MGSC 492 Actual Questions and Correct Answers
Q1
What is the formula for calculating inventory turns?
Answer: Inventory turns = Annual Cost of Goods Sold / Average Annual Inventory.
Q2
What are the three major components of inventory carrying cost?
Answer: 1. Capital Cost 2. Storage Cost 3. Risk Cost
Q3
What does capital cost refer to in inventory management?
Answer: When you purchase inventory, you pay for the inventory price, inspection,
transportation, and any import/customs charges to get it on your books. Capital Cost
is the cost of using your money to hold inventory instead of earning a return
elsewhere.
Q4
What is the total logistics concept?
Answer: The total logistics concept treats all elements of distribution and logistics as
a single integrated system.
Q5
What are the pre-transaction elements of logistics-related customer service?
Answer: Factors that arise prior to the actual transaction taking place. Written
customer service policy Accessibility of order personnel Single order contact point
Organization structure Method of ordering Order size constraints System flexibilit
Q6
Name the four main multifunctional dimensions of customer service.
Answer: 1. Time 2. Dependability 3. Communications 4. Flexibility
, Q7
What is a 'Perfect Order' in logistics?
Answer: A measure that accounts for all attributes of an order that satisfy customer
requirements, including complete delivery and accurate documentation.
Q8
What is a service level agreement?
Answer: A contract that defines the expected level of service between a supplier and
the end user. Usually external but can be internal
Q9
How does market size affect channel characteristics in logistics?
Answer: A larger, widely spread market typically uses a long channel with multiple
storage points, while a smaller market may use a short channel.
Q10
What is the impact of customer expectations on logistics?
Answer: There is a growth in customer expectations leading to increased service
sensitivity and the need for effective service measurement.
Q11
What is the relationship between product value and logistics costs?
Answer: Companies with higher product value tend to have proportionally lower
logistics costs.
Q12
What is the significance of risk cost in inventory management?
Answer: Risk cost accounts for potential losses due to damage, theft, or obsolescence
of stored inventory.
Q1
What is the formula for calculating inventory turns?
Answer: Inventory turns = Annual Cost of Goods Sold / Average Annual Inventory.
Q2
What are the three major components of inventory carrying cost?
Answer: 1. Capital Cost 2. Storage Cost 3. Risk Cost
Q3
What does capital cost refer to in inventory management?
Answer: When you purchase inventory, you pay for the inventory price, inspection,
transportation, and any import/customs charges to get it on your books. Capital Cost
is the cost of using your money to hold inventory instead of earning a return
elsewhere.
Q4
What is the total logistics concept?
Answer: The total logistics concept treats all elements of distribution and logistics as
a single integrated system.
Q5
What are the pre-transaction elements of logistics-related customer service?
Answer: Factors that arise prior to the actual transaction taking place. Written
customer service policy Accessibility of order personnel Single order contact point
Organization structure Method of ordering Order size constraints System flexibilit
Q6
Name the four main multifunctional dimensions of customer service.
Answer: 1. Time 2. Dependability 3. Communications 4. Flexibility
, Q7
What is a 'Perfect Order' in logistics?
Answer: A measure that accounts for all attributes of an order that satisfy customer
requirements, including complete delivery and accurate documentation.
Q8
What is a service level agreement?
Answer: A contract that defines the expected level of service between a supplier and
the end user. Usually external but can be internal
Q9
How does market size affect channel characteristics in logistics?
Answer: A larger, widely spread market typically uses a long channel with multiple
storage points, while a smaller market may use a short channel.
Q10
What is the impact of customer expectations on logistics?
Answer: There is a growth in customer expectations leading to increased service
sensitivity and the need for effective service measurement.
Q11
What is the relationship between product value and logistics costs?
Answer: Companies with higher product value tend to have proportionally lower
logistics costs.
Q12
What is the significance of risk cost in inventory management?
Answer: Risk cost accounts for potential losses due to damage, theft, or obsolescence
of stored inventory.
