1.- In traditional manufacturing environment, which of the following objectives are in conflict?

A) Maximizing customer service and increasing inventory investment

B) Maximizing production costs and increasing inventory investment
C) Minimizing production costs and decreasing inventory investment
D) Minimizing customer service and decreasing inventory investment

2.- Which of the following strategies produces the longest delivery lead time?
A) Make to Order
B) Make to Stock
C) Assemble to Order
D) Continuous manufacturing

3.- Which of the following statements is true?

A) The objectives of marketing and production can be met with higher inventories
B) The objectives of marketing and finance can be met with higher inventories
C) The objectives of marketing and production can be met with lower inventories
D) The objectives of marketing and finance can be met with lower inventories

4.- Which of the following is an activity of physical supply / distribution?

A) Work-in-process inventory
B) Transportation
C) Production activity control
D) Materials requirement planning

5.- Which of the following statements is most accurate?

A) Marketing objectives can be met with low inventories and disruptions to production
B) Finance objectives can be met with disruptions to production of high inventories
C) Production objectives can be met with higher customer service and no disruptions to
production
D) The conflict between marketing, production, and finance centers on customer service,
disruption to production, and inventory levels.

6.- Why is manufacturing important to the company?

A) It generates wealth and adds value to products
B) It uses natural resources and prevents waste
C) It decreases employment and generates wealth
D) It prevent waste and decrease employment

7. Which of the following is a major objective of materials management?

A) Provide sufficient equitable employment
B) Provide the required level of customer service
C) Support cost accounting by decreasing inventory turns
D) Provide cost information for management decisions.

8. Which of the following are primary activities of manufacturing planning and control?
A) Inventory management and cost information
B) Sales support and cost information
C) Production planning and inventory management
D) Sales support, implementation and control

Chapter 1: An Overview of Logistics

Logistics: is that part of supply chain management that plans, implements, and controls the
efficient, effective forward and reverse flow and storage of goods, services, and related
information between the point of origin and the point of consumption in order to meet
customers’ requirements.

A second reason for the importance of meeting customer requirements is the notion that
because different customers have different logistical needs and wants, a one-size-fits-all
logistics approach (mass logistics)—in which every customer gets the same type and levels
of logistics service—will result in some customers being overserved while others are
underserved. Rather, companies should consider tailored logistics approaches, in which
groups of customers with similar logistical needs and wants are provided with logistics
service appropriate to these needs and wants.

Omnichannel retailing is a strategy that focuses on providing customers a seamless

shopping experience regardless of sales channel. Retailers enable their customers to transact
within and across any contract channel (online, in-store, mobile app, etc.) to enhance
information availability and customer experience. Omnichannel retailing takes a number of
different forms and if you have ordered something online and picked it up at a bricks-and-
mortar store, then you have engaged in omnichannel retailing.

From a companywide perspective, the systems approach indicates that a company’s

objectives can be realized by recognizing the mutual interdependence of the major
functional areas of the firm, such as marketing, production, finance, and logistics. One
implication of the systems approach is that the goals and objectives of the major functional
areas should be compatible with the company’s goals and objectives

Logistics managers use the total cost approach to coordinate materials management and
physical distribution in a cost-efficient manner. This approach is built on the premise that all
relevant activities in moving and storing products should be considered as a whole (i.e., their
total cost), not individually. Use of the total cost approach requires an understanding of cost
trade-offs; in other words, changes to one logistics activity cause some costs to increase and
others to decrease. Importantly, an understanding of logistical cost trade-offs recognizes
that the costs of certain logistical activities generally move in opposite directions. As an
example, a decrease in transportation costs is often associated with an increase in
warehousing costs.

One of the most common interfaces between production and logistics involves the length of
production runs. In many cases, the production people favor long production runs of
individual products because this allows the relevant fixed costs to be spread over more units,
thus resulting in a lower production cost per unit. Having said this, long production runs
generate large amounts of inventory, and it is often the logistician’s responsibility to store
and track the inventory. It’s generally much easier to store and track 5 unit of a product that
to store and track 500 units of the product

From a marketing perspective, place decisions may also involve new strategies for reaching
customers. A popular contemporary marketing strategy involves co-branding, which refers
to an alliance that allows customers to purchase products from two or more name-brand
retailers at one store location.

Another product interface between marketing and logistics involves the number of
particular SKUs to hold. Marketers often prefer to carry higher quantities of particular items
because this reduces the likelihood of stockouts (being out of an item at the same time there
is demand for it). However, from a logistics perspective, higher quantities of inventory (1)
necessitate additional storage space and (2) increase inventory carrying costs.

Another concept that is useful in studying the marketing relationships between and among
firms is to look at marketing channels, which refer to “a set of institutions necessary to
transfer the title to goods and to move goods from the point of production to the point of
consumption and, as such, which consists of all the institutions and all the marketing
activities in the marketing process. These channel members work together in several
different channel arrangements—ownership channel, negotiation channel, financing
channel, promotions channel, and logistics channel—.

Chapter 2: Logistics and Information Technology

Logistics information system (LIS) can be defined as the people, equipment, and
procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate
information to logistics decision makers.

Simulation is a technique that models a real-world system, typically using mathematical

equations to represent the relationships among the system’s components.

Transportation management systems (TMS) and warehouse management systems

(WMS) are two prominent examples of logistics-related application-specific software.
Indeed, an annual software survey conducted by Logistics Management magazine has
consistently found that TMS and WMS software are the most likely applications to be
purchased or upgraded.

Data mining, which can be defined as the application of mathematical tools to large bodies
of data in order to extract correlations and rules.

A transportation management system is a software package that automates the process of

building orders, tendering loads, tracking shipments, audits, and payments.

Warehouse management systems are software packages that provide oversight of the
storage and flow of materials within a company’s operations. Activities that can be controlled
by a WMS include inventory management, product receiving, determination of storage
locations, order selection processes, and order shipping.

Electronic procurement (e-procurement) uses the Internet to make it easier, faster, and
less expensive for an organization to purchase goods and services. The types of benefits that
come from electronic procurement include transactional benefits, compliance benefits,
management information benefits, and price benefits.
The Internet of things (IoT) refers to the sensors and data-communication technology that
is built into physical objects that enables them to be tracked and controlled over the Internet.
The IoT concept has been around since the early 2000s but has recently emerged as an
important area of focus for the logistics discipline.

Chapter 3: Strategic and Financial Logistics

A cost leadership strategy requires an organization to pursue activities that will enable it
to become the low-cost producer in an industry for a given level of quality. A differentiation
strategy entails an organization developing a product and/or service that offers unique
attributes that are valued by customers and that the customers perceive to be distinct from
competitor offerings. Finally, a focus strategy concentrates an organization’s
effort on a narrowly defined market to achieve either a cost leadership or differentiation
advantage. Logistics leverage can help firms achieve a competitive advantage from each of
these strategies.

The income statement shows revenues, expenses, and profit for a period of time.

Revenues, also referred to as sales, provide a dollar value of all the products and/or services
an organization provides to their customers during a given period of time. Expenses, also
referred to as costs, provide a dollar value for the costs incurred in generating revenues
during a given period of time.

The balance sheet reflects the assets, liabilities, and owners’ equity at a given point in time.
The balance sheet equates assets with liabilities plus owners’ equity. Assets are what a
company owns and come in two temporal forms: current assets that can be easily converted
to cash (such as stock) and long-term assets that have a useful life of more than a year (such
as a company-owned warehouse). Liabilities are the financial obligations a company owes
to another party. Similar to assets, liabilities come in two temporal forms: current liabilities
which need to be paid in less than a year and long-term liabilities that are due over an
extended period of time. Owners’ equity is the difference between what a company owns
and what it owes at any particular point in time.

The statement of cash flows details how an organization generates cash and where cash is
used during a defined period of time. Positive cash flow enables an organization to continue
daily operations, make investments for growth, meet financial obligations, and ultimately
remain in business.

Return on assets (ROA) indicates what percentage of every dollar invested in the business
ultimately is returned to the organization as profit.

The Strategic Profit Model (SPM) provides the framework for conducting ROA analysis by
incorporating revenues and expenses to generate net profit margin, as well as an inclusion
of assets to measure asset turnover. Net profit margin measures the proportion of each
sales dollar that is kept as profit, while asset turnover measures the efficiency of the capital
employed to generate sales.

Asset turnover is computed by dividing total sales by total assets and provides information
on the efficiency of capital employed to support the business. The most relevant logistics
asset is typically inventory. In addition, logistics decisions can influence the speed at which
invoices are paid as reflected in accounts receivable on the balance sheet.

Inventory can represent a significant part of an organization’s current assets. Logistics

decisions affect all types of inventories within an organization from raw materials to work-
in-progress inventory, to finished goods. Accounts Receivable is the amount of money
customers owe to an organization. It is all the promises to pay that have not been collected
yet.

The Balanced Scorecard (BSC) is a strategic planning and performance management

system used extensively in industry, government, and nonprofit organizations. It is based on
the belief that management should evaluate their business from four distinct perspectives:
customers, internal business processes, learning and growth, and financial.

The major transportation measures focus on such things as labor, cost, equipment, energy,
and transit time. The diversity of equipment types, sizes, and products carried will
complicate the performance measurement in this area of logistics. Measurements in this area
include items such as return on investment (investments in transportation equipment),
outbound freight costs, transportation labor productivity, on-time deliveries, and in-transit
damage frequency, to name a few.

Chapter 4: Organizational and Managerial Issues in logistics

Organizational structure focuses on how work roles and administrative mechanisms are
allocated in an effort to integrate and control work. Two basic organizational structures are
associated with logistics, namely, fragmented and unified. In a fragmented logistics
structure, logistics activities are managed in multiple departments throughout an
organization. In a unified logistics structure, multiple logistics activities are combined into,
and managed as, a single department.

Productivity is an important managerial issue because it provides insight into the efficiency
(or inefficiency) with which corporate resources are being utilized. At a basic level,
productivity can be defined as the amount of output divided by the amount of input. An
understanding of this relationship leads to the recognition that there are three ways to
improve productivity—reduce the amount of input while holding output constant, increase
the amount of output while holding input constant, or increase output while at the same time
decreasing input or at least not allowing input to increase above the rate that output is going
up.
Logistics service quality relates to a firm’s ability to deliver products, materials, and
services without defects or errors to both internal and external customers.
ISO 9000 is a set of generic standards used to document, implement, and demonstrate
quality management and assurance systems.

Another quality-related concept or practice relevant for logistics managers, known as Six
Sigma emphasizes the virtual elimination of business errors. While traditionally seen as rival
initiatives, the integration of Six Sigma with the Lean approach, so-called Lean Six Sigma, is
an area of increased focus within many companies. Lean Six Sigma integrates the goals and
methods of these two approaches in pursuit of quality. What sets Lean Six Sigma apart from
its individual components is the recognition that organizations cannot focus only on quality
or speed.

Risk can be viewed as susceptibility to disruptions that could lead to a loss for a firm, and
this risk can take a variety of forms as it relates to the management of logistics activities.

Customs and Border Protection is responsible for securing U.S. borders to protect the
American people and the U.S. economy. One key CBP function is inspecting cargo, and a
number of high-profile CBP initiatives have affected the management of logistics system

One of the best-known CBP programs enacted since September 11 is the Customs Trade
Partnership Against Terrorism (C-TPAT), in which public (CBP) and private (e.g., retailers
and manufacturers) organizations work together to prevent terrorism against the United
States through imports and transportation. Private organizations apply to Customs and
Border Protection for C-TPAT certification, and the process involves demonstrating that
organizations have improved the physical security of their containerized shipments as well
as the ability to track people who have access to the containerized shipments.

Logistics has an inherent connection to sustainability. A common definition of sustainability

centers on the concept of the “triple bottom line,” which was introduced in the mid-1990s
and refers to the interaction of social, environmental, and economic dimensions.