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CLTD practice questions

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Question 1Logistics Fundamentals

Which statement best describes the primary purpose of logistics management?

  1. To reduce the depreciation expense recorded against production machinery
  2. To meet customer needs by moving and storing goods at lowest total cost Correct answer.
  3. To maximize the number of vehicles operated across owned carrier fleets
  4. To obtain the lowest possible purchase price from raw material suppliers

Explanation

Logistics management plans, implements, and controls the flow and storage of goods, services, and related information between origin and consumption so that customer requirements are satisfied. Decisions are judged on a total-cost basis rather than on any single cost element, because driving down one cost usually raises another.

Question 2Logistics Fundamentals

A shipper switches a lane from air freight to ocean freight, cutting freight charges but raising inventory carrying cost and lengthening order cycle time. Which basis should govern the decision?

  1. Purchase price variance
  2. Total logistics cost Correct answer.
  3. Lowest freight rate per kilogram
  4. Maximum utilization of carrier equipment

Explanation

Total logistics cost analysis sums transportation, inventory carrying, warehousing, order processing, and service-related costs so that trade-offs are evaluated together. A modal change that lowers freight but inflates inventory and slows delivery can raise the overall cost of serving the customer.

Question 3Logistics Fundamentals

Which element is part of the order cycle time experienced by a customer?

  1. The supplier's annual budgeting and planning cycle
  2. The carrier's fleet replacement and maintenance schedule
  3. The manufacturer's internal product design lead time
  4. Time elapsed from order placement to delivery Correct answer.

Explanation

Order cycle time is the elapsed time from when the customer places the order until the goods are received, and it includes order transmittal, order processing, picking and packing, and transportation. Customers perceive the entire interval, not the individual internal steps.

Question 4Logistics Fundamentals

Which transportation mode is generally best suited to moving large volumes of low-value, bulky commodities over long inland distances?

  1. Less-than-truckload trucking
  2. Parcel carrier service
  3. Railroad Correct answer.
  4. Air cargo

Explanation

Railroads offer a very low cost per ton-mile, which suits heavy, low-value freight moving long distances where speed is not critical. Air, parcel, and less-than-truckload services cost more per unit of weight because they provide speed or handle small shipment sizes.

Question 5Logistics Fundamentals

In ABC inventory classification, what distinguishes class A items?

  1. They hold the largest share of annual inventory value Correct answer.
  2. They are the slowest moving items in the whole assortment
  3. They are the items with the longest remaining shelf life
  4. They are the most numerous items in the warehouse

Explanation

ABC classification ranks items by annual dollar usage, so class A items are the small proportion of SKUs that account for the majority of inventory value. Because of their financial impact, class A items receive the tightest counting, forecasting, and replenishment control.

Question 6Logistics Fundamentals

What is the defining characteristic of cross-docking?

  1. Inbound goods move to outbound vehicles with minimal storage Correct answer.
  2. Goods are repackaged into retail-ready displays before storage
  3. Goods are held in a bonded area until customs duty is paid
  4. Goods are stored in reserve racking until a customer order arrives

Explanation

Cross-docking matches inbound receipts to waiting outbound shipments so product flows through the facility with little or no put-away and storage. This cuts handling cost and inventory dwell time, but it demands tight scheduling and accurate inbound visibility.

Question 7Logistics Fundamentals

Which activity is a core function of reverse logistics?

  1. Negotiating inbound freight rates with ocean carriers
  2. Managing returns, repairs, and recycling from customers Correct answer.
  3. Scheduling production runs on the assembly line
  4. Forecasting demand for new product introductions

Explanation

Reverse logistics covers the movement of goods backward from the point of consumption for return, warranty repair, refurbishment, recycling, or disposal. It requires its own processes for authorization, triage, disposition, and credit because the flow, timing, and condition of goods differ from forward shipments.

Question 8Logistics Fundamentals

The landed cost of an imported item typically includes which set of charges?

  1. Invoice price plus the buyer's domestic marketing spend
  2. Invoice price less volume discounts only
  3. Invoice price plus freight, duty, insurance, handling Correct answer.
  4. Only the supplier invoice price

Explanation

Landed cost is the total cost of getting a product to the buyer's door, combining the purchase price with international freight, insurance, customs duties and fees, and handling charges. It allows sourcing options in different countries to be compared on a like-for-like basis.

Question 9Logistics Fundamentals

A retailer's monthly sales vary by about 5 percent, yet its upstream supplier sees order swings of roughly 30 percent. This pattern is best described as:

  1. The bullwhip effect Correct answer.
  2. The Pareto principle
  3. Postponement
  4. Demand smoothing

Explanation

The bullwhip effect is the amplification of demand variability as orders pass upstream through the supply chain. It is driven by demand forecasting at each tier, order batching, price promotions, and shortage gaming, and it inflates inventory and capacity costs throughout the chain.

Question 10Logistics Fundamentals

Which cost trade-off does the basic economic order quantity model balance?

  1. Ordering cost against inventory carrying cost Correct answer.
  2. Stockout cost against obsolescence cost
  3. Purchase price against import duty
  4. Freight cost against warehouse rent

Explanation

The economic order quantity minimizes the sum of ordering or setup cost and inventory carrying cost, which move in opposite directions as lot size changes. Larger orders spread ordering cost over more units but raise average inventory and therefore carrying cost.

Question 11Logistics Fundamentals

A company raises its target service level for an item from 90 percent to 98 percent. Holding variability and lead time constant, what is the most likely effect?

  1. Safety stock is eliminated once service level exceeds 95 percent
  2. Safety stock stays the same because lead time is fixed
  3. Safety stock decreases because forecast accuracy improves
  4. Safety stock rises to protect the higher service level Correct answer.

Explanation

Safety stock is set using a service factor taken from the demand distribution, and that factor grows as the target service level approaches 100 percent. With variability and lead time unchanged, a higher target therefore requires a larger buffer of protective inventory.

Question 12Logistics Fundamentals

Which service is characteristic of a third-party logistics provider?

  1. Running warehousing and transport for the shipper Correct answer.
  2. Owning the shipper's inventory as principal
  3. Underwriting the shipper's cargo insurance policy
  4. Setting the shipper's overall corporate strategy

Explanation

Third-party logistics providers perform outsourced logistics functions such as transportation, warehousing, and value-added services under contract to a shipper. They typically act as agents performing services rather than as principals taking title to the goods.

Question 13Logistics Fundamentals

Under Free On Board (FOB) terms, at what point does risk transfer from seller to buyer?

  1. When customs clears the goods at the port of destination
  2. When goods are delivered to the buyer's own warehouse
  3. When goods are loaded on board at the shipment port Correct answer.
  4. When the carrier collects the goods from the seller's factory

Explanation

FOB requires the seller to deliver the goods on board the vessel nominated by the buyer at the named port of shipment, and risk passes at that moment. The buyer then bears the main carriage, insurance, and import arrangements.

Question 14Logistics Fundamentals

In warehouse slotting, which item should be placed closest to the shipping dock?

  1. A seasonal item held for next year's campaign
  2. A hazardous material requiring segregated storage
  3. A slow-moving item stored in full pallets
  4. A high-volume item picked in small quantities Correct answer.

Explanation

Slotting assigns the shortest-travel locations to items with the highest picking activity, because picker travel dominates warehouse labor cost. High-volume items picked in small quantities generate the most trips and therefore benefit most from dock proximity.

Question 15Logistics Fundamentals

The perfect order index measures the percentage of orders that are:

  1. Received within the longest agreed delivery window
  2. Filled from a single distribution center without transfer
  3. Complete, on time, damage-free, and correctly documented Correct answer.
  4. Delivered at the lowest freight cost per unit

Explanation

The perfect order combines four dimensions: the order is complete, delivered on time to the agreed date, free of damage, and accompanied by accurate documentation. A failure on any one dimension makes the order imperfect, which is why the index is stricter than any single service measure.

Question 16Logistics Fundamentals

A manufacturer ships undifferentiated products to a regional facility where country-specific labels and power cords are added only after customer orders arrive. This practice is an example of:

  1. Speculative inventory deployment
  2. Cross-docking
  3. Just-in-time production
  4. Postponement (late customization) Correct answer.

Explanation

Postponement delays the point at which a product is differentiated into its final market variants until actual demand is known. Inventory is held in a generic form, which lowers forecast risk and reduces the number of distinct SKUs that must be stocked.

Question 17Logistics Fundamentals

Which condition is most essential for a just-in-time logistics system to operate reliably?

  1. Reliable, high-quality supply with short lead times Correct answer.
  2. Large buffer stocks held at each downstream location
  3. Frequent changes to the production schedule
  4. Multiple suppliers bidding on every requirement

Explanation

Just-in-time removes buffer inventory, so the system depends on dependable suppliers, stable quality, and short, predictable replenishment lead times. Any variability in supply or transit time is transmitted directly to the operation because there is no stock to absorb it.

Question 18Logistics Fundamentals

As a company adds distribution centers to its logistics network, which cost pattern typically emerges?

  1. Both warehousing and outbound transport costs rise
  2. Warehousing cost rises while outbound transport falls Correct answer.
  3. Warehousing costs fall while outbound transportation costs rise
  4. Transportation and warehousing costs both decline steadily

Explanation

Additional distribution centers place inventory closer to customers, which shortens outbound delivery distances and lowers outbound transport cost. Against that, each facility brings its own fixed operating cost plus added inventory and inbound freight, so total network cost follows a U-shaped curve.

Question 19Logistics Fundamentals

A firm consolidates four regional stocking points into one central warehouse. According to the square root law, total inventory in the system will approximately:

  1. Fall by about half Correct answer.
  2. Double
  3. Quadruple
  4. Fall by about three quarters

Explanation

The square root law states that total inventory scales with the square root of the number of stocking locations, so consolidating from four sites to one multiplies inventory by the square root of one quarter, or 0.5. The reduction occurs because demand variability across markets partially offsets when stock is pooled.

Question 20Logistics Fundamentals

An item is managed at a 95 percent cycle service level. This measure means that:

  1. Stock is available on 95 percent of the calendar days in a year
  2. Demand is fully met from stock in 95 percent of cycles Correct answer.
  3. 95 percent of total demand is satisfied from stock on hand
  4. 95 percent of customer orders are filled completely

Explanation

Cycle service level is the probability that demand is fully satisfied during a replenishment cycle, in other words the expected proportion of cycles with no stockout. It differs from fill rate, which measures the fraction of total demand or units satisfied from stock and is usually higher for the same buffer.

Question 21Logistics Fundamentals

Which Incoterm places the greatest obligation on the seller, including import clearance and payment of duties at destination?

  1. FCA
  2. CIF
  3. DDP Correct answer.
  4. EXW

Explanation

Delivered Duty Paid requires the seller to bear all costs and risks of bringing the goods to the named destination, including export and import clearance and payment of duties. It sits at the opposite end of the obligation scale from EXW, where the buyer handles nearly everything.

Question 22Logistics Fundamentals

Which statement best explains freight tapering?

  1. Rates per shipment rise as shipment weight increases
  2. Rates per mile decrease as shipment distance increases Correct answer.
  3. Rates per pound fall as shipment size decreases
  4. Rates per mile rise steadily as shipment distance increases

Explanation

Tapering means the rate per mile declines as distance increases, because fixed pickup, terminal, and billing costs are spread over more miles. The total charge still rises with distance, but the cost per mile falls, which is why long hauls are cheaper per mile than short ones.

Question 23Logistics Fundamentals

A buyer's safety stock must cover both demand variability and lead-time variability. Which action most directly shrinks the portion attributable to lead-time variability?

  1. Reducing variability in supplier lead times Correct answer.
  2. Increasing the order quantity on each replenishment order
  3. Adding a second approval step to purchase orders
  4. Raising the target fill rate for the item

Explanation

The lead-time variability term in the safety stock formula contains the standard deviation of lead time multiplied by average demand, so lowering that standard deviation directly reduces the buffer required. Order quantity affects cycle stock, while a higher fill target increases rather than decreases the total buffer.

Question 24Logistics Fundamentals

Which element is typically the largest single component of inventory carrying cost for a consumer goods distributor?

  1. Warehouse rent and utility charges
  2. Insurance and property taxes on stock
  3. Cost of capital tied up in the inventory Correct answer.
  4. Obsolescence and shrinkage losses

Explanation

The opportunity cost of the capital invested in inventory usually represents the largest share of carrying cost, often around half or more of the total. Storage, risk of obsolescence and shrinkage, insurance, and taxes make up the remainder.

Question 25Logistics Fundamentals

Which capability most directly provides real-time visibility of a shipment's location across multiple carriers?

  1. A spreadsheet listing negotiated freight rates
  2. Pallet labels scanned once at the outbound dock
  3. A routing guide that is reissued at the start of each quarter
  4. Live GPS feeds into the transport management system Correct answer.

Explanation

Real-time visibility requires continuous event data from tracking devices transmitted to a transport management or visibility platform that consolidates carriers and shipments. Planning documents and single-point scans can confirm a handover but cannot show where the freight is at any moment.

Question 26Logistics Fundamentals

Which statement best describes the scope of logistics management?

  1. Coordinating goods, information, and service flows to the customer Correct answer.
  2. Setting the selling price of each finished good in every regional market served
  3. Recruiting and training the sales force serving retail accounts
  4. Designing the physical characteristics of a product's packaging

Explanation

Logistics management plans and controls the movement and storage of goods, information, and related services from origin to the point of consumption, including reverse flows. Pricing, package design, and sales staffing belong to marketing and product functions rather than to the logistics process itself.

Question 27Logistics Fundamentals

A logistics manager accepts a slower, cheaper transport mode even though it will raise inventory levels. Which analytical approach supports this decision?

  1. Standard costing
  2. Contribution margin analysis
  3. Total cost analysis Correct answer.
  4. Activity-based segmentation

Explanation

Total cost analysis compares every cost that a logistics decision changes, including transport, inventory, warehousing, and service, rather than minimizing a single cost line. The cheaper mode is justified only when the freight saving exceeds the added inventory cost.

Question 28Logistics Fundamentals

A logistics manager classifies customer service elements as pre-transaction, transaction, or post-transaction. Which element belongs in the post-transaction category?

  1. Product warranty and returns handling Correct answer.
  2. A written statement of the company's service policy
  3. A committed order-cycle time for each account
  4. A system for receiving and processing customer orders

Explanation

Post-transaction elements occur after goods are delivered and include warranty support, returns processing, complaint handling, and product replacement. Service policy statements and order-entry systems are pre-transaction, while order-cycle commitments are transaction elements.

Question 29Logistics Fundamentals

Which transport mode is generally the lowest-cost choice for moving high-volume, low-value bulk commodities over long distances?

  1. Air
  2. Rail Correct answer.
  3. Parcel
  4. Truckload

Explanation

Rail carries very high fixed costs for track and terminals but very low variable cost per ton-mile, which makes it economical for heavy, low-value freight over long hauls. Air and parcel are premium modes, and truckload costs more per ton-mile for very long distances.

Question 30Logistics Fundamentals

Which document serves both as a receipt for goods and as the contract of carriage between shipper and carrier?

  1. Packing list
  2. Certificate of origin
  3. Bill of lading Correct answer.
  4. Commercial invoice

Explanation

The bill of lading acknowledges that the carrier received the goods in apparent good order and sets the terms of carriage, making it both receipt and contract. It can also function as a document of title when issued in negotiable form.

Question 31Logistics Fundamentals

Under ABC inventory classification, items are placed in class A primarily because they:

  1. Have the longest supplier lead times
  2. Account for the highest annual dollar usage Correct answer.
  3. Occupy the largest share of the warehouse floor space
  4. Are the most difficult to stack and handle

Explanation

ABC classification ranks items by annual dollar usage, the product of annual demand and unit value, so class A holds the fewest items but the greatest share of value. These items receive the tightest control and most frequent review.

Question 32Logistics Fundamentals

Which function is performed by a transportation management system (TMS)?

  1. Tracking raw material conversion on the production line
  2. Storing bin locations and pick paths inside a warehouse
  3. Planning, rating, and tendering freight shipments Correct answer.
  4. Recording employee payroll and benefit deductions

Explanation

A TMS selects modes and carriers, calculates rates, tenders loads, tracks shipments, and supports freight bill audit and payment. Bin locations and pick paths are held in a warehouse management system, and payroll belongs to human resources systems.

Question 33Logistics Fundamentals

In logistics, the term 'last mile' refers to:

  1. The final leg of a long-haul rail movement between two rail yards
  2. The last full truckload shipped before a fiscal year closes
  3. The distance from a supplier's dock to the outbound carrier
  4. Delivery from a local hub to the end customer Correct answer.

Explanation

The last mile is the final segment of the delivery journey, from a local distribution node or depot to the end customer's location. It is typically the most expensive segment per unit because drops are small and dispersed.

Question 34Logistics Fundamentals

A manufacturer dispatches one truck each morning that visits four nearby suppliers on a fixed route, collecting small lots from each before returning to the plant. This practice is:

  1. A milk run Correct answer.
  2. Drop shipping
  3. Break-bulk
  4. A backhaul

Explanation

A milk run uses a single vehicle on a fixed circuit to collect small quantities from several suppliers, consolidating them into one economical inbound load. It reduces inbound freight cost and improves pickup regularity for high-frequency, low-volume parts.

Question 35Logistics Fundamentals

A freight forwarder combines several shippers' small consignments into one full container so that each shipper pays a lower rate per unit. This practice is:

  1. Detention
  2. Trailer pooling
  3. Freight consolidation Correct answer.
  4. Cabotage

Explanation

Consolidation merges multiple small shipments into a larger unit, moving the freight onto a lower cost-per-unit rate structure such as a full container or truckload. The forwarder then deconsolidates at destination and distributes to each consignee.

Question 36Logistics Fundamentals

An item shows a 96 percent unit fill rate. This means that:

  1. 96 percent of units demanded were shipped from stock Correct answer.
  2. 96 percent of inventory records were counted as accurate
  3. 96 percent of the item's demand variability was covered by safety stock
  4. 96 percent of orders were delivered on the promised date

Explanation

Unit fill rate measures the share of demanded units that are filled from available stock, so 96 percent means 4 units out of every 100 requested were short. It differs from on-time delivery, which measures timing, and from cycle service level, which measures the probability of not stocking out.

Question 37Logistics Fundamentals

Under a vendor managed inventory arrangement, which party determines the replenishment quantity for the buyer's stock?

  1. The carrier
  2. The third-party warehouse
  3. The supplier Correct answer.
  4. The buyer's finance department

Explanation

In vendor managed inventory the supplier has visibility of the buyer's stock position and decides when and how much to ship within agreed service and inventory parameters. The buyer sets the rules and targets but does not size each replenishment order.

Question 38Logistics Fundamentals

Electronic data interchange (EDI) is best described as:

  1. A satellite-based system that tracks vehicle position and speed
  2. A barcode symbology printed on shipping cartons and pallets
  3. A web portal where customers browse marketing brochures and place orders
  4. Standardized computer-to-computer document exchange Correct answer.

Explanation

EDI moves structured business documents such as purchase orders, advance ship notices, and invoices directly between trading partners' systems in a common standard format, with no manual rekeying. This reduces transaction cost and error rates in high-volume replenishment relationships.

Question 39Logistics Fundamentals

Which advantage does RFID offer over barcode labels in a distribution center?

  1. It reads many tags at once without line-of-sight Correct answer.
  2. It requires no data standards for encoding product information
  3. It never requires capital investment in readers or tags
  4. It eliminates the need for an item master file

Explanation

RFID tags can be read remotely and in bulk without being individually scanned, which supports automatic receiving, cycle counting, and asset tracking. This removes the line-of-sight and one-at-a-time constraints of barcode scanning.

Question 40Logistics Fundamentals

What is the primary role of a licensed customs broker in international logistics?

  1. Packing export cartons to the carrier's specifications
  2. Filing import entries and clearing goods through customs for the importer Correct answer.
  3. Negotiating the ocean freight rate with the steamship line
  4. Insuring cargo against damage occurring during transit

Explanation

A customs broker prepares and files entry documentation, classifies goods, arranges duty payment, and clears shipments through customs on the importer's behalf. Carriers set freight rates, insurers issue cargo cover, and packers prepare the cartons.

Question 41Logistics Fundamentals

Which benefit does a foreign trade zone (FTZ) provide to an importer?

  1. Duty deferral until goods enter the domestic market Correct answer.
  2. Guaranteed lowest ocean freight rates from any carrier
  3. Automatic waiver of product quality inspections
  4. Exemption from all local labor, safety, and environmental laws

Explanation

Goods held in a foreign trade zone are not formally entered into the country's commerce, so duties are deferred until they leave the zone for domestic sale and may be avoided entirely on re-exports. This improves cash flow and allows manipulation, sorting, or assembly before duty is assessed.

Question 42Logistics Fundamentals

How does cycle counting differ from a full annual physical inventory?

  1. It counts only items that show a zero on-hand balance
  2. It counts a rotating sample of items throughout the year Correct answer.
  3. It is performed by the carrier while goods are in transit
  4. It counts every item in the warehouse once at fiscal year end

Explanation

Cycle counting counts a portion of the inventory on a scheduled rotation, often prioritizing high-value or high-error items, so discrepancies are found and corrected continuously. It avoids the shutdown and lost throughput of a full wall-to-wall count.

Question 43Logistics Fundamentals

Demurrage charges are assessed when:

  1. A consignee keeps a carrier's trailer beyond free time
  2. A vessel departs a port ahead of its published schedule
  3. A truck arrives at a dock outside its appointment window
  4. A container sits at a terminal beyond free time Correct answer.

Explanation

Demurrage is a charge for cargo or containers dwelling at a terminal or port longer than the allowed free period. It is intended to keep terminals fluid by penalizing slow pickup or clearance by the cargo owner.

Question 44Logistics Fundamentals

A distributor's truck delivers goods to a customer 200 miles away and returns loaded with inbound material from a supplier located near that customer. The return movement is called a:

  1. Backhaul Correct answer.
  2. Deadhead
  3. Linehaul
  4. Drayage

Explanation

A backhaul is a revenue-producing or cost-offsetting return movement of equipment after a delivery has been made. Finding backhaul freight reduces the cost per mile by spreading it over two loaded legs instead of one.

Question 45Logistics Fundamentals

Which shipment characteristic most influences the freight class assigned to an LTL shipment?

  1. The fuel surcharge percentage that the carrier applies to the shipment
  2. The payment terms negotiated with the consignee
  3. The number of years the shipper has used the carrier
  4. The density of the product in the shipping container Correct answer.

Explanation

LTL classes are driven mainly by density, stowability, handling, and liability, with dense freight generally carrying a lower class because it uses trailer space efficiently. Fuel surcharges and commercial terms are applied after the class rate is set.

Question 46Logistics Fundamentals

A shipper can move 100 containers by air for $4,000 each or by ocean for $1,500 each. Ocean transit adds 20 days and $150,000 of additional inventory carrying cost. On a total cost basis, the ocean option:

  1. Costs $50,000 more
  2. Saves $100,000 Correct answer.
  3. Is cost-neutral
  4. Saves $250,000

Explanation

Air totals $400,000 while ocean totals $150,000 of freight plus $150,000 of added carrying cost, or $300,000, so ocean is $100,000 cheaper overall. Comparing freight rates alone would overstate the saving as $250,000 because it ignores the inventory consequence of longer transit.

Question 47Logistics Fundamentals

A distributor reports annual cost of goods sold of $18 million and average inventory at cost of $3 million. Its inventory turns are:

  1. 6.0 Correct answer.
  2. 0.17
  3. 15.0
  4. 21.0

Explanation

Inventory turns equal annual cost of goods sold divided by average inventory at cost, so $18 million divided by $3 million equals 6.0 turns. Higher turns indicate that capital tied up in stock is being converted into sales more frequently.

Question 48Logistics Fundamentals

An order contains 5 order lines. The warehouse ships 4 lines complete and back-orders 1. The line fill rate for that order is:

  1. 100 percent
  2. 20 percent
  3. 25 percent
  4. 80 percent Correct answer.

Explanation

Line fill rate is the number of order lines filled completely divided by the number of lines ordered, so 4 of 5 lines equal 80 percent. A unit-based fill rate would be calculated on quantities rather than on lines.

Question 49Logistics Fundamentals

A trailer has 4,000 cubic feet of usable capacity and a load occupies 2,600 cubic feet. Which action would most directly raise cube utilization for the same shipment?

  1. Adding a second shift of dock workers
  2. Reducing carton void and stacking loads to full height Correct answer.
  3. Increasing the number of delivery stops made on the route each day
  4. Reducing the trailer's rated axle weight limit

Explanation

Cube utilization is loaded volume divided by available volume, 65 percent in this case, so filling empty space inside cartons and above the load raises the ratio. Stops, axle limits, and dock staffing affect routing, weight, and labor but do not fill unused cubic space.

Question 50Logistics Fundamentals

A company switches a steady, high-volume product from air to ocean freight. Which cost is most likely to rise as a direct result?

  1. Warehousing cost for finished goods at the plant
  2. The customs duty rate applied to the product
  3. Inventory carrying cost for goods in transit Correct answer.
  4. The unit purchase price paid to the supplier

Explanation

Slower transit lengthens the pipeline, so more units are in transit at any moment and the carrying cost of that pipeline inventory rises. Duty rates and supplier prices are set independently of the mode chosen, and plant storage is not directly affected.