Chapter 4Designing the Distributen Network in a Supply ChainTrue/False1. Distributi on occurs betwee n every pair of stages in the supply chai n.An swer: TrueDifficulty: Moderate2. Distributi on only occurs betwee n manu facturi ng and con sumers in the supply cha in.An swer: FalseDifficulty: Moderate3. Compa nies in the same in dustry ofte n select very differe nt distributi onn etworks, because the choice of the distributi on n etwork can be used to achieve a variety of supply cha in objectives ranging from low cost to high resp on sive ness.An swer: TrueDifficulty: Moderate4. Compa nies in the same in dustry should always select similar distributi on n etworks, because their objectives will be similar.An swer: FalseDifficulty: Moderate5. A customer always wants the highest level of performa nee along all dime nsions of customer service, in cludi ng resp onse time, product variety, product availability, customer experie nee, order visibility, and returnability.An swer: FalseDifficulty: Moderate6. A customer does not n ecessarily want the highest level of performa nee along all dime nsions of customer service, in cludi ng resp onse time, product variety, product availability, customer experie nee, order visibility, and returnability.An swer: TrueDifficulty: Easy7. Outbo und tran sportati on costs per unit tend to be lower tha n inboundcosts, because inbound lot sizes are typically larger .An swer: FalseDifficulty: Easy8. Outbound transportation costs per unit tend to be higher than inboundcosts, because inbound lot sizes are typically larger. Answer: True Difficulty: Easy9. Transportation costs are high with drop-shipping because the averageoutbound distance to the end consumer is large and package carriers are used to shipping the product.Answer: True Difficulty: Easy10. Transportation costs are low with drop-shipping because the averageoutbound distance to the end consumer is small. Answer: False Difficulty: Easy11. The main advantage of in-transit merge over drop-shipping is thesomewhat lower transportation cost and improved customer experience. Answer: True Difficulty: Moderate12. The main advantage of a distribution network with local storage is thatit can lower the delivery cost and provide a faster response than other networks. Answer: True Difficulty: Moderate13. The main advantage of a distribution network with local storage is thatit can lower the inventory and facility costs. Answer: False Difficulty: Moderate14. The major disadvantage of a distribution network with local storage isthe increased delivery cost. Answer: False Difficulty: Moderate15. The major disadvantage of a distribution network with local storage isthe increased inventory and facility costs. Answer: True Difficulty: Easy16. A distributi on n etwork desig ner n eeds to con sider product characteristics as well as n etwork requireme nts whe n decidi ng on the appropriate delivery n etwork.An swer: TrueDifficulty: Hard17. Only ni che compa nies will end up using a sin gle distributi on n etwork. An swer: TrueDifficulty: Easy18. Most compa nies are best served by a sin gle distributi on n etwork. An swer: FalseDifficulty: Moderate19. Distributors add value to a supply cha in betwee n a supply stage and a customer stage if there are many small players at the customer stage, each requiri ng a small amount of the product at a time.An swer: TrueDifficulty: ModerateMultiple Choice1. The steps take n to move and store a product from the supplier stage to a customer stage in the supply chain is referred to asa. tran sportati on.b. retaili ng.c. wholesali ng.d. distributi on.e. manu facturi ng.An swer: dDifficulty: Easy2. Distribution is a key driver of the overall profitability of a firm becausea. the addition of distributors only adds cost to the supply chain.b. it directly impacts both the supply cha in cost and the customer experie nee.c. it slows dow n the resp on sive ness of the supply cha in.d. it cannot be developed as a part of supply chai n strategy.e. Distributi on is not a key driver of profitability.An swer: bDifficulty: Moderate supply3. The choice of the distribution network can be used to achievechain objectives such asa. low cost.b. high responsiveness.c. high cost.d. high responsibility.e. a and b onlyAnswer: e Difficulty: Moderate4. Companies in the same industry often select very different distributionnetworks becausea. some companies are poorly run.b. different companies try to avoid using the same approach.c. different companies have different objectives for their supplychain.d. all of the abovee. none of the aboveAnswer: c Difficulty: Moderate5. A poor/inappropriate distribution network cana. 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 abovee. b and c onlyAnswer: d Difficulty: Moderate6. Which of the following would not be the result of a poor/inappropriatedistribution network?a. High profitabilityb. Low level of customer servicec. High costd. Poor profitabilitye. None of the above are true. Answer: a Difficulty: Easy7. On which dimensions should the performance of a distribution network be evaluated at the highest level?a. Profitability of individual supply chain componentsb. Efficiency of overall supply chain networkc. Customer needs that are metd. Cost of meeting customer needse. c and d onlyAnswer: e Difficulty: Hard8. Which of the following are measures of customer service that areinfluenced by the structure of the distribution network?a. Response timeb. Product varietyc. Product availabilityd. Customer experiencee. all of the above Answer: e Difficulty: Easy9. Which of the following are measures of customer service that areinfluenced by the structure of the distribution network?a. Returnabilityb. Order visibilityc. Customer experienced. Product availabilitye. all of the above Answer: e Difficulty: Moderate10. Which of the following is not a measure of customer service that is influenced by the structure of the distribution network?a. Returnabilityb. Customer experiencec. Customer maturityd. Product availabilitye. All of the above are measures of customer service. Answer: cDifficulty: Easy11. The time between when a customer places an order and receives deliveryisa. response time.b. product variety.c. product availability.d. customer experience.e. order visibility. Answer: a Difficulty: Easy12. The number of different products/configurations that a customer desires from the distribution network isa. response time.b. product variety.c. product availability.d. customer experience.e. order visibility. Answer: b Difficulty: Easy13. The probability of having a product in stock when a customer orderarrives isa. response time.b. product variety.c. product availability.d. customer experience.e. order visibility. Answer: c Difficulty: Easy14. The ease with which the customer can place and receive their order aswell as other aspects of value that the sales staff provides isa. customer experience.b. order visibility.c. product availability.d. response time.e. returnability. Answer: a Difficulty: Easy15. The ability of the customer to track their order from placement todelivery isa. customer experience.b. order visibility.c. product availability.d. response time.e. returnability. Answer: b Difficulty: Easy16. The ease with which a customer can return unsatisfactory merchandise andthe ability of the network to handle such returns isa. customer experience.b. order visibility.c. product availability.d. response time.e. returnability.Answer: eDifficulty: Easy17. The costs incurred in bringing material into a facility area. sourcing transportation costs.b. outbound transportation costs.c. crossbound transportation costs.d. inbound transportation costs.e. none of the aboveAnswer: dDifficulty: Easy18. The costs incurred in sending material out of a facility area. sourcing transportation costs.b. outbound transportation costs.c. crossbound transportation costs.d. inbound transportation costs.e. none of the aboveAnswer: bDifficulty: Easy19. Outbound transportation costs per unit tend to bea. 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 aboveAnswer: bDifficulty: Moderate20. As the number of facilities in a supply chain increasesa. 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 Difficulty: Moderate21. As the response time desired by the customer decreases, the required number of facilities in the distribution networka. decreases.b. remains the same.c. increases.d. increases and then decreases.e. none of the above Answer: c Difficulty: Moderate22. As the number of facilities in a supply chain increases, totaltransportation costa. decreases.b. remains the same.c. increases.d. increases to a point and then decreases.e. decreases to a point and then increases. Answer: eDifficulty: Hard23. As the number of facilities in a supply chain increases, total facilitycostsa. decrease.b. remain the same.c. increase.d. increase to a point and then decrease.e. decrease to a point and then increase. Answer: cDifficulty: Moderate24. Total logistics costs for a supply chain network are a sum ofa. 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 aboveAnswer: d Difficulty: Moderate25. As the number of facilities in a supply chain network increases, totallogistics costs willa. decrease.b. decrease at first and then increase.c. increase.d. increase at first and then decrease.e. neither increase or decrease.Answer: b Difficulty: Moderate26. Which of the following are key decisions in the design of a distributionnetwork?a. Will product be delivered to the customer location or picked upfrom a pre-ordained site?b. Will product flow through a production facility?c. Will product flow through an intermediary (or intermediatelocation)?d. all of the abovee. a and c onlyAnswer: eDifficulty: Moderate27. 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 shippingb. Manufacturer storage with distributor pickupc. Distributor storage with package carrier deliveryd. Distributor storage with last mile deliverye. Manufacturer/distributor storage with customer pickup Answer: b Difficulty: Moderate28. 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 shippingb. Manufacturer storage with direct shipping and in-transit mergec. Distributor storage with package carrier deliveryd. Distributor storage with manufacturer pickupe. Retail storage with customer pickup Answer: d Difficulty: Moderate29. In which distribution network design is product shipped directly fromthe manufacturer to the end customer, bypassing the retailer (who takes the order and initiates the delivery request)?a. Manufacturer storage with direct shippingb. Manufacturer storage with direct shipping and in-transit mergec. Distributor storage with package carrier deliveryd. Distributor storage with last mile deliverye. Manufacturer/distributor storage with customer pickup Answer: a Difficulty: Easy30. Which distribution network is also referred to as drop-shipping withproduct delivered directly from the manufacturer to the customer location?a. Manufacturer storage with direct shippingb. Manufacturer storage with direct shipping and in-transit mergec. Distributor storage with package carrier deliveryd. Distributor storage with last mile deliverye. Manufacturer/distributor storage with customer pickup Answer: aDifficulty: Moderate31. Advantages of manufacturer storage with direct shipping includea. the ability to reduce cost of inventory by centralizinginventories at the manufacturer.b. offering the manufacturer the opportunity to postponecustomization until after the customer order has been placed.c. supply chains save on the fixed cost of facilities, because theneed for other warehousing space in the supply chain has been eliminated.d. providing a good customer experience in the form of delivery tothe customer location.e. all of the aboveAnswer: eDifficulty: Moderate32. Which of the following is an advantage of manufacturer storage with direct shipping?a. Transportation costs are low because the average outbounddistance to the end consumer is small and package carriers are used to shipping the product.b. Supply chains save on the fixed cost of facilities, because theneed for other warehousing space in the supply chain has been eliminated.c. Response times tend to be small because the order has to betransmitted from the retailer to the manufacturer.d. Order tracking is easy to implement because of the completeintegration of information systems at both the retailer and the manufacturer.e. The handling of returns is likely to be simple and inexpensive,improving customer satisfaction.Answer: bDifficulty: Moderate33. Disadvantages of manufacturer storage with direct shipping includea. Transportation costs are high because the average outbounddistance to the end consumer is large and package carriers are used to shipping the product.b. Response times tend to be large because the order has to betransmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer scentralized site.c. Order tracking becomes harder to implement because it requires complete integration of information systems at both the retailer and the manufacturer.d. The handling of returns is likely to be difficult and moreexpensive, hurting customer satisfaction.e. all of the above Answer: e Difficulty: Moderate34. Which of the following would be a disadvantage of manufacturer storagewith direct shipping?a. The ability to reduce cost of inventory by centralizinginventories at the manufacturer.b. The manufacturer has to postpone customization until after thecustomer order has been placed.c. Supply chains have to eliminate other warehousing space to saveon the fixed cost of facilities.d. Response times tend to be large because the order has to betransmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer scentralized site.e. Provides a good customer experience when a single ordercontaining products from several manufacturers is delivered in partial shipments.Answer: d Difficulty: Moderate35. Which distribution network design is similar to pure drop-shipping,except that pieces of the order coming from different locations are combined so that the customer gets a single delivery?a. Manufacturer storage with direct shippingb. Manufacturer storage with direct shipping and in-transit mergec. Distributor storage with package carrier deliveryd. Distributor storage with manufacturer pickupe. Retail storage with customer pickup Answer: b Difficulty: Moderate36. The main advantage of in-transit merge over drop-shipping isa. the ability to reduce cost of inventory by centralizinginventories at the manufacturer.b. supply chains save on the fixed cost of facilities, because theneed for other warehousing space in the supply chain has been eliminated.c. somewhat lower transportation cost and improved customerexperience.d. order tracking is easy to implement because of the complete integration of information systems at both the retailer and the manufacturer.e. the handling of returns is likely to be simple and inexpensive,improving customer satisfaction.Answer: cDifficulty: Moderate37. The major disadvantage of in-transit merge compared to drop-shipping isa. transportation costs are high because the average outbound distance to the end consumer is large and package carriers are used to shipping the product.b. response times tend to be large because the order has to be transmitted from the retailer to the manufacturer and shipping distances are on average longer from the manufacturer s centralizedsite.c. order tracking becomes harder to implement because it requires complete integration of information systems at both the retailer and the manufacturer.d. the additional effort during the merge itself.e. the handling of returns is likely to be difficult and more expensive, hurting customer satisfaction.Answer: dDifficulty: Easy38. Which distribution network design is being used when inventory is notheld by manufacturers at the factories, but is held by distributors/retailers in intermediate warehouses and package carriers are used to transport products from the intermediate location to the final customer?a. Manufacturer storage with direct shippingb. Manufacturer storage with direct shipping and in-transit mergec. Distributor storage with package carrier deliveryd. Distributor storage with manufacturer pickupe. Retail storage with customer pickup Answer: cDifficulty: Easy39. Which of the following is an advantage of distributor storage with carrier delivery?a. Inventory cost is higher than with manufacturer storage.b. Product variety is lower than with manufacturer storage.c. Order visibility for the customer is easier than withmanufacturer storage.d. Higher cost to provide the same level of product availability asmanufacturer storage.e. Cost of facilities and handling is somewhat higher thanmanufacturer storage.Answer: cDifficulty: Moderate40. Which of the following is a disadvantage of distributor storage withcarrier delivery?a. Information infrastructure is simpler than manufacturer storage.b. Response time is faster than with manufacturer storage.c. Returnability is easier than with manufacturer storage.d. Product variety is lower than with manufacturer storage.e. Transportation cost is lower than with manufacturer storage.Answer: dDifficulty: Moderate41. Which distribution network design is being used when thedistributor/retailer delivers the product to the customer s homeinstead of using a package carrier?a. Manufacturer storage with direct shippingb. Manufacturer/distributor storage with customer pickupc. Distributor storage with package carrier deliveryd. Distributor storage with last mile deliverye. Retail storage with customer pickup Answer: dDifficulty: Moderate42. Which of the following is an advantage of distributor storage with last mile delivery?a. More expensive to provide product availability than any otheroption except retail stores.b. Inventory cost is higher than distributor storage with packagecarrier delivery.c. Response time is very quick ranging from same day to next daydelivery.d. Transportation cost is higher than any other distribution option.e. Returnability is harder and more expensive than a retail network.Answer: c Difficulty: Easy43. Which of the following is a disadvantage of distributor。