Question 1

As a company moves from domestic to global distribution, it becomes increasingly critical to control which of the following distribution costs?

Accepted Answer

As a company moves from domestic to global distribution, transportation costs become increasingly critical to control, as the distances and complexities of international shipping can significantly impact the overall cost of distribution. While the other options listed are still important considerations for distribution, transportation becomes the highest priority.

Question 2

In the total cost concept, which of the following logistics costs should be considered when selecting a transportation mode?

Accepted Answer

When selecting a transportation mode, inventory carrying costs should be considered in the total cost concept. This cost refers to the cost of holding inventory in a warehouse or distribution center, which includes expenses such as rent, utilities, insurance, and labor. By considering inventory carrying costs, a company can choose a transportation mode that minimizes inventory holding times and costs. Import duty costs, receiving inspection costs, and inventory purchasing costs are not directly related to transportation mode selection.

Question 3

Which of the following activities positions goods or services closer to the customer?

Accepted Answer

Distribution involves the activities of getting the finished products or services to the customer. This includes activities such as storage, order processing, and transportation. By bringing products closer to the customer through distribution channels, businesses can ensure timely delivery and greater convenience for the customer. Manufacturing, materials handling, and transportation are all important activities within the supply chain, but they do not necessarily position goods or services closer to the customer.

Question 4

The complete supply chain dedicated to the flow of products for returns, repair and remanufacturing is:

Accepted Answer

The complete supply chain dedicated to the flow of products for returns, repair and remanufacturing is known as reverse logistics. Option A (reverse auction) refers to a type of auction where buyers compete to purchase products from sellers. Option B (reverse engineering) refers to the process of disassembling a product to understand how it works and how it was made. Option C (reverse flow scheduling) refers to the scheduling of the flow of products in the opposite direction, which is not necessarily related to returns, repair or remanufacturing.

Question 5

Which of the following processes is concerned with the transfer or delivery of goods or services?

Accepted Answer

Distribution channel involves the movement of goods or services from the manufacturer to the end consumer. It includes all the intermediaries involved in the process such as wholesalers, retailers, agents, and brokers. The focus of this process is on ensuring that the products reach the customers in the right place, at the right time, and at the right cost.

Question 6

Which of the following actions is an example of a company expanding its customer service offering?

Accepted Answer

Adding a distribution center would allow the company to offer faster and more efficient shipping, which is a component of customer service. Increasing WIP inventory, implementing SPC, and decreasing lot sizes all relate to manufacturing operations and would not directly benefit the customer service offering.

Question 7

Which of the following factors is a primary consideration when contracting with a supplier?

Accepted Answer

Product quality should be a primary consideration when contracting with a supplier, as the quality of the goods received can have a significant impact on the buyer's own products or services. While inventory levels, order cost, and quantity discounts are also important factors to consider, they should not be the primary consideration over product quality.

Question 8

Which method of record audit is concerned with the total value of inventory?

Accepted Answer

Physical inventory involves physically counting all items in inventory to determine the total value. Weight counts involve weighing a sample of items and extrapolating to determine the total value, cycle counts involve counting a subset of inventory items on a regular schedule, and sampling records involves randomly selecting a sample of inventory transactions to audit. None of these methods specifically address the total value of inventory like physical inventory does.

Question 9

Knowing average daily consumption and on hand inventory, a company can calculate:

Accepted Answer

Days of supply can be calculated by dividing the on hand inventory by the average daily consumption. This metric helps a company understand how many days they can continue operations without restocking, and can inform decisions about inventory management and production planning. The other options are not directly related to this calculation.

Question 10

Which of the following processes is concerned with the change of ownership of goods and services?

Accepted Answer

The transaction channel refers specifically to the process of exchanging money for goods or services. The distribution channel refers to the path which goods or services take from producer to consumer. The supply chain refers to the network of businesses and suppliers involved in the creation and delivery of a product or service. The value chain refers to the overall set of activities involved in delivering value to customers, which includes all of the above as well as other processes like marketing and customer service.

Question 11

Which of the following functions of inventory is most likely to be included in a manufacturer's finished goods?

Accepted Answer

Anticipation is the function of inventory that is most likely to be included in a manufacturer's finished goods inventory. This is because finished goods inventory exists to meet anticipated demand, rather than to be used in production or to maintain operations. Rework, work in process, and MRO supplies are all related to production and operation processes, rather than finished goods inventory.

Question 12

Which of the following statements describes a primary function of distribution inventory?

Accepted Answer

The primary function of distribution inventory is to allow goods to be placed in close proximity to the customer, thus allowing for faster delivery times and lower transportation costs. It also helps to ensure that products are readily available to meet customer demand. Options A and B describe functions of safety inventory and production inventory, respectively, while option C describes a function of purchasing inventory.

Question 13

Which of the following terms represents a complete supply chain dedicated to the flow of products and materials for the purpose of returns, repair, remanufacture, or recycling?

Accepted Answer

Reverse logistics refers to a complete supply chain dedicated to the flow of products and materials for the purpose of returns, repair, remanufacture, or recycling. A responsible landfill refers to a waste management strategy for disposing of non-recyclable materials in an environmentally conscious way. Remanufacturing resource planning is a term that combines remanufacturing with resource planning, but it does not specifically refer to the flow of products and materials in reverse logistics. Global distribution refers to the process of distributing products worldwide, but it does not specifically refer to the reverse logistics supply chain.

Question 14

What is the order point when demand is 120 units per week, the lead time is 2 weeks, and safety stock is 60 units?

Accepted Answer

The order point is calculated as (Demand per week * Lead time) + Safety stock = (120 * 2) + 60 = 300 units.

Question 15

Which of the following statements best describes an example of advance ship notice?

Accepted Answer

An advance ship notice (ASN) is an electronic message that provides detailed information about a pending delivery, such as the contents of the shipment, transportation details, and expected delivery date. Option A best describes an example of an ASN as it indicates that an order has left the port of loading and provides information about the transportation of the shipment. The other options do not provide a clear description of what an ASN entails.

Exam 2: CPIM - Basics of Supply Chain Management