Test Database
Chapter 4 – Designing Channel Networks
True or False
1.
2.
3.
4.
5.
A distribution channel includes only those organizations involved in finished
goods delivery.
a.
True
b.
False
A channel network consists of supplier and distribution organizations.
a.
True
b.
False
The objective of every supply and distribution channel is to maximize the
overall value generated.
a.
True
b.
False
There is a close relationship between channel network design and the success
of the overall channel network.
a.
True
b.
False
When designing a supply and distribution channel, the role of each channel
entity is significant because it will determine the level of flexibility the channel possesses to respond to demand changes.
a.
True
b.
False
2
6.
7.
8.
9.
If a company’s production technology enables significant economies of scale,
designing a distribution channel with many locations is the most effective decision.
a.
True
b.
False
If facilities have lower fixed costs, the creation of a distribution network with
many facilities is preferred because this helps to lower transportation costs.
a.
True
b.
False
Inventory and facility costs decrease as the number of facilities in a distribution channel increase
a.
True
b.
False
Transportation costs increase as the number of facilities is increased.
a.
True
b.
False
10. Outbound transportation costs per unit tend to be lower than inbound costs
because outbound lot sizes are typically larger.
a.
True
b.
False
Multiple Choice
11. Market penetration intensity describes
a. How many echelons deep in the delivery network producers or intermediaries must go to deliver goods to customers.
b. The level of integration forward or horizontally a company chooses to pursue in the delivery channel.
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c. The number of intermediaries needed to bring products to the customer.
d. How the manufacturing process choice affects the scope and depth of the
partnership existing with primary and deeper echelons.
12. Distribution intensity describes
a.
How many echelons deep in the delivery network producers or intermediaries must go to deliver goods to customers.
b.
The level of integration forward or horizontally a company chooses to
pursue in the delivery channel.
c.
The number of intermediaries needed to bring products to the customer.
d.
How the manufacturing process choice affects the scope and depth of the
partnership existing within primary and deeper echelons.
13. Supply integrative intensity describes
a.
How many echelons deep in the supply channel a manufacturer will seek
to go in the planning and acquisition of inventory.
b.
How far back in the supply channel a company is able to control product
sourcing.
c.
How the process choice affects the scope and depth of channel supply
partners.
d.
The level of integration forward or horizontally a company chooses to
pursue in the delivery channel.
14. The number of different products/configurations that a customer desires from
the distribution network refers to
a.
Response time.
b.
Product variety.
c.
Product availability.
d.
Customer experience
15. An example of forward vertical integration in a distribution channel would be
when a company:
a.
Invests in a company selling related products
b.
Acquires a distributor of its products
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4
c.
Forms a strategic alliance with a key supplier
d.
Joins an industry advocacy association
16. Change is one of the constants of channel design management. Which of the
following reasons for supply and distribution channels best responds to this
factor?
a. Customer service
b. Relocation
c. Flexibility and scalability
d. Decentralization
17. A company needs to move product closer to the customer marketplace to reduce lead times. Which of the following reasons for supply and distribution
channels best responds to this factor?
a. Rationalization
b. Decentralization
c. Product diversification
d. Relocation
18. Which of the following channel design considerations focuses on determining
the capabilities of channel facilities to meet expected performance targets?
a.
Capacity allocation
b.
Supply and distribution integrative intensity
c.
Logistics cost management
d.
Customer delivery performance
19. A supply and distribution channel consisting of a loose arrangement of business that intermittently and opportunistically coalesce with channel specialists
in the buying and selling of goods is defined as a
a.
Transaction-based system.
b.
Limited channel system.
c.
Federated network system.
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d.
Partnership and alliance.
20. A supply and distribution channel where two or more firms integrate core
competencies and resources in the pursuit of a common strategy is defined as
a:
a. Transaction based system.
b. Limited channel system.
c. Federated network system.
d. Partnership and alliance.
21. The process of moving products from the producer to the customer is best
termed
a.
b.
c.
d.
Transportation
Retailing
Wholesaling
Distribution
22. The number of different products or configurations desired from the distribution channel is
a.
b.
c.
d.
Response time
Product variety
Product availability
Customer experience
23. The cost incurred to bring inventory into a facility are termed
a.
b.
c.
d.
Sourcing transportation costs
Outbound transportation costs
Cross-docking costs
Inbound transportation costs
24. As the number of facilities in a channel network increase
a.
b.
Inventory and resulting inventory costs increase
Inventory and resulting inventory costs decrease
5
6
c.
d.
Inventory increases and resulting inventory costs decrease
Inventory decreases and resulting inventory costs increase
25. Which of the following process types would have the lowest distribution intensity?
a.
b.
c.
d.
Project
Job shop
Batch
Continuous
26. Which of the following is an advantage of the producer storage with direct delivery option?
a.
b.
c.
d.
Transportation costs are low because the average outbound distance to
the end consumer is small and package carriers are used to ship the product.
Supply chains save on the fixed cost of facilities, because the need for
other warehousing space in the supply chain has been eliminated.
Response times tend to be small because the order has to be transmitted
from the retailer to the manufacturer.
Order tracking is easy to implement because of the complete integration
of information systems at both the retailer and the manufacturer.
27. A channel system in which dependencies between buyers and sellers are characterized as temporary, opportunistic, and can be dissolved at a moment’s notice is described as a
a.
b.
c.
d.
Transaction-based system
Limited channel system
Federated network system
Partnership or alliance system
28. For a make-to-order manufacturer of specialized products, when architecting
strategic supply chain performance goals which one of the following performance drivers would be of low importance?
a.
b.
c.
d.
Customer focus
Channel design
Transportation
Inventory
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29. The channel network model that would contain the very widest product variety would most likely be the
a.
b.
c.
d.
Producer storage with direct delivery
Producer storage with drop ship
Producer with extended channel network
Aggregator with extended channel network
30. Channel planners focused on achieving high customer responsiveness will
most likely
a.
b.
c.
d.
Locate facilities close to the markets they serve
Locate facilities according to low cost criteria
Locate facilities in a high cost area to better serve the market
Locate facilities to maximize on low transportation costs
31. Using the location break-even analysis method using which of the following
as the main criterion for the selection of a location
a.
b.
c.
d.
Delivery time
Lead time
Cost
Transportation
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Answer Key
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F
T
T
T
T
F
T
F
F
F
a
c
b
b
b
c
b
a
b
d
d
b
d
a
a
b
b
d
d
a
c