Transportation Management – LSCM 4560

Flashcard maker : Lily Taylor
Transportation
Overall purchase and control of the movement service used by a firm in achieving its logistics objectives; service or bundle of services; movement of passengers or freight from point A to B
Logistics Management
Part of Supply Chain Management that plans, implements and controls the efficient, effective flow and storage of goods, services, and related information the point of origin and point of consumption in order to meet customers’ requirements
Turn
Sales at cost/ average inventory
Supply Chain Management
The integration of key business processes from end user through original suppliers, that provides products, services, and information that add value for customers and other stakeholders
Transportation adds what utilities?
Time, Place, and Quantity utility
Which of the following transportation modes moves the most inter-city ton-miles?
Rail
You observe that despite an increase of $1 per gallon, the demand for gas remains unchanged. People after the price increase drive the same number of miles and consume the same amount of gasoline. Based on this observation, you would conclude the demand for gas is:
Inelastic
The US was in recession between 2008 and 2009, and the GDP had negative growth during several quarters. The demand for transportation also decreased in the corresponding quarters. The relationship between the company (GDP Growth) and the demand for transportation demonstrates the concept of:
Derived demand
The landed cost includes which of the following:
A cost to produce at source, to transport a product to its destination, and any ancillary expenses
Trucks exclusively serve 80 percent of the delivery locations in US. Only 20 percent of the delivery locations can be served by two or more transportation modes. We should conclude that trucks have a competitive advantage over the modes in which of the following service components of freight demand?
Accessibility
Domestic water carriers can transport entire buildings such as grain elevators or major structures such as container cranes. No other domestic transportation mode can move such large items. Domestic water carriers have a competitive advantage over other transportation modes in which of the following service components of freight demand?
Capability
Physical distribution refers to what part of a company’s supply chain?
Outbound finished goods
The integration of materials management and physical distribution resulted in what we know as logistics. This integration enabled logistics managers to:
Coordinate inbound and outbound transportation to minimize back hauls and lower rates
Which of the following statements is TRUE regarding the relationship between transportation and inventory?
The length and variability transportation transit times affect both safety and cycle stock
We can consider supply chain management to be:
An extended enterprise that crosses the boundaries of multiple firms
The underlying logic for the integration of multiple functions within logistics was:
The systems concept
Throughout this course, we will make references to the terms logistics and supply chain management. Which of the following statements is true regarding the relationship between these two terms?
Logistics focuses on product and information flows whereas supply chain management encompasses these flows and includes others such as financial.
In the 21st century, the transportation system faces significant challenges. Special interest groups will place increased demands on the system for specialized services and access. One of these special interest groups is:
Senior citizens that require public transit to access medical and other services
The percent of total disposal income spent on transportation by the average US household is:
16 to 20 percent
(17 percent)
Current thought has identified five modes of transportation. These modes include all of the following EXCEPT:
Electrical transmission lines
The growth of civilizations is directly associated with the development of transportation systems. Which of the following transportation developments is associated with the development of the US?
Construction of the Erie Canal to link the Green Lakes trade to the Hudson River and the East coast.
The modal split refers to:
An analytic tool that divides the transportation market for passengers or freight by use or volume by transportation mode
The concept of derived demand suggests:
The demand for transportation is derived from the demand for goods.
During the pre-industrial stage of transport evolution, maritime transport was the most convenient way to move freight and people. The amount of freight moved by maritime transport during this stage was:
Negligible due to the slow speed and limited capacity of ships
This change in propulsion technology had the greatest effect on maritime trade and supported large volumes of freight to be moved between countries.
The conversion from coal to oil to power steam ships
Massive modifications of transport systems occurred during the industrial stage of the evolution of transport. These modifications took place during two phases. These phases were the development of:
Canal and rail systems
Location theory concentrates on examining two problems. These two problems are:
What patterns of location develop and where to market to maximize profit.
Several economists have proposed theories to explain location patterns over time. One theory proposed that perishable items or items with a high value to density ratio would be located closest to the city center while items with a low value density ratio would be produced far from the city center. Which of the following proposes this explanation for location patterns?
Von Thünen’s concentric rings
This concept suggest an area will produce the goods or services for which it is best suited. For example, some regions have specialized in the manufacture of textile or apparel products. Which of the following incorporates this concept?
Comparative advantage
Transportation costs are believed to have an effect on the size of a market that can be effectively served by a firm. Beyond the market reach, either the landed cost is too high or competitors’ prices are lower. One theory proposes that if a firm could cut transportation costs in half, the market area served by the firm would become four times as large. Which of the following applies this relationship to explain market reach?
Larder’s law
The authors define supply chain management as the management of several flows across the supply chain. Which of the following is NOT identified as a supply chain process in the text?
Logistics
The focus of physical distribution was:
On the systems cost and cost trade-offs associated with the outbound flow of goods from a firm
The underlying logic of the systems concept was also the rationale for the development of the logistics concept because:
Cost trade-offs in addition to the value or demand aspects of customer service effectiveness are considered
The bullwhip effect refers to fluctuations in supply and demand which may result from:
Uncertainty regarding inventory levels and demand in a supply chain
Supply chain management can be viewed as:
The pipeline for the efficient flow of goods, services, information and financials from the source of supply to the end-user
A supply chain is:
An extended enterprise that crosses the boundary of several firms to span their related activities
Logistics has continued to evolve since WWII; however, several variables have introduced new challenges for managing logistics across the supply chain. These variables include:
Internet, globalization, business alliances, and technology
Reverse logistics refers to:
The flow of returns, times for repair, recyclables, etc from downstream members to upstream supply chain trading partners
Which of the following statements best describes the three stages in the evolution of the supply chain concept?
Supply chain management has evolved from the concepts of physical distribution, then the integration of physical distribution and materials management into logistics, with the third stage being supply chain management.
Supply chain management can be characterized as:
An extended enterprise that permits the coordination of activities across the boundaries of multiple firms
The authors suggest that the concept of supply chain management represents the third phase of an evolution that began in the 1980s. The supply chain concept occurring in the third phase differs from the earlier phases by:
Viewing the total system of interrelated companies as a means to affect a product’s price-value in the marketplace employing the systems concept to understand the interrelationship between logistics functions and to more effectively manage cost trade-offs to minimize total cost
The authors of the course textbook suggest that supply chain management:
Integrates product, information, and cash flows among organizations
The logistics concept evolved from:
The integration of physical distribution and materials management
Logistics differs from physical distribution in several respects. The key difference can be summarized as:
Logistics resulted from the evolutionary merger of materials management and physical distribution.
The terms “logistics” and “supply chain management”
Logistics offers to that part of the supply chain involved with the movement of goods while supply chain management refers to several key business processes spanning multiple companies
Logistics has evolved over time. Initially, executives focused on physical distribution. The authors suggest that an initial focus on physical distribution was logical since:
The costs of handling outbound shipments of finished goods represented a significant cost to the firm
A key relationship exists between marketing and logistics. The relationship can be explained by:
The 4 Ps of marketing. Logistics represents place, or customer service, component or marketing.
A cost trade-off
Recognizes the interrelationship between logistics functions; could result in lower logistics costs but higher overall costs; can occur between logistics and other business functions
Logistics managers frequently must consider cost trade-offs within their system. Which of the following would be the best example of a cost trade-off?
Using air rather than motor carriers to reduce inventory holding cost
The increase in internet purchases has:
Put pressure on the logistics and transportation networks due to the explosion in the number of small package deliveries
The annual CSCMP State of logistics reports show that motor carriers account for approximately half of the logistics expenditures in the US. we can best explain this phenomena by:
The cost trade off occurring between the use of expensive motor carriers to obtain a much lower inventory carrying cost – only 20 percent of logistics expenditures
Consider a firm with a net margin of 10 percent earnings before income tax (EBIT). Which will have the greatest effect on the profitability of the firm:
A reduction in logistics costs of $40,000
Transportation variability affects logistics management through:
Higher safety stock levels
The transportation profile at the beginning of chapter one identifies five key challenges or forces driving the economic landscape in which transportation operates. One of the driving forces is the “enlightened consumer.” How has the enlightened consumer affected transportation?
Retailers have been forced to customize their product/service offerings and be more responsive to consumers resulting in smaller, more frequent shipments being processed
The authors suggest supply chain management is the art and science of integrating:
the product/service, information and financial flows
Information in a supply chain:
flows both up- and down-stream providing customer demand, product availability, and other information
Many individuals consider the terms physical distribution and logistics to be interchangeable, or synonyms. However, logistics in its simplest form differs from physical distribution by:
adding the inbound side
The terms “logistics” and “supply chain management:”
Logistics refers to that part of the supply chain involved with the movement of goods while supply chain management refers to several processes spanning multiple companies
The total cost approach for managing logistics suggests
A decision in one area will affect the costs incurred in another area of logistics– some costs may increase while others decrease–the objective is to lower overall total costs
An important principle underlying logistics management is the cost trade-off. Which of the following represents an effective cost trade-off?
Switching from rail to motor carriers to obtain lower inventory levels and overall total cost
Logistics managers frequently make cost trade-offs to lower overall costs to the firm. Which of the following statements best represents the cost trade-off between inventory and transportation ?
Logistics managers will consider spending more on premium transportation if inventory carrying costs are reduced by a greater amount.
Profit leverage is important to logistics managers because it:
Shows how the effective management of cost trade-offs can increase sales and
reduce the cost of goods sold
A supply chain consists of:
an extended enterprise that crosses the boundaries of individual firms to span their activities
Logistics, as we know it today, evolved from the combination of which two business functions?
Materials management and physical distribution
The authors define supply chain management as the management of several flows across the supply chain. Which of the following is not identified as a supply chain process in the text?
Logistics
In the United States, two mechanisms are used for allocating transportation resources. The government decision to fund the interstate highway system would be an example of which of the following?
Political
Governments have frequently intervened in the transportation marketplace. The rationale for government intervention includes:
Imperfections in the marketplace, substitution of regulation for competition, and necessity for government ownership and control
The rationale for government regulation of transportation stems from:
Imperfections in the marketplace
The role of economic regulation by the government is to transform a monopolistic industry into a competitive one. Under economic regulation, the government can: (1) determine the markets a firm can serve; (2) determine the prices a firm may charge; and (3) determine:
if a firm can enter, or exit an industry
During the promotional era of economic regulation, government actions can be described as
Supporting the growth and development of a national transportation system
Which of the following independent regulatory commission currently has the responsibility for the economic regulation of interstate shipments of petroleum products by railroads?
Surface Transportation Board (STB)
During the Initiation era of transportation regulation, Congress attempted to:
Increase the powers of the ICC and close major loopholes in legislation governing the economic regulation of transportation
Which of the following eras of transportation regulation attempted to protect carriers:
Positive regulation
During the Intermodal era, Congress and the ICC recognized that transportation competition could take three different forms. The forms of competition included:
Intramodal, intermodal, and private versus for-hire
Which sentence best describes the current regulation of transportation?
The federal government has removed most economic control but continues to oversee aspects of transportation safety
The inherent advantage of a mode of transportation suggests that the mode possesses
An advantage that the other modes of transportation do not possess due to their operating or service characteristics
The independent regulatory commission is an administrative body created by legislative authority. The first application was in transportation. This first independent regulatory body was the:
Interstate Commerce Commission
This independent regulatory commission was created to administer the regulations governing rates and practices of oil and gas pipelines.
Federal Energy Regulatory Commission (FERC)
In the selling and purchase of transportation services, two types of antitrust violations can occur. This type of violation is illegal, regardless if any economic harm is done to competitors or other parties. Types of this form of violation include price fixing, division of markets, boycotts, and tying agreements.
Per se violation
This legislative act ended the promotional era and began the initiation era of transportation regulation:
Act to Regulate Commerce
This law prohibits sellers from practicing price discrimination among buyers unless the difference in price can be justified by true differences in the costs of servicing these buyers:
Robinson-Patman Act
This Act deregulated the railroads:
Staggers Act
The US legal system has evolved over time. The system is based on two forms of law, and both have applications in transportation. This form of law relies on judicial precedent or principles of law developed from former court decisions
Common law
Many agencies, institutions, and branches of the government are involved in regulating transportation. The courts play a powerful role in regulating transportation. The courts:
Determine the intent of the law and make decisions that serve as precedent for common law
States can regulate:
certain safety issues that do not create an undue burden on interstate commerce
Logistics has evolved over time. Initially, executives focused on physical distribution. The authors suggest that an initial focus on physical distribution was logical since:
The costs of handling outbound shipments of finished goods represented a significant cost to the firm.
Eminent domain refers to:
The government’s right to require individuals to move or sell their land in order to serve the public interest
The Council of Supply Chain Management Professionals (CSCMP) reported that business expenditures on logistics exceeded:
$1.2 trillion
Air passenger transportation has experienced several major trends since 1970. Which of the following best describes the trend in air passenger miles travelled in the United States?
Have more than quadrupled since 1970 with an average growth rate of five percent
Energy consumption represents a major issues to all developed and developing societies. Transportation is:
The industry with the highest amount of energy consumption, and usage continues to trend upward
Logistics costs as a percent of GDP have:
Steadily trended downward but have fluctuated in recent years due to higher fuel prices and the recession
What is meant by the modal “split?”
Split of total freight volume between transportation modes
Transportation interacts with three different groups within a society. These groups include:
Users, providers, and government
Government interest in transportation stems from:
– Lack of sufficient private funds to support infrastructure requirements
– Transportation as a major expense element in the government budget
– Ability to exert military power to support national objectives
A key outgrowth of transportation regulation is the concept of the common carrier. A common carrier:
has a duty to render service without discrimination based upon set rates for commodities
The least accessible mode of transportation in terms of miles of infrastructure is:
air
Transportation performs two basic logistics functions. These functions include:
Movement and storage
In 2014, the Department of Transportation has a budget of approximately
$77 billion
Transportation accounts for approximately what percent of the average household’s expenditures?
17 percent
Which transportation mode moves the most tonnage of international freight?
Water
Ocean-going containerships have become a lucrative target for pirates because:
Containerships have a small number of crew members, carry large volumes of expensive cargo, and must often travel through narrow straits
Diesel prices are expected to steadily rise during the upcoming decade. Logistics and supply chain professionals will probably respond by:
Restructuring their supply chains to dampen the effect of fuel prices
Place utility occurs when:
Goods are moved to places where they have higher value than where they originated.
A ton-mile is a measure of transportation movement. Which of the following is correct regarding the movement of 500 tons for 4 miles:
2000 ton miles occurred (4×500)
Despite periodic recessions, the US economy has steadily expanded over time. As a result, we would expect the number of ton miles transported:
increased since transportation demand is derived from the demand for goods and services
Demand elasticity indicates
How much demand will change relative to a price change
A horizontal demand curve (flat line) would suggest:
Perfect elasticity–an infinite amount of goods can be sold at that price
A vertical demand curve (straight vertical line) would suggest:
Perfect inelasticity–a change in price will result in no change in quantity
The elasticity of demand for transportation varies with the level of demand aggregation. Which of the following statements is true regarding the relationship between elasticity of demand and demand aggregation?
The elasticity of demand for transportation at the aggregate level is price inelastic
We would expect the demand between rail and motor carriers for the transport of automobiles to be:
Elastic
Value of service considers:
Elasticity of demand and the impact of the transportation cost and service on product demand
A carrier’s service characteristic of length of transit time is important to a shipper because of the effect on the shipper’s:
Inventory requirements
Which of the following refers to the ability of a carrier to move freight between a specific origin and destination?
Accessibility
The ability of a carrier to deliver out-sized project cargo such as blades for an electric wind power generator is representative of which of the following service components of freight demand?
capability
The concept of derived demand for transportation suggests:
The demand for freight transportation is dependent upon the demand for a product in a distant location. The concept also suggest “security.”
The specific purpose of transportation is to:
fulfill a demand for mobility
Transportability refers to:
Ease of movement of freight, passengers, or information
During the industrial revolution, massive modifications were mad to the transport system. These modifications occurred in two phases that included:
Development of canals and railways
During our discussion of facility location models, we identified two approaches. Which of the following is correct when locating in an urban area?
Use the Median model since Rectilinear distance is most appropriate
The efficiency of and systems was poor prior to the industrial revolution. As a result, transportation had a major effect on trade including which of the following?
– Trade was local in scope
– Major civilizations were usually located along waterways
– International trade usually consisted of valuable or luxury items
This concept suggests an area will produce the goods or services for which it is best suited. For example, some regions have specialized in the manufacture of textile or apparel products. Which of the following incorporates this concept?
Comparative advantage
Prior to mechanized transport, trade was overwhelmingly local in scope. Most cities never exceeded the diameter and area that could be traveled by walking. This are was approximately:
a radius of 2.5 kilometers and an area of approximately 20 square kilometers
Prior to the industrial revolution, international trade can be described as:
Negligible due to inadequate land systems and relatively low maritime movement
Four factors led to the remarkable economic, technological, and social change brought by the industrial revolution. These four changes include:
the scientific method, property rights, capital markets, and communications and transport infrastructure
The evolution of transport systems occurred in four stages. The four stages include:
Pre-industrial, industrial, Fordism, and post-fordism
Prior to the industrial revolution, transport technology was limited to:
Animal labor and maritime
The information flow in a supply chain
Flows in two directions as information regarding customer orders and demand flows backwards, but information about product availability, location or shipping flows forward to the customer
Supply chain management:
Integrates key business processes from end-user through original supplier
Reverse logistics refers to which of the following:
The return of products from downstream customers or trading partners to upstream suppliers.
Logistics in its simplest form:
Combined inbound flows [materials management] with the outbound [physical distribution] flows for a firm.
Which of the following is the management of the flows or activities associated with the handling and movement of finished goods?
Physical distribution
Logistics has evolved over time and expanded in management scope. The book suggests that logistics in its simplest form:
Added the inbound side to the outbound logistics of physical distribution
The underlying logic of the systems concept was the rationale for the development of logistics. The systems concept involves:
Making trade-off analyses to lower total logistics costs.
Information is important to transportation and logistics managers because
By better using information they can reduce their inventory investment
The profit leverage model is used to:
Equates the effect on a firm’s bottom line [profitability] achieved through logistics cost savings or increased sales.
Executives must carefully manage several “flows” that span the companies comprising a supply chain. The “bull-whip” effect results from failures to manage which of the following supply chain flows identified in the course text?
Information
The transportation profile at the beginning of chapter one identifies five key challenges or forces driving the economic landscape in which transportation operates. One of the driving forces is the “enlightened consumer.” How has the enlightened consumer affected transportation?
Retailers have been forced to customize their product/service offerings and be more responsive to consumers resulting in smaller, more frequent shipments being processed.
The landed cost of a product includes:
The cost of a product at its source plus the cost to transport the product to its destination.
The decision by a rail executive to lower the price of transporting chemicals to attract business away from water carriers represents which of the following transportation concepts?
Elasticity of demand
A horizontal demand curve (flat line) would suggest:
Perfect elasticity–an infinite amount of goods can be sold at that price
A product or service is considered to be price inelastic if:
The percent of quantity demanded changes less than the percent change in price
The demand for transportation at the aggregate level is
b. Closely related to the general level of economic activity
c. Affected by the strength and maturity of an economy
d. Affected by the strength and maturity of an economy
Value of service pricing:
a. Is frequently associated with the railroads
b. Sets rates according to the value of the product
c. Reflects risk and elasticity of demand
The speed of transportation carriers has a direct effect on the length of order cycle times. The length of order cycle times is important because:
Forecast error and the cost of safety stock increase with longer order cycle times
Antonov AN-124 is the largest cargo aircraft in regular commercial service. This aircraft can transport out-sized cargo long distances. Which service component is demonstrated by the use of the AN-124?
Capability
During our discussion of facility location models, we identified two approaches. Which of the following is correct when locating in an urban area?
Use the Median model since Rectilinear distance is most appropriate
Prior to the end of the 18th century, no forms of mechanized transport existed. Transport was mainly limited to:
Animal and wind power.
Transportation costs are believed to have an effect on the size of a market that can be effectively served by a firm. Beyond the market reach, either the landed cost is too high or competitors’ prices are lower. One theory proposes that if a firm could cut transportation costs in half, the market area served by the firm would become four times as large. Which of the following applies this relationship to explain market reach?
Lardner’s law
Several factors contributed to a new growth phase as the close of the nineteenth century. Which of the following was a subset of these factors?
Panama and Suez canals, shift from coal to oil as a source of fuel, and development of a rail transport system
The spatial evolution of economic systems has passed through four stages. These stages include:
Pre-industrial, industrial revolution, Fordism, and post-fordism
Most major cities prior to the industrial revolution were located along major waterways. The rationale for this phenomenon stems from:
Waterways were the most efficient transport systems available, and cities could benefit from greater trade.
During the industrial era, massive modifications of transport systems occurred in two phases. These phases included:
Canal and rail systems
Transportation interacts with three groups in our society. Transportation interacts with government by:
Enabling an efficient and effective transportation system through regulation and policy
Logistics expenditures as a percent of GDP have steadily decreased since 1980. What factors have attributed to lower logistics costs?
Deregulation of transportation, application of information technology, and improvements in logistics efficiency.
Transportation as a logistics process performs two major functions which include:
Movement and storage
Security represents a major issue for transportation of freight and passengers. A security challenge that has experienced significant growth during the past five years is:
Piracy and the seizure of cargo ships
Air passenger transportation has experienced several major trends since 1970. Which of the following best describes the trend in air passenger miles traveled in the United States?
Have more than quadrupled since 1970 with an average growth rate of five percent
Which mode moves the least amount of international tonnage but moves very expensive cargo and accounts for 26 percent of the value of international goods moved?
Air
Transportation provides quantity utility by:
Ensuring the goods arrive without damage
Transportation is closely tied to the development of the United States. Which of the following played a role in the early development of the United States?
Construction of the National Road
The common carrier concept
Requires a carrier that holds itself out to do business with the general public to render service without discrimination
The modal split is a useful analytic tools for studying transportation because it divides the total transportation market by volume or use. Which of the following statements regarding the modal split is true?
None of the above.
CSCMP reported in their annual State of Logistics report that logistics accounted for nearly $1.3 trillion or what percent of the U.S. economy in terms of gross domestic product (GDP)?
8.5 percent
The components and size of the US transportation system mirror the modes used in transporting freight and people. Based on the size (in miles) of infrastructure, we would expect most freight to move by which mode:
Motor
Transportation represents a significant portion of the US federal budget. In 2013, federal expenditures for transportation are budgeted for:
$74 billion
Which of the following statements is false regarding the elasticity of demand?
With elastic demand, a large price reduction with also result in a disproportionately smaller increase in demand for an item.
The simple grid (aka the center of gravity) model:
Uses Euclidean distance for determining total cost
The United States has experienced
Continued growth in freight volume with truck and rail experiencing the most growth
Passenger travel in the United States:
Has shown a relatively consistent upward trend until the 2008-2010 recession when passenger-miles dropped

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