,TLMT 313 Week 3 Quiz 3 | Supply Chain Management (2026)
Q&A | AMU
1. Which of the following best describes the primary goal of global location decisions in
supply chain management?
A) To minimize the cost of raw materials only
B) To optimize supply chain performance and align with the firm's competitive strategy
C) To increase the number of warehouses in every region
D) To reduce the number of suppliers used by the firm
Correct Answer: B) To optimize supply chain performance and align with the firm's
competitive strategy
Rationale: Global location decisions are strategic choices that determine where to place
facilities such as factories, warehouses, and distribution centers. The primary goal is to
optimize the overall performance of the supply chain while ensuring consistency with the
firm's competitive strategy, whether that strategy is based on cost leadership, differentiation,
or responsiveness.
2. What is the primary role of logistics in a supply chain?
A) To create the efficient flow of goods between supply chain partners to maximize profit and
competitive advantage
B) To manage the financial transactions between buyers and suppliers
C) To design marketing campaigns for new products
D) To recruit and train supply chain personnel
Correct Answer: A) To create the efficient flow of goods between supply chain partners to
maximize profit and competitive advantage
Rationale: Logistics encompasses the planning, implementation, and control of the flow and
storage of goods, services, and related information between the point of origin and the point
of consumption. It is the function that creates efficient flow, allowing profits and competitive
advantage to be maximized.
,3. Which statement accurately describes a private warehouse?
A) It is owned by the firm storing the goods
B) It is owned by a third-party logistics provider
C) It is owned by the government
D) It is leased on a short-term basis
Correct Answer: A) It is owned by the firm storing the goods
Rationale: A private warehouse is a facility that is owned or leased on a long-term basis by
the firm that stores its own goods there. This contrasts with a public warehouse, which is
owned by an independent operator and used by multiple firms on a rental basis.
4. How has the proliferation of the Internet and web-based commerce affected the strategic
location of an organization's facilities?
A) It has completely eliminated the relevance of facility location
B) It has made the speed of delivery and cost of serving the customer irrelevant
C) It has not eliminated the relevance of facility location; speed and cost remain key factors
D) It has made all facilities location decisions unnecessary
Correct Answer: C) It has not eliminated the relevance of facility location; speed and cost
remain key factors
Rationale: While the Internet has transformed commerce, it has not eliminated the
importance of facility location. In fact, the speed of delivery and the cost of serving the
customer remain critical factors in determining where to locate facilities, as customers
increasingly expect fast and affordable delivery.
5. What is the primary objective of risk pooling in supply chain management?
A) To increase the number of warehouses to serve more markets
B) To use fewer warehouses to decrease required safety stock levels by reducing overall
demand variance
, C) To eliminate all inventory from the supply chain
D) To increase the total amount of safety stock held across all locations
Correct Answer: B) To use fewer warehouses to decrease required safety stock levels by
reducing overall demand variance
Rationale: Risk pooling is a strategy that consolidates inventory into fewer locations.
Because demand across different markets is often negatively correlated, the aggregate
demand variance seen by a centralized warehouse is lower than the sum of the variances of
individual markets. This allows the firm to hold less safety stock while maintaining the same
service level.
6. How do regional trade agreements and the World Trade Organization facilitate global
facility location decisions?
A) They eliminate all tariffs on goods and services
B) They provide a framework for investigating facility location elements like tariffs, costs,
and the free flow of goods and services
C) They require all firms to locate facilities in a specific country
D) They prohibit firms from outsourcing to low-cost countries
Correct Answer: B) They provide a framework for investigating facility location elements
like tariffs, costs, and the free flow of goods and services
Rationale: Regional trade agreements and the WTO establish rules and frameworks that
reduce trade barriers and promote the free flow of goods and services. For managers, these
agreements provide a structured environment in which to evaluate important facility location
elements such as tariffs, costs, and market access.
7. Under FOB (Free on Board) pricing, who is the legal owner of a product until it reaches its
destination?
A) The buyer is the legal owner from the point of shipment
B) The supplier is the legal owner until the product reaches its destination
C) The carrier is the legal owner during transit
Q&A | AMU
1. Which of the following best describes the primary goal of global location decisions in
supply chain management?
A) To minimize the cost of raw materials only
B) To optimize supply chain performance and align with the firm's competitive strategy
C) To increase the number of warehouses in every region
D) To reduce the number of suppliers used by the firm
Correct Answer: B) To optimize supply chain performance and align with the firm's
competitive strategy
Rationale: Global location decisions are strategic choices that determine where to place
facilities such as factories, warehouses, and distribution centers. The primary goal is to
optimize the overall performance of the supply chain while ensuring consistency with the
firm's competitive strategy, whether that strategy is based on cost leadership, differentiation,
or responsiveness.
2. What is the primary role of logistics in a supply chain?
A) To create the efficient flow of goods between supply chain partners to maximize profit and
competitive advantage
B) To manage the financial transactions between buyers and suppliers
C) To design marketing campaigns for new products
D) To recruit and train supply chain personnel
Correct Answer: A) To create the efficient flow of goods between supply chain partners to
maximize profit and competitive advantage
Rationale: Logistics encompasses the planning, implementation, and control of the flow and
storage of goods, services, and related information between the point of origin and the point
of consumption. It is the function that creates efficient flow, allowing profits and competitive
advantage to be maximized.
,3. Which statement accurately describes a private warehouse?
A) It is owned by the firm storing the goods
B) It is owned by a third-party logistics provider
C) It is owned by the government
D) It is leased on a short-term basis
Correct Answer: A) It is owned by the firm storing the goods
Rationale: A private warehouse is a facility that is owned or leased on a long-term basis by
the firm that stores its own goods there. This contrasts with a public warehouse, which is
owned by an independent operator and used by multiple firms on a rental basis.
4. How has the proliferation of the Internet and web-based commerce affected the strategic
location of an organization's facilities?
A) It has completely eliminated the relevance of facility location
B) It has made the speed of delivery and cost of serving the customer irrelevant
C) It has not eliminated the relevance of facility location; speed and cost remain key factors
D) It has made all facilities location decisions unnecessary
Correct Answer: C) It has not eliminated the relevance of facility location; speed and cost
remain key factors
Rationale: While the Internet has transformed commerce, it has not eliminated the
importance of facility location. In fact, the speed of delivery and the cost of serving the
customer remain critical factors in determining where to locate facilities, as customers
increasingly expect fast and affordable delivery.
5. What is the primary objective of risk pooling in supply chain management?
A) To increase the number of warehouses to serve more markets
B) To use fewer warehouses to decrease required safety stock levels by reducing overall
demand variance
, C) To eliminate all inventory from the supply chain
D) To increase the total amount of safety stock held across all locations
Correct Answer: B) To use fewer warehouses to decrease required safety stock levels by
reducing overall demand variance
Rationale: Risk pooling is a strategy that consolidates inventory into fewer locations.
Because demand across different markets is often negatively correlated, the aggregate
demand variance seen by a centralized warehouse is lower than the sum of the variances of
individual markets. This allows the firm to hold less safety stock while maintaining the same
service level.
6. How do regional trade agreements and the World Trade Organization facilitate global
facility location decisions?
A) They eliminate all tariffs on goods and services
B) They provide a framework for investigating facility location elements like tariffs, costs,
and the free flow of goods and services
C) They require all firms to locate facilities in a specific country
D) They prohibit firms from outsourcing to low-cost countries
Correct Answer: B) They provide a framework for investigating facility location elements
like tariffs, costs, and the free flow of goods and services
Rationale: Regional trade agreements and the WTO establish rules and frameworks that
reduce trade barriers and promote the free flow of goods and services. For managers, these
agreements provide a structured environment in which to evaluate important facility location
elements such as tariffs, costs, and market access.
7. Under FOB (Free on Board) pricing, who is the legal owner of a product until it reaches its
destination?
A) The buyer is the legal owner from the point of shipment
B) The supplier is the legal owner until the product reaches its destination
C) The carrier is the legal owner during transit
