SCMN 3710 test 1 Questions and All
Correct Answers 2026-2027 Updated.
What is the definition of logistics from a business perspective and how does this fit in to the
supply chain concept? p. 54-55 - Answer `The management of materials both in motion, and
at rest. This fits in the supply chain concept as it's core. at the end of the day, it's how are you
going to get from point A, to point B, then to point C.
What are the utilities of time, place, quantity, form, and possession, and how do they fit with
logistics, manufacturing, and marketing? p. 56-58 - Answer `Form Utility - AKA Transformation
Utility, refers to the value added to the goods through a manufacturing or assembly process.
`Place Utility - Provided by moving goods from production points to markets where demand
exists.
`Time Utility - The economic value added to a good or service by having it at a demand point at
a specific time when it is needed.
`Quantity Utility - Provided with the delivery of the proper quantities demanded.
`Possession Utility - Primarily created through the basic marketing activities related to the
promotion and sales of products and services.
What is the magnitude of logistics spending in the U.S., and how much of it is for
transportation? p. 62-65 - Answer 1,449,000,000,000 total,
907,000,000 on transportation alone
What level are logistics costs relative to GDP? p. 62 - Answer 8.3% in 2014
Explain the interface of logistics with manufacturing, marketing, accounting, and finance. p. 65-
68 - Answer **** come back ****
`Manufacturing - involves length of production runs, minimizing the inventory impact of
seasonal products, ensuring availability of raw materials and components for production
schedules, and ensuring proper industrial packaging is in place to protect the items from
damage in transit.
`Marketing - involves ensuring discounts on products don't outweigh trans. costs, as well as
manage possible increased demand;
`Accounting -
`Finance -
Explain the inventory effect. p. 70 fig 3.6 (discuss inverse relationship i.e. cost of lost sales vs.
inventory cost) - Answer A common way firms will offset the cost of lost sales(COLS), is by
increasing the inventory cost (by increasing overall level, or reorder point) it tends to lower the
COLS
, Explain the transportation effect. p. 70 fig 3.7 - Answer similar to the inventory effect,
increased transportation costs helps offset cost of lost sales. Most often the increase is from an
improved form of transportation, which usually improves customer service
Why are spatial relationships important in logistics? p. 73-74 - Answer Spatial relationships, or
distance, are how efficiently the facility (warehouse, plant, etc..) are to the markets and often
are big deciders in facility locations.
Explain how the product related factors of dollar value, density, susceptibility to damage, and
special handling requirements affect the cost and importance of logistics. p. 71-73 - Answer
`Dollar Value - generally, the higher dollar value of the product, the higher cost of logistics due
to things like more protective packaging, higher transportation costs, and higher facility costs for
high value items.
`Density - Referring to items that are lightweight compared to the size they take up, generally
more of these products leads to lower cost, as there these low density items tend to take up
less space than many high-density items.
`Susceptibility To Damage - This one is simple. The higher the chance of an item being damaged,
the more it costs for both warehousing and shipping.
`Special Handling Requirements - For example, products & items that need to be temperature
controlled will need a truck equipped with special equipment, which always costs more.
Explain the difference between static and dynamic analysis. p. 81-83 - Answer `Static Analysis -
aka short-run analysis, this puts many options side-by-side and analyzes the final data to pick an
option. Often concentrated on a specific time or level of output.
` Dynamic Analysis - aka long-run analysis, uses both data over a long term, as well as formula's
to determine a solution.
What are nodes and links? p. 85 - Answer nodes - permanent locations in the supply chain
(factory, storage facility, store, etc...)
links - transportation lines that connect the nodes in a supply chain (trucks, trains, airlines,
ships, etc..)
What is inventory and what are the different types? RM, WIP, FG? - Answer Inventory is the
amount of supplies you have, both raw materials and components, as well as goods still
currently being produced. Once goods are finished, they are also considered inventory until in
transit.
`RM - Raw Materials
`WIP - Work-in-Process
`FG - Finished Goods
Correct Answers 2026-2027 Updated.
What is the definition of logistics from a business perspective and how does this fit in to the
supply chain concept? p. 54-55 - Answer `The management of materials both in motion, and
at rest. This fits in the supply chain concept as it's core. at the end of the day, it's how are you
going to get from point A, to point B, then to point C.
What are the utilities of time, place, quantity, form, and possession, and how do they fit with
logistics, manufacturing, and marketing? p. 56-58 - Answer `Form Utility - AKA Transformation
Utility, refers to the value added to the goods through a manufacturing or assembly process.
`Place Utility - Provided by moving goods from production points to markets where demand
exists.
`Time Utility - The economic value added to a good or service by having it at a demand point at
a specific time when it is needed.
`Quantity Utility - Provided with the delivery of the proper quantities demanded.
`Possession Utility - Primarily created through the basic marketing activities related to the
promotion and sales of products and services.
What is the magnitude of logistics spending in the U.S., and how much of it is for
transportation? p. 62-65 - Answer 1,449,000,000,000 total,
907,000,000 on transportation alone
What level are logistics costs relative to GDP? p. 62 - Answer 8.3% in 2014
Explain the interface of logistics with manufacturing, marketing, accounting, and finance. p. 65-
68 - Answer **** come back ****
`Manufacturing - involves length of production runs, minimizing the inventory impact of
seasonal products, ensuring availability of raw materials and components for production
schedules, and ensuring proper industrial packaging is in place to protect the items from
damage in transit.
`Marketing - involves ensuring discounts on products don't outweigh trans. costs, as well as
manage possible increased demand;
`Accounting -
`Finance -
Explain the inventory effect. p. 70 fig 3.6 (discuss inverse relationship i.e. cost of lost sales vs.
inventory cost) - Answer A common way firms will offset the cost of lost sales(COLS), is by
increasing the inventory cost (by increasing overall level, or reorder point) it tends to lower the
COLS
, Explain the transportation effect. p. 70 fig 3.7 - Answer similar to the inventory effect,
increased transportation costs helps offset cost of lost sales. Most often the increase is from an
improved form of transportation, which usually improves customer service
Why are spatial relationships important in logistics? p. 73-74 - Answer Spatial relationships, or
distance, are how efficiently the facility (warehouse, plant, etc..) are to the markets and often
are big deciders in facility locations.
Explain how the product related factors of dollar value, density, susceptibility to damage, and
special handling requirements affect the cost and importance of logistics. p. 71-73 - Answer
`Dollar Value - generally, the higher dollar value of the product, the higher cost of logistics due
to things like more protective packaging, higher transportation costs, and higher facility costs for
high value items.
`Density - Referring to items that are lightweight compared to the size they take up, generally
more of these products leads to lower cost, as there these low density items tend to take up
less space than many high-density items.
`Susceptibility To Damage - This one is simple. The higher the chance of an item being damaged,
the more it costs for both warehousing and shipping.
`Special Handling Requirements - For example, products & items that need to be temperature
controlled will need a truck equipped with special equipment, which always costs more.
Explain the difference between static and dynamic analysis. p. 81-83 - Answer `Static Analysis -
aka short-run analysis, this puts many options side-by-side and analyzes the final data to pick an
option. Often concentrated on a specific time or level of output.
` Dynamic Analysis - aka long-run analysis, uses both data over a long term, as well as formula's
to determine a solution.
What are nodes and links? p. 85 - Answer nodes - permanent locations in the supply chain
(factory, storage facility, store, etc...)
links - transportation lines that connect the nodes in a supply chain (trucks, trains, airlines,
ships, etc..)
What is inventory and what are the different types? RM, WIP, FG? - Answer Inventory is the
amount of supplies you have, both raw materials and components, as well as goods still
currently being produced. Once goods are finished, they are also considered inventory until in
transit.
`RM - Raw Materials
`WIP - Work-in-Process
`FG - Finished Goods
