Supply Chain Management Distribution Management 2 — Questions and Answers
Question 1: A 'milk run' delivery route in distribution management is characterized by:
- A truck making multiple scheduled stops to pick up or deliver to several locations on a single route (Correct answer)
- Refrigerated transport exclusively for dairy and perishable goods
- An emergency rush shipment for high-priority customers
- A nonstop direct delivery from manufacturer to retailer
Correct answer: A truck making multiple scheduled stops to pick up or deliver to several locations on a single route
A milk run is a scheduled route where a single truck visits multiple suppliers or customers in sequence, consolidating shipments to improve efficiency.
Question 2: Distribution Requirements Planning (DRP) is primarily used to:
- Calculate the cost of distribution labor and equipment
- Plan the replenishment of inventory across distribution networks based on demand forecasts (Correct answer)
- Design the physical layout of a distribution center
- Negotiate freight rates with carriers
Correct answer: Plan the replenishment of inventory across distribution networks based on demand forecasts
DRP extends MRP logic to the distribution network, helping plan when and how much inventory to replenish at each distribution location to meet forecasted demand.
Question 3: Which order picking method involves sending pickers to a fixed zone of the warehouse where they pick all items for multiple orders within that zone?
- Batch picking
- Zone picking (Correct answer)
- Wave picking
- Cluster picking
Correct answer: Zone picking
Zone picking assigns each picker to a specific area of the warehouse, where they pick all items for any order passing through their zone, reducing travel time.
Question 4: Which key performance indicator (KPI) measures the percentage of customer orders that are shipped complete and on time?
- Inventory turnover ratio
- Perfect order rate (Correct answer)
- Gross margin return on investment (GMROI)
- Days sales outstanding (DSO)
Correct answer: Perfect order rate
The perfect order rate measures the percentage of orders delivered complete, on time, undamaged, and with accurate documentation, reflecting overall distribution effectiveness.
Question 5: In a multi-echelon distribution network, what does each 'echelon' represent?
- A level or tier in the distribution network, such as a factory, regional DC, or local DC (Correct answer)
- A single truck in the fleet assigned to a specific territory
- A category of products grouped by weight or size for shipping
- A reporting period used in financial distribution analysis
Correct answer: A level or tier in the distribution network, such as a factory, regional DC, or local DC
Each echelon is a distinct tier or level in the supply chain distribution network, and multi-echelon optimization coordinates inventory decisions across all tiers simultaneously.
Question 6: Route optimization in distribution primarily aims to:
- Increase the number of drivers on payroll to handle peak demand
- Determine the most cost-efficient or time-efficient sequence of delivery stops (Correct answer)
- Standardize packaging dimensions to reduce truck cube waste
- Automate customer invoice generation after deliveries
Correct answer: Determine the most cost-efficient or time-efficient sequence of delivery stops
Route optimization uses algorithms to sequence delivery stops so drivers travel the shortest or fastest routes, reducing fuel costs, labor time, and carbon emissions.
Question 7: The postponement strategy in distribution involves:
- Delaying product customization or final assembly until closer to customer demand is known (Correct answer)
- Holding all shipments until the end of the quarter to reduce transport costs
- Rescheduling deliveries when weather events disrupt normal routes
- Waiting for lower fuel prices before dispatching long-haul trucks
Correct answer: Delaying product customization or final assembly until closer to customer demand is known
Postponement delays the differentiation of products (labeling, packaging, final assembly) until demand is more certain, reducing finished goods inventory risk.
Supply Chain Management Distribution Management 2
A 'milk run' delivery route in distribution management is characterized by: