Testbank Chapter 4 GSCM

Supply Chain Management, 6e, Global Edition (Chopra/Meindl)
Chapter 4 Designing Distribution Networks and Applications to e-Business

4.1 True/False Questions

1) Distribution occurs between every pair of stages in the supply chain.
Answer: TRUE
Diff: 2
Topic: 4.1 The Role of Distribution in the Supply Chain
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

2) Companies in the same industry often select very different distribution networks, because the
choice of the distribution network can be used to achieve a variety of supply chain objectives
ranging from low cost to high responsiveness.
Answer: TRUE
Diff: 2
Topic: 4.1 The Role of Distribution in the Supply Chain
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

3) A customer does not necessarily want the highest level of performance along all dimensions
of customer service, including response time, product variety, product availability, customer
experience, order visibility, and returnability.
Answer: TRUE
Diff: 1
Topic: 4.2 Factors Influencing Distribution Network Design
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

4) Outbound transportation costs per unit tend to be lower than inbound costs, because inbound
lot sizes are typically larger.
Answer: FALSE
Diff: 1
Topic: 4.2 Factors Influencing Distribution Network Design
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.




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,5) Transportation costs are high with drop-shipping because the average outbound distance to the
end consumer is large and package carriers are used to shipping the product.
Answer: TRUE
Diff: 1
Topic: 4.2 Factors Influencing Distribution Network Design
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

6) As long as inbound transportation economies of scale are maintained, increasing the number
of facilities decreases total transportation cost.
Answer: TRUE
Diff: 1
Topic: 4.2 Factors Influencing Distribution Network Design
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

7) Customers always want the highest level of performance along all the dimensions response
time, product variety and returnability.
Answer: FALSE
Diff: 2
Topic: 4.2 Factors Influencing Distribution Network Design
AACSB: Application of knowledge
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

8) A decrease in the response time customers desire increases the number of facilities required in
the network.
Answer: TRUE
Diff: 1
Topic: 4.2 Factors Influencing Distribution Network Design
AACSB: Analytical thinking
Objective: LO 4.1: Identify the key factors to be considered when designing a distribution
network.

9) The main advantage of in-transit merge over drop-shipping is the somewhat lower
transportation cost and improved customer experience.
Answer: TRUE
Diff: 2
Topic: 4.3 Design Options for a Distribution Network
AACSB: Application of knowledge
Objective: LO 4.2: Discuss the strengths and weaknesses of various distribution options.




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, 10) The main advantage of a distribution network with local storage is that it can lower the
delivery cost and provide a faster response than other networks.
Answer: TRUE
Diff: 2
Topic: 4.3 Design Options for a Distribution Network
AACSB: Application of knowledge
Objective: LO 4.2: Discuss the strengths and weaknesses of various distribution options.

11) The major disadvantage of a distribution network with local storage is the increased
inventory and facility costs.
Answer: TRUE
Diff: 1
Topic: 4.3 Design Options for a Distribution Network
AACSB: Application of knowledge
Objective: LO 4.2: Discuss the strengths and weaknesses of various distribution options.

12) A distribution network designer needs to consider product characteristics as well as network
requirements when deciding on the appropriate delivery network.
Answer: TRUE
Diff: 3
Topic: 4.3 Design Options for a Distribution Network
AACSB: Application of knowledge
Objective: LO 4.2: Discuss the strengths and weaknesses of various distribution options.

13) Only niche companies will end up using a single distribution network.
Answer: TRUE
Diff: 1
Topic: 4.3 Design Options for a Distribution Network
AACSB: Application of knowledge
Objective: LO 4.2: Discuss the strengths and weaknesses of various distribution options.

14) Distributors add value to a supply chain between a supply stage and a customer stage if there
are many small players at the customer stage, each requiring a small amount of the product at a
time.
Answer: TRUE
Diff: 2
Topic: 4.3 Design Options for a Distribution Network
AACSB: Application of knowledge
Objective: LO 4.2: Discuss the strengths and weaknesses of various distribution options.




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