CPL Supply Chain Operations & Logistics Management 2 — Questions and Answers
Question 1: Which inventory management technique classifies items into A, B, and C categories based on annual dollar usage?
- Economic Order Quantity
- ABC Analysis (Correct answer)
- Just-in-Time
- Vendor-Managed Inventory
Correct answer: ABC Analysis
ABC Analysis segments inventory by annual dollar value, allowing managers to focus the most attention on the high-value 'A' items.
Question 2: In logistics, what does the term 'cross-docking' primarily eliminate?
- Transportation costs entirely
- The need for long-term storage in a warehouse (Correct answer)
- Supplier lead times
- Customs clearance requirements
Correct answer: The need for long-term storage in a warehouse
Cross-docking transfers inbound shipments directly to outbound vehicles with minimal or no storage time, reducing warehousing costs.
Question 3: A company's safety stock level is primarily set to protect against which type of uncertainty?
- Currency exchange rate fluctuations
- Variability in demand and supplier lead times (Correct answer)
- Changes in labor regulations
- Equipment depreciation
Correct answer: Variability in demand and supplier lead times
Safety stock acts as a buffer against unexpected spikes in customer demand or delays in supplier delivery.
Question 4: Which transportation mode offers the lowest cost per ton-mile for bulk commodities over long distances?
- Air freight
- Trucking (LTL)
- Rail (Correct answer)
- Parcel courier
Correct answer: Rail
Rail transport has a very low cost per ton-mile and is especially economical for heavy, bulk commodities across long distances.
Question 5: Under Incoterms, which term places the maximum responsibility on the seller, including delivery to the buyer's named destination with all duties paid?
- EXW (Ex Works)
- FOB (Free on Board)
- CIF (Cost, Insurance, Freight)
- DDP (Delivered Duty Paid) (Correct answer)
Correct answer: DDP (Delivered Duty Paid)
DDP requires the seller to bear all costs and risks, including import duties and taxes, until the goods reach the buyer's named destination.
Question 6: What is the primary purpose of a third-party logistics (3PL) provider?
- To manufacture products on behalf of a brand
- To outsource logistics functions such as transportation, warehousing, and fulfillment (Correct answer)
- To provide supply chain financing
- To audit supplier compliance
Correct answer: To outsource logistics functions such as transportation, warehousing, and fulfillment
A 3PL provider takes over one or more logistics functions so companies can focus on their core competencies.
Question 7: Which metric measures the percentage of customer orders shipped complete, on time, and damage-free on the first attempt?
- Order Cycle Time
- Perfect Order Rate (Correct answer)
- Fill Rate
- On-Time Delivery (OTD)
Correct answer: Perfect Order Rate
The Perfect Order Rate combines completeness, timeliness, and condition into a single measure of order fulfillment excellence.
CPL Supply Chain Operations & Logistics Management 2
Which inventory management technique classifies items into A, B, and C categories based on annual dollar usage?