CLM College Challenge Questions
1) Customer service involves maximizing __________ and __________ utilities to
the firm’s suppliers, intermediate customers, and final customers.
a.
b.
c.
d.
e.
time, possession
possession, form
form, place
place, time *
place, possession
2) Obsolescence, pilferage, and product damage would be examples of which
component of inventory carrying costs?
a.
b.
c.
d.
e.
capital costs
inventory risk costs - *
inventory service costs
opportunity costs
storage space costs
3) Efficient consumer response (ECR) would include all of the following strategies
except:
a. continuous replenishment of inventory and flow through distribution
b. cooperative relationships between manufacturers, distributors, suppliers,
and customers
c. greater use of point-of-sale data obtained by greater and more accurate use
of bar coding
d. implementation of electronic data interchange (EDI) up and down the
supply chain
e. increasing use of special deals and promotions to encourage larger
purchases - *
4) If demand and lead time are constant, only __________ is necessary.
a.
b.
c.
d.
e.
associated stock
cycle stock - *
safety stock
speculative stock
seasonal stock
5) The fixed order point, fixed order quantity model:
a. compares current inventory with forecast demand and places an order for
the necessary quantity at a regular specified time
b. places an order where the inventory on hand an on order reaches a
predetermined minimum level required to satisfy demand during the order
cycle - *
c. uses multiple regression analysis that compares current inventory with
forecast demand
d. places an order based on environmental scanning of competitors’
inventories
e. none of the above
6) Assuming the annual inventory carrying cost is equal to 25%, the annual demand
is equal to 5,000 units, the ordering cost is equal to $20 and the average cost or
value of one unit of inventory is $200, then the economic order quantity (EOQ)
would be calculated to be:
a.
b.
c.
d.
e.
124 units
86 units
200 units
63 units - *
50 units
7) All of the following are assumptions of the EOQ except:
a.
b.
c.
d.
e.
constant and known rate of demand
consistent lead time
no stockouts allowed
capital availability is limited - *
no inventory in transit
8) Inventory carrying costs generally include:
a.
b.
c.
d.
e.
capital costs
inventory service costs
inventory risk costs
the fixed costs associated with a company-owned warehouse
A, B, and C only - *
9) Assume that a company has sales of $750,000 (measured at cost, not sales price).
Also assume that the firm’s inventory turn is equal to 2 and the inventory carrying
costs are equal to 40%. If inventory turns were increased from 2 to 4, this would
result in decreasing inventory carrying costs by:
a.
b.
c.
d.
e.
$150,000
$300,000
$750,000
$75,000 - *
none of the above are correct
10) Increasing inventory turns beyond the optimum level may:
a.
b.
c.
d.
e.
improve corporate profitability
increase average inventory
increase other logistics costs - *
B and C only
A, B and C
11) Which of the following activities would not be included within reverse logistics?
a.
b.
c.
d.
e.
finished goods distribution - *
recycling
product and packaging reuse
salvage and scrap disposal
waste disposal
12) Which of the following statements about just-in-time (JIT) is FALSE?
a. JIT helps to reduce manufacturing cycle times
b. JIT has been defined as a philosophy that centers on the elimination of
waste in the manufacturing process
c. JIT seeks to eliminate non-value-added activities
d. JIT helps a firm to reduce its overall material costs
e. JIT programs usually do not impact inventory turnover rates - *
13) Which of the following is not a benefit associated with successful implementation
of MRP systems?
a.
b.
c.
d.
e.
better manufacturing control
higher inventory turnover ratio(s)
more accurate and timely information
reduction in purchasing costs due to fewer orders being placed - *
work force overtime is minimized
14) Which transport mode is characterized by fast time-in-transit, moderate
availability, high consistency of service, low loss and damage rates, and low to
moderate flexibility with respect to meeting customer needs?
a.
b.
c.
d.
e.
Air - *
motor
pipeline
rail
water
15) An international intermodal service in which foreign cargo crosses a country en
route to another country (e.g., Europe to US via ocean, across US by rail, and US
to Japan via ocean) is referred to as:
a.
b.
c.
d.
e.
landbridge - *
microbridge
minibridge
minilandbridge
none of the above answers are correct
16) Benefits to a carrier of improved routing and scheduling include all of the
following except:
a.
b.
c.
d.
e.
greater vehicle utilization
higher levels of customer service
lessening of competition - *
lower transportation costs
reduced capital investment in equipment
17) Which of the following conditions would not indicate that cross-docking should
be considered?
a.
b.
c.
d.
e.
inventory destination is unknown at the time products are received - *
customer is ready to receive inventory immediately
some inventory is time sensitive
inventory arrives at firm’s receiving docks prelabeled
firm’s distribution center is near capacity
18) Which of the following would not be considered an advantage of public
warehousing over private warehousing?
a.
b.
c.
d.
e.
conservation of capital
minimization of labor disputes
knowledge of costs for storage and handling
degree of control exercised by owner of the products - *
ability to increase warehouse space to cover peak requirements
19) The macro approach that locates a warehouse or distribution center at a point that
minimizes transportation costs for products moving between a manufacturing
plant and the markets, and is relatively simplistic, is:
a.
b.
c.
d.
e.
center of gravity approach - *
Hoover’s model
Von Thunen’s model
Weber’s model
none of these are macro location approaches
20) Which of the following would be an example of a warehouse productivity
measure?
a.
b.
c.
d.
cases handled per labor hour - *
percent of pallets filled in a warehouse
ratio of capacity used to available capacity
actual return on assets employed versus budgeted return on assets
employed
e. employee-hours worked versus employee-hours available
21) Reasons for engaging in forward buying include:
a.
b.
c.
d.
e.
delay the impact of rising costs
decrease the firm’s average cost of capital in the short-run
provides protection against future anticipated shortages
A and C only - *
A, B and C
22) The objectives of stockless purchasing include all of the following except:
a.
b.
c.
d.
e.
lower inventory levels
reduce administrative cost and paperwork
increase the number of suppliers - *
provide for timely delivery of material directly to the user
standardize purchase items where possible
23) The international market entry strategy that requires the least amount of
knowledge about foreign markets and minimizes risk to the domestic firm is:
a.
b.
c.
d.
e.
countertrade
exporting - *
joint ventures
licensing
ownership
24) Which international channel strategy has a major drawback (weakness), the
potential that the foreign firm with whom your company works, could become a
future direct competitor?
a.
b.
c.
d.
e.
exporting
importing
direct ownership
licensing - *
countertrade
25) The term that applies to the requirement that a firm import something from a
country in which it has sold something else is:
a.
b.
c.
d.
e.
countertrade - *
duty drawback
free trade
import quotas
maquiladora operation
26) When the terms of shipment are “CIF (Cost, Insurance, Freight) at Port of
Destination,” the seller is responsible for all costs of the shipment except:
a.
b.
c.
d.
e.
forwarders’ and consular fees
inland freight
loading on vessel or plane - *
ocean freight
port charges
27) Which of the following statements about the cost and service considerations in
global logistics is FALSE?
a.
b.
c.
d.
The distances involved are much longer.
Most international freight (measured by weight) moves by air. - *
Order completeness is much more important.
There are higher costs associated with shipping errors than in domestic
logistics.
e. None of the above statements are FALSE.
28) Control over logistics costs can be accomplished by:
a.
b.
c.
d.
e.
standard costs
absorption costing
productivity standards
A and C only - *
A, B and C
29) The order cycle time is the time that elapses between:
a. the customer’s order placement and the time the customer receives the
product - *
b. the company receiving the order and the time the customer receives the
product
c. the customer’s order placement and the time the company ships the
product
d. the company receiving the order and the time the company ships the
product
e. none of the above
30) What type of distribution is usually appropriate for most convenience goods, such
as chewing gum?
a.
b.
c.
d.
e.
measured distribution
selective distribution
exclusive distribution
intensive distribution
none of the above
31) Demand for an item increases 20 percent, and the value of each unit increases 20
percent. What is the effect on EOQ (assuming everything else remains the same)?
a.
b.
c.
d.
e.
EOQ increases 10 percent
EOQ increases 20 percent
EOQ decreases 10 percent
EOQ decreases 20 percent
EOQ stays the same - *
32) A company has four geographically-dispersed distribution centers. The company
plans to consolidate its inventories into a single, centrally-located facility. Their
aggregate inventory in the four distribution centers is 100,000 units. How much
inventory will need to be stored in the proposed single facility?
a.
b.
c.
d.
e.
10,000 units
25,000 units
50,000 units - *
75,000 units
100,000 units
33) Using the fixed order quantity model under conditions of certainty, which is the
reorder point if lead time is a constant 5 days , and yearly demand is 10,000 units
(assume 250 working days in the year)?
a.
b.
c.
d.
e.
100
200 - *
300
400
500
34) A company’s average cost of inventory is $300,000. Inventory is ordered two
times a year at a total reordering costs of $500. The cost of carrying inventory is
15 percent per year. What is the company’s annual inventory carrying cost?
a.
b.
c.
d.
e.
$10,000
$45,000 - *
$50,000
$55,000
$60,000
35) A company’s annual sales at inventory cost is $1,000,000, transportation costs are
$100,000 and average inventory investment is $250,000. What is the turnover
ratio for the company?
a.
b.
c.
d.
e.
25 percent
4-*
10 percent
10
none of the above
36) Product A has an expected number of units out of stock annually of 2,000 and the
total demand for the product is 20,000 units. What is the service level for this
product?
a.
b.
c.
d.
e.
10
10 percent
90 percent - *
9
none of the above
37) Any governmental unit or authority at any level that owns, operates, or otherwise
provides wharf, dock, and other terminal facilities at port locations refers to:
a.
b.
c.
d.
e.
country government
a maritime unit
a free trade zone
a port authority - *
none of the above
38) The current US Secretary of Transportation is:
a.
b.
c.
d.
e.
Rodney Slater
Michael Jackson
Norman Mineta - *
Jane Garvey
Lloyd McClendon
39) What principle for materials handling suggests that high-volume items should be
stored at the shortest distance?
a.
b.
c.
d.
e.
storage principle
height principle
popularity principle - *
distance principle
simplification principle
40) According to the current CLM definition of logistics, the relationship between
logistics and supply chain is:
a.
b.
c.
d.
e.
they are synonymous
supply chain is a part of logistics
logistics is a part of supply chain - *
they are antonyms
they are both part of the marketing channel