TEST BANK

CHAPTER 14: INTERNATIONAL LOGISTICS

Multiple Choice Questions (correct answers are bolded)

1. ___________ refers to the sum of the gross domestic product of all countries.

a. Net world product

b. World net income

c. Gross world product

d. Gross world income

[LO: Material at the beginning of the chapter; Easy; Concept; AACSB Category 3: Analytical thinking]

2. ___________ are taxes that governments place on the importation of certain items.

a. Tariffs

b. Surcharges

c. Quotas

d. Embargoes

[LO 14.1: To discuss macroenvironmental influences on international logistics; Easy; Concept; AACSB Category 3: Analytical thinking]

3. A(n) ___________ limits the amount of product that may be imported from any one country during a particular period of time.

a. embargo

b. import quota

c. confiscation

d. tariff

[LO 14.1: To discuss macroenvironmental influences on international logistics; Easy; Concept; AACSB Category 3: Analytical thinking]

4. A(n) ___________ prohibits trade between countries.

a. expropriation

b. confiscation

c. import quota

d. embargo

[LO 14.1: To discuss macroenvironmental influences on international logistics; Easy; Concept; AACSB Category 3: Analytical thinking]

5. What is the name for a system of accounts that records a country’s international financial transactions?

a. tariffs

b. balance of payments

c. import/export accounts

d. gross domestic product

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Concept; AACSB Category 3: Analytical thinking]

6. Cargo preference rules ___________.

a. are synonymous with embargoes

b. indicate how each shipment should be loaded into a transport vehicle

c. indicate a shipper’s preferred carrier(s)

d. require a certain percentage of traffic to move on a nation’s flag vessels

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Concept; AACSB Category 3: Analytical thinking]

7. When one country’s currency is weak relative to other currencies, ___________.

a. it becomes costlier to import products to the country, but its exports surge

b. both imports and exports surge

c. it becomes costlier to export products from the country, but its imports surge

d. it becomes costlier to import and export products

[LO 14.1: To discuss macroenvironmental influences on international logistics; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

8. Which of the following statements about sachets is false?

a. Sachets can be easier to lose.

b. Sachets are more prone to theft.

c. Sachets need different packaging.

d. Sachets tend to be sold in higher-income countries.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

9. ___________ was the most recent country to be admitted to the European Union, in 2013.

a. Turkey

b. Serbia

c. Croatia

d. Montenegro

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Application; AACSB Category 3: Analytical thinking]

10. A ___________ is used in areas where dockworkers cannot read but need a method to keep documents and shipments together.

a. RFID tag

b. shipper’s mark

c. shipment coordinator

d. bar code

[LO 14.1: To discuss macroenvironmental influences on international logistics; Difficult; Concept; AACSB Category 3: Analytical thinking]

11. Which of the following is not a cultural factor that can influence international logistics?

a. language

b. time orientation

c. population

d. national holidays

[LO 14.1: To discuss macroenvironmental influences on international logistics; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

12. A ___________ specifies the country or countries in which a product is manufactured and can be required by governments for control purposes or by an exporter to verify the location of manufacture.

a. commercial invoice

b. waybill

c. certificate of origin

d. shipper’s export declaration

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Concept; AACSB Category 3: Analytical thinking]

13. A ___________ is similar in nature to a domestic bill of lading and summarizes the entire transaction.

a. certificate of origin

b. commercial invoice

c. shipper’s letter of instruction (SLI)

d. shipper’s export declaration (SED)

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Concept; AACSB Category 3: Analytical thinking]

14. A ___________ often serves as the basis for a country’s official export statistics.

a. shipper’s export declaration

b. shipper’s bill of lading

c. certificate of origin

d. commercial invoice

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Application; AACSB Category 3: Analytical thinking]

15. Incoterms refer to ___________.

a. standardized procedures for handling international shipments

b. standardized international trade terminology

c. a specific method of payment for international shipments

d. terms of sale for international shipments

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Concept; AACSB Category 3: Analytical thinking]

16. Which of the following Incoterms does not apply to sea and inland waterway transport only?

a. free alongside ship (FAS)

b. cost and freight (CFR)

c. free carrier (FCA)

d. free on board (FOB)

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

17. Which of the following is not a method of payment for international shipments?

a. letter of credit

b. open account

c. cash in advance

d. forfaiting

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

18. Which method of payment for international shipments is extremely risky for the seller and minimally risky for the buyer?

a. letter of credit

b. open account

c. bills of exchange

d. cash in advance

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Application; AACSB Category 3: Analytical thinking]

19. What international method of payment is issued by a bank and guarantees payment to a seller provided that the seller has complied with applicable terms and conditions of the particular transaction?

a. bill of exchange

b. letter of credit

c. forfaiting

d. open account

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Application; AACSB Category 3: Analytical thinking]

20. Advising on acceptance of letters of credit, booking space on carriers, and obtaining consular documents are principal functions provided by ___________.

a. export packers

b. export management companies

c. international freight forwarders

d. customs brokers

[LO 14.3: To distinguish among the unique activities of international trade specialists; Moderate; Application; AACSB Category 3: Analytical thinking]

21. Consular documents ___________.

a. involve obtaining permission from the importing country for the goods to enter

b. must be filed for every export shipment

c. can be used in place of a shipper’s export declaration

d. list the shipper, consignee, commodity or commodities, and place of export

[LO 14.3: To distinguish among the unique activities of international trade specialists; Moderate; Concept; AACSB Category 3: Analytical thinking]

22. Which of the following is not a source of income for international freight forwarders?

a. payment for freight pickup and delivery

b. buying space wholesale and selling it retail

c. commissions on shipping revenues generated for carriers

d. fees for document preparation and performing research

[LO 14.3: To distinguish among the unique activities of international trade specialists; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

23. Which international logistics service provider is often confused with the international freight forwarder?

a. customs broker

b. nonvessel-operating common carrier (NVOCC)

c. export management company (EMC)

d. export packers

[LO 14.3: To distinguish among the unique activities of international trade specialists; Moderate; Application; AACSB Category 3: Analytical thinking]

24. ___________ act as the export sales department for a manufacturer.

a. International freight forwarders

b. Shippers associations

c. Export management companies

d. Export trading companies

[LO 14.3: To distinguish among the unique activities of international trade specialists; Moderate; Application; AACSB Category 3: Analytical thinking]

25. An ___________ custom packs shipments when the exporter lacks the equipment or the expertise to do so itself.

a. export management company

b. customshouse broker

c. international freight forwarder

d. export packer

[LO 14.3: To distinguish among the unique activities of international trade specialists; Easy; Concept; AACSB Category 3: Analytical thinking]

26. Approximately ___________ percent of cross-border shipments move by water transportation.

a. 40

b. 50

c. 60

d. 70

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

27. ___________ is the world’s busiest container port.

a. Singapore

b. Shanghai

c. Hong Kong

d. Shenzhen

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

28. Seven of the 10 busiest container ports are located in ___________.

a. Europe

b. the United States

c. China

d. the Middle East

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

29. ___________ refer to major ports where thousands of containers arrive and depart each week.

a. Load centers

b. Break-bulk centers

c. Consolidation points

d. Hubs

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Easy; Concept; AACSB Category 3: Analytical thinking]

30. Shipping conferences refer to ___________.

a. annual meetings of large international shippers

b. international shippers’ associations

c. cartels of ocean vessel operators operating between certain trade areas

d. water ports that are located in the same geographic area

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking]

31. What concept refers to a situation in which ocean carriers retain their individual identities but cooperate in the area of operations?

a. ocean carrier alliances

b. relational exchanges

c. shipping conferences

d. partnerships

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking]

32. Ocean carrier alliances provide two primary benefits to participating members, namely, the sharing of vessel space and ___________.

a. antitrust immunity

b. a broader service network

c. lower rates

d. faster transit times

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

33. Integrated air carriers ___________.

a. perform transportation in tightly linked supply chains

b. are those that own several modes of transportation

c. utilize the services of scheduled airlines

d. own all their vehicles as well as pick up and delivery facilities

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking]

34. The Open Aviation Area is an open skies agreement between the United States and ___________.

a. China

b. Brazil

c. the European Union

d. India

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

35. Which countries rank first, second, and third, respectively in terms of highway mileage?

a. United States, India, China

b. China, India, United States

c. China, United States, Russia

d. Russia, United States, China

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Difficult; Application; AACSB Category 3: Analytical thinking]

36. Which of the following statements is false?

a. In China, freight is often given lower priority than passengers in rail transportation.

b. China ranks first in the world in terms of highway mileage.

c. Highway freight transportation can be provided by animals and carts in some countries.

d. Some countries limit a motor carrier’s operations to within a particular state’s borders.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

37. Short-sea shipping (SSS) is widely accepted and practiced in ___________.

a. North America

b. South America

c. Europe

d. Asia

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Difficult; Application; AACSB Category 3: Analytical thinking]

38. Which of the following statements about international inventory management is false?

a. Product return policies are a concern.

b. Inventory valuation is difficult because of continually changing exchange rates.

c. Safety stocks generally need to be larger.

d. Inventory for sale in one nation generally serves the needs of markets in nearby nations.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Difficult; Synthesis; AACSB Category 3: Analytical thinking]

39. The Logistics Performance Index (LPI) ___________.

a. was created in recognition of the importance of logistics in international trade

b. measures a company’s logistics cost as a percentage of its total cost

c. compares inventory turnover for major retailers

d. applies the Balanced Scorecard approach to international logistics activities

[LO 14.5: To introduce you to the Logistics Performance Index; Moderate; Application; AACSB Category 3: Analytical thinking]

40. ___________ was the top-ranked country in the 2016 Logistics Performance Index (LPI).

a. The United States

b. Germany

c. The Netherlands

d. Luxembourg

[LO 14.5: To introduce you to the Logistics Performance Index; Moderate; Application; AACSB Category 3: Analytical thinking]

True-False Questions

1. Gross world product refers to the sum of the gross domestic product of all countries.

[LO: Material at the beginning of the chapter; Easy; Concept; AACSB Category 3: Analytical thinking]

2. Tariffs refer to taxes that governments place on the importation of certain items.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Easy; Concept; AACSB Category 3: Analytical thinking]

3. The primary purpose of a nontariff barrier is to encourage exports.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

4. Embargoes are physical limits on the amount that may be imported from any one country during a period of time.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Concept; AACSB Category 3: Analytical thinking]

5. Some nations with weak balance-of-payment positions issue an import license on the condition that the goods move on an aircraft or vessel flying that nation’s flag.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

6. Cargo preference rules indicate how each shipment should be loaded into a transport vehicle.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Concept; AACSB Category 3: Analytical thinking]

7. When one country’s currency is weak relative to other currencies, it is more costly to import products into that country.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Application; AACSB Category 3: Analytical thinking]

8. Sachets (single-use packets) require different packaging and are easier to lose and more prone to theft than products sold in larger quantities.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

9. Serbia, in 2013, was the most recent country admitted to the European Union.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Application; AACSB Category 3: Analytical thinking]

10. It might not be unusual for cargo handlers in some countries to be illiterate.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Easy; Synthesis; AACSB Category 3: Analytical thinking]

11. National holidays have no impact on the effectiveness and efficiency of international logistics.

[LO 14.1: To discuss macroenvironmental influences on international logistics; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

12. The documentation requirements for international shipments can act as a nontariff barrier to trade.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Easy; Synthesis; AACSB Category 3: Analytical thinking]

13. A certificate of origin specifies the country or countries in which a product is manufactured.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Easy; Concept; AACSB Category 3: Analytical thinking]

14. A shipper’s letter of instruction (SLI) contains relevant export transaction data such as the transportation mode(s), transaction participants, and description of what is being exported.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Concept; AACSB Category 3: Analytical thinking]

15. Some free trade agreements have actually resulted in an increase in documentation requirements.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

16. Incoterms 2010 now divides terms of sale into two groups, one of which applies to any mode of transport and the other which applies to sea and inland water transport only.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

17. The use of Incoterms is mandatory for international shipments.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Application; AACSB Category 3: Analytical thinking]

18. Four distinct international methods of payment (e.g., letters of credit) exist.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

19. An open account is of minimal risk to the seller and extremely risky to the buyer.

[LO 14.2: To explain documentation as well as terms of sale and methods of payment for international shipments; Moderate; Application; AACSB Category 3: Analytical thinking]

20. Consular documents involve obtaining permission from the importing country for goods to enter.

[LO 14.3: To distinguish among the unique activities of international trade specialists; Moderate; Concept; AACSB Category 3: Analytical thinking]

21. International freight forwarders’ income comes from two primary sources.

[LO 14.3: To distinguish among the unique activities of international freight specialists; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

22. From a shipper’s perspective, a nonvessel-operating common carrier (NVOCC) is a carrier; from an ocean carrier’s perspective, an NVOCC is a shipper.

[LO 14.3: To distinguish among the unique activities of international freight specialists; Moderate; Application; AACSB Category 3: Analytical thinking]

23. Export trading companies act as the export sales department for a manufacturer.

[LO 14.3: To distinguish among the unique activities of international freight specialists; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

24. Export packers custom pack shipments when the exporter lacks the equipment or expertise to do so itself.

[LO 14.3: To distinguish among the unique activities of international trade specialists; Easy; Concept; AACSB Category 3: Analytical thinking]

25. International transportation cannot be effective or efficient without fairly identical handling equipment being in place at each end of the trip.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

26. Approximately 75 percent of cross-border shipments move by water transportation.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

27. In terms of container throughput, Shanghai is the world’s busiest container port.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

28. Five of the world’s 10 busiest container ports are located in the United States.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

29. Load centers refer to major ports where thousands of containers arrive and depart each week.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Easy; Concept; AACSB Category 3: Analytical thinking]

30. Shipping conferences refer to annual meetings of large international shippers.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking]

31. Ocean carrier alliances provide two primary benefits to participating members, namely, the sharing of vessel space and lower rates.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

32. Integrated air carriers own all their vehicles and the facilities that fall in between.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking]

33. Bilateral agreements liberalize international aviation opportunities and limit federal government involvement.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking]

34. China ranks first in the world in terms of highway mileage.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

35. Some countries conduct inspections of trucks as they move from one state to another.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

36. Drayage refers to ocean shipping, often along a region’s coast, rather than across oceans.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Concept; AACSB Category 3: Analytical thinking

37. Because greater uncertainties, misunderstandings, and delays often arise in international movements, safety stocks must be larger.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Application; AACSB Category 3: Analytical thinking]

38. Inventory valuation on an international scale is difficult because of continually changing exchange rates.

[LO 14.4: To illustrate transportation and inventory considerations in international distribution; Moderate; Synthesis; AACSB Category 3: Analytical thinking]

39. The Netherlands ranked first in overall performance in the 2016 Logistics Performance Index (LPI).

[LO 14.5: To introduce you to the Logistics Performance Index; Moderate; Application; AACSB Category 3: Analytical thinking]

40. The Logistics Performance Index (LPI) was created in recognition of the importance of logistics in international trade.

[LO 14.5: To introduce you to the Logistics Performance Index; Moderate; Synthesis; AACSB Category 3: Analytical thinking]