1) If facilities have higher fixed costs, many local facilities are preferred because this helps lower transportation costs. Answer: TRUE FALSE

2) A firm may increase the number of facilities beyond the point that minimizes total logistics cost to improve the response time to its customers. Answer: TRUE FALSE

3) As long as inbound transportation economies of scale are maintained, increasing the number of facilities decreases total transportation cost. Answer: TRUE FALSE

4) Incentive conflicts refer to situations where incentives offered to different stages or participants in a supply chain led to actions that increase variability and reduce total supply chain profits. Answer: TRUE FALSE

5) A reduction of lot sizes increases the amount of fluctuation that can accumulate between any pair of stages of a supply chain, thus increasing the bullwhip effect. Answer: TRUE FALSE

6) With an uncoordinated supply chain each stage tries to maximize its own profits, resulting in actions that often diminish total supply chain profits. Answer: TRUE FALSE

7) Firms can significantly reduce the safety inventory they require by physically aggregating inventories in one location, which will also decrease transportation costs. Answer: TRUE FALSE

8) As the replenishment lead time from a supplier grows, the amount of safety inventory that needs to be held by the buyer also grows in direct proportion to the replenishment lead time. Answer: TRUE FALSE

9) Effective differential pricing over time will generally increase the level of product availability for the consumer willing to pay full price but will decrease total profits for the retailer. Answer: TRUE FALSE

10) The tactic of overbooking or overselling the available asset is suitable in any situation where customers can cancel orders and the value of the asset drops significantly after a deadline. Answer: TRUE FALSE