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Chapter4DesigningtheDistributionNetworkinaSupplyChainTrue/FalseDistributionoccursbetweeneverypairofstagesinthesupplychain.Answer:TrueDifficulty:ModerateDistributiononlyoccursbetweenmanufacturingandconsumersinthesupplychain.Answer:FalseDifficulty:ModerateCompaniesinthesameindustryoftenselectverydifferentdistributionnetworks,becausethechoiceofthedistributionnetworkcanbeusedtoachieveavarietyofsupplychainobjectivesrangingfromlowcosttohighresponsiveness.Answer:TrueDifficulty:ModerateCompaniesinthesameindustryshouldalwaysselectsimilardistributionnetworks,becausetheirobjectiveswillbesimilar.Answer:FalseDifficulty:ModerateAcustomeralwayswantsthehighestlevelofperformancealongalldimensionsofcustomerservice,includingresponsetime,productvariety,productavailability,customerexperience,ordervisibility,andreturnability.Answer:FalseDifficulty:ModerateAcustomerdoesnotnecessarilywantthehighestlevelofperformancealongalldimensionsofcustomerservice,includingresponsetime,productvariety,productavailability,customerexperience,ordervisibility,andreturnability.Answer:TrueDifficulty:EasyOutboundtransportationcostsperunittendtobelowerthaninboundcosts,becauseinboundlotsizesaretypicallylarger.Answer:FalseDifficulty:EasyOutboundtransportationcostsperunittendtobehigherthaninboundcosts,becauseinboundlotsizesaretypicallylarger.Answer:TrueDifficulty:EasyTransportationcostsarehighwithdrop-shippingbecausetheaverageoutbounddistancetotheendconsumerislargeandpackagecarriersareusedtoshippingtheproduct.Answer:TrueDifficulty:EasyTransportationcostsarelowwithdrop-shippingbecausetheaverageoutbounddistancetotheendconsumerissmall.Answer:FalseDifficulty:EasyThemainadvantageofin-transitmergeoverdrop-shippingisthesomewhatlowertransportationcostandimprovedcustomerexperience.Answer:TrueDifficulty:ModerateThemainadvantageofadistributionnetworkwithlocalstorageisthatitcanlowerthedeliverycostandprovideafasterresponsethanothernetworks.Answer:TrueDifficulty:ModerateThemainadvantageofadistributionnetworkwithlocalstorageisthatitcanlowertheinventoryandfacilitycosts.Answer:FalseDifficulty:ModerateThemajordisadvantageofadistributionnetworkwithlocalstorageistheincreaseddeliverycost.Answer:FalseDifficulty:ModerateThemajordisadvantageofadistributionnetworkwithlocalstorageistheincreasedinventoryandfacilitycosts.Answer:TrueDifficulty:EasyAdistributionnetworkdesignerneedstoconsiderproductcharacteristicsaswellasnetworkrequirementswhendecidingontheappropriatedeliverynetwork.Answer:TrueDifficulty:HardOnlynichecompanieswillendupusingasingledistributionnetwork.Answer:TrueDifficulty:EasyMostcompaniesarebestservedbyasingledistributionnetwork.Answer:FalseDifficulty:ModerateDistributorsaddvaluetoasupplychainbetweenasupplystageandacustomerstageiftherearemanysmallplayersatthecustomerstage,eachrequiringasmallamountoftheproductatatime.Answer:TrueDifficulty:ModerateMultipleChoiceThestepstakentomoveandstoreaproductfromthesupplierstagetoacustomerstageinthesupplychainisreferredtoastransportation.retailing.wholesaling.distribution.manufacturing.Answer:dDifficulty:EasyDistributionisakeydriveroftheoverallprofitabilityofafirmbecausetheadditionofdistributorsonlyaddscosttothesupplychain.itdirectlyimpactsboththesupplychaincostandthecustomerexperience.itslowsdowntheresponsivenessofthesupplychain.itcannotbedevelopedasapartofsupplychainstrategy.Distributionisnotakeydriverofprofitability.Answer:bDifficulty:ModerateThechoiceofthedistributionnetworkcanbeusedtoachievesupplychainobjectivessuchaslowcost.highresponsiveness.highcost.highresponsibility.aandbonlyAnswer:eDifficulty:ModerateCompaniesinthesameindustryoftenselectverydifferentdistributionnetworksbecausesomecompaniesarepoorlyrun.differentcompaniestrytoavoidusingthesameapproach.differentcompanieshavedifferentobjectivesfortheirsupplychain.alloftheabovenoneoftheaboveAnswer:cDifficulty:ModerateApoor/inappropriatedistributionnetworkcanleadtohighprofitability.hurtthelevelofservicecustomersreceivewhileincreasingcost.haveasignificantnegativeimpactontheprofitabilityofafirm.alloftheabovebandconlyAnswer:dDifficulty:ModerateWhichofthefollowingwouldnotbetheresultofapoor/inappropriatedistributionnetwork?HighprofitabilityLowlevelofcustomerserviceHighcostPoorprofitabilityNoneoftheabovearetrue.Answer:aDifficulty:EasyOnwhichdimensionsshouldtheperformanceofadistributionnetworkbeevaluatedatthehighestlevel?ProfitabilityofindividualsupplychaincomponentsEfficiencyofoverallsupplychainnetworkCustomerneedsthataremetCostofmeetingcustomerneedscanddonlyAnswer:eDifficulty:HardWhichofthefollowingaremeasuresofcustomerservicethatareinfluencedbythestructureofthedistributionnetwork?ResponsetimeProductvarietyProductavailabilityCustomerexperiencealloftheaboveAnswer:eDifficulty:EasyWhichofthefollowingaremeasuresofcustomerservicethatareinfluencedbythestructureofthedistributionnetwork?ReturnabilityOrdervisibilityCustomerexperienceProductavailabilityalloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingisnotameasureofcustomerservicethatisinfluencedbythestructureofthedistributionnetwork?ReturnabilityCustomerexperienceCustomermaturityProductavailabilityAlloftheabovearemeasuresofcustomerservice.Answer:cDifficulty:EasyTductavailability.customerexperience.ordervisibility.Answer:aDifficulty:EasyThenumberofdifferentproducts/ductavailability.customerexperience.ordervisibility.Answer:bDifficulty:EasyTductavailability.customerexperience.ordervisibility.Answer:cDifficulty:EasyTductavailability.responsetime.returnability.Answer:aDifficulty:EasyTductavailability.responsetime.returnability.Answer:bDifficulty:EasyTductavailability.responsetime.returnability.Answer:eDifficulty:EasyThecostsincurredinbringingmaterialintoafacilityaresourcingtransportationcosts.outboundtransportationcosts.crossboundtransportationcosts.inboundtransportationcosts.noneoftheaboveAnswer:dDifficulty:EasyThecostsincurredinsendingmaterialoutofafacilityaresourcingtransportationcosts.outboundtransportationcosts.crossboundtransportationcosts.inboundtransportationcosts.noneoftheaboveAnswer:bDifficulty:EasyOutboundtransportationcostsperunittendtobeaboutthesameasinboundcosts.higherthaninboundcosts.lowerthaninboundcosts.neitherhigherorlowerthaninboundcosts.noneoftheaboveAnswer:bDifficulty:ModerateAsthenumberoffacilitiesinasupplychainincreasestheinventoryandresultinginventorycostsalsoincrease.theinventoryandresultinginventorycostsdecrease.theinventoryincreasesandresultinginventorycostsdecrease.theinventorydecreasesandresultinginventorycostsincrease.theinventoryandresultinginventorycostsremainthesame.Answer:aDifficulty:ModerateAstheresponsetimedesiredbythecustomerdecreases,therequirednumberoffacilitiesinthedistributionnetworkdecreases.remainsthesame.increases.increasesandthendecreases.noneoftheaboveAnswer:cDifficulty:ModerateAsthenumberoffacilitiesinasupplychainincreases,totaltransportationcostdecreases.remainsthesame.increases.increasestoapointandthendecreases.decreasestoapointandthenincreases. Answer:eDifficulty:HardAsthenumberoffacilitiesinasupplychainincreases,totalfacilitycostsdecrease.remainthesame.increase.increasetoapointandthendecrease.decreasetoapointandthenincrease.Answer:cDifficulty:ModerateTotallogisticscostsforasupplychainnetworkareasumofinventoryandfacilitycosts.inventory,facility,anddistributorcosts.facility,transportation,anddistributorcosts.inventory,transportation,andfacilitycosts.noneoftheaboveAnswer:dDifficulty:ModerateAsthenumberoffacilitiesinasupplychainnetworkincreases,totallogisticscostswilldecrease.decreaseatfirstandthenincrease.increase.increaseatfirstandthendecrease.neitherincreaseordecrease.Answer:bDifficulty:ModerateWhichofthefollowingarekeydecisionsinthedesignofadistributionnetwork?Willproductbedeliveredtothecustomerlocationorpickedupfromapre-ordainedsite?Willproductflowthroughaproductionfacility?Willproductflowthroughanintermediary(orintermediatelocation)?alloftheaboveaandconlyAnswer:eDifficulty:ModerateWhichofthefollowingisnotadistinctdistributionnetworkdesignthatmaybeusedtomoveproductsfromfactorytocustomer?ManufacturerstoragewithdirectshippingManufacturerstoragewithdistributorpickupDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithlastmiledeliveryManufacturer/distributorstoragewithcustomerpickupAnswer:bDifficulty:ModerateWhichofthefollowingisnotadistinctdistributionnetworkdesignthatmaybeusedtomoveproductsfromfactorytocustomer?ManufacturerstoragewithdirectshippingManufacturerstoragewithdirectshippingandin-transitmergeDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithmanufacturerpickupRetailstoragewithcustomerpickupAnswer:dDifficulty:ModerateInwhichdistributionnetworkdesignisproductshippeddirectlyfromthemanufacturertotheendcustomer,bypassingtheretailer(whotakestheorderandinitiatesthedeliveryrequest)?ManufacturerstoragewithdirectshippingManufacturerstoragewithdirectshippingandin-transitmergeDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithlastmiledeliveryManufacturer/distributorstoragewithcustomerpickupAnswer:aDifficulty:EasyWhichdistributionnetworkisalsoreferredtoasdrop-shippingwithproductdelivereddirectlyfromthemanufacturertothecustomerlocation?ManufacturerstoragewithdirectshippingManufacturerstoragewithdirectshippingandin-transitmergeDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithlastmiledeliveryManufacturer/distributorstoragewithcustomerpickupAnswer:aDifficulty:ModerateAdvantagesofmanufacturerstoragewithdirectshippingincludetheabilitytoreducecostofinventorybycentralizinginventoriesatthemanufacturer.offeringthemanufacturertheopportunitytopostponecustomizationuntilafterthecustomerorderhasbeenplaced.supplychainssaveonthefixedcostoffacilities,vidingagoodcustomerexperienceintheformofdeliverytothecustomerlocation.alloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingisanadvantageofmanufacturerstoragewithdirectshipping?Transportationcostsarelowbecausetheaverageoutbounddistancetotheendconsumerissmallandpackagecarriersareusedtoshippingtheproduct.Supplychainssaveonthefixedcostoffacilities,becausetheneedforotherwarehousingspaceinthesupplychainhasbeeneliminated.Responsetimestendtobesmallbecausetheorderhastobetransmittedfromtheretailertothemanufacturer.Ordertrackingiseasytoimplementbecauseofthecompleteintegrationofinformationsystemsatboththeretailerandthemanufacturer.Thehandlingofreturnsislikelytobesimpleandinexpensive,improvingcustomersatisfaction.Answer:bDifficulty:ModerateDisadvantagesofmanufacturerstoragewithdirectshippingincludeTransportationcostsarehighbecausetheaverageoutbounddistancetotheendconsumerislargeandpackagecarriersareusedtoshippingtheproduct.Responsetimestendtobelargebecausetheorderhastobetransmittedfromtheretailertothemanufacturerandshippingdistancesareonaveragelongerfromthemanufacturer’scentralizedsite.Ordertrackingbecomeshardertoimplementbecauseitrequirescompleteintegrationofinformationsystemsatboththeretailerandthemanufacturer.Thehandlingofreturnsislikelytobedifficultandmoreexpensive,hurtingcustomersatisfaction.alloftheaboveAnswer:eDifficulty:ModerateWhichofthefollowingwouldbeadisadvantageofmanufacturerstoragewithdirectshipping?Theabilitytoreducecostofinventorybycentralizinginventoriesatthemanufacturer.Themanufacturerhastopostponecustomizationuntilafterthecustomerorderhasbeenplaced.Supplychainshavetoeliminateotherwarehousingspacetosaveonthefixedcostoffacilities.Responsetimestendtobelargebecausetheorderhastobetransmittedfromtheretailertothemanufacturerandshippingdistancesareonaveragelongerfromthemanufacturer’scentralizedsite.Providesagoodcustomerexperiencewhenasingleordercontainingproductsfromseveralmanufacturersisdeliveredinpartialshipments.Answer:dDifficulty:ModerateWhichdistributionnetworkdesignissimilartopuredrop-shipping,exceptthatpiecesoftheordercomingfromdifferentlocationsarecombinedsothatthecustomergetsasingledelivery?ManufacturerstoragewithdirectshippingManufacturerstoragewithdirectshippingandin-transitmergeDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithmanufacturerpickupRetailstoragewithcustomerpickupAnswer:bDifficulty:ModerateThemainadvantageofin-transitmergeoverdrop-shippingistheabilitytoreducecostofinventorybycentralizinginventoriesatthemanufacturer.supplychainssaveonthefixedcostoffacilities,becausetheneedforotherwarehousingspaceinthesupplychainhasbeeneliminated.somewhatlowertransportationcostandimprovedcustomerexperience.ordertrackingiseasytoimplementbecauseofthecompleteintegrationofinformationsystemsatboththeretailerandthemanufacturer.thehandlingofreturnsislikelytobesimpleandinexpensive,improvingcustomersatisfaction.Answer:cDifficulty:ModerateThemajordisadvantageofin-transitmergecomparedtodrop-shippingistransportationcostsarehighbecausetheaverageoutbounddistancetotheendconsumerislargeandpackagecarriersareusedtoshippingtheproduct.responsetimestendtobelargebecausetheorderhastobetransmittedfromtheretailertothemanufacturerandshippingdistancesareonaveragelongerfromthemanufacturer’scentralizedsite.ordertrackingbecomeshardertoimplementbecauseitrequirescompleteintegrationofinformationsystemsatboththeretailerandthemanufacturer.theadditionaleffortduringthemergeitself.thehandlingofreturnsislikelytobedifficultandmoreexpensive,hurtingcustomersatisfaction.Answer:dDifficulty:EasyWhichdistributionnetworkdesignisbeingusedwheninventoryisnotheldbymanufacturersatthefactories,butisheldbydistributors/retailersinintermediatewarehousesandpackagecarriersareusedtotransportproductsfromtheintermediatelocationtothefinalcustomer?ManufacturerstoragewithdirectshippingManufacturerstoragewithdirectshippingandin-transitmergeDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithmanufacturerpickupRetailstoragewithcustomerpickupAnswer:cDifficulty:EasyWhichofthefollowingisanadvantageofdistributorstoragewithcarrierdelivery?Inventorycostishigherthanwithmanufacturerstorage.Productvarietyislowerthanwithmanufacturerstorage.Ordervisibilityforthecustomeriseasierthanwithmanufacturerstorage.Highercosttoprovidethesamelevelofproductavailabilityasmanufacturerstorage.Costoffacilitiesandhandlingissomewhathigherthanmanufacturerstorage.Answer:cDifficulty:ModerateWhichofthefollowingisadisadvantageofdistributorstoragewithcarrierdelivery?Informationinfrastructureissimplerthanmanufacturerstorage.Responsetimeisfasterthanwithmanufacturerstorage.Returnabilityiseasierthanwithmanufacturerstorage.Productvarietyislowerthanwithmanufacturerstorage.Transportationcostislowerthanwithmanufacturerstorage.Answer:dDifficulty:ModerateWhichdistributionnetworkdesignisbeingusedwhenthedistributor/retailerdeliverstheproducttothecustomer’shomeinsteadofusingapackagecarrier?ManufacturerstoragewithdirectshippingManufacturer/distributorstoragewithcustomerpickupDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithlastmiledeliveryRetailstoragewithcustomerpickupAnswer:dDifficulty:ModerateWhichofthefollowingisanadvantageofdistributorstoragewithlastmiledelivery?Moreexpensivetoprovideproductavailabilitythananyotheroptionexceptretailstores.Inventorycostishigherthandistributorstoragewithpackagecarrierdelivery.Responsetimeisveryquickrangingfromsamedaytonextdaydelivery.Transportationcostishigherthananyotherdistributionoption.Returnabilityisharderandmoreexpensivethanaretailnetwork.Answer:cDifficulty:EasyWhichofthefollowingisadisadvantageofdistributorstoragewithlastmiledelivery?Transportationcostishigherthananyotherdistributionoption.Informationcostissimilartodistributorstoragewithpackagecarrierdelivery.Customerexperienceisverygood,particularlyforbulkyitems.Returnabilityiseasiertoimplementthanotheroptions.Ordertraceabilityislessofanissueandeasiertoimplementthanmanufacturerstorageordistributorstoragewithpackagecarrierdelivery.Answer:aDifficulty:HardWhichdistributionnetworkdesignisbeingusedwheninventoryisstoredatthemanufacturerordistributorwarehousebutcustomersplacetheirordersonlineoronthephoneandthencometodesignatedpickuppointstocollecttheirorders?ManufacturerstoragewithdirectshippingManufacturer/distributorstoragewithcustomerpickupDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithlastmiledeliveryRetailstoragewithcustomerpickupAnswer:bDifficulty:ModerateWhichofthefollowingisanadvantageofmanufacturer/distributorstoragewithcustomerpickup?Facilitycostscanbeveryhighifnewfacilitieshavetobebuilt.Transportationcostislowerthantheuseofpackagecarriers,especiallyifusinganexistingdeliverynetwork.Ordervisibilityisdifficultbutessential.Productvarietyissimilartoothermanufacturerordistributorstorageoptions.Significantinvestmentininformationinfrastructurerequired.Answer:bDifficulty:ModerateWhichofthefollowingisadisadvantageofmanufacturer/distributorstoragewithcustomerpickup?Customerexperienceislowerthanotheroptionsbecauseofthelackofhomedelivery.Responsetimeissimilartopackagecarrierdeliverywithmanufacturerordistributorstorage.Returnabilityissomewhateasiergiventhatpickuplocationcanhandlereturns.Productavailabilityissimilartoothermanufacturerordistributorstorageoptions.Facilitiescostsarelowerifexistingfacilitiesareused.Answer:aDifficulty:HardWhichdistributionnetworkdesignisbeingusedwheninventoryisstoredlocallyatretailstoresandcustomerswalkintotheretailstoreorplaceanorderonlineoronthephoneandpickitupattheretailstore?ManufacturerstoragewithdirectshippingManufacturer/distributorstoragewithcustomerpickupDistributorstoragewithpackagecarrierdeliveryDistributorstoragewithlastmiledeliveryRetailstoragewithcustomerpickupAnswer:eDifficulty:EasyWhichofthefollowingisanadvantageofretailstoragewithcustomerpickup?Inventorycostishigherthanallotheroptions.Transportationcostislowerthanallotheroptions.Facilitiesandhandlingcostsarehigherthanotheroptions.Productvarietyislowerthanallotheroptions.Productavailabilityismoreexpensivetoprovidethanallotheroptions.Answer:bDifficulty:ModerateWhichofthefollowingisadisadvantageofretailstoragewithcustomerpickup?Returnabilityiseasierthanotheroptionsgiventhatpickuplocationcanhandlereturns.Inventorycostishigherthanallotheroptions.Transportationcostislowerthanallotheroptions.Facilitiesandhandlingcostsarelowerthanotheroptions.Productvarietyishigherthanallotheroptions.Answer:bDifficulty:ModerateDistributorsaddvaluetoasupplychainbetweenasupplystageandacustomerstageifthereisasmallnumberofcustomersrequiringalargeamountofproduct.ifthereisalargenumberofcustomersrequiringalargeamountofproduct.iftherearemanysmallplayersatthecustomerstage,eachrequiringasmallamountoftheproductatatime.ifthereareafewlargeplayersatthecustomerstage,eachrequiringalargeamountoftheproductatatime.Distributorsdonotaddvaluetoasupplychain.Answer:cDifficulty:ModerateImprovementinsupplychainperformanceattheresultofdistributorsoccursforwhichofthefollowingreasons?ReductionintransportationcostbecauseofLTLshipmentsfrommanufacturerstodistributor.Reductioninoutboundtransportationcostbecausethedistributorcombinesproductsfrommanycustomersintoasingleoutboundshipment.Reductionininventorycostsbecausedistributordisaggregatessafetyinventoryratherthanaggregatingateachretailer.Amorestableorderstreamfromdistributortomanufacturer(comparedtoerraticordersfromeachretailer)allowsmanufacturerstolowercostbyplanningproductionmoreeffectively.Bycarryinginventoryclosertothepointofsale,manufacturersareabletoprovideabetterresponsetimethandistributorscan.Answer:dDifficulty:HardWhichofthefollowingstatementsaboutdistributionnetworksistrue?Theownershipstructureofthedistributionnetworkcanhaveasbiganimpactasthetypeofdistributionnetwork.Thechoiceofadistributionnetworkhasverylong-termconsequences.Thechoiceofanexclusivedistributionstrategymaybeadvantageous.Alloftheabovearetrue.Noneoftheabovearetrue.Answer:dDifficulty:HardEssay/ProblemsExplainthemeasuresofcustomerservicethatareinfluencedbythestructureofthedistributionnetwork.Answer:Responsetimeisthetimebetweenwhenacustomerplacesanorderandreceivesdelivery.Productvarietyisthenumberofdifferentproducts/configurationsthatacustomerdesiresfromthedistributionnetwork.Availabilityistheprobabilityofhavingaproductinstockwhenacustomerorderarrives.Customerexperienceincludestheeasewithwhichthecustomercanplaceandreceivetheirorder.Italsoincludespurelyexperientialaspects,suchasthepossibilityofgettingacupofcoffeeandthevaluethatthesalesstaffprovides.Ordervisibilityistheabilityofthecustomertotracktheirorderfromplacementtodelivery.Returnabilityistheeasewithwhichacustomercanreturnunsatisfactorymerchandiseandtheabilityofthenetworktohandlesuchreturns.Difficulty:ModerateExplainhowthedesignofthedistributionnetworkaffectsthecostofthefoursupplychaindrivers.Answer:Asthenumberoffacilitiesinasupplychainincreases,theinventoryandresultinginventorycostsalsoincrease.Todecreaseinventorycosts,firmstrytoconsolidateandlimitthenumberoffacilitiesintheirsupplychainnetwork.Outboundtransportationcostsperunittendtobehigherthaninboundcostsbecauseinboundlotsizesaretypicallylarger.Increasingthenumberofwarehouselocationsdecreasestheaverageoutbounddistancetoacustomerandmakesoutboundtransportationdistanceasmallerfractionoftotaldistancetraveledbytheproduct.Thus,aslongasinboundtransportationeconomiesofscalearemaintained,increasingthenumberoffacilitiesdecreasestotaltransportationcost.Facilitycostsdecreaseasthenumberoffacilitiesisreduced,becauseaconsolidationoffacilitiesallowsafirmtoexploiteconomiesofscale.Asthenumberoffacilitiesincreases,totallogisticscostsfirstdecreaseandthenincrease.Eachfirmshouldhaveatleastthenumberoffacilitiesthatminimizetotallogisticscosts.Asafirmwantstofurtherreducetheresponsetimetoitscustomers,itmayhavetoincreasethenumberoffacilitiesbeyondthepointthatminimizeslogisticscosts.Afirmshouldaddfacilitiesbeyondthecost-minimizingpointonlyifmanagersareconfidentthattheincreaseinrevenuesbecauseofbetterresponsivenessisgreaterthantheincreaseincostsbecauseoftheadditionalfacilities.Ingeneral,nodistributionnetworkwilloutperformothersalongalldimensions.Thus,itisimportanttoensurethatthestrengthsofthedistributionnetworkfitwiththestrategicpositi

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