Final International Logistics

Question 1

the risk presented by the fluctuations in exchange rates between the time at which the sale is made and the time at which it is paid

Answer 1

Exchange Rate Risk

Question 2

A currency that can be easily converted into another currency

Answer 2

Hard/Convertible Currencies

Question 3

A currency that cannot always be converted into another currency

Answer 3

Soft Currency

Question 4

The exchange rate of a foreign currency for immediate delivery (within 48 hours)

Answer 4

Spot Exchange Rate

Question 5

The exchange rate of a foreign currency for delivery in 30,60, or 180 days from the day of the quote

Answer 5

Forward Exchange Rate

Question 6

The right - but not the obligation - to purchase (or sell) a currency at a certain price sometime in the future

Answer 6

Currency Options

Question 7

A currency option with which a firm buys the right to sell a currency at a given price sometime in the future

Answer 7

Put Options

Question 8

a currency whose value is determined by a fixed exchange rate with a more widely traded currency, such as the dollar or the euro

Answer 8

Pegged Currencies

Question 9

A currency whose value is determined by market forces. Value changes frequently

Answer 9

Floating Currency

Question 10

The price at which a currency option is exercised

Answer 10

Strike Price

Question 11

Used by large companies operating in multiple (volatile) markets. Use of 2 forward contracts in both directions

Answer 11

Swaps

Question 12

an arrangement between two companies where one uses the other’s intellectual property in exchange for a royalty

Answer 12

Licensing

Question 13

a company that purchases goods in one country for the purpose of reselling them in another country at a profit

Answer 13

Export Trading Company

Question 14

A company that puts suppliers in touch with potential buyers, and earns a commission if a sale is completed

Answer 14

Export Management Company

Question 15

A form of restrictive trade where barriers to trade are set up and take a form other than a tariff.

Answer 15

Non-tariff barriers

Question 16

A strategy, followed by some exporters, that consists of selling the goods at a price considered too low by the importing country’s authorities

Answer 16

Dumping

Question 17

a company elects to keep its entire inventory in one, or a few major hubs that focus on a large region.

Answer 17

Centralization of Inventory

Question 18

What are the Pros of Centralization of Inventory

Answer 18

lower operation costs
Reduced inbound costs
better customer service

Question 19

what are the cons of centralization of inventory?

Answer 19

potential high cost of rush delivery

lack of preparation for emergencies, and potential problems with local managers

Question 20

these strive for a narrow range of products customers, and processes. Result is a factory that is smaller, simpler, and totally focused on one or two key manufacturing tasks

Answer 20

Focused Factories

Question 21

Thumb rule for supply chain

Cost Before Inventory/Cost After Inventory equals square root of # of locations before/# of locations after

Answer 21

Square Root Rule

Question 22

a company specialized in shipping cargo on behalf of shippers - importers and exporters

Answer 22

Foreign Freight Forwarders

Question 23

a firm which groups together orders from different companies into one shipment

Answer 23

consolidators

Question 24

a person authorized by Customs authorities to file entries

Answer 24

Customs House Broker

Question 25

the lowest production point at which long-run total average costs are minimized

Answer 25

minimum efficient scale

Question 26

a measure of the monetary value a product has per kilogram or pound

Answer 26

Value to Weight Ratio

Question 27

easiest of Incoterms for exporter as they only have to make goods available at their place of residence and importer is responsible for everything else

Answer 27

Ex Works

Question 28

With this mode of transportation, the exporter must pay for everything. ultimate form of customer service when exporting and importing goods

Answer 28

DDP (Delivered Duty Paid)

Question 29

a method of payment in which the exporter sends an invoice to the importer along with the goods and expects the importer to pay within a reasonable amount of time

Answer 29

open account

Question 30

a method of payment in which a bank promises to pay the beneficiary (the exporter) on behalf of the applicant (the importer), as long as the exporter has provided the documents requested

Answer 30

letter of credit

Question 31

a quote provided by the exporter to the importer for the purpose of obtaining a letter of credit or an import license

Answer 31

Pro-forma invoice

Question 32

a certificate, signed by the exporter’s chamber of commerce, that attests that the goods originated in the country in which exporter is located

Answer 32

Certificate of Origin

Question 33

the contract of carriage between a carrier and the shipper. Serves as a receipt of freight services, a contract between a freight carrier and shipper, and a document of title

Answer 33

Bill of Lading

Question 34

when a good is made in one country and then shipped to another and is changed enough that the country of origin changes to the new country

Answer 34

Substantial Transformation

Question 35

refers to an importer, whether an entity or individual, who is responsible for ensuring that legal goods are imported in accordance with the law of the place. Importer is responsible for filing legally required documents

Answer 35

Importer of Record

Question 36

A process for which an exporter can be reimbursed for duty that it paid products that it imported but which products it eventually exported

Answer 36

Duty Drawback