Examination Paper of Logistics Management
IIBM Institute of Business Management
Examination Paper MM.100
Distribution & Logistics Management
Section A: Objective Type (30 marks)
This section consists of Multiple Choice questions & short note questions.
Answer all the questions.
Part one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. It deals with the movement of finished goods from the last point of production to the point of
consumption.
a. Marketing Channel Management
b. Logistics Management
c. Boundaries
d. Relationships
2. Which conflict is one of the major bottleneck in the development & maintenance of partnering
channel relationship
a. Channel conflict
b. Management conflict
c. Logistics conflict
d. Distribution conflict
3. The phase of externally integrated business function era (1990s onwards) is recognized as the
era of
a. Logistics Management
b. Human Resource Management
c. Financial Management
d. Supply Chain Management
4. ___________ may be conducted from time-to-time or at least once in a year to know about
change in the expectation levels & actual performance
a. Customer Service Monitoring cell
b. Formal Customer Satisfaction Survey
c. Customer Conference
d. Customer Feedback System
5. The firm’s incomplete or inaccurate knowledge of customer’s service expectations is known as
a. Market Information Gap
b. Service Standards Gap
IIBM Institute of Business Management 1
Examination Paper of Logistics Management
c. Service Performance Gap
d. Internal Communication Gap
6. This gap exist between the present level of customer service offered and the corporate vision
about customer service
a. Gap 1
b. Gap 2
c. Gap 3
d. Gap 4
7. This stock refers to window display of an inventory in order to stimulate demand and act as a
silent salesman
a. Decoupling stock
b. Psychic stock
c. Pipeline stock
d. None
8. This stock is also known as cycle or lot size stock
a. Working stock
b. Safety stock
c. Anticipation stock
d. None
9. In this system manufacturer is given the responsibility for monitoring & controlling inventory
levels at the retail store level
a. Quick Response
b. Continuous Replenishment
c. Vendor-managed Inventory
d. Customer Relationship
10. This mode of transport is a very significant one but with a very restricted scope. It is used
primarily for the shipment of liquid & gas
a. Airways
b. Railways
c. Pipelines
d. Seaways
Part Two:
1. What is Containerization and also mention the main features of Containerization.
2. What is Third Party Logistics?
3. Differentiate between Public & Private Warehouse.
4. What is Logistics Information System?
END OF SECTION A
IIBM Institute of Business Management 2
Examination Paper of Logistics Management
Section B: Caselets (40 Marks)
This section consists of Caselets.
Answer all the questions.
Each caselete carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselete 1
Superior Medical Equipment Company supplies electrical equipment that is used as components in the
assembly of MRI, CAT scanners, PET scanners, and other medical diagnostic equipment. Superior has
production facilities in Phoenix, Arizona, and Monterrey, Mexico. Customers for the components are
located in selected locations throughout the United States and Canada. Currently, a warehouse, that
receives all components from the plants and redistributed them to customers, is located at Kansas City,
Kansas. Superior’s management is concerned about location of its warehouse since its sales have
declined due to increasing competition and shifting sales levels among the customers. The lease is about
to expire on the current warehouse, and management wishes to examine whether it should be renewed
or warehouse space at some other location should be leased. The warehouse owner has offered to
renew the lease at an attractive rate of $2.75 per sq. ft. per year for the 200,000 sq. ft. facility. It is
estimated that any other location would cost $3.25 per q. ft. for a similar-size warehouse. A new or
renewed lease will be for five years. Moving the inventory, moving expenses for key personnel, and
other location expenses would result in a one-time charge of $3, 00,000. Warehouse operating costs are
expected to be similar at any location.
In the most recent year, Superior was able to achieve sales of nearly $70 million. Transportation costs
from the plants to the Kansa warehouse were $2,162,535, and from the warehouse to customers were
$4,819,569. One million dollars was paid annually as warehouse lease expenses. To study the warehouse
location question, data shown in Tables 1 and 2 were collected.
Although transport costs are not usually expressed on a $/cwt./mile basis, given that the outbound
transportation costs for the most recent year were $4,819,569, the weighted average distance of the
shipments was 1128 miles, and the annual volume shipped was 182,100 cwt., the estimated average
outbound rate from a warehouse is $0.0235/cwt./mile.
Table 1 Volume, Rate, Distance, and Coordinate Data for Shipping from Plants to the Kansas City
Warehouse in Truckload Quantities (Class 100) for the Most Recent Year.
PLANT
LOCATION
ANNUAL
VOLUME,
CWT.
b
TRANSPORT
RATE, $/CWT.
DISTANCE,
MILES
GRID
Coordinates
Phoenix 61,500 16.73 1163 3.60 3.90
Monterrey 120,600 9.40 1188 6.90 1.00
Total 182,100
a
b
Miles =230 X coordinate distance
Cwt.=100 lb.
IIBM Institute of Business Management 3
a
X Y
Table 2 Volumes, Rate, Distance, and Coordinate Data for Shipping from Plants to the Kansas City
Warehouse in Truck in 5,000 lb Quantities (Class 100) for the Most Recent Year.
Examination Paper of Logistics Management
PLANT
LOCATION
ANNUAL
VOLUME,
CWT.
b
TRANSPORT
RATE, $/CWT.
DISTANCE,
MILES
GRID
Coordinates
a
X Y
Seattle 17,000 33.69 1858 0.90 9.10
Los Angeles 32,000 30.43 1496 1.95 4.20
Denver 12,500 25.75 598 5.60 6.10
Dallas 9,500 18.32 560 7.80 3.60
Chicago 29,500 25.24 504 10.20 6.90
Atlanta 21,000 19.66 855 11.30 3.95
New York 41,300 26.52 1340 14.00 6.55
Toronto 8,600 26.17 1115 12.70 7.80
Montreal 10,700 27.98 1495 14.30 8.25
Total 182,100
Kansan City 8.20 6.00
Questions:
1. Based on information for the current years, is Kansas City the best location for a warehouse? If
not, what are the coordinates for a better location>? What cost improvement can be expected
from the new location?
2. If by year 5 increases are expected of 25 percent in warehouse outbound transport rates and 15
percent in warehouse inbound rates, would your decision change about the warehouse
location?
Caselete 2
Personal Care limited (PCL) is a large and premier FMCG company in India with a turnover of about Rs
1,200 crore. It has 25 production plants and 10 contract manufacturers spread over the whole country,
producing about 120 products ranging from personal care to household goods. Again out of 120
products, about 60 percent have different variants as well as package sizes.
The company has four own central warehouses situated in the four zones of north, south, east and west
that receive products from almost all the plants on a regular and consignment basis in container by
road. These warehouses are responsible for taking care of stocks, order placement for next arrivals,
loading and unloading, protective storage, stock recording, apart from order processing and
replenishment of good to distributors of respective zone whose numbers come around 150 per
warehouse.
After receiving goods from various plants, these warehousing are first entered into the computer for
inventory recording purposes. Suitable storage location spaces are then assigned after taking into
consideration the quantity to be stored, the physical dimension, characteristics of items, frequency of
flow, and availability of the space, which is quite variable and flexible. For storage of goods, a flexible
racking system is used so that the size of a rack’s space can be changed as per the size on the product’s
package. Furthermore, racing is back-to-back in pallet blocks which are 5-storied, and in one block there
are about 400 back-to-back racks.
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Examination Paper of Logistics Management
In certain area, for selected heavy weight and bulky items, 50 selectors drive forklift trucks and in the
remaining area, as many as 350 selectors pick the goods manually and use hand trolley. Selectors are
normally less educated and highly experienced, who have well-defined areas of selection.
With this existing system, there have been a lot of practical problems, such as underutilization of space,
traffic congestion in between the racks as one selector blocks another’s progress while he is picking item
from a location, wrong assortment, difficult to track goods, difficult to fill one single order as it contains
a variety of items, etc. this result into frequent complaints lodged by distributors.
Furthermore, a trucker is required to collect items from different places of the warehouse to make up
the order. Frequently, they have to wait for a full load. Then, the driver has to collect challan and other
required papers. Normally, this whole process takes seven to ten days, subject to ready availability of
the goods in stock. In the case of stock-out item, it may goes anywhere between 15 and 30 days. That is
why replenishment cycle time for nearby distributors is about 10-15 days and for others, it comes to
around 3 weeks.
Due to a gradual increase in the quantum of competition and increasing customer expectations, along
with increasing awareness about the overwhelming contribution of logistics in cost reduction and
service improvement, the top management of PCL have appointed highly qualified and experienced
professionals at all four warehouses with the following objectives:
To improve the efficiency of the warehouses
To reduce the replenishment cycle time by percent
To reduce the total logistical costs by 10 per cent
To have transparency in dispatch of premium products.
The chief warehouse manager, who joined the north zone warehouse as had a very successful career of
25 years. He wants to redefine the whole warehouse operating system.
Questions:
1. How should the chief warehouse manager of PCL approach this problem?
2. Develop a warehousing operational strategy to overcome the problem and fulfill the
redefined objectives of the firm.
Section C: Applied Theory (30 Marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 15 marks.
Detailed information should from the part of your answer (Word limit 200 to 150 words).
END OF SECTION B
IIBM Institute of Business Management 5
Examination Paper of Logistics Management
1. Information technology had the major effects on all areas of business. Explain the effective
use of Information Technology in Distribution Management.
2. Explain what Partnering Channel Relationship is and also state the reasons for developing
Partnering Channel Relationship.
END OF SECTION C
IIBM Institute of Business Management 6
Examination Paper of Logistics Management
IIBM Institute of Business Management
Examination Paper MM.100
Business Logistics
Section A: Objective Type (30 marks)
This section consists of Multiple Choice questions & short note questions.
Answer all the questions.
Part one questions carry 1 mark each & Part Two questions carry 5 marks each.
Part One:
Multiple Choices:
1. This decision involves mode of selection, shipment size, routing & scheduling
a. Inventory decision
b. Transport decision
c. Distribution decision
d. Facility location decision
2. This refers to the activities of gathering the information needed about the products & services
desired & formally requesting the products to be purchased
a. Order preparation
b. Order transmittal
c. Observation
d. Order entry
3. A very valuable function for the TMS is to suggest the patterns for consolidating small shipments
into larger ones.
a. Mode selection
b. Routing
c. Scheduling
d. Freight Consolidation
4. This refers to transporting truck trailers on railroad flatcars, usually over longer distances than
trucks normally haul
a. Water
b. Pipeline
c. Roadways
d. Trailers on Flatcars
5. An operating philosophy that is an alternative to the use of inventories for meeting the goal of
having the right goods at the right place at the right time.
a. Just-in-time
b. Kanban
IIBM Institute of Business Management 7
Examination Paper of Logistics Management
c. MRP Mechanies
d. None
6. A buyer may wish to negotiate the best possible price but not take delivery of the full purchase
amount at one time.
a. Fixed sourcing
b. Contract buying
c. Flexible sourcing
d. Deal buying
7. Transportation rate structure, especially rate breaks, influence the use of storage facilities is
known as
a. Storage function
b. Holding
c. Consolidation
d. Break-bulk
8. These warehouses are the most common type which handle a broad range of merchandise
a. Household warehouses
b. Miniwarehouses
c. Bulk storage warehouses
d. General merchandise warehouses
9. ___________ refers to the time that goods remain in the transportation equipment during
delivery
a. Leased space
b. Storage in transit
c. Load unitization
d. Space layout
10. It refers to the selection of more than one order on a single pass through the stock
a. Zoning
b. Batching
c. Sequencing
d. Modified area system
Part Two:
1. What is Bid-Rent Curves?
2. What is Mixed Integer linear Programming?
3. Differentiate between Lumpy and Regular Demand.
4. Write a short note on ‘Order Transmittal’.
END OF SECTION A
IIBM Institute of Business Management 8
Examination Paper of Logistics Management
Section B: Caselets (40 Marks)
This section consists of Caselets.
Answer all the questions.
Each caselete carries 20 marks.
Detailed information should form the part of your answer (Word limit 150 to 200 words).
Caselete 1
World is a worldwide refiners and distributor of fuel products for a automobiles, aircrafts, trucks, and
marine operations, services stations, and bulk facilities as outlets. Keeping more than 1,000 such outlets
supplied is a significant operating problem for the company. Maintaining adequate fuel levels at the
auto service stations is its major concern, because fuel generates the most revenue for the firm and has
the greatest demand for customer service. Being able to forecast usage rates by product at these service
stations is one of the key elements of goods distribution operations. In particular, the tanker truck
dispatchers need an accurate forecast of fuel usage in order to schedule fuel deliveries at service
stations to avoid stock outs.
SERVICE STATION OPERATION
Service stations may carry three or four different grades of fuel including 87, 89, and 92 octane gasoline
and diesel fuels. These are stored in underground tanks. Due to the variations in the usage rates among
the stations and the limited capacities of these tanks, the frequency of replenishment may range from
two or three times per day to only several times per week. Each tank is dedicated to one type of fuel.
Fuel levels are measured periodically by placing a calibrated stick into a storage tank, although some of
the more modern stations have electronic metering devices on their tanks. Tanker trucks, typically
having four fuel compartments, are used for replenishment.
A FORECASTING SITUATION
Each service station’s fuel grade represents a specific forecasting situation. A case in point is one of the
lower-volume stations selling 87- octane fuel. With replenishment occurring only a few times per week,
forecast of usage rates on a daily basis is adequate. Because usage does depend on the day of the week,
forecasting for a particular day of the week may be quite different from any other day of the week.
Questions:
1. Develop a forecasting procedure for this service station. Why did you select this method?
2. How should promotions, holidays, or other such periods where fuel usage rates deviate form
normal patterns be handled in the forecast?
IIBM Institute of Business Management 9
Examination Paper of Logistics Management
Caselete 2
As director of purchasing for Industrial Distributors, Walter Negley had to plan the purchasing quantities
for the higher-valued products that Industrial Distribution inventoried and resold to its industrial
customers on a short order cycle. One such product was a replacement motor used in conveyors.
Replacement sales were received from customers located in North America and was approximately
constant throughout the year. These motors were manufactured in West Germany and imported
through the Port of Baltimore. They were transported by truck to industrial’s privately owned
warehouse in the Chicago area. Although the West German manufacturer had a price policy that
included transportation to Baltimore, Industrial incurred the transportation expenses from Baltimore to
Chicago. To help determine the purchase quantities, Walter gathered the following information:
Information Description Quantities/Costs Source of Information
Average annual sales 1,500 units Sales
Replenishment lead time 1 month (0.083 yr) Purchasing
Clerical cost per requisition $ 20 Accounting
Expediting cost per requisition $ 5 Traffic
Inventory-carrying cost 30% per year Finance
Packaged weight per unit 250 lb Traffic
Unloading cost at warehouse $ 0.25 per cwt. Accounting
Storage capacity at
warehouse
Public warehouse storage
rates
$ 300 units Warehouse manager
$ 10 per unit per year Public warehouse
The manufacturer has just announced its new price schedule for motors at the Port of Baltimore.
Checking with the trucking company to move the motors from Baltimore,
Units per Order Unit Price
First 100 $ 700
Next 100 $ 680
All over 200 $ 670
Walter found it practical to contract for either full truckload shipments at $12 per cwt. (100 lb) for
truckload (TL) quantities of 40, 000 lb or more or less-than-truckload (LTL) quantities at $18 per cwt.
Questions:
1. What replenishment order size, to the nearest 50 units, should Walter place, given the
manufacturer’s noninclusive pricing policy?
2. Should Walter change his replenishment order size if the manufacture’s pricing policy were one
where the price in each quantities break includes all units purchased?
END OF SECTION B
IIBM Institute of Business Management 10
Examination Paper of Logistics Management
Section C: Applied Theory (30 Marks)
This section consists of Long Questions.
Answer all the questions.
Each question carries 10 marks.
Detailed information should from the part of your answer (Word limit 200 to 150 words).
1. What is a heuristic Method? How are they useful in solving warehouse location problem?
2. What is a “Virtual Inventory”? What is the planning problem associated with such inventories?
3. Decision makers such as truck dispatchers, can go a long way toward developing good truck routes
& schedule by applying guideline principles. What are those principles for good Routing &
Scheduling?
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