Deck 6: Warehouse Management

Question 1

While warehouses and distribution centers (DCs) store products, they perform different functions. Which of the following statements regarding warehouses versus distribution centers is TRUE.

A) Warehouses store all products, typically for an extended period of time, while DCs hold minimum levels of inventories that are predominantly high-demand items.
B) DCs handle most products in four cycles (receive, store, ship, and pick) while warehouses handle most products in two: receive and ship.
C) Warehouses perform many value-added activities, while DCs perform few value-adding activities.
D) DCs focus on minimizing the operating cost to meet shipping requirements, while warehouses focus on maximizing the profit impact of meeting customer delivery requirements.
E) Warehouses and DCs do essentially the same things and are not really different.

Answer 1

Warehouses store all products, typically for an extended period of time, while DCs hold minimum levels of inventories that are predominantly high-demand items.

Question 2

Which of the following are reasons to hold inventories in storage?

A) To achieve production economies of scale.
B) To maintain a source of supply.
C) To support customer service policies.
D) To achieve production economies of scale and to support customer service policies.
E) To achieve production economies of scale, to maintain a source of supply, and to support customer service policies.

Answer 2

To achieve production economies of scale, to maintain a source of supply, and to support customer service policies.

Question 3

Leasing warehouse storage space long-term is referred to as:

A) Bonded warehousing.
B) Contract warehousing.
C) Cross-docking.
D) Private warehousing.
E) Public warehousing.

Answer 3

Contract warehousing.

Question 4

Which of the following forms of warehousing can be owned by the user of that warehouse?

A) Contract warehousing.
B) Cross-docking.
C) Private warehousing.
D) Cross-docking and private warehousing.
E) Contract warehousing, cross-docking, and private warehousing.

Question 5

Which of the following types of public warehouses are the most commonly available?

A) Bonded warehouses.
B) Bulk storage warehouses.
C) General merchandise warehouses.
D) Household goods and furniture warehouses.
E) Special commodity warehouses.

Question 6

If your firm was going to test market a new product, which of the following options would minimize your company's risk in case the new product was not successful?

A) Contract warehousing.
B) Cross-docking.
C) Public warehousing.
D) Private warehousing.
E) The risk level in each of the above options would be the same.

Question 7

Which of the following specialized services would not be provided by a public warehouse?

A) Ability to store and handle any highly specialized product requiring special handling and unusual storage requirements.
B) Breaking down manufacturers' case quantities to enable orders for less-than-full case quantities to be filled.
C) Combine orders of different customers located in a market and shipping them at the carload or truckload rate.
D) Consolidation of damaged product and products being recalled by the manufacturer.
E) Packaging of manufacturers' products for shipping.

Question 8

Which of the following would not be a good reason to use cross-docking?

A) Storing bulk shipments of raw materials for use in a manufacturing facility.
B) Products arriving from multiple plants being combined into single orders.
C) Products being consolidated into larger truckload (TL) quantities for delivery to large customers.
D) Smaller less-than-truckload (LTL) shipments.
E) When products are pre-picked to a customer order for a customer located nearby.

Question 9

Topps, the sports card manufacturer, implemented a warehouse management system (WMS). They had used a paper-based system to ship 500 orders per day. The WMS allowed the firm to ship between 1,200 and 1,800 orders per day. This would be an example of which benefit associated with implementing a WMS?

A) Customer satisfaction and service are increased.
B) Efficiency and productivity of workers are boosted.
C) System reduces security vulnerabilities.
D) WMS save space.
E) WMS reduces wear on equipment.

Question 10

Which of the following would not be an example of warehouse sustainability?

A) Having a warehouse operating at optimal efficiency and effectiveness.
B) Locating warehouses where transportation is optimized.
C) Minimizing the cube utilization of the warehouse.
D) Reducing the amount of waste sent to landfills.
E) Retrofitting warehouses for energy efficiency.

Question 11

Warehouse productivity can be defined or illustrated as:

A) Ratio of actual output to standard output.
B) Ratio of capacity used to available capacity.
C) Ratio of real output to real input.
D) Ratio of standard hours earned to actual hours.
E) None of the ratios would be a definition of warehouse productivity.

Question 12

Which of the following can be used to improve warehouse productivity?

A) Automation (e.g., robotics, conveyors, AS/RS)
B) Focus on continuous improvement.
C) Maximization of vertical space.
D) Taking advantage of technology (e.g., IoT, WMS, blockchain)
E) All of the options could improve warehouse productivity.

Question 13

Which one of the following costs is not as significant as the others when considering the selection of warehousing options?

A) Administrative costs.
B) Cost of lost sales.
C) Inventory costs.
D) Transportation costs.
E) Warehousing costs.

Question 14

A firm will typically have more warehouses when:

A) Competitors offer rapid delivery to customers.
B) Customer service levels are high.
C) Customers order frequently and in small quantities.
D) High levels of competition from other firms in the marketplace.
E) All of the options would tend to increase the number of warehouses a firm would need.

Question 15

Regarding warehouse location, which of the following statements is FALSE?

A) Generally, warehouse facilities should be located near raw material sources if the facility is serving a manufacturing plant.
B) In theory, the more warehouses in more locations would tend to increase customer service levels.
C) Locating warehouses close to customers facilitates rapid delivery time of product orders to customers.
D) The market positioned location strategy locates warehouses nearest to the manufacturing or production facility.
E) Warehouse locations should attempt to minimize transportation costs.

Question 16

Which of the following would be an example of a micro approach to warehouse site selection?

A) Intermediately positioned.
B) Market positioned.
C) Production positioned.
D) Intermediately positioned, market positioned, and production positioned.
E) None of the options would be an example of a micro approach to warehouse site selection.

Question 17

Of the several location models proposed by economic geographers, only one included consideration of company-specific factors such as environment and security, as well as profitability elements. That model was:

A) Center-of-gravity approach.
B) Greenhut's Model.
C) Hoover's Model.
D) Von Thunen's Model.
E) Weber's Model.

Question 18

In Schmenner's eight-step approach to site selection, the first step in a business location search that applies to warehouse site selection, is:

A) The corporate team develops a list of key criteria for the new location.
B) The firm establishes a separate engineering team to examine potential sites.
C) Geographic regions are evaluated in view of the key criteria established.
D) Management designates a corporate team to examine potential sites and to collect information on selected attributes.
E) Solicits input from those persons in the company affected by the decision.

Question 19

The warehouse layout and design method that places items in the closest available slot, bin, or rack, maximizes space utilization, typically employs a computerized automatic storage and retrieval system (AS/RS), and minimizes labor and handling costs, is:

A) Compatibility approach.
B) Complementarity approach.
C) Dedicated storage.
D) Popularity approach.
E) Randomized storage.

Question 20

Which of the following key performance indicators (KPIs) would be considered an internal warehouse KPI?

A) Fill rate.
B) Inventory carrying cost.
C) Lead time.
D) Sales volume.
E) Product return rate.

Question 21

In supporting manufacturing operations, warehouses often function as inbound consolidation points for the receipt of materials shipments from suppliers.

Question 22

From a physical distribution or outbound perspective, warehouses can be used for outbound consolidation, but not for product mixing.

Question 23

Firms utilizing a focused factory concept will produce certain products in one manufacturing plant and other products in different manufacturing plants. To accommodate products being produced in multiple locations, warehouses can serve as product mixing facilities.

Question 24

Customer service policies such as those in omnichannel retailing that promise delivery times of less than 24 hours, require additional warehouses located closer to customer locations.

Question 25

A major advantage of private warehousing over public warehousing is that private warehousing requires no capital investment on the part of the user.

Question 26

Public warehousing is so widely available that there is never a problem in locating space to rent.

Question 27

When a manufacturer uses a public warehouse, it knows its exact storage and handling costs.

Question 28

In private warehousing, flexibility means that the warehouse can reduce or increase storage space quickly.

Question 29

A common practice of firms is to use private warehousing for storing most of their inventory and to use public warehousing temporarily when there is not enough space in the private warehouse.

Question 30

Private warehousing is the best choice when there are changes in market size, location or customer preferences.

Question 31

A small warehouse can store as much inventory as a large warehouse if the inventory velocity/turnover is sufficiently larger in the smaller facility.

Question 32

Cross-docking is an optimal approach to warehousing when products are going to be stored for more than 30 days.

Question 33

Eliminating the transfer or put-away of products in a cross-dock facility reduces costs and the time goods remain at the facility, thus improving customer service levels.

Question 34

The fee structure based on transactions in contract warehousing is always fixed cost.

Question 35

Warehousing becomes an even more critical activity when firms are involved in Just-in-time (JIT) operations.

Question 36

The cost of outsourcing warehousing to a 3PL can never be less than a firm doing warehousing itself.

Question 37

As the number of warehouses increases, the average size of each warehouse also increases.

Question 38

Square footage measures of warehouse space allow the warehouse to more accurately measure the cube utilization of the facility.

Question 39

As service levels increase, it requires more warehousing space to store more inventory, unless the throughput rate/turnover of products stored in the warehouse increases.

Question 40

In most instances, whenever demand fluctuates significantly or is unpredictable, inventory levels in the warehouse are higher because of safety stock requirements.