Supply Chain Management Logistics 5 — Questions and Answers
Question 1: Which logistics concept involves holding minimal finished goods inventory and instead delaying final product configuration until a customer order is received?
- Just-in-time (JIT)
- Postponement (delayed differentiation) (Correct answer)
- Safety stock buffering
- Make-to-stock production
Correct answer: Postponement (delayed differentiation)
Postponement delays value-added activities (labeling, kitting, final assembly) until demand is known, reducing inventory risk and enabling mass customization.
Question 2: A carrier's freight rate decreases per unit as shipment weight increases. This pricing structure is called:
- Flat-rate pricing
- Dimensional weight pricing
- Tapering rate structure (Correct answer)
- Spot market pricing
Correct answer: Tapering rate structure
A tapering rate structure means freight rates decline per unit of weight or distance as volume increases, rewarding shippers of larger loads.
Question 3: In reverse logistics, what is the primary goal of a 'refurbishment' process?
- Destroying defective products to prevent resale
- Restoring returned products to a like-new or sellable condition (Correct answer)
- Returning goods to the original supplier for credit
- Recycling raw materials from end-of-life products
Correct answer: Restoring returned products to a like-new or sellable condition
Refurbishment repairs and restores returned or defective products so they can be resold, often in secondary markets, recovering product value.
Question 4: Which international shipping term (Incoterm) means the seller is responsible for all costs and risks until the goods are delivered to a named destination port, including import duties?
- FOB (Free on Board)
- CIF (Cost, Insurance, and Freight)
- DDP (Delivered Duty Paid) (Correct answer)
- EXW (Ex Works)
Correct answer: DDP (Delivered Duty Paid)
Under DDP, the seller bears all costs and risks including import clearance and duties, delivering goods to the buyer's named destination.
Question 5: What is the main advantage of a hub-and-spoke distribution network compared to a point-to-point network?
- Faster direct delivery between all pairs of nodes
- Reduced total routes and consolidated freight volumes, lowering per-unit cost (Correct answer)
- Elimination of transfer handling at intermediate points
- Lower inventory requirements at each node
Correct answer: Reduced total routes and consolidated freight volumes, lowering per-unit cost
Hub-and-spoke networks consolidate freight at central hubs, reducing the number of direct routes and enabling higher-volume, lower-cost transportation between hubs.
Question 6: A logistics manager notices that warehouse picking productivity has dropped. Which metric would best help diagnose the issue?
- Order fill rate
- Lines picked per labor hour (Correct answer)
- Inventory turnover
- Freight cost per unit shipped
Correct answer: Lines picked per labor hour
Lines picked per labor hour directly measures warehouse picking efficiency, isolating productivity from other logistics metrics.
Question 7: What is 'freight audit and payment' (FAP) in logistics management?
- Negotiating annual carrier contracts based on lane volume
- Verifying carrier invoices for accuracy and processing approved payments (Correct answer)
- Auditing warehouse inventory against purchase orders
- Evaluating carrier on-time performance for contract renewal
Correct answer: Verifying carrier invoices for accuracy and processing approved payments
FAP involves systematically checking carrier invoices against contracted rates and shipment data to catch billing errors before payment, often recovering 1–2% of freight spend.
Supply Chain Management Logistics 5
Which logistics concept involves holding minimal finished goods inventory and instead delaying final product configuration until a customer order is received?