Deck 3: Strategic and Financial Logistics

Question 1

What provides the framework for conducting return on assets analysis by incorporating revenues and expenses to generate net profit margin, as well as inclusion of assets to measure asset turnover?
a. the Balanced Scorecard
b. the Strategic Profit Model
c. microfinancing
d. Supply Chain Operations Reference Model

Answer 1

the Strategic Profit Model

Question 2

____ strategy decisions involve issues such as the number and location of warehouses and the selection of appropriate transportation modes.
a. marketing
b. production
c. finance
d. logistics

Answer 2

logistics

Question 3

The ____ shows revenues, expenses, and profit for a period of time.
a. balance sheet
b. current ratio
c. income statement
d. annual report

Answer 3

income statement

Question 4

The balance sheet reflects the assets, liabilities, and____ at a given point in time.
a. costs of goods sold
b. net income
c. owners' equity
d. asset turnover

Question 5

Which of the following is not a potential type of logistics strategy decisions?
a. investments in technology that support logistics activities
b. selecting appropriate transportation modes
c. deployment of inventory
d. number and location of warehouses
e. all of the above are potential logistics strategy decisions

Question 6

Which of the following represents the preferred hierarchy of strategy (i.e., from the first strategy to be developed to the last to be developed)?

A) corporate $\rightarrow$ business unit $\rightarrow$ functional
B) functional $\rightarrow$ business unit $\rightarrow$ corporate
C) corporate $\rightarrow$ business unit $\rightarrow$ divisional
D) business unit $\rightarrow$ divisional $\rightarrow$ functional

Question 7

The ____ reflects the assets, liabilities, and owners' equity at a given point in time.
a. balanced scorecard
b. balance sheet
c. income statement
d. annual report

Question 8

Which generic strategy concentrates an organization's effort on a narrowly defined market to achieve either a cost leadership or differentiation strategy?
a. hybrid
b. market orientation
c. tailored
d. focus

Question 9

Depending on industry and product type, reverse logistics costs as a percent of revenue can range between ____ and ____ percent.
a. 5; 10
b. 4; 8
c. 3; 6
d. 2; 4

Question 10

Strategy at a ____ level is primarily focused on the products and services provided to customers and on finding ways to develop and maintain a sustainable competitive advantage with these customers.
a. functional
b. business unit
c. divisional
d. corporate

Question 11

Which of the following is a common measure of organizational financial success?
a. quick ratio
b. the income statement
c. current ratio
d. return on investment

Question 12

____ strategy is focused on determining the goals for the company, the types of businesses in which the company should compete, and the way the company will be managed.
a. functional-level
b. business unit-level
c. divisional-level
d. corporate-level

Question 13

Which of the following is not one of the generic strategies that can be pursued by an organization, as identified by strategist Michael Porter?
a. value enhancement
b. differentiation
c. cost leadership
d. focus
e. all of the above are generic strategies

Question 14

When developing logistics strategy, a ____ strategy refers to the management of logistics activities with a focus on costs.
a. market
b. process
c. command and control
d. information

Question 15

A(n) ____ entails the functional units of an organization providing input into the other levels of strategy formulation.
a. supply chain
b. interfunctional cooperation
c. hierarchy of strategy
d. enterprise resource system

Question 16

Which of the following is not a level at which strategy can be formulated?
a. corporate
b. business unit
c. functional
d. all of the above are levels at which strategy can be formulated

Question 17

The current ratio is calculated by dividing ____ by ____.
a. total current assets; total current liabilities
b. total current liabilities; total current assets
c. total assets; total liabilities
d. total liabilities; total assets

Question 18

A ____ strategy entails an organization developing a product and/or service that offers unique attributes that are valued by customers and that the customer perceives to be distinct from competitor offerings.
a. focus
b. differentiation
c. value enhancement
d. market orientation

Question 19

Which of the following does not appear on the balance sheet?
a. assets
b. owners' equity
c. liabilities
d. net income
e. all of the above appear on the balance sheet

Question 20

In general, the ____ measures the profitability of the products and/or services provided by a company.
a. balance sheet
b. strategic profit model
c. balanced scorecard
d. income statement

Question 21

What is the formula for asset turnover?
a. total sales divided by total assets
b. net profit divided by total assets
c. return on assets divided by total assets
d. return on investment divided by return on net worth

Question 22

A differentiation strategy entails an organization developing a product and/or service that offers unique attributes that are valued by customers and that customers perceive to be distinct from competitor offerings.

Question 23

Depending on the industry and product type, reverse logistics costs as a percentage of revenues can range between 2 and 4 percent.

Question 24

With respect to asset turnover, ____ is typically the most relevant logistics asset.
a. warehousing
b. inventory
c. transportation equipment
d. materials handling equipment

Question 25

Which of the following is false?
a. the Strategic Profit Model (SPM) can assist the logistics manager in the evaluation of cash flows and asset utilization decisions
b. the SPM fails to consider the timing of cash flows
c. the SPM is subject to manipulation in the short run
d. the SPM fails to recognize assets that are dedicated to specific relationships
e. all of the above are true

Question 26

Performance measurement in ____ is used to identify design and operations options that provide benefits in terms of increased speed or reduced costs.
a. materials handling
b. warehousing
c. packaging
d. order management

Question 27

What is the formula for net profit margin?
a. gross profit minus interest expenses
b. sales divided by costs of goods sold
c. total sales divided by total assets
d. net profit divided by sales
e. none of the above

Question 28

____ looks at how long an organization's cash is tied up in receivables, payables, and inventory.
a. cash-to-cash cycle
b. cash flow
c. gross margin return on investment
d. current ratio

Question 29

Strategy can be formulated at a corporate level, a business unit level, and a functional level.

Question 30

Strategy at a business unit level is primarily focused on the types of businesses in which the company should compete and the way the company should be managed.

Question 31

Logistics measurement systems have been traditionally designed to include information on how many types of performance?
a. two
b. three
c. four
d. five

Question 32

The hierarchy of strategy entails the functional units of an organization providing input into the other levels of strategy formulation.

Question 33

Suppose that a logistics manager is able to eliminate some unnecessary inventory, which reduces the value of current assets as well as total asset value. What is the corresponding impact on inventory turnover and return on assets?
a. both inventory turnover and return on assets will increase
b. inventory turnover increases, while return on assets decreases
c. inventory turnover decreases, while return on assets increases
d. both inventory turnover and return on assets will decrease

Question 34

Functional-level strategies exist in marketing and production, but not in logistics.

Question 35

Which of the following is not one of the perspectives evaluated in the balanced scorecard approach?
a. customers
b. internal business processes
c. learning and growth
d. financial
e. all of the above are perspectives in the balanced scorecard approach

Question 36

The balanced scorecard approach is based on the belief that management should evaluate their business from ____ distinct perspectives.
a. two
b. three
c. four
d. five

Question 37

Logistics performance is important for achieving competitive advantage for many firms.

Question 38

Strategist Michael Porter identified three generic strategies that can be pursued by an organization, namely, cost leadership, differentiation, and value enhancement.

Question 39

Return on assets equals:
a. current assets divided by total assets
b. return on investment divided by return on net worth
c. net profit margin times asset turnover
d. total assets divided by costs of goods sold

Question 40

With respect to net profit margin, the most relevant categories for logistics managers to consider are:
a. sales, costs of goods sold, asset turnover
b. accounts receivable, costs of goods sold, total expenses
c. sales, costs of goods sold, total expenses
d. inventory, accounts receivable, total expenses

Question 41

Long-term assets have a useful life of more than two years.

Question 42

A reduction in inventory would increase inventory turnover, which means an increase in that organization's return on assets (ROA).

Question 43

A common measure of organizational financial success is return on investment.

Question 44

Marketing goals in areas such as product availability, desired customer service levels, and packaging design have limited influence on logistics decisions.

Question 45

The balance sheet reflects the assets, liabilities, and costs of goods sold at a given point in time.

Question 46

An understanding of financial terminology can help logisticians to manage logistical activities to improve their company's financial performance.

Question 47

The primary influence of logistics activities on sales would be through the improvement of customer service.

Question 48

A process strategy refers to management of logistics activities across business units with a focus on reducing complexity for customers.

Question 49

With respect to net profit margin, the most relevant categories for logistics managers to consider are sales, costs of goods sold, and asset turnover.

Question 50

Return on assets equals net profit margin times asset turnover.

Question 51

In general, the income statement measures the profitability of the products and/or service provided by a company.

Question 52

Asset turnover is computed by dividing return on assets by total assets.

Question 53

With respect to asset turnover, inventory is typically the most relevant logistics asset.

Question 54

The balanced scorecard provides the framework for conducting return on assets analysis by incorporating revenues and expenses to generate net profit margin, as well as inclusion of assets to measure asset turnover.

Question 55

The current ratio is calculated by dividing total current liabilities by total current assets.

Question 56

Operationally, net profit margin is net profit divided by cost of goods sold.

Question 57

The income statement is the same thing as the balance sheet.

Question 58

Superior logistics service can have a positive influence on an organization's financial performance.

Question 59

Research indicates a positive benefit to aligning functional strategies such as marketing or logistics with the overall corporate strategy.

Question 60

Owners' equity is the difference between what a company owns and what it owes at any particular point in time.

Question 61

When applying performance measures to logistics activities, determination of the key measures should be tailored to the individual organization and level of decision making.

Question 62

The cash-to-cash cycle looks at how long an organization's cash is tied up in receivables, payables, and inventory.

Question 63

When comparing 2012 figures with the 2013 figures shown in the table, the amount budgeted for each warehouse in 2013 was greater than actual 2012 costs. How much of the increase is caused by increased volume of business (units shipped) and how much by inflation?

Question 64

The measures associated with the balanced scorecard can be at a strategic or tactical level.

Question 65

Best in Class companies tend to use transportation scorecards less frequently than other companies.

Question 66

The balanced scorecard is based on the belief that management should evaluate their business from five different perspectives.

Question 67

When comparisons are made among all eight warehouses, which one do you think does the best job for the Brant Company? What criteria did you use? Why?

Question 68

When comparing performance during the first five months of 2013 with performance in 2012, which warehouse shows the most improvement?

Question 69

According to the balanced scorecard approach, the financial perspective is considered the best indicator of whether or not logistics strategy is being properly implemented and executed.

Question 70

Q. is aggressive and is going to recommend that his father cancel the contract with one of the warehouses and give that business to a competing warehouse in the same city. J.Q. feels that when word of this gets around, the other warehouses they use will "shape up." Which of the seven should J.Q. recommend be dropped? Why?

Question 71

A decision to invest in an electronic data interchange system that would increase invoice accuracy should result in a lower amount of accounts receivable.

Question 72

When comparing performance during the first five months of 2013 with performance in 2012, which warehouse shows the poorest change in performance?

Question 73

The year 2013 is nearly half over. J.Q. is told to determine how much the firm is likely to spend for warehousing at each of the eight warehouses for the last six months of 2013. Do his work for him.
There is not enough information to do a very precise forecast. J.Q. assumes that the proportion of costs occurring during the first five months of 2012 should be in the same proportion in 2013.
(1) (2) (3) (4)