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A company finds that one of its warehouses is out of capacity to store products. Expanding the physical size of the warehouse is not an option. The most appropriate solution would be to increase the:
The purpose of price differentiation is to:
In a make-or-buy decision, if the product is modular and the company is dependent on knowledge and capacity, outsourcing most likely will be:
A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:
Supply chains delivering products or services are most able to respond quickly to changing market requirements when:
Throughout most of the supply chain, safety stock will be de-emphasized as a result of improved:
The primary risk associated with outsourcing innovative components to suppliers is:
The practice of supply chain members acting in close collaboration while retaining independent ownership is known as:
A company considers moving a portion of its production to a distant country to support a major customer. Which of the following actions is most effective in mitigating the risk of financial loss in the event of a global economic downturn?
Which of the following elements of total quality management (TQM) results in a lower overall cost of the product?

Question 438 - CSCP discussion

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A retailer that operates a three-level distribution network is considering eliminating one level in the network and shipping directly from the regional warehouses to the retail outlets. Which of the following outcomes is most likely to result?

A.
Total transportation costs will decrease.
Answers
A.
Total transportation costs will decrease.
B.
Retail outlet order frequency will decrease.
Answers
B.
Retail outlet order frequency will decrease.
C.
Deliveries to the retail outlets will decrease in number.
Answers
C.
Deliveries to the retail outlets will decrease in number.
D.
Risk pooling benefits will decrease.
Answers
D.
Risk pooling benefits will decrease.
Suggested answer: D

Explanation:

Three-Level Distribution Network: Involves central warehouses, regional warehouses, and retail outlets.

Risk Pooling: Aggregating inventory at fewer locations to reduce variability in demand and inventory costs.

Impact of Eliminating a Level:

Eliminating Regional Warehouses: Direct shipments from central warehouses to retail outlets reduce the aggregation points.

Decreased Risk Pooling: Fewer aggregation points mean demand variability is less smoothed out, leading to decreased risk pooling benefits.

Comparison with Other Outcomes:

Total Transportation Costs (A): Likely to increase due to more frequent direct shipments.

Retail Outlet Order Frequency (B): Might increase due to more frequent smaller shipments.

Deliveries to Retail Outlets (C): Likely to increase in number due to direct shipment requirements.

Conclusion: The most likely outcome is a decrease in risk pooling benefits.

'Designing and Managing the Supply Chain' by David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi.

APICS Dictionary, 16th Edition.

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asked 16/09/2024
Brant McGurk
35 questions
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