Introduction to Operations and Supply Chain Management, 4e (Bozarth/Handfield)
Chapter 8 Logistics
Learning Objective 8-1
1) Packaging is a logistics activity.
2) The net result of the renaissance in logistics is that logistics costs are expected to decline.
3) Which of these is NOT a logistics activity?
A) material handling
B) inventory management
C) warehousing
D) inspection
4) What percent of North American gross domestic product is accounted for by logistics?
A) almost 8 percent
B) almost 12 percent
C) almost 16 percent
D) almost 20 percent
5) Define logistics and explain why it is critical.
Learning Objective 8-2
1) In the United States, the value of goods transported via highway is greater than the value of
goods transported by all other transportation modes.
2) Between any two locations, a less-than-truckload shipment probably experiences fewer stops
and handling than a direct truck shipment.
3) Roadrailers are considered a multimodal solution when all of their capabilities are utilized.
4) Cross-docking is essentially the reverse flow from consolidation warehousing.
5) Assortment warehousing is a form of warehousing that combines classic operations with light
manufacturing and packaging duties in order to assure short customer lead times.
6) The most detailed level of a logistics information system is the execution system.
7) A material handling system includes equipment and procedures that are needed to move items
within a facility, between a facility and a transportation mode, and between different
transportation modes.
8) Inventory pooling occurs when a warehouse operator fails to complete shipments and is left
with inventory that should be elsewhere.
9) The transportation mode with the highest dollar value of freight in the United States is:
A) water.
B) rail.
C) highway.
D) pipeline.
10) The transportation mode other than highway with the highest annual tonnage in the United
States is:
A) air.
B) water.
C) rail.
D) pipeline.
11) This transportation mode is often the most expensive on a per pound basis.
A) air
B) rail
C) water
D) highway
12) The mode of transportation that is highly cost effective for bulky items but has relatively
poor delivery speed is:
A) highway.
B) water.
C) rail.
D) air.
13) 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.
14) Which of the following is an example of 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.
15) 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.
16) 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.
17) 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 the:
A) assortment warehouse.
B) postponement warehouse.
C) spot stock warehouse.
D) break-bulk warehouse.
18) 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
19) The most detailed level of logistics information systems is the:
A) decision support system.
B) planning system.
C) material handling system.
D) execution system.
20) Which of the following is a type of material handling equipment?
A) 3PL
B) ASRS
C) LTL
D) RFID
21) Which of these statements about inventory management is BEST?
A) Spot stock warehouses are more useful with less inventory in the system.
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.
22) The ________ mode of transportation is highly cost effective for bulky items but has
relatively poor delivery speed.
23) A(n) ________ uses more than one transportation mode through physical, information, and
monetary flows that are as seamless as possible.
24) 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.
25) ________ is a form of warehousing in which smaller outgoing shipments are created from
large incoming shipments.
26) The goods entered doors on one side of the massive building and crossed the floor to the
other side, where they were 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.
27) 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 ________.
28) Seasonal goods such as holiday decorations and recreational equipment may be placed in
a(n) ________ close to the marketplace.
29) The online tracking systems offered by overnight carriers are examples of logistics
information systems known as ________.
30) Compare any four transportation modes by volume of goods moved in the United States and
apparent strengths and weaknesses.
31) Choose a major manufacturer and a major retailer and describe two types of warehousing
each might use and why they use it.
32) What are the three main categories of logistics information systems? What function does
each serve?
Learning Objective 8-3
1) 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.
2) 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.
3) The perfect order measures how effectively logistics serves the customer while the landed cost
measures how efficiently logistics provides that service.
4) 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 sale.
5) A reverse logistics system handles repairs, recycling, returns and remanufacturing.
6) A firm that is interested in consistent on-time delivery would probably 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.
7) 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.
8) 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%
9) 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%
10) 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
11) 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.
12) 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
13) 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
14) 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) $112.85
B) $168.87
C) $103.02
D) $147.26