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Exam 14: Transportation in a Supply Chain

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Question 41

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Suppose that a highway is governed by a use fee charged to motorists that is based on congestion,operation and maintenance.The total traffic t is used to determine the cost of 5t2.What is the average cost per motorist?

A) 2.5
B) 5
C) 5t
D) 2.5t

E) All of the above
F) A) and B)

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Question 42

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Which transportation network design option establishes an extra layer between suppliers and retailers to store inventory and to serve as a transfer location?

A) Direct shipping network
B) Direct shipping with milk runs
C) All shipments via central DC
D) Direct shipping

E) All of the above
F) A) and B)

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Question 43

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A distributor makes investment decisions regarding the transportation infrastructure and then makes operating decisions to try to maximize the return from these assets.

Scenario 14.2 SoxyBack,a manufacturer of fancy men's socks worn by fashionable gentlemen everywhere,is located in Oshkosh,Wisconsin.The socks are sold directly to fashion-conscious men all over North America.SoxyBack currently divides the United States into ten territories,each with its own sales force.All product inventories are maintained locally in each territory and replenished from Oshkosh every five weeks using UPS.The average replenishment lead time using UPS is one week.UPS charges at a rate of $0.75 + 0.33x where x is the quantity shipped in pounds.The products sold fall into two categories-Dandy and Popinjay.Dandy products weigh 0.2 pounds and cost $350 each.Popinjay products weigh 0.10 pounds and cost $35 each. Weekly demand for Dandy products in each territory is normally distributed,with a mean of mH = 3 and a standard deviation of sH = 6.Weekly demand for Popinjay products in each territory is normally distributed,with a mean of mL = 25 and a standard deviation of sL = 6. SoxyBack maintains sufficient safety inventories in each territory to provide a CSL of 0.975 for each product.Annual holding cost at SoxyBack is 30 percent.In addition to the current approach,the management team at SoxyBack is considering two other options: Option A: Keep the current structure but replenish inventory once a week rather than once every five weeks. Option B: Eliminate inventories in the territories,aggregate all inventories in a finished goods warehouse at Oshkosh,and replenish the warehouse once a week. If inventories are aggregated at Oshkosh,orders will be shipped using FedEx,which charges $7.25 + 0.77x per shipment,where x is the quantity shipped in pounds.The factory requires a one-week lead time to replenish finished-goods inventories at the Oshkosh warehouse.An average customer order is for 1 unit of Dandy and 10 units of Popinjay. -Use Scenario 14.2 to determine the total annual cost of Option B for SoxyBack's distribution system.

Which of these statements about use fees for a highway is best?

Rail is the dominant mode of freight transportation in the United States and accounts for over 75 percent of the nation's freight bill.

A firm can meet customer needs by using tailored transportation to provide the appropriate transportation choice based on customer and product characteristics,but at a higher cost.

Which transportation network design option uses a combination of milk runs,shipping via DC,shipping via intermediate DC with storage,and direct shipping with milk runs to reduce the cost and improve responsiveness of the supply chain?

The movement of product from one location to another as it makes its way from the beginning of a supply chain to the customer's hands is referred to as

Suppose that a highway is governed by a use fee charged to motorists that is based on congestion,operation and maintenance.The total traffic t is used to determine the cost of 5t2 + 7t.What is the average cost per motorist?

The combination of a medium density of customers and medium logistical distance is best served by contracting with an LTL carrier.

Cheaper modes of transport typically have

The cost of holding inventory incurred by the shipper's supply chain network is

Transportation cost depends on the prices offered by different carriers and the extent to which the shipper uses inexpensive and slow,or expensive and fast,means of transportation.

Transportation plays a key role in every supply chain because

The dabbawalas of Mumbai make a milk run to begin their day.

Scenario 14.2 SoxyBack,a manufacturer of fancy men's socks worn by fashionable gentlemen everywhere,is located in Oshkosh,Wisconsin.The socks are sold directly to fashion-conscious men all over North America.SoxyBack currently divides the United States into ten territories,each with its own sales force.All product inventories are maintained locally in each territory and replenished from Oshkosh every five weeks using UPS.The average replenishment lead time using UPS is one week.UPS charges at a rate of $0.75 + 0.33x where x is the quantity shipped in pounds.The products sold fall into two categories-Dandy and Popinjay.Dandy products weigh 0.2 pounds and cost $350 each.Popinjay products weigh 0.10 pounds and cost $35 each. Weekly demand for Dandy products in each territory is normally distributed,with a mean of mH = 3 and a standard deviation of sH = 6.Weekly demand for Popinjay products in each territory is normally distributed,with a mean of mL = 25 and a standard deviation of sL = 6. SoxyBack maintains sufficient safety inventories in each territory to provide a CSL of 0.975 for each product.Annual holding cost at SoxyBack is 30 percent.In addition to the current approach,the management team at SoxyBack is considering two other options: Option A: Keep the current structure but replenish inventory once a week rather than once every five weeks. Option B: Eliminate inventories in the territories,aggregate all inventories in a finished goods warehouse at Oshkosh,and replenish the warehouse once a week. If inventories are aggregated at Oshkosh,orders will be shipped using FedEx,which charges $7.25 + 0.77x per shipment,where x is the quantity shipped in pounds.The factory requires a one-week lead time to replenish finished-goods inventories at the Oshkosh warehouse.An average customer order is for 1 unit of Dandy and 10 units of Popinjay. -Use Scenario 14.2 to determine the percentage increase in total annual cost of SoxyBack's current system if the cost of transportation triples while all other parameters are held constant.

Serving a high density of customers at a short distance is best done using

Tailored transportation is the use of different transportation networks and modes based on customer and product characteristics.

Temporal aggregation