Chapter 15: Global Distribution and Logistics
TRUE/FALSE
1. The connections made by marketing institutions are unidirectional and flow downward from the
producer.
2. The use of intermediaries will automatically lead to loss of some control over the marketing of the
firm’s products.
3. Agents have more freedom of movement than distributors.
4. Marketers attend trade fairs to get data on intermediaries in the industry.
5. Facilitating payments by providing a small fee to expedite paperwork through customs is considered
illegal.
6. Parallel importation refers to illegally manufactured items that are smuggled into a market.
7. In international logistics, the objective of the total cost concept is to minimize total cost rather than
maximize after-tax profits.
8. Close collaboration with customers is required in order to develop a just–in-time inventory system.
9. International firms experience ongoing increases in their logistics cost.
10. Currency variation in international logistics forces corporations to adjust planning to incorporate
changes in exchange rates.
11. Tramp service is available for regular routes and is at service at all times.
12. High-value items are more likely to be shipped by air, particularly if they have a high density.
13. Low-priced items can absorb transportation costs more easily than high-priced goods.
14. A bill of exchange is a document that acknowledges the receipt of goods and represents the basic
contract between the shipper and the carrier.
15. A customs broker serves as an agent for an importer with authority to clear inbound goods through
customs and ship them on to their destination.
16. Firms using just-in-time inventory policies will choose suppliers on the basis of their delivery and
inventory performance.
17. By increasing inventories before an imminent devaluation of a currency instead of holding cash, the
corporation can reduce its exposure to devaluation losses.
18. According to an ABC analysis, products for which immediate delivery is not urgent are classified as
“C” products.
19. The responsibility for appropriate packaging in logistics rests with the shipper of goods.
20. Reverse distribution systems ensure that the firm not only delivers the product to the market but can
also retrieve it for subsequent use.
MULTIPLE CHOICE
1. Which of the following is true about channels of distribution?
a.
Their role is limited to providing essential linkages that connect raw material suppliers
with manufacturers.
b.
They are independent agents who work to achieve individual, personal goals.
c.
They are the partners with whom marketing efforts are planned and implemented.
d.
They are temporary market-entry vehicles.
2. The term “_____” refers to the length and width of the channel employed.
a.
channel bandwidth
b.
channel capacity
c.
channel freight
d.
channel design
3. Which of the following is a factor that determines channel design?
a.
Documentation required
b.
Competition involved
c.
Transport modes chosen
d.
Level of inventory stocked
4. Hybrid channels differ from dual channels in that hybrid channels:
a.
have one tier of distributors and resellers.
b.
use a single channel to enhance sales performance in a foreign market.
c.
are based more on cooperation and partnership.
d.
lead to conflicts if disagreements arise as to who is to handle a specific customer.
5. Which of the following statements is true of the factors that determine channel design?
a.
The stronger the marketer’s finances, the more able the firm is to establish channels it
either owns or controls.
b.
The number of areas to be covered is independent of the time elapsed since the product’s
introduction to the market.
c.
The longer the channel, the more easier it is for the marketer to have a final say over
pricing, promotion, and so on.
d.
The looser the relationship is between the marketer and the intermediaries, the more
control can be exerted.
6. In managing channel relationships, vertical trading restrictions result from:
a.
geographic separation.
b.
separate ownership.
c.
cultural separation.
d.
different rules of law.
7. Which of the following best describes gray markets?
a.
They are markets where goods or services are illegally trafficked outside the formal ones
supported by established state power.
b.
They are legal markets for goods and services where all the distribution takes place
through legal channels.
c.
They refer to the distribution of used, repaired, recycled, or discontinued products that are
in working condition through legal brokers and resellers.
d.
They refer to authentic and legitimately manufactured trademark items that are produced
and purchased abroad but imported by bypassing designated channels.
8. The exchange of goods and services via the use of smart mobile handheld devices that allow Web
browsing is known as _____.
a.
outsourcing
b.
autonomic networking
c.
m-commerce
d.
communication security
9. _____ is the design and management of a system that controls the flow of materials into, through, and
out of the international corporation.
a.
M-commerce
b.
Statistical process control
c.
Autonomic networking
d.
International logistics
10. Electronic data interchange (EDI) aims for:
a.
manual recording of all customer data.
b.
providing a platform for customers to interact with each other globally.
c.
standardizing and eliminating the wastes during manufacturing.
d.
more efficient order processing.
11. The _____ phase in logistics involves the movement of the firm’s finished product to its customers.
a.
materials management
b.
quality assurance
c.
physical distribution
d.
production management
12. What is the goal of logistics management?
a.
To ensure that marketing effort is sponsored by an organization that solicits responses
from individuals who share common interests and activities.
b.
To effectively coordinate the materials management and physical distribution phases and
their various components to result in maximum cost-effectiveness while maintaining
service goals and requirements.
c.
To aim for high growth and profits by creating new demand in an uncontested market
space rather than by competing head–to-head with other suppliers for known customers in
an existing industry.
d.
To gather volunteers to try products and then rely on them to talk about their experiences
with friends and colleagues.
13. Which of the following logistics concepts is based on the notion that materials-flow activities within
and outside of the firm are so extensive and complex that they can be considered only in the context of
their interaction?
a.
Aggregation concept
b.
Operating concept
c.
Inert concept
d.
Systems concept
14. The purpose of the _____ concept is to minimize the firm’s overall logistics cost within the entire
system.
a.
aggregation
b.
total cost
c.
inert
d.
trade-off
15. The _____ concept recognizes the linkages within logistics systems that result from the interaction of
their components.
a.
trade-off
b.
total cost
c.
systems
d.
operating
16. Which of the following encompasses the planning and management of all activities involved in
sourcing and procurement, conversion, and logistics?
a.
Supply chain management
b.
Scientific management
c.
Six Sigma
d.
Lean manufacturing
17. Which of the following is NOT one of the guideposts that the experienced manager uses for logistics
decisions?
a.
Development of heuristics
b.
Industry comparison
c.
Intimate knowledge of trends
d.
Demographics of the population
18. The period between departure and arrival of a carrier is called the _____.
a.
waiting time
b.
transit time
c.
transfer time
d.
lag time
19. Which of the following is an import document required during an international shipment?
a.
Bill of lading
b.
Collateral assurance
c.
Promissory note
d.
Letter of credit
20. Which of the following is the most important document to the shipper, the carrier, and the buyer?
a.
Promissory note
b.
Surety bond
c.
Bill of lading
d.
Letter of intent
21. The shipper’s export declaration:
a.
may be a negotiable instrument in that it may be endorsed to other parties or may be
nonnegotiable.
b.
acknowledges receipt of the goods, represents the basic contract between the shipper and
the carrier, and serves as evidence of title to the goods for collection by the purchaser.
c.
is the most important document to the shipper, the carrier, and the buyer.
d.
is a document that states proper authorization for export and serves as a means for
governmental data-collection efforts.
22. Which of the following acts as an agent for the marketer in moving cargo to an overseas destination?
a.
International customs broker
b.
International freight forwarder
c.
Consignee
d.
Stevedore
23. The expense of maintaining inventories is called _____.
a.
inventory sunk costs
b.
inventory marginal costs
c.
inventory carrying costs
d.
inventory opportunity costs
24. Which of the following minimizes the volume of inventory by making it available only when it is
needed for the production process?
a.
Lean manufacturing
b.
Total productive maintenance
c.
Just-in-time
d.
Six Sigma
25. Which of the following best describes order cycle time?
a.
The total lifespan of a product ranging from production to consumption
b.
The total time that passes between the placement of an order and the receipt of the
merchandise
c.
The total time spent in transit by an ordered product
d.
The period between departure and arrival of the carrier
26. Which of the following is true about order cycle time?
a.
In domestic marketing, the order cycle is frequently longer than in international business.
b.
Order transmission times remain the same internationally irrespective of the mode of
communication used.
c.
The international marketer should attempt to increase the consistency without an increase
in total costs.
d.
The international marketer should attempt to increase order cycle time without an increase
in total costs.
27. International inventories can be used by the international corporation as a strategic tool in dealing with
currency valuation changes or in hedging against inflation. Which of the following statements is true?
a.
By decreasing inventories before an imminent devaluation of a currency instead of holding
cash, a corporation may reduce its exposure to devaluation losses.
b.
In the case of high inflation, holding small inventories provides an important inflation
hedge.
c.
If an increase in tax payments outweighs the hedging benefits to a corporation, the firm
needs to increase inventories before devaluation occurs.
d.
The international inventory manager must balance the cost of maintaining high levels of
inventories with the benefits accruing to the firm from hedging against inflation or
devaluation.
28. Which of the following is a method for classifying products that are most sensitive to delivery times?
a.
Economic impact analysis
b.
ABC analysis
c.
Cost-benefit analysis
d.
CPM analysis
29. Which of the following statements is true of “A” products in an ABC analysis?
a.
They are products that are stocked in all distribution centers, and safety stock levels would
be kept high.
b.
They are products for which immediate delivery is not urgent.
c.
They are products that are stored only at selected distribution centers around the world.
d.
They are products for which short delivery time is not important and hence they are
stocked only at headquarters.
30. _____ refers to the shifting of traditional corporate activities to parties outside of the firm and often
outside of the country.
a.
Expediting
b.
Outsourcing
c.
Warehousing
d.
Onshoring
31. Which of the following is true about foreign trade zones?
a.
They enforce duty payment for all merchandise.
b.
Duty payments are not due when the merchandise is shipped into the country from the
foreign trade zone.
c.
If the merchandise is shipped abroad from these zones, no duty payments are ever due.
d.
They are considered, for purposes of tariff treatment, to be within the customs territory of
the country in which they are located.
32. The responsibility for appropriate packaging rests with the _____ of goods.
a.
freight forwarder
b.
shipper
c.
carrier
d.
consignee
33. Which of the following statements about third-party logistics is true?
a.
Firms will be able to maintain higher levels of control if they outsource their logistics
operations to third parties.
b.
Third-party logistics provide logistics services at very high costs.
c.
Third-party logistics usually provide low-quality services.
d.
Third-party logistics providers have the knowledge and means to perform efficient and
innovative services for firms.
34. Which of the following systems is instrumental in ensuring that a firm not only delivers the product to
the market, but also can retrieve it from the market for subsequent use, recycling, or disposal?
a.
Continuous review systems
b.
Perpetual inventory systems
c.
Periodic inventory systems
d.
Reverse distribution systems
35. Which of the following is true about reverse logistics?
a.
Reverse logistics management is highly specialized.
b.
Retrieval of items in reverse logistics is restricted to short-term consumer goods.
c.
Reverse logistics refers to the shifting of traditional corporate activities to parties outside
of the country.
d.
Traditionally, businesses have focused on reverse logistics.
ESSAY
1. Identify the reasons for the termination of a channel relationship.
2. How can inventory be used as a strategic tool? Give an example.
3. Why are reverse distribution systems important?