University of Maryland College Challenge Questions:
____ 1. The channel practice in which a seller requires a buyer to purchase a second product, in
addition to the original product of interest, is called:
A. exclusive dealing
B. tying
C. vertical integration
D. resale price maintenance
E. dual distribution
____ 2. At a minimum, the price negotiated with a supplier must cover:
A. the supplier's variable costs
B. the supplier's fixed costs
C. the supplier's allocated overhead
D. the supplier's profit margin
E. the supplier's general and administrative expenses
____ 3. Which of the following is not a common carrier exception for liability?
A. act of public authority
B. act of the shipper
C. act of God
D. act of a public enemy
E. inherent nature of the carrier's operations
____ 4. A manufacturer sells its product F.O.B. origin point. Due to carrier negligence, the
common carrier misplaces the shipment and now cannot find it. Who files the loss &
damage claim?
A. the shipper
B. the receiver
C. the carrier
D. the Surface Transportation Board
E. not enough information is given to determine who is responsible for filing the
claim
____ 5. Which of the following should be the least important criterion used when selecting a
vendor:
A. quality
B. location
C. reliability
D. reciprocity
E. price
____ 6. Assuming constant usage, an increase of 100 units in the order quantity will cause:
A. an increase of 100 units in average inventory
B. a decrease in average inventory of 100 units
C. an increase in average inventory of 50 units
D. a decrease of 50 units in average inventory
E. cannot be determined--not enough information given
____ 7. All of the following are assumptions of the simple EOQ model except:
A. price is dependent on quantity
B. no inventory in transit
C. continuous, constant, and known rate of demand
D. satisfaction of all demand occurs
E. all of the above are assumptions of the simple EOQ
____ 8. EDI:
A. can improve customer service through the automation of order processing
B. stands for Economic Determined Inventory, a variant of JIT used in the
pharmaceuticals industry
C. has few practical applications for managers
D. increases the amount of paperwork for a company
E. none of the above
____ 9. Which one of the following is an impossible description of a raw material?
A. ubiquitous and pure
B. weight losing and ubiquitous
C. pure and localized
D. weight losing and pure
E. none of the above
____ 10. Listed below are four sets of possible terms of sale which could apply to the purchase
of inbound materials and to the sale of finished product. Assuming that Pittsburgh
Printing Corp. (PPC) receives materials and ships product, which of the following
requires PPC to pay for all transportation, both inbound and outbound?
A. buy materials F.O.B. destination; sell product F.O.B. destination
B. buy materials F.O.B. destination; sell product F.O.B. origin
C. buy materials F.O.B. origin; sell product F.O.B. origin
D. buy materials F.O.B. origin; sell product F.O.B. destination
E. none of the above, F.O.B. sale terms do not designate who pays the carrier
____ 11. The use of localized weight losing raw materials would tend to pull the location of a
production facility:
A. toward the market because of lower production costs
B. toward the raw materials source because of higher stockout costs
C. toward the market because of lower transportation costs
D. toward the raw materials source because of lower transportation costs
E. in either direction because lower transportation costs are offset by production
savings
____ 12. The time between when the customer initiates the order and the order is received by the
seller is called the:
A. order cycle time
B. order transmittal time
C. order processing time
D. order delivery time
E. order follow-up time
____ 13. If demand increases by 10 percent and the value of each unit increases by 10 percent,
what will happen to the EOQ? (Assume that everything else remains the same).
A. the EOQ will increase by 10 percent
B. the EOQ will increase by 20 percent
C. the EOQ will decrease by 10 percent
D. the EOQ will decrease by 20 percent
E. the EOQ will remain the same
____ 14. When a company implements a cycle count program, which items should be counted
most frequently:
A. A items
B. B items
C. C items
D. D items
E. all items should be counted with the same frequency
____ 15. The primary advantage of employing variable slot locations within a warehouse is:
A. ease of record keeping
B. increased space utilization
C. more logical and simple product layout
D. decreased need for computerized control
E. faster moving items naturally gravitate toward the most accessible locations
Answers:
1
2
3
4
5
B
A
E
B
D
6
7
8
9
10
C
A
A
D
D
11
12
13
14
15
D
B
E
A
B
101.
All of the following are characteristics of a supply chain management perspective (as
opposed to a more traditional view of logistics/conventional channels), except:
a. Members of the supply chain acknowledge interdependence
b. Inventories are used as a mechanism of first, rather than last resort
c. The supply chain is viewed as a single entity: competition is not with other firms
in the supply chain but with other supply chains
d. Supply chains are actively managed in both the upstream and downstream
directions
Answer: B. Inventories are used as a mechanism of last, rather than first resort.
102.
Ocean transportation providers that are common carriers and that sail on a regular
schedule are best known as:
a. Liner Operations
b. Tramp Operations
c. Specialized Vessel Operations
d. Private Vessel Operations
Answer: A. Liner Operations.
103.
Cargo that is in free form and loaded by shovel, pump, bucket, or scoop would be
categorized as:
a. Containerized Cargo
b. Neobulk Cargo
c. Break-bulk Cargo
d. Bulk Cargo
Answer: D. Bulk Cargo.
104.
This international organization was established to facilitate cooperation among governments
on technical matters affecting shipping, in terms of safety and pollution prevention:
a. ILO
b. INMARSAT
c. IMO
d. ISO
e. None of the above
Answer: C. IMO
105.
In international water transportation, when a shipper (charterer) is responsible for
providing cargo and crew, this is know as a
a. Demise charter party
b. Voyage charter
c. Non-demise charter party
d. None of the above
Answer: A. Demise Charter Party
106. Advantages of containerization include all of the following except:
a. Reduced packaging
b. Allows through rates to be more readily quoted
c. More competitive rates
d. Facilitates door-to-door service
e. Reduces backhaul problems
Answer: E. Reduces backhaul problems.
107.
One of the most formidable competitors to Air Express Carriers is
a. All-Cargo Carriers
b. Passenger-Cargo Carriers
c. Courier Service
d. Fax and EDI
e. Freight Forwarders
Answer: D. Fax and EDI.
108.
Companies that enter the international marketplace have a number of channel/distribution
strategies available to them. If maximum control over the marketing mix was important and
risk was not a factor, a firm would likely employ the following strategy:
a. exporting
b. importing
c. joint venture
d. licensing
e. ownership
Answer: E.
109.
This type of channel intermediary can handle nearly all logistical aspects of a transaction,
acts like a wholesaler in marketing channels, and purchases transportation in bulk then
consolidates small shipments into larger shipments that move at a lower rate
a. Export Management Company
b. Export Trading Company
c. Customs Broker
d. Goods Surveyors
e. Freight forwarder
Answer: E. Freight Forwarder.
110.
This type of channel intermediary actually buys a manufacturer's goods and sells them
in export markets, and is thus a customer of the manufacturer in selected markets.
a. Export Management Company
b. Export Trading Company
c. Customs Broker
d. Goods Surveyors
e. Freight forwarder
Answer: B.
111.
An international customer asks you to pay for the movement of books from the U.S. all the
way to the port of Christchurch in New Zealand. This would be an example of:
a. Ex Works (EXW)
b. Free Carrier (FCA)
c. Free Alongside Ship (FAS)
d. Cost and Freight (CFR)
e. Cost, Insurance, and Freight Paid (CIP)
Answer: D. CFR.
112.
This document is the exporter's quotation for the goods s/he is offering to ship
a. Bank Letter
b. Shipper's Export Declaration (SED)
c. Pro Forma Invoice
d. Packing Slip
Answer: C. Pro Forma Invoice.
113.
This document is a guarantee by a bank that it will pay the "beneficiary" upon
presentation of certain papers showing that the conditions of the document have been
satisfied
a. Bank Letter
b. Commercial Invoice
c. Letter of Credit
d. Open Account
Answer: C.
114.
The payment alternative that involves the highest risk to the buyer is:
a. Buyer pays in advance
b. Sight draft
c. Commercial invoice
d. Open account
Answer: A.
115.
This document is a summation of the entire international transaction between a buyer
and seller, and is used by Customs to clear goods:
a. Bank Letter
b. Commercial Invoice
c. Confirmed Letter of Credit
d. Letter of Credit
Answer: B.
116.
All of the following are examples of factors that might influence the site specific
location decision, except:
a. Access to rail siding
b. Traffic Patterns
c. Parking Availability
d. Favorable Labor Climate
Answer: D.
117.
"Buffer Stock" (or safety stock) refers to:
a. Inventory kept in the event of unexpected demand during lead time
b. Inventory that is ordered in one season to cover sales in the next season
c. Inventory that is in transit between the seller and the buyer
d. Inventory held in anticipation of normal sales
Answer: A. ‘D’ is an incorrect answer, as it refers to Anticipation Inventory.
118.
Which of the following is an example of DEPENDENT DEMAND?
a. 100 cans of beans on a grocery store shelf
b. 100 backpacks ordered by the UMCP bookstore
c. 100 reams of paper in the stockroom of an accounting department in a
manufacturing firm
d. 100 speakers needed to assemble 50 stereo systems for a customer order
e. None of the above
Answer: D.
119.
The primary purpose of the reorder point quantity is
a. To determine the number of units to reorder
b. To determine the maximum number of units to have in inventory
c. To determine when to place an order
d. To determine the number of units to make in a batch
Answer: C.
120.
Your firm's annual demand is "D" and you order "Q" units at a time. Your average cycle
stock is:
a. Q units
b. D divided by Q
c. Q divided by D
d. Q divided by 2
Answer: D.
121.
The total annual cost formula for inventory is expressed as TC = Q/2(IP)+D/Q(S). In this
formula, what does the value of D/Q represent?
a. The order quantity
b. The average reorder point
c. The annual number of orders or setups
d. By itself it has no specific meaning; it is just a part of the formula
Answer: C.
122.
Inventories of partially completed units are called:
a. OPM
b. MRO
c. WIP
d. EOQ
Answer: C.