Question 1

Miller Corp. can make three individual deliveries to three different customers at a transportation cost of $600 each or can consolidate them into one shipment with a transportation cost of $1,200 and a stop-off charge of $100 per stop. Should Miller Corp. consolidate the shipments?

Accepted Answer

Nonconsolidated cost = $600(3) = $1,800.Consolidated cost = $1,200 + $100(3) = $1,500. Consolidation saves $300.

Question 2

Bill's glass store needs to ship an order of 10 chandeliers to a builder about 1,000 miles away. The chandeliers cost about $10,000 each, and Bill will be paid upon delivery. Bill plans to ship the order by truck at a cost of $1,000. The delivery will take 10 days. Bill uses a 30 percent annual inventory carrying cost. What will be the approximate total shipping and transit inventory carrying cost of the shipment?

Accepted Answer

$1,000 + ($100,000 × 10/365 × .3) = $1,821.92

Question 3

With respect to the following operating service characteristics of the modes of transportation, which combination is CORRECTLY specified?

Accepted Answer

Air is the fastest mode, pipeline is the slowest. Air is low in availability (location of airports). Water can handle more different types/sizes of shipments than rail. Truck is more dependable than rail or air.

Question 4

Zanda Corp. can make three individual deliveries to three different customers at a cost of $500 each or can consolidate them into one shipment with a cost of $1,300 and a stop-off charge of $100 per stop. Should Zanda do this?

Accepted Answer

$1,300 + 3($100) = 1,600, an increase in cost of $100.

Question 5

Zanda Corporation's CEO watched in amazement and frustration as workers handled and loaded individual products onto trucks. She felt handling the individual items was very cumbersome. She should investigate the possibility of:

Accepted Answer

Containerization creates larger containers out of smaller units to facilitate handling.

Question 6

Jones Company has decided to limit deliveries to selected areas to specific days of the week to obtain transportation savings. This is an example of:

Accepted Answer

This is the definition of scheduled delivery consolidation.

Question 7

Generally, the most expensive transportation mode (from among the following choices) is

Accepted Answer

Air is generally the most expensive mode of transportation.

Question 8

Zanda Corp. had established a production plant in Thailand. Recently it decided to close the plant and move production to Mexico. This decision was likely made after Zanda:

Accepted Answer

Total landed cost requires examination of all product- and logistics-related costs. This type of examination may result in decisions regarding the lowest-cost place for manufacturing.

Question 9

With respect to the following operating service characteristics of the modes of transportation, which combination is INCORRECTLY specified?

Accepted Answer

Only C is incorrect. For capability, pipeline is worst, water is best.

Question 10

Richard's Rollerskate Company relies on Simon's Trucking to transport all of their products. Simon's Trucking is the only shipping company for RRC, and all products are shipped in trucks that look like giant roller skates with Richard's Rollerskate branding on the trucks. Richard's Rollerskate is likely using which carrier type?

Accepted Answer

When the carrier takes on the identity of a shipper, it is typically a contract carrier.

Question 11

Suppose you are shipping 1,000 pounds of product to a customer location that is 500 miles away from you. The customer calls you and increases the order size to 10,000 pounds. Which of the following is NOT LIKELY to occur as a result of this change?

Accepted Answer

This consolidation is likely to both decrease the cost per pound of transportation and increase the total cost.

Question 12

Which of the following best describes the concept of total landed cost?

Accepted Answer

Total landed cost is the sum of all product- and logistics-related costs.

Question 13

Jones Company learned that several other shippers in its hometown had customers located in the same markets that it serves. With this information, Jones should investigate the possibility of:

Accepted Answer

Because other shippers are involved in this question, pooled delivery consolidation is the most appropriate answer.

Question 14

One function of warehouses or distribution centers is "consolidation." This means that the warehouse/distribution center is used to:

Accepted Answer

This is the definition of the consolidation role of warehouses/distribution centers.

Question 15

With respect to transportation regulation today in the United States:

Accepted Answer

There is still a small amount of economic regulation, but safety and social regulation has increased dramatically.

Question 16

A company finds the following information about its customers and their locations:  The center of gravity is:

Accepted Answer

X^* = (20(400,000) + 95(200,000) + 60(600000))/(400,000 + 200,000 + 600,000) = 52.5Y^* = (90(400,000) + 75(200,000) + 30(600,000))/(400,000 + 200,000 + 600,000) = 57.5

Question 17

Suppose you were the logistics manager for Way-Off Manufacturing and Marketing, a manufacturer of mosquito repellant. Further suppose that Way-Off markets its products in the entire United States. However, in each geographic region of the country, Way-Off only needs to warehouse products for two months during each year. Way-Off probably would use what type of warehousing?

Accepted Answer

When warehousing needs for a company are short-term, public warehousing is generally the best option.

Question 18

A major disadvantage of private warehousing is:

Accepted Answer

The disadvantage is the investment required. Private warehousing provides more control and operational flexibility.

Question 19

Zanda Corp. made a decision to use a more expensive mode of transportation to deliver orders to customers. This decision was likely made after an examination of

Accepted Answer

Increasing cost to improve service performance represents a cost-to-service trade-off.

Question 20

You are shipping 200 diamonds to one customer located 2,000 miles away. The value of a diamond is $1,500. You can ship via air for $500 and the diamonds will arrive in two days, or you can ship via a specialty ground carrier for $250 and the diamonds will arrive in four days. You figure your inventory carrying cost is 25 percent. Your customer will immediately transfer funds to your bank account on receipt of the shipment. Using the air carrier would save approximately how much money in total cost? Use 365 days as the number of days in a year.

Accepted Answer

Cost of air = $500 + ($300,000 × 2/365 × .25) = $910.96Cost of ground = $250 + ($300,000 × 4/365 × .25) = $1,071.92.Air will save $1,071 - $910.96 = $160.96.

Quiz 11: Logistics Management