CPIM Distribution Planning 2 — Questions and Answers
Question 1: Which distribution network design strategy places inventory closer to end customers to reduce lead times?
- Centralized warehousing
- Forward deployment (Correct answer)
- Cross-docking
- Drop shipping
Correct answer: Forward deployment
Forward deployment positions inventory at locations closer to customers, reducing transit time and improving service levels.
Question 2: A company's distribution center receives full truckloads from suppliers and immediately sorts and ships to retail stores without storing inventory. This is called:
- Milk run
- Cross-docking (Correct answer)
- Zone skipping
- Pool distribution
Correct answer: Cross-docking
Cross-docking transfers inbound shipments directly to outbound vehicles with minimal or no storage, reducing handling and storage costs.
Question 3: The total cost of a distribution network includes which of the following cost components?
- Transportation, warehousing, and inventory carrying costs (Correct answer)
- Only transportation and warehousing costs
- Labor and equipment costs only
- Fixed facility costs only
Correct answer: Transportation, warehousing, and inventory carrying costs
Total distribution network cost includes transportation, warehousing, inventory carrying costs, order processing, and customer service costs.
Question 4: When a single DC serves all customers across a large geography, what is the primary tradeoff compared to using multiple regional DCs?
- Higher transportation costs but lower inventory costs
- Lower transportation costs but higher inventory costs
- Lower inventory costs but higher transportation costs (Correct answer)
- Equal costs with better service
Correct answer: Lower inventory costs but higher transportation costs
Centralization reduces inventory through risk pooling but increases outbound transportation costs due to greater distances to customers.
Question 5: Which metric measures the percentage of customer orders shipped complete and on time from available stock?
- Fill rate
- Perfect order rate (Correct answer)
- Order cycle time
- Distribution service level
Correct answer: Perfect order rate
Perfect order rate measures orders delivered complete, on time, damage-free, and with accurate documentation, reflecting overall distribution performance.
Question 6: A milk run route is best described as:
- Delivering only dairy products in refrigerated trucks
- A single truck making pickups or deliveries at multiple stops on a fixed route (Correct answer)
- A direct truckload shipment between two points
- A hub-and-spoke delivery pattern
Correct answer: A single truck making pickups or deliveries at multiple stops on a fixed route
A milk run is a recurring route where one vehicle makes multiple pickups or deliveries at scheduled stops, consolidating shipments efficiently.
Question 7: Zone skipping in parcel distribution achieves cost savings by:
- Bypassing customs zones for international shipments
- Consolidating shipments and injecting them closer to destination zones, skipping carrier sorting hubs (Correct answer)
- Eliminating dimensional weight charges by repackaging
- Using zone-based pricing to select the cheapest carrier
Correct answer: Consolidating shipments and injecting them closer to destination zones, skipping carrier sorting hubs
Zone skipping moves consolidated freight closer to the destination before tendering to the final carrier, reducing the number of zones charged and lowering costs.
CPIM Distribution Planning 2
Which distribution network design strategy places inventory closer to end customers to reduce lead times?