The idea behind risk pooling is to redesign the supply chain, the production process or the product to either reduce the uncertainty the firm faces or to hedge uncertainty so that the firm is in a better position to mitigate the consequences of uncertainty. Types of Pooling:

• Location Pooling:
• Reduces demand variability
• Reduces expected inventory
• However, creates distance between inventory and customers
• Product Pooling:
• Reduces demand variability
• Better performance in terms of matching supply and demand.
• However, potentially degrades product functionality.
• Lead Time Pooling:
• Decreases lead time
• Keeps inventory closer to customers.
• Reduces inventory investment
• However, extra cost of operating distribution center.
• Additional transportation cost.
• Capacity Pooling:
• Accomodate demand uncertainty
• However, large costs to have flexibility.

• Risk pooling strategies are most effective when damands are negatively correlated because then the uncertainty with total demand is much less than the uncertainty with any individual item. location.
• Risk pooling strategies do not help reduce pipeline inventory.
• Risk pooling strategies can be used to reduce inventory while maintaining the same service or they can be used to increase service while holding the same inventory.

Solved Example: 9022-01

Which of the following represents traditional logistics management approach?

A. A, B only

B. B, C only

C. A, C, D only

D. B, C, D only

Correct Answer: A

Solved Example: 9020-01

Which of the following is NOT true for supply chain mangement approach?

A. Joint reduction in channel inventories

B. Large breadth of supplier base to increase competition and spread risk

C. Risks and rewards are shared over long term

D. Companies use intermodal transportation to reach to their markets

Correct Answer: B

Solved Example: 9020-02

Given below are two statements. One is labelled as Assertion (A) and the other is labelled as Reason (R).

Assertion (A): If the firm is prepared to incur increased cost on transportation, it may be in a position to reduce its inventory cost

Reason (R) : As in such a case, the firm can use the fastest mode of transport and rush the goods / stocks to the desired warehouse, unmindful of the cost of transportation

In the context of the above two statements related to logistics management, which of the following options is correct?

1. Both A) and R) true and R) is the correct explanation of A)

2. Both A) and R) true but R) is NOT the correct explanation of A)

3. A) is true but R) is false

4. A) is false but R) is true

A. 1

B. 2

C. 3

D. 4

Correct Answer: A

Solved Example: 9023-01

Market logistic planning has the following four steps. Arrange the steps in correct sequence

a) Develop operational excellence in sales forecasting, warehouse management transportation and material management

b) Select the best channel design and network strategy for reaching the customers

c) Implement the solution with the best information systems, equipment policies and procedures

d) Decide on company's value proposition to its customers

Select the correct option from those below

A. a) $\rightarrow$ b) → c) → d)

B. d) → b) → a) → c)

C. d) → b) → c) → a)

D. d) → c) → b) → a)

Correct Answer: B

Solved Example: 9023-02

In the recent years - the major gain in logistical efficiency have come from which one of the following?

A. Advances in Information Technology

B. Reduction in petroleum prices

C. Fast order processing

D. Increase in production of commercial vehicles

Correct Answer: A

Solved Example: 9017-01

Which of the following is not true while determining length of distribution channel?

A. The larger the market size, the longer the channel.

B. If the average lot size is large, it is better to have a longer channel.

C. If the product and the market require a high level of service, it is advisable to keep a shorter channel.

D. If customers shop for an assortment of products, it demands for a wider channel of distribution.

Correct Answer: B

Solved Example: 9017-02

Environmental characteristics/factors influencing distribution decisions are

(A) Government policy

(B) State of economy

(C) Social activistism

(D) Technological and infrastructure developments

(E) Statutory provisions

Choose the most appropriate answer from the options given below:

A. (A), (D) only

B. (B), (C), (E) only

C. (A), (C), (D) only

D. (A), (B), (D), (E) only

Correct Answer: D

Solved Example: 9017-03

Which of the following is not true for supply chain mangement approach?

A. Joint reduction in channel inventories

B. Large breadth of supplier base to increase competition and spread risk

C. Risks and rewards are shared over long term

D. Companies use intermodal transportation to reach to their markets

Correct Answer: B

Solved Example: 9017-04

The retail supply chain does NOT include:

A. Manufactures

B. Retailers

C. Wholesalers

D. Regulators

Correct Answer: D

Solved Example: 9017-05

The channel alternative is NOT to be assessed on the basis of:

A. Economic criteria

B. Control criteria

C. Adaptive criteria

D. Accumulation criteria

Correct Answer: D

Solved Example: 9017-06

Statement (I) : Designing a distribution system for a service (for-profit or non-business context) involves to select the parties only through which ownership will pass.

Statement (II) : The ownership channel for most of the services is long and quite complex because of inseparability characteristic.

Statement (III) : Short channels usually mean more control on the part of the seller.

Identify the correct code of being the statements correct or incorrect. These statements relate to channel strategies of products/services

A. Statements (I) and (II) are correct but (III) is not correct.

B. Statements (I) and (III) are correct but (II) is not correct.

C. Statements (I) and (II) are not correct but (III) is correct.

D. Statements (I), (II) and (III) all are not correct.

Correct Answer: C