Question 1

More effective control of inbound shipment costs usually requires purchasing goods under a shipping designation of FOB destination.

Accepted Answer

FOB destination means the seller pays for transportation of the goods to the buyer's location. More effective control of inbound shipment costs is usually achieved under FOB shipping point, where the buyer takes control of the goods once they leave the seller's premises and can negotiate directly with carriers.

Question 2

The most significant advantage of a motor carrier is its relatively lower variable cost.

Accepted Answer

The most significant advantage of a motor carrier is its flexibility and door-to-door service capabilities, not necessarily its lower variable costs compared to other modes of transportation like rail or water.

Question 3

Oftentimes, a single mode of transportation may prove inadequate for a specific shipment.

Accepted Answer

Sometimes a combination of different modes of transportation may be necessary to transport a shipment efficiently and safely. This is known as intermodal transportation.

Question 4

Private carriers are never utilized to make daily "milk runs," picking up smaller amounts of materials from a series of close by suppliers to be used in a lean or just-in-time environment.

Accepted Answer

This statement is false. Private carriers may be utilized to make daily "milk runs" for smaller amounts of materials from nearby suppliers in a lean or just-in-time environment.

Question 5

Growth in international trade has increased the amount of freight moving on oceangoing vessels.

Accepted Answer

The statement is true. With the growth in globalization and international trade, the amount of freight moving on oceangoing vessels has increased.

Question 6

By limiting internal requisitioners to previously approved catalogs of already contracted goods and services from preselected and approved suppliers, volume commitments to approved suppliers can be achieved and maverick spending reduced.

Accepted Answer

By limiting internal requisitioners to previously approved catalogs of already contracted goods and services from preselected and approved suppliers, volume commitments to approved suppliers can be achieved and maverick spending reduced.

Question 7

Moving to a centralized process for procuring professional services does not allow the buying company to leverage its corporate buying power.

Accepted Answer

Centralizing the procurement process enables a company to consolidate its purchasing activities, thereby leveraging its corporate buying power to negotiate better terms and discounts with suppliers.

Question 8

A savvy buyer will want to control transportation costs internally instead of simply allowing the shipper to pass them along in the form of a delivered price.

Accepted Answer

A savvy buyer will want to negotiate transportation costs separately from the cost of the product, and may even have their own transportation arrangements in place in order to have more control over the process and potentially save money. Allowing the shipper to simply pass along transportation costs in the final delivered price can leave the buyer with less visibility and control over their overall costs.

Question 9

The use of a pipeline is usually part of the decision tradeoff between transportation modes.

Accepted Answer

The answer of The use of a pipeline is usually...

Question 10

A major advantage of a rail carrier is the wide range of items it is capable of hauling.

Accepted Answer

Rail carriers can transport various types of cargo such as liquids, gases, bulk materials, and even vehicles.

Question 11

Inbound logistics may also include the shipment of repairable items back to maintenance facilities for refurbishment and return to usable or salable condition.

Accepted Answer

The answer of Inbound logistics may also include the shipment...

Question 12

A performance-based logistics system seeks to drive the logistics service provider's performance by clearly delineating the buyer's preferred outcomes, not by transaction, but in terms of provider value-added and overall systems cost.

Accepted Answer

A performance-based logistics system focuses on achieving desired outcomes and measures the logistics service provider's value-added and overall system cost, rather than just transactional performance.

Question 13

An apparently low-cost carrier may actually end up costing far more than a seemingly higher-cost carrier when all associated costs are calculated.

Accepted Answer

Low-cost carriers often charge extra fees for services that may come as standard on other airlines, such as checked baggage or seat selection. These extra costs can add up and make the overall price of the flight more expensive than initially believed. Additionally, low-cost carriers may operate in smaller or more remote airports, which can result in higher transportation costs to and from the airport.

Question 14

On average, transportation costs easily comprise 10 percent or more of a product's total cost.

Accepted Answer

Transportation costs, including shipping, fuel, and logistics, can significantly impact a product's total cost, often making up at least 10 percent or more.

Question 15

Assigning and maintaining accurate and truly representative commodity codes for indirect goods and services across an enterprise is relatively easy.

Accepted Answer

Assigning and maintaining accurate commodity codes can be complex and challenging, especially for indirect goods and services that may have multiple uses and be sourced from multiple suppliers. It requires ongoing maintenance and regular updates to ensure accuracy and consistency across the enterprise.

Question 16

Centralization of professional service procurement can increase the accountability of outside consultants to the buyer by increasing the monitoring and auditing of services provided.

Accepted Answer

Centralization of professional service procurement allows for more effective monitoring and auditing of services, which can hold outside consultants more accountable to the buyer.

Question 17

The greatest competition between domestic transportation modes involves rail and motor carriers.

Accepted Answer

Rail and motor carriers are the two primary modes of domestic transportation and compete with each other for market share.

Question 18

Shipping a high-priced component via air is never a cost-effective option.

Accepted Answer

Air shipping can be cost-effective for high-priced components when the value of time (e.g., avoiding production delays or meeting tight deadlines) outweighs the higher shipping costs.

Question 19

A two-day shipment by truck can often take a week or more by rail due to the extra handling involved.

Accepted Answer

Trains involve more handling and transfers in between, which can lead to delays and longer shipping times compared to direct truck shipments.

Question 20

The importance of effectively managing an organization's indirect spend is decreasing.

Accepted Answer

Effectively managing an organization's indirect spend remains important as it can contribute to significant cost savings and improved operational efficiency. Indirect spend refers to the purchases of goods and services that are not directly related to the production or delivery of the organization's core products or services, such as office supplies, travel, and utilities. These expenses can often be decentralized and uncontrolled, resulting in unnecessary costs and inefficiencies. Effective management of indirect spend involves identifying and consolidating suppliers, negotiating favorable contracts, and implementing cost-saving measures, among other actions.

Quiz 17: Purchasing Services

More effective control of inbound shipment costs usually requires purchasing goods under a shipping designation of FOB destination.

The most significant advantage of a motor carrier is its relatively lower variable cost.

Oftentimes, a single mode of transportation may prove inadequate for a specific shipment.

Private carriers are never utilized to make daily "milk runs," picking up smaller amounts of materials from a series of close by suppliers to be used in a lean or just-in-time environment.

Growth in international trade has increased the amount of freight moving on oceangoing vessels.

By limiting internal requisitioners to previously approved catalogs of already contracted goods and services from preselected and approved suppliers, volume commitments to approved suppliers can be achieved and maverick spending reduced.

Moving to a centralized process for procuring professional services does not allow the buying company to leverage its corporate buying power.

A savvy buyer will want to control transportation costs internally instead of simply allowing the shipper to pass them along in the form of a delivered price.

The use of a pipeline is usually part of the decision tradeoff between transportation modes.

A major advantage of a rail carrier is the wide range of items it is capable of hauling.

Inbound logistics may also include the shipment of repairable items back to maintenance facilities for refurbishment and return to usable or salable condition.

A performance-based logistics system seeks to drive the logistics service provider's performance by clearly delineating the buyer's preferred outcomes, not by transaction, but in terms of provider value-added and overall systems cost.

An apparently low-cost carrier may actually end up costing far more than a seemingly higher-cost carrier when all associated costs are calculated.

On average, transportation costs easily comprise 10 percent or more of a product's total cost.

Assigning and maintaining accurate and truly representative commodity codes for indirect goods and services across an enterprise is relatively easy.

Centralization of professional service procurement can increase the accountability of outside consultants to the buyer by increasing the monitoring and auditing of services provided.

The greatest competition between domestic transportation modes involves rail and motor carriers.

Shipping a high-priced component via air is never a cost-effective option.

A two-day shipment by truck can often take a week or more by rail due to the extra handling involved.

The importance of effectively managing an organization's indirect spend is decreasing.