Introduction to Operations & Supply Chain Management, 5e (Bozarth)
Chapter 8 Logistics
8.1 Why Logistics Is Critical
1) What percent of North American gross domestic product from way back in 2012 was accounted for by
logistics?
A) almost 8 percent
B) almost 12 percent
C) almost 16 percent
D) almost 20 percent
2) Which of these is NOT a logistics activity?
A) material handling
B) inventory management
C) warehousing
D) inspection
3) The net result of the recent renaissance in logistics is that logistics costs are expected to decline.
4) Packaging is a logistics activity.
5) Define logistics and explain why it is critical.
8.2 Logistics Decision Areas
1) A logistics manager uses this type of logistics information system to select a carrier for an outgoing
shipment or to develop a weekly schedule of deliveries.
A) decision support
B) planning
C) execution
D) operating
2) The most detailed level of logistics information systems is the:
A) decision support system.
B) planning system.
C) material handling system.
D) execution system.
3) The transportation mode with the highest dollar value of freight in the United States is:
A) water.
B) rail.
C) highway.
D) pipeline.
4) The transportation mode other than highway with the highest annual tonnage in the United States is:
A) air.
B) water.
C) rail.
D) pipeline.
5) This transportation mode is often the most expensive on a per-pound basis.
A) air
B) rail
C) water
D) highway
6) The mode of transportation that is highly cost effective for bulky items but has relatively poor delivery
reliability and speed and the lowest number of convenient locations is:
A) highway.
B) water.
C) rail.
D) air.
7) Cargo is loaded and unloaded only once with:
A) direct truck shipment.
B) less-than-truckload shipment.
C) multimodal solutions.
D) None of these modes always has only one loading and unloading.
8) Which of these statements about inventory management is BEST?
A) Spot stock warehouses need less inventory to meet the needs of customers.
B) A system using air transportation experiences higher costs due to higher levels of inventory.
C) Cross-docking facilities don’t need to match incoming and outgoing demand since they typically retain
much of their inventory for a week or longer.
D) A system using water and rail transportation tends to have higher levels of inventory.
9) Which of the following describes consolidation warehousing?
A) Large shipments from multiple suppliers are re-sorted into customized shipments to individual stores.
B) A single manufacturer takes output directly from a single manufacturing plant and sends it directly to
a single customer.
C) A single manufacturer takes output from several of its manufacturing plants and combines them into
one shipment to a major customer.
D) A single manufacturer holds a wide array of goods close to the source of demand.
10) Hub and spoke systems are characterized by:
A) “spokes” that are represented by the sites that receive the goods.
B) “hubs” that hold inventory until the appropriate season or upswing in demand.
C) inventory locations that are close to producers, not customers.
D) warehouses that are used as sorting facilities.
11) One form of warehousing that features light manufacturing and packaging duties and allows firms to
put off final assembly or packaging until the last possible moment is:
A) assortment warehousing.
B) spot stock warehousing.
C) postponement warehousing.
D) pac-man warehousing.
12) The fireworks that were produced year-round in South Africa were sent to warehouses around the
United States during the months of May and June in anticipation of large demand for the July 4th
holiday. The warehousing system that is BEST suited to handle this situation is a(n):
A) assortment warehouse.
B) postponement warehouse.
C) spot stock warehouse.
D) break-bulk warehouse.
13) Which of the following is a type of material handling equipment?
A) 3PL
B) ASRS
C) LTL
D) RFID
14) The most detailed level of a logistics information system is the execution system.
15) A material handling system includes the equipment and procedures that are needed to move items
within a facility, between a facility and a transportation mode, and between different transportation
modes.
16) In the United States, the value of goods transported via highway is greater than the value of goods
transported by all other transportation modes.
17) Between any two locations, a less-than-truckload shipment probably experiences fewer stops and
handling than a direct truck shipment.
18) Roadrailers are considered a multimodal solution when they switch from rail to ground
transportation faster than you can say “Optimus Prime.”
19) Cross-docking is the reverse action of consolidation warehousing.
20) Assortment warehousing is a form of warehousing that combines classic operations with light
manufacturing and packaging duties in order to ensure short customer lead times.
21) Inventory pooling occurs when a warehouse operator fails to complete shipments and is left with
inventory that should be elsewhere.
22) The online tracking systems offered by overnight carriers are examples of logistics information
systems known as ________.
23) The ________ mode of transportation is highly cost effective for bulky items but has relatively poor
delivery speed and by far the fewest locations.
24) A(n) ________ uses more than one transportation mode through physical, information, and monetary
flows that are as seamless as possible.
25) It looked like a scene right out of the Transformers series, albeit in a far more functional format. With
the push of a button the rail car’s wheels folded up into the body of the car and wheels suitable for
highway transportation appeared out of nowhere. The whole process took only a minute or so and the
________ was ready to deliver steaming burritos to the growing crowd at the center of town.
26) ________ is a form of warehousing in which smaller outgoing shipments are created from large
incoming shipments.
27) The goods entered doors on one side of the massive building and crossed the floor to the other side,
where they were sorted and loaded on delivery trucks headed out on their delivery routes. The screams
of the workers were drowned out by the constant traffic from the nearby airport and rail yard, making
this an ideal ________ for the retail giant.
28) The printer manufacturer shipped all finished goods to a centrally located warehouse just down the
street from an international airport. When orders came in from one country, workers at the warehouse
added instruction manuals in that language and included a power supply that fit the appropriate
electrical distribution system. This is an example of ________.
29) Seasonal goods such as holiday decorations and recreational equipment may be placed in a(n)
________ close to the marketplace.
30) What are the three main categories of logistics information systems? What function does each serve?
31) Compare any four transportation modes by volume of goods moved in the United States and
apparent strengths and weaknesses.
32) What is multimodal transportation and why is it an attractive option?
33) Choose a major manufacturer and a major retailer and describe two types of warehousing each might
use and why they use it.
8.3 Logistics Strategy
1) A firm that is interested in consistent on-time delivery may be best to design their transportation and
warehousing system to include:
A) air transportation with a spot stock warehouse.
B) rail transportation with a consolidation warehouse.
C) water transportation with a hub and spoke warehouse.
D) pipeline transportation with a postponement warehouse.
2) A service firm that takes care of all of the logistics requirements for other companies is a:
A) common carrier.
B) contract carrier.
C) third party logistics provider.
D) freight forwarder.
3) Universal Exports has several crates it needs to send from the United Kingdom to North Korea. They
have located a firm that specializes in transferring cargo to the actual carrier that will bring the crates into
North Korea. This firm could be described as:
A) an intermediary
B) a customs broker.
C) a freight forwarder.
D) a mercenary.
4) Last year the Perfection Logistics Company delivered 3.1 million packages and damaged 45,000
deliveries, sent 28,000 to the wrong address, and was late 20,000 times. Assuming no package had more
than one error, Perfection’s percent perfect order is:
A) 93000
B) 3007000
C) 97%
D) 93.7%
5) Last year the Monroe Logistics Company reported 40,000 damaged deliveries, 18,000 deliveries to the
wrong address, 15,000 late deliveries, 1,200 deliveries billed incorrectly, and 127,000 deliveries handled
properly. Assuming no delivery had more than one error, Monroe‘s percent perfect order is:
A) 37%
B) 42%
C) 58%
D) 63%
6) Last year the Monroe Logistics Company reported 4,000 damaged deliveries, 1,000 deliveries to the
wrong address, 500 late deliveries, and 200 deliveries billed incorrectly. Assuming no delivery had more
than one error, how many deliveries were properly handled if their percent perfect order is 87%?
A) 38,145
B) 40,622
C) 43,845
D) 47,561
7) The drought of 2011 devastated hay crops in the plains states and horse owners ranged far and wide to
purchase hay for their horses when winter arrived. Hay can be purchased “up north” for $4 a bale and a
few entrepreneurs with large trailers were more than willing to pick up a few hundred bales and haul
them south where demand was high. The transportation cost was $6 per bale and a packing and loading
cost of $1 was typical. The landed cost of a bale of hay this winter was:
A) $4.
B) $6.
C) $10.
D) $11.
8) The landlord’s favorite place to buy shrimp in New Orleans was the Cajun Seafood market on
Claiborne and he did not hesitate to stock up on shrimp when he dropped by the shotgun double house
he bought as an investment a few years ago. Sadly, it was 685 miles one way to visit the property and
even though gas was available at $1.88 per gallon and the car achieved 25 miles per gallon, it was an
expensive trip. He packed a cooler with $12 worth of ice regardless of the quantity of shrimp he bought to
bring home. The shrimp were a bargain at $7.99 per pound for jumbos and he always tried to fit 35
pounds of the crustaceans in the cooler. What is the landed cost of a pound of shrimp?
A) $11.28
B) $9.80
C) $9.42
D) $8.78
9) The landlord’s favorite place to buy shrimp in New Orleans was the Cajun Seafood market on
Claiborne and he did not hesitate to stock up on shrimp when he dropped by the shotgun double house
he bought as an investment a few years ago. Sadly, it was 685 miles one way to visit the property and
even though gas was available at $1.88 per gallon and the car achieved 25 miles per gallon, it was an
expensive and lengthy trip. Therefore he bought the cheapest plane tickets he could muster at $299 round
trip and packed a cooler with $12 worth of ice. The shrimp were a bargain at $7.99 per pound for jumbos
and he always tried to fit 35 pounds of the crustaceans in the cooler. What is the landed cost of a pound of
shrimp?
A) $11.28
B) $16.88
C) $9.80
D) $14.78
10) The landlord’s favorite place to buy shrimp in New Orleans was the Cajun Seafood market on
Claiborne and he did not hesitate to stock up on shrimp when he dropped by the shotgun double house
he bought as an investment a few years ago. Sadly, it was 685 miles one way to visit the property and
even though gas was available at $1.88 per gallon and the car achieved 25 miles per gallon, it was an
expensive and lengthy trip. The cheapest plane tickets that were routinely available cost $199 round trip,
but occasionally there was a super sale where the price dropped lower than that. He always packed a
cooler with $12 worth of ice regardless of how much shrimp he actually bought. The shrimp were a
bargain at $7.99 per pound for jumbos and he always tried to fit 35 pounds of the crustaceans in the
cooler. What is the price of round trip airfare that would make the landed cost of a pound of shrimp the
same for both driving and flying?
A) $113
B) $169
C) $103
D) $147
11) Which of these statements about reverse logistics is BEST?
A) Reverse logistics systems are usually less cost-efficient than forward-based systems.
B) Reverse logistics systems are usually designed to be less flexible than forward-based systems.
C) Reverse logistics systems usually play no role in customer satisfaction.
D) Reverse logistics systems usually use the same processes and players that comprise the forward-based
system.
12) Your new Garden Weasel fails to “completely satisfy” you so you decide to return it for a full refund.
What is the name of the system that will carry your weasel back to the manufacturer?
A) upstream logistics
B) reverse ordering
C) upstream ordering
D) reverse logistics
13) The Hurricane Fur Wizards that sold two for $19.99 in July began to make their way back to the
supplier in late August thanks to numerous design flaws and some rather spectacular headlines. Which
of these statements is most likely true?
A) The Hurricane Fur Wizards will come back to the supplier in their original packaging.
B) The Hurricane Fur Wizards will return to the manufacturer on a well-established and predictable
schedule.
C) On a per-unit basis, the return of the Hurricane Fur Wizards will likely cost more than their original
shipping cost.
D) A single carrier will be employed to bring all Hurricane Fur Wizards back to the supplier.
14) A company interested in consistently achieving a high level of on-time delivery would be best served
by the highway or air modalities of transportation.
15) The difference between a contract carrier and a common carrier is that the common carrier handles
shipments on a case-by-case basis while the contract carrier handles shipments based on long-term
contracts.
16) Ocho deposited the package neatly on the front porch — it was exactly what Lisa ordered, delivered
on time and in the right quantity. Ocho’s delivery system has completed a perfect order.
17) The perfect order measures how effectively logistics serves the customer while the landed cost
measures how efficiently logistics provides that service.
18) The landed cost is the sum of all of the logistics activities from packaging at the producer’s site
through transportation, handling, customs, and any other logistics fees to the point of shipping.
19) A reverse logistics system handles repairs, recycling, returns and remanufacturing.
20) An optimal design for a reverse logistics system is usually a simple reversal of the forward logistics
system.
21) A(n) ________ can handle shipments on an as-needed basis with no long-term contract required.