
Q5) What issues need to be considered when evaluating capability for design collaboration?
Q6) Why should on-time performance be considered in supplier selection decisions?
Page 17
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Chapter 16: Pricing and Revenue Management in a Supply Chain
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Q1) The cost of wasted capacity is
A) the reduction in margin that results from having to go to a backup source.
B) the margin that would have been generated if the capacity had been used for production.
C) the productivity increase generated when the capacity is used for production.
D) the sales potential of excess capacity kept in reserve for emergency production.
Q2) Any asset that loses value over time is perishable.
A)True
B)False
Q3) Salespeople must understand the revenue management tactic in place so they can align their sales pitch accordingly.
A)True
B)False
Q4) Revenue management adjusts the pricing and available supply of assets to maximize profits.
A)True
B)False
Q5) Explain how differential pricing can benefit a firm.
Q6) Describe the role of revenue management.
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Chapter 17: Sustainability and the Supply Chain
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Q1) Under a carbon tax system, the price of emissions is
A) the tax rate set directly by the regulatory authority.
B) decided by the emitters.
C) determined by the fraction of total carbon assignable to the company.
D) agreed upon by all firms competing for the same pool of customers.
Q2) What are some metrics that can be used to measure sustainability for a supply chain?
Q3) A focus on sustainability allows a supply chain to better serve more environmentally conscious customers while often improving supply chain performance.
A)True
B)False
Q4) McDonough and Braungart (2002) discuss the importance of ________ design if we are to truly limit the landfill inventory generated by a supply chain.
A) cradle to grave
B) cradle to cradle
C) manageable sustainability
D) recyclable content
Q5) Discuss the factors driving an increased focus on sustainability.
Q6) Discuss the role of sustainability supply chains.
Page 19
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