Chapter 2

1. The utility created through the basic marketing activities is known as place utility.

2. Transportation is the physical movement or flow of goods.

3. During the 1990s and 2000s, logistics costs as a percentage of gross national product declined.

4. An aircraft manufacturer is a good example of an organization with a heavy inbound flow and a simple outbound flow.

5. Acme Battery distributes its batteries to warehouses, where they are stored until ordered by a retailer. The warehouses are located close by the retail markets served. This is the logistics channel approach to logistics.

6. In a logistics system, warehousing should be optimized at the expense of related logistics activities, such as transportation and procurement.

7. The mathematical calculation of the point of equality between systems under analysis is used for short-run/static analysis.

8. To hold down distribution cost, the lowest cost carrier should always be used.

9. The inverse relationship that exists between the cost of lost sales and inventory costs is the inventory effect.

10. Ensuring the availability of the right product, in the right quantity, and the right condition, at the right place, at the right time, for the right customer at the right cost, is which definition of logistics?
a. Seven Rs
b. Council of Logistics Management
c. Society of Logistic Engineers
d. supply chain logistics

11. Logistics is the process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods- or service-producing network to fulfill customer requests; and utilizing the network to fulfill customer requests in a timely manner. This is a

a. definition from an inventory perspective.
b. general definition.
c. definition offered by the Society of Logistics Engineers.
d. a definition provided by the Council of Logistics Management.

12. All four subdivisions of logistics have some common characteristics. Which of the below does not belong in the list:
a. transportation
b. marketing
c. scheduling
d. forecasting

13. The value that is added to goods through a manufacturing or assembly process is:
a. form utility
b. place utility
c. time utility
d. possession utility

14. Which of the answers below is an example of the creation of form utility by a logistics activity?
a. when lumber is cut and made into a chair
b. when a firm's finance manager approves customer purchases on a credit basis
c. when Dell combines components with software to produce a computer to a customer’s specifications
d. the breaking bulk and repackaging at a distribution center

15. The utility that is created by moving goods from production points to market points where demand exists is referred to as:
a. form
b. place
c. time
d. possession

16. Logistics creates which utility through production forecasting, production scheduling and inventory control?
a. form utility
b. quantity utility
c. time utility
d. possession utility

17. Time utility depends on
a. when the carrier picks up the shipment.
b. transportation companies delivering on time.
c. proper forecasting.
d. having the product available when the user wants it.

18. What is often the largest component of logistics costs?
a. inventory costs
b. transportation costs
c. shipper-related costs
d. administrative costs

19. Materials handling is concerned with
a. inventory levels.
b. breaking bulk.
c. scheduling trade-offs.
d. short-distance movement.

20. Marketers have begun to recognize the strategic value of place in the marketing mix, as well as the benefits resulting from high-quality logistical services. As a result, which has been recognized as the interface activity between marketing and logistics?
a. product
b. promotion
c. price
d. customer service

21. It can be argued that ? is the second language of logistics and supply chain management.
a. quality
b. manufacturing
c. finance
d. sales

22. What activity is described as the movement of goods into a warehouse, the placement of goods in a warehouse, and the movement of goods from storage to order picking areas and eventually to dock areas for transportation out of the warehouse?
a. materials handling
b. physical distribution
c. business logistics
d. order fulfillment

23. A(n) _______ relationship exists between the cost of lost sales and inventory cost.
a. reverse
b. proportional
c. inverse
d. non linear

24. Water Cruisers is located in Jacksonville, Florida, and makes small yachts and luxury pontoon boats for customers on the East coast of the United States. Each boat requires thousands of parts purchased from over 1,000 vendors. A number of boats are in production at any one time, so a large number of parts constantly arrive and are stored. Once a boat is finished, it is sailed up the coast to a convenient port for customer delivery. Which type of logistics system does Water Cruisers use?
a. balanced system
b. heavy inbound
c. heavy outbound
d. reverse system

25. The product’s dollar value typically affects the cost of logistics activities. Which is not one of these costs?
a. warehousing costs
b. transportation costs
c. promotion costs
d. packaging costs

26. When a specific point in time, or level of production, is chosen and costs are developed for the various logistics cost centers, it is called
a. least cost analysis.
b. short run analysis.
c. cost center analysis.
d. link node analysis.

27. A ______ analysis examines a logistics system over a long time period or range of output.
a. cost center analysis
b. dynamic
c. link node analysis
d. least cost analysis

28. What are fixed spatial points where goods stop for storage or processing?
a. nodes
b. links
c. cost centers
d. fulfillment centers

29. An important sustainability issue that has received much more scrutiny in recent years is the:
a. focus on adequate inventory levels
b. reduction in packaging waste by using alternate materials
c. effort to move warehouse storage closer to consumers
d. emphasis on materials handling and warehouse design

30. What technology has helped make the physical inventory-taking process more efficient and effective?
a. advances in forecasting
b. transportation management systems
c. just-in-time inventory
d. scanning of bar-coded RFID tags