Logistics Cost Management & Financial Analysis Flashcards

Activity-Based Costing (ABC) in logistics assigns overhead costs based on:

Answer: The specific activities that consume resources

ABC traces costs to the specific activities that drive them, providing more accurate cost allocation than broad averaging methods.

Freight consolidation reduces logistics costs primarily by:

Answer: Combining multiple smaller shipments into fewer, larger loads

Consolidation combines smaller shipments to achieve fuller truckloads or container loads, reducing per-unit transportation costs through economies of scale.

In freight transportation, a fuel surcharge is typically indexed to:

Answer: Published fuel price indices such as the DOE weekly diesel average

Fuel surcharges are variable fees indexed to published fuel price indices (e.g., DOE weekly diesel average) to offset carrier fuel cost volatility.

Logistics network optimization primarily aims to:

Answer: Determine optimal facility locations to minimize total distribution costs while meeting service goals

Network optimization models determine the best number, size, and location of facilities to minimize total logistics costs while achieving service level targets.

Modal shift as a logistics cost management strategy involves:

Answer: Switching from one transportation mode to another for cost or service advantages

Modal shift changes the transportation mode used (e.g., air to ocean freight, truck to rail) to optimize the cost-service tradeoff.

Collaborative transportation management (CTM) reduces logistics costs by:

Answer: Sharing transportation capacity and routes with other non-competing shippers

CTM allows companies to share truck capacity, routes, or backhauls with non-competing shippers, reducing empty miles and per-unit costs.

Reverse logistics cost management is primarily concerned with:

Answer: Managing expenses associated with product returns, repairs, recycling, and disposal

Reverse logistics cost management addresses all costs of moving products backward through the supply chain for returns, repairs, reuse, or disposal.