CHAPTER 1: AN OVERVIEW OF LOGISTICS

Multiple Choice Questions (correct answers are bolded)

1. Logistics clearly contributes to and utility.

a. time; place
b. form; time
c. place; form
d. possession; time
e. none of the above

2. utility refers to the value or usefulness that comes from a customer

being able to take possession of a product.
a. Time
b. Place
c. Form
d. Possession

3. utility refers to having products available where they are needed by

customers.
a. Possession
b. Time
c. Place
d. Form

4. All of the following are types of economic utility, except:

a. Time
b. Production
c. Place
d. Possession
e. All of the above are types of economic utility

5. “How well a company does what it says it’s going to do” represents .
a. efficiency
b. productivity
c. leading edge logistics
d. effectiveness

What concept refers to “how well company resources are used to achieve what a company
promises it can do

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 e. Efficiency
f. Productivity
g. Reengineering
h. Effectiveness

6. Every customer getting the same type and level of logistics service refers to
.

a. tailored logistics
b. mass logistics
c. effectiveness
d. efficiency

7. Which of the following is not a reason for the increased importance of logistics?

a. growing power of manufacturers

b. reduction in economic regulation
c. globalization of trade
d. technological advances
e. all of the above are reasons

8. Widespread reductions in economic regulation of US transportation carriers

occurred in .

a. 1960s and 1970s

b. 1970s and 1980s
c. 1980s and 1990s
d. only the 1990s

9. The concept suggests that the customer desires a product offering that is highly
tailored to the customer’s exact preferences.

a. market demassification
b. relationship marketing
c. customized customer
d. niche marketing

10. Approximately percent of US adult women are currently in the workforce.

a. 70
b. 60
c. 50
d. 40

11. refers to the removal of intermediaries between producer and consumer.

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 a. direct channels
b. market demassification
c. consolidation
d. disintermediation

12. are stores with large amounts of both floor space and product for sale.

a. mass merchandisers
b. power retailers
c. big-box retailers
d. do-it-yourself (DIY) retailers

13. World trade grew at an average annual rate of approximately percent between
1991 and 2011.

a. 5.5
b. 4.5
c. 3.5
d. 2.5

14. The approach indicates that a company’s objectives can be realized by

recognizing the mutual interdependence of major functional areas.

a. supply chain
b. systems
c. interfunctionality
d. rhochrematics

15. The movement and storage of materials into a firm refers to:

a. physical distribution
b. materials management
c. supply chain management
d. materials handling

16. Which concept refers to the storage of finished product and movement to the
customer?

a. supply chain management

b. business logistics
c. physical distribution
d. materials management

17. Logistics managers use the approach to coordinate materials management and
physical distribution in a cost-efficient manner.

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 a. total cost
b. supply chain
c. interfunctional logistics
d. intrafunctional logistics

18. A cost trade-off is a situation where:

a. all costs react according to their individual degrees of inflation in the economy
b. all costs are reflected as a percentage variation from standard costs
c. some costs increase and some costs decrease
d. some costs are eliminated by efficient management controls

19. The department often measures inventory in terms of its cost or value in dollars,
whereas tends to measure inventory in terms of units.

a. marketing; logistics
b. finance; production
c. marketing; production
d. finance; logistics

20. A common interface between production and logistics involves:

a. the types of material handling equipment

b. the length of production runs
c. the use of plastic versus wood pallets
d. the mode of transportation

21. refers to the delay of value-added activities such as assembly, production, and
packaging to the latest possible time.

a. building blocks
b. lean manufacturing
c. deferral
d. postponement

22. The four basic components of the marketing mix include all of the following except:

a. price
b. production
c. place
d. promotion

23. Co-branding allows customers to purchase products from two or more name-brand
retailers at one store location. Which of the following statements about co-branding is
false?

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 a. they offer potential customers convenience by satisfying needs at one place
b. they boost brand awareness
c. they create relatively few logistical challenges
d. they increase customer spending per transaction
e. all of the above are true

24. Landed costs refer to:

a. the costs of a product shipped via surface transport

b. the costs of a product that is quoted cash on delivery (COD)
c. the costs of a prepaid shipment
d. a price that includes both the cost of the product plus transportation to the
buyer

25. refers to being out of an item at the same time there is demand for it.

a. intensive distribution
b. tailored logistics
c. stockout
d. supplier indifference

26. Which of the following is not part of the marketing channel?

a. the logistics channel

b. the negotiations channel
c. the promotion channel
d. the finance channel
e. all are part of the marketing channel

27. The ownership channel consists of all parties except:

a. customers
b. manufacturers
c. wholesalers
d. retailers

28. Which channel covers the movement of title to the goods?

a. promotions
b. logistics
c. finance
d. ownership

29. is bringing together similar stocks from different sources.

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 a. accumulating
b. assorting
c. auditing
d. allocating

30. refers to breaking a homogeneous supply into smaller lots.

a. sorting out
b. allocating
c. accumulating
d. assorting

31. Channel intermediaries:

a. assume temporary ownership of the goods

b. tend to lack focus
c. fill niches
d. tend to disappear as the market becomes organized

32. Brokers are intermediaries that are commonly associated with the channel.

a. promotions
b. finance
c. ownership
d. negotiation

33. The most costly logistics activity in many firms is

a. industrial packaging
b. transportation management
c. order management
d. warehousing management

34. U.S. News & World Report suggests that logistics employment should increase by
percent through 2018.

a. 10
b. 15
c. 20
d. 25

True-False Questions

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1. Absolute and relative logistics costs in relation to Gross Domestic Product vary
from country to country. (True)

2. The four general types of economic utility are production, possession, time, and
place. (False)

3. Logistics clearly contributes to time and form utility. (False)

4. The current definition of logistics, as promulgated by the Council of Supply Chain

Management Professionals, suggests that logistics is part of the supply chain
process. (True)

5. Logistics is only concerned with forward flows, that is, those directed towards
the point of consumption. (False)

6. The purpose of logistics is to maximize customer service. (False)

7. In mass logistics, groups of customers with similar logistical needs and wants
are provided with logistics services appropriate to those wants and needs. (False)

8. Humanitarian logistics represents an emerging application of logistics to not-for-profit

organizations. (True)

9. Reductions in economic regulation allowed individual transportation

companies flexibility in pricing and service. (True)

10. Market demassification suggests that the customer desires a product offering that is
highly tailored to her/his exact preference. (False)

11. Disintermediation refers the removal of intermediaries between producer

and consumer. (True)

12. Superior logistics is an essential component of corporate strategies for many big-
box retailers. (True)

13. Logistics has played a minor role in the growth of global trade. (False)

14. The systems approach indicates that a company’s objectives can be realized by
recognizing the mutual interdependence of the major functional areas of a firm. (True)

15. Physical distribution is synonymous with materials management. (False)

16. Interfunctional logistics attempts to coordinate materials management and

physical distribution in a cost efficient manner that supports an organization’s
customer service objectives. (False)

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17. The key to the total cost approach is that all relevant cost items are
considered simultaneously when making a decision. (True)

18. The finance department tends to measure inventory in terms of units while
logistics tends to measure inventory in terms of its cost / value. (False)

19. Long production runs sometimes result in excessive inventory of products

with limited demand for them. (True)

20. Postponement is the delay of value-added activities such as assembly, production, and
packaging to the latest possible time. (True)

21. Logistics offers many companies an important route for creating

marketing superiority. (True)

22. Dual distribution refers to an alliance that allows customers to purchase

products from two or more name-brand retailers at one store location. (False)

23. Landed costs refer to the price of a product at its source. (False)

24. Stockouts refer to a situation where a company is out of an item at the same time
that there is demand for that item. (True)

25. Logistical decisions tend not to be impacted by marketers’ growing emphasis

on offering sustainable products. (False)

26. Many promotional decisions, such as pricing campaigns that lower the price
of certain items, require close coordination between marketing and logistics.
(True)

27. The ownership channel is the one where buy and sell agreements are reached. (False)

28. The financing channel handles a company’s credit and payment for goods. (True)

29. There is no linkage between the promotions and logistics channels. (False)

30. The most significant contribution that the logistics channel makes to the
overall channel process is the sorting function. (True)

31. The sorting function has four steps. (True)

32. The sorting function takes place between retailers and the consumer. (False)

33. Intermediaries assume ownership of goods while they’re in the marketing

channel. (False)

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34. A broker is a type of intermediary often associated with the negotiations
channel. (True)

35. A commonly used logistical intermediary is the freight forwarder. (True)

36. Demand forecasting is not considered to be a logistics-related activity. (False)

37. Packaging can have both a marketing and logistical dimension. (True)

38. Transportation represents the most costly logistics activity in many

organizations. (True)

39. It is better for a logistics manager to be a generalist rather than a specialist. (False)

40. U.S. News & World Report has highlighted logistician as one of the 50 best
careers. (True)

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EXAMINATION QUESTIONS

CHAPTER 8: INVENTORY MANAGEMENT

Multiple Choice Questions (correct answers are bolded)

1. refers to stocks of goods and materials that are maintained for many purposes, the
most common being to satisfy normal demand patterns.

a. logistics
b. supply chain management
c. inventory
d. production

2. Holding high levels of inventory result in inventory carrying costs and

stockout costs.

a. high; high
b. high; low
c. low; high
d. low; low

3. stock refers to inventory that is needed to satisfy normal demand during the
course of an order cycle.

a. base
b. speculative
c. pipeline
d. safety

4. stock refers to inventory that is held in addition to cycle stock to guard

against uncertainty in demand and/or lead time.

a. base
b. pipeline
c. speculative
d. buffer

5. stock refers to inventory that is en route between various nodes in a logistics

system.

a. base
b. safety
c. speculative
d. cycle
e. none of the above

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6. stock refers to inventory that is held for several reasons, to include seasonal
demand, projected price increases, and potential shortages of product.

a. base
b. safety
c. pipeline
d. speculative

7. stock is carried to stimulate demand.

a. base
b. psychic
c. speculative
d. attractive
e. none of the above

8. Inventory costs in the United States in the twenty-first century represent approximately
of total logistics costs.

a. one-fifth
b. one-fourth
c. one-third
d. one-half

9. All of the following statements are true, except:

a. the importance of individual carrying costs factors (categories) is

generally consistent from product to product
b. inventory carrying costs consist of a number of different components or factors
c. in general, companies prefer to carry less inventory as carrying costs increase
d. in general, inventory carrying costs are expressed in percentage terms
d. all of the above are true

10. Inventory carrying costs in the United States in the twenty-first century have
ranged between and percent.

a. 4; 9
b. 9; 14
c. 14; 19
d. 19; 24

11. Inventory shrinkage .

a. is another name for inventory turnover

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 b. refers to the fact that more items are recorded entering than
leaving warehousing facilities
c. refers to situations where the size and/or volume of inventory is decreased over
time
d. refers to a technique of stabilizing unit loads by using shrink wrap packaging

12. Each of the following is a component of inventory carrying cost except:

a. accounting cost
b. storage cost
c. shrinkage cost
d. interest cost
e. all of the above are components

13. In the United States, has traditionally provided a convenient starting point
when estimating the interest charges associated with maintaining inventory.

a. Gross Domestic Product growth

b. Consumer Price Index
c. the prime rate of interest
d. the yield on US Treasury bills

14. Which of the following is not a component of ordering (order) costs?

a. costs of preparing invoices

b. costs of receiving orders
c. costs of verifying inventory availability
d. costs of conducting a credit check
e. all are components of ordering (order) costs

15. Which of the following situations is likely the most damaging (costly) with respect
to a stockout?

a. the customer buys a substitute product that yields a higher profit for the seller
b. the customer buys a substitute product that yields a lower profit for the seller
c. the customer goes to a competitor for a purchase
d. the customer says, “Call me when it’s in”

16. Which of the following statements is false?

a. with respect to stockouts, a delayed sale is virtually costless to a company

because of the customer’s brand loyalty
b. the higher the average cost for a stockout, the more inventory (safety stock) that
should be held
c. tradeoffs exist between carrying costs and stockout costs
d. stockouts can be more costly than having too many items in stock

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 e. all of the above are true

17. Under conditions of certainty, a reorder point is equal to .

a. average daily demand times the length of the replenishment cycle

b. safety stock plus an EOQ
c. base stock plus safety stock
d. base stock minus safety stock

18. The economic order quantity (EOQ) deals with calculating the proper order size
with respect to costs and costs.

a. ordering; stockout
b. stockout; carrying
c. accounting; carrying
d. carrying; ordering

19. The economic order quantity (EOQ) determines .

a. the point at which a company should reorder

b. the point at which carrying costs equal ordering costs
c. the point at which the sum of carrying costs and ordering costs is maximized
d. the relevant inventory flow for a particular time period
e. none of the above

20. Which of the following is not an assumption associated with the basic economic
order quantity (EOQ) model?

a. no inventory in transit
b. an infinite planning horizon
c. stockouts are permitted
d. a constant and known replenishment or lead time
e. all are basic assumptions with the basic EOQ model

21. Concerning the EOQ model, if demand or annual usage increases by 10%, then
the EOQ will .

a. it depends on the particular product

b. increase
c. decrease
d. stay unchanged

22. Concerning the EOQ model, if the ordering costs increase by 10% and the
product value increases by 10%, then the EOQ will.

a. stay unchanged

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 b. increase
c. decrease
d. it depends on the particular product

23. Inventory flow diagrams illustrate that safety stock can prevent two problem areas,
and .

a. decreased rate of demand; longer-than-normal replenishment

b. increased rate of demand; shorter-than-normal replenishment
c. decreased rate of demand; shorter-than-normal replenishment
d. increased rate of demand; longer-than-normal replenishment

24. recognizes that all inventories are not of equal value to a firm and thus all
inventories should not be managed in the same way.

a. vendor-managed inventory
b. suboptimization
c. marginal analysis
d. ABC analysis of inventory

25. ABC analysis of inventory .

a. applies activity-based costing to managing inventory

b. recognizes that inventories are not of equal value to a firm
c. is synonymous with vendor-managed inventory
d. is an alternative to the EOQ model

26. Dead inventory (dead stock) refers to a product for which there is no sales during a
month period.

a. three
b. six
c. twelve
d. twenty-four

27. All of the following are suggestions for dealing with dead stock (inventory), except
.

a. aggressive marketing
b. donate to charities
c. make to order
d. throw it away
e. all of the above are suggestions

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28. Inventory turnover can be calculated by .

a. dividing the cost of goods sold by average inventory

b. dividing average inventory by the costs of goods sold
c. multiplying average inventory by 1.5
d. adding beginning and ending inventory and then dividing by two
e. none of the above

29. items refer to those that are used or distributed together.

a. me-too
b. substitute
c. co-branded
d. complementary

30. products refer to those that customers view as being able to fill the same need or
want as another product.

a. copycat
b. me-too
c. substitute
d. co-branded

31. Which of the following is not an example of a lean inventory approach?

a. just-in-time
b. collaborative planning, forecasting, and replenishment
c. efficient consumer response
d. quick response
e. all of the above are lean inventory approaches

32. Which of the following statements about the lean approach and JIT is false?

a. JIT tends to focus on product movement from manufacturer to retailer

b. organizations should give careful consideration before adopting a
lean philosophy
c. the lean approach views inventory as waste
d. trucking is an important mode of transportation in JIT systems
e. all of the above are true

33. Which of the following statements about service parts logistics is false?

a. customer expectations for service parts logistics continues to increase

b. some organizations outsource their service parts logistics to companies that
specialize in this area
c. service parts logistics creates a variety of potential challenges for logisticians

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 d. the worldwide economic slowdown of 2008 and 2009 caused a
decreased emphasis on service parts logistics
e. all of the above are true

34. Under , the size and timing of replenishment orders are the responsibility of
the manufacturer.

a. quick response
b. supply chain management
c. vendor-managed inventory
d. efficient consumer response

35. Which of the following is not a potential benefit to vendor-managed inventory?

a. reduced order errors

b. improved demand forecasts
c. reduced inventories
d. fewer stockouts
e. all are VMI benefits

True-False Questions

1. Inventories are stocks of goods and materials that are maintained for many
purposes. (True)

2. Different organizational functions, such as marketing and production, tend to

have similar inventory management objectives. (False)

3. Inventory carries its greatest costs after value has been added through manufacturing
and processing. (True)

4. Buffer stock is also referred to as cycle stock. (False)

5. Safety stock refers to inventory that is held in addition to cycle stock to guard
against uncertainty in demand and/or lead time. (True)

6. Pipeline stock is inventory that is en route between various fixed facilities in a

logistics system. (True)

7. Psychic stock is associated with retail stores. (True)

8. Inventory tends to be one of the largest assets (in terms of dollar value) on
a company’s balance sheet. (True)

9. As a general rule, companies prefer to carry less inventory as the carrying

cost percentage decreases. (False)

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10. The range of inventory carrying costs in the United States in the twenty-first century
has been between 22 and 27 percent. (False)

11. Inventory shrinkage refers to the fact that products lose value through time. (False)

12. Obsolescence costs are one component of inventory carrying costs. (True)

13. The trade-off that exists between carrying costs and ordering costs is that they
respond in opposite ways to the number of orders or size of orders. (True)

14. Not having enough items can be as bad as, and sometimes worse than, having
too many items. (True)

15. The higher the average cost of a stockout, the more likely a company is going to
want to hold some amount of inventory (safety stock) to protect against stockouts. (True)

16. A reorder point is equal to average daily demand divided by the length of the
replenishment cycle. (False)

17. One requirement of a fixed order quantity system is that the inventory must
be constantly monitored. (True)

18. A fixed order quantity system is more susceptible to stockouts than is a fixed
order interval system. (False)

19. The EOQ is the point at which carrying costs equal ordering costs. (True)

20. One assumption of the basic EOQ model is a continuous, constant, and known rate
of demand. (True)

21. The EOQ can only be calculated with respect to the number of units to be
ordered. (False)

22. Inventory flow diagrams graphically depict the demand for, and replenishment
of, inventory. (True)

23. Safety stock can prevent against two problem areas: An increased rate of demand
and longer-than-normal replenishment. (True)

24. Marginal analysis recognizes that all inventories should not be managed in the same
way. (False)

25. In terms of ABC analysis of inventory, no more than 25% of items should
be classified as “A’s.” (False)

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26. Dead stock (inventory) refers to product for which there is no sales during a 12-month
period. (True)

27. One way of dealing with dead stock (inventory) is for companies to simply throw
it away. (True)

28. The number of times that inventory is sold in one year is referred to as
average inventory. (False)

29. Inventory turnover can be calculated by dividing costs of goods sold by

average inventory. (True)

30. High inventory turnover indicates that a company is taking longer to sell its
inventory. (False)

31. Complementary products can be defined as inventories that can be used or

distributed together, such as razor blades and razors. (True)

32. Many grocery chains target in-stock rates of 90 percent for individual stores so that
sufficient substitutes exist for a customer to purchase a substitute item rather than go to
a competing store. (False)

33. Lean manufacturing focuses on the elimination of waste. (True)

34. Because of smaller, more frequent orders and closer supplier location, trucking
tends to be an important mode of transportation in the just-in-time approach. (True)

35. Efficient consumer response (ECR) and collaborative planning, forecasting,

and replenishment (CPFR) are examples of lean inventory approaches. (False)

36. A confluence of events, such as increasing global sourcing, suggests that

organizations should carefully consider the potential trade-offs before adopting a lean
inventory philosophy. (True)

37. Service parts logistics has decreased in importance in recent years. (False)

38. One logistical challenge with service parts logistics is that it can be
extremely difficult to forecast the demand for the necessary parts. (True)

39. In vendor-managed inventory, the size and timing of replenishment orders are
the responsibility of the manufacturer. (True)

40. Vendor-managed inventory can only be applied to consumer, and not industrial,
products. (False)

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©2011 Pearson Education, Inc. publishing as Prentice Hall
11
CHAPTER 10: WAREHOUSING MANAGEMENT

Multiple Choice Questions (correct answers are bolded)

1. Warehousing and _ are substitutes for each other.

a. transportation
b. materials handling
c. packaging
d. inventory management
e. none of the above

2. and refer to adjustments associated with the quantity of product.

a. allocating; assorting
b. accumulating; allocating
c. sorting out; accumulating
d. sorting out; assorting

3. involves bringing together similar stocks from different sources.

a. bulk-breaking
b. assorting
c. accumulating
d. sorting out

4. refers to building up a variety of different products for resale to particular

customers.

a. accumulating
b. allocating
c. sorting out
d. assorting

5. refers to separating products into grades and qualities desired by different

target markets.

a. assorting
b. sorting out
c. allocating
d. accumulating

6. Warehouses emphasize and their primary purpose is to maximize .

a. rapid movement of product; usage of available storage space

©2011 Pearson Education, Inc. publishing as Prentice Hall

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 b. rapid movement of product; throughput
c. product storage; usage of available storage space
d. product storage; throughput

7. Distribution centers emphasize and their primary purpose is to maximize .

a. rapid movement of product; throughput

b. product storage; throughput
c. product storage; usage of available storage space
d. rapid movement of product; usage of available storage space

8. Throughput refers to _ .

a. storage capacity of a warehousing facility

b. volume through a pipeline
c. inventory turnover in a one-month period
d. amount of product entering and leaving a facility in a given time period

9. refers to a process where a product is received in a facility, occasionally married

with product going to the same destination, and then shipped at the earliest time, without
going into longer-term storage.

a. just-in-time
b. cross-docking
c. accumulation
d. agglomeration

10. Warehousing labor safety practices in the United States are monitored by
which federal government agency?

a. Warehousing Safety Administration

b. Department of Commerce
c. Food and Drug Administration
d. Consumer Product Safety Commission
e. none of the above

11. Which of the following is not a characteristic of public warehousing?

a. requires no capital investment from user

b. users have a fairly exact determination of their warehousing costs
c. good for companies dealing with large volumes of inventory
d. lack of control by user
e. all of the above are characteristics

12. What is considered to be the biggest drawback to public warehousing?

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 a. high fixed cost to user
b. lack of safety regulation
c. lack of locational flexibility
d. lack of control by the user

13. warehousing is owned or occupied on a long-term lease by the firm using them.

a. private
b. public
c. contract
d. multiclient

14. All are characteristics of private warehousing, except .

a. generates high fixed costs for the user

b. feasible when demand patterns are irregular
c. users have a great deal of control
d. may reduce an organization’s flexibility
e. all of the above are characteristics

15. With respect to contract warehousing, to year contracts appear to allow

sufficient time for the warehousing provider to learn the client’s business while allowing
the client some flexibility in case the agreement fails to produce acceptable results.

a. 1; 2
b. 2; 3
c. 3; 5
d. 5; 7

16. Multiclient warehousing mixes attributes of and warehousing.

a. private; contract
b. common; private
c. public; common
d. public; contract

17. One of the best pieces of advice with respect to the design of warehousing facilities is
to .

a. automate whenever possible

b. build up rather than out
c. avoid consultants
d. use common sense
18. Trade-offs must be made among space, labor, and with respect to warehousing
design.

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 a. cost
b. construction materials
c. mechanization
d. speed

19. A key advantage of fixed slot locations in a warehouse is .

a. improved employee morale

b. knowledge of where specific products are located
c. better materials handling
d. increased space utilization

20. A key advantage of variable slot locations in a warehouse is .

a. increased space utilization

b. better materials handling
c. ease of record keeping
d. more logical and simple product layout

21. As one builds higher, building costs , while warehousing equipment costs tend to
.

a. increase; decrease
b. increase; increase
c. decrease; decrease
d. decrease; increase

22. Which of the following statements about a one-dock layout is false?

a. each and every dock can be used for both shipping and receiving
b. it requires carriers to pick up and deliver at specific times
c. goods move in a straight configuration
e. product may sometimes be reloaded in the vehicle that delivered it
e. all of the above statements are true

23. Narrow aisles can store to percent more product than conventional width
aisles.

a. 30; 40
b. 20; 25
c. 15; 20
d. 10; 15

24. Which of the following is not an example of warehouse automation?

a. radio frequency identification

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 b. narrow aisle forklifts
c. automated guided vehicles
d. automated storage and retrieval systems
e. all of the above are examples of warehouse automation

25. Which of the following is not a trade-off in warehousing design?

a. two-dock versus single-dock layout

b. build up versus build out
c. order picking versus order taking functions
d. degree of warehouse automation
e. all of the above are trade-offs in warehousing design

26. One estimate suggests that only approximately percent of a facility’s cubic
capacity is actually occupied by product.

a. 10
b. 25
c. 40
d. 50

27. Which of the following is not a potential measure of warehousing productivity?

a. average warehouse capacity used

b. order fill rate
c. pallets shipped per person
d. cases shipped per person
e. all of the above are potential measures of warehousing productivity

28. What is the most frequent source of injuries among warehousing personnel?

a. heart attacks
b. assault by other warehousing personnel
c. leg wounds from forklifts
d. back and shoulder injuries

29. What is dunnage?

a. a slang term for a particular type of ocean liner

b. a type of packaging material that is placed inside of boxes
c. material that is used to block and brace products inside carrier equipment
d. additional transportation fees that are charged to small shippers

30. Which of the following is not one of the common causes of warehousing fires?

a. electrical failure or malfunction

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 b. lightning strikes
c. heat source too close to combustibles
d. cutting or welding too close to combustibles
e. all of the above are common causes

31. According to the Occupational Safety and Health Administration, approximately

employees are killed each year while operating forklifts in warehousing facilities.

a. 100
b. 250
c. 500
d. 1,000
e. none of the above

32. A safety data sheet (SDS) is required for .

a. all finished goods stored in a warehouse

b. each hazardous product to be stored in a facility
c. all raw materials brought into a firm
d. any product imported into the United States

33. Which of the following is not one of the four questions associated with effective
management of hazardous materials storage?

a. what material is being stored

b. why is it being stored
c. what is the material’s source
d. where is it being stored
e. each of the above is one of the four questions

34. In general, warehousing security can be enhanced by focusing on people, , and

.

a. building; equipment
b. buildings; cost
c. cost; processes
d. facilities; processes

35. Which of the following statements is false?

a. clean and sanitary warehousing facilities can have a positive impact on morale
b. one suggestion for warehouse sanitation is to clean the facility at least once a
day
c. warehousing cleanliness and sanitation can be facilitated by putting product at
the back of a facility where it is out of the way
d. clean and sanitary warehousing facilities can reduce employee turnover

©2011 Pearson Education, Inc. publishing as Prentice Hall

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 e. all of the above are true

True-False Questions

1. Many well-run companies view warehousing as a strategic consideration and as

a potential source of competitive advantage. (True)

2. Materials handling has been referred to as transportation at zero miles per hour. (False)

3. Warehousing is needed because patterns of production and consumption may

not coincide. (True)

4. Assorting and sorting refer to adjustments associated with the quantity of

product. (False)

5. Accumulating involves bringing together similar stocks from different sources. (True)

6. Assorting involves breaking larger quantities into smaller quantities. (False)

7. Warehouses emphasize the rapid movement of products through a facility and

attempt to maximize throughput. (False)

8. Throughput is the amount of product entering and leaving a warehousing facility in

a given period of time. (True)

9. One drawback of cross-docking is that it increases the amount of necessary

warehousing space. (False)

10. With public warehousing the user rents space as needed, thus avoiding the cost
of unneeded space. (True)

11. In the United States, the Warehousing Safety Administration has

primary responsibility for warehousing safety practices. (False)

12. Perhaps the biggest drawback to public warehousing is the inability to provide
specialized services. (False)

13. Private warehousing tends to be feasible when demand patterns are relatively
stable. (True)

14. Private warehousing offers potential users a great deal of control over their
storage needs. (True)

15. Public warehousing has embraced value-adding activities such as customization and
reverse logistics to a greater degree than has contract warehousing. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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16. Three-to-five year contracts appear to allow sufficient time for contract warehouses
to learn their client’s business while at the same time allowing clients some flexibility.
(True)

17. In essence, multi-client warehousing mixes attributes of private and contract

warehousing. (False)

18. Common sense should not be ignored with respect to the design of
warehousing facilities. (True)

19. A storage facility with low rates of product turnover should be laid out in a
manner that maximizes utilization of the cubic capacity of the storage facility. (True)

20. Trade-offs must be made among space, labor, and mechanization with respect
to warehousing design. (True)

21. A variable slot location warehousing system may result in low space
utilization. (False)

22. A general rule of thumb is that it is cheaper to build up than build out. (True)

23. A one-dock warehouse layout, in contrast to a two-dock layout, increases the space
needed for storage docks. (False)

24. Narrower aisles can increase the space utilization of a facility. (True)

25. Radio frequency identification is an example of warehouse automation. (True)

26. Recent estimates suggest that only approximately 25% of a warehousing

facility’s cubic capacity is actually occupied by product. (False)

27. Motivation of warehousing employees can be difficult because of the

somewhat repetitive nature of the operation. (True)

28. Increases in warehousing productivity require significant investment in technology

or mechanized or automated equipment. (False)

29. One low-cost suggestion for improving warehousing productivity is to play music,
if conditions permit. (True)

30. Forklift operators in the United States must be recertified every five years. (False)

31. Back and shoulder injuries are the most frequent injuries among
warehousing personnel. (True)

32. Dunnage refers to charges for accessorial transportation service. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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33. Fires are a constant threat in warehousing. (True)

34. Approximately 10% of all warehousing fires in recent years were sent intentionally.
(False)

35. In the United States, approximately 95,000 employees are injured every year
while operating forklifts in warehousing facilities. (True)

36. Government regulations require organizations to create a safety data sheet (SDS) for
each imported item that is stored in a warehousing facility. (False)

37. Buildings that store hazardous materials often have walls and doors that
can withstand several hours of intense fire. (True)

38. Potential threats to warehousing security include theft, pilferage, heat and
humidity, and fire, among others. (True)

39. In general, warehousing security can be enhanced by focusing on people,

facilities, and information. (False)

40. Clean and sanitary warehousing facilities can have a positive impact on
employee safety, morale, and productivity. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall

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©2011 Pearson Education, Inc. publishing as Prentice Hall
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CHAPTER 11: PACKAGING AND MATERIALS HANDLING

Multiple Choice Questions (correct answers are bolded)

1. Product density refers to a product’s .

a. volume
b. weight
c. weight per volume
d. fragility
e. none of the above

2. Which of the following statements is false?

a. a product’s chemical characteristics have little to no influence on the

way the product is handled
b. some products can be exposed to freezing weather; others cannot
c. the various properties of goods must be made known to consumers to help them
make the correct buying decision and properly care for the product
d. perishable products require special packaging as they move from source to
customer
e. all of the above are true

3. Which of the following statements regarding perishable products is false?

a. they require special storage

b. they require special monitoring
c. they require special loading
d. they require special packaging
e. all of the above are true

4. The building blocks concept is associated with which logistics function?

a. warehousing
b. packaging
c. materials handling
d. inventory management

5. refers to materials used for the containment, protection, handling, delivery, and
presentation of goods.

a. materials management
b. materials handling
c. procurement
d. packaging

©2011 Pearson Education, Inc. publishing as Prentice Hall 1

6. Each of the following is a shipping hazard that a package may be exposed to except
.

a. retraction
b. vibration
c. compression
d. rough handling
e. all of the above are shipping hazards for a package

7. Which of the following is false?

a. package labeling is usually done at the end of the assembly line

b. pictures are preferable to words for labeling a product
c. labeling regulations may differ from country to country
d. labeling requirements within a particular country can vary from state to state
(province to province)
e. all of the above are true

8. As a general rule, labeling requirements and enforcement tends to be more stringent in

countries than in countries.

a. larger; smaller
b. older; younger
c. economically developed; economically developing
d. smaller; larger

9. The Globally Harmonized System of Classification and Labeling of Chemicals

(GHS) was developed by the.

a. International Chamber of Commerce

b. World Trade Organization
c. World Bank
d. United Nations

10. Which of the following is not a key piece of classification and labeling
information provided by the Globally Harmonized System of Classification and
Labeling of Chemicals (GHS)?

a. a signal word (e.g., “danger”)

b. a picture of the chemical or hazardous material
c. a symbol
d. a hazard statement (e.g., “severe projection hazard”)
e. all of the above are key pieces of GHS information

11. Over 80% of customers view packaging as .

©2011 Pearson Education, Inc. publishing as Prentice Hall 2

 a. irrelevant to the purchase decision
b. one of the least important logistics activities
c. deceptive
d. a major environmental issue

12. Biodegradable plastics cost as much as conventional plastics.

a. two times
b. three times
c. four times
d. five times

13. Which of the following is not a characteristic of plastic packaging?

a. lack of versatility
b. takes a long time to biodegrade
c. plastic is dependent on petroleum
d. plastic litter can kill marine animals
e. all of the above are characteristics of plastic packaging

14. Which of the following is not an environmentally-friendly packaging strategy

that firms might adopt?

a. reduce the amount of packing materials used

b. use more environmentally-friendly packaging materials
c. use reusable containers
d. retain or support services that collect the used package and recycle it
e. all of the above are strategies

15. systems consider the reverse flow of products, their reuse, and the marketing
and distribution of recovered products.

a. eco-
b. open-loop
c. closed-loop
d. dynamic

16. How many countries in the world do not currently use the metric system
of measurement?

a. five
b. three
c. two
d. zero

©2011 Pearson Education, Inc. publishing as Prentice Hall 3

17. Which of the following is not a logistical consequence of packaging inefficiency?

a. increased loss
b. increased damage
c. higher storage costs
d. slower materials handling
e. all of the above are logistical consequences

18. What has been described as the “last frontier” of logistics savings opportunities?

a. information technology
b. transportation consolidation
c. packaging inefficiencies
d. inventory management
e. none of the above

19. A “box-maker’s certificate” .

a. refers to what box makers receive upon finishing their training

b. is given in recognition of superior box making ability
c. assures that boxes are free from any visible defects
d. assures railroads and motor carriers that boxes are sufficiently sturdy
to meet their handling requirements

20. What organization regulates the packaging of international air shipments?

a. International Air Transport Association

b. United Nations
c. World Trade Organization
d. International Chamber of Commerce

21. A unit load involves .

a. a convoy of rail cars carrying the same product

b. loading an entire vehicle with shipments from three or fewer shippers
c. the usage of a pallet rack system of storage
d. consolidation of several units into larger units to improve efficiency
in handling and to reduce shipping costs

22. A major advantage of the unit load is _ .

a. its environmental friendliness

b. mechanical devices can be substituted for manual labor
c. its value to companies that deal in small quantities
d. that it simplifies transportation requirements

©2011 Pearson Education, Inc. publishing as Prentice Hall 4

23. Which of the following is false?

a. the unit load is of limited value to shippers that deal in smaller quantities
b. unit loads may discourage pilferage
c. the unit load allows mechanical devices to be substituted for manual labor
d. pallets suffer from a lack of standardized sizes, particularly in the U.S.
e. all of the above are true

24. The has established six international pallet size standards.

a. World Trade Organization

b. International Chamber of Commerce
c. International Standards Organization
d. United Nations

25. The basic unit in unit loading is a .

a. box
b. crate
c. pallet
d. container

26. A major drawback to metal and plastic pallets is their .

a. lifespan
b. price
c. weight
d. incompatibility with existing forklifts

27. pounds is the approximate weight at which there is a noticeable increase in

injuries, particularly back injuries, from manual handling.

a. 25
b. 40
c. 50
d. 60
e. none of the above

28. From a space utilization perspective, one pallet occupies times more space than
a plastic slip sheet.

a. 80
b. 60
c. 40
d. 20

©2011 Pearson Education, Inc. publishing as Prentice Hall 5

29. refers to the short distance movement that usually takes place within the
confines of a building such as a plant or distribution center and between a building and
a transportation service provider.

a. physical distribution
b. materials management
c. warehousing
d. materials handling

30. With respect to density, a vehicle loaded with is most likely to cube out (cubic
capacity is filled before reaching its weight capacity).

a. grain
b. coal
c. soybeans
d. gravel

31. A dry bulk material’s is important for determining the quantity that can be
stored in a given location.

a. viscosity
b. specific gravity
c. angle of repose
d. market value
e. none of the above

32. refers to the interaction between workers and workplace conditions.

a. rhochrematics
b. labor relations
c. human resource management
d. ergonomics

33. The total cost of ownership is associated with which of the 10 materials
handling principles?

a. life cycle cost principle

b. planning
c. system
d. standardization
e. none of the above

34. It is important that the materials handling equipment be aligned with

an organization’s objectives, customers, and .

©2011 Pearson Education, Inc. publishing as Prentice Hall 6

 a. suppliers
b. top management
c. products
d. stakeholders

35. Which of the following is false?

a. racks and bins are examples of storage equipment

b. automation refers to equipment that complements, rather than
replaces, human contact
c. forklifts can be dangerous
d. in a part-to-picker system, the pick location is brought to the picker
e. all of the above are true

True-False Questions

1. Packaging and materials handling decisions can be made in isolation from

other logistics activities. (False)

2. The physical characteristics of some goods change while they are moving in
the logistics channel. (True)

3. Certain products should not, for safety or health reasons, be packaged together. (True)

4. Procurement can be thought of in terms of the building-blocks concept. (False)

5. One general function of packaging is to identify the relevant product. (True)

6. The severity of the distribution environment is the primary consideration in properly

designing a protective packaging system. (False)

7. When new products or new packaging techniques are about to be introduced, it is

somewhat advisable to have the packages pretested. (True)

8. Shipping hazards include vibrations, dropping, rough handling, and overexposure

to extreme temperatures. (True)

9. Most package labeling takes place at the end of the assembly line. (True)

10. As a general rule, labeling requirements and enforcement tend to be more stringent
in larger countries (based on population) than in smaller countries. (False)

11. Failure to comply with labeling guidelines can result in surcharges, administrative
fees, or penalty charges. (True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 7

12. The International Chamber of Commerce developed the Globally Harmonized
System of Classification and Labeling of Chemicals (GHS). (False)

13. Approximately 50% of consumers view packaging as a major environmental issue.

(False)

14. Biodegradable plastics cost approximately three times as much as

conventional plastics. (False)

15. Plastic packaging tends to be cheaper, more versatile, and more consumer-friendly
than paper packaging. (True)

16. Polyvinyl chloride (PVC), commonly referred to as vinyl, is considered a friendly

plastic because it has few, if any, potential side effects. (False)

17. Reusable containers work best in a closed-loop system. (True)

18. The United States is the only country in the world that does not currently use
the metric system of measurement. (False)

19. Transportation consolidation has been described as the “last frontier” of

logistics savings opportunities. (False)

20. Carriers’ tariffs and classifications influence the type of packaging and packing
methods that must be used. (True)

21. A “box maker’s certificate” assures that boxes are free from any visible
defects. (False)

22. When a unit load is secured to a pallet, it is more difficult for pilferage to take place.
(True)

23. The major advantage of the unit load is that it enables mechanical devices to
be substituted for manual labor. (True)

24. The World Trade Organization has established six international pallet size
standards. (False)

25. The retail package is the basic unit in unit loading. (False)

26. In the United States, the majority of pallets are made of wood. (True)

27. Plastic pallets tend to be less expensive than wooden or metal pallets. (False)

28. Fifty pounds is a significant weight in many logistics systems because it

represents the approximate weight at which there is a noticeable increase in injuries.
(True)

©2011 Pearson Education, Inc. publishing as Prentice Hall 8

29. Advances in technology have created stronger plastics that can be used for slip
sheets and this has resulted in a corresponding decrease in damage rates. (True)

30. Load-planning software can be used to suggest how to load a container with
different sizes of cartons. (True)

31. “Weighing out” refers to a container that has been weighed prior to its departure
from a container yard. (False)

32. Materials handling deals with the short distance movement that usually takes
place within the confines of a building such as a plant or DC and between a building
and a transportation service provider. (True)

33. Iron ore is more likely than coal to cube out a vehicle (i.e., equipment’s
cubic capacity is filled before reaching its weight capacity). (False)

34. A material’s angle of repose refers to the size of angle that would be formed by
the side of a conical stack of that material. (True)

35. The “standardization principle” is generally regarded as the most important of the
10 material handling principles. (False)

36. The total cost of ownership is associated with the system principle of
material handling. (False)

37. Ergonomics refers to the interaction between workers and workplace

conditions. (True)

38. Automatic guided vehicles (AGVs) are an example of mechanized materials handling
equipment. (False)

39. It has been suggested that automation becomes economically viable only when a
facility handles at least 50,000 cartons a day. (True)

40. As a general rule, picker-to-part systems are preferable to part-to-picker

systems. (False)

©2011 Pearson Education, Inc. publishing as Prentice Hall 9

©2011 Pearson Education, Inc. publishing as Prentice Hall 10
CHAPTER 12: TRANSPORTATION (correct answers are bolded)

Multiple Choice Questions

1. is the actual, physical movement of goods and people between two points.

a. logistics
b. transportation
c. materials handling
d. materials management

2. There are modes of transportation.

a. three
b. four
c. five
d. six

3. A 3,047 meter (10,000 foot) runway is significant because it .

a. is generally viewed as adequate for accommodating the largest existing

wide-body aircraft
b. is the longest that can be used worldwide due to safety regulations
c. represents the longest runway in the world
d. is only found in economically developed countries
e. none of the above

4. Rail gauge refers to .

a. the allowable speed on a particular segment of track

b. the thickness of rail track
c. the length of rail track
d. the distance between the inner sides of two parallel rail tracks

5. In the United States, account for the largest share of ton-miles and account
for the majority of freight revenues.

a. railroads; railroads
b. trucks; trucks
c. trucks; railroads
d. railroads; truck

6. is generally the fastest form of transportation for shipments exceeding 600 miles.
 a. less-than-truckload motor carriers
b. air
c. parcel carriers
d. truckload motor carriers

7. Consignees are .

a. extremely large less-than-truckload carriers

b. shippers of freight
c. receivers of freight
d. preferred suppliers

8. Dimensional weight _ .

a. considers a shipment’s density

b. only applies to air transportation
c. is associated with commodity rates
d. does not impact transportation rates

9. Which of the following is not likely to move by air transportation?

a. wearing apparel
b. fruits and vegetables
c. cut flowers
d. auto parts
e. all are likely to move by air

10. Less-than-truckload motor carriers .

a. serve only regional markets

b. operate through a series of terminals
c. are exempt from hours-of-service regulations
d. carry the shipment directly from shipper to consignee

11. Truckload carriers focus on shipments of greater than pounds.

a. 10,000
b. 15,000
c. 17,500
d. 20,000
e. none of the above

12. Each of the following is true, except .

 a. Schneider National is an example of a truckload carrier
b. in truckload shipments, the shipper loads and the consignee unloads the trailer
c. a truckload shipment involves only one customer
d. truckload carriers focus on shipments of greater than 10,000 pounds
e. all of the above are true

13. Hours-of-service (HOS) rules and speed limits have long been justified in the motor
carrier industry on the basis of .

a. cost efficiency
b. customer requirements
c. operational efficiency
d. safety concerns

14. The primary advantage for motor carriers is .

a. reliability
b. speed
c. capability
d. flexibility

15. is the most reliable form of transportation.

a. rail
b. motor carrier
c. pipeline
d. air
e. water

16. pipelines carry crude oil from gathering-line concentration points to the oil
refineries.

a. product
b. trunk
c. arterial
d. collection

17. have a level of market concentration and dominance that is not found in the
other modes.

a. railroads
b. pipelines
c. airlines
d. motor carriers
18. Which mode is not the “best” or “worst” on any of the six attributes (e.g.,
capability, flexibility, etc.) that were used to compare the modes?

a. railroads
b. water carriers
c. pipelines
d. motor carriers

19. Inland waterways in the United States are dredged to a depth of feet, which
tends to be the minimum depth required for most barges.

a. fifteen
b. twelve
c. nine
d. six

20. A raises or lowers barges so that they can meet the river’s level as they move
upstream or downstream.

a. barge crane
b. lock
c. levee
d. towboat
e. none of the above

21. The predominant commodity moved by barge transportation is .

a. grain
b. coal
c. iron ore
d. petroleum

22. transportation occurs when two or more modes work closely together in an
attempt to utilize the advantages of each mode while at the same time minimizing
their disadvantages.

a. intermodal
b. bifurcated
c. intramodal
d. collaborative

23. What container size is often used to rank water ports and measure
containership capacity?

a. 48 foot container
b. 40 foot container
 c. 20 foot container
e. 10 foot container

24. The primary advantage to land bridge service is .

a. less loss and damage

b. reduced transit times
c. lower transportation cost
d. improved reliability

25. Freight forwarders .

a. are the same as shippers’ associations

b. consolidate the shipments of several carriers
c. represent the consignees’ interests
d. consolidate the shipments of several shippers

26. Shippers’ associations .

a. are the same as a freight forwarder

b. function in a manner similar to freight forwarders
c. specialize in truckload shipments
d. are used only for agricultural products

27. A transportation broker .

a. looks to match a shipper’s freight with a carrier to transport it

b. deals only with agricultural products
c. is the same as a freight forwarder
d. tends to be spun off from carriers or management consulting firms

28. Firms that specialize in carrying packages that weigh up to 150 pounds are called
.

a. couriers
b. accessorial carriers
c. parcel carriers
d. expedited carriers

29. What is the largest transportation company (by revenues) in the United States?

a. FedEx
b. Union Pacific Railroad
c. United Parcel Service
d. United Airlines
30. In the United States, commercial airline pilots must retire at age .

a. 70
b. 65
c. 62
d. 60
e. none of the above

31. The U.S. is the federal government body with primary responsibility for
transportation safety regulation.

a. Interstate Commerce Commission

b. Department of Commerce
c. Department of Homeland Security
d. Department of Transportation

32. With respect to U.S. economic regulation, the has primary responsibility for
resolving railroad rate and service disputes, reviewing potential rail mergers, and
some jurisdiction over motor carriers, domestic water transportation, and pipelines.

a. Surface Transportation Board

b. Interstate Commerce Commission
c. Federal Trade Commission
d. Department of Commerce

33. Common carriers of transportation have obligations.

a. six
b. five
c. four
d. three
e. none of the above

34. Which of the following is not a legal classification of carriers?

a. exempt
b. contract
c. common
d. private
e. all of the above are legal classifications

35. Private transportation is most prevalent in the industry.

a. pipeline
b. trucking
c. railroad
 d. airline

True-False Questions

1. Transportation refers to the actual, physical movement of goods and people

between two points. (True)

2. There are four different modes of transportation. (False)

3. A 10,000 foot (3,047 meter) runway is viewed as adequate for accommodating

the largest existing wide-body aircraft. (True)

4. Rail gauge refers to the thickness of rail track. (False)

5. In the U.S., motor carriers have the largest share of ton-miles. (False)

6. Air is generally the fastest mode of transportation for shipments exceeding 600 miles.
(True)

7. Products that move by airfreight tend to be high in value and tend to require
urgent delivery. (True)

8. Less-than-truckload shipments range from about 150 to 10,000 pounds. (True)

9. Truckload freight moves through a carrier’s terminal(s). (False)

10. Hours-of-service rules and speed limits have generally been justified on the basis of
operational efficiency. (False)

11. The primary advantage for motor carriers is flexibility (the ability to deliver
the product to the customer). (True)

12. Pipelines are a unique mode of transportation because it is the only one without
vehicles. (True)

13. Railroads are considered the most reliable form of transportation. (False)

14. The U.S. railroad industry is dominated by four freight carriers. (True)

15. Twelve feet of water is the minimum depth required for most barges. (False)

16. A barge crane raises or lowers barges so they can meet the river’s level as they
move upstream or downstream. (False)

17. Barge transportation tends to be slow. (True)

18. Of the modes with vehicles, railroads offer the greatest capacity, or volume, that can
be carried at one time. (False)

19. With intermodal transportation, two or more modes work closely together in an
attempt to utilize the advantages of each mode while at the same time minimizing
their disadvantages. (True)

20. Airfreight containers are commonly referred to as “skids.” (False)

21. A commonly used metric for measuring container volumes is the TEU (twenty-foot
equivalent unit). (True)

22. Land bridge services involve the use of surface transportation—generally

rail transportation—between an origin and destination port. (True)

23. Freight forwarders are the same thing as freight brokers. (False)

24. Freight forwarders sell freight at a higher rate per pound than they pay carriers to
haul it. (True)

25. The main benefit of shippers’ association is one-stop shopping. (False)

26. A transportation broker looks to match a shipper’s freight with a carrier to transport
it. (True)

27. Parcels refer to packages weighing up to 100 pounds. (False)

28. U.S. commercial airline pilots face mandatory retirement at age 70. (False)

29. The level and degree of transportation regulation varies from country to
country. (True)

30. Environmental regulation of transportation is concerned with water, noise, and

air pollution. (True)

31. The U.S. Department of Homeland Security is the federal government body
with primary responsibility for transportation safety regulation. (False)

32. U.S. pipelines are so safe that there is no federal safety agency assigned to
regulate them. (False)

33. Economic regulation in transportation refers to control over business practices and
activities such as entry and exit; pricing; service; accounting and financial issues;
mergers and acquisitions. (True)
34. The U.S. Department of Commerce has primary responsibility for resolving
railroad rate and service disputes as well as reviewing potential rail mergers. (False)

35. Since economic deregulation, transportation carriers are no longer constrained

with respect to the variety of service they can offer. (True)

36. Private carriers do not have to comply with environmental and safety
regulations. (False)

37. Common carrier transportation companies have four specific obligations. (True)

38. A contract carrier is under no obligation to render services to the general public.
(True)

39. Private transportation is most prevalent in the pipeline industry. (False)

40. One disadvantage to private transportation is that managerial costs are often
ignored or underestimated. (True)
CHAPTER 13: TRANSPORTATION MANAGEMENT

Multiple Choice Questions (correct answers are bolded)

1. refers to the buying and controlling of transportation services by either a

shipper or consignee.

a. transportation management
b. logistics management
c. routing
d. tracking

2. In general terms, accounts for about 6% of U.S. gross domestic product.

a. warehousing
b. logistics
c. supply chain management
d. transportation

3. signifies the price charged for freight transportation.

a. fare
b. tariff
c. rate
d. revenue

4. Which of the following is not one of the three primary factors that transportation
rates are based upon?

a. product
b. density
c. weight
d. distance

5. Weight times rate equals .

a. density
b. transportation cost
c. stowability
d. volume
e. none of the above

6. A(n) rate refers to a specific rate for every possible combination of product,
weight, and distance.
 a. exception
b. ad valorem
c. commodity
d. class

7. A(n) rate simplifies each of the three primary rate factors—product, weight, and
distance.

a. class
b. ad valorem
c. exception
d. commodity

8. Which of the following is not a factor used to determine a product’s classification?

a. density
b. liability to damage and theft
c. stowability
d. ease of handling
e. all of the above are factors used to determine a product’s classification

9. The National Motor Freight Classification currently has 18 separate ratings, or

classes, that range for Class 50 to Class

a. 300
b. 400
c. 500
d. 600
e. none of the above

10. refers to how heavy a product is in relation to its size.

a. stowability
b. volume
c. weight
d. density

11. refers to how easy a commodity is to pack into a load.

a. recoupering
b. stowability
c. drayage
d. materials handling

12. Liability for loss and damage is one factor used to determine a product’s
freight classification. Which of the following is not a loss and damage
consideration?
 a. a commodity’s propensity to damage other freight
b. ability to load freight on top of a commodity
c. a commodity’s perishability
d. a commodity’s value
e. all of the above are loss and damage considerations

13. With respect to a commodity’s freight classification, shippers tend to prefer a _

classification number and carriers tend to prefer a classification number.

a. lower, lower
b. lower, higher
c. higher, lower
d. higher, higher

14. In the class rate system, freight rates are expressed in dollars or cents per .

a. hundredweight
b. pounds
c. kilograms
d. tons

15. Suppose that a particular item is Class 200 according to the National Motor Freight
Classification. What is the relationship between this item’s rate and the rate for an item
in Class 100?

a. the class 200 rate is lower than the class 100 rate
b. the rate relationship depends on other factors
c. the rates are identical
d. the class 200 rate is higher than the class 100 rate
e. there is insufficient information to answer the question

16. Which of the following is not a possible payment option (terms of sale) for
U.S. domestic shipments?

a. FOB origin, freight collect and charged back

b. FOB origin, freight collect
c. FOB origin, freight prepaid
d. FOB origin, freight prepaid and charged back
e. all of the above are possible payment options

17. With FOB destination, freight prepaid .

a. the buyer pays the freight charges, but the seller owns the goods in transit
 b. the buyer pays the freight charges and owns the goods in transit
c. the seller pays the freight charges and owns the goods in transit
d. the seller pays the freight charges, but the buyer owns the goods in transit

18. Which of the following tends to be the most important factor in carrier selection?

a. pricing
b. loss and damage performance
c. transit time reliability
d. financial stability
e. none of the above

19. A(n) refers to a transportation manager who purchases a prespecified level of

transportation service and is indifferent to the mode and carrier used to provide the
transportation service.

a. industrial transportation manager

b. certified logistics professional
c. third-party logistics shipper
d. amodal shipper

20. The most important single transportation document is the .

a. freight bill
b. bill of lading
c. commercial invoice
d. certificate of origin

21. Each of the following is true, except .

a. the bill of lading is the most important transportation document

b. the bill of lading adds to the complexity of the transportation manager’s
job
c. the straight bill of lading contains the name of the consignee
d. the order bill of lading does not contain the name of the consignee
e. all of the above are true

22. An order bill of lading is used .

a. for overseas shipments

b. when a shipment must be expedited
c. when a shipment is started before the buyer is known
d. to guard against disruptions in transit

23. An invoice submitted by the carrier requesting to be paid is .

 a. a freight bill
b. a bill of lading
c. a carnet
d. dunnage

24. What is the time limitation within which a freight claim must be filed?

a. three months from delivery date

b. six months from delivery date
c. nine months from delivery date
d. twelve months from delivery date
e. none of the above

25. Which of the following is false?

a. freight claims must be filed within nine months of the delivery date
b. concealed loss and damage is a delicate area for shippers and carriers
c. the volume of freight claims activity has dropped since transportation
deregulation
d. shippers or carriers are entitled to a product’s full retail value when
filing a freight claim
e. all of the above are true

26. If a product destroyed or damaged in transit is intended to be placed into

general replacement inventory, then the retailer would likely receive .

a. nothing but an apology from the carrier

b. the wholesale price, plus 20%
c. the retail price, minus 20%
d. the wholesale price, plus freight if previously paid

27. Small shipments are defined as those that _.

a. involve three or fewer cartons

b. are moved primarily by parcel carriers
c. weigh more than 150 pounds but less than 500 pounds
d. weigh more than 10 pounds but less than 100 pounds

28. Which of the following statements is false?

a. carriers may be reluctant to accept small shipments because they require a

high degree of manual labor
b. some carriers believe they lose money on small shipments
c. consolidating small shipments into larger ones could result in poorer service
to the final customer
 d. consolidating small shipments into larger ones likely results in higher
inventory carrying costs
e. all of the above are true

29. Demurrage charges are collected by railroads, , and .

a. motor carriers, pipelines

b. water carriers, pipelines
c. motor carriers, water carriers
d. airlines, pipelines

30. Which of the following statements is false?

a. detention is similar to demurrage, except that detention applies to pipelines

b. demurrage is a penalty payment made to a railroad for keeping equipment
beyond the time it should be released
c. averaging agreements can be used with demurrage
d. carriers and shippers can negotiate demurrage / detention policies
e. all of the above are true

31. U.S. freight railroads currently allow hours of free time for unloading railcars
and hours of free time for loading railcars.

a. 24, 24
b. 24, 48
c. 48, 24
d. 48, 48

32. can be defined as the process of determining how a shipment will be moved
between origin and destination.

a. tracking
b. recoupering
c. transportation
d. routing

33. A provides a variety of shipment information such as shipment preparation,

freight invoicing, a list of preferred carriers, and a list of which carrier or carriers to
use for shipments moving between two points.

a. freight book
b. routing guide
c. tariff
d. bill of lading

34. refers to determining a shipment’s location during the course of its move.
 a. expediting
b. recoupering
c. reparation
d. tracking

35. refers to rapidly moving a shipment through a carrier’s system.

a. expediting
b. recoupering
c. fast logistics
d. cross-docking

True-False Questions

1. Today’s transportation manager can play an active role in blending the

appropriate pricing and service packages for his / her organization. (True)

2. Routing refers to the buying and controlling of transportation services by a shipper

or consignee. (False)

3. Freight transportation accounts for approximately 10% of U.S. gross domestic

product. (False)

4. A rate is the logistics term that signifies the price charged for freight
transportation. (True)

5. A transportation charge (the cost of transportation) can be calculated by multiplying

a product’s weight times the applicable rate. (True)

6. A commodity rate is very good for dealing with demand-specific situations. (True)

7. The class rate system simplifies with respect to three primary factors—
density, product, and distance. (False)

8. The National Motor Freight Classification has 18 separate classes, or ratings, from
Class 50 to Class 600. (False)

9. Ease of handling is one of the four factors used to determine a product’s

freight classification. (True)

10. Liability to damage and theft is viewed as the primary factor in setting a
product’s freight classification. (False)

11. Volume refers to how heavy a product is in relation to its size. (False)
12. Stowability refers to how easy a commodity is to pack into a load. (True)

13. An item with a freight classification of Class 200 will be charged a higher rate than
an item with a freight classification of Class 100. (True)

14. With respect to a commodity’s freight classification, shippers tend to prefer a higher
classification number while carriers tend to prefer a lower classification number.
(False)

15. The price and service trade-offs available to today’s transportation manager
are limited only by her / his creativity and ingenuity. (True)

16. With FOB origin pricing, the seller retains title and control of the shipment until it is
delivered. (False)

17. A disadvantage of FOB destination pricing from a seller’s perspective is that the
seller’s organization must have a thorough knowledge of transportation
management. (True)

18. Because transportation costs tend to be lower per unit of weight for larger shipments,
there is a natural motivation to consolidate smaller shipments into larger ones. (True)

19. The carrier selection procedure appears to be less straightforward than the
procedure for modal selection. (True)

20. Transit time reliability is the most important factor that shippers tend to use
when selecting carriers. (False)

21. An amodal shipper refers to the use of a logistics intermediary to make the
relevant transportation decisions. (False)

22. Transportation documentation serves both a practical function (e.g., what, where,
and how much is being transported) as well as potentially providing legal recourse if
something goes awry. (True)

23. The most important single transportation document is the bill of lading. (True)

24. An order bill of lading specifies the consignee. (False)

25. Order bills of lading can be used when faced with slow-paying customers. (True)

26. The bill of lading is an invoice, submitted by the carrier, requesting to be paid. (False)

27. Freight bill audits are designed to detect errors that result in overcharges and
to correct those errors in the future. (True)
28. A freight claim must be filed within six months of the shipment’s delivery
date. (False)

29. Suppose that a shipment of products destined for a particular retailer is lost or
damaged. If these products were going into general inventory replacement stock, then
the retailer is entitled to recover the wholesale price plus freight costs (if they were
paid). (True)

30. Concealed loss and damage claims are some of the most difficult for shippers
and carriers to handle. (True)

31. The volume of transportation freight claims has increased in recent years. (False)

32. Small shipments refer to those that can be handled relatively expeditiously
and inexpensively by a small package carrier. (False)

33. From a carrier perspective, there may be a reluctance to accept small

shipments because they tend to require a high degree of manual labor. (True)

34. Demurrage is a penalty payment associated with railroads, while detention is a

penalty payment associated with motor carriers. (True)

35. U.S. freight railroads currently allow 24 hours of free time for unloading rail cars
and 48 hours of free time for loading rail cars. (False)

36. In demurrage-related averaging agreements, slow equipment returns can be offset

by fast equipment returns. (True)

37. A routing guide can provide a variety of shipment-related information such as

shipment preparation and a list of preferred carriers for shipment moving between
two points. (True)

38. Expediting refers to determining a shipment’s location during the course of its
move. (False)

39. Expedited shipments by motor carriage can sometimes provide faster and more
reliable service than expedited shipping involving air transportation. (True)

40. Some transportation managers utilize performance scorecards that contain a list
of relevant attributes and an evaluation of each carrier on every attribute. (TruE
©2011 Pearson Education, Inc. publishing as Prentice Hall 11