Designing Distribution Networks and Applications to e-Business Pt1

Designing Distribution Networks and Applications to e-Business 4.1 True/False Questions 1) Distribution occurs between every pair of stages in the supply chain. Answer: TRUE 2) Companies in the same industry often select very different distribution networks, because the choice of the distribution network can be used to achieve a variety of supply chain objectives ranging from low cost to high responsiveness. Answer: TRUE 3) Companies in the same industry should always select similar distribution networks, because their objectives will be similar. Answer: FALSE 4) A customer does not necessarily want the highest level of performance along all dimensions of customer service, including response time, product variety, product availability, customer experience, order visibility, and returnability. Answer: TRUE 5) Outbound transportation costs per unit tend to be lower than inbound costs, because inbound lot sizes are typically larger. Answer: FALSE 6) Transportation costs are high with drop-shipping because the average outbound distance to the end consumer is large and package carriers are used to shipping the product. Answer: TRUE 7) The main advantage of in-transit merge over drop-shipping is the somewhat lower transportation cost and improved customer experience. Answer: TRUE 8) The main advantage of a distribution network with local storage is that it can lower the delivery cost and provide a faster response than other networks. Answer: TRUE 9) The main advantage of a distribution network with local storage is that it can lower the inventory and facility costs. Answer: FALSE 10) The major disadvantage of a distribution network with local storage is the increased inventory and facility costs. Answer: TRUE 11) A distribution network designer needs to consider product characteristics as well as network requirements when deciding on the appropriate delivery network. Answer: TRUE 12) Only niche companies will end up using a single distribution network. Answer: TRUE 13) Distributors add value to a supply chain between a supply stage and a customer stage if there are many small players at the customer stage, each requiring a small amount of the product at a time. Answer: TRUE 14) As long as inbound transportation economies of scale are maintained, increasing the number of facilities decreases total transportation cost. Answer: TRUE 15) Customers always want the highest level of performance along all the dimensions response time, product variety and returnability. Answer: FALSE 16) Firms that target customers who can tolerate a long response time require only a few locations that may be far from the customer. Answer: TRUE 17) A decrease in the response time customers desire increases the number of facilities required in the network. Answer: TRUE 4.2 Multiple Choice Questions 1) The steps taken to move and store a product from the supplier stage to a customer stage in the supply chain is referred to as A) transportation. B) retailing. C) wholesaling. D) distribution. E) manufacturing. Answer: D 2) Distribution is a key driver of the overall profitability of a firm because A) the addition of distributors only adds cost to the supply chain. B) it directly impacts both the supply chain cost and the customer experience. C) it slows down the responsiveness of the supply chain. D) it cannot be developed as a part of supply chain strategy. E) Distribution is not a key driver of profitability. Answer: B 3) The choice of the distribution network can be used to achieve supply chain objectives such as A) low cost. B) high responsiveness. C) high cost. D) high responsibility. E) A and B only Answer: E 4) Companies in the same industry often select very different distribution networks because A) some companies are poorly run. B) different companies try to avoid using the same approach. C) different companies have different objectives for their supply chain. D) all of the above E) none of the above Answer: C 5) A poor/inappropriate distribution network can A) lead to high profitability. B) hurt the level of service customers receive while increasing cost. C) have a significant negative impact on the profitability of a firm. D) all of the above E) B and C only Answer: D 6) Which of the following would not be the result of a poor/inappropriate distribution network? A) High profitability B) Low level of customer service C) High cost D) Poor profitability E) None of the above are true. Answer: A 7) On which dimensions should the performance of a distribution network be evaluated at the highest level? A) Profitability of individual supply chain components B) Efficiency of overall supply chain network C) Customer needs that are met D) Cost of meeting customer needs E) C and D only Answer: E 8) Which of the following are measures of customer service that are influenced by the structure of the distribution network? A) Response time B) Product variety C) Product availability D) Customer experience E) all of the above Answer: E 9) Which of the following are measures of customer service that are influenced by the structure of the distribution network? A) Returnability B) Order visibility C) Customer experience D) Product availability E) all of the above Answer: E 10) Which of the following is not a measure of customer service that is influenced by the structure of the distribution network? A) Returnability B) Customer experience C) Customer maturity D) Product availability E) All of the above are measures of customer service. Answer: C 11) The number of different products/configurations that a customer desires from the distribution network is A) response time. B) product variety. C) product availability. D) customer experience. E) order visibility. Answer: B 12) The probability of having a product in stock when a customer order arrives is A) response time. B) product variety. C) product availability. D) customer experience. E) order visibility. Answer: C 13) The ease with which the customer can place and receive their order as well as other aspects of value that the sales staff provides is A) customer experience. B) order visibility. C) product availability. D) response time. E) returnability. Answer: A 14) The ability of the customer to track their order from placement to delivery is A) customer experience. B) order visibility. C) product availability. D) response time. E) returnability. Answer: B 15) The costs incurred in bringing material into a facility are A) sourcing transportation costs. B) outbound transportation costs. C) crossbound transportation costs. D) inbound transportation costs. E) none of the above Answer: D 16) The costs incurred in sending material out of a facility are A) sourcing transportation costs. B) outbound transportation costs. C) crossbound transportation costs. D) inbound transportation costs. E) none of the above Answer: B 17) Outbound transportation costs per unit tend to be A) about the same as inbound costs. B) higher than inbound costs. C) lower than inbound costs. D) neither higher or lower than inbound costs. E) none of the above Answer: B 18) As the number of facilities in a supply chain increases A) the inventory and resulting inventory costs also increase. B) the inventory and resulting inventory costs decrease. C) the inventory increases and resulting inventory costs decrease. D) the inventory decreases and resulting inventory costs increase. E) the inventory and resulting inventory costs remain the same. Answer: A 19) As the response time desired by the customer decreases, the required number of facilities in the distribution network A) decreases. B) remains the same. C) increases. D) increases and then decreases. E) none of the above Answer: C 20) As the number of facilities in a supply chain increases, total transportation cost A) decreases. B) remains the same. C) increases. D) increases to a point and then decreases. E) decreases to a point and then increases. Answer: E 21) As the number of facilities in a supply chain increases, total facility costs A) decrease. B) remain the same. C) increase. D) increase to a point and then decrease. E) decrease to a point and then increase. Answer: C 22) Total logistics costs for a supply chain network are a sum of A) inventory and facility costs. B) inventory, facility, and distributor costs. C) facility, transportation, and distributor costs. D) inventory, transportation, and facility costs. E) none of the above Answer: D 23) As the number of facilities in a supply chain network increases, total logistics costs will A) decrease. B) decrease at first and then increase. C) increase. D) increase at first and then decrease. E) neither increase or decrease. Answer: B 24) Which of the following are key decisions in the design of a distribution network? A) Will product be delivered to the customer location or picked up from a pre-ordained site? B) Will product flow through a production facility? C) Will product flow through an intermediary (or intermediate location)? D) all of the above E) A and C only Answer: E 25) Which of the following is not a distinct distribution network design that may be used to move products from factory to customer? A) Manufacturer storage with direct shipping B) Manufacturer storage with distributor pickup C) Distributor storage with package carrier delivery D) Distributor storage with last mile delivery E) Manufacturer/distributor storage with customer pickup Answer: B 26) Which of the following is not a distinct distribution network design that may be used to move products from factory to customer? A) Manufacturer storage with direct shipping B) Manufacturer storage with direct shipping and in-transit merge C) Distributor storage with package carrier delivery D) Distributor storage with manufacturer pickup E) Retail storage with customer pickup Answer: D 27) In which distribution network design is product shipped directly from the manufacturer to the end customer, bypassing the retailer (who takes the order and initiates the delivery request)? A) Manufacturer storage with direct shipping B) Manufacturer storage with direct shipping and in-transit merge C) Distributor storage with package carrier delivery D) Distributor storage with last mile delivery E) Manufacturer/distributor storage with customer pickup Answer: A