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DB 320 exam 2
| Question | Answer |
|---|---|
| The Total Cost Approach | involves the cost of the “system” to deliver the desired customer service |
| Transportation accounts for _______of total logistics expenditures | 60% |
| Economy of Scale: | cost per unit weight decreases as the size of the shipment increases |
| Economy of Distance: | cost per unit weight decreases as distance increases |
| Warehousing | involves holding and storing products in facilities until they are sold or needed in another location |
| • location • number of facilities • size of the facilities • design of the facilities, including the layout and internal systems • whether to own or rent the property | Common considerations of Warehousing are: |
| inventory carrying costs can be up to _______of inventory value. | 25% |
| economic order quantity. | It is a balance of order costs (a large order allows ordering costs to be spread over the larger order) and inventory carrying costs (the costs rise with larger inventory levels) |
| By ordering the economic order quantity (EOQ), | the amount of time inventory stays in the warehouse can be reduced, increasing inventory turnover. |
| A _________ inventory turnover in general is positive. It can mean a firm is using its inventory investment efficiently | faster |
| It is also possible that a high inventory turnover is due to | frequent stockouts and lost sales or poor forecasting |
| Just-in-time | inventory management system aims to lower inventory costs but match demand precisely |
| ________must be predictable for a JIT system to work. | Demand |
| Average Inventory | typical amount of inventory held over time |
| • Order Quantity | amount ordered for replenishment |
| • Safety Stock | extra inventory used to protect against demand and performance uncertainty |
| • Obsolete Inventory | out-of-date stock or stock that has not been in recent demand |
| • Transit inventory | amount of inventory in transit between facilities on order but not yet received |
| • Order Fill Rate (Case Fill Rate) | percentage of customer orders (or cases, units) completely filled as requested |
| • Order Performance Cycle (Order Cycle Time) | time between order placed and customer receipt |
| Inventory turnover | indicates how frequently the inventory being held is replenished throughout the year. |
| if you are “turning your inventory over”, | ________you are selling product, which is why the saying is: inventory turnover equals cash. |
| The Inventory turnover is calculated as a function of | Cost of Goods Sold and Average Inventory on hand through the year. |
| Materials Management | involves the range of labor activities and equipment used to place and move products in storage |
| Important Materials Management considerations include: | • minimizing distances that products move within the warehouse • minimizing the amount of times the products move or are handled |
| Cross-docking | is a frequent solution to reduce handling costs. |
| Cross-docking can reduce per case handling costs by as much as | two- thirds. |
| order processing | is crucially important to the core mission of providing reliable product availability. |
| order cycle time | is the time between order placement and customer receipt |
| Packaging | involves the outer material a customer sees (promotional packaging) and the material to protect products while being transported. |
| Selling Price | is List Price minus any discounts; the actual price paid |
| Gross Margin | Selling Price minus COGS and adjustments (discounts) |
| Percent Gross Margin (PGM) – | gross profit that is the percentage of revenue |
| • Percent Mark-up (PMU) – | gross profit that is the percentage of cost |
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