CPSM Logistics & Distribution 3 — Questions and Answers
Question 1: Which distribution strategy places inventory at a single central location and ships directly to end customers?
- Cross-docking
- Centralized distribution (Correct answer)
- Decentralized distribution
- Drop shipping
Correct answer: Centralized distribution
Centralized distribution consolidates inventory at one hub, reducing carrying costs while increasing outbound freight.
Question 2: In logistics, 'last-mile delivery' refers to which segment of the supply chain?
- Supplier to manufacturer
- Manufacturer to distribution center
- Distribution center to final destination (Correct answer)
- Port to inland warehouse
Correct answer: Distribution center to final destination
Last-mile delivery covers the final leg from a distribution point to the end customer and is often the costliest per unit.
Question 3: A company ships 1,000 units monthly with a fixed freight cost of $500 and a variable cost of $0.20/unit. What is the total logistics cost?
- $500
- $200
- $700 (Correct answer)
- $1,500
Correct answer: $700
Total cost = $500 fixed + (1,000 × $0.20) variable = $700.
Question 4: Which mode of transportation offers the lowest cost per ton-mile for bulk commodities over long distances?
- Air freight
- Trucking
- Rail (Correct answer)
- Intermodal
Correct answer: Rail
Rail transport provides the lowest cost per ton-mile for heavy, non-time-sensitive bulk commodities.
Question 5: What is the primary purpose of a bill of lading in logistics?
- To request a shipping quote
- To serve as a contract and receipt for goods in transit (Correct answer)
- To calculate customs duties
- To document warehouse storage terms
Correct answer: To serve as a contract and receipt for goods in transit
A bill of lading is a legal document between shipper and carrier that serves as a shipment receipt, contract of carriage, and title document.
Question 6: Which concept describes sharing transportation capacity between multiple shippers to reduce cost?
- Full truckload (FTL)
- Dedicated contract carriage
- Less-than-truckload (LTL) (Correct answer)
- Milk run routing
Correct answer: Less-than-truckload (LTL)
LTL consolidates shipments from multiple shippers into one trailer, reducing per-shipper transportation cost.
Question 7: A distribution network with multiple regional warehouses close to customers is best described as:
- Hub-and-spoke
- Direct shipping
- Decentralized distribution (Correct answer)
- Cross-docking
Correct answer: Decentralized distribution
Decentralized distribution positions inventory in multiple regional nodes near customers to reduce delivery lead time.
CPSM Logistics & Distribution 3
Which distribution strategy places inventory at a single central location and ships directly to end customers?