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Flashcards in Final International Logistics Deck (36)
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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

Exchange Rate Risk

2

A currency that can be easily converted into another currency

Hard/Convertible Currencies

3

A currency that cannot always be converted into another currency

Soft Currency

4

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

Spot Exchange Rate

5

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

Forward Exchange Rate

6

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

Currency Options

7

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

Put Options

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

Pegged Currencies

9

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

Floating Currency

10

The price at which a currency option is exercised

Strike Price

11

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

Swaps

12

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

Licensing

13

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

Export Trading Company

14

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

Export Management Company

15

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

Non-tariff barriers

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

Dumping

17

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

Centralization of Inventory

18

What are the Pros of Centralization of Inventory

lower operation costs
Reduced inbound costs
better customer service

19

what are the cons of centralization of inventory?

potential high cost of rush delivery
lack of preparation for emergencies, and potential problems with local managers

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

Focused Factories

21

Thumb rule for supply chain
Cost Before Inventory/Cost After Inventory equals square root of # of locations before/# of locations after

Square Root Rule

22

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

Foreign Freight Forwarders

23

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

consolidators

24

a person authorized by Customs authorities to file entries

Customs House Broker

25

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

minimum efficient scale

26

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

Value to Weight Ratio

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

Ex Works

28

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

DDP (Delivered Duty Paid)

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

open account

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

letter of credit