Supply Chain Management Distribution Management 1 — Questions and Answers
Question 1: What is the primary purpose of a distribution center (DC) in a supply chain?
- To manufacture finished goods for retail
- To receive, store, and ship products to customers or retail locations (Correct answer)
- To design packaging for consumer products
- To manage supplier contracts and negotiations
Correct answer: To receive, store, and ship products to customers or retail locations
A distribution center receives products from suppliers, consolidates or sorts them, and ships them to customers or retail outlets efficiently.
Question 2: Which distribution strategy involves products being received at a facility and immediately transferred to outbound trucks with minimal or no storage time?
- Drop shipping
- Postponement
- Cross-docking (Correct answer)
- Milk run delivery
Correct answer: Cross-docking
Cross-docking transfers incoming shipments directly to outbound vehicles, reducing storage time and handling costs.
Question 3: The 'bullwhip effect' in distribution refers to:
- The cracking sound made by forklift equipment in warehouses
- Increasing demand variability as orders move upstream through the supply chain (Correct answer)
- A rapid increase in transportation costs during peak seasons
- The oscillation of fuel prices affecting distribution costs
Correct answer: Increasing demand variability as orders move upstream through the supply chain
The bullwhip effect describes how small fluctuations in consumer demand are amplified into larger swings in orders as they travel upstream from retailers to distributors to manufacturers.
Question 4: In a hub-and-spoke distribution model, what is the role of the 'hub'?
- A small local delivery point serving individual customers
- A central facility that consolidates and redistributes freight to spoke locations (Correct answer)
- A satellite office managing regional supplier relationships
- A point-of-sale terminal tracking retail inventory
Correct answer: A central facility that consolidates and redistributes freight to spoke locations
The hub is the central consolidation point that receives shipments from many origins and redistributes them to multiple spoke destinations, improving efficiency.
Question 5: Direct Store Delivery (DSD) is best described as:
- A method where manufacturers deliver products directly to retail stores, bypassing distribution centers (Correct answer)
- An online ordering system for retail store managers
- A software platform for tracking in-store inventory levels
- A cost-reduction strategy that eliminates the need for suppliers
Correct answer: A method where manufacturers deliver products directly to retail stores, bypassing distribution centers
DSD allows manufacturers or distributors to deliver products directly to retail stores, reducing lead times and giving suppliers greater control over shelf placement.
Question 6: Which distribution network design typically results in the lowest transportation cost but highest inventory holding cost?
- Centralized distribution with one DC serving all markets
- Decentralized distribution with many regional DCs (Correct answer)
- Direct shipping from factory to customer
- Drop shipping through third-party retailers
Correct answer: Decentralized distribution with many regional DCs
A decentralized network with many regional DCs reduces transportation distances (lowering freight cost) but requires holding safety stock at multiple locations, increasing inventory costs.
Question 7: What does 'last-mile delivery' refer to in distribution management?
- The final leg of the journey from a distribution point to the end customer (Correct answer)
- The last shipment sent before a product is discontinued
- A regulatory requirement for documenting final delivery paperwork
- The most expensive mile of highway tolls on a long-haul route
Correct answer: The final leg of the journey from a distribution point to the end customer
Last-mile delivery is the final step of the delivery process from a distribution facility to the end customer, and it is often the most costly and time-consuming portion of the supply chain.
Supply Chain Management Distribution Management 1
What is the primary purpose of a distribution center (DC) in a supply chain?