Logistics Cost Management & Financial Analysis Flashcards

The inventory turnover ratio is calculated as:

Answer: Cost of Goods Sold divided by Average Inventory

Inventory turnover = COGS / Average Inventory, measuring how many times inventory is sold and replaced during a period.

Cost-to-serve analysis helps logistics managers primarily to:

Answer: Determine the true profitability of serving specific customers or channels

Cost-to-serve analysis identifies all costs associated with specific customers or segments to determine true profitability.

Landed cost includes all of the following EXCEPT:

Answer: Retail markup applied by the buyer

Landed cost covers all expenses to bring goods to the destination (freight, duties, insurance, fees) but excludes the buyer's retail markup.

Days Inventory Outstanding (DIO) measures:

Answer: The average number of days inventory is held before being sold

DIO measures the average number of days a company holds inventory before it is sold, indicating inventory management efficiency.

Return on Logistics Assets (ROLA) best measures:

Answer: The profitability generated relative to assets deployed in logistics operations

ROLA measures how effectively logistics assets generate profit, helping evaluate the financial performance of logistics investments.

A logistics scorecard is primarily used to:

Answer: Track and measure key logistics KPIs against established targets

A logistics scorecard monitors KPIs across cost, service, and quality dimensions to evaluate performance and drive improvement.

Logistics operating margin is calculated by dividing:

Answer: Net logistics profit by net logistics revenue

Logistics operating margin = Net Logistics Profit / Net Logistics Revenue, measuring the operational profitability of logistics activities.