Module 1

1. All things being equal, what is a factor that would require having higher levels of customer
service in logistics than other industries?

a) Highly fragile goods

b) High density goods
c) Highly substitutable goods
d) High value goods

2. What should a logistics manager do if product development indicates they want to create
three new models of a product that are each a little different (there is just one model at
present)?
a) Oppose the proposal since it increases complexity and risk.
b) Indicate that the work should be outsourced to a low labor cost country.
c) Do nothing since this is not an area where logistics should provide input.
d) Inform decision makers of the additional logistics costs for more SKUs.

3. An organization is moving from make-to-stock to make-to-order for its primary product

family as it enters decline. What might this change mean for warehousing?

a) Little need for warehousing in general.

b) Little need for finished goods warehousing.
c) Warehousing will be unaffected by this change.
d) Increased need for distribution center warehousing.

4. Company A has no immediate use for the containers they receive from China after unloading
their shipments. Currently they pay to have the empty containers hauled to a depot. Which
option would reduce both costs and complexity?
a) Purchase inventory to sell in China and export it in the containers.
b) Purchase a few trucks to haul them to the depot yourself.
c) Keep the containers and use them as storage units.
d) Partner with an exporter to China who will pick up the containers and for free.

5. Which will be the most effective way to increase the organization's profits of the options
provided?

a) Open sales in a new market, raising revenue by 10 percent.

b) Reduce fixed warehouse costs by 10 percent at the cost of 3 percent higher variable
transportation costs.
c) Increase promotions of goods in surplus, raising revenue by 10 percent.
d) Reduce transportation labor costs by 10 percent.

6. Which inventory has the highest amount of place utility?

a) Inventory at a manufacturer warehouse
b) Inventory at a central distribution center
c) Inventory at a retail location
d) Inventory at a branch distribution center

1
7. Logistics can be summed up as physical supply plus what?
a) Transportation
b) Materials management
c) Receiving
d) Distribution

8. An organization decides to source closer to a key market and due to lower logistics costs
can sell the goods at a competitive price there despite higher production labor costs. What is a
disadvantage of this strategy relative to competitors who source in the more distant low labor
cost region?
a) These competitors' products have high substitutability in this local key market.
b) The organization would be more sensitive to fuel prices than these competitors.
c) These competitors have access to more markets globally.
d) The organization will have higher landed cost than these competitors in this market.

9. In the trade-off of cost to serve versus level of customer service provided by logistics, which
is the primary goal?
a) Find the balance that optimizes total logistics cost.
b) Find the balance that minimizes inventory.
c) Find the balance that maximizes revenue.
d) Find the balance that maximizes profit.

10. Which action by a logistics manager would empower his or her employees?
a) Avoid holding the person accountable for results.
b) Avoid giving feedback on the desired end result.
c) Closely supervising subordinates as they perform the work.
d) Have employees participate in setting performance targets related to their work.

11. What is a good way to increase the profitable service area for a fulfilment DC?
a) Increase the time that inventory remains in the pipeline to the DC.
b) Increase the variable costs of the DC relative to its fixed costs.
c) Invest in a larger fleet of fuel-efficient vehicles.
d) Decrease the transportation costs to that DC.

12. When working with direct sales to consumers, what is an important role for logistics to play
when marketing is determining the best-selling price?
a) Indicating the price for bulk discount offers.
b) Calculating the cost per unit type of offering free shipping.
c) Indicating the quantities to hold in inventory of each type based on the chosen price.
d) Calculating the ideal selling price based on total logistics costs.

13. When an organization has a private fleet, how should it assess efficiency?
a) Benchmark against third-party alternatives.
b) Speed rather than consistency.
c) Consistency rather than speed.
d) Benchmark against prior year costs and throughput.

2
14. Customer A has a contribution margin of €500,000 and has €150,000 in fixed direct costs.
Customer B has a contribution margin of €300,000 and €80,000 in fixed direct costs. These are
the only two customers but the organization also has €200,000 in fixed indirect costs. If the
Customer B account was dropped, what would be the change in the organization's net profit?
a) €145,000 less
b) €220,000 less
c) €300,000 less
d) €370,000 less

15. Increasing safety stocks will increase which risks?

a) Suboptimization
b) Lost customers
c) Obsolescence
d) Stockouts

16. The customer's primary requirement is for low variability. A carrier met the customer's
order cycle time goal of two days under budget and passed on some of these savings to the
customer. Some late deliveries were balanced out by some early ones to keep the order cycle
time metric on target. Which is the best way to describe the carrier?
a) Not efficient but effective
b) Neither efficient nor effective
c) Efficient but not effective
d) Efficient and effective

17. What is a market pressure on 3PLs that specialize in TL and LTL deliveries?
a) Direct-to-consumer trends
b) Larger container ships
c) Increasing power of retailers
d) Cross docking center trends

18. If transportation labor costs could be volatile in the next few years, what is the best way
that an organization could reduce the risk that the landed cost of its goods might not be
competitive?
a) Source and manufacture in the country where demand exists
b) Increase the fixed component of logistics cost
c) Source closer to the point of demand
d) Increase the variable component of logistics cost

18. A finance professional wants to make some cuts to warehouse personnel because actual
costs exceeded the budget. If warehouse workers were actually overworked due to high sales,
what would be a good way to justify the budget overages and avoid cutting staff?

a) Show how you will prioritize high-value good movements.

b) Show a dollar-driven budget.
c) Show a unit-driven budget.
d) Show an overtime report.

19. What are goals of logistics that need to be optimally balanced?

a) Effectively meet minimum customer service and efficiently minimize total systems cost.
b) Effectively meet customer requirements and efficiently minimize total systems cost.
c) Effectively maximize customer service and efficiently minimize cost trade-offs.

3
 d) Effectively maximize the order to fulfilment cycle and efficiently minimize cost trade-offs.

20. Which is an example of logistics form utility?

a) Faster transportation
b) Easy returns policy
c) Sufficient quantity on hand
d) Mixing

21. Which logistics activity is all about reducing risk?

a) Inventory management
b) Materials handling
c) Packaging
d) Customer service management

22. What is a key leadership skill that can be learned according to process-based leadership
theories?
a) The ability to admit mistakes.
b) Making people follow you.
c) Exercising position authority.
d) The ability to be charismatic and passionate.

23. Which is a tradeoff that will be experienced when production is leveled throughout the year
even though demand is strongly seasonal?
a) More need for overtime in production
b) Less ability to ship in full transportation loads
c) Higher warehousing costs
d) Higher risk of production shutdowns

24. What is one way that an organization that nearsources to reduce logistics costs could
break in to more distant markets?
a) Accept higher logistics costs elsewhere because they will average out.
b) Use lower grade materials than the competition but charge the same amount.
c) Outsource logistics in those more distant markets.
d) Nearsource separately in each key market.

25. Which is the fastest way to improve logistics throughput if it is measured using monetary
value metrics?
a) Treat all units with the same level of priority for picking and shipping.
b) Pick and ship higher value goods with higher priority.
c) Have short production runs with fast changeovers.
d) Have long production runs with fewer changeovers.

26. What is a primary factor that can result in a country's logistics as a percentage of GDP
being higher or lower relative to other countries?
a) Aggregate inventory levels
b) Tax rates
c) Fuel costs
d) Labor costs

4
27. Compressed product life cycles increase what pressure on logistics?
a) To maximize bulk shipping
b) To diversify globally
c) To minimize inventory
d) To buy rather than make

28. Which were fragmented business functions until they were integrated in the 1990s?
a) Order processing and transportation
b) Industrial packaging and materials handling
c) Finished goods and distribution center warehousing
d) Manufacturing inventory and finished goods inventory

29. A warehouse uses activity-based costing. Type A units are costed at US$0.30 per pick.
Type B units are costed at US$0.40 per pick. Type C units are costed at US$0.50 per pick. In
one week, 5,000 units of A were picked, 3,000 units of B were picked, and 1,000 units of C were
picked. What percentage of the week's warehouse costs are allocated to Type C units?
a) 17.2%
b) 15.6%
c) 34.2%
d) 19.5%

30. Which was not originally a part of logistics but was added as part of the evolution to supply
chain management?
a) Customer service management
b) Externally integrated information systems
c) Distribution requirements planning
d) Material requirements planning

31. What type of direct-to-consumer fulfillment model most closely resembles the traditional
retail fulfillment model except that the retailer directly ships to the customer?
a) Flow-through
b) Drop-shipped
c) Integrated
d) Outsourced

32. What is a good way to improve available-to-promise (ATP) and delivery date accuracy
without necessarily increasing ongoing costs?
a) Increase the time spent on individual order picking.
b) Spending more time on order management.
c) Maintain one-and-a-half times the safety stock at each location.
d) Run a project to reduce variability in ordering and delivery lead time.

33. How does transportation add value to inventory?

a) It gets goods closer to the point where they are in demand.

b) It reduces the amount of dwell time.

5
 c) It uses information to replace inventory.
d) It is an expense, not a value adding service.
34. What needs to be leveraged in order to gain the true benefits of supply chain management?
a) The logistical networks of customers and suppliers
b) New customer and supplier relationship management software
c) Customer service requirements and expectations
d) Purchasing or manufacturing from low labor cost countries

35. What is an example of why traditional accounting methods are less useful for logistics
costing?
a) Property, plant, and equipment costs related to inventory are in separated accounts.
b) Inbound transportation cost is treated as an expense.
c) Insurance costs for inventory is grouped with other types of insurance.
d) Outbound transportation cost is included in the cost of goods sold.

36. What is a primary difference between forward and reverse logistics flows?

a) Same network but in opposite directions

b) Profit center versus cost center
c) Homogeneous versus diverse unit types
d) Form utility versus service utility

37. What is a good way that the true value of packaging can be presented to stakeholders such
as finance?

a) Include the rate of freight claims.

b) Present a unit-driven budget.
c) Bundle packaging cost with consumer packaging cost.
d) Bundle packaging cost with unit cost.

38. How do mergers between 3PLs result in better economies of scale?

a) They eliminate some of the competition and can lower their prices.
b) They can spread fixed costs over a greater number of units.
c) They have more value added services to offer.
d) They can spread variable costs over a greater number of units.

39. How did the shift in focus from logistics to supply chain management affect how inventory
is perceived?
a) It is a risk reduction technique against variations in supply.
b) It is the most important lever to use when adjusting customer service levels.
c) It is a last resort when information or stabilizing processes fail.
d) It is now seen as the buffer between the links in the chain.

40. What is generally much more expensive with a direct-to-customer model in comparison
with a retail fulfillment model?
a) Showcasing
b) Order picking
c) Line haul
d) Cross-docking

6
41. What can be a leading indicator that a low-labor cost country will not remain so for long?

a) Shrinking middle class

b) Economic success on a macroeconomic level
c) Population rate increasing faster than other countries
d) Increased rate of deregulation

42. A warehouse has US$200,000 in fixed costs and US$10/unit in variable costs. Half of each
of these costs are direct costs and half are indirect costs. If it has 5,000 pallets in storage, what
is the cost per pallet?
a) US$10 per pallet
b) US$25 per pallet
c) US$40 per pallet
d) US$50 per pallet

43. What is a general rule for including or omitting an entire echelon from a logistics network?

a) It needs to reduce total cycle time.

b) It needs to reduce total systems cost.
c) It needs to make a profit.
d) It needs to add value to the business model.

44. Which cost will be reduced as more DCs are added to a logistics network?
a) Drop distance cost
b) Inventory storage costs
c) Line haul costs
d) Stem distance cost

45. If an organization decides to be customer focused as its area of specialization for

competitive advantage, what might it need to do?

a) Be able to ramp up or down quickly without disrupting the business.

b) Be the best at getting the most utilization out of each of its assets.
c) Be different things for different customers.
d) Be the fastest at time to market, delivery, and response time for all customers.

46. What is a market pressure on 3PLs that specialize in TL and LTL deliveries?
a) Larger container ships
b) Cross docking center trends
c) Direct-to-consumer trends
d) Increasing power of retailers

47. When an organization has a private fleet, how should it assess efficiency?

a) Benchmark against prior year costs and throughput.

b) Speed rather than consistency.

7
 c) Benchmark against third-party alternatives.
d) Consistency rather than speed.
48. What is a good way that the true value of packaging can be presented to stakeholders such
as finance?
a) Bundle packaging cost with unit cost.
b) Bundle packaging cost with consumer packaging cost.
c) Include the rate of freight claims.
d) Present a unit-driven budget.

49. What needs to be leveraged in order to gain the true benefits of supply chain management?

a) New customer and supplier relationship management software

b) Purchasing or manufacturing from low labor cost countries
c) Customer service requirements and expectations
d) The logistical networks of customers and suppliers

50. What is generally much more expensive with a direct-to-customer model in comparison
with a retail fulfilment model?
a) Cross-docking
b) Showcasing
c) Order picking
d) Line haul

51. If transportation labour costs could be volatile in the next few years, what is the best way
that an organization could reduce the risk that the landed cost of its goods might not be
competitive?
a) Source and manufacture in the country where demand exists
b) Increase the variable component of logistics cost
c) Source closer to the point of demand
d) Increase the fixed component of logistics cost

52. Company A has no immediate use for the containers they receive from China after
unloading their shipments. Currently they pay to have the empty containers hauled to a depot.
Which option would reduce both costs and complexity?

a) Purchase inventory to sell in China and export it in the containers.

b) Partner with an exporter to China who will pick up the containers and for free.
c) Keep the containers and use them as storage units.
d) Purchase a few trucks to haul them to the depot yourself.

53. How do mergers between 3PLs result in better economies of scale?

a) They can spread variable costs over a greater number of units.
b) They eliminate some of the competition and can lower their prices.
c) They can spread fixed costs over a greater number of units.
d) They have more value added services to offer.

54. The customer's primary requirement is for low variability. A carrier met the customer's
order cycle time goal of two days under budget and passed on some of these savings to the
customer. Some late deliveries were balanced out by some early ones to keep the order cycle
time metric on target. Which is the best way to describe the carrier?

8
 a) Neither efficient nor effective
b) Efficient but not effective
c) Not efficient but effective
d) Efficient and effective

55. An organization decides to source closer to a key market and due to lower logistics costs
can sell the goods at a competitive price there despite higher production labor costs. What is a
disadvantage of this strategy relative to competitors who source in the more distant low labor
cost region?
a) The organization will have higher landed cost than these competitors in this market.
b) These competitors' products have high substitutability in this local key market.
c) These competitors have access to more markets globally.
d) The organization would be more sensitive to fuel prices than these competitors.

56. Increasing safety stocks will increase which risks?

a) Stockouts
b) Lost customers
c) Suboptimization
d) Obsolescence

57. If an organization decides to be customer focused as its area of specialization for

competitive advantage, what might it need to do?
a) Be the best at getting the most utilization out of each of its assets.
b) Be different things for different customers.
c) Be able to ramp up or down quickly without disrupting the business.
d) Be the fastest at time to market, delivery, and response time for all customers.

58. What type of direct-to-consumer fulfilment model most closely resembles the traditional
retail fulfilment model except that the retailer directly ships to the customer?

a) Flow-through
b) Outsourced
c) Drop-shipped
d) Integrated

59. Which was not originally a part of logistics but was added as part of the evolution to supply
chain management?

a) Distribution requirements planning

b) Customer service management
c) Externally integrated information systems
d) Material requirements planning

60. What is a good way to improve available-to-promise (ATP) and delivery date accuracy
without necessarily increasing ongoing costs?
a) Run a project to reduce variability in ordering and delivery lead time.
b) Maintain one-and-a-half times the safety stock at each location.
c) Increase the time spent on individual order picking.

9
 d) Spending more time on order management.

61. What is a key leadership skill that can be learned according to process-based leadership
theories?

a) The ability to be charismatic and passionate.

b) The ability to admit mistakes.
c) Making people follow you.
d) Exercising position authority.

62. What is a general rule for including or omitting an entire echelon from a logistics network?

a) It needs to add value to the business model.

b) It needs to reduce total cycle time.
c) It needs to make a profit.
d) It needs to reduce total systems cost.

63. Logistics can be summed up as physical supply plus what?

a) Transportation
b) Receiving
c) Materials management
d) Distribution

64. Which logistics activity is all about reducing risk?

a) Customer service management
b) Packaging
c) Materials handling
d) Inventory management

65. Which were fragmented business functions until they were integrated in the 1990s?

a) Order processing and transportation

b) Finished goods and distribution center warehousing
c) Manufacturing inventory and finished goods inventory
d) Industrial packaging and materials handling

66. A warehouse uses activity-based costing. Type A units are costed at US$0.30 per pick.
Type B units are costed at US$0.40 per pick. Type C units are costed at US$0.50 per pick. In
one week, 5,000 units of A were picked, 3,000 units of B were picked, and 1,000 units of C were
picked. What percentage of the week's warehouse costs are allocated to Type C units?
a) 15.6%
b) 34.2%
c) 19.5%
d) 17.2%

67. An organization is moving from make-to-stock to make-to-order for its primary product
family as it enters decline. What might this change mean for warehousing?

a) Warehousing will be unaffected by this change.

b) Little need for warehousing in general.

10
 c) Increased need for distribution center warehousing.
d) Little need for finished goods warehousing.

68. What is one way that an organization that near sources to reduce logistics costs could
break in to more distant markets?
a) Nearsource separately in each key market.
b) Outsource logistics in those more distant markets.
c) Use lower grade materials than the competition but charge the same amount.
d) Accept higher logistics costs elsewhere because they will average out.

69. Which is an example of logistics form utility?

a) Sufficient quantity on hand

b) Faster transportation
c) Mixing
d) Easy returns policy

70. When working with direct sales to consumers, what is an important role for logistics to play
when marketing is determining the best-selling price?

a) Calculating the cost per unit type of offering free shipping.

b) Calculating the ideal selling price based on total logistics costs.
c) Indicating the quantities to hold in inventory of each type based on the chosen price.
d) Indicating the price for bulk discount offers.

71. What is a primary difference between forward and reverse logistics flows?

a) Homogeneous versus diverse unit types

b) Form utility versus service utility
c) Same network but in opposite directions
d) Profit center versus cost center

72. A finance professional wants to make some cuts to warehouse personnel because actual
costs exceeded the budget. If warehouse workers were actually overworked due to high sales,
what would be a good way to justify the budget overages and avoid cutting staff?

a) Show how you will prioritize high-value good movements.

b) Show a unit-driven budget.
c) Show an overtime report.
d) Show a dollar-driven budget.

73. What is a primary factor that can result in a country's logistics as a percentage of GDP
being higher or lower relative to other countries?
a) Tax rates
b) Aggregate inventory levels
c) Labor costs
d) Fuel costs

74. A warehouse has US$200,000 in fixed costs and US$10/unit in variable costs. Half of each
of these costs are direct costs and half are indirect costs. If it has 5,000 pallets in storage, what
is the cost per pallet?

11
 a) US$10 per pallet
b) US$25 per pallet
c) US$40 per pallet
d) US$50 per pallet
75. What is a good way to increase the profitable service area for a fulfillment DC?
a) Decrease the transportation costs to that DC.
b) Invest in a larger fleet of fuel-efficient vehicles.
c) Increase the time that inventory remains in the pipeline to the DC.
d) Increase the variable costs of the DC relative to its fixed costs.

76. What are goals of logistics that need to be optimally balanced?

a) Effectively meet customer requirements and efficiently minimize total systems cost.
b) Effectively maximize customer service and efficiently minimize cost trade-offs.
c) Effectively meet minimum customer service and efficiently minimize total systems cost.
d) Effectively maximize the order to fulfilment cycle and efficiently minimize cost trade-offs.

77. What is an example of why traditional accounting methods are less useful for logistics
costing?
a) Outbound transportation cost is included in the cost of goods sold.
b) Inbound transportation cost is treated as an expense.
c) Property, plant, and equipment costs related to inventory are in separated accounts.
d) Insurance costs for inventory is grouped with other types of insurance.

78. What can be a leading indicator that a low-labor cost country will not remain so for long?

a) Population rate increasing faster than other countries

b) Increased rate of deregulation
c) Shrinking middle class
d) Economic success on a macroeconomic level

79. Which is the fastest way to improve logistics throughput if it is measured using monetary
value metrics?
a) Treat all units with the same level of priority for picking and shipping.
b) Have long production runs with fewer changeovers.
c) Have short production runs with fast changeovers.
d) Pick and ship higher value goods with higher priority.

80. Which cost will be reduced as more DCs are added to a logistics network?
a) Stem distance cost
b) Inventory storage costs
c) Line haul costs
d) Drop distance cost

81. All things being equal, what is a factor that would require having higher levels of customer
service in logistics than other industries?

12
 a) Highly substitutable goods
b) High density goods
c) Highly fragile goods
d) High value goods

82. Which will be the most effective way to increase the organization's profits of the options
provided?
a) Open sales in a new market, raising revenue by 10 percent.
b) Reduce transportation labor costs by 10 percent.
c) Increase promotions of goods in surplus, raising revenue by 10 percent.
d) Reduce fixed warehouse costs by 10 percent at the cost of 3 percent higher variable
transportation costs.

83. How does transportation add value to inventory?

a) It gets goods closer to the point where they are in demand.

b) It uses information to replace inventory.
c) It is an expense, not a value adding service.
d) It reduces the amount of dwell time.

84. How did the shift in focus from logistics to supply chain management affect how inventory
is perceived?

a) It is now seen as the buffer between the links in the chain.

b) It is the most important lever to use when adjusting customer service levels.
c) It is a risk reduction technique against variations in supply.
d) It is a last resort when information or stabilizing processes fail.

85. Which inventory has the highest amount of place utility?

a) Inventory at a manufacturer warehouse

b) Inventory at a branch distribution center
c) Inventory at a retail location
d) Inventory at a central distribution center

86. Which is a tradeoff that will be experienced when production is leveled throughout the year
even though demand is strongly seasonal?
a) More need for overtime in production
b) Less ability to ship in full transportation loads
c) Higher warehousing costs
d) Higher risk of production shutdowns

87. In the tradeoff of cost to serve versus level of customer service provided by logistics,
which is the primary goal?

a) Find the balance that maximizes profit.

b) Find the balance that maximizes revenue.
c) Find the balance that optimizes total logistics cost.
d) Find the balance that minimizes inventory.

88. Customer A has a contribution margin of €500,000 and has €150,000 in fixed direct costs.
Customer B has a contribution margin of €300,000 and €80,000 in fixed direct costs. These are
the only two customers but the organization also has €200,000 in fixed indirect costs. If the
Customer B account was dropped, what would be the change in the organization's net profit?

13
 a) €145,000 less
b) €220,000 less
c) €300,000 less
d) €370,000 less

89. What should a logistics manager do if product development indicates they want to create
three new models of a product that are each a little different (there is just one model at
present)?
a) Oppose the proposal since it increases complexity and risk.
b) Inform decision makers of the additional logistics costs for more SKUs.
c) Indicate that the work should be outsourced to a low labor cost country.
d) Do nothing since this is not an area where logistics should provide input.

90. Compressed product life cycles increases what pressure on logistics?

a) To buy rather than make

b) To maximize bulk shipping
c) To diversify globally
d) To minimize inventory

91. Which action by a logistics manager would empower his or her employees?
a) Avoid giving feedback on the desired end result.
b) Closely supervising subordinates as they perform the work.
c) Avoid holding the person accountable for results.
d) Have employees participate in setting performance targets related to their work.

1. Where would customer relationship management (CRM) fall within the SCOR model
processes?
a) Source
b) Plan
c) Deliver
d) Enable

2. A realistic best-case scenario for logistics at a consumer packaged goods organization in

terms of life cycles would be which of these?
a) Some products in each of the stages at all times.
b) All products in the growth stage.
c) Most products in the decline stage but for extended periods.
d) Products all in the same stage to the degree possible.

3. A retail value driver is to maximize sales per square meter of floor space. What would be one
logistics key performance indicator that could support this objective?

a) Local delivery vehicle utilization

b) Order fulfillment cycle time
c) Regression analysis
d) Picking rates

14
4. When reviewing the finalists for a distribution requirements planning system, what should
be done to validate marketing assertions?
a) Go through a live version of the system step by step.
b) Provide the same information to each finalist to make sure it is comparable.
c) Prepare a detailed statement of work.
d) Include this verification step in the contract terms and conditions.

5. How can an organization be responsive to customer requirements while maintaining the

economies of scale needed to keep customer service levels affordable?

a) Set a custom level of service that differs for each customer per their requirements.
b) Establish a basic logistics service floor and exceed it only when needed.
c) Set aspirational world-class targets for service to motivate excellence.
d) Hold enough safety stock and reliable carrier contracts to have no service failures.

6. Retailers sell a wide variety of beauty products at low margins. The wholesaler knows that
the retailers cannot afford to maintain safety stocks. How can it provide availability as a value
added customer service in this situation?
a) Agility to ramp up or down in volume
b) More frequent deliveries
c) Increasing delivery speed at the cost of variability
d) Order management training programs

7. The plan, source, make, and deliver values at risk (VAR) sum to US$500,000. Return has
three major risks. The warranty returns have a 25 percent chance of being over the allocated
level by up to US$200,000. There is a one percent chance of a recall that could cost up to
US$1,500,000. Finally, a law could come into effect that would require taking back a family of
products for no charge at end of life. There is a 10 percent chance this would occur and it
would require a budget of US$2,000,000. What is the overall value at risk?
a) US$765,000
b) US$872,000
c) US$1,832,000
d) US$4,200,000

8. Return on working capital is after-tax operating income divided by net working capital. How
should net working capital be calculated?
a) Revenue - (direct cost + indirect cost)
b) Fixed assets - depreciation
c) Inventory + accounts receivable - accounts payable
d) Days sales outstanding + inventory days of supply - days payables outstanding

9. A logistics study maps the network's nodes and links. What is good way to use such a
diagram
a) Places to put nodes that will break up the longest links into shorter distances.
b) Simplifications like dropping a DC if a nearby facility could have the same service level.
c) Complex subsystems that can be replicated elsewhere in the network to add value.
d) Ways to get partners to assume more of the costs or shipping responsibilities.

15
10. Why is it important to carefully craft measurements for logistics?
a) To encourage goal seeking while minimizing unintended consequences.
b) To provide a valid means of assessing blame especially for third parties.
c) To justify logistics as a necessary expense and cost center.
d) To track efficiency even though they do not help to measure effectiveness.

10. The organization identified the top 20 percent of customers in terms of the revenue they
provide. What would be the best way a logistics professional could use this information?

a) Provide them with the basic service level.

b) Discover ways to make them even more profitable such as by upselling to them.
c) Get to know these customers' logistics pain points and solve them.
d) Study these customers' purchases and promote these to the unprofitable customers.

11. An organization sometimes delays pickup of its containers from a shipping port to wait for
a lull in the use of their local delivery vehicles. Is there a problem with this technique?
a) Yes, it is an overutilization of assets.
b) No, it is a good example of routing and scheduling optimization.
c) No, it properly reduces inventory holding costs.
d) Yes, it increases cycle time variability.

12. Warehouse equipment expenses would be rolled up as part of which Level 1 SCOR metric?

a) Cash-to-cash cycle time

b) Order fulfillment cycle time
c) Return on supply chain fixed assets
d) Return on working capital

13. An organization has decided that its need for consolidation warehouses can be met best by
an outsourced provider following a breakeven analysis that indicated they would need much
higher throughput, especially in the summer months, to justify owning these facilities. What
type of provider would likely be the best for this organization?
a) An insourced provider
b) A dedicated provider
c) A multi-user service
d) A cross-docking provider

14. An organization uses the strategic profit model to break down the areas that logistics might
influence improvements in the return on assets metric. What is the best way shown that the
organization can determine targets for the tradeoff areas of reducing inventory and reductions
in sales?
a) Best-in-class benchmarking
b) Balanced scorecards
c) Competitive benchmarking
d) The country's macroeconomic leading indicators

15. What is the difference between upside supply chain flexibility and upside supply chain
adaptability?

16
 a) Flexibility is a ratio of capacity utilization and adaptability is a ratio of labor utilization.
b) Flexibility is a ratio of production versus cost and adaptability is a ratio of production versus
quality.
c) Flexibility is a measure of time and adaptability is a measure of production quantity.
d) Flexibility is a measure of customization and adaptability is a measure of capacity.

16. What does each key performance indicator need to be linked back to?

a) Public or pre-determined third party standards

b) A performance objective or value driver
c) Data analysis
d) The relevant logistics function or department

17. A 3PL can perform local delivery services for a little less than your organization's fleet of
leased trucks and employee drivers. What might be a factor that still points to "make" rather
than "buy"?
a) Your drivers often get positive feedback from customers who know them well.
b) Company executives believe that the drivers are the best at local delivery.
c) The 3PL has very positive but not perfect reviews from its other clients.
d) The vehicle leases have a bargain purchase option at the end of the lease term.

18. The centralized independent 3PL can provide goods to retailers and direct to consumers for
less than current wholesalers can sell to retail. What should the channel master do?
a) Design contracts to require retailers use the wholesalers.
b) Eliminate the wholesalers.
c) Allow the 3PL to raise its prices.
d) Invest in information systems for the wholesalers.

19. What tool might be most effective in a situation where some trucks have been stolen right
from the shipping docks even though the controls in place should have prevented this?

a) Best-in-class benchmarking
b) Audit checklists
c) Balanced scorecards
d) Key performance indicators

20. Which type of specialized logistics operating arrangement would be best for a major
consumer packaged goods manufacturer who primarily sells assortments to retailers and
needs to maximize efficiency?
a) Direct
b) Combined
c) Echelon
d) Flexible

17
21. What is a key skill for logistics professionals in any organization, but especially in one that
separates logistics into different departments?
a) Knowledge of product life cycles
b) Segmentation by customer value
c) Cross-functional leadership
d) Matrix leadership style

22. Which is a key warehouse control to reduce risks of employee theft?

a) Rotate work assignments.

b) Audit complete line items in every instance.
c) Only grant yard access exceptions to persons with disabilities.
d) Consolidate goods movement and approval authority.

23. Which is a way to reduce the risks inherent in a lean production system?

a) Maintain inventory buffers at key production points.

b) Implement multiple supplier relationships at the level of "contract."
c) Give outsourcing partners full access to proprietary designs.
d) Nearsource suppliers and production in several key markets.

24. What is a good policy regarding logistics network complexity?

a) A complex network should expand its asset footprint commensurately.
b) Increase the system's agility along with its increase in complexity.
c) Organizational maturity needs to keep pace with complexity.
d) An overly simplified network is preferable to a too complex one.

25. A logistics professional starts working for an organization that has a network
organizational structure. Which is something in this structure that will require cross-functional
leadership to implement?
a) Delaying committing to finalization of goods until actual demand is known.
b) Reducing the amount of supervision of employees based on training.
c) Analyzing customization requests for logistics services at lower hierarchy levels.
d) Getting inbound and outbound logistics to use a bulk discounted carrier contract.

26. When conducting a strengths, weaknesses, opportunities, and threats (SWOT) analysis,
what is the best source of information on weaknesses?

a) Shareholder reports or their equivalent

b) Customers
c) Functional area managers
d) External market scans

27. Which logistics planning element is made at the tactical (6 to 12 months) level?
a) Customer service levels
b) Materials handling unit load sizes
c) Load planning
d) Use of a 3PL versus in-house logistics

18
28. An organization has a large investment in a private fleet that has improved its efficiency
over the past few years but still costs more per delivery than a 3PL would cost. What should
the organization do?

a) Continue to invest in the fleet since its efficiency is moving in the right direction.
b) Contract with the 3PL to manage the fleet and start providing some deliveries.
c) Keep the fleet since it is a significant investment that was already made.
d) Sell the fleet since it is an opportunity cost.

29. Which is a generic logistics strategy that differentiates logistics from the competition by
reducing complexity for its customers?

a) Market strategy
b) Information strategy
c) Process strategy
d) Focus strategy

30. What is the breakeven in units that would favor building a DC rather than leasing space in
one if it would cost US$5 million to build the facility and the storage cost per unit would be
US$10 per unit but the leased space would have no fixed costs and be US$25 per unit?

a) 142,847 units
b) 200,000 units
c) 333,333 units
d) 500,000 units

31. Is there a positive event that might still prompt the end of a strategic alliance?
a) No, these alliances need to be developed to endure if they are to succeed.
b) Yes, if the organization learns their best practices it can do that part itself better.
c) Yes, if a different partner would be more advantageous for a new product.
d) No, they invariably involve a failure to deliver results or to communicate.

32. Which is a good way to reduce risk when implementing a close partnership with another
organization in the supply chain that involves fully restructuring the logistics network?
a) Reserve more complex tasks until later project phases.
b) Ensure each party has an equal amount of risk in the relationship.
c) Terminate the relationship if there are early failures.
d) Develop an implementation project that can be fully completed very quickly.

33. What is needed to transform variance analysis into exception handling?

a) A baseline or budget
b) Thresholds
c) Data gathering
d) Utilization

34. What typically needs to be implemented at an organization before the total cost to serve
can be measured at the transactional rather than aggregate level?
a) Risk probability and monetary value assessments
b) Activity-based costing
c) Lean systems
d) Capacity utilization metrics

19
35. According to the definition of the total cost of ownership (TCO), which cost is the largest
portion of total cost?
a) Purchase price/acquisition cost
b) Transportation costs
c) Post-transaction costs
d) Opportunity cost

36. Using the two components that are added to find order fulfilment cycle time, what can a
logistics manager specifically monitor and control and thus improve?
a) Safety stock levels
b) Order picking from stock time
c) Shortest and longest process times
d) Dwell time

37. An organization is doing a make-or-buy cost analysis on whether to use a customs broker
or to perform these services in house. Which expresses the primary considerations for this
analysis?

a) Capacity availability of broker versus capacity requirements.

b) Cost of broker fees versus direct customs application fees.
c) Organizational investment in this type of specialized knowledge versus additional investment
required.
d) Cost of hiring to get specialized knowledge versus volume and variety of transactions.

38. What is a good way for a 3PL to increase loyalty in its customer base?
a) Position yourself from the start as the logical choice for strategy setting.
b) Initiate the relationship by indicating your goals and success criteria.
c) Allow them to start with high management control even if you could do it better.
d) Avoid raising or lowering prices by improving costs and profits with some secrecy.

39. What SCOR performance attribute would be the highest priority for a 3PL that has high
variability in customer orders and wants to be flexible and adaptable enough to ramp up or
down in capacity without significant financial or human resources hardships or risks?
a) Supply chain reliability
b) Supply chain responsiveness
c) Supply chain agility
d) Supply chain asset management

40. Which general type of financial ratio could be used to assess whether a small retail
customer might not be able to pay its debts on time or could default entirely?

a) Activity ratios
b) Liquidity ratios
c) Profitability ratios
d) Leverage ratios

20
41. What would be a good reason to avoid collecting data for performance measurement at the
usual time?

a) Conditions during the data collection time are unusually busy with rush orders.
b) There is no good reason to alter the collection schedule.
c) The organization uses a balanced scorecard system.
d) The crew does their cleaning just prior to this time period on a regular basis.

42. What is the role of logistics in customer segmentation?

a) Defining the segments with input from marketing.
b) Preparing a detailed statement of work.
c) Leading B2B customer segmentation but not consumer segmentation.
d) Providing input on service levels per segment.

43. Which is the best example of a core competency?

a) A logistics team that is almost at the same service level and cost as the top competitor's
benchmarks.
b) A proprietary product that no one has been able to mimic or copy.
c) A level of market share that creates a dominant sustaining influence on demand.
d) A process that integrates warehousing and transportation requirements with demand.

44. At what point in a product life cycle would logistics provide input on unit load size or bulk
purchase discount price break points by weight or volume?
a) Growth
b) Introduction
c) Maturity
d) Development

45. Which is a vital part of the first step in the contracting out process that is at risk of being
overlooked?
a) Communicate with staff to manage morale.
b) Assess the current costs of performing the activity.
c) Assess whether the element should be a core competency.
d) Stopping if the economics point to "make."

46. Which is a primary benefit and motivation for organizations to more closely partner with
other organizations in the same supply chain?
a) Achieve close partnership and full information sharing with all partners.
b) Can specialize in faster or cheaper service, but not both.
c) Eliminate duplicate buffer inventories with no effect on customer service.
d) Increase the risk but greatly increase the potential reward.

47. A proprietary technology hardware and software design and marketing organization wants
to use dedicated providers rather than multi-user services because of the risk to intellectual
property. They want to get input on their strategy in the form of joint planning and will offer
indefinite contracts. What type of relationships should they develop?
a) Enterprise extension
b) Ongoing relationship

21
 c) Leader/follower
d) Strategic alliance

48. A key performance indicator (KPI) indicates that a carrier failed to preclear 20 percent of
shipments in the last month. What type of KPI is this?
a) Leading indicator
b) Lagging indicator
c) Diagnostic indicator
d) Business process perspective indicator

49. Offshore outsourcing would reduce total labor costs by 60 percent but transportation costs
would increase by 20 percent. What other area should be examined closely for significant cost
changes prior to making a make-or-buy decision?
a) Cost of financing
b) Cost of monitoring and controlling
c) Cost of warehousing in the offshore country
d) Cost of order processing

50. An organization's annualized cost of goods sold is US$60,000,000. It has average inventory
for the year of US$10,000,000. What is its inventory days of supply?

a) 0.2 days
b) 6 days
c) 61 days
d) 72 days

51. An organization has ambient temperature, refrigerated, and frozen product segments. What
is one way to increase the capacity and flexibility of a fleet of delivery vehicles?
a) Have just a refrigerated and frozen zone in each truck.
b) Have trucks with ambient, refrigerated, and frozen zones in each truck.
c) Have three truck types, one for each product segment.
d) Have just a frozen zone for all trucks.

52. If a supply chain initiative is closely integrating two companies in a supply chain, how
might this affect logistics operations?
a) Handoff of logistics responsibilities to the other organization.
b) Regular direct interactions with the other organization's logistics professionals.
c) Maintaining separate and parallel logistics functions to maintain redundancy.
d) Provide input to your buyer or salesperson's intercompany interactions.

53. An organization's distribution function delivered 1,200 customer orders during the period. 5
orders arrive with incorrect products, 7 with some backordered items, and 11 were complete
but delayed by a day due to port congestion, 2 were delivered two days early, and 8 were
complete and on time but the shipments were not precleared. What is the perfect order
fulfillment level?

a) 1.92%
b) 2.75%
c) 97.25%
d) 98.08%

54. Which is a typical area requiring regulatory approval?

22
 a) Use of a particular type of road carrier and their rates.
b) Rail line abandonment.
c) Choice to not participate in public-private customs partnership programs.
d) Use of an open-skies agreement.

55. A warehouse is facing a temporary slowdown in customer orders for its manufacturing
postponement activities. Which would accomplish agility goals while also reducing long-term
labor costs?
a) Set work rules to minimize unproductive time.
b) Cross-train workers on those days.
c) Maintain production levels to build an inventory buffer.
d) Lay off the least productive workers.

56. Documentation accuracy, delivery performance to customer commit date, and percent of
order in full all relate to which Level 1 SCOR metric?
a) Overall value at risk
b) Orders delivered defect free conformance
c) Supply chain responsiveness
d) Perfect order fulfillment

1. Why does lean emphasize short, consistent lead times so much?

a) Buffers between processes can be kept at consistent levels.
b) The push pull frontier can be moved back further in this way.
c) It helps maximize takt time and multi-piece flow.
d) Higher transportation and warehousing costs are accepted as a trade-off.

2. Which is considered a form of waste in a lean system because it is non-value added?

a) Quality
b) Risk management
c) Warehousing
d) Transportation

3. An organization has to have long lead times because the goods it sells are low margin and
have many competitors. The high competition and high substitutability among brands means
that demand is also highly unpredictable. What type of supply chain would be best for this
organization?
a) Lean
b) Agile
c) Quick response
d) Leagile

4. What does an organization need to do to implement a define, measure, analyse, improve,

and control (DMAIC) six sigma continuous improvement cycle?

a) Get to near 3.4 defects per million opportunities.

b) Determine the symptoms of poor quality and address them sequentially.
c) Implement kaizen methodologies and empower employees.
d) Implement rigorous measurement methodologies

23
5. An organization has spikes and dips in demand that are unpredictable rather than being
seasonal. Demand during a given year is between 500,000 and 800,000 units and this range has
been observed for a number of years in good and bad economic times. Profit margins are low
and anything that can be done to improve them would be welcome. Which solution would
improve margins with the fewest trade-offs?
a) Produce all units in a low-labor cost country but ocean ship up to 500,000 units and air ship
any remaining demand.
b) Nearsource all units in an agile facility that can change capacity by at least 37.5 percent within
30 days.
c) Produce 500,000 units in a low-labor cost country and ocean ship, then nearsource remaining
demand at agile facilities.
d) Insource all units at a lean facility but use low-labor cost country produced components from
multiple suppliers that all ocean ship.

6. What would make a lean initiative likely to fail because it would unfairly fail to capture the
productivity gains of lean?
a) Using six sigma
b) Using standard cost accounting
c) Using cash-to-cash cycle time and other cash flow metrics
d) Using value stream mapping

7. Which is an aspect of six sigma quality that cannot be ignored?

a) Maximizing the grade of materials

b) Fixing the symptoms of a problem
c) A delivery network that is average in speed but is top in consistency
d) Customer expectations regarding price

8. Using six sigma language, at least how many chances of a defect exist with perfect order
fulfilment?
a) One
b) Four
c) Five
d) Six

9. It is discovered that logistics professionals have been overburdened expediting shipments

and this has led to a decrease in perfect orders? Using lean's problem solving approach to
waste, which is the most likely root cause of this issue?
a) Overburdening of workers or processes (muri)
b) Ability of any worker to stop a process or production line (jidoka)
c) Demand or activities that are inconsistent or uneven (mura)
d) Activities that consume resources but create no customer value (muda)

10. According to lean philosophy, what is essentially a workaround that insulates the
organization from immediately feeling the pain of late deliveries, part shortages, idle
equipment, long picking queues, returns, and more?

24
 a) Over processing
b) Lead time
c) Inventory
d) Dwell time

11. Which is an example of a lean objective put into practice?

a) The number of items transported on container ships is incrementally increased each year.
b) Delivery speed is given the highest priority even over delivery variability.
c) Warehouse pickers wear walking chronometers and compete on fewest steps per line item
picked.
d) Warehouse final assembly workers finish up some extra units whenever there is a lull in
demand.

12. Which would be unacceptable in an organization that has fully embraced lean?
a) Having each person be responsible for their own inspections.
b) Publicly berating an employee for missing a deadline.
c) Providing team rewards rather than individual rewards.
d) Standardizing work to require it be done a certain way.

13. What should an organization do if achieving six sigma's 3.4 defects per million
opportunities is unfeasible given current technology levels and customer expectations are
much lower than that?

a) Retain the six sigma targets and continue to work toward them.
b) Use six sigma processes but ignore this particular goal.
c) Customize goals that are ambitious given what is feasible and customer accepted.
d) Use a different quality system that is more appropriate to the given industry.

14. Under lean, which low level employee action is encouraged?

a) Deferring to their superiors regarding ownership of their work.

b) Proposing experiments that could improve work effectiveness.
c) Continuing to perform an activity as directed even if it clearly has an error.
d) Changing process steps without approval if it seems more efficient.

1. What SCOR performance attribute would be the highest priority for a 3PL that has high
variability in customer orders and wants to be flexible and adaptable enough to ramp up or
down in capacity without significant financial or human resources hardships or risks?
a) Supply chain reliability
b) Supply chain responsiveness
c) Supply chain agility
d) Supply chain asset management

25
2. An organization sometimes delays pickup of its containers from a shipping port to wait for a
lull in the use of their local delivery vehicles. Is there a problem with this technique?
a) Yes, it increases cycle time variability.
b) No, it properly reduces inventory holding costs.
c) No, it is a good example of routing and scheduling optimization.
d) Yes, it is an overutilization of assets.

3. Logistics can be summed up as physical supply plus what?

a) Distribution
b) Receiving
c) Transportation
d) Materials management

4. Using the two components that are added to find order fulfilment cycle time, what can a
logistics manager specifically monitor and control and thus improve?
a) Order picking from stock time
b) Dwell time
c) Safety stock levels
d) Shortest and longest process times

5. What is an example of why traditional accounting methods are less useful for logistics
costing?
a) Insurance costs for inventory is grouped with other types of insurance.
b) Property, plant, and equipment costs related to inventory are in separated accounts.
c) Outbound transportation cost is included in the cost of goods sold.
d) Inbound transportation cost is treated as an expense.

6. What should an organization do if achieving six sigma's 3.4 defects per million opportunities
is unfeasible given current technology levels and customer expectations are much lower than
that?
a) Retain the six sigma targets and continue to work toward them.
b) Use a different quality system that is more appropriate to the given industry.
c) Customize goals that are ambitious given what is feasible and customer accepted.
d) Use six sigma processes but ignore this particular goal.

7. An organization decides to source closer to a key market and due to lower logistics costs
can sell the goods at a competitive price there despite higher production labor costs. What is a
disadvantage of this strategy relative to competitors who source in the more distant low labor
cost region?
a) The organization would be more sensitive to fuel prices than these competitors.
b) These competitors' products have high substitutability in this local key market.
c) These competitors have access to more markets globally.
d) The organization will have higher landed cost than these competitors in this market.

8. When an organization has a private fleet, how should it assess efficiency?

a) Speed rather than consistency.
b) Consistency rather than speed.
c) Benchmark against prior year costs and throughput.
d) Benchmark against third-party alternatives.

26
9. Which is considered a form of waste in a lean system because it is non-value added?
a) Warehousing
b) Quality
c) Risk management
d) Transportation

10. Which is an aspect of six sigma quality that cannot be ignored?

a) Customer expectations regarding price

b) Fixing the symptoms of a problem
c) A delivery network that is average in speed but is top in consistency
d) Maximizing the grade of materials

11. Which will be the most effective way to increase the organization's profits of the options
provided?
a) Reduce fixed warehouse costs by 10 percent at the cost of 3 percent higher variable
transportation costs.
b) Increase promotions of goods in surplus, raising revenue by 10 percent.
c) Reduce transportation labor costs by 10 percent.
d) Open sales in a new market, raising revenue by 10 percent.

12. What is a key leadership skill that can be learned according to process-based leadership
theories?
a) Making people follow you.
b) Exercising position authority.
c) The ability to be charismatic and passionate.
d) The ability to admit mistakes.

13. A logistics professional starts working for an organization that has a network
organizational structure. Which is something in this structure that will require cross-functional
leadership to implement?
a) Getting inbound and outbound logistics to use a bulk discounted carrier contract.
b) Delaying committing to finalization of goods until actual demand is known.
c) Analyzing customization requests for logistics services at lower hierarchy levels.
d) Reducing the amount of supervision of employees based on training.

14. A key performance indicator (KPI) indicates that a carrier failed to preclear 20 percent of
shipments in the last month. What type of KPI is this?
a) Diagnostic indicator
b) Business process perspective indicator
c) Lagging indicator
d) Leading indicator

27
15. Is there a positive event that might still prompt the end of a strategic alliance?
a) No, these alliances need to be developed to endure if they are to succeed.
b) No, they invariably involve a failure to deliver results or to communicate.
c) Yes, if a different partner would be more advantageous for a new product.
d) Yes, if the organization learns their best practices it can do that part itself better.

16. Return on working capital is after-tax operating income divided by net working capital. How
should net working capital be calculated?

a) Revenue - (direct cost + indirect cost)

b) Inventory + accounts receivable - accounts payable
c) Days sales outstanding + inventory days of supply - days payables outstanding
d) Fixed assets - depreciation

17. Which general type of financial ratio could be used to assess whether a small retail
customer might not be able to pay its debts on time or could default entirely?
a) Leverage ratios
b) Liquidity ratios
c) Profitability ratios
d) Activity ratios

18. What is a market pressure on 3PLs that specialize in TL and LTL deliveries?
a) Direct-to-consumer trends
b) Larger container ships
c) Increasing power of retailers
d) Cross docking center trends

19. How do mergers between 3PLs result in better economies of scale?

a) They eliminate some of the competition and can lower their prices.
b) They have more value added services to offer.
c) They can spread fixed costs over a greater number of units.
d) They can spread variable costs over a greater number of units.

20. A warehouse is facing a temporary slowdown in customer orders for its manufacturing
postponement activities. Which would accomplish agility goals while also reducing long-term
labor costs?

a) Lay off the least productive workers.

b) Set work rules to minimize unproductive time.
c) Cross-train workers on those days.
d) Maintain production levels to build an inventory buffer.

28
1. When working with direct sales to consumers, what is an important role for logistics to play
when marketing is determining the best selling price?
a) Calculating the cost per unit type of offering free shipping.
b) Indicating the price for bulk discount offers.
c) Indicating the quantities to hold in inventory of each type based on the chosen price.
d) Calculating the ideal selling price based on total logistics costs.

2. Which is the best example of a core competency?

a) A process that integrates warehousing and transportation requirements with demand.
b) A level of market share that creates a dominant sustaining influence on demand.
c) A proprietary product that no one has been able to mimic or copy.
d) A logistics team that is almost at the same service level and cost as the top competitor's
benchmarks.

3.Which is a primary benefit and motivation for organizations to more closely partner with
other organizations in the same supply chain?

a) Can specialize in faster or cheaper service, but not both.

b) Eliminate duplicate buffer inventories with no effect on customer service.
c) Increase the risk but greatly increase the potential reward.
d) Achieve close partnership and full information sharing with all partners.

3. What is a good way for a 3PL to increase loyalty in its customer base?
a) Initiate the relationship by indicating your goals and success criteria.
b) Avoid raising or lowering prices by improving costs and profits with some secrecy.
c) Position yourself from the start as the logical choice for strategy setting.
d) Allow them to start with high management control even if you could do it better.

4. What is one way that an organization that near sources to reduce logistics costs could break
in to more distant markets?

a) Outsource logistics in those more distant markets.

b) Use lower grade materials than the competition but charge the same amount.
c) Accept higher logistics costs elsewhere because they will average out.
d) Nearsource separately in each key market.

5. A key performance indicator (KPI) indicates that a carrier failed to preclear 20 percent of
shipments in the last month. What type of KPI is this?
a) Diagnostic indicator
b) Lagging indicator
c) Leading indicator
d) Business process perspective indicator

6. What type of direct-to-consumer fulfillment model most closely resembles the traditional
retail fulfillment model except that the retailer directly ships to the customer?

a) Integrated
b) Flow-through
c) Outsourced
d) Drop-shipped

29
7. What tool might be most effective in a situation where some trucks have been stolen right
from the shipping docks even though the controls in place should have prevented this?
a) Audit checklists
b) Key performance indicators
c) Balanced scorecards
d) Best-in-class benchmarking

8. What should a logistics manager do if product development indicates they want to create
three new models of a product that are each a little different (there is just one model at
present)?

a) Indicate that the work should be outsourced to a low labor cost country.
b) Do nothing since this is not an area where logistics should provide input.
c) Inform decision makers of the additional logistics costs for more SKUs.
d) Oppose the proposal since it increases complexity and risk.

9. Using six sigma language, at least how many chances of a defect exist with perfect order
fulfilment?
a) One
b) Four
c) Five
d) Six

10. Which is a vital part of the first step in the contracting out process that is at risk of being
overlooked?
a) Assess whether the element should be a core competency.
b) Assess the current costs of performing the activity.
c) Stopping if the economics point to "make."
d) Communicate with staff to manage morale.

11. What should an organization do if achieving six sigma's 3.4 defects per million opportunities is
unfeasible given current technology levels and customer expectations are much lower than that?

a) Customize goals that are ambitious given what is feasible and customer accepted.
b) Use six sigma processes but ignore this particular goal.
c) Retain the six sigma targets and continue to work toward them.
d) Use a different quality system that is more appropriate to the given industry.

12. Under lean, which low level employee action is encouraged?

a) Changing process steps without approval if it seems more efficient.
b) Proposing experiments that could improve work effectiveness.
c) Deferring to their superiors regarding ownership of their work.
d) Continuing to perform an activity as directed even if it clearly has an error.

13. Which is a typical area requiring regulatory approval?

a) Rail line abandonment.
b) Choice to not participate in public-private customs partnership programs.
c) Use of an open-skies agreement.
d) Use of a particular type of road carrier and their rates.

30
14. What is a good way to increase the profitable service area for a fulfilment DC?
a) Invest in a larger fleet of fuel-efficient vehicles.
b) Increase the time that inventory remains in the pipeline to the DC.
c) Decrease the transportation costs to that DC.
d) Increase the variable costs of the DC relative to its fixed costs.

15. Logistics can be summed up as physical supply plus what?

a) Transportation
b) Materials management
c) Distribution
d) Receiving

16. What is a general rule for including or omitting an entire echelon from a logistics network?

a) It needs to reduce total systems cost.

b) It needs to reduce total cycle time.
c) It needs to make a profit.
d) It needs to add value to the business model.

17. Where would customer relationship management (CRM) fall within the SCOR model
processes?
a) Source
b) Enable
c) Plan
d) Deliver

18. What is the difference between upside supply chain flexibility and upside supply chain
adaptability?
a) Flexibility is a measure of customization and adaptability is a measure of capacity.
b) Flexibility is a measure of time and adaptability is a measure of production quantity.
c) Flexibility is a ratio of capacity utilization and adaptability is a ratio of labor utilization.
d) Flexibility is a ratio of production versus cost and adaptability is a ratio of production versus
quality.

19. How did the shift in focus from logistics to supply chain management affect how inventory
is perceived?
a) It is a last resort when information or stabilizing processes fail.
b) It is the most important lever to use when adjusting customer service levels.
c) It is a risk reduction technique against variations in supply.
d) It is now seen as the buffer between the links in the chain.

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