CLA The Logistics Environment 3 — Questions and Answers
Question 1: Which incoterm places the MAXIMUM responsibility and cost on the seller, including delivery to the buyer's named destination?
- EXW (Ex Works)
- FOB (Free on Board)
- DDP (Delivered Duty Paid) (Correct answer)
- CIF (Cost, Insurance, Freight)
Correct answer: DDP (Delivered Duty Paid)
DDP requires the seller to handle all costs and risks, including import duties and delivery to the final destination—the most seller-obligated Incoterm.
Question 2: A warehouse that temporarily holds goods for sorting and immediate re-shipment without long-term storage is using which practice?
- Dropshipping
- Cross-docking (Correct answer)
- Bonded warehousing
- Kitting
Correct answer: Cross-docking
Cross-docking transfers inbound freight directly to outbound vehicles with minimal or no storage time, improving speed and reducing handling.
Question 3: An Electronic Data Interchange (EDI) system in logistics is used primarily to:
- Track vehicle GPS locations in real time
- Automatically exchange standardized business documents between trading partners electronically (Correct answer)
- Monitor warehouse temperature and humidity
- Process employee payroll for logistics staff
Correct answer: Automatically exchange standardized business documents between trading partners electronically
EDI enables automated, standardized electronic exchange of business documents such as purchase orders, invoices, and advance ship notices between companies.
Question 4: Which inventory metric measures how many times a company sells and replaces its stock during a given period?
- Days on hand
- Fill rate
- Inventory turnover (Correct answer)
- Safety stock ratio
Correct answer: Inventory turnover
Inventory turnover (COGS ÷ average inventory) indicates how efficiently a company is selling through its stock in a given period.
Question 5: In the context of logistics carrier selection, 'transit time reliability' refers to:
- The carrier's average speed between two points
- The consistency with which a carrier meets its promised delivery windows (Correct answer)
- The percentage of freight that arrives undamaged
- The carrier's on-time pickup performance only
Correct answer: The consistency with which a carrier meets its promised delivery windows
Transit time reliability (also called schedule reliability) measures how consistently a carrier delivers within the quoted time frame, not just average speed.
Question 6: Which environmental regulation most directly affects how logistics companies manage vehicle emissions in the United States?
- Sarbanes-Oxley Act
- Clean Air Act and EPA emissions standards (Correct answer)
- Occupational Safety and Health Act (OSHA)
- Jones Act
Correct answer: Clean Air Act and EPA emissions standards
The Clean Air Act and EPA standards set emission limits for commercial vehicles, directly affecting fleet equipment choices and maintenance in logistics.
Question 7: A 'bill of lading' (BOL) in freight shipping serves as:
- A tax invoice sent to customs authorities
- A receipt for goods, a contract of carriage, and a document of title all in one (Correct answer)
- A warehouse storage agreement
- An insurance certificate for cargo
Correct answer: A receipt for goods, a contract of carriage, and a document of title all in one
The bill of lading functions simultaneously as a shipment receipt, a contract between shipper and carrier, and (for negotiable BOLs) a document of title.
CLA The Logistics Environment 3
Which incoterm places the MAXIMUM responsibility and cost on the seller, including delivery to the buyer's named destination?