Test Database

Chapter 2 – The Distribution Management Environment

True or False

1.Every channel network must include at least one supplier, manufacturer, wholesaler/distributor, broker/jobber, and retail store.

a.True

b.False

  1. Demand occurring between a retail store and the customer is considered “independent” demand.
  1. True
  2. False
  1. Demandoccurring between a distributor and a retail store is considered “dependent” demand.
  1. True
  2. False
  1. Distribution channels reduce channel complexity by reducing the number of transactions occurring between channel players.
  2. True
  1. False
  1. Brokers and jobbers do not take ownership of channel inventories and but offer a wide range of services

a.True

b.False

  1. Assorting is the process of mixing similar or functionally related items into assortment to meet customer demand.
  1. True
  2. False
  1. When it comes to inventory in the supply chain, ownership is not necessarily the same as possession.
  1. True
  2. False
  1. Channel transaction functions, such as physical possession, ownership, and promotion are usually categorized as forward channel flows.
  1. True
  2. False
  1. Regardless of the size of the number of channel echelons, channel transaction flows occur only once.
  1. True
  2. False
  1. The triple bottom line is an important reason to pursue environmental sustainability.
  1. True
  2. False

Multiple Choice

11.Adding a distributor as a channel intermediary between manufacturers and retailers will result in all but the following.

  1. a decrease in the number of transactions for retailers
  2. a decrease in transportation costs
  3. an increase in the number of transactions for manufacturers
  4. a reduction in the number of shipments from manufacturers

12.The demand placed on a factory or a central warehouse by distribution centers is considered

a.dependent

b.independent

c.derived

d.uniform

13.The number of different products/configurations that a customer desires from the distribution network refers to

a.response time

b.product variety

c.product availability

d.customer experience

14.A company needs to move product closer to the customer marketplace to reduce lead times. Which of the following reasons for supply and distribution channels best responds to this factor?

a. rationalization

b.decentralization

c.product diversification

d.relocation

15.How do manufacturers view inventory?

a.as a long-term risk

b.as a medium-term risk

c.as a short-term risk

d.as a general risk

16.Manufacturers who sell directly to customers without the use of channel intermediaries experience which type of demand?

a.independent demand

b.dependent demand

c.first-order demand

d.derived demand

17.A manufacturing company would use which type of computer system to manage manufacturing inventories?

a.reorder point

b.distribution requirements planning (DRP)

c.materials requirements planning (MRP)

d.min/max system

18.Which of the following characterizes an echelon distribution delivery system?

  1. products are delivered directly from the producer to the customer
  2. products are normally make-to-order and customized
  3. products are normally delivered in full truck loads at minimal cost
  4. products are delivered from channel intermediaries

19.Perhaps the critical deciding factor between a centralized and a decentralized distribution system is

  1. inventory cost
  2. delivery lead times to the customer
  3. transportation costs
  4. depth of the supply channel

20.Of the below factors, which one contributes the most to supply chain disintermediation?

  1. transportation costs
  2. e-commerce
  3. shortened product life cycles
  4. globalization
  1. If a supply chain consisted of 5 producers that sold all of their products to 20 customers and a channel intermediary is used, how many possible transactions are there in the channel?
  1. 20 transactions
  2. 25 transactions
  3. 30 transactions
  4. 50 transactions

22.Which of the following is considered a limited-service wholesaler?

  1. wholesale merchants
  2. general-line wholesaler
  3. general merchandise wholesaler
  4. truck wholesaler

23.The channel process of combining homogeneous stocks of products into larger groups of supply is termed?

  1. sorting
  2. allocation
  3. accumulation
  4. assorting

24.Which of these functions is not considered a channel service output?

  1. bulk-breaking
  2. spatial convenience
  3. assortment
  4. specialization

25.The prime reason companies use channel postponement is to

  1. keep product in a semi-finished until final differentiation by a customer order
  2. reduce the channel costs
  3. increase control over supply chain finished goods
  4. reduce the amount of supply chain inventory obsolescence and spoilage

26.When a channel member is disintermediated from the transaction flow, the transfer of the transactions functions it had performed to the remaining channel members is termed

  1. channel functional spin-off
  2. channel exchange flow repositioning
  3. channel transaction flow reversal
  4. channel absorption

27.If a supply channel contained 3,000 units and 250 units were sold each day, what would be the channel throughput in days?

  1. 10 days
  2. 12 days
  3. 15 days
  4. 25 days

28.The main cause of the bull whip effect is

  1. adding buffer stocks at each channel node
  2. focusing on channel-level forecasting
  3. failing to plan effectively for variable demand
  4. using statistical replenishment techniques

29.Which one of these is not a factor driving today’s concern with reverse logistics?

  1. reducing product defects causing order returns
  2. customer service
  3. environmental awareness
  4. exploiting the triple bottom line

30.Which one of the four reverse logistics functions is considered to be the most beneficial to the environment?

  1. reuse
  2. reduce
  3. recover
  4. recycle

Answer Key

  1. F
  2. T
  3. F
  4. T
  5. F
  6. T
  7. T
  8. T
  9. F
  10. T
  11. c
  12. c
  13. b
  14. b
  15. a
  16. a
  17. c
  18. d
  19. b
  20. b
  21. b
  22. d
  23. c
  24. d
  25. a
  26. d
  27. b
  28. a
  29. a
  30. b

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