Contents Introduction Chapter 1: Logistics and the Supply Chain.................................................................................................1 Chain.................................................................................................1 ........................................................................................................................................................................ ........................................................................................................................................................................ ........................................................................................................................................................................ ........................................................................................................................................................................ ........................................................................................................................................................................ Chapter 2: The Supply Chain Management Concept...............................................................................23 Concept...............................................................................23 Chapter 3: Logistics and Information Inf ormation Technology Technology...................................................................................43 ...................................................................................43 Chapter 4: emand Management! "rder Management and Customer Ser#ice........................................$2 Ser#ice........................................$2 Chapter %: &rotecti#e &ac'aging and Materials (andling........................................................................)1 (andling........................................................................)1 Chapter $: Transportation *************************....................+) Chapter ,: Transportation Management..................................................................................................11% Management..................................................................................................11% Chapter ): istri-ution Center! arehouse! arehouse! and &lant Location............................................................13% Location............................................................13% Chapter +: In#entory Management.........................................................................................................1%, Management.........................................................................................................1%, Chapter 1/: arehousing Management...................................................................................................1)2 Chapter 11: &rocurement........................................................................................................................2/1 Chapter 12: International Logistics................................................................. ...................................... ..221 Chapter 13: Logistics Systems Controls............................................ Controls..................................................................................... ......................................... ............24/ ........ ....24/ Chapter 14: "rgani0ing and naly0ing Logistics Systems..................................................................... 2$/
&T II SS T" 5"65C(&T 78STI"S C(&T 1: L"9ISTICS T( S8&&L C(I 1. id it surprise you that logistics can -e such an important component in a country;s economic system< hy or =hy not< 它构成了一个国家至少 1/>的 9&、对于经济增长有很重要的作用 The ans=er to this ?uestion li'ely depends on a student;s prior e@posure to logistics. AtypicalB student in an undergraduate -asic logistics course li'ely has had limited e@posure to and 'no=ledge a-out logistics and thus =ould li'ely -e una=are as to logistics; impact on a country;s economic system. s such! shehe might -e pleasantly surprised to learn that logistics often accounts for at least 1/> of a country;s 9& and also is important for economic gro=th and de#elopment. 2. istinguish istinguish -et=een -et=een possession! possession! form! form! time! time! and place utilit utilityy. &ossession utility refers to the #alue or usefulness that comes from a customer -eing a-le to ta'e possession of a product and can -e influenced -y the rele#ant payment terms. 6orm utility refers to a product;s -eing in a form that D1E can -e used -y the customer and D2E is of #alue to the customer. Time utility refers to ha#ing products a#aila-le =hen they are needed -y customers =hile place utility refers to ha#ing products a#aila-le =here they are needed -y customers. 3. (o= does does logisti logistics cs contri-u contri-ute te to time and place place utili utility< ty< 时间效用：不同产有不同的时间!"#$%&'()*+,效用：-产./至少的+01 2/34的+05
Logistics contri-utes to time utility -y recogni0ing that different products ha#e different sensiti#ities to time. 6or e@ample! a three5day late deli#ery of -ananas li'ely has more serious conse?uences than a three5day late deli#ery of a -o@ of pencils. s for place utility! logistics facilitates products -eing mo#ed from points of lesser #alue to points of greater #alue. 4. (o= can a particular particular logisti logistics cs system -e effecti#e effecti#e -ut -ut not efficie efficient< nt< 6不678
789:不:
ffecti#eness can -e thought of as Aho= =ell a company does =hat they say they;re going to doFB efficiency focuses on ho= =ell Dor poorlyE company resources are used to achie#e =hat a company promises they can do. There are a multitude of e@amples that =ould illustrate an effecti#e! -ut not efficient! logistics system. 6or e@ample! some companies routinely use premium andor e@pedited transportationG=hich increase transportation transp ortation costsGto meet customer deli#ery re?uirements. s such! the company could -e considered effecti#e Dmeeting deli#ery deadlinesE -ut perhaps not efficient Dincreased transportation costsE.
%. @plain @plain the significan significance ce of the fact that that the purpose purpose of logistics logistics is to to meet customer customer re?uirement re?uirements. s. ;<要=>?@A'BCDE$FGHI的JKL不MNO*不同的BC有不同的JK$不6 用P一QRP一ST的UVW对X有YB5
"ne reason for this significance is that meeting customer re?uirements means that companies must 'no=Grather than assumeGcustomer needs and =ants. This 'no=ledge is facilitated -y communication -et=een companies and their customers. #en today some companies are hesitant to communicate =ith customers. In addition! meeting customer re?uirements means that a Aone si0e fits allB approach to logistics =ill result in some customers -eing o#erser#ed and others -eing underser#ed. s a result! companies should consider a Atailored logisticsB approach! =here groups of customers =ith similar logistical needs and =ants are pro#ided =ith the appropriate logistical ser#ices. $. @plain @plain ho= an understandi understanding ng of logistics logistics management management could could -e rele#ant rele#ant to your your fa#orite fa#orite charita-le charita-le organi0ation.Z[\构 ]^ +511 ]^_#`ab ^cdE不:的eZ[\构fghij时间klmno$dE6 pWq、rd、sdt
There are any num-er of e@amples that can -e used. Consider the sian tsunami of late 2//4. In a relati#ely short time! a #ariety of humanitarian organi0ations! =ith the help of pri#ate sector companies! =ere a-le to get relief supplies as =ell as food and medicine into the region and distri-ute them to the affected population. ,. iscuss three reasons for =hy logistics has -ecome more important since 1+)/. 经济uv的w少*xyz{|的}~*•€‚的>?*ƒ„…†‡的ˆ‰*Š‹Œ
"ne reason for the increased importance of logistics in#ol#es a reduction in economic regulation. This allo=ed indi#idual carriers fle@i-ility in terms of pricing and ser#ice and pro#ided them =ith an opportunity to -rea' a=ay from a Aone A one si0e fits allB approach. Second! changes in consumer -eha#ior! such as an increasing num-er of mar'et segments! necessitate fle@i-le rather than rigid logistics systems. Third! technological ad#ances ha#e allo=ed logisticians to ma'e faster! more informed! and more accurate decisions. The chapter also discusses the gro=ing po=er of retailers and glo-ali0ation of trade as reasons for the increased importance of logistics.
). hich reason reason for the increased increased importa importance nce of logistics logistics do you -elie#e -elie#e is is most important important<< hy< There is no single ans=er here. Students can offer compelling support for any one of the fi#e reasonsGa reduction in economic regulationF changes in consumer -eha#iorF technological ad#ancesF gro=ing po=er of retailersF glo-ali0ation of tradeGpresented in the chapter. 6or e@ample! a reduction in economic regulation has allo=ed carriers to offer different pricing5 ser#ice options to different customers! =hich is important -ecause different customers are trying to achie#e different o-Hecti#es =ith their logistical systems. +. hat are some some practical practical implicat implications ions of the idea idea that one logisti logistics cs system does does not fit all all companies< dEŽ'一个;<的‘’Ž“一”*不同;<有不同的Ž5
The idea that one logistics system does not fit all companies is deri#ed from the fact that logistical goals and o-Hecti#es should -e compati-le =ith the o#erall goals and o-Hecti#es of a particular company. "ne -asic implication is that different companies should ha#e different logistical strategies and tacticsGand these strategies and tactics should reflect a company;s goals and o-Hecti#es. s such! a company focusing on cost containment should ha#e different logistics strategies and tactics than a company focusing on superior customer ser#ice. 6or instance! a company concerned =ith cost containment might purchase an e@tremely large ?uantity in order to recei#e cost sa#ings. This decision impacts =arehousing and transportation in the sense that the company =ill li'ely need a great deal of storage space and =ill li'ely utili0e #olume5oriented transportation pro#iders. dditional implications can -e offered. 1/. istinguish -et=een in-ound logistics! materials materials management! and physical distri-ution. –—˜'™š—一个;<*;
In-ound logistics refers to the mo#ement and storage of materials into a firmF materials management refers to the mo#ement and storage of materials and components =ithin a firmF physical distri-ution refers to the storage of finished product and mo#ement to the customer. 11. hat is the systems approach to pro-lem sol#ing< (o= is is this concept applica-le to logistics management< Ÿ;<¡¢6£¤¥间的“¦§¨©$.L78;<Ž5一个£¤的ª«¬6®2¯H ¢6£¤的1°$X±要Ÿ£¤¥间的“¦§¨51²£的一个ª«¬6®³š、´µt
The systems approach to pro-lem sol#ing suggests that a company;s o-Hecti#es can -e reali0ed -y recogni0ing the mutual interdependence of the maHor functional areas such as mar'eting! production! finance! and logistics. s such! decisions made -y one functional area can ha#e ha# e important implications for the other functional areas. ith respect to logistics! the systems sys tems approach suggests that one should recogni0e the mutual interdependence of the #arious acti#ities that constitute the logistics function. Thus! a transportation decision may impact in#entory! =arehousing! and pac'aging! among others. 12. @plain =hat is meant -y the total total cost approach to logistics. ¶成·¸¹0h要-¡个º»¼½一个‘’¸¹$要对成·¾¿$一个º»的成·增À不Á ¶成·增À$¯Hº»成·¬6w少$.L¶成·w少5
The total cost approach to logistics is -uilt on the premise that all rele#ant acti#ities in mo#ing and storing products should -e considered as a =hole Di.e.! their total costE and not indi#idually. 8se of the total cost approach re?uires an understanding of cost tradeoffs. In other =ords! changes to one logistics acti#ity cause some costs to increase and others to decrease. The 'ey to the total cost approach is that all rele#ant cost items are considered simultaneously =hen
ma'ing a decision. The o-Hecti#e is to find the approach =ith the lo=est total cost that supports the organi0ation;s customer ser#ice re?uirements. 13. efine =hat is meant -y a cost trade5off. trade5off. o you -elie#e that this concept is =or'a-le< hy or =hy not< }~一个º»的ÃĬ6Å”一Æ成·增À¯H成·w少$ÇL$的M¶成·w少、YBU V不È®5
cost trade5off ac'no=ledges that changing patterns or acti#ities of distri-ution =ill result in some costs increasing and other costs decreasing. The net effect! ho=e#er! should -e an o#erall cost decrease for pro#iding a gi#en le#el of customer ser#ice. The remainder of the ?uestion as's the student for herhis opinion a-out the =or'a-ility of this concept. lthough nearly any ans=er is accepta-le! those students =ho -elie#e that cost trade5 offs are un=or'a-le might ha#e difficulty =ith many of the concepts presented throughout the te@t. 14. hat are se#eral areas in =hich finance and logistics might might interface< ÉV®dE$Ê^–Ëœ'´µÌ产*ÍÎ一个ÏÐfM™Ñ5
The finance department is often in charge of capital -udgeting decisions that =ould affect logistics! such as materials handling and pac'aging e?uipment. nother potential area of financelogistics interface is =ith respect to in#entory. ey issues include in#entory #aluation! in#entory float! and the fact that finance tends to #ie= in#entory from a dollar perspecti#e =hile logistics tends to -e more concerned =ith the num-er of units of in#entory. 1%. Jriefly discuss each of the four -asic aspects of the mar'eting mi@ and ho= each interfaces =ith the logistics function. In your opinion! =hich component of the mar'eting mi@ represents the most important interface =ith logistics< hy< 4& +,Ò3 时间、Ó‡、gÔÕÖ、/TÒ1²成·Ö、产Ò×QØWØÙ$ÚÛØWØ Ù$对dE的要KØWØÜÖ、ÝÞÒ要KÞ„'dEßà9á:Ö5
The four -asic aspects of the mar'eting mi@ are place! price! product! and promotion. ith respect to place! a 'ey concern is to pro#ide a certain product at the right time! in the right ?uantities! and in an undamaged condition. 'ey component of the pricing decision in#ol#es transportation cost factors. lthough mar'eters tend to prefer deli#ered pricing systems! such systems create logistical challenges in the sense that the seller -ecomes responsi-le for product distri-ution. &roduct decisions ha#e -een complicated in recent years -y a mar'ed increase in product offerings. lthough these increased offerings allo= for greater grea ter customer choice! they create logistical challenges in terms of identification! storage! and trac'ing. 6inally! promotion re?uires close coordination -et=een mar'eting and logistics particularly =hen AspecialsB are utili0ed. 6ailure to ha#e sufficient product a#aila-ility to support these specials can -e especially detrimental to customer good=ill. The remainder of the ?uestion as's for students to choose! and support! the most important interface =ith logistics. ny of the four components is accepta-le. 1$. hy do mar'eters tend to prefer 6"J destination pricing rather than 6"J origin origin pricing< â4Þ„ãä*åæ有“同的2ç成·$èé同一ãä的ê个;<ë6用同一的ƒ„/T*Þ „ìíîvdE$Þ„zïð‡ñòó4ô2õö的Ž
There are se#eral reasons =hy mar'eters li'e 6"J destination pricing. 6irst! it ena-les a company to e@pand the geographic area to =hich its product is sold -ecause distant customers
in a region do not pay the full costs of transportation. Second! -ecause each -uyer has the same landed cost! it is easier for a company to apply a uniform retail price on a regional or national -asis. Third! -ecause the seller controls the logistics net=or'! it can function in a manner that is most -eneficial to the seller;s o#erall o-Hecti#es. 1,. hat are se#eral =ays in =hich logistics and production might interface< "ne important interface in#ol#es the length of production runs. &roduction often fa#ors longer production runs in order to achie#e lo=er production costs per unit. (o=e#er! this generates large amounts of in#entoryGgenerally the responsi-ility of logistics. nother interface might occur =ith respect to the postponement concept in the sense that some #alue5added acti#ities that =ere traditionally performed at the production plant are no= performed in =arehousing facilities. These facilities =ill need ne= types of e?uipment and may need to -e configured differently in order to allo= the #alue5added acti#ities to ta'e place. 1). Jriefly discuss the o=nership! negotiations! financing! promotion! and logistics channel. The o=nership channel co#ers mo#ement of the title to the goodsF the goods themsel#es might not -e physically present or e#en e@ist. The negotiations channel is the one in =hich -uy and sell agreements are reached and can include telephone! email! and electronic data interchange! among others. The financing channel handles payment for goods and the company;s credit! =hile the promotions channel is concerned =ith promoting a ne= or an e@isting product. 6inally! the logistics channel handles the physical flo= of the product. 1+. iscuss fi#e acti#ities that might -e part of a company;s logistics department. The chapter presents! and descri-es! 14 separate acti#ities that might -e part of a company;s logistics department. ny fi#e of the 14 are accepta-le to -e discussed -y the students. 2/. Logistics managers must -e -oth generalists and specialists. hy is this true< oes this help to e@plain =hy there tends to -e an im-alance in the supply of! and demand for! logistics managers< Logisticians need to -e generalists in order to understand the relationship -et=een logistics and other corporate functions! -oth =ithin and outside the firm. Logisticians also need to -e specialists to understand the relationships -et=een #arious logistics acti#ities! as =ell as ha#ing some technical 'no=ledge of the #arious acti#ities. This com-ination of generalist and specialist li'ely pro#ides a partial e@planation for the im-alance in the supply of! and demand for! logisticians in the sense that not e#eryone is capa-le of -alancing generalist and specialist re?uirements.
&T III KMITI" 78STI"S C(&T 1: L"9ISTICS T( S8&&L C(I Multiple Choice 7uestions 1. Logistics as a percentage of 8.S. 9ross omestic &roduct is appro@imately D=ithin 2>E: a. %> -. 1/> c. 1%> d. 2/> e. none of the a-o#e D-F p. 3E 2. Logistics clearly contri-utes to and utility. a. timeF place -. formF time c. placeF form d. possessionF time e. none of the a-o#e DaF p. 4E 3. utility refers to the #alue or usefulness that comes from a customer -eing a-le to ta'e possession of a product. a. Time -. &lace c. 6orm d. &ossession DdF p. 4E 4. utility refers to ha#ing products a#aila-le =here they are needed -y customers. a. &ossession -. Time c. &lace d. 6orm DcF p. %E
%. ll of the follo=ing terms ha#e -een used to refer to -usiness logistics e@cept: a. -usiness logistics -. industrial distri-ution c. logistics management d. physical distri-ution e. all of the a-o#e are correct DeF p. %E $. A(o= =ell a company does =hat it says it;s going to doB represents ^÷½L不M½的øùé . a. efficiency -. producti#ity c. leading edge logistics d. effecti#eness DdF p. $E ,. #ery customer getting the same type and le#els of logistics ser#ice refers to . a. tailored logistics -. mass logistics c. effecti#eness d. efficiency D-F p. ,E ). hich of the follo=ing is not a reason for the increased importance of logistics< a. gro=ing po=er of manufacturers Mƒ„… -. reduction in economic regulation c. glo-ali0ation of trade d. technological ad#ances e. all of the a-o#e are reasons DaF pp. ,1/E +. The concept suggests that there are an e#er5increasing num-er of mar'et segments =ith distinct preferences. a. rhochrematics -. relationship mar'eting c. mar'et demassification d. niche mar'eting DcF p. )E
1/. are characteri0ed -y large mar'et share and lo= prices.
a. Category 'illers -. Mass merchandisers c. &o=er retailers d. o5it5yourself DIE retailers DcF p. 1/E 11. The approach indicates that a company;s o-Hecti#es can -e reali0ed -y recogni0ing the mutual interdependence of maHor functional areas. a. supply chain -. systems c. interfunctionality d. total cost D-F p. 1/E 12. The mo#ement and storage of materials into a firm refers to: a. physical distri-ution N úkžÎ -. materials management Nk£ c. materials handling d. in-ound logistics úΞkN èMû个¶成·¸¹hü¸¹的ûý DdF p. 11E 13. The mo#ement and storage of materials =ithin a firm refers to: a. physical distri-ution -. in-ound logistics c. materials management d. procurement DcF p. 13E 14. Logistics managers use the approach to coordinate in-ound logistics! materials management! and physical distri-ution in a cost efficient manner . a. total cost -. supply chain c. mass logistics d. interfunctional DaF p. 13E
1%. cost trade5off is a situation =here: a. -. c. d.
all costs react according to their indi#idual degrees of inflation in the economy all costs are reflected as a percentage #ariation from standard costs some costs increase! some decrease! and the net effect is that total costs decrease some costs are eliminated -y efficient management controls
DcF p. 13E 1$. The cash flow associated with holding inventory is 'no=n as in#entory . a. turno#er -. #aluation c. stoc' d. float ™Ñþ»、™Ñ>{ DdF p. 14E 1,. The four -asic components of the mar'eting mi@ include all of the follo=ing e@cept: a. &rice -. production c. product d. place D-F p. 14E
4& M price、 promotion、 product、 place
1). refers to one location =here customers can purchase products from t=o or more -rand5 name retailers. a. Intensi#e distri-ution -. Co5-randing c. Co5generation d. Selecti#e distri-ution D-F p. 1%E 1+. Landed costs refer to: a. a product that is shipped #ia surface transport -. a product that is ?uoted cash on deli#ery DC"E c. a prepaid shipment d. a price that includes -oth the cost of the product plus transportation to the -uyer DdF p. 1%E
2/. &hantom freight refers to: a. paying more for transportation than the actual cost -. late shipments c. shipments accepted -y non5certified carriers d. freight that AdisappearsB in transit DaF p. 1$E 21. 6reight a-sorption refers to: a. a special rate to co#er increasing fuel costs
-. rates that are higher than other carriers charge c. the a-ility of card-oard to a-sor- moisture d. transportation payments lo=er than the actual costs incurred to ship the product DdF p. 1$E 22. In 6"J origin pricing! all of the follo=ing are true e@cept: a. prices ?uoted do no include transportation to the consignee -. mar'eters can adopt uniform prices on a regional or national -asis c. consignees must arrange for the transportation of the purchased product d. the seller al=ays recei#es the same net from each sale D-F pp. 1%51$E 23. refers to a situation =here the applica-le charges are paid at the time a shipment is tendered to a carrier. a. 6reight prepaid -. 6reight a-sorption c. &hantom freight d. 6"J origin DaF p. 1$E 24. refers to charges -eing paid at the time of shipment deli#ery. 6reight a-sorption 6reight yield 6reight collect 6"J destination DcF p. 1$E a. b. c. d.
2%. The most common interface between production and logistics generally in#ol#es: the use of plastic #ersus =ood pallets the mode of transportation shipment pricing the length of production runs DdF p. 1)E a. b. c. d.
2$. refers to the delay of #alue5added acti#ities such as assem-ly! production! and pac'aging to the latest possi-le time. ÿ二个Ì产'dE的àÐ a. b. c.
Juilding -loc's eferral emurrage
d. Postponement
DdF p. 1+E
2,. hich of the follo=ing is not part of the mar'eting channel< a. the logistics channel b. the negotiations channel c. the promotion channel d. the finance channel e. all are part of the marketing channel
DeF p. 1+E
2). The o=nership channel consists of all parties e@cept: a. customers b. manufacturers c. =holesalers d. retailers
DaF p. 1+E
2+. The channel handles the physical flo= of product. o=nership negotiations logistics promotions DcF p. 1+E a. b. c. d.
3/. hich channel co#ers the mo#ement of title to the goods< promotions logistics finance o=nership DdF p. 2/E a. b. c. d.
31. is -ringing together similar stoc's from different sources. a. Accumulating b. ssorting c. uditing d. llocating
DaF p. 21E
32. refers to -rea'ing a homogenous supply into smaller lots.
a. Sorting out b. Allocating c. ccumulating d. ssorting
D-F p. 21E
33. Channel intermediaries: assume temporary o=nership of the goods fill niches disappear as the mar'et -ecomes organi0ed tend to lac' focus D-F p. 21E a. b. c. d.
34. The most common logistical intermediary is a: cargo sur#eyor freight for=arder Ñ1Áœ人 freight -ro'er -an' Dfinance companyE D-F p. 22E a. b. c. d.
3%. The most costly logistics acti#ity in many firms is . industrial pac'aging =arehousing management order management transportation management DdF p. 24E a. b. c. d.
True56alse 7uestions 1. -solute and relati#e logistics costs in relation to 9ross omestic &roduct #ary from country to country. DTrueF p. 3E 2. Logistics clearly contri-utes to time and form utility. D6alseF p. 4E 3. The current definition of logistics! as promulgated -y the Council of Supply Chain Management &rofessionals! suggests that logistics is part of the supply chain process. DTrueF p. $E
4. Logistics is only concerned =ith for=ard flo=s! that is! those directed to=ards the point of consumption. D6alseF p. $E %. The purpose of logistics is to ma@imi0e customer ser#ice. D6alseF p. ,E $. In mass logistics! groups of customers =ith similar logistical needs and =ants are pro#ided =ith logistics ser#ices appropriate to those =ants and needs. D6alseF p. ,E ,. Logistical principles apply only to for5profit organi0ations. D6alseF p. ,E ). Mar'et demassification suggests that an e#er5increasing num-er of mar'et segments has distinct preferences. DTrueF p. )E +. The Internet has done little to impro#e logistical effecti#eness and efficiency. D6alseF p. +E 1/. Superior logistics is an essential component of corporate strategies for many po=er retailers. DTrueF p.1/E 11. In-ound logistics refers to the mo#ement and storage of materials into a firm. DTrueF p. 11E 12. &hysical distri-ution is synonymous =ith materials management. D6alseF p. 13E 13. Interfunctional logistics attempts to coordinate in-ound logistics! materials management! and physical distri-ution in a cost efficient manner that supports an organi0ation;s customer ser#ice o-Hecti#es. D6alseF p. 13E 14. The 'ey to the total cost approach is that all rele#ant cost items are considered simultaneously =hen ma'ing a decision. DTrueF p. 13E 1%. The 'ey aspect of the total cost approach is to ma@imi0e customer satisfaction. D6alseF p. 13 E 1$. The finance department tends to measure in#entory in terms of units =hile logistics tends to measure in#entory in terms of its cost #alue. D6alseF p. 14 E 1,. Logistics offers many companies an important route for creating mar'eting superiority. DTrueF p.14E 1). Co5-randing is a retailing strategy that is associated =ith place decisions. DTrueF p. 1%E 1+. Landed costs refer to the price of a product at the source. D6alseF p. 1%E 2/. s a general rule! mar'eters prefer 6"J origin pricing rather than 6"J destination pricing. D6alseF p. 1$E 21. &hantom freight and freight a-sorption are associated =ith 6"J origin pricing. D6alseF p. 1$E 22. Stoc'outs refer to a situation =here a company is out of an item at the same time that there is demand for that item. DTrueF p. 1)E
23. Long production runs sometimes result in e@cessi#e in#entory of products =ith limited demand for them. DTrueF p. 1)E 24. &ostponement is the delay of #alue5added acti#ities such as assem-ly! production! and pac'aging to the latest possi-le time. DTrueF p. 1+E 2%. Most decisions made =ithin channels are for repeat purchases. DTrueF p. 2/E 2$. The negotiations channel is the one =here -uy and sell agreements are reached. DTrueF p. 2/E 2,. The financing channel handles a company;s credit and payment for goods. DTrueF p.2/ E 2). There is no lin'age -et=een the promotions and logistics channel. D6alseF p. 21E 2+. The most significant contri-ution that the logistics channel ma'es to the o#erall channel process is the sorting function. DTrueF p. 21E 3/. The sorting function has four steps. DTrueF p. 21E 31. The sorting function ta'es place -et=een retailers and the consumer. D6alseF p. 21E 32. The retailer is the most important channel intermediary in the o=nership channel. D6alseF p. 21E 33. Intermediaries assume o=nership of goods =hile they;re in the mar'eting channel. D6alseF p. 21E 34. -ro'er is a type of intermediary often associated =ith the negotiations channel. DTrueF p. 24E 3%. d#ertising agencies are a channel intermediary that might -e found in the promotions channel. DTrueF p. 22E 3$. @port management companies are the most common intermediary in the logistics channel. D6alseF p. 22E 3,. In#entory management represents the most costly logistics acti#ity in many organi0ations. D6alseF p. 2,E 3). eturned products represent one type of acti#ity in the logistical channel. DTrueF p. 24E 3+. It is -etter for a logistics manager to -e a generalist rather than a specialist. D6alseF p. 2%E 4/. There are relati#ely fe= opportunities for employment in the logistics sector. D6alseF p. 2%E
&T IO CS S"L8TI"S Cases are included at the end of each chapter. They #ary in length! difficulty! and type of pro-lem addressed! and some students may find them to -e difficult. ll of these cases ha#e -een pre5tested in one or more classes. The ans=ers gi#en here are -ased on =hat =ere considered to -e AcompleteB Dalthough not e@hausti#ely thoroughE student responses. Instructors should de#elop their o=n techni?ues for using the cases. Many can ser#e as the -asis for detailed and lengthy classroom discussions. Many of the cases can -e used for e@amination purposes! although many of the ?uestions ha#e more than one single correct ans=er. &re#ious adopters of our te@t ha#e =ondered a-out an AidealB length for =ritten ans=ers to the #arious case ?uestions. e hesitate to offer such guidance in part -ecause the AidealB length depends on a #ariety of factors. 6or e@ample! if the =ritten ans=ers are a type of Ae@tra creditB that can -e earned! then shorter ans=ers are li'ely prefera-le to longer ones. lternati#ely! if the cases are used for e@amination purposes! then longer ans=ers might -e prefera-le to shorter ones. Se#eral of the cases can -e analy0ed using commonly5used soft=are pac'ages such as @cel and =e suggest that instructors familiari0e themsel#es =ith the soft=are and its application to the rele#ant case G&I" to assigning the case. Such instructor preparation is important and necessary -ecause today;s college student is far more computer literate than in the past. Cases must -e carefully read -ecause 'ey facts may -e hidden. Instructors should clearly indicate ho= much additional data! not in the te@t of the original case! could -e incorporated into each case analysis and its ans=ers. 6or instance! a student =ho has =or'ed in a =arehouse may attempt to reference her or his o=n e@periences in related situations. ns=ers for each ?uestion are included in this section of the manual. It is indicated here alternati#e ans=ers are accepta-le. 6inally! a fe= discussion points the instructor might raise are included for some cases.
CS 151 S8S S"&! IC. 7uestion 1: ssume that you are 6ran' Pohnson;s assistant! and he as's you to loo' into #arious scheduling pro-lems that might occur. List and discuss them. 6irst! e@tra time =ill -e needed to put the dishes in the pac'ages. (o= =ill this affect production schedules< (o= must production and deli#ery -e altered to ensure that all geographic mar'ets! including (a=aii Dif it is to -e included in the TO campaignE! recei#e the same dish items in the same =ee'< In addition! =ill pac'ages ha#e special printing that tell =hat type of dish they contain< If so! there =ill -e pro-lems coordinating the same dishes =ith the same pac'ages. 7uestion 2: hat pac'aging pro-lems! if any! might there -e< ill one pac'age hold all fi#e dishes! or =ill some re?uire a uni?ue pac'age si0e D=hich =ill rule out the proposalE< hat e@ternal changes in printing on the pac'age =ill -e needed< ill the pac'ages safely transport the dishes< ill the changed =eight of pac'ages ha#e an impact on handling! or on transportation costs< 7uestion 3: Many firms selling consumer goods are concerned =ith pro-lems of product lia-ility. oes the dish offer present any such pro-lems< If so! =hat are they< Can they -e accommodated< 6irst! -rea'age. ho reim-urses the customer! =ho pays for soap! and =ho disco#ers -ro'en glass=are inside< If there are deli#ery snags or supply pro-lems! =hat responsi-ility is there to pro#ide consumers =ith dishes they could not o-tain during the promotion< oes the firm;s product lia-ility insurance co#er pro-lems that may occur from the dinner=are promotion< 7uestion 4: Should the e@terior of the Sudsy Soap pac'age -e altered to sho= =hat dish it contains< If so! =ho should pay for the e@tra costs< The pac'age should -e altered e@ternally to remind the customer of the promotion and indicate that there is a free item inside. Jecause the dish5ma'er gets free ad#ertising from the soap pac'ages! they should pay part of the costs. The splitting of these costs is su-Hect to negotiation and =ould depend upon the o#erall agreement -et=een the t=o firms.
7uestion %: ssume that you are another one of Pohnson;s assistants and your principal responsi-ility is managing the in#entories of all the firm;s inputs! finished products! and out-ound in#entories. hat additional =or' =ill the dish proposal cause for you< There might -e a rise in sales! an increased need for all inputs into production! as =ell as need for higher capacity and in#entories. There =ould need to -e an estimate of the possi-le sales increase! demands imposed -y ne= deli#ery re?uirements! and the change in pac'age si0e and =eight. In addition! incoming dishes =ould need to -e monitored! as =ould specially5printed
pac'ages and outgoing pac'aged soap Dclassified -y the type of dish insideE. fter the promotion! -y ho= much! and for ho= long! =ill soap sales decline< 7uestion $: ou are Mr. Jee#er. our staff has gi#en many o-Hections to the dish tie5in proposal! -ut you -elie#e that much of the pro-lem is your staff;s reluctance to try anything inno#ati#e. raft a letter to the company thatGalthough not accepting their proposalGattempts to clarify points that may -e su-Hect to misinterpretation and also ta'es into account some of your staff;s legitimate concerns. Some of the points the letter =ould co#er include: aE If =e cannot fulfill deli#ery on schedule to all mar'ets! to ha#e the dishes in the right place =hen your TO campaign -rea's! are =e lia-le to you< To the customer< -E hat if the dishes -rea' in route from you to us< cE hat ?uality assurance of your dinner=are product can you pro#ide< dE If! for some reason! a customer cannot find pieces for an entire place setting! =ill you supply them missing pieces< t =hat cost< e don;t =ant any -ac'lash against our company and soap product. eE ho pays the freight and insurance charges to get the dishes to our factory< fE ho pays for our increased pac'aging and handling costs< gE ho pays for the increased costs caused -y complications added to our scheduling of out-ound shipments< hE hat is the content of the TO campaign< hat sho=s =ill it appear on< (o= much mention =ill -e made of our product< (o=! if at all! =ill our soap pac'ages -e sho=n on TO< iE ho =ill pay for the redesign of our pac'ages< HE ill there -e import duties on the dinner=are< ill =e -e reim-ursed for paying them< 'E ill you assume any lia-ility in case =e are sued -ecause of something resulting from this promotion<
ISC8SSI" Se#eral instructors use this case early in the course! and then as part of the final e@amination.
CS 152 IIL T( S8& 9M 7uestion 1: List and discuss the ad#antages and disad#antages of purchasing a t=o5=heeled trailer for each store to use for deli#ering Super 9yms. Jecause the stores are in a num-er of states! one =ould ha#e to chec' the motor #ehicle and insurance re?uirements of each state. n ad#antage is that deli#eries =ould -e under the control of each store. disad#antage may -e la-or costs! especially if t=o =or'ers are needed to ma'e the deli#ery. lso! once at the site! the store;s employees might -e as'ed to assist in the assem-ly of the gym. ,/ 家…店Ÿ布i不同的八个州$^c给ê个…店配置一个两轮拖车$f要了解¡个州对 于车辆S«5一个ñËfMê一家…店的Ñd配送ë6够\»+掌握iõö的手ü$一 个弊端¬6fM耗y了Ɇ$L且还J要配备额Î的人†W1送$2ôBCË后$BC ¬6ï要K店员协助¯成!"æ的µ配5
7uestion 2: List and discuss the ad#antages and disad#antages of ha#ing local truc'ing companies deli#er the Super 9ym from the retail stores to the customers. There are pro-a-ly no disad#antages to using a local truc'ing company to ma'e the deli#ery. decision =ould ha#e to -e made ho= to handle the truc'ing firm;s charges. #$+Ñ1;
7uestion 3: List and discuss the ad#antages and disad#antages of stoc'ing Super 9yms at the distri-ution centers and then ha#ing the truc' that ma'e deli#eries from the distri-ution center to the retail stores and also ma'e deli#eries of Super 9yms to indi#idual customers. The pro-lem here focuses on the si0e of e?uipmentF the large tractor5trailer com-inations are not suited to ma'ing home deli#eries. The actual costs to iddieLand of using truc's this =ay might -e #ery high. There might -e some sa#ings in in#entory costs -y stoc'ing the gyms at the distri-ution center rather than at each retail store. #Ñ车5à-%&!"æ.配送ü612ƒ„…店'BCË$7Ç解ª了Ñd84BC ghõö19的()$:M1Ñ的;车
?.的@é$M不Aí—˜B ã—{家C配送的5D且还要EF2G™成·$i配送ü6™H'iƒ„…店™H的成 ·对于¡+ãW.IM不一é的$JK对于L个州W.$-Ñd™Hi配送ü6á6M N成·5
7uestion 4: List and discuss the ad#antages and disad#antages of charging the customer for home deli#ery if they are una-le to carry the Super 9ym home. &erhaps the one ad#antage to charging for home deli#ery is that iddieLand recoups the associated costs. (o=e#er! -ecause charged home deli#ery =ill add to the customer;s total purchase price! there could -e a reduction in demand or this could generate customer dissatisfaction. OPQRÀX.$iddieland .SžBCT要U1y$:¥VI.SW„U^XY4的 …5fZ,W.$úBC[\1y]g^_+ïw少 iddieland 的成·$:M对于x yzW.$y用增À@ÇïÅ”`åJKab$ïÅ”YBicFd的}e$YB¬6 对f的{|Âg不h$.LÅ”BCiw少5
7uestion %: hich alternati#e =ould you prefer< hy<
The student can choose any alternati#e. (o=e#er! the te@t of the case seems to prefer the use of a local truc'ing company and charging the customer for home deli#ery. jc|4¬±ÚÛklmü的两个ín‰W用$^cjIop$+的Ñ1;<2¯í作$Ç后 úYBW[\1yqï^÷rs对于±V的Ñd$t|’u不4X±YBõö¬±19家$; <不vw送Ñ2家的UV58i§Çxyèé5^ct|Ñd84YBz有{hõö19$@ ùfúYBWª«M|ÚÛqÑ1;
7uestion $: raft a -rief statement Dcatalog copyE to -e inserted in the firm;s springsummer -rochure that clearly e@plains to the potential customers the policy that is recommended in ?uestion %. The -rochure is intended for use in all stores! so =hate#er copy is prepared must -e =idely applica-le. sentence might read: AThe Super 9ym comes unassem-led and is pac'ed in three -o@es: one =eighing pounds! is inches -y inches -y inchesF the second =eighs pounds! is inches -y inches -y inchesF and the third =eighs pounds! and is inches -y inches -y inches. ssem-ly re?uires the follo=ing tools: F F F and .B %&!"æS经µ配$Ÿ€´iû个‚ü：ÿ一‚重 KK 'g$ST| KK cm ƒ KK „ …*ÿ二‚重 KK 'g$ST| KK cm ƒ KK „…*ÿû‚重 KK 'g$ST| KK cm ƒ KK „…5 †µ%&!"æJ要±‡ˆ‰：KK$**$ KK5 †µŠ‹：** 7uestion ,: In the first meeting Toth as'ed a-out S8Os -ut there =as no further mention of them. (o= =ould you follo= up on his ?uery< nyone in the group could ans=er that sport utility #ehicles ha#e more carrying capacity than autos and many also ha#e trailer5hitches. S8Os are sufficiently popularGparticularly in the 8nited StatesGthat almost e#ery -uyer of the Super 9ym e?uipment =ould either ha#e a S8O! or -e a-le to -orro= one. S8O iŒ国很E{$它MŠ sport utility #ehicles$-1»RÙ6车$“/于一Ž的车$它 I‰有á:的‘6†$L且很Ù还’有拖车“àµ备5iŒ国它很E{$^cBC’有èé 车辆$@ùHI¬6f¬±õö”!"æ192家ü$:MèMúBCõöÚÛ的不Msj I的–用的lmlM对z有 S8O 的YB的—˜5
&T II SS T" 5"65C(&T 78STI"S C(&T 2: T( S8&&L C(I M9MT C"C&T 1. iscuss the differences -et=een supply chain and supply chain management. supply chain refers to the acti#ities associated =ith the flo= and transformation of goods from the ra= material stage! through to the end user! as =ell as the associated information flo=s. Supply chains are not a ne= concept in the sense that through the years organi0ations ha#e -een dependent on suppliers and organi0ations ha#e ser#ed customers. lthough any
organi0ation can -e part of a supply chain! supply chain management re?uires o#ert management efforts -y the organi0ations in the supply chain. Moreo#er! supply chain management cannot -e successful unless the participating companies adopt an enterprise5to5 enterprise perspecti#e. 2. iscuss the SC" and 9SC6 models of supply chain management. The SC" model identifies fi#e 'ey processesGplan! source! ma'e! deli#er! and returnG associated =ith supply chain management. ach of the fi#e processes indicates the important role of logistics in supply chain management. There are eight rele#ant processes in the 9SC6 modelGcustomer relationship management! customer ser#ice management! demand management! order fulfillment! manufacturing flo= management! supplier relationship management! product de#elopment management! and returns management. Logistics also plays an important role in the supply chain processes in the 9SC6 model. 3. hat are four 'ey attri-utes of supply chain management< The chapter discussed si@ 'ey attri-utes of supply chain management: customer po=erF a long5 term orientationF le#eraging technologyF enhanced communication across organi0ationsF in#entory controlF interorgani0ational coordination. 4. hy do contemporary supply chains need to -e fast and agile< 6irst! AfastB encompasses a timespeed component! =hile AagileB focuses on an organi0ation;s a-ility to respond to changes in demand =ith respect to #olume and #ariety. 6ast and agile are important attri-utes of contemporary supply chains in part -ecause customer needs and =ants change relati#ely ?uic'ly. Failure to be fast and agile can result in decreased market share, reduced profitability, lower stock price, and/or dissatisfied customers for supply chain participants.
%. hat is the difference -et=een relational and transactional e@changes< hich is more rele#ant for supply chain management< hy< Relational echanges tend to emphasi!e a long"term orientation! =hile transactional echanges have a short"term orientation. 8nli'e transactional e@changes! relational e@changes are
characteri0ed -y attri-utes such as trust! commitment! and dependence! among others. Supply chain management suggests that supply chains e@ist to impro#e the long5term performance of the indi#idual companies and the supply chain as a =hole. Relational echanges also have a long"term orientation. As a result, relational echanges are more relevant than transactional echanges to supply chain management.
$. This chapter suggests that technology has -een at the center of changes ta'ing place that affect the supply chain. o you agree or disagree< hy< lthough students can support either side of the argument! the te@t does argue that technology has -een at the center of changes ta'ing place that affect the supply chain. In particular! increases in computing po=er and the Internet ha#e -een -ehind much of this change.
,. iscuss the impact of the Internet on supply chain management. The Internet can facilitate supply chain effecti#eness and efficiency -y pro#iding opportunities to simultaneously impro#e customer ser#ice and reduce logistics costs. The Internet allo=s one supply chain party to ha#e #irtually instantaneous #isi-ility to the same data as do other supply chain participants. This can ultimately result in lo=er in#entories and impro#ed profita-ility throughout the supply chain. ). iscuss some of the =ays that in#entory can -e reduced in the supply chain. ays to reduce in#entory in the supply chain include! -ut are not limited to! smaller! more fre?uent ordersF the use of premium transportationF demand5pull Dthin' of ell ComputersE! as opposed to supply5push! replenishmentF the elimination or consolidation of slo=er5mo#ing products. +. o you agree that supply chain colla-oration can -e classified as transactional! tactical information sharing! or strategic in nature< hy< Students could argue that supply chain colla-oration is not transactional! tactical information sharing or strategic in nature! -ut the te@t argues for this classification scheme.
1/. (o= might regulatory and political conditions act as -arriers to supply chain management< ith respect to regulatory conditions! a num-er of today;s supply chain arrangements =ere illegal until the early 1+)/s. t a minimum! companies should -e a=are of regulatory considerations -efore pursuing supply chain arrangements. &olitical conditions such as =ar and go#ernmental sta-ility can also act as -arriers to supply chain management. ar! for e@ample! could easily disrupt =ell5esta-lished supply chains. 9o#ernment policies that either discourage interorgani0ational coordination or discourage doing -usiness =ith certain countries =hich =ould ha#e a negati#e impact on supply chain efficiency. 11. hy is top management commitment necessary for successful supply chain management< Top management has the a-ility to allocate the necessary resources for supply chain endea#ors and top management has the po=er to structure! or restructure! corporate incenti#e policies to focus on achie#ing organi0ational or interorgani0ational Das opposed to functionalE o-Hecti#es. 12. Some companies are hesitant to use fre?uent shopper cards -ecause the data pro#ided could #iolate the customer;s pri#acy. o you agree or disagree< hy< lthough either ans=er is accepta-le! the ?uestion of data usage #ersus customer pri#acy has generated impassioned discussions -y students. "n the one hand! the fre?uent shopper cards can pro#ide a plethora of data a-out the shopping ha-its of particular consumers! potentially allo=ing stores to achie#e customi0ed mar'eting for indi#idual customers. t the same time! fre?uent shopper cards could #iolate customer pri#acy in the sense that certain customers might
-e uncomforta-le that stores ha#e access to such detailed data a-out them! particularly if the data includes fre?uent purchases of potentially Aem-arrassingB products De.g.! la@ati#esE. 13. iscuss the -est of -reed and single integrator approaches. In a single integrator approach! all rele#ant soft=are applications De.g.! in#entory management! transportation management! =arehouse management! etc.E are pro#ided -y a single #endor. "ne ad#antage of this approach is that there should -e coordination across the #arious applications. lternati#ely! a -est of -reed approach chooses the -est application for a particular function and this approach often re?uires additional soft=are pac'ages to coordinate the different applications.
14. o you thin' corporate cultures are rele#ant for supply chain management< hy or =hy not< gain! either ans=er is ade?uate. (o=e#er! the te@t indicates that incompati-le corporate cultures could present potential o-stacles to effecti#e and efficient supply chain management. In addition! manifestations of corporate cultures! such as company rituals! company -rochures! and the li'e! can pro#ide important clues a-out the a-ility of potential supply chain parties to =or' together. 1%. hy is supply chain integration so difficult in glo-al supply chains< Integration challenges in glo-al supply chains include cultural! economic! technological! political! spatial! and logistical differences. 9lo-al supply chains translate into -oth longer! and more unpredicta-le! lead times for shipments! =hich increases the chances that customer demand might not -e fulfilled due to a potential out5of5stoc' situation. 1$. iscuss the three primary methods that organi0ations can use to integrate their supply chains. "ne method is #ertical integration! in =hich one organi0ation o=ns multiple participants in the supply chain. Sher=in5illiams! for e@ample! is a paint manufacturer and also o=ns retail paint stores. second method in#ol#es formal contracts among #arious participants! such as occurs =ith franchising. The third method focuses on informal agreements among #arious organi0ations to pursue common goals and o-Hecti#es. This option pro#ides a great deal of fle@i-ilityG=hich can ha#e -oth positi#e and negati#e aspects. 1,. iscuss the factors that distinguish contemporary third5party logistics from earlier types of third5 party logistics. 6or one! there tend to -e formal contracts Dgenerally 3% yearsE -et=een pro#iders and users. Contemporary third5party logistics also tends to -e characteri0ed -y a relational focus! an emphasis on mutual -enefits! and the a#aila-ility of customi0ed Das opposed to standardi0edE offerings. In short! contemporary third5party logistics has a decidedly long5term outloo'! as opposed to Ashopping aroundB for the -est deal at the present time. 1). hat are some reasons for using third5party logistics ser#ices< hat are some reasons that third5 party logistics arrangements aren;t al=ays successful<
The decision to use third5party logistics ser#ices can -e dri#en -y strategic considerations in the sense that an organi0ation -elie#es that one or more aspects of its supply chain needs to -e transformed. lternati#ely! the decision to use 3&L ser#ices could -e more tactical in natureF an organi0ation might ha#e an inefficient distri-ution net=or' as =ell as an ina-ility to control costs! among other reasons. easons for unsuccessful 3&L arrangements include unreasona-le and unrealistic e@pectations and a lac' of fle@i-ility. 1+. o you agree or disagree =ith the sentiment that fourth5party logistics companies Dlead logistics pro#idersE merely add unnecessary cost and fe= ser#ice impro#ements to supply chains< hy< ither ans=er is accepta-le. Jecause fourth5party logistics is a relati#ely ne= concept! it may -e too early to ha#e a good idea as to the ultimate roleDsE that these intermediaries =ill play in effecti#e and efficient supply chains. Their usefulness could -e limited if they continue to -e -est suited to large companies =ith glo-al supply chains. 2/. iscuss the #arious types of supply chain soft=are. Some soft=are pac'ages focus on specific functional areas such as re#erse logistics! transportation! =arehousing! or in#entory management. "ther soft=are pac'ages focus on specific supply chain processes such as customer relationship management or colla-orati#e planning! forecasting! and replenishment. Still other pac'ages attempt to simultaneously optimi0e supply chain processes across organi0ations.
&T III KMITI" 78STI"S C(&T 2: T( S8&&L C(I M9MT C"C&T Multiple Choice 7uestions 1. ccording to &rofessor Ment0er and colleagues! the supply chain concept originated in =hat discipline< a. mar'eting -. operations c. logistics d. production DcF p. 33E 2. The supply chain management philosophy emerged in =hich decade< a. 1+$/s -. 1+,/s c. 1+)/s d. 1++/s DdF p. 33E 3. encompasses all acti#ities associated =ith the flo= and transformation of goods from the ra= material stage! through to the end user! as =ell as the associated information flo=s. a. production line -. supply chain c. mar'eting channel d. =arehouse D-F p. 34E 4. lthough nearly any organi0ation can -e part of a supply chain! supply chain management re?uires: a. the in#ol#ement of third5party logistics companies -. o#ert management efforts -y the organi0ations in a supply chain c. the participation of =orld5class organi0ations d. at least one organi0ation to -e a multinational company D-F p. 3%E
%. T=o of the most prominent supply chain management frame=or's are the Supply5Chain "perations eference DSC"E model and the model. a. Council of Supply Chain Management &rofessionals DCSCM&E -. Supply Chain fficiency DSCE
c. 9lo-al Supply Chain 6orum D9SC6E d. &enn State 8ni#ersity D&S8E DcF p. 3%E $. hich of the follo=ing is not one of the processes in the SC" model< a. sell -. plan c. ma'e d. return DaF p. 3%E ,. The current 9lo-al Supply Chain 6orum D9SC6E model identifies 'ey processes associated =ith supply chain management. a. fi#e -. si@ c. se#en d. eight DdF p. 3%E ). hich of the follo=ing are not 'ey attri-utes of supply chain management< a. in#entory control -. le#eraging technology c. customer po=er d. a long5term orientation e. all are 'ey attri-utes DeF p. 3$E +. Contemporary supply chains should -e fast and . a. lean -. agile c. interacti#e d. rele#ant D-F p. 3,E
1/. Contemporary supply chains should -e agile and . a. fast -. lean c. interacti#e d. rele#ant DaF p. 3,E
11. n organi0ation;s a-ility to respond to changes in demand =ith respect to #olume and #ariety refers to . a. responsi#eness -. leanness c. agility d. rele#ancy DcF p. 3,E 12. hat is a perfect order< a. simultaneous achie#ement of rele#ant customer metrics -. an order that arri#es on time c. an order that arri#es undamaged d. an order that is easy for the recei#er to fill DaF p. 3)E 13. hich of the follo=ing is not associated =ith relational e@changes<长™的Ž ¡š›¥间要 a. independence -. trust c. commitment d. shared -enefits DaF p. 3)E 14. &ositi#e! long5term relationships -et=een supply chain participants refer to: a. co5opetition -. tailored logistics c. partnerships d. supply chain management DcF p. 3)E
#$. ccording to
the te@t! has -een at the center of the changes ta'ing place that affect the supply chain. a. logistics -. =arehousing c. technology d. customer po=er DcF p. 3)E
#%. The t=o 'ey factors that ha#e spar'ed much of the technological change affecting supply chains are
and .
a. IF & -. Computing po=erF & c. IF Internet d. Computing po=erF Internet DdF p. 3)E #&. The bullwhip effect'
a. is an ineffecti#e =ay to moti#ate =arehouse employees -. applies to rodeos and has nothing to do =ith supply chain management c. refers to the As=ayingB motion associated =ith triple trailers d. refers to variability in demand orders among supply chain participants
DdF p. 3+E
#(. The #aria-ility in demand orders among supply chain participants:
a. cannot -e controlled -. refers to the -ull=hip effect c. can -e controlled =ith electronic order placement d. is more pronounced in relational e@changes D-F p. 3+E #). hich of the follo=ing is not a =ay to reduce in#entory le#els<
a. supply5push replenishment -. smaller! more fre?uent orders c. use of premium transportation d. elimination of slo=er mo#ing products DaF p. 3+E
*+. ooperative supply chain relationships developed to enhance the overall business performance of both parties is a definition of'
a. third5party logistics -. supply chain colla-oration c. do#etailing d. relationship mar'eting D-F p. 41E *#. Supply chain colla-oration can -e classified as transactional! strategic! or in nature.
a. operational -. superorgani0ational c. managerial d. tactical information sharing DdF p. 41E
**. colla-orations offer the
-est opportunity for impro#ing supply chain performance.
a. Transactional -. Strategic c. Tactical information sharing d. "perational D-F p. 41E *-. hich of the follo=ing is false<
a. top management commitment is essential if supply chain efforts are to ha#e any chance of success -. some companies are uncomforta-le =ith the concept of customer po=er in supply chains c. senior management commitment to supply chain management occurs in one of every two organi!ations
d. some companies are hesitant to enter into long5term relationships -ecause such relationships might -e percei#ed as limiting a company;s operational fle@i-ility e. all are true statements DcF p. 42E
*. hich of the follo=ing is not a -arrier to supply chain management<
a. regulatory and political considerations -. lac' of top management commitment c. reluctance to share! or use! rele#ant data d. incompati-le corporate cultures e. all are -arriers DeF pp. 4244E *$. ata mining:
a. is illegal in the 8nited States -. is synonymous =ith marginal analysis c. loo's for patterns and relationships in rele#ant data d. can only -e done -y grocery stores DcF p. 43E *%. Loo'ing for patterns and relationships in rele#ant data refers to:
a. -. c. d.
data =arehousing marginal analysis correlation analysis data mining
DdF p. 43E *&. In aDnE approach! all rele#ant soft=are applications are pro#ided -y a single #endor.
a. single integrator -. capti#e customer c. information outsourcing d. customer centric DaF p. 43E *(.
refers to Aho= =e do things around hereB and reflects an organi0ationQs #ision! #alues! and strategic plans. a. Supply chain management -. "rgani0ational -eha#ior c. mission statement d. Corporate culture DdF p. 43E
*). hich of the follo=ing is not a routine occurrence in glo-al supply chains<
a. documentation errors -. incomplete shipments c. pac'aging errors d. failure to follo= order guidelines e. all of the a-o#e are routine occurrences DeF p. 44E -+. Supply
chains can -e integrated -y ha#ing #arious parties enter into and carry out long5term mutually -eneficial agreements. These agreements are 'no=n -y se#eral names. hich of the follo=ing is not one of these names< a. partnerships -. strategic alliances c. third5party arrangements d. contract logistics e. all of the a-o#e are correct DeF p. 44E
-#. There
are three primary methods that organi0ations can pursue =hen attempting to integrate their supply chains. hich of the follo=ing is not one of them< a. -. c. d.
#ertical integration intensi#e distri-ution formal contracts informal agreements
D-F p. 4%E -*. ll
of the follo=ing are factors that distinguish contemporary third5party logistics from earlier efforts e@cept: a. there tends to -e a formal contract in contemporary 3&L -. contemporary 3&L focuses on customi0ed offerings c. contemporary 3&L has a transactional focus d. contemporary 3&L focuses on mutual -enefits DcF p. 4$E
--. hich of the follo=ing statements is true<
a. 3&L ser#ices are not used outside of estern urope and orth merica -. The decision to use third5party logistics can only -e strategic in nature c. Contemporary 3&L -egan to emerge in the 1+,/s d. common cause of 3&L failure is unreasona-le and unrealistic e@pectations e. one of the a-o#e are true DdF pp. 4$54,E -. hat is a fourth5party logistics pro#ider< a. a third5party logistics pro#ider that has -een in e@istence for at least 2% years -. a third5party logistics pro#ider that has achie#ed IS" +/// certification c. a logistics intermediary that speciali0es in one logistics acti#ity De.g.! transportation! =arehousingE d. a general contractor that coordinates the acti#ities of third5party logistics pro#iders DdF p. 4,E -$. hich of the follo=ing statements a-out supply chain soft=are is false<
a. many supply chain soft=are pac'ages are developed for specific! rather than general! applications 还z2时间 -. supply chain soft=are pac'ages can focus on specific functional acti#ities such as transportation and =arehousing c. supply chain soft=are pac'ages can focus on specific supply chain processes such as customer relationship management d. supply chain soft=are pac'ages can attempt to simultaneously optimi0e supply chain processes across organi0ations e. all are true DaF p. 4)E True56alse 7uestions 1. The supply chain concept originated in the logistics literature. DTrueF p. 33E 2. Customers are not included as part of supply chains. D6alseF p. 34E
3. Supply chain management re?uires o#ert management efforts -y the organi0ations =ithin the supply chain. DTrueF p.3%E 4. T=o of the more prominent supply chain management frame=or's are the Supply5Chain "perations eference DSC"E and 9lo-al Supply Chain 6orum D9SC6E models. DTrueF p. 3%E %. The SC" model identifies four 'ey processes associated =ith supply chain management. D6alseF p. 3%E $. Jecause customer needs and =ants change relati#ely ?uic'ly! supply chains should -e fast and lean. D6alseF p. 3,E ,. ith respect to supply chains! rele#ancy focuses on an organi0ation;s a-ility to respond to changes in demand =ith respect to #olume and #ariety. D6alseF p. 3,E ). perfect order simultaneously achie#es rele#ant customer metrics. DTrueF p. 3)E +. Supply chains should employ a long5term orientation =ith #arious participants. DTrueF p. 3)E 1/. elational e@changes cannot -e successful =ithout information sharing among #arious participants. DTrueF p. 3)E 11. &o=er retailers ha#e -een at the center of changes ta'ing place that affect the supply chain. D6alseF p. 3)E 12. The Internet has -een referred to as the greatest force of commodi0ation 'no=n to man! for -oth goods and ser#ices. DTrueF p. 3+E 13. nhanced communications across organi0ations in a supply chain is only dependent on the technological capa-ilities of the organi0ations. D6alseF p. 3+E 14. Oaria-ility in demand orders among supply chain participants is 'no=n as the bubble effect. D6alseF p. 3+E 1%. In#entory control in supply chain management is attempting to mo#e from Astops and startsB to continuous flo=. DTrueF p. 3+E 1$. Supply chain disruptions De.g.! terrorist attac's! natural disastersE ha#e caused some supply chains to reassess their emphasis on in#entory reduction. DTrueF p. 4/E 1,. s a general rule! supply chain colla-oration is =idely and successfully applied. D6alseF p. 41E 1). Tactical information sharing offers the -est opportunity for impro#ing supply chain performance. D6alseF p. 41E 1+. egulatory considerations present a -igger o-stacle than political considerations to supply chain management. D6alseF p. 42E
2/. The o#erall glo-al climate climate for -usiness has shifted to=ard allo=ing allo=ing more cooperation cooperation among firms G=hich should help supply chain management. DTrueF p. 42E 21. Top management is sometimes hesitant to fully commit commit to supply chain management. DTrueF DTrueF p. 42E 22. ctual ctual senior management commitmen commitmentt to supply chain chain management occurs in one of e#ery t=o organi0ations. D6alseF p. 42E 23. "ne cause of the -ull=hip -ull=hip effect is asymmetrical asymmetrical information information among supply chain participants. participants. DTrueF p. 43E 24. ata ata =arehou =arehousin singg is a techni techni?ue ?ue that loo's loo's for patterns patterns and relation relationship shipss in the rele#ant rele#ant data. D6alseF p. 43E 2%. lthough customer loyalty programs De.g.! fre?uent shopper cardsE can pro#ide highly highly detailed data to companies! there are some =ho -elie#e that these programs potentially #iolate a customer;s right to pri#acy. DTrueF p. 43E 2$. Today oday! comput computer er hard=are hard=are is a larger larger -arrie -arrierr than than comput computer er soft=are soft=are to interor interorgani gani0at 0ation ional al colla-oration. D6alseF p. 43E 2,. -est5of5-reed -est5of5-reed approach chooses the -est soft=are soft=are application application for a particular particular function. DTrueF DTrueF p. 43E 2). Corporate cultures should not -e considered =hen designing a supply chain. chain. D6alseF p. 43E 2+. Supply chain chain integration integration tends to -e more challenging challenging in glo-al! glo-al! as opposed to domestic! domestic! supply chains. DTrueF p. 44E 3/. n indi#idual firm can only -e in#ol#ed in in one supply chain at a time. D6alseF p. 44E 31. Oertica erticall integra integratio tionn is one of the methods methods that organi organi0at 0ation ionss can pursue pursue =hen =hen attemp attemptin tingg to integrate their supply chains. DTrueF p. 4$E 32. Contemporary third5party logistics has e@isted since a-out 1+,%. D6alseF p. 4$E 33. Contem Contempora porary ry third5p third5part artyy logist logistics ics tends tends to -e charact characteri eri0ed 0ed -y standar standardi0 di0ed! ed! as opposed opposed to customi0ed! offerings. D6alseF p. 4$E 34. Indications Indications are that third5party third5party logistics =ill -ecome increasingl increasinglyy important in parts of the =orld such as astern urope and sia. DTrueF p. 4$E 3%. Shipment Shipment routing and re#erse logistics logistics are common common acti#ities acti#ities demanded demanded -y third5party third5party logistics customers. D6alseF p. 4$E 3$. Th Thee deci decisi sion on to use use thir third5p d5par arty ty logi logist stic icss compa compani nies es can can -e dri#e dri#enn -y stra strate tegi gicc or tact tactic ical al considerations. DTrueF pp. 4$54,E
3,. fourth5pa fourth5party rty logistic logisticss pro#id pro#ider er should should -e #ie=ed #ie=ed as a compan companyy =hose =hose primar primaryy purpose purpose is to insure that third5party logistics pro#iders are =or'ing to=ard rele#ant supply chain goals. DTrueF p. 4,E 3). The fourth5party fourth5party logistics concept appears to -e -est suited suited to small companies companies that need logistical assistance in only one or t=o functional areas. D6alseF p. 4,E 3+. s a general general rule! supply supply chain chain soft=ar soft=aree pac'age pac'agess loo' loo' to coordi coordinat natee and integr integrate ate functions! functions! processes! andor systems across acr oss multiple supply chain participants. DTrueF p. 4,E 4/. The supply chain soft=are soft=are mar'et has -een characteri0ed characteri0ed -y a great deal of consolidation consolidation in recent years. DTrueF p. 4)E
&T IO CS S"L8TI"S CS 251 P"(S" T" C"M& 7uestion 1: 6rom the standpoint of an indi#idual concerned =ith accounting controls! discuss and e#aluate Pohnson Toy Company;s present policies for handling returned items. The controls are poor from the standpoint of accuracy of financial records! -ecause they pro#ide poor information to management. 7uestion 2: ns=er ?uestion 1! -ut from the standpoint of an indi#idual interested in mar'eting. Mar'eting people tend to fa#or less stringent controls in the sense that they pro#ide more fle@i-ility =hen -argaining =ith retailers. 7uestion 3: &ropose a policy for handling returns that should -e adopted -y the Pohnson P ohnson Toy Toy Company. Je certain to list circumstances under =hich e@ceptions =ould -e allo=ed. Should it apply to the Pungle Pim dolls< "ne student;s ans=er is reproduced here. I.
(I9( (I9( O"L8 O"L8M M C8ST C8ST"M "M SS Dde Ddefi fine nedd as as purc purcha hasi sing ng R,%!/ R,%!/// // of merch merchan andi dise se from from Pohnson;s per yearE . 6unctionall 6unctionallyy damaged goods may -e returned returned to Pohnson; Pohnson;ss plant at Pohnson; Pohnson;ss e@pense =ith a full refund. J. (igh #olume #olume customers customers =ill recei#e recei#e a straight 2> deducti deduction on off of the =holesale =holesale selling price to co#er defecti#esG=hether defecti#es are classified as cosmetically damaged or slo= mo#ing items! e@cept =hen una-le to sell due to special circumstances Dsee Section IIIE.
I I.
L" O"L8M C8ST"MS . 6unctionall 6unctionallyy damaged goods may -e returned returned to Pohnson; Pohnson;ss plant #ia Pohnson; Pohnson;ss salesperson =ith a full refund. J. Lo= #olume #olume customers customers =ill "T recei#e recei#e an automatic automatic deduction deduction for defecti#es. defecti#es. Instead! the damage or defect must -e defined: 1. Cosmeticall Cosmeticallyy damaged damaged goods Dclassified Dclassified as functiona-le functiona-le and sella-le sella-leE: E: a 2%> discount granted upon inspection -y Pohnson;s salesperson. 2. Slo= Slo= mo#i mo#ing ng item items: s: " T T8 8S S 3. on5mo#ing on5mo#ing items items Dfor reasons other than than physical physical damageE: damageE: see special special circumstances! Section IIIE
III.
S&CIL S&CI L CIC8MS CIC8MST TCS CS hen hen produc productt is is not resella resella-le -le for reasons reasons other other than than -eing functionally damaged or Hust a slo= mo#er in the off season! such s uch as =hen the product recei#es -ad press Das D as in the case of Pungle Pim and Pogger ollsE! Pohnson =ill allo= return of all such non5resella-le items under the follo=ing conditions: . etailer etailer must pay for the returned returned merchandise merchandise to reach Pohnson; Pohnson;ss plant. J. etailer;s etailer;s account account =ill =ill -e credited credited for the full full amount amount of said purchase. purchase. C. Credit is to -e used used =ithin 3/ days of receipt receipt of returned returned goods at Pohnson;s Pohnson;s plantF plantF credit =ill -e #oid after 3/ days.
o mention =as made as to =hether it should apply to the Pungle Pim dolls. The firm might try to enforce it -ut customers might complain that it should not -e applied retroacti#ely. 7uestion 4: Should this policy! if adopted! -e printed and distri-uted to all of the retailers =ho handle Pohnson Toy Company products< hy or =hy not< If it should not -e distri-uted to them! =ho should recei#e copies< es! retailers should 'no= 'no = e@actly =hat the returns policy =ill -e. "ne element of a customer ser#ice policy is to let customers 'no= in ad#ance =hat the policy is. 7uestion %: ssume that it is decided to prepare a statement on returns to -e distri-uted to all retailers and that it should -e less than a single dou-le5spaced page. &repare such a statement. The ans=er pro#ided for ?uestion 3 =ould suffice here as =ell. 7uestion $: "n the -asis of the policy in your ans=er to ?uestion 3! de#elop instructions for the Pohnson Toy Company distri-ution and accounting departments =ith respect to their roles and procedures in the handling of returns. return s. "ne could ta'e the information as de#eloped in ans=ers 3 and %! and draft a memo to -e sent to -oth the distri-ution and accounting departments! telling them of the ne= policies! and their roles in carrying them out. The accounting department should -e told to de#elop additional procedures that =ill protect against fraud. In addition! other departments in the firm should recei#e some information concerning the returns! -ecause they may contain information that should interest mar'eting! ?uality control and production scheduling. 7uestion ,: ssume that you are Cheryl 9uridi! the firm;s logistics manager. o you thin' that the returns policy fa#ored -y the logistics manager =ould differ from =hat =ould -e -est for the firm< hy or =hy not< es! the returns policy p olicy fa#ored -y the logistics manager =ill fa#or a tight return policy so that her department does not ha#e to -e responsi-le for 'eeping trac' of returned in#entories! and for shipping damaged goods. The firm =ould pro-a-ly prefer a looser return policy so that it could -e used as a -argaining tool to increase sales. 7uestion ): 8ntil the policy you recommend in your ans=er to ?uestion 3 ta'es effect! ho= =ould you handle the immediate pro-lem of retailers =anting to return unsold Pungle Pim the Pogger dolls<
There are se#eral approaches to this ?uestion. Some students ha#e pro#ided #ery specific policies. "thers ha#e said that -ecause the policy =as not no t in effect =hen the Pungle Pim dolls =ent out! it should not apply to their situation. This latter group fa#ored a policy of Aalmost anythingB that =ould 'eep retailers happy. They arguedG=ith support from the case materialG that there =ere a num-er of #alued long5term relationships =ith retailers that should not -e harmed.
CS 252 "M" 9"C J8S; C""&TIO 7uestion 1: Co5op mem-ers presently pay for goods Aon the -asis of cost to the co5op plus 23> to co#er =arehousing and transportation from the =arehouses to the mem-ers; retail stores.B Is this a fair =ay to co#er =arehousing costs< Can you thin' of a -etter =ay< If so! descri-e it. This system pro-a-ly fa#ors the stores that ha#e smaller order si0es and higher transportation costs to reach. AJetterB may or may not -e the issueF it is only if one thin's that the rates should -e cost5oriented. 7uestion 2: ns=er the pro-lem posed in ?uestion 1 =ith respect to transportation costs. The pre#ious ans=er is applica-le here. If one =anted rates oriented to=ard transportation costs! they might de#ise a method that ta'es into account tonnages carried and distances tra#eled. 7uestion 3: To=ard the end of the case! Jright descri-ed ho= some manufacturers pay -ri-es to get shelf space in retail stores. Should retailers accept such -ri-es< hy or =hy not< The -ri-es are paid in t=o =ays. "ne is a gift of additional merchandise to -e sold! =hich merely lessens the store;s cost of goods purchased. This is sometimes called a Astoc'ing allo=ance.B The other =ay is cash paid to salaried employees! =hich they =ould pro-a-ly poc'et. The first method is a fairly common practiceF the second method =ould -e #ie=ed -y many as =rong and thus should -e discouraged. 7uestion 4: The case says! AStores =ere responsi-le for placing orders =ith the co5op! although a co5op representati#e =ould call on a =ee'ly -asis! and one of herhis functions =as to help some store operators complete their order forms.B Is this a function that the co5op should -e performing< hy or =hy not< It;s a =ay for the co5op to help some of its mem-ers and it also helps to 'eep certain stores loyal to the co5op. 8nless the co5op;s -oard adopts a policy against the practice! then there;s nothing =rong =ith it. The practice can -e #ie=ed as a form of customer ser#ice. 7uestion %: The case mentions that some of the larger stores that -elonged to the co5op sometimes threatened to form their o=n co5op. ssume that you are hired -y some of them to study the feasi-ility of such a mo#e. List the #arious topics that you =ould include in your study. "ne could loo' at all the elements in the distri-ution system needed to ser#e the larger co5ops: =arehousing! transportation! in#entories! order management! etc. Then one =ould determine the costs ser#ing the larger co5ops and compare these costs to =hat is presently offered -y yomo. This is an area =here ?uantity discounts are important: can the ne= co5op earn large enough discounts on =hat it -uys to ha#e some maHor sa#ings< 7uestion $: (o= =ould you #ote on (ardy;s motion< hy< student can #ote either =ay! although free0ing the num-er of S8s may force the larger mem-ers to lea#e the co5op.
7uestion ,: ould it ma'e a difference =hether you represented a large or small store< hy< Small stores =ould pro-a-ly fa#or the resolution! unless they reali0ed that e@pansion =as necessary for the sur#i#al of the co5op. If they lose their larger mem-ers! many costs per unit may increase. 7uestion ): re there other strategies that the co5op might pursue to o#ercome this pro-lem< If so! descri-e. They could get additional product space for some product lines! or arrange to ha#e some large #olume orders deli#ered directly to stores! -ypassing the =arehouse. &T II SS T" 5"65C(&T 78STI"S C(&T 3: L"9ISTICS I6"MTI" TC("L"9 1. In =hat =ays can information -e helpful in logistics and supply5chain management< There are a num-er of =ays in =hich information can -e helpful in logistics and supply5chain management. These include! -ut are not limited to! greater 'no=ledge and #isi-ility across the supply chain! =hich ma'es it possi-le to replace in#entory =ith informationF greater a=areness of customer demand #ia point5of5sale data! =hich can help impro#e planning and reduce #aria-ility in the supply chainF -etter coordination of manufacturing! mar'eting! and distri-ution through enterprise resource planning toolsF more streamlined order processing and reduced lead times ena-led -y coordinated logistics information systems. 2. iscuss ho= your fa#orite store su-stitutes information for in#entory. There are a num-er of ans=ers to this ?uestion. The -oo' mentions that se#eral 8.S.5-ased grocery chains ha#e studied (ispanic customers and learned that they place greater emphasis on fresh produce than do other ethnic groups. s a result! grocery stores located in hea#ily (ispanic areas often stoc' more fresh produce than to grocery stores located in other areas. 3. ame the si general types of information systems! and gi#e one logistics application for each one that you;#e named. "ne type is office automation systems! and a logistics application could -e spreadsheets that calculate optimal order ?uantities. second is communication systems one logistics e@ample is #oice5-ased order pic'ing. Transaction processing systems are a third general type! =ith point5 of5sale systems -eing a logistics application. 0anagement and eecutive information systems are a fourth general type of information systemsF a logistics application in#ol#es logistics information systems. fifth general type of information system is decision support systems, =ith =arehouse management systems -eing a logistics5related application. The si@th! and final! general type of information system is the enterprise system, represented -y logistics modules of enterprise resource planning systems.
4. o you #ie= the spreadsheet as the most rele#ant general soft=are pac'age for logisticians< hy or =hy not< The te@t indicates that spreadsheets are indeed the most rele#ant general soft=are pac'age for logisticians. Today;s spreadsheets allo= managers to sol#e a #ariety of -usiness pro-lems relati#ely ?uic'ly and ine@pensi#ely. ey logistics pro-lems that can no= -e analy0ed -y spreadsheets include transportation cost minimi0ation and the optimal num-er of =arehouse locations. %. (o= did communication systems facilitate logistics management in the immediate aftermath of situations such as terrorist attac's and natural disasters< "ne e@ample in#ol#es the su-stitution of information for in#entory. The total shutdo=n of the 8.S. a#iation system follo=ing the terrorist attac's of Septem-er 11! 2//1 caused many air shipments to -e di#erted to truc'sGthus adding to deli#ery times. ir5freight companies such as 6ed@ used their communication systems to inform customers that their shipments =ere -eing di#erted and =hen the shipments =ould -e arri#ing. $. hat ad#ances in telecommunications technology do you #ie= as -eing most -eneficial to logistics management< hy< The ans=er to this ?uestion is li'ely to #ary from student to student. Certainly cell phones! e5 mail! and =ireless communications =ould -e popular choices. ,. iscuss ho= =ireless communications can impro#e logistical effecti#eness and efficiency. 9lo-al positioning systems! for e@ample! allo= customers to ha#e real5time #isi-ility in terms of shipment locations and these systems also allo= transportation companies to 'eep -etter trac' of their #ehicles. Ooice5-ased order pic'ing is another =ireless technology that offers the opportunity for increased =or'er producti#ity and higher pic' accuracy. ). iscuss the -enefits and dra=-ac's of I. &otential -enefits to I include reductions in: document preparation and processing timeF in#entory carrying costsF personnel costsF information floatF shipping errorsF returned goodsF lead timesF order cycle timesF and ordering costs. In addition! I may lead to increases in: cash flo=F -illing accuracyF producti#ityF and customer satisfaction. &otential dra=-ac's include a lac' of a=areness of its -enefitsF high setup costsF lac' of standard formatsF and incompati-ility of computer hard=are and soft=are. +. o you -elie#e that I is a #ia-le technology for contemporary logistics management< Support your ans=er. lthough other technologies such as the Internet and KML offer great promise for logisticians! I is li'ely to continue as a #ia-le technology in part -ecause it reduces costs associated =ith in#entory! order management! and transportation. Indeed! I has increased in popularity in the early years of the 21st century. Moreo#er! there are suggestions that the Internet =ill -e a complement to! rather than a su-stitute for! I.
1/. iscuss the relationship -et=een automatic identification technologies and point5of5sale systems. The idea -ehind point5of5sales D&"SE systems is to provide data and enhance managerial decision making, and automatic identification technologies can -e #ery helpful in so doing. t the present time! &"S systems in#ol#e scanning uni#ersal product codes D8&CE! and these data are recorded into a data-ase that supplies information such as the product;s price! applica-le ta@es! and so on. The specific price for each product! as =ell as a description! is flashed on a monitor screen near the chec'5out counter. hen all products ha#e -een scanned! the customer recei#es #erification that lists the products purchased! their respecti#e prices! and the total -ill. 11. hy are some companies hesitant to adopt 6I technology< "ne prominent dra=-ac' to 6I in#ol#es pri#acy concerns such as the inappropriate use of technology. nother dra=-ac' to the =idespread adoption of 6I is the costs of installing 6I5related hard=are and soft=are! particularly the cost of 6I tags DchipsE. 12. iscuss the importance of timely and accurate information to a logistics information system. Timely information can in#ol#e se#eral dimensions. 6or e@ample! AtimelyB can refer to the up5 to5date status of information! =hich can -e influenced -y a company;s collection and analyses procedures. lthough such information should ideally in#ol#e internal and e@ternal sources! internal sources of logistics information are not al=ays as plentiful as =ould -e desired. ATimelyB can also refer to ho= ?uic'ly a manager recei#es the re?uested informationF this is influenced -y a company;s retrie#al and dissemination procedures. Technological ad#ances such as personal digital assistants ha#e facilitated the dissemination of information. ccurate information may reflect the effecti#eness and efficiency of a company;s logistics information system. This means that a logistics information system needs to consider the nature and ?uality of the rele#ant data. 6or e@ample! although the Internet can -e a #ery cheap source of e@ternal information! some Internet information is of ?uestiona-le #alidity. 13. The chapter listed 1/ logistics simulation =hat not to do;s. hich t=o do you thin' are most important< hy< ny t=o of the simulation =hat not to do;s are appropriate ans=ers. 14. hat 'ind of uses does artificial intelligence ha#e for logistics< rtificial intelligence has -een used to manage certain parts in#entories for the 8nited States ir 6orce. recent logistics5related application of artificial intelligence focused on select issues =ith high=ay traffic! including the prediction of ur-an traffic flo=s and managing traffic congestion. 1%. hat is data mining< (o= might it -e used in logistics< ata mining can -e defined as the application of mathematical tools to large -odies of data in order to e@tract correlations and rulesF it uses sophisticated ?uantitati#e techni?ues to find AhiddenB patterns in large #olumes of data. ata mining has allo=ed al5Mart to disco#er that =hen hurricanes are proHected to hit the state of 6lorida! there is a dramatic increase in demand
for -eer and ellogg;s &op Tarts. s a result! al5Mart ma'es sure that additional stoc's of these products are a#aila-le =hen hurricanes are proHected to hit 6lorida. 1$. iscuss ad#antages and disad#antages of enterprise resource planning systems. & systems are attracti#e -ecause they offer the potential for lo=er costs and -oth increased producti#ity and customer satisfaction. In theory! & systems pro#ide an opportunity for all functional areas =ithin a firm to access and analy0e a common data-ase. This should allo= for enterprise5=ide coordination of rele#ant -usiness processes. "ne of the most fre?uently mentioned shortcomings in#ol#es the costs of installation! and companies often fail to consider rele#ant costs such as upgraded hard=are and employee training. Moreo#er! & implementation can -e ?uite time consumingF actual implementation times may -e 2 to 4 times longer than #endor estimates. 8nfortunately! glitches in & installations often result in se#ere logistical pro-lems. 1,. (o= might unsuccessful & implementations lead to logistical shortcomings< The -oo' pro#ides an e@ample of & implementation pro-lems at a leading manufacturer of home medical products. This company missed shipment deadlines! could not respond to customer in?uiries! and had limited information a-out order status. The order5related pro-lems resulted in a higher5than5normal le#el of returns associated =ith incorrect orders and the missed shipments caused the company to spend more for e@pedited transportation. 1). efer -ac' to the logistical acti#ities listed in Chapter 1F pic' t=o that you are interested in and research ho= they ha#e -een influenced -y the Internet. re you surprised -y your findings< hy or =hy not< gain! there is any num-er of accepta-le ans=ers for this ?uestion. 1+. iscuss the ad#antages and disad#antages of on5demand soft=are. Its pay5per5use formula allo=s customers to a#oid high capital costs! and thus -ecomes a #ia-le option for many companies that could not afford to purchase! install! and maintain application5 specific soft=are. "ther ad#antages include faster and less costly installation! a smaller information technology staff! and regular upgrades and updates from the soft=are pro#ider. "ne dra=-ac' is that the regular upgrades and updates can -e too fre?uent and numerous! and customers struggle to 'eep up =ith them. There are also limited opportunities for customi0ation and -ecause the Internet is the primary transaction medium! security issues such as data protection can -e a concern. 2/. 6rom a logistical perspecti#e! =hat are some differences -et=een online and in5store retailing< "nline orders tend to -e more plentiful and in much smaller ?uantities than in5store retailing. Therefore! online retailing re?uires an order management system capa-le of handling high #olumes of orders. In addition! online shopping is characteri0ed -y open5case pic'ing! rather than full5case pic'ing! and this necessitates pac'aging containers! such as -ags and en#elopes! =hich are =ell suited to holding small ?uantities of product. The smaller order ?uantities associated =ith online retailing tend to fa#or transport companies =ith e@tensi#e deli#ery
net=or's and e@pertise in parcel shipments. Moreo#er! return rates for online retailing are higher than in5store retailing and thus online retailers should attempt to ma'e the return process as painless as possi-le.
&T III KMITI" 78STI"S C(&T 3: L"9ISTICS I6"MTI" TC("L"9 Multiple Choice 7uestions #.
hich of the follo=ing is not a -enefit to utili0ing information in logistics< greater 'no=ledge and #isi-ility across the supply chain greater a=areness of customer demand #ia point5of5sale data -etter coordination of manufacturing! merchandising! and distri-ution through & tools more streamlined order processing and reduced lead time all are -enefits DeF p. %)E a. b. c. d. e.
*.
(o= do data and information differ< data is a -ody of facts in a format suita-le for decision ma'ing! =hile information is simply facts b. they are the same c. data is simply factsF information is a -ody of facts in a format suita-le for decision ma'ing d. data is associated =ith decision support systemsF information is associated =ith & systems DcF pp. %)5%+E a.
-.
pro#ide effecti#e =ays to process organi0ational -usiness data! to perform calculations! and to create documents. nterprise resource planning systems Transaction processing systems ecision support systems "ffice automation systems DdF p. %+E a. b. c. d.
.
Spreadsheets represent =hat general type of information management system< communication system transaction processing system decision support system office automation system DdF p. %+E a. b. c. d.
$. The most relevant general software package for logisticians is: a. b. c.
=ord processing e5mail presentation pac'ages
spreadsheets DdF p. %+E d.
%. 1hich of the following is not considered a general software package2
spreadsheets =ord processing data-ase management presentation pac'ages all are general soft=are pac'ages DeF p. %+E a. b. c. d. e.
&.
help #arious sta'eholdersGemployers! suppliers! customersG=or' together -y interacting and sharing information in many different forms. "ffice automation systems Communication systems Transaction processing systems ecision support systems D-F p. $/E a. b. c. d.
(. 1hat has emerged as the measuring stock for logistics information technology in the *# st century2
the Internet electronic data interchange =ireless communication enterprise resource planning systems DcF p. $1E a. b. c. d.
).
refers to a net=or' of satellites that transmits signals that pinpoint the e@act location of an o-Hect. 9lo-al positioning systems 9eographic information systems lectronic data interchange Transportation management systems DaF p. $1E a. b. c. d.
#+. All of the following are attributes of contemporary voice"based order picking systems ecept'
more costly more po=erful -etter #oice ?uality less cum-ersome for =or'ers all are attri-utes DaF p. $1E a. b. c. d. e.
##. 3lectronic data interchange represents =hat general type of information management system<
communication system transaction processing system decision support system office automation system D-F p. $2E a. b. c. d.
#*. refers to the computer"to"computer transmission of -usiness data in a structured
format.
ata mining & I OMI DcF p. $2E a. b. c. d.
#-. hich of the follo=ing statements a-out I is not true<
I can ha#e high setup costs I can result in increased in#entory carrying costs I can lead to increased -illing accuracy The Internet is li'ely a complement to! rather than su-stitute for! I D-F p. $2E a. b. c. d.
#. Automatic identification systems are an essential component in .
e#ery =arehouse point5of5sale systems a logistics information system dual distri-ution D-F p. $2E a. b. c. d.
#$. The most popular automatic identification system currently in use is .
#oice5data entry radio fre?uency identification magnetic strips -ar code scanners DdF p. $3E a. b. c. d.
#%. There has -een a great deal of interest in radio5fre?uency identification D6IE technology due in
part to 6I compliance initiati#es championed -y al5Mart and . a. b. c. d.
Star-uc's The 8.S. epartment of efense Œ国国œ£ &rocter and 9am-le Tesco
D-F p. $3E #&. There are suggestions that widespread adoption of RF45 will only occur when the price of read" only tags drops below 6666 cents. a. b. c. d.
%/ 2% 1/ $
DdF p. $3E #(. logistics information system
-egins =ith:
a logistics manager re?uesting information a good computer system lots of money a customer order DaF p. $3E a. b. c. d.
#). ll of the follo=ing statements a-out logistics information systems are true! e@cept:
AtimelyB can refer to the up5to5date status of information internal sources of logistics information are relati#ely plentiful AtimelyB can refer to ho= ?uic'ly a manager recei#es re?uested information a LIS must -e concerned =ith the nature and ?uality of data D-F pp. $35$4E a. b. c. d.
*+. The primary ad#antage of is that it ena-les a firm to test the feasibility of proposed changes at relatively little epense.
data mining e@pert systems simulation -enchmar'ing DcF p. $%E a. b. c. d.
*#. The initial focus of many logistics simulation programs is .
reducing transportation costs reducing in#entory costs reducing =arehousing costs impro#ing customer ser#ice DdF p. $%E a. b. c. d.
**. refers to a -ranch of computer science that studies the computational re?uirements
for tas's such as perception! reasoning! and learning! and de#elops systems to perform those tas's.
&sycho cy-ernetics ata mining rtificial intelligence Simulation DcF p. $%E a. b. c. d.
*-. ll of the follo=ing are eamples of artificial intelligence! e@cept:
e@pert systems 家pž fu00y logic Ÿ¡¢ neural net=or's Q£经¤¥ artesian systems all are e@amples DdF p. $%E a. b. c. d. e.
*. arehouse management systems represent an e@ample of =hat general type of information
management system<
communication system transaction processing system decision support system office automation system DcF p. $$E a. b. c. d.
*$. hich of the follo=ing is not a logistics5related decision support system<
simulation application5specific soft=are artificial intelligence electronic data interchange è¦于 transaction processing systems T&S all are logistics5related decision support systems DdF pp. $%5$$E a. b. c. d. e.
*%. 666666666666 refers to the application of mathematical tools to large bodies of data in order to etract correlations and rules.
6u00y logic 6actor analysis ata mining Linear regression DcF p. $,E a. b. c. d.
*&. 6666 create and maintain consistent data processing methods and an integrated database across multiple business functions.
Logistics information systems nterprise systems ecision support systems Transaction processing systems D-F p. $,E a. b. c. d.
*(. The origins of contemporary & systems can -e traced -ac' to logistics and .
manufacturing mar'eting finance accounting DaF p. $,E a. b. c. d.
*). 1hich of the following statements about 3RP is false2 a. 3RP7s origins can be traced back to finance and manufacturing b. 3RP implementation costs can easily reach the tens of millions of dollars y用Ü c. Top management support is essential for successful 3RP implementation 要KÜ § uœ d. 3RP glitches often have a logistical component to them 8a pp. %&"%(9
-+. ll of the follo=ing are potential costs associated =ith & implementation! e@cept: a. employee training b. upgraded computer hardware
c. data conversion d. system testing e. all are costs
DeF p. $)E
-#. general rule of thum- is that the actual
time to implement & systems may range from to times longer than the time period specified -y the & #endor. 1F2 2F 3 2F 4 3F 4 DcF p. $)E a. b. c. d.
-*. Research suggests 666666666666 and 666666666666 to be the logistics functions with the highest degree of 4nternet usage.
transportationF order management order managementF in#entory management =arehousingF in#entory management transportationF =arehousing DaF p. $+E a. b. c. d.
--. &erhaps the most popular application of on5demand soft=are in#ol#es .
=arehouse management systems transportation management systems colla-orati#e forecasting in#entory optimi0ation D-F p. $+E a. b. c. d.
-. Channel disintermediation refers to .
multiple functions -eing performed -y one intermediary fe=er =ays of distri-uting a product remo#ing intermediaries -et=een producer and consumer the emergence of ne= types of intermediaries DcF p. $+E a. b. c. d.
-$. hich of the follo=ing statements is false< a. orders associated =ith online retailing tend to -e for smaller ?uantities than in5store retailing b. online retailers are challenged -y last mile considerations c. online retailing and in"store retailing eperience similar rates of product return d. online retailing is characteri0ed -y open5case! rather than full5case! pic'ing e. all statements are true
DcF p. ,/E
True56alse 7uestions 1. The effecti#e and efficient use of information allo=s organi0ations to either reduce costs or impro#e customer satisfaction. D6alseF p. %)E 2. AataB and AinformationB are synonymous terms. D6alseF pp. %)5%+E 3. "ffice automation systems pro#ide effecti#e =ays to process personal and organi0ational -usiness data! to perform calculations! and to create documents. DTrueF p.%+E 4. The most rele#ant general soft=are pac'age for the logistician is the spreadsheet. DTrueF p. %+E %. transaction processing system helps people =or' together -y interacting and sharing information in many different forms. D6alseF p. $/E $. The Internet has emerged as the measuring stic' for logistics information technology during the first decade of the 21st century. D6alseF p. $1E ,. 9lo-al positioning systems can -e helpful in locating lost or stolen transportation e?uipment. DTrueF p. $1E ). Contemporary #oice5-ased pic'ing systems are less costly than earlier #oice5-ased systems. DTrueF p. $1E +. 9lo-al positioning systems often pay for themsel#es =ithin si@ months. D6alseF p. $1E 1/. In -atch processing! data are collected and stored for processing at a later time. DTrueF p. $1E 11. I is an e@ample of a logistics5related transaction processing system. DTrueF p. $2E 12. The Internet is a su-stitute for I. D6alseF p. $2E 13. I has increased in popularity during the early years of the 21st century. DTrueF p. $2E 14. The idea -ehind point5of5sale systems is to pro#ide data to guide and enhance managerial decision ma'ing. DTrueF p. $2E 1%. adio5fre?uency identification is the most popular automatic identification system currently in use. D6alseF p. $3E 1$. "ne prominent dra=-ac' to radio5fre?uency identification D6IE in#ol#es pri#acy concerns. DTrueF p. $3E 1,. It is suggested that =idespread adoption of 6I =ill only occur =hen the price for read5only chips drops -elo= % cents apiece. DTrueF p. $3E
1). logistics information system -egins =ith a logistics manager re?uesting information and ends =ith the manager recei#ing regular and customi0ed reports. DTrueF p. $3E 1+. Internal sources of logistics information are not al=ays as plentiful as might -e desired. DTrueF p. $4E 2/. ith respect to a logistics information system! e@ternal information is more important than internal information. D6alseF p. $4E 21. ATimelyB information can refer to its nature and ?uality. D6alseF p. $4E 22. Simulation is an e@ample of a logistics5related decision support systems techni?ue. DTrueF p. $%E 23. The primary ad#antage of simulation is that it ena-les a firm to test the feasi-ility of proposed changes at relati#ely little e@pense. DTrueF p. $%E 24. eural net=or's are a type of logistics information system. D6alseF p. $%E 2%. pplication5specific soft=are is a type of decision support system. DTrueF p. $$E 2$. Correlation analysis uses sophisticated ?uantitati#e techni?ues to find AhiddenB patterns in large #olumes of data. D6alseF p. $,E 2,. al5Mart and its #endors ma'e e@tensi#e use of data mining to impro#e supply chain efficiency and effecti#eness. DTrueF p. $,E 2). The attracti#eness of & systems comes from their potential for lo=er costs as =ell as increased producti#ity and customer satisfaction. DTrueF p. $,E 2+. The origin of & systems can -e traced -ac' to finance and manufacturing. D6alseF p. $,E 3/. There are suggestions that consultant fees for & implementations may -e three times as costly as the soft=are itself. DTrueF p. $)E 31. general rule of thum- is that the actual time to implement an & system may range from 1 to 2 times longer than the time period specified -y the & #endor. D6alseF p. $)E 32. "rgani0ations =ith successful & implementations recogni0e that & re?uires maHor changes in the =ay they operate. DTrueF p. $)E 33. The Internet offers the potential for -oth cost reductions and ser#ice impro#ements across and =ithin logistics functions. DTrueF p. $+E 34. The t=o logistics functions =ith highest degree of Internet usage are =arehousing and transportation. D6alseF p. $+E 3%. arehouse management systems are perhaps the most popular logistics5related on5demand soft=are. D6alseF p. $+E
3$. Security issues such as data protection are a 'ey concern =ith on5demand soft=are. DTrueF p. $+E 3,. Channel disintermediation refers to fe=er =ays of distri-uting a product. D6alseF p. $+E 3). There are fe= logistical similarities -et=een online and in5store retailing. D6alseF p. ,/E 3+. The smaller order ?uantities occasioned -y online retailing tend to fa#or transport companies =ith e@tensi#e deli#ery net=or's and e@pertise in parcel shipments. DTrueF p. ,/E 4/. The return rates associated =ith e5commerce are ?uite similar to those associated =ith other 'inds of retailing. D6alseF p. ,/E
&T IO CS S"L8TI"S CS 351 S&"TS C C 7uestion 1: If Tayfun had a si@th car to repairrepaint could he fit it inside the 3/ =or'ing days limit< If so! ho= long could the repairs and repaint ta'e< Tayfun could not repairrepaint a si@th car =ithin the 3/5day limit. The &orsche repairs are finished on ay 2)! and its painting occurs on ays 2+ and 3/. 7uestion 2: Some=hat to his em-arrassment! Tayfun suddenly learned that only cars -uilt in the 8nited States =ere to -e sho=n at &e--le Jeach. Luc'ily! he had some in his sta-le! though they also =ould need some repairs and paintingrepainting. 6ollo=ing are the fi#e 8.S.-uilt cars =ith their re?uired times for repair and paintrepaint. Cars D7E 7#ale D6E 6ord Shel-y D"E "lds Toronado DCE Cor#ette DE odge Oiper
epair DdaysE 4 2 ) 1 +
&aint DdaysE 3 , $ , %
etermine the order of the 8.S. cars that are going to -e ta'en into repair and repaint. The order is as follo=s: first is the Cor#ette! follo=ed -y the Shel-y. This is follo=ed -y the "lds Toronado! and then comes the odge Oiper. 6inally comes the 7#ale. 7uestion 3: ra= a 9antt chart of the gi#en =or' processes. 8se @hi-it 35 as a guide. 7uestion 4: Calculate the total least amount of processing time for the =or' processes. The least total amount of processing time for the =or' is 2+ days. 7uestion %: If Tayfun had a si@th 8.S. car to repairrepaint! could he fit it inside the 3/ days =or'ing limit< If so! ho= long could the repairs and paintrepaint ta'e< es! one more car could -e added. This car could ta'e % days to repair and 1 day to paintrepaint.
CS 352 P8ST5I5TIM I LMU"" 7uestion 1: hat is the total annual cost of maintaining the components in#entory under the present system< Current system
Item 9as range Toilet &ump efrigerator DlargeE efrigerator DsmallE 6oam cushion CJ radio Dtype E ome lights =ning -rac'et Insect screen
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PIT lot si0e 1/ 1/ , $
8nit cost R1/% R1// R1% R113
#erage freight In#entory cost per unit maintenance DsurfaceE cost R22 R$$!/4/ R1) R$1!3$/ R4 R%%!32) R2% R43!/%$
1
R)%
R1%
R3$!4//
,% 3
R, R13/
R3 R2$
R3%1!/// R,3!//)
3$ $/ %/
R4 R% R,
one R1 R2
R1,1!3+2 R1$)!4)/ R2$$!,$/
Total in#entory maintenance cost per year V R1!2+2!)24.// The ta-le in this case is a 1/> sample of the firm;s in#entory and reflects the inputs needed for one =ee';s acti#ities. e must calculate the a#erage stoc' on hand for each item Dsafety stoc' W order lot si0eE! and must calculate the cost per item Dunit cost plus freightE. 6or the first item Ggas rangesGa safety stoc' of 4/ units is maintained! and the order lot si0e is 1// units! for a total in#entory in stoc' of 14/ units. 8nit cost DR1//E plus freight DR2/E e?uals R12/. Multiplying a#erage in#entory D14/E times R12/ e?uals R1$!)//. oing all the items on ta-le gi#es a total of R+$!1,%. Jecause this is a 1/> sample! the total parts in#entory =ould -e =orth R+$1!,%/. In#entory carrying costs on this! at 2/> per year! =ould -e R1+2!3%/. 7uestion 2: hat =ould -e the total annual cost of maintaining the components in#entory under the PIT system Dassuming no safety stoc'sE< "ne =ould loo' at the a#erage num-er used per =ee'! -ut apply the ne=! usually higher unit costs and freight charges. 6or one =ee';s acti#ity sho=n on the ta-le! the ne= cost =ould -e R24!)$2 per =ee' Dcompared =ith a-out R21!)1) under the e@isting systemE. (ence the cost of the PIT system is higher. 7uestion 3: Should Jallenger ta'e into account any other costs or -enefits from the PIT system< If so! =hat are they< 8nder a PIT system! Jallenger should e@hi-it less concern =ith #arious pro-lems associated =ith maintaining a large in#entory such as shrin'age and o-solescence. 7uestion 4: If the PIT system is adopted! are there safety stoc's of any item that should -e maintained< If so! =hich ones! and ho= much<
8nfortunately! the case does not pro#ide sufficient information to ans=er this ?uestion. &arts that are crucial to the process =ould need to -e indicated -y management! or perhaps =or'5flo= process charts. 7uestion %: If the PIT system is adopted! =hat changes! if any! should occur in the relationships -et=een Jallenger;s firm and his suppliers of components< iscuss. (e =ould need -etter discipline in terms of prompt deli#ery and freedom from defects. 7uestion $: ssume that Jallenger has s=itched to the PIT system and that he recei#es a surprise phone call from a competitor =ho is going out of -usiness. The competitor =ants to sell Jallenger ,!/// dome lights of the type listed on @hi-it 35C. Should Jallenger -uy them< If so! at =hat price< &ro-a-ly not -ecause this =ould undermine the discipline en#isioned -y the PIT system. "n the other hand! if the purchase price =as #ery lo=! and there =ere no uni?ue storage re?uirements! Jallenger might -uy them. 7uestion ,: Carrying costs are 2/>. Is there a le#el of carrying costs at =hich -oth Jallenger;s present system and a PIT system ha#e similar costs< If so! =hat is it< 8sing a -asic spreadsheet pac'age! =e found that at the astronomical rate of 1$,>! the t=o systems =ere e?ual. ISC8SSI" This is a difficult case although it can -e approached in se#eral =ays. "ne must calculate the a#erage costs of all the goods! as they are used each =ee'! plus a figure for in#entory carrying costs. &T II SS T" 5"65C(&T 78STI"S C(&T 4: M M9MT! " M9MT C8ST"M SOIC 1. hat is the relationship -et=een demand management! order management! and customer ser#ice< There is a 'ey lin' -et=een order management and demand forecasting! in that a firm does not simply =ait for orders to arri#e in order to learn =hat is happening. 6orecasts are made of sales and of the in#entories that must -e stoc'ed so that the firm can fill orders in a satisfactory manner. There is also a 'ey lin' -et=een order management and customer ser#ice -ecause many organi0ations analy0e customer ser#ice standards in terms of the four stages of the order cycle. 2. iscuss the three -asic demand forecasting models. Pudgmental forecasting in#ol#es using Hudgment or intuition and is preferred in situations =here there is limited or no historical data! such as =ith a ne= product introduction. Pudgmental forecasting techni?ues include sur#eys and the analog techni?ue. n underlying assumption of time5series forecasting is that future demand is solely dependent on past demand. Time5series forecasting techni?ues include simple mo#ing a#erages and =eighted mo#ing a#erages. Cause and effect forecasting assumes that one or more factors are related to demand and that the
relationship -et=een cause and effect can -e used to estimate future demand. Simple regression and multiple regression are e@amples of cause and effect forecasting. 3. List and discuss se#eral demand forecasting issues. emand forecasting issues include the situation at hand! forecasting costs in terms of time and money! and the accuracy of #arious forecasting techni?ues. ith respect to the situation at hand! Hudgmental forecasting is appropriate =hen there is little or no historical data. s for time and money! sur#ey research! for e@ample! can cost a great deal of money andor also ta'e a great deal of time depending on the media. 6orecasting accuracy refers to the relationship -et=een actual and forecasted demand! and accurate forecasts ha#e allo=ed some companies to reduce transportation costs -ecause fe=er shipments need to -e e@pedited. 4. Is computer soft=are the panacea for demand forecasting< hy or =hy not< The te@t suggests that there ha#e -een tremendous ad#ancement in the -readth and computational po=er of computer soft=are. onetheless! soft=are5-ased forecasting continues to -e plagued -y inappropriate applications! cost issues and forecast error. elati#ely simple soft=are! such as Microsoft @cel! tends to generate relati#ely unsophisticated forecasts characteri0ed -y a great deal of error. lternati#ely! highly e#ol#ed forecasting soft=are may -e too difficult to learn ho= to use. %. efine and descri-e the order cycle. hy is it considered an important aspect of customer ser#ice< The order cycle is the elapsed time from =hen a customer places an order until the customer recei#es the order. It is an important aspect of customer ser#ice in part -ecause the order cycle is fre?uently used to determine the parameters of customer ser#ice goals and o-Hecti#es. The order cycle is also -eing used -y some firms as a competiti#e =eapon Dgenerally the shorter the -etterE! and technological ad#ances no= ma'e it e@tremely easy Dand fastE for customers to determine the e@act status of their orderDsE. $. hat are some causes of order cycle #aria-ility< hat are the conse?uences of order cycle #aria-ility< "rder cycle #aria-ility can occur in each stage of the order cycle. 6or e@ample! order transmittal -y mail sometimes results in the mailed item ne#er reaching its intended destinationF #aria-ility! in the form of unrelia-le transit times! can occur during order deli#ery. "ne conse?uence of order cycle #aria-ility might -e an increase in in#entory le#els to guard against stoc'outs. If in#entory le#els are not increased! then stoc'outs could occur -ecause of order cycle #aria-ility! or a company might -e forced to use e@pedited transportation to ma'e sure orders arri#e on time. ,. efine the perfect order concept. hat is its rele#ance to the order cycle< The te@t defines a perfect order as simultaneously achie#ing rele#ant customer metrics. The order cycle offers plentiful opportunities for errors to occurGand thus failure to achie#e a perfect order. ). List the #arious methods of order transmittal and discuss rele#ant characteristics of each one.
In person VX greatly reduces the potential for order errors! -ut it is not al=ays con#enient or practical in situations =here the supplier is geographically distant. Mail VX more con#enient than ordering in person! -ut mail is relati#ely slo= and there are occasions =hen the order ne#er reaches the intended destination. Telephone VX fast and con#enient! -ut order errors may not -e detected until the order is deli#ered. 6a@ VX fast! con#enient and pro#ides hard copy documentation of an order! -ut there is the potential for Hun' Dun=antedE fa@es and the ?uality of transmission may -e pro-lematic. lectronic VX fast! con#enient! and potentially #ery accurateF maHor concern is the security of the data -eing transmitted. +. efine order triage and e@plain ho= it can impact order processing. "rder triage refers to classifying orders according to pre5esta-lished guidelines so that a company can prioriti0e ho= orders should -e filled. Companies that choose to do order triage must decide the attri-uteDsE used to prioriti0e De.g.! first in! first ser#edF customer longe#ityE. lthough there is no one right attri-ute to use for order prioriti0ation! the chosen attri-utes are li'ely to delight one set of customers and disappoint other customers. 1/. hat is pic'5to5light technology! and ho= can it impro#e order pic'ing< In pic'5to5light technology! orders to -e pic'ed are identified -y lights placed on shel#es or rac's. n ad#antage to pic'5to5light is that the =or'er simply follo=s the light from pic' to pic'! as opposed to the =or'er ha#ing to figure out an optimal pic'ing path. &ic'5to5light often results in higher pic' rates and fe=er pic'ing errors! along =ith reduced training time and reduced le#els of employee turno#er. 11. iscuss the order deli#ery stage of the order cycle. "rder deli#ery refers to the time from =hen a transportation carrier pic's up a shipment until it is recei#ed -y the carrier. Customers no= ha#e increasing po=er in terms of deli#ery options and companies such as 8&S and 6ed@ offer prospecti#e shippers a di#erse menu of transit time options. In addition! shippers are emphasi0ing -oth elapsed transit time as =ell as transit time #aria-ility and some companies are utili0ing deli#ery =indo=s! or the time span =ithin =hich an order must arri#e. nother 'ey deli#ery change is that the o#ernight range for truc' ser#ice has -een pushed from %// miles to -et=een $// and ,// miles. 12. (o= can customer ser#ice act as a competiti#e =eapon< Customer ser#ice is more difficult for competitors to imitate than other mar'eting mi@ #aria-les such as price and promotion. The te@t cites an e@ample of ordstrom;s! a high5end retailer that has a long5standing reputation for e@cellent customer ser#ice. Their de#otion to e@cellent customer ser#ice leads ordstrom;s to do things that competitors cannot or =ill not match. 13. istinguish -et=een customer ser#ice and customer satisfaction. Customer ser#ice stri#es to 'eep customers happy and creates in the customer;s mind the perception of an organi0ation that is easy to do -usiness =ith. Customer satisfaction compares
a customer;s actual e@perience =ith the e@pected e@perience! and if the actual e@perience e?uals or e@ceeds the e@pected e@perience then the customer =ould -e satisfied. Customer ser#ice can influence -oth the e@pected and actual e@perience and hence influence customer satisfaction. 14. hy are organi0ations and customers demanding a higher le#el of customer ser#ice< Macroen#ironmental changes! such as glo-ali0ation and ad#ances in technology! are causing organi0ations and indi#iduals to demand higher le#els of customer ser#ice. Moreo#er! customer Dand organi0ationalE e@pectations continue to increase o#er time! and if the associated performance Dser#iceE le#els fail to 'eep up! then customer dissatisfaction is a li'ely outcome. nd! in an increasingly automated and computeri0ed =orld! the relationships -et=een customers and #endors can -ecome dehumani0ed. company that can offer a high le#el of customer ser#ice! especially on a personal -asis! finds that it has a po=erful sales ad#antage in the mar'etplace. 1%. List and discuss the three elements of the dependa-ility dimension of customer ser#ice. The three elements are consistent order cycles! safe deli#ery! and complete deli#ery. s pointed out earlier! inconsistent order cycles necessitate higher in#entory re?uirements. Safe deli#ery -rings loss and damage considerations into playF lost or damaged product can cause a #ariety of negati#e ramifications for a customer! such as an out of stoc' situation. "ne =ay of measuring the completeness of deli#ery in#ol#es the order fill rate or the percentage of orders that can -e completely and immediately filled from e@isting stoc'F incomplete deli#eries generally translate into unhappy customers. 1$. hat are some ad#antages and disad#antages to technological ad#ances designed to facilitate -uyer5seller communications< Cell phones! personal digital assistants! and the Internet ha#e certainly helped -uyer5seller communications. These technological ad#ances allo= for less costly and more fre?uent contact -et=een the t=o parties. (a#ing said this! technology such as te@t messaging and the Internet can depersonali0e the communication process! =hich is =hy periodic telephone interaction and e#en face5to5face contact -et=een seller and customer are recommended. 1,. istinguish -et=een customer ser#ice goals and o-Hecti#es. 9oals tend to -e -road! generali0ed statements regarding the o#erall results that the firm is attempting to achie#e. "-Hecti#es! the means -y =hich goads are to -e achie#ed! ha#e certain minimum re?uirements and are more specific than goals. "-Hecti#es should -e specific! measura-le! achie#a-le! and cost effecti#e.
1). (o= do characteristics such as su-stituta-ility and product life cycle stage influence the de#elopment of customer ser#ice goals and o-Hecti#es< If a firm has a near monopoly on an important product Di.e.! fe= su-stitutes are a#aila-leE! a high le#el of customer ser#ice is not re?uired -ecause a customer that needs the product =ill -uy it under any reasona-le customer ser#ice standard. s for stage in the &LC! a product Hust
-eing introduced needs a different 'ind of ser#ice support than one that is in a mature or declining mar'et stage. hen introducing a ne= product! companies =ant to ma'e sure that there is sufficient supply of it to meet potential customer demand! and so companies might use e@pedited transportation to protect against out of stoc' situations. 1+. Should organi0ations use a limited! or e@tensi#e! num-er of customer ser#ice measures< Support you position. The te@t suggests that =hile customer ser#ice must -e measured if it is to -e managed! organi0ations should resist the tendency to Ameasure e#erything that mo#es.B ather! organi0ations should utili0e a limited num-er of meaningful and rele#ant metrics. @cessi#e measurement can strain an organi0ation -ecause it re?uires the collection of tremendous amounts of data! and once collected the data must -e analy0ed. This can result in analysis paralysis! or the idea that so much time is re?uired for analysis that there is little! if any! time left to ma'e decisions -ased on the data. 2/. hat is meant -y ser#ice reco#ery< (o= is it rele#ant to logistics< Ser#ice reco#ery refers to a process for returning a customer to a state of satisfaction after a ser#ice or product has failed to li#e up to e@pectations. Ser#ice reco#ery is particularly rele#ant to the order cycleF for e@ample! late or erratic deli#eries can play ha#oc =ith customer supply chains. "ne ser#ice reco#ery guideline! fair treatment for customers! is operationali0ed -y some transportation companies in the form of ser#ice guarantees. If a shipment misses #arious deli#ery parameters De.g.! on time deli#eryE! then customers can recei#e a full refund Dor are not -illed for the transportationE.
&T III KMITI" 78STI"S C(&T 4: M M9MT! " M9MT C8ST"M SOIC Multiple Choice 7uestions #.
The creation across the supply chain and its mar'ets of a coordinated flo= of demand is the definition of: a.
order cycle
order management demand management supply chain management DcF p. )2E b. c. d.
*.
hich of the follo=ing is not a -asic type of demand forecasting model< e@ponential smoothing cause and effect Hudgmental time series all are -asis types of forecasting models DaF p. )2E a. b. c. d. e.
-.
Sur#eys and analog techni?ues are e@amples of forecasting. cause and effect time series e@ponential smoothing Hudgmental DdF p. )2E a. b. c. d.
.
n underlying assumption of forecasting is that future demand is dependent on past demand. trial and error time series Hudgmental cause and effect D-F p. )2E a. b. c. d.
$.
hich forecasting techni?ues tends to -e appropriate =hen there is little or no historical data< e@ponential smoothing Hudgmental time series cause and effect D-F p. )3E a. b. c. d.
%.
Successful implementations of colla-orati#e planning! forecasting and replenishment ha#e resulted in 2/ to 3/> impro#ements in forecasting accuracy as =ell as to > reduction in order cycle times. %F 1/ 1/F 1% 2/F 3/ 4/F %/ DcF p. )4E a. b. c. d.
&.
hich of the follo=ing is true< computer soft=are for demand forecasting dates -ac' a-out 2% years one challenge to colla-orati#e planning! forecasting! and replenishment is getting supply chain partners to share data c. the @cel soft=are pac'age tends to generate forecasts that generate #ery little error d. S& is the most =idely used soft=are pac'age for demand forecasting e. ll are true D-F p. )4E a. b.
(.
refers to the management of #arious acti#ities associated =ith the order cycle. Logistics "rder processing emand management "rder management DdF p. )4E a. b. c. d.
).
The order cycle is:
the time that it ta'es for a chec' to clear the time that it ta'es from =hen a customer places an order until the selling firm recei#es the order c. also called the replenishment cycle d. also called the #endor cycle DcF p. )4E #+. The order cycle is composed of each of the follo=ing e@cept: a. b.
order pic'ing and assem-ly order deli#ery order retrie#al order transmittal DcF p. )4E a. b. c. d.
##. 1hich of the the following following is false2 false2
order cycle lengths continue to get shorter the order cycle should -e analy0ed in terms of total cycle time and cycle time #aria-ility order management has -een profoundly impacted -y ad#ances in information systems order management and the order cycle are #itally important to the perfect order concept all are true DeF p. )%E a. b. c. d. e.
#*. :rder :rder transmitt transmittal al is' a. b.
the same thing as an order cycle the series of e#ents that occur -et=een the time a customer places an order and the time the seller recei#es the order
the series of e#ents that occur -et=een the time the customer percei#es the need for something and the time the seller recei#es the order d. the series of e#ents -et=een the time a customer places an order and the time the order cycle -egins D-F p. )%E c.
#-. In general! there are possi-le =ays to transmit orders.
si@ fi#e man mail telephone fa@ electronic four three D-F p. )%E a. b. c. d.
#. hich of the follo=ing is not a possi-le method of order transmittal< a. b. c. d. e.
in5person mail fa@ electronic all are methods of order transmittal
#$. "rdering -y can -e fast and con#enient! -ut order errors are generally not detected until the
order is deli#ered. a. telephone b. mail c. fa@ d. electronic
DaF p. )%E
#%. 6666 refers to the time from from when the seller receives receives an order until an appropriate appropriate location is authori!ed to fill the order. a. :rde :rderr proc proces essi sing ng b. "rder cycle c. "rder management d. "rder transmittal
DaF p. ))E
#&. "rder processing typically in#ol#es each of the follo=ing acti#ities e@cept: a. credit chec' b. entering the order into the system c. determining in#entory location d. mar'eting department crediting the salesperson =ith the sale e. all all ar are act activ ivit itie iess
DeF p. ))E
#(. Classifying orders according to pre5esta-lished guidelines so that a company can prioriti0e ho=
orders are to -e filled refers to . order management order processing order triage ¨P©Ú JC analysis DcF p. +/E a. b. c. d.
#). "rder pic'ing and assem-ly is:
the most important component of the order cycle the =ay a customer decides =hat he needs to purchase the component that follo=s order processing the most computeri0ed part of the order cycle DcF p. +/E a. b. c. d.
*+. The te@t suggests that often represents the -est opportunity to impro#e the effecti#eness and
efficiency of an order cycle.
order transmittal order deli#ery order processing order pic'ing and assem-ly DdF p. +/E a. b. c. d.
*#. Tra#el time accounts for to
> of total time =hen pic'ing an order.
1/F 2/ 2/F 3/ 4/F %% $/F )/ DdF p. +/E a. b. c. d.
**. hich of the follo=ing is not a characteristic of ad#ances in order pic' technology<
higher pic' rates reduced employee turno#er fe=er employee accidents fe=er pic'ing errors all are characteristics DcF p. +/E a. b. c. d. e.
*-. The document that indicates =hat items =ere pic'ed! along =ith =ho pic'ed the order! is called
aDnE .
a. packi cking li list b. order pic' list
order chec' list consular document DaF p. +1E c. d.
*. The final phase of the order cycle is called order .
pic'ing and assem-ly deli#ery recei#ing replenishment D-F p. +1E a. b. c. d.
*$. The time span =ithin =hich an order must arri#e refers to .
transit time deli#ery =indo= order deli#ery transit time relia-ility D-F p. +1E a. b. c. d.
*%. A commonly used rule of thumb is that it costs approimately approimately 6666 times as much to get a new customer as it does to keep an eisting customer. customer.
three four fi#e si@ DcF p. +1E a. b. c. d.
*&. 1hy might customer service service be more effective effective than pricing as a competitive competitive tool2
price reductions can -e done only once or t=ice -efore they -ecome ineffecti#e holding large in#entory stoc's is cheaper than price reductions superior customer ser#ice =ill -e noticed more than a price reduction superior customer ser#ice is more difficult to imitate DdF p. +2E a. b. c. d.
customer ;s actual e@perience =ith the e@pected e@perience. *(. compares a customer;s customer satisfaction customer ser#ice customer loyalty order management DaF p. +2E a. b. c. d.
*). The a-ility of logistics management to
and con#enience is the definition of:
satisfy users in terms of time! dependa-ility! communication!
customer satisfaction the order cycle perfect order customer ser#ice DdF p. +3E a. b. c. d.
-+. hich of the follo=ing is not a dimension of customer ser#ice<
time con#enience dependa-ility communication all of the a-o#e are dimensions DeF p. +3E a. b. c. d. e.
-#. The percentage of orders that can be completely and immediately filled from e@isting stoc' is the
rate.
order cycle perfect order order fill optimal in#entory DcF p. +3E a. b. c. d.
-*. hat component of customer ser#ice focuses on the ease of doing -usiness =ith a seller<
con#enience dependa-ility time communication DaF p. +4E a. b. c. d.
--. hich of the follo=ing statements is false< a. goals tend to be broad, generali!ed statements regarding the overall results that the firm is trying to achieve b. ob;ectives are more specific than goals c. a central element to the establishment of customer service goals and ob;ectives is determining the customer7s viewpoint d. -enchmar'ing generally in#ol#es comparing an organi0ation to competitors in the same
industry e. all of the statements are true DdF pp. +45+%E
-. is the process of ta'ing correcti#e action =hen measurements indicate that the goals and
o-Hecti#es of customer ser#ice are not -eing achie#ed. Control Managing Leadership Jenchmar'ing DaF p. +$E a. b. c. d.
-$. hich of the follo=ing statements is false<
ser#ice reco#ery refers to a process for returning a customer to a state of satisfaction after a ser#ice or product has failed to li#e up to e@pectations b. one ser#ice reco#ery guideline in#ol#es fair treatment for customers c. appro@imately 4/> of customers =ho e@perience a pro-lem =ith purchases of less than R% =ill not do -usiness =ith that company again d. good or e@cellent ser#ice reco#ery can actually result in increased customer loyalty e. all of the statements are true DcF pp. +)5++E a.
True56alse 7uestions 1. In ma'e5to5order situations! finished goods are produced after recei#ing a customer order. DTrueF p. )2E 2. Simple mo#ing a#erages and =eighted mo#ing a#erages are e@amples of Hudgmental forecasting. D6alseF p. )2E 3. Pudgmental forecasting is appropriate =hen there is little or no historical data. DTrueF p. )3E 4. S& is currently the most =idely used soft=are for -usiness forecasting. D6alseF p. )4E %. o soft=are pac'ageGregardless of its sophistication and costGis capa-le of totally eliminating forecast errors. DTrueF p. )4E $. In general terms! order management refers to ho= a firm handles incoming orders. DTrueF p. )4E ,. The order cycle is usually the time from =hen a customer places an order to =hen the customer recei#es the order. DTrueF p. )4E ). s a general rule! order cycle times ha#e -een increasing in recent years. D6alseF p. )4E
+. The shorter and more consistent the order cycle! the less in#entory that is needed -y one;s customers. DTrueF p. )%E 1/. "rder processing refers to the time from =hen the customer places an order until the seller recei#es the order. D6alseF p. )%E 11. There are four possi-le =ays to transmit orders. D6alseF p. )%E 12. "ne method of order transmittal relies on -ar codes and scanners. DTrueF p.))E 13. "rder information is chec'ed for completeness and accuracy in the order processing component of the order cycle. DTrueF p. ))E 14. The Aorder triageB function refers to correcting mista'es that may occur =ith order pic'ing. D6alseF p. +/E 1%. commonsense approach is to fill an order from the facility location that is closest to the customer! =ith the idea that this should generate lo=er transportation costs as =ell as a shorter order cycle time. DTrueF p. +/E 1$. "rder pic'ing and assem-ly follo=s the order processing component of the order cycle. DTrueF p. +/E 1,. "rder processing often represents the -est opportunity to impro#e the effecti#eness and efficiency of the order cycle. D6alseF p. +/E 1). Tra#el time accounts for a maHority of an order pic'er;s total pic' time. DTrueF p. +/E 1+. &ic'5to5light technology is an order pic'ing techni?ue that has gro=n in popularity in recent years. DTrueF p. +/E 2/. pic' list indicates =hat items =ere pic'ed as =ell as the person responsi-le for preparing the order for shipment. D6alseF p. +1E 21. "rder retrie#al is the final phase of the order cycle. D6alseF p. +1E 22. s a general rule! the narro=est deli#ery =indo=! or time span =ithin =hich an order must arri#e! that carriers must meet is 3/ minutes. D6alseF p. +1E 23. The current ma@imum range for o#ernight deli#ery -y truc's is appro@imately %// miles. D6alseF p. +1E 24. It costs appro@imately fi#e times as much to get a ne= customer as it does to 'eep an e@isting customer. DTrueF p. +1E 2%. Customer ser#ice and customer satisfaction are synonymous concepts. D6alseF p. +2E 2$. Consumers are demanding a-out the same le#els of ser#ice today as in years past. D6alseF p. +2E
2,. "ne reason that customers are demanding higher le#els of customer ser#ice is that relia-le ser#ice allo=s a firm to maintain a lo=er le#el of in#entory. DTrueF p. +2E 2). Customer ser#ice compares a customer;s actual e@perience =ith the e@pected e@perience. D6alseF p. +3E 2+. ependa-ility consists of consistent order cycles! safe deli#ery! and consistent deli#ery. DTrueF p. +3E 3/. "rder fill rate is the percentage of orders that can -e completely and immediately filled from e@isting stoc'. DTrueF p. +3E 31. Te@t messaging and the Internet ha#e lessened the need for telephone interaction and face5to5face contact -et=een seller and customer. D6alseF p. +4E 32. The con#enience component of customer ser#ice focuses on the ease of doing -usiness =ith a seller. DTrueF p. +4E 33. 9oals are the means -y =hich o-Hecti#es are achie#ed. D6alseF p. +%E 34. "-Hecti#es should -e as specific as possi-le! so it can -e determined if the o-Hecti#es ha#e -een met. DTrueF p. +%E 3%. Jenchmar'ing should only in#ol#e numerical comparisons of rele#ant metrics De.g.! fill ratesE. D6alseF p. +%E 3$. The nature of the product can affect the le#el of customer ser#ice that should -e offered. DTrueF p. +%E 3,. Leadership is the process of ta'ing correcti#e action =hen measurements indicate that the goals and o-Hecti#es of customer ser#ice are not -eing achie#ed. D6alseF p. +$E 3). "rgani0ations should utili0e a limited num-er of meaningful and rele#ant metrics and should resist the tendency to Ameasure e#erything that mo#es.B DTrueF p. +)E 3+. -out 2%> of customers =ho e@perience a pro-lem =ith purchases of less than R% =ill not do -usiness =ith that company again. D6alseF p. +)E 4/. Satisfactory ser#ice reco#ery tends to increase a customer;s =illingness to recommend the offending organi0ationF unsatisfactory ser#ice reco#ery magnifies the initial failure. DTrueF p. ++E
&T IO CS S"L8TI"S CS 451 C(U (U 7uestion 1: ssume that Chee0y hee0y goes into the catalog order -usiness. hat policy should it adopt for handling stoc'outsGthat is! =hat should the company do =hen it recei#es mail orders that it cannot completely fill -ecause one or more of the desired items are out of stoc'< They could ha#e any one of a range of policies. They pro-a-ly should find out =hat their competitors are doing. "ne suggestion =ould -e to as' for customer phone num-ers Dor e5mail addressesE on the order form and then contact customers in case of a stoc'out and determine ho= customers =ant to handle the situation. 7uestion 2: Some mail customers =ill complain that the items Chee0y hee0y shipped ne#er arri#ed. hat policy should Chee0y hee0y adopt to deal =ith this< gain! the firm has a #ariety of options. 6irms might ship a duplicate order upon receipt of a complaint! and maintain a file of customer complaints to insure that certain customers do not a-use Chee0y hee0y;s Ano ?uestions as'edB policy. n alternati#e is to use parcel shipping that re?uires a signature upon receipt of a pac'age. 7uestion 3: Should the order form! =hich =ill -e stapled into the center of the catalog and =ill -e addressed to Chee0y hee0y! -e of the postage5paid type! =hich means that Chee0y hee0y =ill pay the first5class postage rate plus a fe= cents on each en#elope deli#ered to it! or should the customer -e e@pected to add a first5class stamp to the order -efore he or she mails it< iscuss. The increasing cost of postage! com-ined =ith the customer ha#ing to put a stamp on an en#elope! could -e a sufficient enough hassle to con#ince some customers to shop else=here. Moreo#er! there could -e delays if some potential customers need to o-tain stamps. &ostage5 paid en#elopes increase the con#enience factor for the consumer! and allo= the order to -e mailed more ?uic'ly. 7uestion 4: Chee0y hee0y;s head?uarters are in e= 9larus! -ut the company also operates in southern isconsin and northern Illinois. Is e= 9larus the -est address to use for recei#ing mail orders for cheese< Might there -e ad#antages! perhaps! in ha#ing the mail addressed to a more maHor cityGsay! Madison! Mil=au'ee! or Chicago< iscuss. n ad#antage of the larger city post offices is that the mail might -e deli#ered earlier. The ad#antage of e= 9larus is that the name is one that =ould -e associated =ith the cheese industry. 7uestion %: 6rom the facts that ha#e -een presented in the case! ho= =ould you handle the matter of charging for the packaging costs of each shipment< hy< gain! there can -e a #ariety of ans=ers. ?uite common response among past students =as to include pac'aging costs in the costs of the cheese! rather than de#eloping comple@ ta-les that =ould co#er all possi-le situations.
7uestion $: (o= =ould you handle the matter of charging for the transportation costs of each shipment< hy< &ast students ha#e suggested including a simple ta-le! =ith the =eight of the shipment along one a@is! and the distance from e= 9larus along the other! as the -asis for calculating transportation charges. 7uestion ,: Ta'ing into consideration your ans=ers to ?uestions % and $! =rite out in either te@t or ta-ular form the e@planation of shipping charges that your catalog customers =ill read. Dote: s used here! shipping includes -oth pac'aging and transportation.E complete ans=er could say something li'e! ACalculate shipping charges from the accompanying ta-leF the figures include pac'aging! insurance! and deli#ery to your door.B The ta-le =ould ha#e groups of t=o5digit 0ip codes Di.e.! the first t=o digits of one;s fi#e digit 0ip codeE across the top of the chart =ith the shipment;s =eight along the side. ithin the ta-le =ould -e num-ers! e@pressed as dollars and cents! =hich are the shipping costs. 7uestion ): "n a single ) -y 115inch sheet of paper! design a catalog order form for use -y Chee0y hee0y. If this assignment is done outside of class the student =ill pro-a-ly -orro= hea#ily from Areal5 =orldB catalog order forms Despecially during the latter part of the calendar year! =hen holiday catalogs a-oundE. 7uestion +: Contemplate a simple =e-site for Chee0y hee0y to sell its products =ithin the 8nited States. (o=! if at all! =ould the order form used in its =e-site differ from an order form printed and mailed as part of a catalog< ould any sales or shipping policies -e changed< iscuss. The order form on the =e-site =ould -e designed so that customers =ould ha#e to su-mit an accurate order! i.e.! 0ip codes could -e re?uired and addition of charges =ould ha#e to -e correctly done. It =ould pro-a-ly -e easiest to ha#e the same sales and shipping policies for -oth catalog and e- presentation. The =e-site could recogni0e repeat customers in case it =as -elie#ed that they deser#e some sort of -onus or incenti#e.
CS 452 ( ! IC. 7uestion 1: Is this a customer ser#ice pro-lem< hy or =hy not< Customer ser#ice is sometimes defined as 'eeping e@isting customers happy and =e ha#e little e#idence that there is a customer ser#ice pro-lem. e do not 'no= of customers =ho are incon#enienced -y this system! nor do =e 'no= of lost sales. (o=e#er! some customers are pro-a-ly confused -y the system. 7uestion 2: Mar'eting channels are the arrangement of intermediaries D=holesalers! retailers! and the li'eE that the firm uses to achie#e its mar'eting o-Hecti#es. Is the pro-lem discussed in (andy ndy;s mar'eting channels< hy or =hy not< This is a mar'eting channels pro-lem -ecause the arrangements -et=een the home office! the factory distri-utors! the regular dealers and customers are not =hat =as planned. The e@isting systems may -e =or'ing -etter! -ut that is not the ?uestion. 7uestion 3: Logistics channels handle the physical flo= of goods or ser#ice. Is the pro-lem discussed in (andy ndy;s logistics channel< hy or =hy not< There is pro-a-ly not much of a pro-lem in the physical flo= of goods -ecause the factory distri-utors =ere e@pected to -e the main source of compactors! deli#ered and installed. 7uestion 4: It appears that the factory distri-utors are e@ploiting the smaller dealers. et from =hat =e can tell! (andy ndy in St. Louis has heard no complaints from the smaller dealers. hy =ould they not complain< They may -e afraid or they may -e recei#ing A'ic'5-ac'sB from the factory distri-utor. Chances are that if the smaller dealers =ere losing money then they =ould li'ely complain to (andy ndy. 7uestion %: hat should (andy ndy;s mar'eting Oice &resident do< hy< &ro-a-ly study the situation further -ecause there is little or no information so far that the e@isting arrangements! confusing as they may seem! are cutting into (andy ndy;s sales. The pro-lem may -e more complicated than the te@t indicates -ecause the dealers and factory distri-utors also pro-a-ly mar'et other lines of appliances produced -y other manufacturers. So the focus may -e on the mar'eting arrangements for all types of appliances! not Hust (andy ndy compactors.
7uestion $: edesign the =arranty postcard! staying =ithin the same dimensions! and include ?uestions or statements that =ill ma'e it easier for (andy ndy head?uarters to detect =hether installation practices of the type discussed in this case occur. In the past! some students ha#e designed cards similar to the one presented in the -oo'! =ith a ?uestion or t=o added as'ing =hether the model installed =as the one originally ordered. To understand e@actly =hat =as happening! a num-er of specific ?uestions had to -e crafted. "ther students -elie#ed! ho=e#er! that such ?uestions =ould undermine customer confidence in (andy ndy and its distri-utors. 7uestion ,: In the case is the statement! AThe factory distri-utors in these fe= cities indicated that they! not (andy ndy! Inc.! stood -ehind the 15year =arranty.B Is this a pro-lem for (andy ndy< hy or =hy not< This is a difficult ?uestion to ans=er -ecause =e are not certain =hether the -uyer percei#es that -oth the factory distri-utor and (andy ndy are standing -ehind the product Di.e.! dou-ling their protectionE or that the factory distri-utor is filling a #oid created -y (andy ndy;s un=illingness or ina-ility. 7uestion ): ssume that the situation descri-ed in ?uestion , is a pro-lem. (o= should the firm deal =ith it< "ne suggestion is to change the =ording in the =arranty! gi#ing more emphasis to (andy ndy;s role. statement could also -e added to the return post card. &T II SS T" 5"65C(&T 78STI"S C(&T %: &"TCTIO &C9I9 MTILS (LI9 #.
(o= do product characteristics influence pac'aging and materials handling considerations< "ne consideration is a product;s physical characteristicsF su-stances e@ist in three formsGsolid! li?uid! gasGand each form has specific pac'aging re?uirements. 6or instance! metal cylinders are one method for the pac'aging of gases! =hile metal pails can -e used for the pac'aging of li?uids. nother physical characteristic is the product;s a-ility to =ithstand the elementsF coal can -e e@posed to rain! =hereas salt piles cannot. In a similar #ein! some products can -e e@posed to free0ing conditions! =hile others cannot. &roduct density D=eight per #olumeE is yet another physical characteristic that can affect pac'aging conditions.
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iscuss some of the packaging re
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hat is the -uilding5-loc's concept< (o= is it applied to the handling of pac'aged goods<
The -uilding5-loc' concept is a 'ey factor in unit loads. Juilding -loc's ha#e certain dimensions that allo= them to stac' or load on a pallet or similar piece of e?uipment. The -uilding5-loc's hierarchy is important to remem-er -ecause each of the different -uilding -loc's is inside another and their total effect must -e to protect the product. They function in a complementary sense. .
The chapter descri-es appro@imately 1/ functions that a protecti#e pac'age should accomplish. oes e#ery pac'age ha#e to accomplish e#ery function< @plain. &ac'ages are designed to perform a num-er of protecti#e functions: protect the product from physical damageF -e strong enough to support additional -o@es as part of the -uilding5-loc' conceptF pro#ide uniform =eight distri-ution =ithin the pac'ageF and allo= enough e@terior space for shipping and identification la-els to -e attached. thoughtful e@amination of the 1/ functions =ould suggest that not e#ery function is applica-le to e#ery pac'age. 6or e@ample! tampering tends to -e more important =ith food and drugs than =ith! say! paper products. In addition! separation of the contents to pre#ent undesired contact is li'ely more important =ith fragile items such as glass=are.
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iscuss the relationship -et=een the le#el of protecti#e pac'aging used relati#e to the pac'aging re?uirement of common carriers. Carriers; tariffs and classifications influence! if not control! the type of pac'aging and pac'ing methods that must -e used. In freight classification documents! the type of pac'aging is specified. The carriers esta-lished these different classifications for t=o main reasons. 6irst! pac'aging specifications determined -y product density encourage shippers to tender loads in densities that ma'e -est use of the e?uipment;s =eight and #olume capa-ilities. Second! specifications that deal =ith protecti#e pac'aging reduce the li'elihood of damage to products =hile they are -eing carried.
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iscuss the role of la-eling in logistics management. "nce the material -eing pac'aged is placed into the appropriate container and sealed shut! it -ecomes necessary to la-el the container. hether =ords or code num-ers are used depends on the nature of the product and its #ulnera-ility to pilferage. etroflecti#e la-els that can -e read -y optical scanners may also -e applied. Jatch num-ers are fre?uently assigned to food and drug products! so that they may -e more easily traced in case of a product recall. Many regulations go#ern the la-eling of pac'ages! including the la-eling of =eight! specific contents! and instructions for use. La-eling can also -e used to ena-le a container to pass through Customs and other inspections as it tra#els in international commerce.
,. hy is it important to recogni0e that la-eling re?uirements may differ from country to country< 6ailure to comply =ith la-eling re?uirements could su-Hect the offending organi0ation to surcharges! administrati#e fees! andor penalty charges. s a general rule! la-eling re?uirements and enforcement tend to -e more stringent in economically de#eloped countries than in economically de#eloping countries.
). escri-e some of the de#ices that are used to monitor conditions during the Hourney that a shipment ma'es. Oarious pac'aging material manufacturers and trade organi0ations pro#ide free pac'age testing that attempts to duplicate shipping ha0ards such as #i-ration! dropping! compression! and rough handling! among others. ctual monitoring of the en#ironment the pac'age must pass through can -e done -y enclosing recording de#ices =ithin cartons of the products that are shipped. More sophisticated de#ices record o#er time a series of #aria-les! such as temperature! humidity! and acceleration force and duration. +. hat are some en#ironmental disad#antages to plastic pac'aging< "ne of plastic;s most fre?uently cited shortcomings is the length of time that it ta'es to -iodegrade! =hich can -e up to se#eral hundred years. Moreo#er! the production of plastic products is dependent on petroleum! =hich is a diminishing natural resource Dand an e@tremely costly resource in recent yearsE. third en#ironmental concern =ith plastic pac'aging is that sometimes plastic litter unintentionally ends up 'illing large num-ers of marine animals. 1/. hat en#ironmentally friendly pac'aging strategies might a firm adopt< "ne is to reduce the amount of pac'ing materials used! such as the use of Hust one material. second pac'aging strategy is to use en#ironmentally friendly pac'aging materials! such as postconsumer recycled content. third strategy is to use reusa-le containers! such as refilla-le glass -e#erage -ottles. fourth en#ironmentally friendly strategy is to retain or support ser#ices that collect used pac'aging and recycle it. 11. hat information is needed to design a protecti#e pac'age properly< Three important 'inds of information are re?uired: the se#erity of the distri-ution en#ironmentF the fragility of the product to -e protectedF and the performance characteristics of #arious cushion materials. 12. hat are some potential ad#antages to the unit load< "ne ad#antage is additional protection to the cargo -ecause the cartons are secured to the pallet -y straps! shrin'5=rapping! or some other -onding de#ice. second ad#antage is that pilferage is discouraged -ecause it is difficult to remo#e a single pac'age or its contents. The maHor ad#antage of the unit load is that it ena-les mechanical de#ices to -e su-stituted for manual la-or. 13. iscuss the disad#antages of the unit load. "ne disad#antage is that it represents a larger ?uantity of an item than a single -o@ and may -e of limited #alue to organi0ations that deal in small ?uantities. In addition! the mechanical de#ices! such as a for'lift! that can -e su-stituted for manual la-or can -e #ery e@pensi#e. et another dra=-ac' is a lac' of standardi0ation of pallet si0es! especially in the 8nited States. This lac' of standardi0ation may necessitate repalleti0ation of e@ports from the 8.S.
14. hat trade5offs e@ist -et=een =ood! plastic! and steel pallets< ood pallets are relati#ely ine@pensi#e compared =ith plastic and steel pallets. (o=e#er! plastic and steel pallets ha#e much greater longe#ity relati#e to =ood. Steel pallets can last for o#er 2/ yearsGa =ood pallet might last for one useY 8nli'e plastic and steel! =ood pallets can -rea' and splinter and thus pose safety dangers to =or'ers as =ell as perhaps necessitating repair costs. nother disad#antage to =ood pallets is that they are much hea#ier than plastic and steel. ood and plastic pallets are much more flamma-le than steel. 1%. Is the slip sheet currently a #ia-le alternati#e to the pallet< hy or =hy not< slip sheet! or flat sheet of either fi-er-oard material or plastic! is placed under the unit load and ta'es up less space than a pallet. The te@t suggests that ad#ances in technology ha#e created stronger plastics for slip sheets! =hich has led to a dramatic decrease in product damage. Impro#ed damage rates and lo= cost DR.+/ to R1.%/ per slip sheetE suggest that slip sheets could account for 3/> of product shipments -y 2/1/. 1$. hat issues does the logistics manager face once unit loads ha#e -een placed onto a transportation #ehicle< "ne consideration is ho= to load pallets! cartons! and the li'e into a transportation #ehicleG some cartons cannot -e laid on their sides or cannot ha#e other cartons placed on top of them. Jracing or inflata-le dunnage -ags are used to fill narro= empty spaces! -ut e#en =hen properly -raced! #arious forces such as #i-ration! pitch! and roll can still cause damage. Some goods are so hea#y that they utili0e a #ehicle;s =eight capacity =ithout filling its cu-ic capacityF these loads must -e carefully -raced and the =eight must -e distri-uted as e#enly as possi-le. 1,. iscuss the #arious handling characteristics associated =ith -ul' cargoes. Jul' materials are loose rather than in pac'aged form and are handled -y pumps! sho#el de#ices! con#eyor -elts! or the mere force of gra#ity. "ne handling characteristic for -ul' materials is density! and this can affect the amount of product that can -e loaded onto a transport #ehicle. material;s angle of repose is the si0e of angle that =ould -e formed -y the side of a conical stac' of that materialF the greater the angle! the higher the pile of material that can -e placed on a specific land area. Jul' li?uids ha#e uni?ue handling characteristics and their resistance to flo= is measured as #iscosity! =hich can -e lo=ered -y increasing the temperature of a li?uid. 9ases ha#e uni?ue handling properties! although most of them are handled =ithin completely enclosed pipeline systems.
1). escri-e t=o material handling principles. hich of the t=o do you -elie#e is more important< hy< The te@t lists 1/ materials handling principles de#eloped -y The College5Industry Council on Material (andling ducation. ny t=o of these principles can -e descri-ed! and the student can Hustify =hich one she he -elie#es to -e more important.
1+. hy is it important that materials handling -e aligned =ith an organi0ation;s o-Hecti#es! customers and products< The te@t indicates that this should -e common sense -ut relates an anecdote a-out a consumer products company that redesigned one of its storage facilities =ith the primary purpose to -e state of the art in terms of materials handling e?uipment. Less than a year later! the storage facility had to -e redesigned -ecause the state of the art materials handling e?uipment =as inconsistent =ith the type of products sold -y the company as =ell as =ith its customers; ordering re?uirements. 2/. oes your hometo=n ha#e mandatory recycling re?uirements< If so! =hat 'inds of products must -e recycled< The ans=ers to this ?uestion can pro#ide a stimulating discussion assuming that the students come from different geographic areas De#en =ith the same metropolitan areaE. It can -e interesting to learn that side5-y5side to=ns ha#e #astly different recycling re?uirements as =ell as to e@plore the logistical implications of the #arious recycling re?uirements.
&T III KMITI" 78STI"S C(&T %: &"TCTIO &C9I9 MTILS (LI9 Multiple Choice 7uestions #.
hich of the follo=ing statements is false< a. b. c.
some products can -e e@posed to free0ing =eatherF others cannot perisha-le products re?uire special pac'aging as they mo#e from source to customer a product;s chemical characteristics ha#e little or no influence on the =ay they are handled
the #arious properties of goods must -e made 'no=n to consumers to help them ma'e the correct -uying decision and properly care for the product e. all are true DcF pp. 1/,51/)E d.
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hich of the follo=ing statements r egarding perishable products is false< they re?uire special pac'aging they re?uire special monitoring they re?uire special loading they re?uire special storage all are true DeF p. 1/)E a. b. c. d. e.
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Legislation passed after the re?uires petroleum ª« carriers and tan' farms to ha#e in place e@tensi#e response plans for dealing =ith possi-le spills. @@on Oalde0 "il Spill terrorist attac's of Septem-er 11! 2//1 &ersian 9ulf ar of 1++1 Oietnam ar DaF p. 1/+E a. b. c. d.
. 1hat is a placard2 ; ¬ Ž -®
a de#ice used to monitor engine speed a distinct sign that identifies ha0ardous material protecti#e =rap for shipments that might free0e =hile in transit a type of manually operated materials handling e?uipment D-F p. 1/+E a. b. c. d.
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The -uilding -loc's concept is associated =ith =hich logistics function< =arehousing pac'aging materials handling in#entory management D-F p. 1/+E a. b. c. d.
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refers to materials used for the containment! protection! handling! deli#ery! and presentation of goods. &ac'aging -o@ Materials handling &rocurement DaF p. 11/E a. b. c. d.
&.
hich of the follo=ing is not a general function of pac'aging< to promote to protect to facilitate product handling to identify Dla-elE all are general functions DcF p. 11/E a. b. c. d. e.
(.
ll of the follo=ing are protecti#e functions of pac'aging e@cept: enclosing the materials -eing tamper5proof pro#iding uniform =eight distri-ution cushioning the contents all are protecti#e functions DeF pp. 11/5111E a. b. c. d. e.
).
Abo"maker7s certificateB: refers to =hat -o@ ma'ers recei#e upon finishing their training is gi#en in recognition of superior -o@ ma'ing a-ility assures that -o@es are free from any #isi-le defects assures rails and truc'ers that -o@es are sufficiently sturdy to meet their handling re?uirements DdF p. 113E a. b. c. d.
#+. regulates the pac'aging of international air shipments.
n indi#idual airline The 8nited ations country;s federal go#ernment The International ir Transport ssociation DdF p. 114E a. b. c. d.
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hich of the follo=ing is false< pac'age la-eling is usually done at the end of the assem-ly line code num-ers are prefera-le to =ords for la-eling a product some firms are mo#ing from one dimensional to t=o dimensional -ar codes -atch num-ers are fre?uently assigned to food and drug products D-F p. 114E a. b. c. d.
#*. s a general rule! la-eling re?uirements and enforcement tend to -e more stringent in
countries than in countries. a.
largerF smaller
economically de#elopingF economically de#eloped economically de#elopedF economically de#eloping smallerF larger DcF p. 114E b. c. d.
#-. hich of the follo=ing is not a type of information that is needed to de#elop a protecti#e pac'aging
system<
se#erity of the distri-ution en#ironment the -udget for pac'aging fragility of the product to -e protected performance characteristics of #arious cushioning materials all are types of information D-F p. 11,E a. b. c. d. e.
#. ach of the follo=ing is a shipping ha0ard that a pac'age may -e e@posed to e@cept:
etraction ¯9 #i-ration compression e@treme temperature all are shipping ha0ards for a pac'age DaF p. 11,E a. b. c. d. e.
#$. The ordinance concerning recycling is indicati#e of the direction in =hich the =orld is
mo#ing.
8.S. 6rench Jritish 9erman DdF p. 11+E a. b. c. d.
#%. hich of the follo=ing is not a characteristic of plastic pac'aging<
lac' of #ersatility 用°±² ta'es a long time to -iodegrade plastic is dependent on petroleum plastic litter can 'ill marine animals all are characteristics of plastic pac'aging DaF p. 11+E a. b. c. d. e.
#&. The te@t suggests that firms can adopt en#ironmentally5friendly pac'aging strategies. a. b. c. d.
t=o three four fi#e
DcF p. 11+E #(. hich of the follo=ing is not an en#ironmentally5friendly pac'aging strategy that firms might
adopt<
reduce the amount of pac'ing materials used use more en#ironmentally5friendly pac'aging materials use reusa-le containers retain or support ser#ices that collect the used pac'age and recycle it all are strategies DeF pp. 11+512/E a. b. c. d. e.
#). systems consider the re#erse
of reco#ered products.
flo= of products! their reuse! and the mar'eting and distri-ution
co5 "pen5loop etro5mo#ement Closed5loop DdF p. 12/E a. b. c. d.
*+. Li-ya! Myanmar! and are the only three countries in the =orld that do not currently use the
metric system of measurement. S=eden rgentina The 8nited States Papan DcF p. 12/E a. b. c. d.
*#. The -asic unit in unit loading is:
a -o@ a crate a pallet a container DcF p. 121E a. b. c. d.
**. unit load in#ol#es:
a con#oy of rail cars carrying the same product loading an entire #ehicle =ith shipments of three -o@es or less the usage of a pallet rac' system of storage securing one or more -o@es to a pallet or s'id in order to handle -y mechanical means DdF p. 121E a. b. c. d.
*-. The maHor ad#antage of the unit load is: a.
its en#ironmental friendliness
mechanical de#ices can -e su-stituted for manual la-or its #alue to companies that deal in small ?uantities that it simplifies transportation none of the a-o#e D-F p. 122E b. c. d. e.
*. hich of the follo=ing is false<
the unit load is of limited #alue to shippers =ho deal in smaller ?uantities unit loads may discourage pilferage ³´ the unit load allo=s mechanical de#ices to -e su-stituted for manual la-or pallets suffer from a lac' of standardi0ed si0es all are true DeF p. 122E a. b. c. d. e.
*$. maHor dra=-ac' to steel and plastic pallets is their .
=eight incompati-ility =ith e@isting for'lifts price lifespan DcF p. 122E a. b. c. d.
*%. pounds is a significant =eight in many logistics systems -ecause
=eight at =hich there is a noticea-le increase in inHuries.
it represents the appro@imate
4/ %/ $/ ,% D-F p. 124E a. b. c. d.
*&. Jecause of the height that a pallet ta'es up in a #ehicle or =arehouse! a method of achie#ing the
ad#antages of a pallet =ithout losing space is: slip sheets optimum cost relia-ility point mini5s'id system lo= profile pallet system DaF p. 124E a. b. c. d.
*(. Inflata-le fill #oid space and function as -oth a cushion and a -race. a. b. c. d.
tu-es rafts mattresses dunnage -ags [µd'˜¶·
DdF p. 124E *). The short distance mo#ement of material -et=een t=o or more points refers to:
=arehousing transportation materials handling materials management DcF p. 12$E a. b. c. d.
-+. is a uniform! sealed reusa-le metal -o@ in =hich goods are shipped.
container #essel trailer crate DaF p. 12$E a. b. c. d.
-#. dry -ul' material;s is important for determining the ?uantity that
location.
can -e stored in a gi#en
mar'et #alue angle of repose specific gra#ity #iscosity D-F p. 12)E a. b. c. d.
-*. The greater a -ul' material;s angle of repose! the .
higher the pile of materials that can -e placed on a specific land area greater its resistance to flo= higher its specific gra#ity harder it is to mo#e DaF p. 12)E a. b. c. d.
--. ach of the follo=ing is a ?uestion associated =ith materials handling! e@cept:
ho= =ill the product -e handled< =hat 'ind of e?uipment is needed to handle or store the product< in =hat form =ill the product -e< ho= much is the product =orth< all of the a-o#e are ?uestions DdF p. 12)E a. b. c. d. e.
-. The principle of materials handling r eminds us that the shortest distance between two points is a straight line.
ergonomic system standardi0ation =or' DdF p. 12+E a. b. c. d.
-$. hich of the follo=ing is false<
in a part5to5pic'er system! the pic' location is -rought to the pic'er for'lifts can -e dangerous ¸车 automation refers to e?uipment that complement s! rather than replaces! human contact rac's and -ins are e@amples of storage e?uipment ѹ'‚º all are true DcF p. 13/E a. b. c. d. e.
True56alse 7uestions 1. The physical characteristics of some goods change =hile they are mo#ing in the logistics channel. DTrueF p. 1/,E 2. Certain products should not! for health or safety reasons! -e pac'aged together. DTrueF pp. 1/)E 3. Compressed gases are one category of ha0ardous materials. DTrueF p. 1/+E 4. Legislation passed during the 1+,/s re?uires petroleum carriers and tan' farms to ha#e in place e@tensi#e response plans for dealing =ith spills. D6alseF p. 1/+E %. &lacards are distinct signs that identify ha0ardous materials. DTrueF p. 1/+E $. &rocurement can -e thought of in terms of the -uilding5-loc's concept. D6alseF p. 1/+E ,. "ne general function of pac'aging is to facilitate a product;s handling. D6alseF p. 11/E ). The promotional and protecti#e functions of pac'aging sometimes conflict. DTrueF p. 11/E +. &rotecti#e pac'aging should -e a-le to perform multiple functions. DTrueF pp. 11/5111E 1/. A-o@ ma'er;s certificateB assures that -o@es are free from any #isi-le defects. D6alseF p. 113E 11. egardless of =hether the shipper or carrier is responsi-le for damage in transit! the shipper specifies the le#el of pac'aging protection to -e used. D6alseF pp. 1135114E
12. The pac'aging re?uirements for airlines and e@press deli#ery companies tend to -e less detailed than those used -y rail and motor carriers. DTrueF p. 114E 13. Most pac'age la-eling ta'es place at the end of the assem-ly line. DTrueF p. 114E 14. s a general rule! la-eling re?uirements and enforcement tend to -e more stringent in larger countries D-ased on populationE than in smaller countries. D6alseF p. 114E 1%. hen ne= products or ne= pac'aging techni?ues are a-out to -e introduced! it is some=hat ad#isa-le to ha#e the pac'ages pre5tested. DTrueF p. 11,E 1$. 8nder the 9erman recycling ordinance! the final consumer has the ultimate responsi-ility for pac'aging disposal. D6alseF p. 11+E 1,. &lastic pac'aging tends to -e cheaper! more #ersatile! and more consumer5friendly than paper pac'aging. DTrueF p. 11+E 1). &oly#inyl chloride D&OCE! commonly referred to as #inyl! is considered a friendly plastic -ecause it has fe=! if any! potential side effects. D6alseF p. 12/E 1+. eusa-le containers =or' -est in a closed5loop system. DTrueF p. 12/E 2/. The 8nited States is the only country in the =orld that does not currently use the metric system of measurement. D6alseF p. 12/E 21. 8nited States e@porters are coming under increasing pressure to mar'et their products o#erseas in metric units. DTrueF p. 12/E 22. The -asic unit in unit loading is the retail pac'age. D6alseF p. 121E 23. hen a unit load is secured to a pallet! it is more difficult for pilferage to ta'e place. DTrueF p. 122E 24. The maHor ad#antage of the unit load is that it ena-les mechanical de#ices to -e su-stituted for manual la-or. DTrueF p. 122E 2%. There are no disad#antages to the unit load. D6alseF p. 122E 2$. Lift truc's are the common =or'horse used around =arehouses to mo#e pallets. DTrueF p. 122E 2,. &lastic pallets tend to -e less e@pensi#e than =ooden or steel pallets. D6alseF p. 122E 2). Steel pallets ha#e longer lifespans than =ooden or plastic pallets. DTrueF p. 124E 2+. d#ances in technology ha#e created stronger plastics that can -e used for slip sheets and this has resulted in a corresponding decrease in damage rates. DTrueF p. 124E 3/. 6or surface cargo! the ne@t5si0ed -uilding -loc' -eyond the unit load is the pallet load. D6alseF p. 124E
31. Load5planning soft=are can -e used to suggest ho= to load a container =ith different si0es of cartons. DTrueF p. 124E 32. A=eighed outB container refers to one that has -een =eighed prior to its departure from a container yard. D6alseF p. 12%E 33. Materials handling deals =ith the short distance mo#ement of the material -et=een t=o or more points. DTrueF p. 12$E 34. "cean carriers and railroads ha#e -oth de#eloped methods of handling t=o or more containers at one time. DTrueF p. 12$E 3%. material;s angle of repose refers to the si0e of angle that =ould -e formed -y the side of a conical stac' of that material. DTrueF p. 12)E 3$. Oiscosity refers to a -ul' material;s =ater content. D6alseF p. 12)E 3,. rgonomics refers to the science that see's to adapt =or' or =or'ing conditions to suit the a-ilities of the =or'er. DTrueF p. 12+E 3). The planning principle of materials handling suggests that the material handling plan should -e in line =ith the strategic o-Hecti#es of the organi0ation. DTrueF p. 12+E 3+. utomatic guided #ehicles D9OsE are an e@ample of mechani0ed materials handling e?uipment. D6alseF p. 13/E 4/. s a general rule! pic'er5to5part systems are prefera-le to part5to5pic'er systems. D6alseF p. 13/E
&T IO CS S"L8TI"S CS %51 LT T( J LI9(T LM& S( C"M& C"M& 7uestion 1: (o= many style shades can -e loaded into an intermodal container< The intermodal container holds 2!,2/ cu-ic feet! ho=e#er! the top si@ inches is of no use. It =ill hold 2!%$/ style shades. 7uestion 2: (o= many style J shades can -e loaded into an intermodal container< Style J shades could -e stac'ed t=o pac'ages high =ith the s?uare foot on the -ottom. ach column =ould hold 12 shades. There =ould -e ) @ 4/! or 32/ columns of 12! yielding 3!)4/ lamp shades! and =ould =eigh less than 4/!/// pounds. 7uestion 3: (o= many style C shades can -e loaded into an intermodal container< Style C shades could -e stac'ed the same =ay as style J and a container =ould hold 32/ columns of 2/! yielding $!4// lamp shades. (o=e#er! this =ould e@ceed the 44!/// pound =eight limit. ach shade =eighs 1/.1 poundsF di#iding that into 44!/// pounds yields appro@imately 4!3%/ lamp shades. 7uestion 4: hat are the total costs cos ts of deli#ering the style s tyle shades to the port po rt of importation< Item Shade &ac'aging Intermodal containers D3E Container drayage to &ort of "a'land Insurance "cean freight rates DaE "cean freight rates D-E &ic' higher of DaE or D-E Total
Cost parameters R 4 @ % !4 / / R.$/ @ %!4//
Total cost R 2 1! $ / / R3!24/
R1!/// @ 3 R2,!)// @ ./2 R22 per 2!/// pounds R22 per 4/ cu-ic feet
R3!/// R% % $ R %+ 4 R 2! + , / R2!+,/ R31!3$$
7uestion %: hat are the total costs of deli#ering the style J shades to the port of importation< Item Shade &ac'aging Intermodal containers D2E Container drayage to &ort of "a'land Insurance "cean freight rates DaE "cean freight rates D-E &ic' higher of DaE or D-E
Cost parameters R % @ % !4 / / R2 @ +//
Total cost R 2 ,! / / / R1!)//
R1!/// @ 2 R3/!)// @ ./2 R22 per 2!/// pounds R22 per 4/ cu-ic feet
R2!/// R$ 1 $ R $1 4 R 1! + $ / R1!+$/
Total
R33!3,$
7uestion $: hat are the total costs of deli#ering the style C shades to the port of importation< Item Shade &ac'aging Intermodal containers D2E Container drayage to &ort of "a'land Insurance "cean freight rates DaE "cean freight rates D-E &ic' higher of DaE or D-E
Cost parameters R $ @ % !4 / / R3 @ %4/
Total cost R 3 2! 4 / / R1!$2/
R1!/// @ 2 R3$!/2/ @ ./2 R22 per 2!/// pounds R22 per 4/ cu-ic feet
R2!/// R, 2 / R $/ / R 1! 2 3 ) R1!23)
Total
R3,!+,)
7uestion ,: hich style =ould you recommend< hy< 6rom the rele#ant data! style is least e@pensi#e. &T II SS T" 5"65C(&T 78STI"S C(&T $: TS&"TTI" 1. hy is transport transportation ation importa important nt to a firm; firm;ss supply chain chain operation operations< s< Transportation influences! or is influenced -y! many logistics acti#ities such as the fact that transportation costs are directly affected -y the location of plants! =arehouses! #endors! retail locations! and customers. In#entory re?uirements are influenced -y the mode mode of transport used and the transport mode influences the pac'aging re?uired as =ell as the materials handling e?uipment. Customer ser#ice goals influence the type and ?uality of carrier and carrier ser#ice selected -y the seller. 2. hy is it important important to 'no= 'no= a-out the characteri characteristics stics of a country;s country;s transporta transportation tion infrastruct infrastructure< ure<
n indi#idual country;s topology! economy! infrastructure and other macroen#ironmental factors influence a country;s country;s transportation system. Jecause an increasing num-er of shipments shipments are -eing transported -et=een multiple countries! 'no=ledge of a country;s infrastructure can help a#ert potential transportation pro-lems. 6or e@ample! some countries may ha#e fe= airports =ith 1/!/// foot run=ays! =hich might reduce the feasi-ility of mo#ing shipments #ia air. 3. List some some products products that fre?uentl fre?uentlyy mo#e -y airfreight. airfreight. hy do you thin' thin' that airfrei airfreight ght =as selected as the mode to use< s a general rule! products that mo#e -y airfreight tend to -e high #alue and may -e of a perisha-le nature or other=ise re?uire re?u ire urgent deli#ery. deli#ery. These products include cut flo=ersF electronic e?uipment and partsF fruits and #egeta-les among others. 4. (o= do truc'load truc'load operations operations differ differ from less5than5truc less5than5truc'load 'load operati operations< ons< Less5than5truc'load DLTLE shipments range from a-out 1%/ 1/!/// poundsF truc'load DTLE carriers focus on shipments of greater than 1/!/// pounds although the e@act =eight depends on the product. LTL shipments are often too -ig to handle manually! manually! do not fill a truc' and LTL LTL carriers transport shipments of many customers simultaneously. simultaneously. hereas LTL LTL shipments are routed through terminals! TL shipments tend to mo#e directly from the shipper;s location to the consignee;s location.
%. (o= do speed speed limits limits and hours5of5ser#ic hours5of5ser#icee rules potentia potentially lly affect affect motor motor carrier ser#ice< ser#ice< Speed limits and hours5of5ser#ice D("SE rules ha#e long -een Hustified on the -asis of safety concerns. (o=e#er! speed limits limits influence the amount of territory that can -e co#ered -y a truc'er during a particular time period Da lo=er speed limit means less mileage can -e co#eredE. (ours5of5ser#ice rules limit the num-er of hours that can -e dri#en in a 245hour period as =ell as the num-er of hours that can -e dri#en in a one =ee' period. $. hat are are ad#antages ad#antages and disad#an disad#antages tages to a pipeline; pipeline;ss lac' of #ehicle #ehicles< s< There is no need for #ehicle operators and little li'elihood of =or' stoppages -y operating employees. The lac' of #ehicles also means that transportation is one =ay and the the lac' of a -ac'haul reduces potential e@cess capacity c apacity issues. In addition! pipeline;s lac' of #ehicles means that it is the most relia-le form of transportation -ecause there are not #ehicle5related disruptions and pipelines are #irtually #irtually unaffected -y ad#erse =eather conditions. conditions. (o=e#er! the lac' of #ehicles means that the rele#ant product must -e forced through the pipeline and this means that pipelines tend to -e the slo=est form of transportation. ,. hat are pipeline pipeline slurry systems< systems< (o= do they function< function< Slurry systems allo= -ul' commodities to -ecome li?uefia-le -y grinding the solid material to a certain particle si0e! mi@ing it =ith a li?uid to form a fluid muddy su-stance! pumping that su-stance through a pipeline! and then decanting the li?uid and remo#ing it! lea#ing the solid
material. hile =ater is the most common li?uid used in slurry systems! other li?uids can -e used. ). iscuss iscuss the the dra=-a dra=-ac's c's of rail rail transp transport ortati ation. on. There is a le#el of mar'et domination in railroading that creates limited ser#ice and pricing options for potential customers. 8S railroads ha#e e@hi-ited rather une#en relia-ility in recent years in part -ecause of se#ere =eather conditions that ha#e destroyed and damaged many miles of trac'. ailroads present an interesting parado@ in the sense that they they are not the A-estB or A=orstB on any of the attri-utes such as capa-ility! capa-ility! capacity! cost! and so on. +. (o= do =eather =eather condit conditions ions influence influence the the relia-ilit relia-ilityy of inland inland =ater carriers carriers<< rought creates pro-lems -ecause =hen =ater le#els drop -elo= accepta-le le#els! -arges are forced to reduce their loads or -arge traffic might -e halted altogether! situations that re?uire alternate means of transportation. Icing closes -odies of =ater and pre#ents year5round operations. ith ith flooding! there is too much =ater and =hile the the disruptions from flooding tend to -e shorter than those associated =ith drought! any disruption negati#ely impacts transportation relia-ility. relia-ility. 1/. iscuss the positi#e positi#e attri-utes of inland =ater transportation. Inland =ater transportation is relati#ely ine@pensi#e to users! particularly =hen compared to rail and truc' transportation. Moreo#er! many different different 'inds of products can -e carried and of the modes =ith #ehicles! inland =ater transportation offers the greatest capacity D#olume that can -e carried at one timeE. 11. hat is a land -ridge ser#ice< (o= might it -e applied< ather than all =ater ser#ice -et=een t=o ports! land -ridge ser#ices in#ol#e the use of surface transportationGusually railG-et=een the origin and destination port. The te@t presents an e@ample of a shipment of pineapples from (a=aii to urope. ather than going -y =ater from (a=aii through the &anama Canal and then onto urope! under land -ridge ser#ice the pineapples =ould mo#e -y ship from (a=aii to a 8S =est coast =ater port. por t. 6rom this port the pineapples could -e placed on railcars and shipped across the 8S to an east coast port por t =here the pineapples =ould -e loaded onto a #essel for mo#ement to urope. 12. hat are freight for=arders< (o= do they they function< hat ser#ices do they perform< 6reight for=arders operate as agents that act as consolidators of freight. They function -y consolidating shipments from small shippers! -uying transportation in #olume rates! and then charging shippers a rate some=here -et=een the non5#olume rate and the #olume rate. The for=arder may offer pic'up and deli#ery deli#ery ser#ices! -ut not linehaul ser#ice. In addition! for=arders can speciali0e -y handling domestic or international shipmentsF -y handling surface or air shipmentsF -y handling certain products De.g.! garmentsE. 13. hat is a shippers; association< association<
Shippers; associations perform -asically the same functions as surface and air freight for=arders! e@cept shippers; associations do not operate as profit5ma'ing organi0ations. ll profits achie#ed through their consolidation programs pro grams are returned to the associations; mem-ers. 14. hy do truc'load truc'load rates tend to -e lo=er than less5than5truc'load less5than5truc'load rates< Truc'load rates are lo=er lo=er than less5than5truc'load rates for three reasons: 1E the shipper loads the goods and the consignee unloads the trailerF 2E the load goes directly from shipper to consignee =ithout passing through terminalsF 3E paper=or'! -illing! and other administrati#e costs are little more for a 2%!/// pound shipment than they =ould -e for a 2%/ pound shipment. 1%. iscuss the #arious options that are a#aila-le to parcel shippers. &arcel shippers! =ho send pac'ages =eighing up to 1%/ pounds! ha#e a #ariety of options such as &arcel &ost! a ser#ice of the 8.S. &ostal Ser#ice that =as specifically esta-lished to send pac'ages through the mail system. &arcel &ost has definite si0e and =eight limitations Dappro@imately ,/ poundsE. 8nited &arcel Ser#ice D8&SE and 6ed@ are also options for parcel shippersF their rates! unli'e the &arcel &ost! include -oth pic' up and deli#ery. deli#ery. The =eight limitations for 8&S and 6ed@ range from ,/ to 1%/ pounds! depending on the type of ser#ice purchased. &ac'age ser#ices are also a#aila-le a #aila-le from 9reyhound Lines! the primary intercity -us company in the 8.S.! and pac'ages are limited to a ma@imum =eight of 1// pounds. 1$. List se#eral en#ironmental regulations and descri-e their impact on transportation. oise standards promulgated -y the 8.S. n#ironmental &rotection &r otection gency gency D&E D&E meant that commercial airlines had to e?uip their fleet =ith =ith ?uieter engines. In terms of air pollution! the & has mandated that -eginning in 2//, hea#y5duty truc' engines must meet stringent emission standards. The & & is is also ?uite concerned =ith resource conser#ation and impro#ed fuel efficiency and reduced consumption of petroleum ha#e -ecome important issues for many transportation companies. 1,. &ic' three modes of transportation! transportation! name the federal agency responsi-le for safety regulation for each of the modes you pic'ed! and pro#ide a safety5related issue for each mode. ir: 6ederal #iation dministrationF =eather5related accidents. Motor carriers: 6ederal Motor Carrier Safety dministrationF large truc' accidents are most often caused -y dri#er -eha#ior. ailroads: 6ederal ailroad dministrationF dministrationF signal and train control issues. &ipelines: &ipeline and (a0ardous Materials Materials Safety dministrationF classifies accidents according to cause! damage! and fatalities or inHuries. Inland =ater: 8.S. Coast 9uardF impro#e tug-oat! to=-oat! and -arge safety. 1). efine =hat is meant -y economic regulation. hy is transportation economic deregulation important< conomic regulation in transportation refers to control o#er -usiness practices and acti#ities such as entry and e@it! pricing! ser#ice! accounting and financial issues! mergers and ac?uisitions. conomic deregulation of transportation is important -ecause it allo=ed transportation companies much greater freedom =ith respect to pricing and ser#ice optionsG
t=o attri-utes that facilitate the tailored logistics concept. In addition! the economic deregulation that occurred in the 8.S. has -een the catalyst for economic deregulation in Canada and some uropean nations. 1+. (o= does a common carrier differ from a contract carrier< common carrier has agreed to ser#e the general pu-lic -y assuming four specific o-ligations: to ser#e! to deli#er! to charge reasona-le rates! and to a#oid discrimination in pricing and ser#ice. contract carrier offers a speciali0ed ser#ice to customers on a contractual -asis and the contract specifies the compensation to -e recei#ed! the ser#ices to -e pro#ided! the type of e?uipment to -e used! among others. 8nli'e the common carrier! the contract carrier is under no o-ligation to render ser#ices to the general pu-lic and only has to ser#e customers =ith =hom it has contracts. 2/. iscuss ad#antages and disad#antages to pri#ate transportation. "perational control is a 'ey ad#antage to pri#ate transportation. 6or e@ample! shipments can mo#e at a time con#enient to the company! as opposed to a time that might -e con#enient for a carrier. &ri#ate transportation may also -e a cost effecti#e form of transportation! particularly in situations =here the company can find -ac'haul trafficF re#enue from the -ac'haul can -e used to offset costs on -oth the fronthaul and -ac'haul. 'ey disad#antage is that pri#ate transportation can -e ?uite costly! in part -ecause of the capital e@penditures that are necessary to o=n or lease the rele#ant #ehicles. Moreo#er! managerial costs are often ignored or underestimated! =hich sometimes results in large! unanticipated outlays to procure a full5time pri#ate fleet manager.
&T III KMITI" 78STI"S C(&T $: TS&"TTI" Multiple Choice 7uestions 1. is the actual! physical mo#ement of goods and people -et=een t=o points. a. Logistics -. Transportation c. Materials handling d. Telecommunications D-F p. 13%E 2. There are modes of transportation. a. three -. four c. fi#e d. si@ DcF p. 13$E 3. 3!/4, meter D1/!/// footE run=ay »G is significant -ecause it . a. is the longest that can -e used =orld=ide due to safety regulations -. represents the longest run=ay in the =orld c. is generally #ie=ed as ade?uate for accommodating e@isting =ide -ody aircraft d. is only found in economically de#eloped countries DcF p. 13$E 4. ail gauge refers to . a. the distance -et=een the inner sides of t=o parallel rail trac's -. the length of rail trac' c. the thic'ness of rail trac' d. the allo=a-le speed on a segment of trac' e. none of the a-o#e DaF p. 13,E
%. In the 8nited States! account for the largest share of ton5miles and account for the maHority of freight re#enues.¼½ a. railsF rails -. truc'sF truc's c. truc'sF rails
d. railsF truc's DdF p. 13,E $. is generally the fastest form of transportation for shipments e@ceeding $// miles. a. Less5than5truc'load carriers -. ir c. &arcel carriers d. Truc'load carriers D-F p. 13)E ,. Consignees are: a. preferred suppliers -. recei#ers of freight c. shippers of freight d. e@tremely large LTL carriers D-F p. 13)E ). imensional =eight . a. is no longer used -. only applies to air transportation c. considers a shipment;s density d. is associated =ith commodity rates DcF p. 13)E +. hich of the follo=ing is not li'ely to mo#e -y air transportation< a. =earing apparel -. fruits and #egeta-les c. cut flo=ers d. auto parts e. all are li'ely to mo#e -y air DeF p. 13+E
1/. Less5than5truc'load DLTLE carriers: a. ser#e only regional mar'ets -. operate through a series of terminals c. are e@empt from hours5of5ser#ice regulations d. carry the shipment directly from shipper to consignee D-F p. 13+E 11. Truc'load carriers focus on shipments of greater than pounds.
a. 1/!/// -. 1%!/// c. 2/!/// d. 2%!/// DaF p. 13+E 12. ach of the follo=ing statements are true! e@cept: a. truc'load mo#ements go directly from shipper to consignee =ithout passing through terminals -. truc'load shipments cost less per pound than LTL shipments c. in truc'load shipments! the shipper loads and the consignee unloads the trailer d. P.J. (unt is an e@ample of a truc'load carrier e. all are true DeF pp. 13+514/E 13. (ours5of5ser#ice D("SE rules and speed limits ha#e long -een Hustified in the motor carrier industry on the -asis of . a. cost efficiency -. operational efficiency c. safety concerns d. customer re?uirements DcF p. 14/E 14. The primary ad#antage for motor carriers is . a. relia-ility -. speed c. capa-ility d. fle@i-ility DdF p. 14/E
1%. truc'ing tends to ha#e the highest cost per hundred =eight. a. LTL -. TL c. &arcel d. @pedited À¾ DdF pp. 14/5141E
1$. is the most relia-le form of transportation. a. ail
-. Motor carrier c. &ipeline d. ir e. ater DcF p. 141E 1,. allo=s -ul' commodities to -ecome li?uefia-le -y grinding the solid material to a certain particle si0e! mi@ing it =ith li?uid! transporting it and then decanting the li?uid. a. hochrematics -. Slurry systems c. Con#eyor systems d. 9eothermic systems D-F p. 141E 1). ha#e a le#el of mar'et concentration and dominance that is not found in the other modes. a. &ipelines -. irlines c. ailroads d. Motor carriers DcF p. 142E 1+. hich mode is not the A-estB or A=orstB on any of the si@ attri-utes De.g.! capa-ility! fle@i-ility! etc.E that =ere used to compare the modes< a. railroads -. =ater carriers c. pipelines d. motor carriers DaF p. 142E 2/. Inland =ater=ays should -e dredged to a depth of feet! =hich tends to -e the minimum depth re?uired for most -arges. a. si@ -. nine c. t=el#e d. fifteen D-F p. 143E 21. raises or lo=ers -arges so that they can meet the ri#er;s le#el as they mo#e upstream or do=nstream. a. to=-oat -. le#ee c. -arge crane d. loc' DdF p. 143E
22. "f the modes =ith #ehicles! offer the greatest capacity D#olume that can -e carried at one timeE. a. railroads -. =ater carriers c. motor carriers d. airlines D-F p. 144E 23. transportation occurs =hen two or more modes work closely together in an attempt to utili0e the ad#antages of each mode =hile at the same time minimi0ing their disad#antages. a. Multimodal -. Intramodal c. Intermodal d. Colla-orati#e DcF p. 144E 24. hat is regarded as the key development in intermodal transportation o#er the past 3/ years< a. economic deregulation -. impro#ed rail access c. the container d. the Internet DcF p. 144E 2%. The primary ad#antage to land -ridge ¿+ÀDÁ ser#ice is . a. less loss and damage -. reduced transit time c. lo=er transportation cost d. impro#ed relia-ility D-F p. 14%E 2$. Freight forwarders'Ñ1Áœ a. are the same as shippers; associations -. consolidate the shipments of se#eral carriers XË|1人 MÂ1人 c. represent the consignees; interests d. consolidate the shipments of se#eral shippers Ãü了Ù个Â1人 DdF p. p. 14$E 2,. Shippers; associations: a. -. c. d.
are the same as a freight for=arder function in a manner similar to freight for=arders speciali0e in truc'load shipments are used only for agricultural products
D-F p. 14$E 2). transportation -ro'er: Ä助ÅÀop a. loo's to match a shipper7s freight with a carrier to transport it -. deals only =ith agricultural products c. is the same as a freight for=arder d. tends to -e spun off from carriers or management consulting firms DaF p. 14,E 2+. 6irms that speciali0e in carrying pac'ages ´Æ that =eigh up to 1%/ pounds are called: a. couriers -. accessorial carriers c. parcel carriers d. e@pedited carriers DcF p. 14,E
3/. hat is the largest transportation company D-y re#enuesE in the 8nited States< a. 6ed@ -. 8nion &acific ailroad c. merican irlines d. 8nited &arcel Ser#ice DdF p. 14,E 31. The 8.S. is the federal go#ernment -ody =ith primary responsi-ility for transportation safety regulation. a. Interstate Commerce Commission -. epartment of Commerce c. epartment of (omeland Security d. epartment of Transportation DdF p. 14)E 32. ith respect to 8.S. economic regulation! the has primary responsi-ility for resol#ing railroad rate and ser#ice disputes! re#ie=ing potential rail mergers and some Hurisdiction o#er motor carriers! domestic =ater transportation! and pipelines. a. -. c. d.
Surface Transportation Joard Interstate Commerce Commission 6ederal Trade Commission epartment of Commerce
DaF p. 14)E 33. Common carriers of transportation ha#e o-ligations. 1人ÇV： a. si@ -. fi#e c. four d. three e. none of the a-o#e DcF p. 1%/E 34. hich of the follo=ing is not a legal classification of carriers< a. @empt ȼ -. Common É< c. Contract í同 d. &ri#ate õÊ e. all are legal classifications DeF p. 1%/E 3%. &ri#ate transportation is most pre#alent E{ in the industry. a. pipeline -. truc'ing c. railroad d. airline D-F p. 1%1E True56alse 7uestions 1. Transportation is the actual! physical mo#ement of goods and people -et=een t=o points. DTrueF p. 13%E 2. There are si@ different modes of transportation. D6alseF p. 13$E 3. 1/!/// foot D3!/4, meterE run=ay is #ie=ed as ade?uate for accommodating the largest e@isting =ide -ody aircraft. DTrueF p. 13$E 4. ail gauge refers to the thic'ness of rail trac'. D6alseF p. 13,E %. In the 8.S.! motor carriers ha#e the largest share of ton5miles. D6alseF p. 13,E $. ir is generally the fastest mode of transportation for shipments e@ceeding $// miles. DTrueF p. 13)E ,. ccessorial ser#ice is al=ays pro#ided -y truc's. D6alseF p. 13)E
). &roducts that are air freighted tend to -e high in #alue and tend to re?uire urgent deli#ery. DTrueF p. 13)E +. Less5than5truc'load shipments range from a-out 1%/ to 1/!/// pounds. DTrueF p. 13+E 1/. Truc'load freight mo#es through a carrier;s terminalDsE. D6alseF p. 13+E 11. (ours5of5ser#ice rules and speed limits ha#e generally -een Hustified on the -asis of operational efficiency. D6alseF p. 14/E 12. The primary ad#antage for motor carriers is capa-ility Dthe amount of different types of products that can -e carriedE. D6alseF p. 14/E 13. &ipelines are a uni?ue mode of transportation -ecause it is the only one =ithout #ehicles. DTrueF p. 141E 14. ailroads are considered the most relia-le form of transportation. D6alseF p. 141E 1%. Trun' lines carry crude oil to concentration points. D6alseF p. 141E 1$. The 8.S. railroad industry is dominated -y four freight carriers. DTrueF p. 142E 1,. 8.S. freight railroads are not the A-estB or A=orstB on any of the si@ attri-utes that =ere used to compare modes. DTrueF p. 142E 1). T=el#e feet of =ater is the minimum depth re?uired for most -arges. D6alseF p. 143E 1+. rought! icing! and flooding can impact the relia-ility of inland =ater transportation. DTrueF p. 143E 2/. Jarge transportation tends to -e slo=. DTrueF p. 143E 21. "f the modes =ith #ehicles! railroads offer the greatest capacity! or #olume! that can carried at one time. D6alseF p. 144E 22. The container is regarded as the 'ey de#elopment in intermodal transportation o#er the past 3/ years. DTrueF p. 144E 23. commonly used metric for measuring container #olumes is the T8 Dt=enty5foot e?ui#alent unitE. DTrueF p. 144E 24. 6reight for=arders are the same thing as freight -ro'ers. D6alseF pp. 14$514,E 2%. 6reight for=arders sell freight at a higher rate per pound than they pay carriers to haul it. DTrueF p. 14$E 2$. Shipper cooperati#es perform -asically the same function as surface and air freight for=arders! e@cept that cooperati#es do not operate as profit5ma'ing organi0ations. DTrueF p. 14$E
2,. transportation -ro'er loo's to match a shipper;s freight =ith a carrier to transport it. DTrueF p. 14,E 2). &arcels refer to pac'ages =eighing up to 1// pounds. D6alseF p. 14,E 2+. The largest 8.S. transportation company -y re#enues is 6ed@. D6alseF p. 14,E 3/. The #arious types of transportation regulation cost money. DTrueF p.14)E 31. The le#el and degree of transportation regulation is relati#ely uniform from country to country. D6alseF p. 14)E 32. n#ironmental regulation of transportation is concerned =ith =ater! noise! and air pollution. DTrueF p. 14)E 33. The 8.S. epartment of (omeland Security is the federal go#ernment -ody =ith primary responsi-ility for transportation safety regulation. D6alseF p. 14)E 34. 8.S. pipelines are so safe that there is no federal safety agency assigned to regulate them. D6alseF p. 14+E 3%. conomic regulation in transportation refers to control o#er -usiness practices and acti#ities such as entry and e@itF pricingF ser#iceF accounting and financial issuesF mergers and ac?uisitions. DTrueF p. 14+E 3$. Since deregulation! transportation carriers are no longer constrained =ith respect to the #ariety of ser#ices they can offer. DTrueF p. 1%/E 3,. &ri#ate carriers do not ha#e to comply =ith en#ironmental and safety regulations. D6alseF p. 1%/ E 3). Common carrier transportation companies ha#e four specific o-ligations. DTrueF p. 1%/E 3+. contract carrier is under no o-ligation to render ser#ices to the general pu-lic. DTrueF p. 1%/E 4/. &ri#ate transportation is most pre#alent in the pipeline industry. D6alseF p. 1%1E
&T IO CS S"L8TI"S CS $51 J"" S(" C"M& 7uestion 1: ssume that there are no commodity or e@ception rates in effect for this shipment. 8sing @hi-its $5J! $5C! and $5! calculate the applica-le charge. The LCL rating for arch support insoles Ditem num-er 133+/E is 1// and a CL rating D2/!/// pound minimumE is ,/. The rate -asis num-er is %,+. The rate can then -e foundF it is R3.4+ per hundred=eight DCTE. The charge can -e calculated =ith the class rate formula: ate @
=eight in CTs
V
charge
R3.4+ @
1,/
V
R%+3.3/
7uestion 2: Ste#e remem-ered that he had heard Larry spea' of shipping A=ind.B This in#ol#ed paying the CL minimum =eight in order to recei#e the CL rate! e#en if the shipment actually =eighed less than the carload minimum =eight. Should this techni?ue -e used for the shipment< hy or =hy not< 8sing the same formula as a-o#e: R2.44 @
2//
V
R4))
Jy using the CL rating and shipping 3!/// pounds of A=ind!B a sa#ing of R1/%.3/ DR%+3.3/ minus R4))E is possi-le. (o=e#er! in order to ?ualify for the CL rate! the shipper =ould ha#e to load the railcar and the consignee unload it. 7uestion 3: The -uyer =ill pay on receipt of the shipment! =hich is #alued at R21!/// plus any transportation charges. Joone Shoe Company -orro=s money from the -an' regularly on an open line of credit and is currently paying interest on its de-t at the rate of 1%> per year. If rail LCL ser#ice is used! deli#ery time to 9reen Jay =ill -e a-out 1/ days. If rail CL ser#ice is used! deli#ery time =ill -e $ days. hat is the additional ad#antage to Joone Shoe Company if it chooses to use CL ser#ice< The shoe company should recei#e their payment 4 days earlier. The annual 1%> interest rate =or's out to -e .1$> for 4 days. Multiplying R21!/// -y .1$ gi#es us R33.$/ of sa#ings in interest e@pense. 7uestion 4: DThis is a continuation of ?uestion 3.E Joone Shoe Company also o=ns se#eral large truc's! although Ste#e is uncertain =hether they are a#aila-le for immediate use. (e 'no=s that they could ma'e the deli#ery to 9reen Jay in 2 days. (e chec's the high=ay distance from St. Poseph to 9reen Jay and finds that it is %)) miles. Larry had once told Ste#e that it cost the company R.)% per mile to operate its high=ay truc's. o you thin' that a truc' should -e used if it is a#aila-le< hy< The one5=ay cost is %)) times R.)%! or R4++.)/. ote! ho=e#er! that this lea#es the truc' Dand dri#erE in 9reen Jay. It must either -e dri#en -ac' empty! or a -ac'haul of some other commodity must -e found.
7uestion %: DThis is a continuation of ?uestions 2 and 3.E nother alternati#e is to ma'e the shipment -y rail from Joone;s St. Louis =arehouse. ail deli#ery time =ill -e 4 days. hat price should Tom Coo' -e told to ?uote to La=son;s< It still pays to ship A=ind.B The rate -asis num-er is 4%) and the CL rate Dusing 4$/E is 21%. Multiplying R2.1% times 2// yields R43/. If Tom really =anted to -e competiti#e! he could ta'e into account that payment =ould -e $ days earlier. 7uestion $: Joone Shoe Company often sells large ?uantitiesGfrom 1/!/// up to 3/!/// poundsGof arch5support insoles on an 6"J5deli#ered -asis. fter referring to @hi-it $5J! do you thin' there is a minimum =eight Din this 1/!///3/!/// pound rangeE that customers should -e encouraged to order< If so! =hat is it< "-#iously! orders o#er 2/!/// pounds =ill mo#e at lo=er D,/E ratings. (o=e#er! -ecause of the Ashipping =indB principle! there are some sa#ings in the =eight categories -et=een 14!/// and 2/!/// pounds.
&T II SS T" 5"65C(&T 78STI"S C(&T ,: TS&"TTI" M9MT 1. (o= is the transportation manager;s Ho- different today than =hen the first edition of this -oo' =as pu-lished in the late 1+,/s< T=o maHor reasons for this difference are glo-ali0ation and changes in regulation. In the late 1+,/s! the &eople;s epu-lic of China had Hust -egun to emerge from the Cultural e#olution! a mo#ement that se#erely restricted the country;s economic de#elopment. Today! -y contrast! China has a -ooming economy and is a 'ey source of manufactured products for many countries. The economic deregulation that -egan in the late 1+,/s has gi#en the transportation manager greater pricing and ser#ice options. 2. iscuss ho= transportation managers could -e in#ol#ed =ith other operations of the firm. They assist mar'eting -y ?uoting freight rates for salespeople! suggesting ?uantity discounts that can -e -ased on transportation sa#ings! and selecting carriers and routes for relia-le deli#ery of products. Transportation managers can help manufacturing -y ad#ising on pac'aging and materials handling and ma'ing certain that an ade?uate supply of transportation is a#aila-le =hen it is needed. In addition! transportation managers help purchasing -y ad#ising a-out methods to control the costs and ?uality of in-ound deli#eries and -y tracing and e@pediting lost or delayed shipments of important inputs. 3. Jriefly e@plain the class rate system. The class rate system simplifies rate determination in terms of three primary factorsGproduct! =eight! and distance. 6our factors are used to determine a product;s classification. They are density! sto=a-ility! ease of handling! and lia-ility to damage and theft. istances are
simplified in terms of rate -asis num-ersF higher rate -ase num-ers reflect greater distance -et=een t=o points. eight is di#ided into different groups! such as less than %// pounds! %//5 +++ pounds! and so on. 4. iscuss the four factors used in determining a product;s freight classification. 5ensity! =hich refers to ho= hea#y a product is in relation to its si0e! is #ie=ed as the primary
factor for setting a product;s classification. Lo= density products Dlo= =eight per cu-ic feetE are assigned a higher classification -ecause these products tend to cu-e out -efore they =eigh out. =towability refers to ho= easy the commodity is to pac' into a load! =hile ease or difficulty of handling refers to challenges to handling that might -e presented -y a commodity;s si0e! =eight! and so on. The liability for loss and damage considers! among others! a commodity;s propensity to damage other freight! its perisha-ility! and its #alue.
%. @plain the =eight -rea' concept. The fact that lo=er #olume rates De.g.! LTL ratesE tend to -e higher than higher #olume rates De.g.! TL ratesE leads to the =eight -rea' concept! that is! the shipment si0e that e?uates transportation charges for different rates and =eight groups. The =eight -rea' concept can -e applied =hene#er rates differ -y #olume and there is a minimum =eight specified for the higher #olume classification. $. iscuss ho= a transportation manager might ta'e ad#antage of the trade5offs -et=een price and ser#ice. The te@t pro#ides t=o e@amples =here monetary premiums =ere paid for meeting predetermined ser#ice standards and there can -e monetary penalties for failure to achie#e predetermined ser#ice standards. 6or e@ample! t=o5day deli#ery of product should -e cheaper than ne@t day deli#ery of product. &rice and ser#ice tradeoffs are limited only -y the transportation manager;s creati#ity and ingenuity. ,. hy is the carrier selection process less straightfor=ard than the modal selection process< There are se#eral reasons =hy the carrier selection process is less straightfor=ard than the modal selection process. 6irst! =hile there are only fi#e modes! there are many different types of carriers and a plethora of indi#idual carriers =ithin indi#idual modes. Second! there is a lac' of agreement as to the num-er of rele#ant factors that might -e used in carrier selectionF the num-er of carrier selection factors e#aluated in academic research has ranged from less than 1/ to o#er 1%/. ). efine =hat is meant -y an amodal shipper and discuss the factors that ha#e contri-uted to its gro=th. n amodal shipper refers to a transportation manager =ho purchases a prespecified le#el of transportation ser#ice De.g.! t=o5day deli#ery for a particular priceE and is indifferent to the modeDsE and or carriers used to pro#ide the actual transportation ser#ice. "ne reason for its gro=th is that non5asset -ased third5party logistics companies ha#e the a-ility to de#elop multi5 modal solutions to a client;s transportation pro-lems. modalism is also aided -y companies
such as 8&S and 6ed@ that o=n companies that pro#ide different types of transportation ser#ices De.g.! air! e@pedited! etc.E. +. The -ill of lading is the single most important document in transportation. iscuss some of the -asic functions it performs. The -ill of lading is the -asic operating document in the transportation industry. It functions as a deli#ery receipt =hen products are tendered to carriers. The signed original -ill of lading is the shipper;s legal proof that the carrier recei#ed the freight. 6urthermore! the -ill of lading is a -inding contract! specifying the duties and o-ligations of -oth the carrier and shipper. 1/. istinguish -et=een the straight -ill of lading and the order -ill of lading. straight -ill of lading is printed on =hite paper. It states the name of the consignee in the appropriate place and the carrier is under a strict legal o-ligation to deli#er the freight to the named consignee and to no one else. n order -ill of lading is printed on yello= paper and the name of the consignee is not specified. "rder -ills of lading guarantee that the customer pays for the product prior to receipt. 11. hat is a freight -ill< hy should each freight -ill -e audited< freight -ill is an in#oice that is su-mitted -y the carrier re?uesting to -e paid. ach freight -ill should -e audited to ensure that companies are not -eing charged too much Do#erchargesE for transportation ser#ices. 12. hat is the -asic rule of thum- regarding the determination of the full actual loss sustained -y the shipper or consignee in a loss or damage claim situation< The o=ner should -e made =hole -y recei#ing the proper money e?ui#alent for =hat has actually -een lost or to restore the o=ner to the position he DsheE =ould ha#e occupied had the carrier performed its contract. &roducts going into general in#entory replacement stoc' mean that the shipper =ould reco#er =holesale costs =hile products destined for the final customer means that the shipper consignee =ould recei#e the retail price. 13. iscuss the -asic issues! conflicts! and pro-lems in#ol#ed in concealed loss and damage claims. Concealed loss and damage claims are more difficult to handle -ecause the e@terior pac'age does not appear to -e damaged or tampered =ith. t a later date! the consignee opens the pac'age and finds that the product is damaged or missing. Carriers are reluctant to pay concealed loss and damage claims for t=o reasons. If the pac'age came through the shipment =ith no e@terior damage then there is a strong possi-ility that the product =as improperly protected on the inside. If this is the case! then the carrier is e@empted from lia-ility -ecause improper pac'aging is the fault of the shipper. Second! the possi-ility e@ists that the consignee;s employees -ro'e or stole the products. 14. @plain =hy smaller shipments are challenging to transportation managers. The transportation manager faces the decision of =hether and =hen to consolidate large num-ers of small shipments into small num-ers of large shipments -ecause it costs less on a per5pound -asis to ship larger ?uantities. (o=e#er! it could ta'e some time to accumulate the
units and this increased time could result in poorer ser#ice to the customer. large num-er of small shipments also mean that there needs to -e an information system capa-le of 'eeping trac' of each shipment;s status. Moreo#er! =hile larger shipments may yield transportation cost sa#ings there are in#entory cost considerations to holding units during consolidation. 1%. iscuss the -asic idea of demurrage and detention and ho= a#eraging agreements can -e helpful in this area. emurrage is a penalty payment made -y the shipper or consignee to a railroad! inland =ater carrier! or pipeline for 'eeping particular e?uipment -eyond the time =hen it should -e released -ac' to the carrier. etention is the same concept applied to truc'ing companies. In a#eraging agreements! an accounting system of de-its and credits is esta-lished. credit is recei#ed e#ery time the e?uipment is released early and a de-it is recorded e#ery time the e?uipment is released late. 1$. istinguish -et=een di#ersion and reconsignment. i#ersion occurs =hen a shipper notifies a carrier! prior to the shipment;s arri#al in the destination city! of a change in the destination. econsignment is similar -ut it occurs after the shipment has arri#ed in the destination city. Joth ser#ices are commonly used in conHunction =ith order -ills of lading. 1,. @plain ho= a routing guide might -e used -y a transportation manager. outing can -e defined as the process of determining ho= a shipment =ill -e mo#ed -et=een consignor and consignee or -et=een points of acceptance -y the carrier and place of deli#ery to the consignee. routing guide pro#ides guidance in terms of a preferred list of carriers for shipments mo#ing -et=een t=o points. The te@t pro#ides an e@ample of a company that 1E specifies preferred carriers for each origin destination com-ination and 2E specifies the ordering of the carriers Dmost preferred! 2nd most preferred! etc.E. 1). hat challenges might occur if rail mo#ements of ha0ardous materials are -anned from going through maHor cities< ailroads currently ha#e a common carrier o-ligation to transport ha0ardous materials and if those shipments are prohi-ited from mo#ing through maHor cities! they =ill -e rerouted through other! less populated areasGit is not li'ely that these areas =ill -e happy. Moreo#er! rerouting =ill add to transit times and transport costs! and the railroads; cost of hauling ha0ardous materials ha#e increased dramatically in recent years -ecause of higher insurance premiums associated =ith transporting ha0ardous materials. 1+. istinguish -et=een tracing and e@pediting. hy are motor carriers -eing used to a greater e@tent in e@pediting< Tracing refers to determining a shipment;s location during the course of its mo#e and the a-ility to trace a shipment directly affects e@pediting! =hich in#ol#es the need to rapidly mo#e a shipment to its final destination. Motor carriers are -eing used to a greater e@tent in e@pediting -ecause they are less e@pensi#e than air transportation and -ecause e@pedited motor carriers can
often dedicate one truc' to one shipment! e@pedited shipment -y motor carriage can pro#ide faster and more relia-le ser#ice than e@pedited shipments in#ol#ing air transportation. 2/. hat is a carrier performance scorecard< (o= might it -e used -y a transportation manager< Carrier performance scorecards contain a list of rele#ant attri-utes Dperhaps the same attri-utes used to select carriersE and an e#aluation of each carrier on e#ery attri-ute. The performance scorecard could -e used as a diagnostic toolF if an indi#idual carrier;s performance is -elo= a certain num-er! then the carrier might -e put on pro-ation for a certain time period. If performance does not sho= satisfactory impro#ement during the pro-ationary period! then the carrier might -e fired.
&T III KMITI" 78STI"S C(&T ,: TS&"TTI" M9MT Multiple Choice 7uestions 1. In general general terms! terms! accounts accounts for a-out $> of 8.S. 9ross 9ross omestic omestic &roduct. &roduct. a. =areh rehousin sing -. logistics c. suppl supplyy chai chainn mana managem gement ent d. tran transp spor orta tati tion on DdF p. 1$/E 2. Studies Studies ha#e indicated indicated that that transportati transportation on managers managers can spend up to one5thir one5thirdd of their time time dealing dealing =ith considerations. a. moda modall and and carri carrier er sel select ectio ionn -. international transportation c. docu docum ment entati ation d. rat rate Dpr Dpriicing cingEE DdF p.1$1E 3. hich of the the follo=ing follo=ing is not one one of the primary primary factors factors that transport transportation ation rates rates are -ased upon< upon< a. product -. density c. =eight d. distance D-F p. 1$1E 4. DnE rate rate refers to a specific specific rate rate for e#ery possi-le possi-le com-inat com-ination ion of product! product! =eight! =eight! and distance. a. e@ception -. class c. ad #alorem d. commodity DdF p. 1$1E
%. DnE rate rate simplifies simplifies each each of the three three primary rate rate factorsGprodu factorsGproduct! ct! =eight! =eight! and distance. distance. a. class -. ad #alorem c. commodity
d. e@ception DaF p. 1$2E $. (o= many many factors factors are used to to determine determine a product; product;ss freight classificat classification< ion< a. three -. four c. fi#e d. si@ D-F p. 1$2E ,. hich of the the follo=ing follo=ing is not a factor factor used used to determine determine a product; product;ss classificatio classification< n< a. density -. lia-ility to damage and theft c. sto sto=a-ility d. ease ease of of han handl dlin ingg e. all are factors factors used used to determine determine a product; product;s classifica classification tion DeF p. 1$2E ). refers refers to to ho= easy a commodity commodity is to pac' into a load. load. a. ase ase of hand handlling -. ecoupering c. Sto=a-ility d. rayage DcF p. 1$2E +. Suppose that there is is a rate rate of R,% per hundred=ei hundred=eight ght and you ha#e ha#e a $// pound shipmen shipment.t. hat is the correct transportation charge for this shipment< a. R) -. R4%/ c. R1!2// d . R 4 % !/ / / e. cann cannot ot -e dete determ rmin ined ed D-F p. 1$2E
1/. The shipment si0e that that e?uates transportation charges for different different =eights and =eight groups is the concept. a. optimu optimum m cost cost reliarelia-ili ility ty point point -. satisficing c. =eight ght -rea rea' d. ma@i ma@imu mum5 m5mi mini nimu mum m DcF p. 1$$E
11. Suppose the LTL LTL rate is R2.// per hundred=eight! the TL rate is is R1.4/ per hundred=eight and the TL minimum is 1)!/// pounds. hat is the =eight -rea'< a. %!2+4 2+4 poun ounds -. 1/!%)) pounds c. 12!$/ !$// po pounds d. 3/!/ 3/!/// //// pou pound ndss e. cann cannot ot -e dete determ rmin ined ed DcF p. 1$$E 12. hich of the follo=ing follo=ing tends to -e the most important factor in carrier selection< a. pricing -. loss and damage performance c. tran transi sitt tim timee reli reliaa-il ilit ityy d. fina financ ncia iall sta-i sta-ili lity ty e. none none of the the a-o a-o#e #e DeF p. 1$)E 13. DnE refers to a transportation transportation manager =ho purchases a prespecified le#el of transportation ser#ice and is indifferent to the mode and carrier used to pro#ide the transportation ser#ice. a. indust industria riall transpo transporta rtati tion on manager manager -. certified logistics professional c. thir third5p d5par arty ty logi logist stic icss shippe shipper r d. amod amodal al shi shipper pper DdF p. 1$)E 14. The most important single transportation document is the: a. -il -ill of ladin adingg -. freight -ill c. comm commer erci cial al in#o in#oic icee d. cert certif ific icat atee of of origi originn DaF p. 1$+E 1%. ach of the follo=ing follo=ing is true! true! e@cept: a. the -ill -ill of of lading lading is the most most important important transportati transportation on document document -. the straight -ill of lading contains the name of the consignee c. the order order -ill -ill of lading lading does does not contain contain the name name of the the consignee consignee d. the -ill -ill of lading lading adds to the comple@i comple@ity ty of the transport transportatio ationn manager;s manager;s Hoe. all all of of the the a-o# a-o#ee are are true true DdF p. 1$+E 1$. ach of the follo=ing is a type of -ill of lading! lading! e@cept: a. long -. straight
c. short d. order e. all all are are a type type of -il -illl of ladi lading ng DeF p. 1$+E 1,. n order -ill -ill of lading lading is used: a. for for o#er o#erse seas as shi shipm pmen ents ts -. =hen a shipment must -e e@pedited c. =hen =hen a shipmen shipmentt is start started ed -efore -efore the the -uyer -uyer is 'no=n 'no=n d. to guard guard agai against nst disru disrupti ptions ons in in transi transitt DcF p. 1$+E 1). n in#oi in#oice ce >Ë su-mitted -y the carrier re?uesting to -e paid is . a. a -i -ill of ladi lading ng -. a freight -ill c. a carnet d. dunnage D-F p.1,1E 1+. The =as formed -y shippers and carriers as a means for settling freight claims claims disputes. a. Transport ransportati ation on r-itra r-itrati tion on Joard Joard -. 6reight Claims Council c. Shippe Shipper5C r5Carri arrier er Mediat Mediation ion Joard Joard d. Traffic raffic Manag Manageme ement nt Claim Claimss Committ Committee ee DaF p. 1,3E
2/. If a product destroyed or damaged in transit is intended to -e placed into general replacement in#entory! then the retailer =ould li'ely recei#e: a. nothin nothingg -ut -ut an an apolog apologyy from from the the carri carrier er -. the =holesale price plus 2/> c. the the ret retai aill pri price ce minus minus 2/> d. the =hole =holesal salee price! price! plus plus freight freight if pre#i pre#iousl ouslyy paid DdF p. 1,3E 21. Since deregulation! the #olume of transportation transportation claims acti#ity acti#ity has: a. stay stayed ed the the sam same 不J要4‡G™ -. decreased Ì时¬1 不J要4‡G c. slig slight htly ly incr increa ease sedd d. drama dramati tica call llyy inc incre rease asedd D-F p. 1,3E 22. Small shipment shipmentss are defined as those that:
a. in#o in#ol# l#ee thre threee or fe=e fe=err cart cartons ons -. are mo#ed primarily -y parcel carriers c. =eigh =eigh more more than than 1%/ 1%/ pounds pounds -ut -ut less less than than %// %// pound poundss d. =eigh =eigh more more than than 1/ pounds pounds -ut -ut less less than than 1// pounds pounds DcF p. 1,4E 23. hich of the follo=ing follo=ing statements statements is false< a. carriers carriers may -e reluctant reluctant to to accept small shipmen shipments ts -ecause -ecause they re?uire re?uire a high high degree degree of manual la-or -. some carriers -elie#e that they lose money on small s mall shipments c. consolidatin consolidatingg small shipment shipmentss into larger larger ones could could result in in poorer ser#ice ser#ice to the final final customer d. consolidatin consolidatingg small shipment shipmentss into larger larger ones li'ely li'ely results results in higher higher in#entory in#entory carrying carrying costs e. all all stat statem ement entss are are true true DeF p. 1,4E 24. emurrage charges are collected -y =hich t=o modes of transportation< a. truc'F ra rail -. pipelineF air c. rail ailF =ate ater d. truc truc'F 'F pipe pipeli line ne DcF p. 1,$E 2%. hich of the follo=ing follo=ing statements statements is false< a. demurrage demurrage is a penalty penalty payment payment made made -y the the shipper shipper or consignee consignee to a railro railroad ad for 'eeping 'eeping e?uipment -eyond the time it should -e released -. detention is similar to demurrage! e@cept that detention applies to the truc'ing industry c. a#eragi a#eraging ng agreem agreement entss can -e -e used =ith =ith demurra demurrage ge d. carriers carriers and shippers shippers can can negotiate negotiate demurrage demurrage detentio detentionn policies policies e. all all stat statem ement entss are are true true DeF p. 1,$E 2$. occurs =hen a shipper notifies a carrier! prior to a shipment;s arri#al in a destination city! city! of a change in destination. a. i#ersion -. ispatch c. emurrage d. etention DaF p. 1,$E 2,. occurs =hen a shipment;s shipment;s destination is changed after it has arri#ed in the destination city. city.
a. i#ersion -. emurrage c. econsignment d. e5routing DcF p. 1,$E 2). can -e defined as the process of determining ho= a shipment =ill -e mo#ed -et=een consignor and consignee or -et=een place of acceptance -y the carrier and place of deli#ery to the consignee. a. Tracing -. ecoupering c. Transportation d. outing e. one of the a-o#e DdF p. 1,,E
2+. pro#ides guidance in terms of a preferred list of carriers for shipments mo#ing -et=een t=o points. a. routing guide -. manifest c. -ill of lading d. carnet DaF p. 1,,E 3/. The 8.S. federal go#ernment first -egan regulating the transportation of ha0ardous materials in the century. a. 1)th -. 1+th c. 2/th d. 21st D-F p. 1,,E 31. hich of the follo=ing is false< a. a num-er of large 8S metropolitan areas are see'ing -ans on railroad mo#ement of ha0ardous materials through maHor cities -. ha0ardous materials are #ery common and include some e#eryday household items c. the 8S federal go#ernment first -egan regulating the transportation of ha0ardous materials in the 2/th century 1+ d. 8S regulations concerning the transportation of ha0ardous materials ha#e -een modified to more closely resem-le those issued -y the 8nited ations
DcF p. 1,,E 32. is the attempt to locate lost or late shipments. a. @pediting -. ecoupering c. eparation d. Tracing e. one of the a-o#e DdF p. 1,+E 33. refers to rapidly mo#ing a shipment through a carrier;s system. a. @pediting ¾Í>送 -. ecoupering c. eparation d. Cross5doc'ing DaF p. 1,+E 34. Tracing refers to: a. determining the least e@pensi#e route for a shipment -. locating the proper rate c. locating lost or delayed shipments d. finding the shortest distance -et=een t=o points DcF p. 1,+E 3%. The installation costs for transportation management systems range from: a. R%//!/// 5 R1!///!/// -. R%/!/// se#eral million dollars c. R2%!/// 5 R%//!/// d. R1//!/// 5 R2!///!/// D-F p. 1,+E True56alse 7uestions 1. Today;s transportation manager can play an acti#e role in -lending the appropriate pricing and ser#ice pac'ages for his her organi0ation. DTrueF p. 1$/E 2. 6reight transportation accounts for appro@imately 1/> of 8.S. 9ross omestic &roduct. D6alseF p. 1$/E 3. Studies ha#e indicated that transportation managers can spend up to one5third of their time dealing =ith rate considerations. DTrueF p. 1$1E 4. commodity rate is #ery good for dealing =ith demand5specific situations. DTrueF p. 1$1E
%. The class rate system simplifies =ith respect to three primary factorsGdensity! product! and distance. D6alseF p. 1$2E $. eight is one of the four factors used to determine a product;s freight classification. D6alseF p. 1$2E ,. Sto=a-ility refers to ho= easy a commodity is to pac' into a load. DTrueF p. 1$2E ). transportation charge Dthe cost of transportationE can -e calculated -y multiplying the =eight times the rate. DTrueF p. 1$2E +. ith respect to a commodity;s freight classification! shippers tend to prefer a higher classification num-er =hile carriers tend to prefer a lo=er classification num-er. D6alseF p. 1$4E 1/. =eight -rea' refers to the ma@imum =eight of freight that can -e loaded into a #ehicle -efore another #ehicle is needed. D6alseF p. 1$$E 11. 6e=er than %// motor carriers currently use the freight classification system. D6alseF p. 1$$E 12. The price and ser#ice tradeoffs a#aila-le to today;s transportation manager are limited only -y her his creati#ity and ingenuity. DTrueF p. 1$,E 13. The carrier selection procedure appears to -e less straightfor=ard than the procedure for modal selection. DTrueF p. 1$)E 14. Transit time relia-ility is the most important factor that shippers tend to use =hen selecting carriers. D6alseF p. 1$)E 1%. n amodal shipper uses a logistics intermediary to ma'e the rele#ant transportation decisions. D6alseF p. 1$)E 1$. Transportation documentation ser#es -oth a practical function De.g.! =hat! =here! and ho= much is -eing transportedE as =ell as potentially pro#iding legal recourse if something goes a=ry. DTrueF p. 1$+E 1,. The most important single transportation document is the -ill of lading. DTrueF p. 1$+E 1). n order -ill of lading specifies the consignee. D6alseF p. 1$+E 1+. The long5form -ill of lading contains the entire contract -et=een shipper and carrier. DTrueF p. 1$+E 2/. The -ill of lading is an in#oice! su-mitted -y the carrier! re?uesting to -e paid. D6alseF p. 1,1E 21. 6reight -ill audits are designed to detect errors that result in o#ercharges and to correct these errors in the future. DTrueF p. 1,2E 22. The Transportation r-itration Joard DTJE =as formed -y a group of disgruntled shippers as a method for settling claim disputes. D6alseF p. 1,3E
23. Suppose that a shipment of products destined for a particular retailer is lost or damaged. If these products =ere going into general in#entory replacement stoc'! then the retailer is entitled to reco#er the =holesaler price plus freight costs Dif they =ere paidE. DTrueF p. 1,3E 24. Concealed loss and damage claims are some of the most difficult for shippers and carriers to handle. DTrueF p. 1,3E 2%. Since deregulation! the #olume of transportation claims acti#ity has increased. D6alseF p. 1,3E 2$. Small shipments refer to those that can -e handled relati#ely e@peditiously and ine@pensi#ely -y either the postal system or 8&S. D6alseF p. 1,4E 2,. 6rom a transportation manager;s perspecti#e! small shipments are costly to transport and often recei#e poor ser#ice from transportation carriers. DTrueF p. 1,4E 2). Transportation specialists such as freight for=arders! shippers; associations! and transportation -ro'ers can -e helpful in achie#ing consolidation across place for small shipments. DTrueF p. 1,4E 2+. emurrage is a payment penalty associated =ith railroads! =hile detention is a payment penalty associated =ith the truc'ing industry. DTrueF p. 1,$E 3/. In demurrage5related a#eraging agreements! slo= e?uipment returns can -e offset -y fast e?uipment returns. DTrueF p. 1,$E 31. Today;s transportation carriers tend to ha#e uniform demurrage and detention policies. D6alseF p. 1,$E 32. i#ersion occurs after a shipment has arri#ed in its destination city. D6alseF p. 1,$E 33. lthough the te@t presents di#ersion and reconsignment as t=o separate concepts! the t=o terms are sometimes used interchangea-ly. DTrueF p. 1,$E 34. carnet pro#ides guidance in terms of a preferred list of carriers for shipments mo#ing -et=een t=o points. D6alseF p. 1,,E 3%. The 8.S. federal go#ernment has -een regulating the transportation of ha0ardous materials since the mid51+,/;s. D6alseF p. 1,,E 3$. 8.S. regulations regarding the transportation of ha0ardous materials ha#e -een modified to more closely resem-le those de#ised -y the 8nited ations. DTrueF p. 1,,E 3,. Tracing refers to determining a shipment;s location during the course of its mo#e. DTrueF p. 1,+E 3). @pedited shipment -y motor carriage can sometimes pro#ide faster and more relia-le ser#ice than e@pedited shipping in#ol#ing air transportation. DTrueF p. 1,+E 3+. The installation costs for transportation management systems range from R%//!/// to R1!%//!///. D6alseF p. 1,+E
4/. Some transportation managers ha#e de#eloped performance scorecards that contain a list of rele#ant attri-utes and an e#aluation of each carrier on e#ery attri-ute. DTrueF p. 1)/E &T IO CS S"L8TI"S CS ,51 C(I&& &"TT" C(I& C"M& Jecause motor freight classifications are not static! -ut change o#er time! it is suggested that students #isit ===.nmfta.org! a =e-site that pro#ides up5to5date information on the ational Motor 6reight Classification DM6CE. 7uestion 1: If you =or'ed for Chippy! =hat ne= classification =ould you as' for< 9i#e your reasons. s of ecem-er 2//$! the M6C indicated that a-sent compelling information a-out other freight classification characteristics De.g.! sto=a-ilityE! density -ecomes the chief criteria guiding classification. The AoldB style chips ha#e a density of 4.$, pounds per cu-ic foot Dcarton =eight of 14 pounds di#ided -y carton si0e of 3 cu-ic feet! =hile the Ane=B style chips ha#e a density of 1/ pounds per cu-ic foot Dcarton =eight of 1/ pounds di#ided -y carton si0e of 1 cu-ic feetE. gain! as of mid52//3! a 1/ l-cu-ic foot density could ?ualify for a classification of 1//. Moreo#er! the relati#ely lo= #alue per pound of the product ?ualifies for a classification of less than 1//. 7uestion 2: Classifications are -ased on -oth cost and #alue of ser#ice. 6rom the carriers; standpoint! ho= has cost of ser#ice changed< t a minimum! the cost of ser#ice is changed in the sense that the increased density per cu-ic foot means that carriers =ill -e a-le to carry greater =eight -efore cu-ing out of #ehicle space. The cost of ser#ice might also change -ecause the tu-ular containers may result in less product damage. 7uestion 3: 9i#en the e@isting LTL classification of 2//! ho= has #alue of ser#ice to the customer changed< Jecause the tu-ular containers may result in less product damage! the #alue of ser#ice to the customer may change. "n the other hand! the #alue of ser#ice appears to -e negati#ely impacted in that they are paying R.%+ for a fi#e ounce container! #ersus R.%+ for an eight ounce -agGin other =ords! a-out a 4/> decrease in product for the same price. 7uestion 4: The ne= tu-ular containers are much sturdier. If you =or'ed for Chippy! ho=Gif at allG =ould you argue that this factor influences classification< s pointed out in ?uestions 2 and 3! Chippy might argue that the sturdier container ma'es it less li'ely that the potato chips =ill -e damaged and -ecause of this! a lo=er classification should -e assigned. 7uestion %: ou =or' for the motor carrier classification -ureau and notice that the relationship -et=een the =eight of potato chips and the =eight of pac'aging has changed. (o=! it at all! should this influence changes in the product;s classification<
It appears as if the ratio of total product =eight to total carton =eight =ith the AoldB chips is appro@imately )%.,>. DThe carton =eighs 14 pounds or 224 ouncesF the product =eight is 24 -ags times ) ounces per -ag! or 1+2 ounces. 1+2 di#ided -y 224 e?uals )%.,>.E s such! pac'aging appears to account for 14.3> of the total carton =eight. Jy contrast! the product to carton =eight for the Ane=B chips is ,%> D12/ ounces of product di#ided -y 1$/ ounces of carton =eightE! meaning that pac'aging appears to -e 2%> of the total carton =eight. The motor carrier classification -ureau could argue se#eral things =ith respect to classification: D1E That there is less pac'aging efficiency in the ne= system Din the sense that less of the carton contains actual productE and thus classification should -e higherF D2E The increased proportion of pac'aging might -e a surrogate for suscepti-ility to loss and damage! =hich again =ould argue for a higher classification. 7uestion $: "ne of Chippy;s o=n truc's! used for local deli#eries! has t=o a@les and an enclosed -ody measuring DinsideE se#en feet -y eight feet -y t=enty feet and is limited -y la= to carrying a load of no more than )!/// pounds. Jecause the truc' is not supposed to -e o#erloaded! =hat com-inations! e@pressed in terms of cartons of each! of ne=5 and old5style chips can it legally carry< D(int: use a piece of graph paper.E s a starting point! one might calculate the num-er of cartons that it =ould ta'e to =eigh out as =ell as cu-e out. ith respect to the AoldB style! )!/// pounds of capacity di#ided -y 14 pounds per carton yields a capacity of %,1 cartons. The capacity of the truc' is 1!12/ cu-ic feet D, times ) times 2/EF the 3 cu-ic foot carton for the AoldB style yields a capacity of 3,3 cartons. In other =ords! the #ehicle =ill cu-e out -efore it =eighs out D3,3 cartons times 14 l-scarton V %!222 poundsE. In terms of the Ane=B style! the )!/// pound #ehicle capacity di#ided -y 1/ pounds per carton yields )// cartons. s for cu-ic usage the 1!12/ cu-ic feet di#ided -y the 1 cu-ic foot carton gi#es us 1!12/ cartonsF thus the #ehicle =ill =eigh out -efore it cu-es out.
CS ,52 uern-erg ugs-urg Maschinen=er'e D..M.E 7uestion 1: ssume that you are eiss. (o= many #ia-le alternati#es do you ha#e to consider regarding the initial shipment of 2% -uses< The ans=er to this ?uestion can #ary depending on ho= students define A#ia-le alternati#es.B If =e ta'e a -road perspecti#e and Hust focus on the primary cities! Jremerha#en does not appear to -e an option -ecause there is no scheduled liner ser#ice in the desired time frame. That lea#es us =ith &rague to Santos through (am-urg and &rague to Santos through otterdam. Se#eral of the #essel departure dates for -oth alternati#es are not feasi-le. 6or e@ample! the 1) day transit time from (am-urg eliminates -oth the "cto-er 31st and o#em-er 3rd departuresF li'e=ise! the 1, day transit time from otterdam eliminates the o#em-er 2nd departure. nd although the "cto-er 2,th departure from (am-urg or the "cto-er 2)th departure from otterdam should get the -uses to Santos -y o#em-er 1%th! neither departure lea#es much room for potential transit delays De.g.! a late season hurricaneE. s such! it appears that eiss has -ut t=o #ia-le alternati#esF the "cto-er 24th departure from (am-urg and the "cto-er 23rd departure from otterdam. 7uestion 2: hich of the routing alternati#es =ould you recommend to meet the initial +/5day deadline for the 2%5-us shipment< Train or =ater=ay< To =hich portDsE< hat =ould it cost< If one assumes that rail transport is used from &rague to either (am-urg or otterdam! then the total transportation costs of the t=o alternati#es are #irtually identical. lthough rail costs to otterdam are Z 3// higher than to (am-urg! the shipping costs from otterdam are Z 3// lo=er than from (am-urg D-ased on Z $/// times .+%E. Jecause the total transportation costs are essentially the same! the decision li'ely needs to -e -ased on ser#ice considerations. The initial shipment is e@tremely important. It might -e suggested that &rague to (am-urg -y rail and (am-urg to Santos -y ocean #essel is the preferred alternati#e. "ur rationale is that the pro#ided transit times =ith (am-urg are definiti#e! that is! 3 days -y rail and 1) days -y =ater. ith otterdam! -y contrast! the rail transit time is either 4 or % days! although =ater transportation is 1, days. 7uestion 3: hat additional information =ould -e helpful for ans=ering ?uestion 2< There is a #ariety of other information that =ould -e helpful for ans=ering ?uestion 2. 6or e@ample! the case offers no insight a-out port congestion issues and ho= this congestion might impact the timeliness of shipment loadings. There also is no information a-out port performance in terms of loss and damage metrics. In addition! although the case indicates that rail transit time from &rague is either 4 or % days! it might -e helpful to 'no= =hat percentage of shipments is completed in 4 days. Students are li'ely to come up =ith more suggestions. 7uestion 4: (o= important! in fact! are the transport costs for the initial shipment of 2% -uses< Clearly! =ith ocean shipping costs of either Z %,// or Z $/// per -us! transportation costs cannot -e ignored. (a#ing said this! the initial shipment holds the 'ey to the remainder of the order Danother 1++ -usesE and appears to -e instrumental in securing another order for %$) -uses Dfor a total of ,$, more -usesE. s such! ..M might -e some=hat fle@i-le =ith respect to transportation costs for the initial shipment. Suppose! for e@ample! that ..M. can earn a profit of Z %/// per -us Dsuch profit on a Z 12//// -us is -y no means e@or-itantE. profit of Z
%/// times ,$, -uses yields a total profit of Z 3!)3%!///. Jecause of such a large upside =ith respect to additional orders! ..M. might focus on achie#ing the specified metrics for the initial shipment =ithout -eing o#erly concerned =ith transportation costs. 7uestion %: hat 'inds of Acustomer ser#iceB support must -e pro#ided for this initial shipment of 2% -uses< ho is responsi-le< lthough a num-er of different constituencies are in#ol#ed in the initial shipment De.g.! railroads! doc' =or'ers! ocean carrier! etc.E! the particular customersGthe pu-lic transit authoritiesGare -uying product from ..M. Jecause of this! ..M. should -e the responsi-le party =ith respect to customer ser#ice support. There are myriad 'inds of customer ser#ice support that might -e pro#ided. eal5time shipment trac'ing should -e an option so that the customers can 'no=! at any time! the location of the shipment. ..M. might also pro#ide regular updates of shipment progressF perhaps ..M. could email or fa@ AimportantB progress points De.g.! the shipment has left &ragueF the shipment has arri#ed in (am-urg! etc.E to the customers. Jecause successful performance on the initial shipment is crucial to securing future -usiness! ..M. might ha#e one of their managers actually accompany the shipment. 7uestion $: The Jra0ilian -uyer =ants the -uses Adeli#eredB at Santos. eiss loo's up the International Cham-er of Commerce;s year 2/// Incoterms and finds t=o categories of Adeli#eredB at a recei#ing port. They are: S Deli#ered @ ShipE. In this type of transaction! the seller must pay all the costs and -ear all the ris' of transport up to the foreign port of unloading! -ut not including the cost or ris' of unloading the cargo from the ship. 7 Deli#ered @ 7uayE. This is the same as S e@cept that the terms pro#ide for the seller to pay the costs of unloading the cargo from the #essel and the cost of import clearance.
(o= should he choose< hy< gain! gi#en the importance of the initial shipment! it =ould appear that the more control that ..M. has o#er the process! the -etter. lthough the 7 option is more costly! it also affords ..M. a -it more control later into the shipment process. Moreo#er! a =illingness -y ..M. to ta'e on the additional costs associated =ith 7 might -e #ie=ed in a positi#e fashion -y the customers. 7uestion ,: ould you ma'e the same routing recommendation for the second! larger D1++ -usesE component of the order! after the initial +/5day deadline is met< hy or =hy not< Time pressures do not appear to -e as critical for the larger component of the order! so this might argue for use of =ater transportation -et=een &rague and (am-urg. The rationale =ould -e that e#en though =ater transportation is slo=er! it sa#es money DZ 4) per -usE o#er rail shipments. lternati#ely! gi#en that the selling price per -us is li'ely to -e around Z 12////! trading off 3 days transit time in e@change for a sa#ings of Z 4) might not -e such a good idea. 7uestion ): (o= important! if at all! is it for ..M. to ship #ia =ater to sho= its support of the A9reenB mo#ement;s desires< "n the one hand! ..M. could use rail transportation to (am-urg! Jremerha#en! or otterdam Ga significant point in that the case indicates that the A9reenB mo#ement appears to -e mor e concerned =ith su-stituting =ater for truck mo#ements than =ith su-stituting =ater for rail mo#ements. lternati#ely! the case also indicates that the A9reenB mo#ement has not hesitated to pu-licly em-arrass shippers =ho use truc's instead of =ater. (a#e D=illE the A9reensB also targeted shippers =ho use rail instead of =ater< hat is the nature of the pu-lic em-arrassment formulated -y the A9reens
&T II SS T" 5"65C(&T 78STI"S C(&T ): ISTIJ8TI" CT! ("8S! < L"CTI" 1. (o= can ad#ances in technology and communication influence the facility location decision< The te@t cites an e@ample of a manufacturer that used the Internet to gather the rele#ant data for choosing a ne= production facility to ser#e their customers east of the oc'y Mountains. d#ances in technology and communication allo= companies the a-ility to collect data ine@pensi#ely and relati#ely ?uic'ly. 2. iscuss the factors that influence the num-er of facilities that a firm chooses to operate. ather than as'ing! Ahere should a ne= facility -e located
Aaccepta-leB le#els. The general trend in recent years has -een for companies to reduce the num-er of facilities in their distri-ution net=or's. 3. Jriefly descri-e the general factors influencing facility location. The cost and a#aila-ility of natural resources may -e a factor! particularly for manufacturing facilities. n area;s population is also importantF population ser#es as a mar'et for goods as =ell as a source of la-or. Ta@es and su-sidies are yet another general factor! as is the cost and a#aila-ility of transportation. "#er the past t=o decades! many organi0ations ha#e identified pro@imity to 'ey suppliers as an important determinant =hen locating a facility. Trade patterns! such as commodity flo=s! can -e studied to determine changes occurring in the mo#ement of ra= materials and finished goods. n increasingly important locational factor can -e -roadly called ?uality5of5life considerations and can include access to commercial air tra#el! an area;s cost of li#ing! and its crime! among others. 4. (o= does a ra= material;s status as pure! =eight5losing! or =eight5gaining influence the facility location decision< pure ra= material is one that loses no =eight in manufacturing and! -ecause of this! the processing point can -e any=here near the ra= material source and the mar'et. eight5losing products lose =eight during processingF the processing point should -e near their source in order to a#oid payment of unnecessary transportation charges. eight5gaining products gain =eight during processingF the processing point should -e close to the mar'et. %. iscuss ho= en#ironmental considerations might influence the facility location decision. "ne set of en#ironmental considerations in#ol#es #arious types of pollutionGair! =ater! and noise. nother is the conser#ation of natural resourcesGsometimes =ith respect to those used in production and other times for #arious reasons. e#eloping nations often ha#e la@ en#ironmental regulations! a situation that can foster economic gro=th and impro#e standards of li#ing. These la@ en#ironmental regulations may ha#e long5term conse?uences! such as depletion of 'ey natural resourcesG=hich could render certain facilities meaningless. $. iscuss ho= population can -e #ie=ed as -oth a mar'et for goods and a source of la-or. ith respect to a mar'et for goods! attri-utes of current and potential customers are important. Things such as changes in population si0e as =ell as changes in population characteristics are important. In terms of population si0e! for e@ample! India and China are potentially attracti#e mar'ets in part -ecause these t=o countries account for appro@imately one5third of the =orld;s population. There are myriad concerns associated =ith population as a source of la-or! to include the si0e of the =or'forceF the unemployment rateF the age profileF its s'ills and educationF pre#ailing =age ratesF and union status. ,. (o= might the factors considered important for locating manufacturing facilities differ from the factors considered important for locating a distri-ution facility<
There are a num-er of possi-le ans=ers for this ?uestion. 6or e@ample! the a#aila-ility of natural resources is pro-a-ly much more important for a manufacturing facility than a distri-ution facility. &opulation is li'ely to -e an important factor regardless of =hether one is loo'ing at a manufacturing facility or a distri-ution facilityG-ut the rele#ant attri-utes may differ. ccess to lo= cost la-or might -e a greater consideration for a manufacturing facility than for a distri-ution facility. The impact of ta@es and su-sidies is li'ely to -e different as =ell. 6or instance! certain regions may de#elop su-sidyincenti#e plans to attract manufacturing facilities De.g.! foreign automa'ers locating in the Southern 8nited StatesE =hile in#entory ta@es could -e a concern =ith distri-ution facilities. ). iscuss the ad#antages and disad#antages of locating manufacturing! assem-ly! or distri-ution facilities in countries =ith relati#ely lo= =ages. La-or =age rates appear to -e a 'ey locational determinant as supply chains -ecome more glo-al in nature. lthough a-solute =age comparisons are important! relati#e comparisons can -e ?uite insightful. 6or e@ample! at pre#ailing =age rates! a company could ha#e appro@imately similar compensation costs -y hiring nine Me@ican =or'ers or one 8.S. =or'er. ine =or'ers might generate more total output than one =or'er! so there could -e producti#ity ad#antages as =ell. "ne possi-le disad#antage is that there are sometimes limits on the num-er of super#isory personnel that can -e -rought in from outside the country. There may also -e regulations that specify that nationals -e trained for and employed in super#isory posts. Countries =ith lo= la-or costs may also ha#e a num-er of s=eatshops! =hich can -e #ie=ed as organi0ations that e@ploit =or'ers and that do not comply =ith fiscal and legal o-ligations to=ards employees. +. hat are right5to5=or' la=s< (o= do they influence locational decisions< ight5to5=or' la=s refer to situations =here an indi#idual cannot -e compelled to Hoin a union as a condition of employment. ight5to5=or' la=s tend to ma'e particular locations more attracti#e to potential employersF in recent years se#eral non58.S. automa'ers ha#e constructed production facilities in right5to5=or' states such as la-ama! 9eorgia! and Te@as. 1/. hat are e@patriate =or'ers< hat challenges do they face< @patriate =or'ers are those employees =ho are sent to other countries to =or' for e@tended periods of time. It appears that most e@patriate turno#er is caused not -y technical factors D'no=ledge and s'illsE -ut! rather! -y sociali0ation issues. These sociali0ation concerns can -e magnified if the e@patriate;s family comes along on the =or' assignmentF it;s #ital that the e@patriate and hisher family are comforta-le =ith the social and cultural factors of the country =here they =ill -e employed. 11. o you thin' in#entories should -e ta@ed< hy or =hy not< Students can ta'e either side in ans=ering this ?uestion. n in#entory ta@ may -e a disincenti#e in the sense that it adds to the cost of doing -usiness and may cause a certain location to -e #ie=ed as less A-usiness friendly.B Moreo#er! as this manual is -eing prepared! there are suggestions that in#entory ta@es might -e o-solete -y 2/1/! in part -ecause of lac' of agreement of =hat is meant -y in#entory.
12. hat are empo=erment 0ones< hat is their rele#ance to locational decisions< mpo=erment 0ones =ere created -y the 8.S. epartment of (ousing and 8r-an e#elopment to encourage -usiness de#elopment! through ta@ credits! in economically depressed portions of indi#idual cities. They represent one type of incenti#e for locating a facility in less5than5 desira-le areas. 13. hat mode of transportation do you thin' is the most important to firms =hen e#aluating ne= sites< hy< The ans=er to this ?uestion =ill depend on the type of facility that is -eing considered. manufacturing plant might need -oth rail ser#ice Din order to -ring in ra= materialsE and truc' ser#ice Dto carry the finished goodsE. distri-ution center for repair parts might! -y contrast! need high=ay and air ser#ice. 14. hat are supplier par's< 9i#e some e@amples. Supplier par's re?uire 'ey suppliers to locate on! or adHacent to! assem-ly plants =hich helps to reduce shipping costs as =ell as in#entory carrying costs. They ha#e -een popular in urope! ha#e spread to other continents! and ha#e often -een associated =ith automa'ers and their suppliers. 1%. iscuss ho= multicountry trade agreements ha#e influenced the location of production or distri-ution facilities. The orth merican 6ree Trade greement D6TE has seen Me@ico -ecome the third largest trading partner for the 8nited States. 6T has resulted in increased north5south mo#ement of product among the 8nited States! Canada! and Me@ico! and the Interstate 3% corridor has -ecome a hot-ed for distri-ution acti#ity. The #irtual elimination of trade -arriers among mem-ers of the uropean 8nion D8E has allo=ed many companies to reduce the num-er of rele#ant distri-ution facilities. hen the 8 consisted of 14 countries! the Jenelu@ countries =ere a fa#ored location for distri-ution facilities. (o=e#er! since the 8;s addition of 1/ Central and astern uropean countries in 2//4! the C0ech epu-lic has -ecome a fa#ored production and distri-ution site -ecause of its relati#ely central geographic location. 1$. hat ?uality of life considerations do you thin' are the most important for locational decisions< hy< There are a num-er of accepta-le ans=ers for this ?uestion! and the ans=er may #ary from student to student. n unmarried student =ith no children! for e@ample! might ha#e a much different response from a married student =ith children. 1,. Jeyond the general factors discussed in this chapter! =hat additional considerations are important =hen a firm is thin'ing of locating a facility DfacilitiesE in other countries<
The considerations include the rele#ant legal systemF political sta-ilityF -ureaucratic red tapeF corruptionF protectionismF nationalismF pri#ati0ationF e@propriation DconfiscationEF treaties and trade agreements. Social unrest and crime may also -e important considerations! as are culture! customs! holidays! language! le#el of education! and religion. Currency fluctuations and de#aluations can result in fre?uent cost changes for e@patriate =or'ers. The la=s in the host country! and the a-ility to repatriate profits! limit one;s a-ility to use profits that operations in the host country might generate. 1). hat is a free trade 0one< hat functions might -e performed in it< 6ree trade 0ones refer to highly speciali0ed sites =here a company can locate =ithout -eing su-Hected to duties and ?uotas until the goods or their products enter the customs territory of the 0one country. 6unctions that might -e performed include storing! processing! e@hi-iting! andor manufacturing. 1+. iscuss ad#antages and disad#antages to grid systems such as the center5of5gra#ity and =eighted center5of5gra#ity approaches. s a general rule! grid systems can -e used for locating a single facility so that the distance to e@isting facilities is minimi0edGand -y e@tension! transportation costs are minimi0ed as =ell. In addition! grid systems are relati#ely simple to apply! and calculations can -e done relati#ely ?uic'ly. lternati#ely! the relati#e simplicity means that adHustments ha#e to -e made to ta'e into account real5=orld considerations such as ta@es! =age rates in particular locations! #olume discounts! the cost and ?uality of transport ser#ices! and the fact that transport rates taper =ith increased distances. 2/. istinguish -et=een facility relocation and facility closing. (o= should companies deal =ith their human resources D=or'ersE in -oth situations< 6acility relocation occurs =hen a firm decides that it can no longer continue operations in its present facility and must mo#e operations to another facility in order to -etter ser#e suppliers andor customers. 6acility closing! -y contrast! occurs =hen a company decides to discontinue operations at a current site -ecause the operations may no longer -e needed or can -e a-sor-ed -y other facilities. egardless of =hether =e are tal'ing a-out relocation or closing! current employees should -e 'ept informedG-y their employerGa-out rele#ant issues. Information from other sources could cause confusion! anger! and lo=er morale and could easily offset the producti#ity of the e@isting facility. dditional information is generally re?uired for facility closings! in the sense that the or'er dHustment and etraining otification ct mandates that employers gi#e $/ days notice a-out closings and mass layoffs.
&T III KMITI" 78STI"S C(&T ): ISTIJ8TI" CT! ("8S! < L"CTI" Multiple Choice 7uestions 1. The maHor factors influencing locational decisions are and. a. mar'etsF resource a#aila-ility -. la-orF transport ser#ices c. mar'etsF la-or d. transport ser#icesF resource a#aila-ility e. none of the a-o#e DaF p. 1))E 2. ach of the follo=ing is a dimension in facility location e@cept: a. time -. cost c. #alue d. si0e DdF p. 1)+E 3. ith respect to facility location decisions! firms are see'ing the most at the least in the least elapsed amount of time. a. customersF cost -. #alueF effort c. #alueF cost d. sitesF distance DcF p. 1)+E 4. The initial focus in facility location is on a. a. city -. county c. state d. region DdF p. 1)+E
%. The general trend in recent years has -een for companies to do =hat =ith their distri-ution net=or's< a. maintain the status ?uo -. reduce the num-er of facilities c. slightly increase the num-er of facilities d. relocate their facilities D-F p. 1+1E $. Chicago Consulting is 'no=n for its annual list of AThe 1/ Jest arehouse et=or'sB for ser#ing the 8.S. population. 6or =hat country did Chicago Consulting de-ut a A1/ Jest arehouse et=or'sB during 2//$< a. India -. China c. Jra0il d. ussia D-F p. 1+1E ,. pure material: a. is one that loses no =eight in manufacturing -. cannot -e mi@ed =ith other materials c. is solu-le in =ater d. comes from the ocean e. none of the a-o#e DaF p. 1+3E ). The processing point for a pure material: a. should -e near its source -. should -e near the final mar'et c. can -e any=here in the =orld d. can -e any=here near the source and the mar'et DdF p. 1+3E +. The processing point for a =eight5losing ra= material: a. can -e any=here near the source and the mar'et -. should -e near its source c. should -e near the final mar'et d. should -e e?uidistant -et=een the source and the mar'et D-F p. 1+3E
1/. The processing point for a =eight5gaining ra= material: a. can -e any=here near the source and the mar'et
-. should -e near its source c. should -e near the final mar'et d. should -e e?uidistant -et=een the source and the mar'et DcF p. 1+3E 11. "#er the past ?uarter century! discussion of natural resources and facility location has increasingly factored in considerations. a. cost -. supply chain c. ethical d. en#ironmental DdF p. 1+3E 12. hat t=o countries account for appro@imately one5third of the =orld;s population< a. IndonesiaF China -. IndiaF China c. 8nited StatesF India d. IndonesiaF 8nited States D-F p. 1+4E 13. ccording to a recent update to the 2/// 8.S. census! the population of the is proHected to gro= appro@imately 14> -et=een 2/// and 2/1/. a. 9reat La'es -. ortheast c. est d. Southeast e. none of the a-o#e DcF p. 1+4E 14. hich of the follo=ing countries has the highest hourly =or'er compensation< a. 9ermany -. 8nited States c. Papan d. 9reat Jritain DaF p. 1+%E 1%. plants! =hich are located Hust south of the 8.S.Me@ican -order! pro#ide much needed Ho-s to Me@ican =or'ers and allo= for lo=5cost! duty5free production so long as all the goods are e@ported from Me@ico. a. -. c. d.
@patriate Trade 0one ationali0ation Ma?uiladora
DdF p. 1+%E 1$. ight5to5=or' la=s refer to a situation =here: a. an indi#idual cannot -e compelled to Hoin a union as a condition of employment -. each state pro#ides employment to those people recei#ing pu-lic assistance c. e#ery person =ho =ants a Ho- is guaranteed a Hod. =or'er stri'es are illegal DaF p. 1+%E 1,. ll of the follo=ing are true! e@cept: a. countries =ith lo= la-or costs often ha#e a multitude of s=eatshops -. a =or'force;s union status may -e a 'ey locational determinant for some organi0ations c. e@patriate =or' assignments can -e costly d. there has -een declining union mem-ership in industriali0ed nations e. all are true DeF pp. 1+%51+$E 1). n e@patriate refers to a person: a. =ho holds dual citi0enship -. =ho is sent to =or' in other countries for e@tended periods of time c. =ho is IS" +/// certified d. =ho has renounced union mem-ership e. none of the a-o#e D-F p. 1+$E 1+. Logisticians and supply chain managers ha#e a particular interest in ta@es. a. real estate -. corporate income c. in#entory d. se#erance DcF p. 1+$E 2/. general rule of thum- is that the ser#ices -eing recei#ed in e@change for ta@es represent a-out > of the ta@es paid. a. )/ -. ,/ c. $/ d. %/ DdF p. 1+,E 21. The purpose of 0ones is to encourage -usiness de#elopment in economically depressed portions of a particular city. a. commercial
-. free trade c. pri#ati0ation d. empo=erment DdF p. 1+,E 22. hich of the follo=ing is not a general factor influencing facility location< a. transportation considerations -. natural resources c. pro@imity to 'ey suppliers d. trade patterns e. all are general factors DeF pp. 1+351++E 23. It has -een suggested that all things -eing e?ual! the -est locations are generally those =here the -est are located. a. s'illed =or'ers -. =arehousing facilities c. transportation ser#ices d. natural resources DcF p. 1+,E 24. The e@istence of transportation competition! =hether intermodal or intramodal! tends to: a. ha#e cost! -ut not ser#ice! -enefits to a user -. ha#e ser#ice! -ut not cost! -enefits to a user c. ha#e -oth cost and ser#ice -enefits to users d. ha#e neither cost nor ser#ice -enefits to users DcF p. 1+,E 2%. Supplier par's are a concept that de#eloped around and their suppliers in urope. a. supermar'ets -. apparel ma'ers c. computer ma'ers d. automa'ers DdF p. 1++E 2$. ith respect to commodity flo=s! logisticians are especially interested in and . a. =hat is -eing producedF =here it is -eing produced -. ho= much is -eing producedF =here it is -eing shipped c. ho= much is -eing producedF =here it is -eing produced d. =hat is -eing producedF =here it is -eing shipped D-F p. 1++E
2,. Since the uropean 8nion;s e@pansion into 1/ Central and astern uropean countries in 2//4! has -ecome a fa#ored production and distri-ution site -ecause of its relati#ely central location. a. C0ech epu-lic -. &oland c. stonia d. ustria DaF p. 2//E 2). hich of the follo=ing is not a possi-le ?uality of life consideration< a. access to commercial air tra#el -. cost of li#ing c. crime rate d. educational opportunities e. all are ?uality of life considerations DeF p. 2//E 2+. A-ro=nfieldB is: a. a term for =here crushed -o@es are 'ept -efore recycling -. a term that refers to a potential facility site that has no trees needing to -e cleared -efore construction c. a property for =hich use and rede#elopment is complicated -y past use d. an airport that lac's pa#ed run=ays DcF p. 2/1E 3/. free trade 0one refers to: a. an area that is home to -usinesses that are o=ned and operated -y large concentrations of a particular ethnic group -. an area in =hich products can -e stored! e@hi-ited! or processed =ithout -eing su-Hected to duties and ?uotas unless they enter the customs territory of the 0one country c. an area in =hich the federal go#ernment disregards all import and e@port ?uotas for products coming from! or destined to! Afa#oredB nations d. an area outside the legal Hurisdiction of federal! state! andor local go#ernments e. none of the a-o#e D-F p. 2/2E 31. ach of the follo=ing statements a-out free trade 0ones are false! e@cept: a. they must -e located adHacent to ports or airports -. they cannot -e used for processing or manufacturing c. they re?uire duties to -e paid prior to lea#ing the trade 0one d. they ha#e -ecome less popular in recent years e. all are false DeF p. 2/2E
32. The center5of5gra#ity approach to location analysis minimi0es: a. la-or costs -. =arehousing costs c. ta@es d. distance to e@isting facilities DdF p. 2/4E 33. (o= does the =eighted center5of5gra#ity approach to location analysis differ from the center5of5 gra#ity approach to location analysis< a. the =eighted approach considers ta@es -. the =eighted approach is less complicated c. the =eighted approach considers shipment #olume d. the =eighted approach considers tapering rates DcF p. 2/4E
34. Location =ithin another firm;s channel is feasi-le assuming that the products in#ol#ed are . a. complementary -. supplemental c. #ery similar d. #ery different DaF p. 2/%E 3%. hich of the follo=ing is not a possi-le reason for facility closings< a. eliminating redundant capacity in mergers and ac?uisitions -. poor planning c. impro#ing supply chain efficiency d. insufficient #olume of -usiness e. all of the a-o#e are possi-le reasons DeF p. 2/$E True56alse 7uestions 1. The maHor factors influencing locational decisions are mar'ets and resource a#aila-ility. DTrueF p. 1))E 2. ith respect to facility location decisions! firms are see'ing the most #alue at the least cost in the least elapsed amount of time. DTrueF p. 1)+E 3. The initial focus in facility location is on the region. DTrueF p. 1)+E
4. The general trend in recent years has -een for companies to increase the num-er of facilities in their distri-ution net=or's. D6alseF p. 1+1E %. Chicago Consulting;s AThe 1/ Jest Chinese arehouse et=or'sB suggests that going from t=o to fi#e =arehouses allo=s a company to sa#e nearly one day of lead time to the Chinese population. DTrueF p. 1+1E $. pure material is one that is totally =ater solu-le. D6alseF p. 1+3E ,. The processing point for a pure material can -e any=here -et=een the source and the mar'et. DTrueF p. 1+3E ). The processing point for a =eight5losing ra= material can -e any=here -et=een the source and the mar'et. D6alseF p. 1+3E +. The processing point for a =eight5gaining ra= material should -e close to the mar'et. DTrueF p. 1+3E 1/. "#er the past ?uarter century! discussion of natural resources and facility location has increasingly factored in supply chain considerations. D6alseF p. 1+3E 11. &opulation can -e #ie=ed as -oth a mar'et for goods and a potential source of la-or. DTrueF p. 1+4E 12. &opulation si0e is an irrele#ant consideration in the facility location decision. D6alseF p. 1+4E 13. La-or =age rates appear to -e a 'ey locational determinant as supply chains -ecome more glo-al in nature. DTrueF p. 1+%E 14. The 8nited States has the highest hourly compensation rates in the =orld. D6alseF p. 1+%E 1%. Ma?uiladora plants ha#e e@perienced resurgence in recent years -ecause of a focus on manufactured products that depend on fast time to mar'et. DTrueF p. 1+%E 1$. S=eatshops are organi0ations that e@ploit =or'ers and that do not comply =ith fiscal and legal o-ligations. DTrueF p. 1+%E 1,. ight5to5=or' la=s mean that e#ery person =ho =ants a Ho- is guaranteed a Ho-. D6alseF p. 1+%E 1). n e@patriate is a person =ho holds dual citi0enship. D6alseF p. 1+$E 1+. Turno#er rates for e@patriate =or'ers currently range -et=een 2/> and 4/>. DTrueF p. 1+$E 2/. The in#entory ta@ is -ased on the a#erage amount of in#entory during a si@5month period. D6alseF p. 1+$E 21. There are suggestions that in#entory ta@es may -e o-solete -y 2/1/ in part -ecause of lac' of agreement as to =hat is meant -y in#entory. DTrueF p. 1+$E
22. The ser#ices recei#ed from -usiness ta@es represent only a-out %/> of the ta@es that =ere paid. DTrueF p. 1+,E 23. The purpose of empo=erment 0ones is to encourage -usiness de#elopment in economically depressed portions of a city. DTrueF p. 1+,E 24. Transportation considerations! in the form of transportation a#aila-ility and costs! tend to play a relati#ely minor role in facility location decisions. D6alseF p. 1+,E 2%. Intermodal competition refers to the num-er of carriers =ithin a particular mode of transportation. D6alseF p. 1+,E 2$. Centrali0ed facilities tend to minimi0e total transit distances! =hich li'ely results in minimum transportation cost. DTrueF p. 1+,E 2,. Supplier par's refer to places =here main component ma'ers locate in specially created industrial comple@es adHacent to assem-ly plants. DTrueF p. 1++E 2). ith respect to commodity flo=s! logisticians are especially interested in =hat is -eing produced and =here it is -eing produced. D6alseF p. 1++E 2+. The de#elopment and implementation of multicountry trade agreements has had profound impacts on trade patterns. DTrueF p. 1++E 3/. Since the uropean 8nion;s e@pansion into 1/ Central and astern uropean countries in 2//4! &oland has -ecome a fa#ored production and distri-ution site -ecause of its relati#ely central geographic location. D6alseF p. 2//E 31. 7uality of life considerations play a limited role in locational decisions. D6alseF p. 2//E 32. 9o#ernment considerations such as the rele#ant legal system! political sta-ility! and protectionism are important =hen companies are thin'ing of facility locations in non5domestic countries. DTrueF p. 2//E 33. Uoning classifications can -e changed in an effort to encourage or discourage -usiness acti#ity. DTrueF p. 2/1E 34. Jro=nfields refer to a place =here flattened cartons are stored until they are recycled. D6alseF p. 2/1E 3%. 6ree trade 0ones must -e adHacent to a port or airport. D6alseF p. 2/2E 3$. 9rid systems are important to locational analysis -ecause they allo= one to analy0e spatial relationships =ith relati#ely simple mathematical tools. DTrueF p. 2/2E 3,. The idea -ehind a =eighted center5of5gra#ity approach is that a prospecti#e =arehousing facility =ill -e located closer to the e@isting sites =ith the greatest current demand. DTrueF p. 2/4E 3). Location =ithin another firm;s channel is feasi-le assuming that the products in#ol#ed are supplementary in nature. D6alseF p. 2/%E
3+. 6acility relocation is associated =ith -usiness gro=th! =hile facility closing is associated =ith -usiness contraction. DTrueF p. 2/%E 4/. Communication =ith employees is more important for facility closings than for facility relocations. D6alseF p. 2/$E
&T IO CS S"L8TI"S CS )51 " MI L"9ISTICS 7uestion 1: hat =ould the first5year costs -e to ML if they purchased the 1/ used 2/5foot containers< (o= long =ould it ta'e to recoup the in#estment! assuming that the mushroom traffic continued< Cost category In-ound transportation "ut-ound transportation Maintenance nergy
Monthly cost DR8.S.E 2/!/// 1/!///
Total
nnual cost DR8.S.E 24/!/// 12/!/// 22!22/ 33!33/ 41%!%%/
e#enue category Mushroom sales Jac'haulsa
Monthly re#enue DR8.S.E 3/!///
Total
nnual re#enue DR8.S.E 3$/!/// 12!/// 3,2!///
a: -ased on 12/ container shipments per yearF 1/> of return loads! or 12 containers! =ould generate re#enues e?ual to the associated costs ccording to the a-o#e data! the proposed ser#ice is a money loser and the rele#ant in#estment DR2%%!%3/ in 8.S. currencyE cannot -e recouped. In#estment costs are as follo=s: 1/ containers [ , la'h V ,/ la'hF re5e?uipping of % flatcars [ + la'h V 4% la'h! for a total in#estment of 11% la'h. Multiplying 11% la'h times R2!222 per la'h V R2%%!%3/. 7uestion 2: hat =ould the first5year costs -e to ML if they purchased % ne= 4/5foot containers< (o= long =ould it ta'e to recoup the in#estment! assuming that the mushroom traffic continued< Cost category In-ound transportation "ut-ound transportation Maintenance nergy
Monthly cost DR8.S.E 1%!%// ,!,%/
Total e#enue category Mushroom sales Jac'haulsa Total
nnual cost DR8.S.E 1)$!/// +3!/// / 33!33/ 312!33/
Monthly re#enue DR8.S.E 3/!///
nnual re#enue DR8.S.E 3$/!/// +!3// 3$+!3//
a: -ased on $/ container shipments per yearF 1/> of return loads! or $ containers! =ould generate re#enues e?ual to the associated costs ccording to the a-o#e data! the proposed ser#ice =ould generate an annual AprofitB of R%$!+,/ DR3$+!3// minus R312!33/E. The in#estment in for % containers is as follo=s: % containers [ 1% la'h V ,% la'h! plus % re5e?uipped flatcars [ + la'h V 4% la'h! for a total of 13/ la'h. 13/ la'h V R2))!)$/F this di#ided -y R%$!+,/ yields a pay-ac' time of appro@imately %.1 years. 7uestion 3: Is either of the alternati#es co#ered in ?uestions 1 and 2 ris'ier< hy< 9i#en that the 1/5container option yields an annual lossG=hich precludes recouping any part of the rele#ant in#estmentGit appears to -e the ris'ier of the t=o alternati#es. 7uestion 4: Mr. Singh has read a-out the supply5chain concept that attempts to identify and lin' all the participants from suppliers; suppliers to customers; customers. ho are all of the participants in the supply chain! a part of =hich has -een discussed in the case< The participants could include! -ut are not limited to: mushroom suppliers! such as the farmers! mushroom pic'ers! and mushroom pac'ersF 6reshfoodsF consolidators in msterdamF transportation carriers -ringing the mushrooms to the consolidatorsF ocean carrier from msterdam to Mum-aiF transportation pro#iderDsE from Mum-ai to elhiF MLF the container leasing companyF stores! open5air mar'ets! hotels! and restaurants in orthern India. 7uestion %: Logistics partnerships in#ol#e sharing costs and ris's. hat are all the costs and ris's that this #enture entails< (o= might they -e shared< Some of the costs include accessorial and linehaul transportation costsF the in#estment costs for the containersF energy costs to pro#ide po=er for the refrigerated containersF reconfiguration costs for the flatcarsF maintenance costs for the containers. nother cost! =hich appears not to ha#e -een mentioned! is the cost of capital. Some of the rele#ant ris's include irregularities in product supply due to poor gro=ing conditions for mushroomsF product spoilage due to refrigeration pro-lemsF lac' of demand for the productF higher than e@pected maintenance for the containers D-ecause of the high temperatures in IndiaEF theft! perhaps not so much for the mushrooms -ut -ecause containers can ser#e as shelterF dramatic changes in the cost of capital! particularly if capital costs increase su-stantially. The sharing of the costs and ris's depends on =hich parties are impacted -y a particular cost or ris'. 6or e@ample! lac' of demand for the mushrooms is a ris' that might -e shared -y 6reshfoods and ML. lternati#ely! the ris' of refrigeration inade?uacies might -e shared -y ML! the container supplier! and perhaps the company installing the po=er e?uipment on flatcars Dif different from MLE. 7uestion $: ith some help from your instructor! di#ide into groups representing most or all of the supply chain mem-ers identified in ?uestion 4! and negotiate an agreement or agreements that share the costs! ris's! and possi-le profits and losses from the #enture -eing considered. There is any num-er of accepta-le responses.
CS )52 LJT (I9( &TMT! 9I" OI "ne student de#eloped the follo=ing dra=ing to guide her analysis: $///;\ \ Mile $ D,// tonsE \ %%//; \ \ Mile % D$%/ tonsE \ %///; J \ \ Mile 4 D%)/ tonsE \ 4%//; C\ \ Mile 3 D%3/ tonsE \ 4///; \ \ Mile 2 D4)/ tonsE \ 3%//; \ \ Mile 1 D4// tonsE \ 3///;555555555555555555555555555555]55555555555555555X Jear Oalley 1 mile 4/ miles La'e Louise Silo
7uestion 1: Should one portion of sand silos at the La'e Louise maintenance station -e relocated to a point to the =est! at a higher ele#ation< If yes! =here should it -e relocated! ho= much capacity should it ha#e! and =hat are the proHected annual sa#ings in truc' operating costs< Sho= your =or'. The ans=er is that a portion of the La'e Louise sand silos should -e relocated to &oint J. The capacity should -e 2!4$/ tons Dplus reser#esGactual amount unspecifiedE. The follo=ing ta-le sho=s the cost calculations for each alternati#e.
e= silo at
Sectors #erage In-ound ser#ed -y tonnage each costs from ne= silo and Jo= Oalley -y La'e Louise
5$!%!4!3
LL52!1
J
J5$!%!4!3
LL52!1
C
C5$!%!4!3!2
LL51
5$!%!4!3!2
24$/
24$/ @ 4$ @ . /3 V R3!3+%
))/
))/ @ 4/ @ . /3 V R1!/%$
24$/
))/
2+4/
4//
2+4/
"ut-ound Total costs costs to sectors -eyond one mile from silo to 4: %)/ @ 1 @ .1/ V R%) to 3: %3/ @ 2 @ .1/ V R1/$ LL to 2: 4)/ @ 2 @ .1/ V R+$ LL to 1: 4// R4!,%1 @ 1 @ .1/ V R4/
24$/ @ 4% @ . J to $: ,// @ /3 V R3!321 1 @ .1/ V R,/ J to 3: %3/ @ 1 @ .1/ V R%3 ))/ @ 4/ @ . LL to 2: 4)/ /3 V R1!/%$ @ 2 @ .1/ V R+$ LL to 1: 4// @ 1 @ .1/ V R4/ 2+4/ @ 44 @ . C to $: ,// @ /3 V R3!))1 2 @ .1/ V R14/ C to %: $%/ @ 1 @ .1/ V R$% C to 2: 4)/ @ 1 @ .1/ V R4) 4// @ 4/ @ . LL to 1: 4// /3 V R4)/ @ 1 @ .1/ V R4/ 2+4/ @ 43 @ .
to $: ,//
R4!$3$
R4!$%4
/3 V R3!,+3
LL51
o ne= silo
5$!%!4!3!2!1
LL5 $!%!4!3!2!1
4//
334/
334/
@ 3 @ .1/ V R21/ to %: $%/ @ 2 @ .1/ V R13/ to 4: %)/ @ 1 @ .1/ V R%) 4// @ 4/ @ . LL to 1: 4// /3 V R4)/ @ 1 @ .1/ V R4/
334/ @ 42 @ . to $: ,// @ /3 V R4!2/) 4 @ .1/ V R2)/ to %: $%/ @ 3 @ .1/ V R1+% to 4: %)/ @ 2 @ .1/ V R11$ to 3: %3/ @ 1 @ .1/ V R%3 334/ @ 4/ @ . LL to $: ,// /3 V R4!//) @ $ @ .1/ V R42/ LL to %: $%/ @ % @ .1/ V R32% LL to 4: %)/ @ 4 @ .1/ V R232 LL to 3: %3/ @ 3 @ .1/ V R1%+ LL to 2: 4)/ @ 2 @ .1/ V R+$ LL to 1: 4// @ 1 @ .1/ V R4/
R4!,1/
R4!)%2
R%!2)/
7uestion 2: ssume that it is disco#ered that it =ould -e impossi-le to split the silo into sections. (o=e#er! it =ould -e feasi-le to mo#e the entire silo to a site farther up the slope. The section of high=ay from the La'e Louise maintenance station stretching =est 1 mile to =here it reaches the
3!///5foot ele#ation point must -e sanded for 3/ days per year. ll points east of the La'e Louise maintenance station can -e ser#iced from other points. Should the entire silo -e mo#ed to another point< If so! to =here< hat =ill the sa#ings -e< Sho= your =or'. This is handled the same =ay as ?uestion 1 e@cept that =e must also supply 3// tons of sand for the mile -et=een the La'e Louise silo and the start of the hill. The com-ined hauling and spreading costs for each silo are: ! R%!$41F J! R%!3,3F C! R%!22)F ! R%!1+4 Dthe lo=est costEF ! R%!2$/F and lea#ing the silo at La'e Louise! R%!$4/. The Alea#ing the silo at La'e LouiseB cost is higher than gi#en in ?uestion 1 -ecause =e no= must include costs of sanding the mile Hust =est of the silo. 7uestion 3: Ignore all statements made in ?uestion 2 and assume! instead! that the silo can -e di#ided into three sections: one remaining at La'e Louise and other t=o located some=here along the $5mile stretch. If t=o sections are to -e located =ithin the $5mile section! =here should they -e placed< hat =ill the sa#ings -e o#er the present system< Sho= your =or'. Jecause larger tonnages are used at the top! it =ould -e the cheapest to place the split silos closer to the top: at site =hich =ould ser#e miles $ and %! and at site C =hich =ould ser#e miles 4 and 3. "ther sites =ould -e ser#ed from La'e Louise. 7uestion 4: This case =as =ritten some time ago! =hen fuel costs =ere #ery lo=. ssume no= that the spreader dump truc' costs R.3% per ton5mile to operate Dcompared to R.1/E and that the trailer dump truc' used to mo#e sand from the ?uarry costs R.2/ per ton5mile to operate Dup from R./3E. ns=er ?uestion 1 again! -ut this time ta'e into account the ne= truc' operating costs. The pro-lem is set up as in ?uestion 1! although the costs ha#e changed. The ne= Alo= costB silo site is ! =ith annual costs of R3/!/2,! =hich should -e compared =ith the annual costs of R31!1)% to 'eep the site at La'e Louise. 7uestion %: ns=er ?uestion 2 again -ut using the ne= truc'ing costs outlined in ?uestion 4. The ne= site is ! =ith annual costs of R32!+4,! compared =ith annual costs of R33!%)+ of 'eeping the silo at La'e Louise. ith respect to -oth ans=ers 4 and %! note that the costs of the hauling truc's has increased more than the costs of spreading truc'sF hence the most ad#antageous sites are lo=er on the hill. 7uestion $: ns=er ?uestion 3 again! ta'ing into account the ne= truc'ing costs outlined in ?uestion 4. The ans=er for ?uestion 3 applies here as =ell. &T II 5"65C(&T 78STI"S C(&T +: IOT" M9MT 1. hat is in#entory turno#er< (o= can a high in#entory turno#er ratio -e detrimental to a firm<
In#entory turno#er refers to the num-er of times that in#entory is sold in a one year period. It can -e calculated -y di#iding the cost of goods sold for a particular period -y the a#erage in#entory for that period. (igh in#entory turno#er may signal a lo= le#el of in#entories! =hich can increase the chance of product stoc'outs. 2. istinguish among cycle! safety! pipeline! and speculati#e stoc'. Cycle D-aseE stoc' refers to in#entory that is needed to satisfy normal demand during the course of an order cycle. Safety D-ufferE stoc' refers to in#entory that is held in addition to cycle stoc' to guard against uncertainty in demand andor lead time. &ipeline Din5transitE stoc' is in#entory that is en route -et=een #arious nodes in a logistics system! =hile speculati#e stoc' is in#entory that is held for se#eral reasons to include seasonal demand! proHected price increases! and potential product shortages. 3. efine =hat is meant -y in#entory carrying costs. hat are some of its main components< In#entory carrying costs refer to the costs associated =ith holding in#entory. In#entory carrying costs consist of a num-er of different components! and their importance can #ary from product to product. These components include o-solescence costs! shrin'age costs! storage costs! ta@es! and interest costs. 4. iscuss the concept of stoc'out costs. (o= can a stoc'out cost -e calculated< Stoc'outs refer to situations =here customers demand items that are not immediately a#aila-le and stoc'out costs refer to the costs associated =ith not ha#ing items a#aila-le. Calculation of a stoc'out cost first re?uires a company to classify potential customer responses to a stoc'out De.g.! delays the purchase! lost sale! lost customerE. e@t! the company needs to assign pro-a-ilities to the #arious responses as =ell as to assign monetary losses to the #arious responses. The respecti#e pro-a-ilities and losses are multiplied together and then all costs are summed to yield an a#erage cost of stoc'out.
%. istinguish -et=een a fi@ed order ?uantity and fi@ed order inter#al system. hich one generally re?uires more safety stoc'< hy< In a fi@ed order ?uantity system! the order si0e stays constant Dalthough the time inter#al -et=een orders may #aryEF in a fi@ed order inter#al system! the time inter#al is constant Dalthough the order si0e may #aryE. The infre?uency of in#entory monitoring ma'es a fi@ed order inter#al system more suscepti-le to stoc'outs and thus there is li'ely to -e higher le#els of safety stoc' in a fi@ed order inter#al system. $. @plain the logic of the "7 model. The logic of the "7 model is as follo=s: determining an order ?uantity re?uires a company to -alance t=o costsF the costs of carrying the in#entory and the costs of ordering it. In#entory carrying costs are in direct proportion to order si0eF that is! the larger the order! the greater the in#entory carrying costs. "rdering costs! -y contrast! tend to decline =ith order si0e -ut not in a linear fashion. The "7 attempts to find the point D?uantityE at =hich ordering costs e?uals carrying costs. ,. (o= can in#entory flo= diagrams -e useful to a logistics manager< They present a #isual depiction of additions to! and su-tractions from! in#entory. This could -e helpful in identifying any patterns that might -e occurring. In addition! in#entory flo= e@amples illustrate ho= safety stoc' can offset an increased rate of demand as =ell as longer than normal replenishment cycles. ). iscuss =hat is meant -y JC analysis of in#entory. hat are se#eral measures that can -e used to determine JC status< JC analysis is an approach that recogni0es all in#entories are not of e?ual #alue to a firm and! as a result! all in#entory should not -e managed in the same =ay. Measures that can -e used to determine JC status include sales #olume in dollars! sales #olume in units! the fastest selling items! item profita-ility! or item importance. +. hat are implications of the PIT approach for supply chain management< The conse?uences of PIT actually go far -eyond in#entory management and PIT has important implications for supply chain efficiency. "ne implication is that suppliers must deli#er high ?uality materials to the production line! in part -ecause of PIT;s emphasis on lo= DnoE safety stoc'. Moreo#er! -ecause customers in a PIT system tend to place smaller! more fre?uent orders! it is imperati#e that suppliers; order systems are capa-le of handling an increased num-er of orders in an error5free fashion. Smaller! more fre?uent orders! coupled =ith close supplier location! tend to fa#or truc' as a mode of transportation and this means that production and distri-ution facilities should -e designed to support truc' shipments. 1/. (o= does #endor5managed in#entory differ from traditional in#entory management< In AtraditionalB in#entory management! the si0e and timing of replenishment orders are the responsi-ility of the party using the in#entory. 8nder #endor5managed in#entory! -y contrast! the si0e and timing of replenishment orders are the responsi-ility of the manufacturer. This
represents a huge philosophical shift for some organi0ations in the sense that they are allo=ing another party to ha#e control o#er their in#entories and this re?uires a great deal of trust among the #arious parties. 11. o su-stitute items or complementary items present the greater managerial challenge< Support your ans=er. ither ans=er =ould -e accepta-le. Students should recogni0e that -oth su-stitute items and complementary items present managerial challenges! -ut the nature of these challenges is different. 6or instance! one challenge =ith su-stitute items might -e the amount of product to holdF a challenge =ith complementary items might -e product placement in a retail outlet. 12. efine =hat it meant -y dead in#entory. hat are se#eral =ays to manage it< ead in#entory refers to product for =hich there is no demandGat least under current mar'eting practices. Jecause dead in#entory has often -een associated =ith o#erproduction of items that customers do not =ant Dor needE! one suggestion =ould -e ma'e to order as opposed to ma'e to stoc'. (a#ing said this! an increasing source of dead stoc' in recent years in#ol#es special! highly customi0ed orders that ne#er end up =ith the customer. Suggestions for dealing =ith this situation include partial Dor fullE prepayment as =ell as a no5return policy. nother suggestion is for companies to more aggressi#ely mar'et their dead stoc'! and companies might also sell dead in#entory #ia auctions. nother possi-ility is to donate the dead in#entory to charita-le causes. last resort is to simply thro= a=ay the dead in#entory in order to free up storage space. 13. @plain ho= an S8 might ha#e different meanings! depending on one;s position in the supply chain. retailer! for e@ample! might 'eep records in terms of indi#idual items or case lots! =hile the =arehouse that supplies the retailer may deal only =ith case lots or pallets loads of a product. In turn! the distri-utor that sells to =arehouses may deal =ith only pallet loads or #ehicle loads! and may only accept orders only for pallet loads or #ehicle loadsGand not case lots or indi#idual items. 14. hy is it important for a manager to understand informal considerations =ith respect to in#entory management< "ne reason is that the increasing ?uest for customer ser#ice and customer satisfaction is leading many companies to engage in informal considerations. #en though AformalB in#entory analysis should not -e ignored! they should not -e applied =ithout ta'ing into account informal arrangements. The informal arrangements may not fit any AformalB in#entory tenets! -ut many informal considerations tend to do an e@cellent Ho- of satisfying customers. nd! =ithout customers! -usinesses are not going to -e #ery successful. 1%. iscuss some of the challenges that are associated =ith managing repair and replacement parts. "ne challenge is the difficulty in forecasting the demand for these productsG=hen =ill products -rea' do=n or fail< s such! it -ecomes challenging =ith respect to =hich parts to
carry as =ell as the appropriate stoc'ing le#els for them. nother challenge in#ol#es the num-er of =arehousing facilities to -e used: Should the parts -e more decentrali0ed or more centrali0ed< These and other challenges ha#e caused some companies to outsource their repairreplacement parts -usiness. 1$. hich presents the greater re#erse logistics challenge: D1E eturned items or D2E efur-ished and recycled products< Support your ans=er. s =as the case =ith ?uestion 11! either ans=er is accepta-le. gain! it is important to recogni0e that -oth present re#erse logistics challengesG-ut the nature of the challenges is different. 6or e@ample! there is unpredicta-ility =ith respect to returned items! in terms of return rates and product content. efur-ishing and recycling! -y contrast! are predicated on sufficient product #olumes! =hich re?uire ade?uate storage space. 1,. hat are su-stitute items and ho= might they affect safety stoc' policies< Su-stitute items refer to products that customers #ie= as -eing a-le to fill the same need or =ant. ith respect to safety stoc' policies! if a consumer has little hesitation in su-stituting another item for one that is out of stoc'! there =ould appear to -e minimal penalties for a stoc'out. It is also important that companies understand su-stitution patterns in the sense that &roduct may -e a su-stitute for &roduct J! -ut the re#erse may not -e true. In such a situation! safety stoc' policies =ould need to reflect the appropriate relationships.
1). hich supply chain participantDsE should -e responsi-le for managing in#entory le#els< hy< The 'ey to this ?uestion is the =ord Amanaging.B lthough #arious in#entory approaches may re?uire certain select participants to maintain the in#entory! supply5chain effecti#eness and efficiency =ould argue that all supply chain participants should -e in#ol#ed =ith managing in#entory le#els. Jecause the supply chain is a system! one company;s in#entory policies and practices can impact the other mem-ers of the supply chain. 6ailure to consider these other participants =hen setting in#entory policies and practices could lead to dysfunctional conse?uences. 1+. Should in#entories -e considered in#estments< hy< The te@t suggests that in#entories should -e considered in#estments. Carrying costs for in#entories can -e significantF the return on in#estment to a firm for its funds tied up in in#entory should -e as high as the return it can o-tain from other! e?ually ris'y uses of the same funds. 2/. Since the mid51++/s! many -eer and soft5drin' cans and -ottles ha#e contained a freshness date stamped on them to indicate the latest date that the product should -e consumed. hat pro-lems might such a system cause for the people responsi-le for managing such in#entories< iscuss. There are a #ariety of possi-le ans=ers to this ?uestion. "ne consideration is that product needs to -e in places =here it can -e -ought prior to the e@piration date. t a minimum! this means
that companies need to -e a-le to identify indi#idual products! locate the products! and mo#e the products to the appropriate placeDsE. The oldest in#entory should -e AturnedB -efore other in#entory. nother consideration in#ol#es =hat to do =ith e@pired product! a situation that -rings into play re#erse logistics considerations.
&T III KMITI" 78STI"S C(&T +: IOT" M9MT Multiple Choice 7uestions 1. refers to stoc's of goods and materials that are maintained for many purposes! the most common -eing to satisfy normal demand patterns. a. Logistics -. Supply chain management c. In#entory d. &roduction DcF p. 21$E 2. In#entory turno#er can -e calculated -y: a. adding -eginning and ending in#entoryF di#ide -y t=o -. di#iding the cost of goods sold -y a#erage in#entory c. di#iding a#erage in#entory -y the cost of goods sold d. multiplying a#erage in#entory -y 1.% e. none of the a-o#e D-F p. 21)E 3. ll of the follo=ing are true! e@cept: a. there is no one optimal in#entory turno#er ratio -. high in#entory turno#er may signal a lo= le#el of in#entories c. lo= in#entory turno#er results in high in#entory carrying costs d. in#entory turno#er is calculated -y di#iding the cost of goods sold -y a#erage in#entory e. all are true DeF p. 21)E 4. stoc' is carried to stimulate demand. a. Jase -. Speculati#e c. ttracti#e d. &sychic ™ÑÎÏ DdF p. 21)E
%. stoc' refers to in#entory that is needed to satisfy normal demand during the course of an order cycle. a. &sychic -. Speculati#e c. Jase d. &ipeline DcF p. 21)E $. stoc' refers to in#entory that is held in addition to cycle stoc' to guard against uncertainty in demand andor lead time. a. Juffer -. Jase c. &ipeline d. Speculati#e DaF p. 21)E ,. stoc' refers to in#entory that is en route -et=een #arious nodes in a logistics system. a. Jase -. Safety c. &ipeline d. Speculati#e DcF p. 21)E ). stoc' refers to in#entory that is held for se#eral reasons! to include seasonal demand! proHected price increases! and potential shortages of product. a. Jase -. Safety c. &ipeline d. Speculati#e DdF p. 21+E
+. commonly used estimate for in#entory carrying costs is . a. 3%> -. 2%> c. 2/> d. 1/> e. none of the a-o#e D-F p. 21+E 1/. ll of the follo=ing statements are true! e@cept: a. -. c. d.
in general! in#entory carrying costs are e@pressed in percentage terms in general! companies prefer to carry less in#entory as carrying costs increase in#entory carrying costs consist of a num-er of different factors or categories the importance of indi#idual carrying costs factors DcategoriesE is generally consistent from product to product 不同 e. all are true DdF p. 21+E
11. In#entory shrin'age: a. is another name for in#entory turno#er -. refers to the fact that more items are recorded entering than lea#ing =arehousing facilities c. refers to situations =here the si0e andor #olume of in#entory is decreased o#er time d. refers to a techni?ue of sta-ili0ing unit loads -y using shrin' =rap pac'aging D-F p. 21+E 12. ach of the follo=ing is a component of in#entory carrying cost e@cept: a. storage cost -. accounting cost c. shrin'age cost d. interest cost e. all are components D-F pp. 21+522/E 13. In the 8nited States! has traditionally pro#ided a con#enient starting point =hen estimating the interest charges associated =ith maintaining in#entory. a. 9ross omestic &roduct gro=th -. Consumer &rice Inde@ c. The prime rate of interest d. The yield on 8S Treasury -ills DcF p. 22/E 14. hich of the follo=ing situations is li'ely the most damaging DcostlyE =ith respect to a stoc'out< a. the customer -uys a su-stitute product that yields a higher profit for the seller -. the customer -uys a su-stitute product that yields a lo=er profit for the seller c. the customer goes to a competitor for this purchase
d. the customer says ACall me =hen it;s inB DcF p. 22/E 1%. hich of the follo=ing statements is false< a. =ith respect to stoc'outs! a delayed sale is #irtually costless -ecause of the customer;s -rand loyalty -. the higher the a#erage cost of a stoc'out! the more in#entory Dsafety stoc'E that should -e held c. tradeoffs e@ist -et=een carrying costs and stoc'out costs d. stoc'outs can -e more costly than ha#ing too many items in stoc' e. all are true DeF pp. 22/5221E 1$. hen marginal analysis is used =ith respect to safety stoc's one is loo'ing for: a. the point =here the costs of holding additional safety stoc' are e?ual to the sa#ings in stoc'out costs a#oided †Š™Ñ成·t于ÐÑ成· -. the point =here the costs of holding additional safety stoc' are e?ual to the carrying costs of the "7 c. the point at =hich +%> of possi-le demand situations can -e co#ered d. the point at =hich the marginal cost of one additional unit of safety stoc' is nearly 0ero DaF p. 221E 1,. 8nder conditions of certainty! a reorder point is e?ual to: a. a#erage daily demand in units times the length of the replenishment cycle -. safety stoc' plus an "7 c. -ase stoc' plus safety stoc' d. -ase stoc' minus safety stoc' DaF p. 222E
1). The economic order ?uantity D"7E deals =ith calculating the proper order si0e =ith respect to costs and costs. a. orderF stoc'out -. stoc'outF carrying c. carryingF order d. accountingF carrying DcF p. 223E 1+. If there =ere no in#entory carrying costs! then: a. firms =ould continually place orders and maintain #irtually no in#entory at all -. stoc'out costs =ould -e infinite c. speculati#e stoc's =ould decrease d. customers =ould hold immense in#entory DdF p. 223E 2/. The "7 determines: a. the point at =hich a company should reorder -. the point at =hich carrying costs e?ual ordering costs c. the point at =hich the sum of carrying costs and ordering costs is ma@imi0ed d. the rele#ant in#entory flo= for a particular time period e. none of the a-o#e D-F p. 224E 21. Concerning the "7 model! if demand or annual usage increases -y 1/>! then the "7 =ill: a. increase -. decrease c. stay unchanged d. it depends on the particular product DaF p. 224E 22. Concerning the "7 model! if the ordering costs increase -y 1/> and the product #alue increases -y 1/>! then the "7 =ill: a. increase -. decrease c. stay unchanged d. it depends on the particular product DcF p. 224E
23. In#entory flo= diagrams illustrate that safety stoc' can pre#ent t=o pro-lem areas! and . a. increased rate of demandF longer5than5normal replenishment -. decreased rate of demandF shorter5than5normal replenishment
c. increased rate of demandF shorter5than5normal replenishment d. decreased rate of demandF longer5than5normal replenishment DaF p. 22$E 24. recogni0es that all in#entories are not of e?ual #alue to a firm and thus all in#entories should not -e managed in the same =ay. a. Oendor5managed in#entory -. Su-optimi0ation c. Marginal analysis d. JC analysis DdF p. 22,E 2%. The PIT concept started in: a. Papan -. 9ermany c. ngland d. 8nited States DdF p. 22)E 2$. hich of the follo=ing statements a-out PIT is false< a. the PIT concept started in Papan -. organi0ations should gi#e careful consideration -efore adopting a PIT philosophy c. the PIT approach #ie=s in#entory as =aste d. truc'ing is an important mode of transportation in PIT systems e. all are true DaF p. 22)E 2,. 8nder ! the si0e and timing of replenishment orders are the responsi-ility of the manufacturer. a. 7uic' esponse -. Supply Chain Management c. Oendor5Managed In#entory d. fficient Consumer esponse DcF pp. 22+523/E 2). hich of the follo=ing is not a potential -enefit to #endor5managed in#entory DOMIE< a. higher re#enues ܽò -. impro#ed demand forecasts c. reduced in#entories d. fe=er stoc'outs e. all are OMI -enefits DeF p. 23/E 2+. items refer to those that are used or distri-uted together.
a. Me5too -. Su-stitute c. Co5-randed d. Complementary DdF p. 23/E 3/. ll of the follo=ing are suggestions for dealing =ith dead stoc' Din#entoryE! e@cept: a. aggressi#e mar'eting -. donate to charities c. ma'e to stoc' d. thro=ing it a=ay e. all are suggestions DeF p. 231E 31. DnE refers to a specific indi#idual item or product for =hich separate records must -e maintained. a. economic order ?uantity -. stoc'5'eeping unit c. proHect cargo d. throughput D-F p. 233E 32. hat appears to -e the dri#ing force -ehind informal arrangements outside the distri-ution channel< a. decreasing costs -. the increasing comple@ity of formal in#entory analysis c. increasing ?uest for customer satisfaction d. impro#ed information systems e. none of the a-o#e DcF p. 233E 33. can -e essential to customer ser#ice and satisfaction! yet it can -e e@tremely difficult to forecast demand for them. a. epairreplacement parts -. Complementary products c. Su-stitute products d. Co5-randed products DaF p. 233E 34. ll of the follo=ing statements concerning re#erse logistics are true e@cept: a. return goods tend to -e characteri0ed -y unpredicta-le product content -. product returns are characteri0ed -y a predicta-le product flo=
c. refur-ishing and recycling are predicated on sufficient product #olumes d. return rates tend to #ary across industry e. all are true D-F pp. 234523$E 3%. products refer to products that customers #ie= as -eing a-le to fill the same need or =ant as another product. a. Copycat -. Canni-ali0ed c. Su-stitute d. Complementary DcF p. 23$E True56alse 7uestions 1. In#entories are stoc's of goods and materials that are maintained for many purposes. DTrueF p. 21$E 2. In#entory carries its greatest costs after #alue has -een added through manufacturing and processing. DTrueF p. 21,E 3. The num-er of times that in#entory is sold in a one year period is referred to as a#erage in#entory. D6alseF p. 21)E 4. (igh in#entory turno#er indicates that a company is ta'ing longer to sell its in#entory. D6alseF p. 21)E %. In#entory turno#er can -e calculated -y di#iding cost of goods sold -y a#erage in#entory. D6alseF p. 21)E $. &sychic stoc' is associated =ith retail stores. DTrueF p. 21)E ,. Juffer stoc' can also -e called cycle stoc'. D6alseF p. 21)E ). Safety stoc' refers to in#entory that is held in addition to cycle stoc' to guard against uncertainty in demand andor lead time. DTrueF p. 21)E +. &ipeline stoc' refers to in#entory that is en route -et=een #arious nodes in a logistics system. DTrueF p. 21)E 1/. s a general rule! companies prefer to carry less in#entory as the carrying cost percentage decreases. D6alseF p.21+E 11. In#entory shrin'age refers to the fact that products lose #alue through time. D6alseF p. 21+E 12. In the 8nited States! the prime rate of interest has traditionally pro#ided a con#enient starting point =hen estimating the interest charges associated =ith maintaining in#entory. DTrueF p. 22/E 13. ot ha#ing enough items can -e as -ad as! and sometimes =orse than! ha#ing too many items. DTrueF p. 22/E
14. The higher the a#erage cost of a stoc'out! the more li'ely a company is going to =ant to hold some amount of in#entory Dsafety stoc'E to protect against stoc'outs. DTrueF p. 221E 1%. ith respect to marginal analysis as applied to stoc'outs! one is loo'ing for the point at =hich +%> of possi-le demand situations can -e co#ered. D6alseF p. 221E 1$. In a fi@ed order ?uantity system! the order si0e stays constant although the time inter#al -et=een orders may fluctuate. DTrueF p. 222E 1,. fi@ed order ?uantity system is more suscepti-le to stoc'outs than is a fi@ed order inter#al system. D6alseF p. 222E 1). reorder point is e?ual to a#erage daily demand di#ided -y the length of the replenishment cycle. D6alseF p. 222E 1+. "ne re?uirement of a fi@ed order inter#al system is that the in#entory must -e constantly monitored. D6alseF p. 223E 2/. If there =ere no in#entory carrying costs! then customers =ould continually place orders and maintain #irtually no in#entory at all! aside from safety stoc's. D6alseF p. 223E 21. The "7 is the point at =hich carrying costs e?ual ordering costs. DTrueF p. 224E 22. If demand or annual usage increases -y 2/>! then the rele#ant economic order ?uantity =ill decrease. D6alseF p. 224E 23. "7s! once calculated! may not -e the same as the lot si0es in =hich a product is commonly -ought and sold. DTrueF p. 22%E 24. Safety stoc' can pre#ent against t=o pro-lem areas: n increased rate of demand and longer5than5 normal replenishment. DTrueF p. 22$E 2%. JC analysis recogni0es that all in#entories should not -e managed in the same =ay. DTrueF p. 22,E 2$. In terms of JC analysis of in#entory! no more than 2%> of items should -e classified as A;s.B D6alseF p. 22,E 2,. The PIT approach originated in Papan. D6alseF p. 22)E 2). The PIT approach #ie=s in#entory as =aste. DTrueF p. 22)E 2+. Jecause of smaller! more fre?uent orders and closer supplier location! truc'ing tends to -e an important mode of transportation in the PIT approach. DTrueF p. 22)E 3/. In #endor5managed in#entory! the si0e and timing of replenishment orders are the responsi-ility of the manufacturer. DTrueF pp. 22+523/E 31. "ne dra=-ac' of OMI is that retailers often e@perience lo=er in#entory turno#er. D6alseF p. 23/E
32. Complementary products can -e defined as in#entories that can -e used or distri-uted together! such as ra0or -lades and ra0ors. DTrueF p. 23/E 33. "ne =ay of dealing =ith dead stoc' Din#entoryE is for companies to simply thro= it a=ay. DTrueF p. 231E 34. In#entory deals are occurring =ith greater fre?uency today than in the recent past. D6alseF p. 233E 3%. The definition of a stoc'5'eeping unit is the same! regardless of a party;s positionrole in the supply chain. D6alseF p. 233E 3$. The increasing ?uest for customer ser#ice and customer satisfaction is leading many companies to engage in informal arrangements outside the distri-ution channel. DTrueF p. 233E 3,. "ne challenge =ith repairreplacement parts in#ol#es difficulties in determining =hich parts to carry. DTrueF pp. 2335234E 3). eturn items are characteri0ed -y unpredicta-ility of product flo=. DTrueF p. 23$E 3+. efur-ishing refers to dismantling an e@isting product in order to collect component parts. D6alseF p. 23$E 4/. &roduct placement is often a 'ey issue =ith su-stitute items. D6alseF p. 23$E
&T IO CS S"L8TI"S CS +51: L" IL C"M& 7uestion 1: 8sing the "7 methods outlined in chapter +! ho= many 'egs of nails should Lo= order at one time< The "7 formula is: "7 V ^ 2 Dannual use in unitsE Dcost of placing an orderE annual carrying cost per item per year V ^ 2 D2///E D$/E 2 V ^ 12/!/// V 34% 'egs per order ote the 2 in the denominator. That is -ecause! on a#erage! the rented =arehouse space is only half f ull! =hich! ma'es the a#erage =arehousing cost per 'eg -e R2. 7uestion 2: ssume all conditions in ?uestion 1 hold! e@cept that Lo=;s supplier no= offers a ?uantity discount in the form of a-sor-ing all or part of Lo=;s order processing costs. 6or orders of ,%/ or more 'egs of nails! the supplier =ill a-sor- all the order processing costsF for orders -et=een 24+ and ,4+ 'egs! the supplier =ill a-sor- half. hat is Lo=;s ne= "7< DIt might -e useful to lay out all costs in ta-ular form for this and later ?uestions.E "rdersyear
"rder si0e
1 2 3 4 % $ , ) +
2!/// 1!/// $$, %// 4// 334 2)$ 2%/ 223
&rocessing costs DRE
arehousing costs DRE
6ree 6ree +/ 12/ 1%/ 1)/ 21/ 24/ %4/
2!/// 1!/// $$, %// 4// 334 2)$ 2%/ 223
Sum of processing and =arehousing costs DRE 2!/// 1!/// ,%, $2/ %%/ %14 4+$ 4+/ ,43
The ne= "7! -ased on the a-o#e information! is 2%/ 'egs. 7uestion 3: Temporarily! ignore your =or' on ?uestion 2. ssume that Lo=;s =arehouse offers to rent Lo= space on the -asis of the average num-er of 'egs Lo= =ill ha#e in stoc'! rather than on the ma@imum num-er of 'egs Lo= =ould need room for =hene#er a ne= shipment arri#ed. The storage
cost per 'eg remains the same. oes this change the ans=er to 7uestion 1< If so! =hat is the ne= ans=er< The rele#ant ta-le is as follo=s:
"rdersyear
"rder si0e
1 2 3 4 %
2!/// 1!/// $$, %// 4//
&rocessing costs DRE $/ 12/ 1)/ 24/ 3//
arehousing costs DRE 1!/// %// 334 2%/ 2//
Sum of processing and =arehousing costs DRE 1!/$/ $2/ %24 4+/ %//
The ne= "7! -ased on the a-o#e information! is %//. 7uestion 4: Ta'e into account the ans=er to ?uestion 1 and the supplier;s ne= policy outlined in ?uestion 2 and the =arehouse;s ne= policy in ?uestion 3. Then determine Lo=;s ne= "7. The rele#ant ta-le is as follo=s: "rdersyear
"rder si0e
1 2 3 4 % $ ,
2!/// 1!/// $$, %// 4// 334 2)$
&rocessing costs DRE 6ree 6ree +/ 12/ 1%/ 1)/ 21/
arehousing costs DRE 1!/// %// 334 2%/ 2// 1$, 143
Sum of processing and =arehousing costs DRE 1!/// %// 424 3,/ 3%/ 34, 3%3
The ne= "7! -ased on the a-o#e information! is 334. 7uestion %: Temporarily! ignore your =or' on ?uestions 2! 3! and 4. Lo=;s luc' at the race trac' is o#erF he no= must -orro= money to finance his in#entory of nails. Loo'ing at the situation outlined in ?uestion 1! assume that the =holesale cost of nails is R4/ per 'eg and that Lo= must pay interest at the rate of 1.%> per month on the unsold in#entory. hat is his ne= "7< This ans=er can -e done in ta-ular form as =ell! =ith the interest on in#entory appearing as a ne= column. If one order is placed a year! the a#erage in#entory is 1!/// 'egs! =orth R4/!///! =ith annual interest charges D1.% @ 12 V 1)>E of R,!2//. "ther interest costs are calculated in a similar fashion! adHusted for a#erage in#entory.
The rele#ant ta-le is as follo=s:
"rdersyear 1 2 3 4 % $ , ) + 1/ 11 12 13 14
"rder si0e
&rocessing costs DRE
2!/// 1!/// $$, %// 4// 334 2)$ 2%/ 223 2// 1)2 1$, 1%4 143
$/ 12/ 1)/ 24/ 3// 3$/ 42/ 4)/ %4/ $// $$/ ,2/ ,)/ )4/
Sum of processing! arehousing Interest costs =arehousing! costs DRE DRE and interest costs DRE 2!/// ,!2// +!2$/ 1!/// 3!$// 4!,2/ $$, 2!4/% 3!2%2 %// 1!)// 2!%4/ 4// 1!44/ 2!14/ 334 1!2/3 1!)+, 2)$ 1!/3/ 1!,3$ 2%/ +// 1!$3/ 223 )/, 1!%,/ 2// ,2/ 1!%2/ 1)2 $%$ 1!4+) 1$, $/% 1!4+2 1%4 %%% 1!4)+ 143 %1+ 1!%/2
The ne= "7! -ased on the a-o#e information! is 1%4 'egs. 7uestion $: Ta'ing into account all the factors listed in ?uestions 1! 2! 3! and %! calculate Lo=;s "7 for 'egs of nails. The rele#ant ta-le is as follo=s:
"rdersyear 1 2 3 4 % $ , ) +
"rder si0e 2!/// 1!/// $$, %// 4// 334 2)$ 2%/ 223
&rocessing costs DRE 6ree 6ree +/ 12/ 1%/ 1)/ 21/ 24/ %4/
Sum of processing! arehousing Interest costs =arehousing! costs DRE DRE and interest costs DRE 1!/// ,!2// )!2// %// 3!$// 4!1// 334 2!4/% 2!)2+ 2%/ 1!)// 2!1,/ 2// 1!44/ 1!,+/ 1$, 1!2/3 1!%%/ 143 1!/3/ 1!3)3 12% +// 1!2$% 112 )/, 1!4%+
The ne= ans=er! -ased on the a-o#e information! is 2%/ 'egs.
CS +52 PCS";S ("8S DThis case can -est -e assessed only -y those familiar =ith ST"M soft=are! although other -usiness analysis soft=are programs might -e used. The terminology and approach are not e@actly the same as used here! especially the use of Sigma lead times! =hich are measured in units and can -e e@plained as measuring the AdippingB into safety stoc's. lso! some of the topics =ill -e ne= to readers of this [email protected] 7uestion 1: &erform an JC analysis. Is it of much use if the firm maintains only 12 S8s< hy or =hy not< (ere is the JC analysis printout from one soft=are pac'age! -ased on total annual usage of R3!212!%$/: Item ran' 1 2 3 4 % $ , ) + 1/ 11 12
Item name Item 2 Item 11 Item $ Item % Item 1 Item 3 Item 4 Item , Item 12 Item + Item 1/ Item )
Item I +4/ 2%) 44, 3/1 4/2 $$/ )2+ ,++ $2 2, 1+$ %+,
nnual usage DRE ,4)!+// %4$!/// 4,4!24/ 4%%!/// 312!/// 312!/// 1/1!4// )3!2// ,4!))/ 43!$)/ 3$!4// 24!+$/
> of cumulati#e items ).33 1$.$, 2%.// 33.33 41.$, %/.// %).33 $$.$, ,%.// )3.33 +1.$, 1//.//
> of R usage 23.31 4/.3/ %%./, $+.23 ,).+4 )).$% +1.)1 +4.4/ +$.,3 +)./+ ++.22 1//.//
JC classes J J J J C C C C C C
ith only 12 S8s! JC analysis is pro-a-ly not useful! unless it is #ery difficult to 'eep trac' of in#entory. onetheless! one can see the ad#antages of esta-lishing priorities for 'eeping trac' of in#entory.
7uestion 2: 6ind the reorder point for each of the S8s e@pressed as the point to =hich e@isting in#entory must drop to trigger a replenishment order. The printout follo=s: Item name Item 1 Item 2 Item 3 Item 4 Item % Item $ Item , Item ) Item + Item 1/ Item 11 Item 12
Item I
"rderssetups
"rder si0e
4/2 +4/ $$/ )2+ 3/1 44, ,++ %+, 2, 1+$ 2%) $2
2$./ 3).% 2%./ 22.$ 4,.+ 4).+ 2/.) 11.1 14.+ 13.% %2./ 1+.3
) 2, 2% $+ 3) %1 2/ %$ 14 ,, 42 4)4
eorder point 1/1 1/2 1$4 1$2 1)3 212 %, 1/% )$ 11+ 231 1331
Ma@ orders outstanding 1 1 1 1 1 1 1 1 1 1 1 1
7uestion 3: (o= large a safety stoc' should -e maintained for each S8< The printout follo=s: Item name Item 1 Item 2 Item 3 Item 4 Item % Item $ Item , Item ) Item + Item 1/ Item 11 Item 12
Item I 4/2 +4/ $$/ )2+ 3/1 44, ,++ %+, 2, 1+$ 2%) $2
"rder cost DRE 1!+%/ 2!))+.)+ 1!),2.// $,).2$ 1!43$.)4 1!4$).24 $24.// 334.2+ 44%.,1 4/%.1+ 1!%$/.// %)/.1,
or'ing stoc' cost DRE 1!)// 2!+1$.// 1!),%.// $,2.,% 1!42%.// 1!4%3.%/ $//.// 33$.// 441.// 4/4.2% 1!%,%.// %)/.)/
Safety stoc' cost DRE Total cost DRE 41!),1.14 1,!,$4.42 2/!+3%.%, 2!%$%.+, 11!1/2.,$ +!3,%.$, 2!+$/.,4 +,$.++ %!1)1.2+ 1!/3$.2$ 14!1)$.)$ 2!,$3.3%
4%!$21.14 23!%$+.31 24!$)2.%, 3!+1$.+) 13!+$4.$/ 12!2+,.4/ 4!1)4.,4 1!$4,.2) $!/$).// 1!)4%.,/ 1,!321.)$ 3!+24.32
7uestion 4: (o= much money =ill Pac'son ha#e as its a#erage in#estment in in#entory< The printout follo=s: Pac'son;s arehouse 999T IOT" OL8S In#entory carrying charge V 3/> Ser#ice le#el V +%> Total num-er of items
12
#erage =or'ing stoc' in#estment #erage safety stoc' in#estment Total in#entory in#estment
R4$!+31.// R43%!,3$.,/ R4)2!$$,.,/
Cost of ordering "7 items per year #erage =or'ing stoc' carrying cost per year #erage safety stoc' carrying cost per year Total in#entory carrying cost per year Total cost per year
R14!243.%+ R14!/,+.3/ R13/!,21.// R144!)//.3/ R1%+!/43.+/
um-er of orders for "7 items
341
@pected stoc'outs
1,
7uestion %: Interest rates drop! and Pac'son;s no= assumes that its carrying costs are 2/>! rather than 3/>. (o= =ill this change your ans=ers to ?uestions 2! 3! and 4! if at all< @plain.
The printout for ?uestion 2! as re#ised for 2/> carrying costs:
Item name Item 1 Item 2 Item 3 Item 4 Item % Item $ Item , Item ) Item + Item 1/
Item I
"rderssetups
"rder si0e
4/2 +4/ $$/ )2+ 3/1 44, ,++ %+, 2, 1+$
2/.) 31.% 2/.1 1).4 3)., 3+.$ 1$.$ +.2 12.2 11.1
1/ 33 31 )% 4, $3 2% $) 1, +4
eorder point 1/1 1/2 1$4 1$2 1)3 212 %, 1/% )$ 11+
Ma@ orders outstanding 1 1 1 1 1 1 1 1 1 1
Item 11 Item 12
2%) $2
42.) 1%.)
%1 %+2
231 1331
1 1
The printout for ?uestion 3! as re#ised for 2/ > carrying costs: Item name
Item I
Item 1 Item 2 Item 3 Item 4 Item % Item $ Item , Item ) Item + Item 1/ Item 11 Item 12
4/2 +4/ $$/ )2+ 3/1 44, ,++ %+, 2, 1+$ 2%) $2
"rder cost DRE 1!%$/.// 2!3$3.$4 1!%/+.$) %%/.%+ 1!1$1.,/ 1!1)).%, 4++.2/ 2,%.2+ 3$,./$ 331.+1 1!2)4.,1 4,4.32
or'ing stoc' cost DRE 1!%//.// 2!3,$.// 1!%%/.// %%2.%/ 1!1,%.// 1!1+,.// %//.// 2,2.// 3%,.// 32+.// 1!2,%.// 4,3.$/
Safety stoc' cost DRE Total cost DRE 2,!+14./+ 11!4)2.+% 13!+%,./% 1!,1/.$% ,!4/1.)4 $!2%/.44 1!+,3.)2 $%1.33 3!4%4.1+ $+/.)4 +!4%,.+1 1!)42.24
3/!+,4./+ 1$!%)2.%) 1,!/1$.,2 2!)13.,4 +!,3).%4 )!$3$./2 2!+,3./2 1!1+).$2 4!1,).2% 1!3%1.,% 12!/1,.$1 2!,+/.1$
The printout for ?uestion 4! as re#ised for 2/> carrying costs: Pac'son;s arehouse 999T IOT" OL8S In#entory carrying charge V 2/> Ser#ice le#el V +%> Total num-er of items #erage =or'ing stoc' in#estment #erage safety stoc' in#estment Total in#entory in#estment Cost of ordering "7 items per year #erage =or'ing stoc' carrying cost per year #erage safety stoc' carrying cost per year Total in#entory carrying cost per year Total cost per year um-er of orders for "7 items @pected stoc'outs
12 R%,!,)%.%/ R43%!,3$.,/ R4+3!%22.2/ R11!%$$.$, R11!%%,.1/ R),!14,.3% R+)!,/4.4% R11/!2,1.1/ 2,, 14
7uestion $: isregard your ans=ers to ?uestions 4 and %. ns=er ?uestion 3 again! this time assuming that Pac'son;s =ants to 'eep enough of each S8 to fill orders +/> of the time. The printout for ?uestion 3! assuming Pac'son =ants to fill orders +/> of the time: Item name
Item I
Item 1 Item 2 Item 3 Item 4 Item % Item $ Item , Item ) Item + Item 1/ Item 11 Item 12
4/2 +4/ $$/ )2+ 3/1 44, ,++ %+, 2, 1+$ 2%) $2
"rder cost DRE 1!+%/.// 2))).)+ 1!),2.// $,).2$ 1!43$.)4 1!4$).24 $24.// 334.2+ 44%.,1 4/%.1+ 1!%$/.// %)/.1,
or'ing stoc' cost DRE 1!)//.// 2+1$.// 1!),%.// $,2.,% 1!42%.// 1!4%3.%/ $//.// 33$.// 441.// 4/4.2% 1!%,%.// %)/.)/
Safety stoc' cost DRE Total cost DRE 32!$22.+) 13!)4/.,$ 1$!311.4+ 1!+++.22 )!$%/.4, ,!3/4.)4 2!3/$.,+ ,$1.2/ 4!/3$.)+ )/,.3) 11!/%3.3) 2!1%3./1
3$!3,2.+) 1+!$4%.$% 2/!/%).4+ 3!3%/.23 11!%12.32 1/!22$.%) 3!%3/.,+ 1!431.4+ 4!+23.$/ 1!$1$.)2 14!1)).3) 3!313.+,
The printout for ?uestion 4! assuming Pac'son =ants to fill orders +/> of the time: Pac'son;s arehouse 999T IOT" OL8S In#entory carrying charge V 3/> Ser#ice le#el V +/> Total num-er of items #erage =or'ing stoc' in#estment #erage safety stoc' in#estment Total in#entory in#estment Cost of ordering "7 items per year #erage =or'ing stoc' carrying cost per year #erage safety stoc' carrying cost per year Total in#entory carrying cost per year Total cost per year um-er of orders for "7 items @pected stoc'outs &T II 5"65C(&T 78STI"S
12 R4$!+31.// R33+!4+4.,/ R3)$!42%.,/ R14!243.%+ R14!/,+.3/ R1/1!)4).4/ R11%!+2,.,/ R13/!1,1.3/ 341 34
C(&T 1/: ("8SI9 M9MT 1. istinguish -et=een =arehouses and distri-ution centers. arehouses emphasi0e the storage of products and their primary purpose is to ma@imi0e the use of storage space. In contrast! distri-ution centers emphasi0e the rapid mo#ement of products through a facility and thus attempt to ma@imi0e throughput Dthe amount of product entering and lea#ing a facility in a gi#en time periodE. 2. @plain the four =ays that =arehousing facilitates the regrouping function. egrouping in#ol#es rearranging the ?uantities of products as they mo#e through the supply chain and it ta'es four forms: accumulating Dalso referred to as -ul'5ma'ingE! allocating Dalso referred to as -ul'5-rea'ingE! assorting! and sorting. ccumulating in#ol#es -ringing together similar stoc's from different sources! =hile allocating in#ol#es -rea'ing larger ?uantities into smaller ?uantities. ssorting refers to -uilding up a #ariety of different products for resale to particular customers! =hile sorting out refers to separating products into grades and ?ualities desired -y different target mar'ets. 3. iscuss some of the #alue5added acti#ities that can -e performed -y =arehouses and distri-ution centers. These #alue5added acti#ities include assem-ly! custom la-eling! light manufacturing! product testing! repac'aging! and re#erse logistics considerations! among others. 4. hat is cross5doc'ing< (o= might it affect =arehousing design< Cross5doc'ing can -e defined as a process =here a product is recei#ed in a facility! occasionally married =ith product going to the same destination! then shipped at the earliest opportunity! =ithout going into long5term storage. There is some disagreement =ith respect to the design of a cross5doc' facility. Some prefer a design that resem-les a motor carrier terminalG rectangular! long! and as narro= as possi-le. "thers suggest that all cross5doc' doors should -e on one =all or placed at +/ degrees to one another. %. istinguish -et=een -onded storage and field =arehousing. There are se#eral types of -onded storage and all refer to situations =here goods are not released until applica-le fees are paid. 8.S. Customs5-onded =arehouses hold goods until import duties are collected. Internal e#enue ser#ice5-onded =arehouses hold goods until other federal ta@es and fees are collected. field =arehouse is a facility temporarily esta-lished at the site of an in#entory of goods! often the premises of the goods; o=ner. The =arehouser assumes custody of the goods and issues a receipt for them! =hich can then -e used as collateral for a loan. $. hat are the ad#antages and disad#antages of pri#ate =arehousing< "ne disad#antage to pri#ate =arehousing is that they are characteri0ed -y high fi@ed costsG =hich necessitates high and steady demand #olumes. In addition! a high fi@ed cost alternati#e
-ecomes less attracti#e in times of high interest rates -ecause it is more costly to secure the necessary financing. &ri#ate =arehousing may also reduce an organi0ation;s fle@i-ility =ith respect to responding to changes in the e@ternal en#ironment. s for ad#antages! pri#ate =arehousing offers users a great deal of control o#er their storage needs. More specifically! pri#ate =arehouses can -e constructed to meet user specifications and companies can also control product placement =ithin a facility. In addition! pri#ate =arehousing offers access to products =hen an organi0ation needs or =ants them. ,. iscuss =hy contract =arehousing is -ecoming a preferred alternati#e for many organi0ations. Contract =arehousing simultaneously mitigates the negati#e aspects and accentuates the positi#e aspects of pu-lic and pri#ate =arehousing. 6or instance! contract =arehousing allo=s a company to focus on its core competencies! =ith =arehousing management pro#ided -y e@perts. Contract =arehousing also tends to -e more cost effecti#e than pri#ate =arehousing! =ith potentially the same degree of control -ecause 'ey specifications can -e included in the rele#ant contract. ). @plain ho= common sense can -e helpful in terms of =arehousing design and operations. "ne common sense piece of ad#ice is that prior to designing a =arehousing facility! the ?uantity and character of goods to -e handled must -e 'no=n. 6or e@ample! online orders tend to -e much smaller than those going to retail storesF as a conse?uence! pic'ing and assem-ling one or t=o items is much different than pic'ing and assem-ling a palletload of items. nother common sense piece of ad#ice is that it is important for an organi0ation to 'no= the purpose to -e ser#ed -y a particular facility -ecause the relati#e emphasis placed on the storage and distri-ution functions affects space layout. 6or instance! a distri-ution5oriented facility attempts to ma@imi0e throughput rather than storage. +. In terms of =arehousing design! gi#e e@amples of trade5offs in#ol#ing space! la-or! and mechani0ation. Spaciousness may not al=ays -e ad#antageous -ecause the distances that an indi#idual or machine must tra#el in the storing and retrie#ing functions are increased. "n the other hand! cramped conditions can lead to inefficiencies such as the product damage that can -e caused -y for'lift puncture and mo#ement -ottlenec's caused -y inefficient aisle =idth. 1/. istinguish -et=een fi@ed and #aria-le slot locations. (o= might they affect =arehousing design< fi@ed slot location refers to a situation =here each S8 has one or more permanent slots assigned to it! =hereas a #aria-le slot location in#ol#es empty slots -eing assigned to products -ased on space a#aila-ility. 6i@ed slot systems may result in lo= space utili0ation and generally need to -e larger than a #aria-le slot facility. 11. iscuss the trade5offs associated =ith order5pic'ing #ersus stoc'5replenishing functions. "rgani0ations must decide =hether =or'ers =ho pic' outgoing orders and those =ho are restoc'ing storage facilities should =or' at the same time or in the same area. hen order pic'ers and stoc' replenishers are allo=ed to =or' in the same area! fe=er managerial
personnel may -e needed -ut it may also lead to congestion due to the num-er of =or'ers in a relati#ely limited space. "ne suggestion is for the t=o sets of =or'ers to use different aisles for their acti#ities! -ut this re?uires a superior information system. 12. istinguish -et=een a t=o5doc' and a single5doc' =arehousing layout. hich one re?uires more space< hy< t=o5doc' layout has recei#ing doc's on one side of the facility and shipping doc's on the other side =ith goods mo#ing -et=een them. In a one5doc' system! each and e#ery doc' can -e used for -oth shipping and recei#ing. This alternati#e reduces the space needed for storage doc's! -ut it re?uires carriers to pic' up and deli#er at specific times. 13. hat are some potential ad#antages to paperless =arehousing operations< There are se#eral important -enefits to paperless =arehousing! such as reduced clerical =or'! impro#ed order pic'ing efficiency! and a decrease in pic'ing and shipping errors. 6or e@ample! most paper5-ased systems re?uire pic'ed orders to -e manually entered into a computer system. This information is often #erified at the order staging area! a process that can delay shipping! add to processing costs! and does not catch all errors. 14. iscuss ho= storage and handling e?uipment can influence =arehousing operations. Jefore installing storage e?uipment! companies should -e familiar =ith the applica-le regulations such as -uilding codes in earth?ua'e5prone areas often limit the height of storage shel#es and rac's. The use of rac's may impro#e space utili0ation -y allo=ing for narro=er aisles. (o=e#er! narro=er aisles re?uire speciali0ed e?uipment =ith the capa-ility of mo#ing -oth #ertically and hori0ontally at the same time. 1%. hat is a =arehouse management system DMSE< (o= can it -enefit =arehousing operations< arehouse management systems are soft=are pac'ages that control the mo#ement and storage of materials =ithin an operation. cti#ities that can -e controlled -y MS include in#entory management! product recei#ing! and determination of storage locations! order selection processes! and order shipping. ata entry errors can -e dramatically reduced and the tra#el times for order pic'ing can -e reduced -y nearly %/>. "ther -enefits to MS include reduced operating e@penses! fe=er stoc'outs! increased in#entory accuracy! and impro#ed ser#ice to customers. 1$. hat is "S(< hat is "S(;s role in =arehousing safety< "S( is the "ccupational Safety and (ealth dministration! an agency of the 8.S. federal go#ernment that has responsi-ilities for industrial safety practices. In recent years! "S( mandated that for'lift dri#ers actually ha#e to dri#e for'lifts as part of the training process and that dri#er performance -e e#aluated e#ery three years. "S( inspectors ma'e fre?uent #isits to industrial =or'places. In cases of non5compliance! citations can -e issued and fines can -e le#ied. 1,. hat are the most common causes of =arehousing fires< hich do you thin' is the easiest for managers to control< Pustify your ans=er.
The most common cause of =arehousing fires are arson! to-acco smo'ing! improper use of for'lifts! electrical malfunctions! poor product disposal practices! and storage of incompati-le materials. There are a #ariety of possi-le ans=ers to the second part of the ?uestionF ha#ing said this! students should recogni0e that many fires can -e pre#ented -y common sense. 1). (o= might the storage of ha0ardous materials affect the design of a =arehousing facility< Juildings that store ha0ardous materials often ha#e specially constructed areas so that materials can -e contained in the case of an accident. Li'e=ise! these facilities often ha#e =alls and doors that can =ithstand se#eral hours of intense fire. It is also important for a ha0mat storage facility to ha#e proper sprin'ling systems as =ell as e@cellent #entilation. 1+. iscuss ho= =arehousing security can -e enhanced -y focusing on people! facilities! and processes. ith respect to people! a starting point might -e determining if a facility e#en has a formal hiring process. s for facilities! a num-er of different lo=5tech De.g.! fencesE and high5tech De.g.! closed5circuit #ideo camerasE de#ices can help to enhance =arehousing security. 6inally! =ith respect to processes! the more times a shipment is handled! the greater the opportunities for loss andor damage. 2/. hy are cleanliness and sanitation issues rele#ant to =arehousing operations< 8nclean and unsanitary =arehousing facilities are not li'ely to attract many ne= customers and could cause e@isting customers to ta'e their -usiness else=here. Moreo#er! clean and sanitary facilities ha#e a positi#e impact on employee safety! morale! and producti#ity =hile also reducing employee turno#er.
&T III KMITI" 78STI"S C(&T 1/: ("8SI9 M9MT Multiple Choice 7uestions 1. arehouses emphasi0e and their primary purpose is to ma@imi0e. a. product storageF throughput -. product storageF usage of a#aila-le storage space c. rapid mo#ement of productF throughput d. rapid mo#ement of productF usage of a#aila-le storage space D-F p. 242E 2. istri-ution centers emphasi0e and their primary purpose is to ma@imi0e. a. product storageF throughput -. product storageF usage of a#aila-le storage space c. rapid mo#ement of productF throughput d. rapid mo#ement of productF usage of a#aila-le storage space DcF p. 242E 3. Throughput refers to: a. storage capacity of a =arehousing facility -. #olume through a pipeline c. in#entory turno#er in a one5month period d. amount of product entering and lea#ing a facility in a gi#en time period DdF p. 242E 4. The primary factor that distinguishes a distri-ution center from a =arehouse is: a. distri-ution centers tend to -e multi5story -uildings -. distri-ution centers stress storage c. distri-ution centers stress rapid mo#ement of products through the facility d. distri-ution centers tend to -e smaller than =arehouses DcF p. 242E
%. arehousing and are su-stitutes for each other. a. transportation -. materials handling c. pac'aging d. procurement e. none of the a-o#e DaF p. 242E $. and refer to adHustments associated =ith the ?uantity of product. a. ccumulatingF allocating -. llocatingF assorting c. SortingF accumulating d. SortingF assorting DaF p. 3243E ,. in#ol#es -ringing together similar stoc's from similar sources. a. Jul'5-rea'ing -. ssorting c. ccumulating d. Sorting DcF p. 244E ). refers to -uilding up a #ariety of different products for resale to particular customers. a. ccumulating -. llocating c. Sorting d. ssorting DdF p. 244E +. refers to a process =here a product is recei#ed in a facility! occasionally married =ith product going to the same destination! and then shipped at the earliest time! =ithout going into longer5term storage. a. Pust5in5time -. Cross5doc'ing c. Consolidation d. Tur-ologistics D-F p. 244E
1/. =arehouses are similar to common carriers. a. &u-lic -. &ri#ate
c. Contract d. Cross5doc' DaF p. 24%E 11. hich of the follo=ing is not a characteristic of pu-lic =arehousing< a. re?uires no capital in#estment from user -. user recei#es a regular -ill for space used c. good for companies dealing =ith large #olumes of in#entory d. lac' of control -y user e. all are characteristics DcF pp. 24%524$E 12. Jonded storage in a pu-lic =arehouse refers to: a. products -eing stored in a pu-lic =arehouse and no duties or ta@es paid until the products lea#e the facility -. products that are insured -y a general =arranty -ond c. products that are -onded as re?uired in the order specifications d. products that are su-Hected to regular inspections e. none of the a-o#e DaF p. 24$E 13. field =arehouse is: a. a facility that is often used as a field sales office along =ith the traditional storage function -. a facility esta-lished primarily to hold material ser#ing as collateral for a loan c. a facility that is primarily used as a -rea'5-ul' point d. a facility located in a num-er of remote areas from the main production facility D-F p. 24$E 14. =arehousing is o=ned or occupied on a long5term lease -y the firm using them. a. &u-lic -. &ri#ate c. Contract d. Multi5client D-F p. 24$E 1%. ll are characteristics of pri#ate =arehousing! e@cept: a. o=ned or occupied on a long5term lease -y the firm using them -. feasi-le =hen demand patterns are irregular c. users ha#e a great deal of control d. may reduce an organi0ation;s fle@i-ility e. all are characteristics D-F pp. 24$524,E
1$. ll are true concerning contract =arehousing! e@cept: a. can also -e referred to as third5party =arehousing -. 3% year contracts appear to offer -enefits to -oth user and pro#ider c. more cost effecti#e than pri#ate =arehousing d. more fle@i-le than pu-lic =arehousing e. all are characteristics DdF p. 24)E 1,. Multi5client =arehousing mi@es attri-utes of and =arehousing. a. pu-licF contract -. pu-licF common c. commonF pri#ate d. pri#ateF contract DaF pp. 24)524+E 1). "ne of the -est pieces of ad#ice =ith respect to the design of =arehousing facilities is to: a. a#oid consultants -. -uild up rather than out c. use common sense d. ma@imi0e space utili0ation DcF p. 24+E 1+. Tradeoffs must -e among space! la-or! and =ith respect to =arehousing design. a. cost -. construction materials c. speed d. mechani0ation DdF p. 2%2E
2/. The primary ad#antage of #aria-le slot locations in a =arehouse is: a. increased space utili0ation -. -etter materials handling c. ease of record 'eeping d. more logical and simple product layout DaF p. 2%3E 21. The primary ad#antage of fi@ed slot locations in a =arehouse is: a. increased space utili0ation -. -etter materials handling c. 'no=ledge of =here specific products are located
d. impro#ed employee morale DcF p. 2%3E 22. s one -uilds higher! -uilding costs! =hile =arehousing e?uipment costs tend to . a. increaseF decrease -. increaseF increase c. decreaseF decrease d. decreaseF increase DdF p. 2%3E 23. hich of the follo=ing statements a-out a one5doc' layout is false< a. each and e#ery doc' can -e used for -oth shipping and recei#ing -. it re?uires carriers to pic' up and deli#er at specific times c. goods mo#e in a straight configuration d. product may sometimes -e reloaded in the #ehicle that deli#ered it e. all of the statements are true DcF p. 2%4 E 24. hich of the follo=ing is not a tradeoff in =arehousing design< a. t=o5doc' #ersus single5doc' layout -. -uild up #ersus -uild out c. order pic'ing #ersus order ta'ing functions d. space de#oted to aisles #ersus space de#oted to storage e. all are tradeoffs DcF pp. 2%352%4 E
2%. hich of the follo=ing is not a -enefit associated =ith paperless =arehousing< a. lo= cost -. reduced clerical =or' c. decreased pic'ing and shipping errors d. impro#ed order pic'ing efficiency e. all are -enefits DaF p. 2%4E 2$. It is possi-le for paperless =arehousing facilities to ha#e pay-ac' periods of appro@imately months. a. $ -. 12 c. 1) d. 24 DcF p. 2%4E
2,. ecent estimates suggest that only appro@imately of a facility;s cu-ic capacity is actually occupied -y product. a. %%> -. 4/> c. 2%> d. 1/> DdF p. 2%% E 2). tend to -e the standard =or'horse in many =arehousing facilities. a. 6or'lifts -. &allet Hac's c. oc' carts d. Con#eyor systems DaF p. 2%$E 2+. hich of the follo=ing is false< a. =arehouse =or' can -e strenuous and physically demanding -. the use of rac's may impro#e space utili0ation -y allo=ing for narro=er aisles c. goods can -e mo#ed -y a com-ination of manual! mechani0ed! and automated methods d. =arehouse =or'ers tend to -e easily moti#ated e. all are true DdF pp. 2%%52%$E 3/. Soft=are pac'ages that control the mo#ement and storage of materials =ithin an organi0ation refer to systems. a. enterprise resource planning -. materials re?uirement planning c. =arehouse management d. in#entory management DcF p. 2%$E 31. The most fre?uent inHuries among =arehousing personnel in#ol#e: a. feet -. the torso c. hands d. -ac' and shoulder e. none of the a-o#e DdF p. 2%)E 32. regulations deal =ith many aspects of =arehousing safety. a. "S(
-. 6 c. 6TC d. S DaF p. 2%)E 33. hat is dunnage< a. a type of pac'aging material that is placed inside of -o@es -. a slang term for a particular type of ocean liner c. additional transportation fees that are charged to small shippers d. material that is used to -loc' and -race products inside carrier e?uipment DdF p. 2%+E 34. hich of the follo=ing is not one of the four ?uestions associated =ith effecti#e management of ha0ardous materials storage< a. =hat material is -eing stored -. =hy is it -eing stored c. =hat is the material;s source d. =here is it -eing stored e. all are ?uestions DcF p. 2$/E 3%. It is estimated that the theft and pilferage of products stored in =arehousing facilities causes losses in the range of to times the products; #alue. a. fi#eF si@ -. fourF fi#e c. threeF four d. t=oF three D-F p. 2$/E True56alse 7uestions 1. arehouses emphasi0e the storage of products and their primary purpose is to ma@imi0e throughput. D6alseF p. 242E 2. istri-ution centers emphasi0e the rapid mo#ement of products through a facility and attempt to ma@imi0e throughput. DTrueF p. 242E 3. Throughput is the amount of product entering and lea#ing a =arehousing facility in a gi#en period of time. DTrueF p. 242E 4. Materials handling has -een referred to as transportation at 0ero miles per hour. D6alseF p. 242E %. arehousing is needed -ecause patterns of production and consumption may not coincide. DTrueF p. 243E
$. ssorting and sorting refer to adHustments associated =ith the ?uantity of product. D6alseF p. 243E ,. ccumulating in#ol#es -ringing together similar stoc's from different sources. DTrueF p. 244E ). ssorting in#ol#es -rea'ing larger ?uantities into smaller ?uantities. D6alseF p. 244E +. facility designed for cross doc'ing should de#ote more space to product storage and less space to doc' operations. D6alseF p. 244E 1/. Jecause companies ha#e different strategies! goals! and o-Hecti#es! there is no AcorrectB mi@ of pu-lic! pri#ate! and contract =arehousing. DTrueF p. 244E 11. ith pu-lic =arehousing the user rents space as needed! thus a#oiding the costs of unneeded space. DTrueF p. 24%E 12. T=o nota-le pri#ate =arehouse ser#ices in#ol#e -onded storage and field =arehousing. D6alseF p. 24$E 13. &erhaps the -iggest dra=-ac' to pu-lic =arehousing is the ina-ility to pro#ide speciali0ed ser#ices. D6alseF p. 24$E 14. &ri#ate =arehousing tends to -e feasi-le =hen demand patterns are relati#ely sta-le. DTrueF p. 24$E 1%. &ri#ate =arehousing offers potential users a great deal of control o#er their storage needs. DTrueF p. 24,E 1$. The gro=th in contract =arehousing appears to ha#e come at the e@pense of pu-lic =arehousing. DTrueF p. 24)E 1,. Contract =arehousing tends to -e more cost effecti#e than pu-lic =arehousing. D6alseF p. 24)E 1). "ne to t=o year contracts appear to allo= sufficient time for contract =arehousers to learn their client;s -usiness =hile at the same time allo=ing clients some fle@i-ility. D6alseF p. 24)E 1+. In essence! multi5client =arehousing mi@es attri-utes of pri#ate and contract =arehousing. D6alseF pp. 24)524+E 2/. Common sense should not -e ignored =ith respect to the design of =arehousing facilities. DTrueF p. 24+E 21. Tradeoffs must -e made among space! la-or! and mechani0ation =ith respect to =arehousing design. DTrueF p. 2%2E 22. fi@ed slot location =arehousing system may result in lo= space utili0ation. DTrueF p. 2%3E 23. general rule of thum- is that it is cheaper to -uild up than -uild out. DTrueF p. 2%3E 24. one5doc' =arehouse layout Din contrast to a t=o5doc' layoutE increases the space needed for storage doc's. D6alseF p. 2%4E
2%. arro=er aisles can increase the space utili0ation of a facility. DTrueF p. 2%4E 2$. arro= aisle for'lifts can operate in an aisle =idth of four feet! compared to the nine foot =idth that is needed -y the standard for'lift. D6alseF p. 2%4E 2,. It is possi-le for paperless =arehousing facilities to ha#e pay-ac' periods of appro@imately 1) months. DTrueF p. 2%4E 2). ecent estimates suggest that only appro@imately 2%> of a =arehousing facility;s cu-ic capacity is actually occupied -y product. D6alseF p. 2%%E 2+. Moti#ation of =arehouse employees can -e difficult -ecause of the some=hat repetiti#e nature of the operation. DTrueF p. 2%%E 3/. 6or'lifts tend to -e the standard =or'horse in many =arehousing facilities. DTrueF p. 2%$E 31. The maHority Do#er %/>E of =arehouse management system installations are completed =ithin -udget. D6alseF p. 2%$E 32. arehouse management systems can result in reduced data entry errors as =ell as reduced tra#el distances for order pic'ing. DTrueF p. 2%$E 33. Jac' and shoulder inHuries are the most fre?uent inHuries among =arehouse personnel. DTrueF p. 2%)E 34. The arehousing Safety dministration has primary responsi-ility for =arehousing safety practices. D6alseF p. 2%)E 3%. unnage refers to charges for accessorial transportation ser#ice. D6alseF p. 2%+E 3$. 6ires are a constant threat in =arehousing. DTrueF p. 2%+E 3,. Juildings that store ha0ardous materials often ha#e =alls and doors that can =ithstand se#eral hours of intense fire. DTrueF p. 2$/E 3). It is estimated that the theft and pilferage of products stored in =arehousing facilities causes losses in the range of t=o to three times the products; #alue. D6alseF p. 2$/E 3+. In general! =arehousing security can -e enhanced -y focusing on people! facilities! and information. D6alseF p. 2$1E 4/. 8nsanitary =arehousing facilities could cause e@isting customers to ta'e their -usiness else=here. DTrueF p. 2$1E
&T IO CS S"L8TI"S CS 1/51: S;S C 7uestion 1: 8sing those items of comparison for =hich costs can -e calculated! determine the cost difference -et=een the t=o deli#ery systems. The ans=er can -est -e gi#en -y calculating costs in appro@imately the same order as gi#en in the te@t: Item eceipts from sales LSS: cost of goods sold plus discount
Schoenec'er;s dri#ersalespeople R,1.//
Manni@ Mar'ets R%+.%/
R%/.,/
R31.//
R.++
R.$2
55
R.31
"rdering costs
R1.%/
R1.44
Shelf5stoc'ing
55
R1.3)
arehousing
55
_
eli#ery to store
55
egligi-le
Chec'ing goods
R1.%/
55
Jilling costs
R1.//
55
R1%.31
R24.,% De@cluding =arehousing costsE
Shrin'age [ =s prices Spoilage
T"TL
_: Less than R1 calculated on a per ton -asis -ut R.+$ on a line5item -asis 7uestion 2: List and compare those factors for =hich it is difficult to assign precise costs. arehousing costs are the most difficult to calculate and allocate. Schoenec'er;s =ill pro-a-ly offer a higher le#el of ser#ice than =ould occur if Manni@ performs the function -ut this is difficult to ?uantify.
7uestion 3: 9i#en the data that Sandy has! do you -elie#e that Manni@ Model Mar'ets should get its Schoenec'er candy through the -uying cooperati#e or continue to rely on direct deli#eries -y Schoenec'er;s dri#ers5salespeople< 9i#e your reasons. Manni@ Mar'ets; o=n systems appear prefera-le gi#en the data a#aila-le to Ms. y'er'. 7uestion 4: If you =ere Sandy! =hat additional information =ould you li'e to ha#e -efore -eing as'ed to ma'e such a recommendation< See the ans=er to ?uestion 2. hether the change is desira-le depends almost entirely upon ho= one calculates the cost of mo#ing the candy through the Manni@ distri-ution system. 7uestion %: Candy sales increase during holiday seasons. hich of the t=o candy distri-ution systems do you thin' =ould do a -etter Ho- of anticipating and supplying these seasonal increases< hy< Schoenec'er;s should do a -etter Ho- -ecause candy is their specialty. 7uestion $: ssume you are in charge of la-or relations for Manni@ Model Mar'ets. ould you li'e to see continued reliance on dri#ers5salespeople to supply the mar'ets; candy needs< hy or =hy not< The ad#antage =ould -e that =e =ould ha#e another firm;s la-or costs and practices =ith =hich =e could compare our o=n.
CS 1/52 MIT" ("8S 7uestion 1: 6or each of the four =or' team si0es! calculate the e@pected num-er of truc's in the ?ueue =aiting to -e unloaded. Si0e of team 2 3 4 %
um-er of truc's in ?ueue 3.2 .% .2, .12
7uestion 2: 6or each of the four =or' team si0es! calculate the e@pected time in the ?ueueGthat is! the e@pected time a truc' has to =ait in line to -e unloaded. Si0e of team 2 3 4 %
@pected time in ?ueue .) hours .12% hours ./$, hours ./3/ hours
7uestion 3: 6or each of the four =or' team si0es! =hat is the pro-a-ility that a truc' cannot -e unloaded immediately< Si0e of team 2 3 4 %
&ro-a-ility that truc' must =ait upon arri#al )/> %/> 4/> 3/>
7uestion 4: hich of the four =or' teams has the lo=est cost to ayne< Si0e of team 2 3 4 %
Total cost R2$).// R1/2.// R+$.// R+%.32
7uestion %: ayne is also considering rental of a for'lift to use in truc' unloading. team of only t=o =ould -e needed! -ut the hourly cost =ould -e R3) per hour DR2) for the =or'ers and R1/ for the for'liftE. They could unload a truc' in fi#e minutes. Should ayne rent the for'lift< t=o5person cre= and a for'lift =ill cost R3) per hour. Compare this =ith the ans=ers in ?uestion 4F ayne should adopt a t=o5man cre= and use a for'lift. 7uestion $: isregard your ans=er to ?uestion %. La-or negotiations are coming up and ayne thin's he can get the union to gi#e =ay on the =or' rule that prohi-its =arehouse =or'ers on the unloading doc' from -eing gi#en other assignments =hen they are not unloading truc's. (o= much =ould ayne
sa#e in unloading doc' costs if he could reassign =arehouse =or'ers to other tas's =hen they are not unloading truc's! assuming that he has pic'ed a good team of =or'ers and each =or'er =or's ) hours a day< 6rom the printouts! =e must determine ho= much Aidle timeB there is =ith the present system. This depends in part upon the cre= si0e. 6or a cre= of four! for e@ample! 24 minutes per hour is spent unloading truc's and the rest is idle time. Therefore! ayne could get 3$ minutes of =or' per hour of =or' else=here out of each =or'er. t R14 per hour! this is =orth R).4/ DR14hr times .$ hoursE. In theory! he could sa#e up to R).4/ per =or'er per hour assuming he could assign them to other tas's =here the pay rates =ere the same.
&T II 5"65C(&T 78STI"S C(&T 11: &"C8MT 1. hat is procurement< hat is its rele#ance to logistics< &rocurement refers to the ra= materials! component parts! and supplies -ought from outside organi0ations to support a company;s operations. It is closely related to logistics since ac?uired goods and ser#ices must -e entered into the supply chain in the e@act ?uantities and at the precise time they are needed. 2. Contrast procurement;s historical focus to its more strategic orientation today. &rocurement;s historical focus in many organi0ations =as to achie#e the lo=est possi-le cost from potential suppliers. "ftentimes these suppliers =ere pitted against each other in AcutthroatB competition in#ol#ing three5 or si@5month length contracts a=arded to the lo=est -idder. "nce this lo=est -idder =as chosen! the -illing cycle =ould almost immediately start again and another lo= -idder =ould get the contract for the ne@t se#eral months. Today procurement has a much more strategic orientation in many organi0ations! and a contemporary procurement manager might ha#e responsi-ility for reducing cycle times! playing an integral role in product de#elopment! or generating additional re#enues -y colla-orating =ith the mar'eting department. 3. iscuss three potential procurement o-Hecti#es. The te@t pro#ides fi#e potential procurement o-Hecti#es that could -e discussed. They are supporting organi0ational goals and o-Hecti#esF managing the purchasing process effecti#ely and efficientlyF managing the supply -aseF de#eloping strong relationships =ith other functional groupsF supporting operational re?uirements. 4. ame and descri-e the steps in the supplier selection and e#aluation process.
Identify the need for supply VX can arise from the end of an e@isting supply agreement or the de#elopment of a ne= product. Situation analysis loo's at -oth the internal and e@ternal en#ironment =ithin =hich the supply decision is to -e made. Identify and e#aluate potential suppliers delineates sources of potential information! esta-lishes selection criteria! and assigns =eights to selection criteria. Select supplierDsE is =here an organi0ation chooses one or more companies to supply the rele#ant products. #aluate the decision in#ol#es comparison of e@pected supplier performance to actual supplier performance.
%. iscuss the factors that ma'e supplier selection and e#aluation difficult. Supplier selection and e#aluation generally in#ol#e multiple criteria and these criteria can #ary -oth in num-er and importance depending on the particular situation. Second! -ecause some #endor selection may -e contradictory! it is important to understand tradeoffs -et=een them. Third! the e#olution of -usiness practices and philosophies! such as Hust5in5time and supply chain management! may re?uire ne= selection criteria or the reprioriti0tion of e@isting criteria. $. efine supplier de#elopment and e@plain =hy it is -ecoming more prominent in some organi0ations. Supplier de#elopment Dre#erse mar'etingE refers to a degree of aggressi#e procurement not normally encountered in supplier selection and can include a purchaser initiating contact =ith a supplier! as =ell as a purchaser esta-lishing prices! terms! and conditions. "ne reason for its gro=ing prominence is the myriad inefficiencies associated =ith suppliers initiating mar'eting efforts to=ards purchasers. second reason is that the purchaser may -e a=are of important e#ents that are un'no=n to the supplier. Moreo#er! achie#ing competiti#e ad#antage in the supply chain is predicated on purchasers adopting a more aggressi#e approach so as to compel suppliers to meet the necessary re?uirements. ,. hy does the issue of ?uality in procurement represent a delicate -alancing act for organi0ations< If an organi0ation -uys an input of inferior ?uality! it runs the ris' of lo=ering the ?uality of the final product. If an organi0ation -uys an input of higher ?uality than one;s final product! it may -e paying for something that is not needed. ). hat is the role of IS" certification in ?uality management programs< IS" +/// is a set of generic standards used to document! implement! and demonstrate ?uality management and assurance systems. These standards are intended to help companies -uild ?uality into e#ery core process in each department. lthough IS" +/// certification continues to -ecome more commonplace throughout the =orld! it can still -e a competiti#e ad#antage for some companies. +. escri-e significant -enefits and dra=-ac's to Si@ Sigma programs.
The most significant -enefits from Si@ Sigma ha#e -een reduced costs! reduced errors! and =aste! and reduced cycle time! =hile the 'ey dra=-ac's ha#e in#ol#ed o#ercoming -usiness cultural -arriers! in#esting the re?uired resources D-oth human and moneyE! and gaining top management commitment. 1/. iscuss the Malcolm Jaldrige ational 7uality =ard. The Malcolm Jaldrige ational 7uality =ard =as esta-lished in the 1+)/s to recogni0e 8.S. organi0ations for their achie#ements in ?uality and performance. The Jaldrige 7uality =ards! =hich are restricted to organi0ations head?uartered in the 8nited States! re?uire interested parties to su-mit a formal application that is e#aluated -y a committee largely made up of pri#ate sector e@perts in -usiness and ?uality. Se#en categories are e#aluated: -usiness resultsF customer and mar'et focusF human resource focusF leadershipF measurement! analysis! and 'no=ledge managementF process managementF and strategic planning. 11. (o= do IS" +/// and the Jaldrige 7uality =ard differ< IS" +/// essentially allo=s an organi0ation to determine if it complies =ith its specific ?uality system. In contrast! the Jaldrige =ard is more hea#ily focused on the actual results from a ?uality system as =ell as on continuous impro#ement. The Jaldrige =ard also tends to -e more e@ternally focused in the sense that organi0ations -enchmar' themsel#es against organi0ations from outside their particular industry. 12. hat are the components of the glo-al sourcing de#elopment model presented in this chapter< &lanning! specification! e#aluation! relationship management! transportation and holding costs! implementation! and monitoring and impro#ements ma'e up the components of the glo-al sourcing de#elopment model presented in this chapter. 13. &ic' and discuss t=o components of the glo-al sourcing de#elopment model presented in this chapter. ny t=o components listed in the ans=er to 7uestion 12 could -e discussed. 14. iscuss the -enefits and dra=-ac's to electronic procurement. Transaction -enefits measure transaction -enefits De.g.! reduced in#oice5to5payment timeE! =hile compliance -enefits focus on the sa#ings that come from adherence to esta-lished procurement policies. Management information -enefits encompass those that result from management information! customer satisfaction! and supplier satisfaction le#els after implementation of electronic procurement. &rice -enefits are those that are gi#en as a result of adopting e5procurement. "ne concern =ith electronic procurement in#ol#es the security of information that is -eing transmittedF there is a ris' that sensiti#e or proprietary information could end up in the =rong hands. nother concern is that electronic procurement can -e impersonal in the sense that human interaction is replaced -y computer transactions. Moreo#er! despite su-stantial hype a-out the potential -enefits of electronic procurement! a recent sur#ey disco#ered that only a-out 2%> of the responding organi0ations mandate its use.
1%. hat is an online re#erse auction< hy do -uyers li'e them< In an online re#erse auction! a -uyer in#ites -ids from multiple sellers and the seller =ith the lo=est -id is generally a=arded the -usiness. Juyers tend to li'e re#erse auctions -ecause they aim to generate lo= procurement prices and the online nature of re#erse auctions allo=s -uyers to drill do=n to a seller;s lo= price #ery ?uic'ly. 1$. iscuss the -enefits of electronic procurement cards. lectronic procurement cards Dp5cardsE can -enefit organi0ations in se#eral =ays! one of =hich is a reduction in the num-er of in#oices. In addition! these cards allo= employees to ma'e purchases in a matter of minutes! as opposed to days! and procurement cards generally allo= suppliers to -e paid in a more timely fashion. 1,. istinguish -et=een e@cess! o-solete! scrap! and =aste materials. @cess DsurplusE materials refer to stoc' that e@ceeds the reasona-le re?uirements of an organi0ation! perhaps -ecause of an o#erly optimistic demand forecast. "-solete materials! unli'e e@cess materials! are not li'ely to e#er -e used -y the organi0ation that purchased them. Scrap materials refer to materials that are no longer ser#icea-le! ha#e -een discarded! or are a -y5product of the production process. aste materials refer to those that ha#e -een spoiled! -ro'en! or other=ise rendered unfit for reuse or reclamation. 8nli'e scrap materials! =aste materials ha#e no economic #alue. 1). Should in#estment reco#ery -e the responsi-ility of the procurement manager< If yes! =hy< If not! =hich party DpartiesE should -e responsi-le for in#estment reco#ery< The -oo' indicates that in#estment reco#ery! =hich identifies opportunities to reco#er re#enues or reduce costs associated =ith scrap! surplus! o-solete! and =aste materials! is often the responsi-ility of the procurement manager. "ne could argue that procurement should -e responsi-le for in#estment reco#ery -ecause =ithout procurement in the first place! there pro-a-ly =ould -e no scrap! surplus! o-solete! or =aste material to manage. lternati#ely! one could argue that since in#estment reco#ery focuses on re#enues and costs! the finance department should ha#e responsi-ility.
1+. ame and gi#e an e@ample of the fi#e dimensions of socially responsi-le purchasing. i#ersity VX includes procurement acti#ities associated =ith minority or =omen5o=ned organi0ations. The en#ironment VX includes considerations such as =aste reduction and the design of products for reuse or recycling. (uman rights VX includes child la-or la=s as =ell as s=eatshop la-or. &hilanthropy VX focuses on employee #olunteer efforts and philanthropic contri-utions. Safety VX concerned =ith the safe transportation of purchased products as =ell as the safe operation of rele#ant facilities.
2/. iscuss some of the ethical issues that are associated =ith procurement. reas of ethical concern in procurement include gift gi#ing and recei#ingF -ri-es Dmoney paid -efore an e@changeE and 'ic'-ac's Dmoney paid after an e@changeEF misuse of informationF improper methods of 'no=ledge ac?uisitionF lying or misrepresentation of the truthF product ?uality Dlac' thereofEF misuse of company assets! to include a-use of e@pense accountsF and conflicts of interest! or acti#ity that creates a potential conflict -et=een one;s personal interest and her or his employer;s interests.
&T III KMITI" 78STI"S C(&T 11: &"C8MT Multiple Choice 7uestions 1. refers to the ra= materials! component parts! and supplies -ought from outside organi0ations to support a company;s operations. a. In-ound logistics -. &rocurement c. Materials management d. Supply management e. one of the a-o#e D-F p. 2,/E 2. &rocurement;s historical focus in many organi0ations =as to . a. incur minimal supply disruptions -. use a limited num-er of suppliers c. minimi0e loss and damage d. achie#e the lo=est possi-le cost DdF p. 2,/E 3. &rocurement costs often range -et=een of an organi0ation;s re#enues. a. $/5)/> -. %/5,/> c. 4/5$/> d. 3/5%/> DaF p. 2,/E 4. &rocurement and are #ie=ed as synonymous terms. a. materials management -. supply management c. purchasing d. in-ound logistics DcF p. 2,/E
%. hich of the follo=ing is not a potential procurement o-Hecti#e< a. supporting organi0ational goals and o-Hecti#es
-. managing the supply -ase c. de#eloping strong relationships =ith other functional groups d. supporting operational re?uirements e. all are potential procurement o-Hecti#es DeF p. 2,1E $. focus on satisfying internal customers is associated =ith =hich procurement o-Hecti#e< a. managing the supply -ase -. supporting organi0ational goals and o-Hecti#es c. managing the purchasing process effecti#ely and efficiently d. supporting operational re?uirements DdF p. 2,1E ,. Juying the right products! at the right price! from the right source! at the right specifications! in the right ?uantity! for deli#ery at the right time to the right internal customer is associated =ith =hich procurement o-Hecti#e< a. managing the purchasing process effecti#ely and efficiently -. supporting operational re?uirements c. supporting organi0ational goals and o-Hecti#es d. managing the supply -ase D-F p. 2,1E ). loo's at -oth the internal and e@ternal en#ironment =ithin =hich the supply decision is to -e made. a. Identify the need for supply -. Identify suppliers c. Situation analysis d. #aluate suppliers DcF p. 2,1E +. is the second step of the supplier selection and e#aluation process. a. Identify need for supply -. Select suppliers c. Identify and e#aluate possi-le suppliers d. Situation analysis DdF p. 2,1E 1/. The te@t outlines a supplier selection and e#aluation process that consists of steps. a. , -. $ c. % d. 4 DcF pp. 2,152,2E
11. hat is the final step in the supplier selection and e#aluation process< a. e#aluate decision -. implement decision c. select suppliers d. pro#ide feed-ac' DaF p. 2,2E 12. hich of the follo=ing statements is false< a. Supplier selection and e#aluation generally in#ol#e multiple criteria. -. The e#olution of -usiness practices and philosophies may re?uire ne= supplier selection criteria. c. Selecting suppliers is the final step of the supplier selection and e#aluation process. d. Some supplier selection criteria may -e contradictory. e. ll are true DcF p. 2,3E 13. degree of aggressi#e procurement in#ol#ement not normally encountered in supplier selection refers to . a. supply management -. supplier de#elopment c. materials management d. physical supply D-F p. 2,3E 14. Supplier de#elopment is synonymous =ith . a. supplier selection and e#aluation -. procurement c. materials management d. re#erse mar'eting DdF p. 2,3E 1%. hich of the follo=ing is not a reason for =hy purchasers are adopting a more proacti#e and aggressi#e role in the procurement process< a. there are myriad inefficiencies associated =ith suppliers initiating mar'eting efforts to=ards purchasers -. an e@cess num-er of suppliers currently e@ist c. achie#ing competiti#e ad#antage in the supply chain d. purchasers may -e a=are of important -enefits that are not 'no=n to the supplier e. all are reasons D-F p. 2,3E 1$. The defines ?uality as Aa su-Hecti#e term for =hich each person has his or her o=n definition.B
a. 8.S. epartment of Commerce -. 8nited ations c. merican Society of 7uality d. International Standards "rgani0ation DcF p. 2,3E 1,. is a set of generic standards used to document! implement! and demonstrate ?uality management and assurance systems. a. IS" +/// -. IS" 14/// c. Si@ Sigma d. 7uality Circle DaF p. 2,4E 1). 8pon achie#ing IS" +/// certification! organi0ations can -e recertified e#ery years. a. 1/ -. , c. % d. 3 DdF p. 2,4E
1+. suggests that there =ill -e 3.4 defects! deficiencies! or errors per one million opportunities. a. IS" +/// -. IS" 14/// c. Si@ Sigma d. 7uality ssurance DcF p. 2,4E 2/. educed costs! reduced errors and =aste! and reduced cycle time are -enefits that are associated =ith . a. the Malcolm Jaldrige ational 7uality =ard -. Si@ Sigma c. IS" 14/// d. IS" +/// D-F p. 2,4E 21. recogni0es 8.S. organi0ations for their achie#ements in ?uality and performance. a. Si@ Sigma
-. IS" +/// c. The Malcolm Jaldrige ational 7uality =ard d. The 8.S. epartment of Commerce Commendation of 7uality DcF p. 2,4E 22. hich of the follo=ing is not a Jaldrige 7uality =ard category that is e#aluated for achie#ement and impro#ement< a. customer and mar'et focus -. strategic planning c. cost reduction d. process management e. all are rele#ant categories DcF p. 2,%E 23. essentially allo=s an organi0ation to determine if it complies =ith its specific ?uality system! =hile is more hea#ily focused on the actual results from a ?uality system as =ell as on continuous impro#ement. a. IS" +///F Si@ Sigma -. IS" +///F Jaldrige =ard c. Jaldrige =ardF IS" +/// d. Si@ SigmaF Jaldrige =ard D-F p. 2,%E 24. hich of the follo=ing is false< a. In the factor5input strategy! an organi0ation is see'ing lo= costs or high5?uality sources of supply. -. 9lo-al procurement refers to -uying components and inputs any=here in the =orld. c. &lanning is the first step in glo-al procurement. d. 9lo-al procurement is dri#en -y the factor5input and the mar'et5access strategies. e. ll are true DeF p. 2,%E 2%. hat is the first step in a glo-al sourcing de#elopment model< a. specification -. situation analysis c. pro-lem recognition d. planning DdF p. 2,%E 2$. is often a maHor shortcoming to many glo-al procurement plans. a. Implementation -. #aluation c. Specification d. Monitoring and impro#ing DaF p. 2,$E
2,. hich of the follo=ing is not a type of -enefit that can come from electronic procurement< a. management information -. transaction c. price d. compliance e. all are -enefits DeF p. 2,$E 2). -enefits focus on the sa#ings that come from adherence to esta-lished procurement policies. a. Transactional -. Compliance c. Management information d. &rice D-F p. 2,$E 2+. refers to employees =ho do not follo= company guidelines a-out =hich suppliers to use in a particular situation. a. Irresponsi-le procurement -. ecalcitrant spending c. Ma#eric' spending d. 8nauthori0ed procurement DcF p. 2,$E 3/. recent sur#ey indicated that a-out of responding companies mandate the use of electronic procurement. a. 1%> -. 2%> c. 4/> d. %/> D-F pp. 2,$52,,E 31. hich of the follo=ing is false< a. lectronic procurement has facilitated online re#erse auctions. -. Juyers li'e re#erse auctions -ecause they aim to generate lo= procurement prices. c. In re#erse auctions a -uyer in#ites -ids from multiple sellers. d. The lo=DestE -id must -e accepted in re#erse auctions. e. ll are true DdF p. 2,,E 32. materials refer to stoc' that e@ceeds the reasona-le re?uirements of an organi0ation. a. aste -. "-solete c. Scrap
d. @cess DdF p. 2,)E 33. materials are materials that are no longer ser#icea-le! ha#e -een discarded! or are a -y5 product of the production process. a. @cess -. Scrap c. "-solete d. aste D-F p. 2,)E 34. materials ha#e no economic #alue. a. aste -. Scrap c. "-solete d. @cess DaF p. 2,)E 3%. esearch suggests that socially responsi-le procurement consists of dimensions. a. t=o -. three c. fi#e d. se#en DcF p. 2,+E True56alse 7uestions 1. &rocurement refers to the ra= materials! component parts! and supplies -ought from outside organi0ations to support a company;s operations. DTrueF p. 2,/E 2. &rocurement;s costs often range -et=een 4/5$/> of an organi0ation;s re#enues. D6alseF p. 2,/E 3. &rocurement;s historical focus in many organi0ations =as to minimi0e the total num-er of outside suppliers. D6alseF p. 2,/E 4. &rocurement and purchasing are #ie=ed as synonymous terms. DTrueF p. 2,/E %. Supporting organi0ational goals and o-Hecti#es means that procurement;s focus is on satisfying internal customers. D6alseF p. 2,1E $. 6irst and foremost! procurement;s o-Hecti#es must manage the purchasing process effecti#ely and efficiently. D6alseF p. 2,1E ,. The first step in supplier selection and e#aluation is situation analysis. D6alseF p. 2,1E
). Trade sho=s! trade pu-lications! and the Internet can -e used to identify possi-le suppliers. DTrueF pp. 2,152,2E +. The final step of the supplier selection process is to e#aluate the decision. DTrueF p. 2,2E 1/. Supplier selection and e#aluation generally in#ol#e multiple criteria. DTrueF p. 2,3 E 11. Supply management refers to a degree of aggressi#e procurement not normally encountered in supplier selection. D6alseF p. 2,3E 12. Supplier de#elopment is synonymous =ith re#erse mar'eting. DTrueF p. 2,3E 13. "ne reason for the gro=th of the supplier de#elopment concept is that achie#ing competiti#e ad#antage in the supply chain is predicated on purchasers adopting a more aggressi#e approach. DTrueF p. 2,3E 14. n e@cessi#e num-er of suppliers is one reason =hy purchasers are adopting a more proacti#e and aggressi#e role in the procurement process. D6alseF p. 2,3E 1%. The International Standards "rgani0ation defines ?uality as a su-Hecti#e term for =hich each person has his or her o=n definition. D6alseF p. 2,3E 1$. IS" +/// is a set of generic standards used to document! implement! and demonstrate ?uality management and assurance systems. DTrueF p. 2,4E 1,. fter achie#ing IS" +/// certification! organi0ations can -e recertified e#ery three years. DTrueF p. 2,4E 1). IS" 14/// suggests that there =ill -e 3.4 defects! deficiencies! or errors per one million opportunities. D6alseF p. 2,4E 1+. educed costs and reduced cycle times are t=o -enefits associated =ith Si@ Sigma. DTrueF p. 2,4E 2/. ny organi0ation in the =orld can apply for the Malcolm Jaldrige 7uality =ard. D6alseF p. 2,4E 21. The Jaldrige =ard allo=s an organi0ation to determine if it complies =ith its specific ?uality system. D6alseF p. 2,%E 22. 9lo-al procurement refers to -uying components and inputs any=here in the =orld. DTrueF p. 2,%E 23. &ro-lem recognition is the first step in glo-al procurement. D6alseF p. 2,%E 24. Jecause glo-al sourcing increases the distance that components and inputs must -e mo#ed! managers must consider the tradeoff -et=een transportation and holding costs. DTrueF p. 2,$E 2%. Implementation is often a maHor shortcoming to many glo-al procurement plans. DTrueF p. 2,$E 2$. "ne =ay of e#aluating electronic procurement is -y categori0ing -enefits as hard! soft! or intangi-le. DTrueF p. 2,$E
2,. 8nauthori0ed spending refers to employers =ho do not follo= company guidelines a-out =hich suppliers to use in a particular situation. D6alseF p. 2,$E 2). "ne concern is that electronic procurement can -e impersonal in the sense that human interaction is replaced -y computer transactions. DTrueF p. 2,$E 2+. -out %/> of the companies in a recent sur#ey mandate the use of electronic procurement. D6alseF pp. 2,$52,,E 3/. In a re#erse auction! the -uyer must accept the lo=est -id. D6alseF p. 2,,E 31. Juyers are critical of re#erse auctions -ecause their primary emphasis is lo= price. D6alseF p. 2,,E 32. reduction in the num-er of in#oices is one -enefit to procurement cards. DTrueF p. 2,,E 33. In#estment reco#ery is often the responsi-ility of the finance manager. D6alseF p. 2,,E 34. @cess materials refer to stoc' that e@ceeds the reasona-le re?uirements of an organi0ation. DTrueF p. 2,)E 3%. Scrap materials are no longer ser#icea-le! ha#e -een discarded! or are a -y5product of the production process. DTrueF p. 2,)E 3$. "-solete materials ha#e no economic #alue. D6alseF p. 2,)E 3,. The =ays that organi0ations manage the in#estment reco#ery for e@cess! o-solete! scrap! and =aste materials should -e influenced -y the materials; classification. DTrueF p. 2,)E 3). Socially responsi-le procurement refers to procurement acti#ities that meet the ethical and discretionary responsi-ilities e@pected -y society. DTrueF p. 2,+E 3+. i#ersity and philanthropy are t=o dimensions of socially responsi-le procurement. DTrueF p. 2,+E 4/. Jri-es refer to money paid after an e@change. D6alseF p. 2,+E
&T IO CS S"L8TI"S CS 1151: SI9 I;S I 7uestion 1: rrange the tas's sho=n in @hi-it 115 in a net=or' or &T chart. chart =ith three paths results. They! and their completion times! are:
JC( IL
$.%/ days
6 L
$.4% days
9PL
).// days
The case does not indicate =hether it is necessary to complete -efore -eginning J. This could -e discussed in class. 7uestion 2: etermine the critical path. hat is the least amount of time it ta'es -et=een receipt of an order and its deli#ery to a customer< The critical path is 9 P L and it ta'es ) days. 7uestion 3: Considering your ans=ers to 7uestions 1 and 2! =hat areas of acti#ity do you thin' ood should loo' at first! assuming she =ants to reduce order processing and deli#ery times< hy< She should! of course! loo' at the critical path -ecause it ta'es the longest and is controlling. Items 9 and P seem li'e candidates. 7uestion 4: o= that she is a Californian ready for the race do=n the information superhigh=ay! ood =ants to -e a-le to impress &ollac' in terms of her 'no=ledge of current technology. ecently a sales representati#e from a =arehouse e?uipment company called! trying to interest her in installing a AStar ars5o-oticB order pic'er for the =arehouse. Controlled -y lasers and po=ered -y magnetic le#itation! the de#ice can pic' orders Dtas' (E in 1% minutes! rather than $ hours D.,% daysE! the current time. (o= #alua-le =ould such a de#ice -e for ood< hy< lthough the AStar ars5o-oticB order pic'er offers impressi#e time sa#ings! it =ould appear to offer limited immediate ad#antages in the sense that o#erall completion time along the critical path =ould -e unaffected.
7uestion %: nother alternati#e is to use faster transportation. (o= should ood choose -et=een paying more for faster transportation and paying more for other impro#ements< ssume that her only goal is speed. See the ans=er to ?uestion 3. ood should loo' at all costs along the critical path. ny impro#ement =ould ha#e to -e an item on the pathF and the cost of each impro#ement =ould ha#e to -e compared =ith the time sa#ings it pro#ides. 7uestion $: To offset some of the costs of speeding up the system! does the &T chart indicate =here there might -e some potential sa#ings from assigning fe=er people to some tas's! there-y increasing the amount of time needed to complete these tas's< If so! =hich tas's are li'ely candidates< hy< ood should e@plore transferring =or'ers from tas's not on the critical path! such as J! C! ! 6! (! I! or ! and these =or'ers should -e transferred to tas's on the critical path. She could do this so long as the function from =hich the =or'ers =ere transferred does not -ecome part of a ne= critical path.
CS 1152: TM&" LT. 7uestion 1: Should Terim let some-ody else complete the transaction -ecause he 'no=s that if he does not sell to the orth oreans some-ody else =ill< This ?uestion may stimulate a great deal of discussion among students. "n the one hand! Terim is contemplating a transaction in#ol#ing commodities Dchemicals and lum-erE as =ell as =ith a country Dorth oreaE =ith =hich he is not all that familiar. These aspects might argue against completing the transaction. Moreo#er! in light of certain e#ents in#ol#ing orth oreaG specifically! admitting that they possess nuclear capa-ilitiesGTerim might pull -ac' from the proposed transaction -ecause of uncertainty as to e@actly ho= the chemicals =ill -e used -y the orth oreans De.g.! might the chemicals actually -e used to ma'e =eapons
Cost D8.S. dollarsE 42!/// 3!/// 1%!/// $!2%/ 1/!211 ,$!4$1
7uestion 3: hat are the total costs gi#en in the case for the option of mo#ing #ia Syria< cti#ity "cean transportation to Lata'ia Sue0 Canal charges Truc' (andling us#et Total
Cost D8.S. dollarsE 33!/// 3!/// 12!/// $!2%/ %/!/// 1/4!2%/
7uestion 4: hich option should Terim recommend< hy< ither option can -e supported. 6or e@ample! the omanian option is nearly R3/!/// cheaper than the Syrian option! thus solely from the perspecti#e of cost! the omanian option might -e preferred. (o=e#er! the omanian option ta'es three =ee's longer to complete than does the Syrian option. Moreo#er! the omanian option appears to -e ris'ier than the Syrian one in the sense that things might go a=ry in the redocumentation process. 7uestion %: hat other costs and ris's are in#ol#ed in these proposed transactions! including some not mentioned in the case< The entertainment of the orth orean officials can -e #ie=ed as -oth a cost and a ris'. t a minimum! lu@urious hotel accommodations as =ell as -usiness5related dinners and receptions =ill not come cheaply. 6rom a ris' perspecti#e! there is a chance that the entertainment could get out of hand and generate em-arrassing pu-licity. There is also a chance that some of the rus#et AfeesB might une@pectedly increase! particularly those associated =ith generating the false documents. If pro#iders of the documentation understand the Acapti#eB nature of the lum-er shipment from omania to Tur'ey! then it is possi-le that these pro#iders could le#erage their position to increase their income. more general ris' for these proposed transactions is the #olatile political situation in the Middle ast. "ne manifestation of this #olatility is through disruptions in transportation routesF traffic through the Sue0 Canal has periodically -een influenced -y the region;s political #olatilityGan important consideration gi#en that the proposed lum-er shipments =ill need to mo#e through the Sue0 Canal. Students are li'ely to generate other costs and ris's. 7uestion $: egarding the supply chain! ho=Gif! at allGshould -ri-es -e included< hat functions do they ser#e< 6rom a -road perspecti#e! the purpose of -ri-es should -e to facilitate the completion of international transactions. t least t=o perspecti#es must -e considered =hen analy0ing the first part of the ?uestion. "ne is the legal perspecti#eF ?uite simply! in some countries Dsuch as the 8nited StatesE! -ri-es are theoretically illegalGregardless of the circumstances. 8nder this scenario! -ri-es =ould not -e included in the supply chain. second perspecti#e! practicality! understands that -ri-es are essential for the completion of international transactions. 8nder this scenario! supply chains =ould need the fle@i-ility to accommodate situations that re?uire a -ri-e. "ne manifestation of this fle@i-ility could -e the name assigned to a A-ri-e.B 6or e@ample! one of the authors =as not allo=ed to -oard an airplane flight to atmandu! epal until all four mem-ers of his tra#eling party Deach a 8.S. residentE paid =hat =as called a A=eight penalty.B This A=eight penaltyB appears to ha#e -een -ri-e5li'e in the sense that none of the other passengers! se#eral of =hom clearly had =eight pro-lems! =ere assessed A=eight penalties.B 7uestion ,: If Terim puts together this transaction! is he acting ethically< iscuss.
The ans=er to this ?uestion could depend on one;s definition of ethical actions. "ne definition! for e@ample! focuses on a personal code of conduct to guide one;s actions. nother definition suggests that anything that is not illegal is ethical. (a#ing said this! the omanian routing appears ?uestiona-le -ecause of the document alterations associated =ith it. These document alterations are pro-a-ly illegal! regardless of the country in ?uestion. lternati#ely! -ecause the Syrian routing does not appear to include any o#ertly illegal acti#ities! some might #ie= it as ethical. #en though it includes rus#ets! Terim merely =ould -e follo=ing accepted protocol for many international transactions. Moreo#er! the use of Syria is AsmartB in the sense that Terim is a#oiding a Tur'ish port =here the chances of getting caught! and the associated penalties! are much higher. lternati#ely! the case suggests that Terim is struggling =ith the decision to do -usiness =ith the orth oreans in part -ecause of concerns a-out their communist regime and support of terrorist policies. Jecause this may indicate that Terim has a Aconscience!B any transaction in#ol#ing the orth oreans could -e #ie=ed as unethical in the sense that Terim is #iolating his personal code of conduct. 7uestion ): hat do you suggest should -e done to -ring moral #alues into the situation so that the de#eloping countries are some=hat in accordance =ith estern standards< eep in mind that the ris's in#ol#ed in such en#ironments are much higher than the ris's of conducting -usiness in estern mar'ets. lso! note that some cultures see -ri-ery as a =ay to -etter distri-ute =ealth among their citi0ens. Jecause this case in#ol#es organi0ations located in t=o non5estern countries! it might -e culturally insensiti#e to -ring in moral #alues that are more in accordance =ith estern standards. &T II 5"65C(&T 78STI"S C(&T 12: ITTI"L L"9ISTICS 1. @plain ho= de#eloping nations ensure that an increasing proportion of supply chain acti#ities are conducted =ithin their -orders. Jecause the role of these go#ernments in their economies is su-stantial! they are a-le to e@ert considera-le influence o#er outside firms desiring to do -usiness =ithin their -orders. The go#ernments are -ecoming more insistent that much of their foreign trade -e carried on #essels or planes o=ned -y AtheirB companies and head?uartered =ithin their -oundaries. The go#ernments also =ant their local firms to ha#e at least their fair share of re#enues from the sale of freight for=arding ser#ices! marine insurance! and other distri-ution functions. 2. iscuss some of the challenges associated =ith international logistics. conomic changes! such as changes in the relati#e #alue of currencies! ha#e a profound affect on international trade patterns. hen one country;s currency is =ea' relati#e to other countries!
it -ecomes costly to import products -ut e@ports often surgeF =hen one country;s currency is strong relati#e to other currencies! the opposite occurs. ifferences in regulations! la=s! and legal systems also add to the challenges of international logistics and the degree of enforcement of e@isting regulations and la=s is not uniform from country to country. Cultural considerations! such as differences in language! also contri-ute to international logistics challenges. Moreo#er! for goods mo#ing in cross5-order trade! it is not safe to assume that cargo handlers can read nglish and it =ould not -e unusual for some cargo handlers to -e illiterate. 3. hat are some 'ey political restrictions on cross5-order trade< Many nations -an certain types of shipments that might Heopardi0e their national security. Li'e=ise! indi#idual nations may -and together to pressure another country from -eing an acti#e supplier of materials that could -e used to -uild nuclear =eapons. Some nations restrict the outflo= of currency -ecause a nation;s economy =ill suffer if it imports more than it e@ports o#er a long term. relati#ely common political restriction on trade in#ol#es tariffs or ta@es that go#ernments place on the importation of certain items. nother group of political restrictions can -e classified as nontariff -arriers! =hich refer to restrictions other than tariffs that are placed upon imported products. nother political restriction in#ol#es em-argoes! or the prohi-ition of trade -et=een particular countries. 4. iscuss the roles that a particular country;s go#ernment might play in international transport. 9o#ernments may e@ert strong control o#er ocean and air traffic -ecause they operate as e@tensions of a nation;s economy and most of the re#enue flo=s into that nation;s economy. In some cases! import licenses may restrict mo#ement to a #essel or plane o=ned or operated -y the importing country. lthough federal go#ernments ha#e often o=ned ocean carriers and international airlines! some are mo#ing to=ard the pri#ate sector. In addition! some nations pro#ide su-sidies to de#elop andor maintain their ocean and air carriers. 9o#ernments also support their o=n carriers through cargo preference rules! =hich re?uire a certain percentage of traffic to mo#e on a nation;s flag #essels. %. hat is a certificate of origin! a commercial in#oice! and a shipper;s e@port declaration< certificate of origin specifies the country DiesE in =hich a product is manufactured and can -e re?uired -y go#ernments for control purposes or -y an e@porter to #erify the location of manufacture. commercial in#oice is similar in nature to a domestic -ill of lading in the sense that a commercial in#oice summari0es the entire transaction and contains Dshould containE 'ey information to include a description of the goods! the terms of sale and payment! the shipment ?uantity! the method of shipment! and so on. shipper;s e@port declaration contains rele#ant e@port transaction data such as the transportation modeDsE! transaction participants! and description of =hat is -eing e@ported. $. hat is determined -y the terms of sale< The terms of sale determines =hen and =here to transfer the follo=ing -et=een -uyer and seller:
The physical goods Dthe logistics channelE &ayment for the goods! freight charges! and insurance for the in5transit goods Dthe financing channelE Legal title to the goods Dthe o=nership channelE e?uired documentation Dthe documentation channelE esponsi-ility for controlling or caring for the goods in transit! say! in the case of li#estoc' Dthe logistics channelE.
,. &ic'! and descri-e! one C Incoterm! one Incoterm! one Incoterm! and one 6 Incoterm. ny of the respecti#e C! ! ! and 6 Incoterms can -e descri-ed.
). iscuss the role of the letter of credit =ith respect to international shipments. The letter of credit is a #ery popular payment alternati#e that spreads ris' across -uyers and sellers. letter of credit is issued -y a -an' and guarantees payment to a seller pro#ided that the seller has complied =ith the applica-le terms and conditions of the particular transaction. +. iscuss four possi-le functions that might -e performed -y international freight for=arders. The te@t descri-es eight such functions! so discussion of any four =ould -e appropriate. 1/. hat is an O"CC< n O"CC Dnon5#essel operating common carrierE is often confused =ith international freight for=arders. lthough -oth O"CCs and international freight for=arders must -e licensed -y the 6ederal Maritime Commission! O"CCs are common carriers and thus ha#e common carrier o-ligations to ser#e and deli#er! among others. O"CCs consolidate freight from different shippers and le#erage this #olume to negotiate fa#ora-le transportation rates from ocean carriers. 6rom the shipper;s perspecti#e! an O"CC is a carrierF from an ocean carrier;s perspecti#e! an O"CC is a shipper. 11. hat ser#ices do e@port management companies perform< n e@port management company is a firm that speciali0es in handling o#erseas transactions. They represent manufacturers and help them find o#erseas firms that can -e licensed to manufacture their products in other countries. The e@port management company also handles sales correspondence in foreign languages! ensures that la-eling re?uirements are met! and performs other speciali0ed functions. 12. hat are the t=o primary purposes of e@port pac'ing< "ne function is to allo= goods to mo#e easily through customs. 6or a country assessing duties on the =eight of -oth the item and its container! this means selecting light=eight pac'ing materials. The second purpose of e@port pac'ing is to protect products in =hat almost al=ays is
a more difficult Hourney than they =ould e@perience if they =ere destined for domestic consignees. 13. hat are "5" #essels< oll on5roll off D"5"E #essels ha#e large doors on their sterns or on their sides. amps are stretched to the shore and cargo is mo#ed off "5" #essels in trailers. The re?uired port facilities are relati#ely ine@pensi#eF only a ramp for dri#ing trailers on or off is needed. 14. hat is a parcel tan'er< &arcel tan'ers ha#e o#er %/ different tan's of #arying capacities. ach tan' can carry a different li?uid and is loaded and unloaded through a separate piping system. The tan's ha#e different types of coating and some are temperature controlled. 1%. @plain the load center concept. (o= might load centers affect the dynamics of international transportation< Load centers are maHor ports =here thousands of containers arri#e and depart each =ee'. s #essel si0es increase! it -ecomes more costly to stop at multiple ports in a geographic area! and as a result! operators of larger container ships prefer to call at only one port in a geographic area. Load centers might impact the dynamics of international trade in the sense that some ports =ill -e relegated to pro#iding feeder ser#ice to the load centers. 1$. iscuss ser#ice contracts as applied to international =ater transportation. ser#ice contract consists of a commitment -y a shipper to a shipping conference or indi#idual carrier for a minimum #olume of cargo! =ith rate le#els indicated as intermodal! point5to5point or port5to5port. The carrier or conference must guarantee regular ser#ice and there are clauses for damages in case the shipper does not li#e up to its commitment Dsuch as loss of o#erseas salesE. 1,. iscuss the role of alliances in the container trades. Carriers retain their indi#idual identities -ut cooperate in the area of operations. These alliances pro#ide t=o primary -enefits to participating mem-ers! namely! the sharing of #essel space and the a-ility to offer shippers a -roader ser#ice net=or'. hereas an indi#idual carrier might only -e a-le to pro#ide =ee'ly ser#ice on a particular route! an alliance might -e a-le to offer daily ser#ice. The si0e of the alliance allo=s them to e@ercise considera-le clout in their dealings =ith shippers! port terminal operators! and connecting land carriers. 1). (o= do the rates esta-lished -y the International ir Transport ssociation influence international airfreight< To o-tain lo=er rates from the IT carriers! the shipper must tender the freight loaded to airline specificationsF at the other end of the Hourney! the entire load must -e destined to one consignee. The result has -een to increase the a#erage si0e of shipments handled -y the airlines and this has reduced the num-er of indi#idual pac'ages each airline terminal must handle. 1+. iscuss some of the challenges to surface transport in other countries.
6e= nations ha#e as =ide a range of modes to choose from -ecause the 8nited States has traditionally encouraged the de#elopment across all modes of transport. In addition! the degree of nationali0ation of transportation is often higher in many countries than in the 8nited States. The =idespread use of sea-orne containers has -rought a-out hopes for standardi0ing land #ehicles for carrying containers on the land=ard legs of their Hourneys. (o=e#er! there is opposition to truc' transportation in some countries. ail e?uipment si0es! as =ell as -ridge and tunnel clearances! #ary throughout the =orld and most nations use e?uipment that is much smaller than that used in the 8.S. Containers that can -e loaded t=o to a railcar in the 8nited States are fre?uently carried on indi#idual railcars else=here. ifferent rail gauge can complicate the e@change of traffic -et=een nations. 2/. hat are some of the challenges associated =ith in#entory management in cross5-order trade< Jecause of greater uncertainties! misunderstandings and transport delays! safety stoc's must -e larger. In#entory policies should -e modified to accommodate the rele#ant mar'eting area and tailoring products for indi#idual mar'ets can -e pro-lematic. eturn items are e@tremely difficult! if not impossi-le! to accommodate in international distri-utionGparticularly for products that must cross multiple -orders. 6urthermore! in#entory #aluation on an international scale is difficult -ecause of fluctuations in the #arious currencies. hen a nation;s Dor the =orld;sE currency is unsta-le! in#estments in in#entories rise -ecause they are -elie#ed to -e less ris'y than holding cash or securities. Inefficient =arehousing practices can impact in#entory carrying cost through increased storage! handling! o-solescence! or shrin'age costs.
&T III KMITI" 78STI"S C(&T 12: ITTI"L L"9ISTICS 1. hat -rought an end to the colonial system of international trade< a. computeri0ation -. ad#ances in telecommunications c. orld ar II d. the end of the Cold ar e. none of the a-o#e DcF p. 2+1E 2. uring 2//$! the 8.S. trade deficit =ith China =as appro@imately R -illion. a. ,% -. 13% c. 1+/ d. 23/ DdF p. 2+1E 3. is used in areas in =hich doc'=or'ers cannot read -ut need a method to 'eep documents and shipments together. a. 6I tag -. Shipper;s mar' c. Jar code d. Shipment coordinator D-F p. 2+3E 4. hat is a consular office< a. -. c. d.
a place =here tariffs are filed sources of information regarding a nation;s import and currency e@change regulations another name for a police department a location =here imported goods must -e inspected to ensure that they are free from plant and animal diseases D-F p. 2+4E
%. are ta@es that go#ernments place on the importation of certain items. a. Tariffs -. m-argoes
c. Surcharges d. eciprocities DaF p. 2+%E $. hich of the follo=ing is not a political restriction on international trade< a. em-argoes -. tariffs c. -arring certain types of shipments d. nontariff -arriers e. all are political restrictions DeF p. 2+%E ,. Cargo preference rules . a. are synonymous =ith em-argoes -. indicate ho= each shipment should -e loaded into onto a transport #ehicle c. indicate preferred shippers d. re?uire a certain percentage of traffic to mo#e on a nation;s flag #essels DdF p. 2+$E ). is similar in nature to a domestic -ill of lading and summari0es the entire transaction. a. shipper;s letter of instruction -. shipper;s e@port declaration c. commercial in#oice d. certificate of origin DcF p. 2+$E +. often ser#es as the -asis for a company;s official e@port statistics. a. certificate of origin -. commercial in#oice c. shipper;s e@port declaration d. shipper;s letter of instruction e. none of the a-o#e DcF p. 2+$E
1/. Incoterms refer to: a. terms of sale for international shipments -. a specific method of payment for international shipments c. standardi0ation of international trade terminology d. standardi0ed procedures for handling international shipments DaF p. 2+,E
11. 6rom a seller;s perspecti#e! the most -asic Incoterms transaction is: a. free on -oard -. e@5=or's c. cost and freight d. deli#ered e@ ship D-F p. 2+,E 12. letter of credit . a. is only used for domestic shipments -. allo=s a consignee =ith poor credit to pay -y credit c. is pro#ided =hen a transportation #ehicle is loaded or unloaded prior to its allotted free time d. is a popular payment alternati#e for international transactions DdF p. 2++E 13. International freight for=arders can pro#ide a num-er of functions. hich is not one of them< a. -oo'ing space on carriers -. o-taining consular documents c. preparing an e@port declaration d. arranging for insurance e. all are possi-le functions DeF p. 3//E 14. hich is not a source of e@port for=arders; income< a. -uying space =holesale and selling it retail -. commissions on shipping re#enues generated for carriers c. fees for document preparation and performing research d. payment for freight pic' up and deli#ery e. all are sources of income DdF p. 3/3E
1%. DnE o#ersees the efficient mo#ement of an importer;s goods Dand accompanying paper=or'E through customs and other inspection points. a. customshouse -ro'er -. international freight for=arder c. import management company d. shippers association DaF p. 3/3E 1$. main difference -et=een international freight for=arders and customshouse -ro'ers is: a. there are no differences -. for=arders ta'e title to goods although customshouse -ro'ers do not
c. for=arders tend to handle e@ports =hile customshouse -ro'ers tend to handle imports d. customshouse -ro'ers are typically go#ernment agents DcF p. 3/3E 1,. hich international logistics ser#ice pro#ider is often confused =ith the international freight for=arder< a. customshouse -ro'er -. e@port management company c. non5#essel operating common carrier d. e@port trading company DcF p. 3/4E 1). represent manufacturers and help them find o#erseas firms that can -e licensed to manufacture their products. a. International freight for=arders -. Shippers associations c. @port management companies d. @port trading companies DcF p. 3/4E 1+. and international freight for=arders are closely related -ecause together they can offer a complete o#erseas sales and distri-ution ser#ice to the domestic manufacturer that =ants to e@port -ut does not 'no= ho=. a. @port management companies -. @port trading companies c. on5#essel operating common carriers d. Customshouse -ro'ers DaF p. 3/4E 2/. n custom pac's shipments =hen the e@porter lac's the e?uipment or the e@pertise to do so itself. a. e@port management company -. e@port pac'er c. e@port trading company d. international freight for=arder D-F p. 3/4E 21. Jecause the distances associated =ith international shipments are often much greater than those associated =ith domestic shipments! the -uyer and seller must often choose -et=een and transportation. a. irF =ater -. ailF air c. aterF rail d. aterF truc' DaF p. 3/%E
22. ppro@imately of cross5-order shipments mo#e -y =ater transportation. a. 4/> -. %/> c. $/> d. ,/> DcF p. 3/%E 23. Much of the =orld;s ocean shipping tonnage is used to carry: a. containers -. petroleum c. grain d. coal D-F p. 3/%E 24. has o#er %/ different tan's! and each tan' can carry a different li?uid. a. -ul' tan'er -. storage tan'er c. tramp ship d. parcel tan'er DdF p. 3/$E
2%. refer to maHor ports =here thousands of containers arri#e and depart each =ee'. a. (u-s -. Consolidation points c. Ship par's d. Load centers DdF p. 3/,E 2$. is =hen #essel lines -ump =aste paper cargo for loads of higher5paying cargo. a. olling -. Jumping c. etention d. Sto=a-ility DaF p. 3/)E 2,. 8sers of ocean shipping companies #ie= as the most important contract pro#ision. a. predicta-le! sta-le rates -. guaranteed space a#aila-ility c. all5inclusi#e rates
d. door5to5door ser#ice DaF p. 3/)E 2). Shipping conferences refer to . a. annual meetings of large international shippers -. the same thing as shippers; associations c. cartels of ocean #essel operators operating -et=een certain trade areas d. =ater ports that are located in the same geographic area DcF p. 3/)E 2+. "cean carrier alliances pro#ide t=o primary -enefits to participating mem-ers! namely! the sharing of #essel space and . a. anti5trust immunity -. the a-ility to offer shippers a -roader ser#ice net=or' c. lo=er rates d. faster transit times D-F p. 3/)E
3/. hich of the follo=ing is not a type of international air freight operations< a. chartered aircraft -. scheduled air carriers c. integrated air carriers d. tramp air carriers DdF p. 3/+E 31. The freight rates for international air carriers are esta-lished -y: a. indi#idual carriers -. go#ernment negotiations c. the International ir Transport ssociation d. shippers associations DcF p. 3/+E 32. Integrated carriers: a. are those that o=n se#eral modes of transportation -. utili0e the ser#ices of scheduled airlines c. o=n all their #ehicles as =ell as pic' up and deli#ery facilities d. perform transportation in tightly lin'ed supply chains DcF p. 311E 33. refers to ocean shipping along a region;s coast! rather than across oceans.
a. rayage -. Intramodal c. Land -ridge d. Short sea DdF p. 311E 34. Short sea shipping is unli'ely to -ecome a more common transportation option in the 8nited States until high=ay dri#ing speeds decrease to a-out miles per hour. a. 4/ -. 3/ c. 2/ d. 1/ DcF p. 311E
3%. hich of the follo=ing statements a-out international in#entory management is false< a. return items are ?uite difficult to accommodate -. in#entory #aluation is difficult -ecause of continually changing e@change rates c. inefficient =arehousing practices can impact in#entory carrying cost d. an in#entory in one nation generally ser#es the needs of mar'ets in near-y nations e. all are true statements DdF pp. 3135314E True56alse 7uestions 1. orld ar I -rought an end to the colonial system of international trade. D6alseF p. 2+1E 2. e#eloping nations insist that an increasing proportion of assem-ling and manufacturing -e conducted =ithin their o=n -orders. DTrueF p. 2+1E 3. International logistics is -oth more costly and challenging than domestic logistics. DTrueF p. 2+1E 4. hen one country;s currency is =ea' relati#e to other currencies! it is more costly to import products into that country. DTrueF p. 2+1E %. shipper;s mar' is used in areas in =hich doc'=or'ers cannot read -ut need a method to 'eep documents and shipments together. DTrueF p. 2+3E $. Consular offices are current sources of information regarding their nation;s import and currency e@change regulations. DTrueF p. 2+4E
,. eciprocities refer to ta@es that go#ernments place on the importation of certain items. D6alseF p. 2+%E ). The primary purpose of a non5tariff -arrier is to encourage e@ports. D6alseF p. 2+%E +. m-argoes are physical limits on the amount that may -e imported from any one country during a period of time. D6alseF p. 2+%E 1/. Some nations =ith =ea' -alance5of5payment positions issue an import license on the condition that the goods mo#e on an aircraft or #essel flying that nation;s flag. DTrueF p. 2+%E 11. Cargo preference rules indicate ho= each shipment should -e loaded into onto a transport #ehicle. D6alseF p. 2+$E 12. The documentation re?uirements for international shipments can act as a nontariff -arrier to trade. DTrueF p. 2+$E 13. certificate of origin specifies the country DiesE in =hich a product is manufactured. DTrueF p. 2+$E 14. shipper;s letter of instruction contains rele#ant e@port transaction data such as the transportation modeDsE! transaction participants! and description of =hat is -eing e@ported. D6alseF p. 2+$E 1%. Some free trade agreements ha#e actually resulted in an increased in documentation re?uirements. DTrueF p. 2+,E 1$. The use of Incoterms is mandatory for international shipments. D6alseF p. 2+,E 1,. n @5or's DKE transaction is considered the most -asic transaction in the Incoterms frame=or'. DTrueF p. 2+,E 1). commercial in#oice is a #ery popular payment alternati#e that spreads ris' across -uyers and sellers in international transactions. D6alseF p. 2++E 1+. International freight for=arders can handle either #essel shipments or air shipments. DTrueF p. 2++E 2/. Consular documents in#ol#e o-taining permission from the importing country for goods to enter. DTrueF p. 3/1E 21. Customshouse -ro'ers are another name for international freight for=arders. D6alseF p. 3/3E 22. 6rom the shipper;s perspecti#e! a non5#essel operating common carrier DO"CCE is a carrierF from an ocean carrier;s perspecti#e! an O"CC is a shipper. DTrueF p. 3/4E 23. on5#essel operating common carriers are not allo=ed to enter into contract arrangements =ith indi#idual shippers. D6alseF p. 3/4E 24. @port trading companies represent 8.S. manufacturers and help them find o#erseas firms that can -e licensed to manufacture their products. D6alseF p. 3/4E
2%. @port pac'ers custom pac' shipments =hen the e@porter lac's the e?uipment or e@pertise to do so itself. DTrueF p. 3/4E 2$. International transportation cannot -e effecti#e or efficient =ithout fairly identical handling e?uipment -eing in place at each end of the trip. DTrueF p. 3/%E 2,. Much of the =orld;s shipping tonnage is used for carrying agricultural products. D6alseF p. 3/%E 2). Load centers refer to maHor ports =here thousands of containers arri#e and depart each =ee'. DTrueF p. 3/,E 2+. In terms of necessary contract pro#isions! ocean shippers #ie= guaranteed ship space as the most important factor. D6alseF p. 3/)E 3/. Shipping conferences refer to annual meetings of large international shippers. D6alseF p. 3/)E 31. Some =ater carriers are engaged in a ne= type of alliance in =hich carriers retain their indi#idual identities -ut cooperate in some areas of operations. DTrueF p. 3/)E 32. "cean carrier alliances pro#ide t=o primary -enefits to participating mem-ers! namely! the sharing of #essel space and lo=er rates. D6alseF p. 3/)E 33. The three types of international airfreight operations are chartered aircraft! scheduled air carriers! and integrated carriers. DTrueF p. 3/+E 34. The schedules and routes of international air carriers are esta-lished -y the International ir Transport ssociation. D6alseF p. 3/+E 3%. 8&S and 6ed@ are e@amples of integrated air carriers. DTrueF p. 311E 3$. rayage refers to ocean shipping! often along a region;s coast! rather than across oceans. D6alseF p. 311E 3,. Short sea shipping is unli'ely to -ecome a more common transportation option in the 8.S. until high=ay dri#ing speeds decrease to a-out 3% miles per hour. D6alseF p. 311E 3). n in#entory held in one nation may not necessarily ser#e the needs of mar'ets in neigh-oring nations. DTrueF pp. 3135314E 3+. eturn items are #irtually impossi-le to accommodate in an international distri-ution system. DTrueF p. 314E 4/. In#entory #aluation on an international scale is difficult -ecause the #alue of #arious currencies continually change. DTrueF p. 314E
&T IO CS S"L8TI"S CS 1251: (T T8C C"M& 7uestion 1: ssume you are Oanderpool. raft the comparison &on Hust re?uested. Many students =ill calculate transportation costs. 6or the mo#ement #ia Chicago! they =ill choose to use rail. (ere;s the comparison: Oia Chicago Oessel charter Load and -loc' DR2/tr'E ail rate at R+/tr' harfage Loading and sto=ing DR)/tr'E Sea=ay tolls DR2,tr'E 8nloading Insurance DR1/%tr'E
Costs DRE ,2!/// 2!/// +!/// 1!/,/ )!/// 2!,// 4!2// 1/!%//
Total
1/+!4,/
Oia Jaltimore Load and -loc' DR3/tr'E ail rate at R44)tr' (andling [ Jaltimore DR1//tr'E "cean freight DR,2/tr'E Insurance DR,%tr'E
Costs DRE 3!/// 44!)// 1/!/// ,2!/// ,!%//
Total
13,!3//
7uestion 2: hich of the t=o routing alternati#es =ould you recommend< hy< In terms of transportation costs only! the chartered #essel is cheaper. (o=e#er! =hen =e ta'e into account cash flo=s and the #alue of money! the Jaltimore route -ecomes ad#antageous. ssume =e use the charter #essel. It should arri#e on May 3/ th and (T =ill -e paid. (o=e#er! if truc's are sent t=o at a time #ia Jaltimore! the middle pair D`2% and `2$E should -e finished on a-out pril 1$th and arri#e at oha a-out May )th! =hen they =ill -e paidGin other =ords! 22 days earlier than if they arri#ed on May 3/th on the chartered #essel. (T pays )> per year for its money so here is ho= to calculate the sa#ings for truc' `2% or `2$: DR1,2!/// times ./) times 22E di#ided -y 3$% V R)2+.3, Multiplying R)2+.3, times %/ yields R41!4$).%/. hen added to the costs of using Chicago DR1/+!4,/E! the total cost no= -ecomes R1%/!+3).%/G=hich is more e@pensi#e than using Jaltimore.
7uestion 3: ssume that the -uyer in Saudi ra-ia has made other large purchases in the 8nited States and is considering consolidating all of its purchases and loading them onto one large ship! =hich the -uyer =ill charter. The -uyer contacts (T and! although ac'no=ledging its commitment to -uy 6S oha! as's ho= much (T =ould su-tract from the R1,2!/// per truc' price if the selling terms =ere changed to 6"J (T;s Cro=n &oint plant. (o= much of a cost reduction do you thin' (T should offer the -uyer< 8nder =hat terms and conditions< ll the transportation costs! calculated a-o#e! could -e su-tracted. The re#ised terms of sale should also specify dates =hen cargo =ould -e pic'ed up and paid for! and the price should include (T;s daily costs in in#estment in finished in#entory. 7uestion 4: ns=er ?uestion 3 =ith regard to changing the terms of sale to deli#ery at port in Jaltimore. The -uyer =ould unload the truc's from the railcars. The ans=er for ?uestion 3 holds here as =ell. ote that (T still has responsi-ility for getting the truc's to Jaltimore on railroad flatcars! although the -uyer =ould -e responsi-le for unloading the railcars. 7uestion %: Is there an interest rate that =ould ma'e (T change from one routing to another< If so! =hat is it< Let i e?ual the rate of interest. efer to ans=ers to ?uestions 1 and 2. The rele#ant e?uation is: R1/+!4,/ W D)!$//!/// times 223$%iE V R13,!%// Sol#ing for i yields an appro@imate #alue of ./%3 Su-stituting ./%3 into the left side of the rele#ant e?uation Di.e.! shipping #ia ChicagoE a-o#e yields a #alue of R1/+!4,/ W R2,!4,3! =hich comes to slightly less than R13,!///Gthus less than the costs #ia Jaltimore. 7uestion $: ssume that it is the year 2//% and the cost to (T of -orro=ing money is 12> per year. Jecause the -uyer =ill pay for truc's as they are deli#ered! =ould it -e ad#antageous for (T to pay o#ertime to speed up production! ship the truc's as they =ere finished #ia the &ort of Jaltimore! and collect their payment earlier< hy or =hy not< The selling price of each truc' is still R1,2!///. ach day that (T must =ait for payment costs D.12 times R1,2!///E di#ided -y 3$%b! or R%$.%% per day. They should pay o#ertime only if it costs less than this amount.
CS 1252: JLL TULL CLL C"M& 7uestions 15%: 7uestions 14 as' for the total in#entory carrying costs of alternati#es 1 through 4! respecti#elyF ?uestion % as's for =hich alternati#e upferman should recommend and =hy. These ?uestions can -e approached in the same manner although a fe= simplifying assumptions are needed. e =ill set up annual costs. e =ill ignore the pro-lem of A&ancho Oilla.B e =ill also assume that the additional in#entories can -e produced =ithout undue strain on the firm;s a-ility to fill current orders. a. ach day;s production at ogales represents a cost of R1/!///. -. ach day;s production at Tucson represents a cost of R14!/// Dthe cost at ogales plus costs of transporting plates to Tucson plus costs at TucsonE. c. nnual costs of maintaining in#entory are 12> of the costs. d. ssume that trailers and truc'5tractors ha#e 35year li#es. lternati#es Interest cost on in#entory DannualE DRE nnual costs of trailers [ R1!/// per trailer DRE nnual costs of truc'5tractor [ R1!$$, per truc'5tractor Total DRE
1 $!///
2 $!4)/
3 %!,$/
4 %!/4/
%!///
4!///
4!///
3!///
1!$$,
3!333
3!333
1!$$,
12!$$,
13!)13
13!/+3
+!,/,
"ffhand! alternati#e 4 is the least costly. lso! it has the ad#antage of larger in#entories in Tucson! =here there should -e fe=er =orries a-out timely deli#ery. Therefore! this appears to -e the -est alternati#e. 7uestion $: T0ell A=anted enough in#entory in reser#e that the T0ell Cell Company could fill ++> of all orders on time.B This is! as you may recall! a customer ser#ice standard. (o= reasona-le is a ++> le#el< hy not! say! a +%> le#el< (o= =ould ell and upferman determine the relati#e ad#antages and disad#antages of the +%> and the ++> ser#ice le#els< hat 'ind of cost calculations =ould they ha#e to ma'e< This depends on the costs of not maintaining a +,> ser#ice le#el. hat is the percent of delayed shipments! =ith penalty clauses the firm must confront! and =hat losses can -e incurred< To decide -et=een a +%> and +,> ser#ice standard! the company =ould ha#e to figure out the e@pected costs from penalties and the loss of customers and reputation that =ould result from a drop to the +%> ser#ice le#el. Is the firm losing more through penalty clauses than it =ould from increased storage charges< 7uestion ,: Pedson lectronic Tools in#o'ed a penalty clause on a purchase order that T0ell Cell Company had accepted and the T0ell Cell Company had to forfeit R3!///. raft! for ell T0ell;s signature! a memo indicating =hen and under =hat conditions the Jelle T0ell Cell Company should accept penalty clauses in purchase orders co#ering missed deli#ery times or A=indo=s.B
The memo should only commit T0ell to a penalty clause =here the company -elie#es there is little chance for delay. There is no information in the case to determine =hich deli#ery re?uests are ris'ier. It might -e a good idea to limit the amount of penalty payment to the amount that the customer =ill lose -ecause of the delay. 7uestion ): In your opinion! is it ethical for a 8.S.-ased firm to relocate some of its operations in Me@ico so as to a#oid the stricter 8.S. pollution and =or'er5safety la=s< hy or =hy not< lthough not illegal! such -eha#ior is not ethical. (a#ing said this! one;s competitors may -e relocating to Me@ico for these same reasons and thus =ould ha#e significantly lo=er costs for the products that they sell. 7uestion +: Should the firm -e =illing to pay -ri-es at the Me@ican -order to get their shipments cleared more promptly< hy or =hy not< The Ao-#iousB ans=er is no! if for no other reason than -ri-es are prohi-ited -y the 6oreign Corrupt &ractices ct. (a#ing said this! the -eha#ior of #arious Me@ican -order agents is resulting in e@tended deli#ery times for certain shipments. These e@tended deli#ery times are contri-uting to poorer customer ser#ice! and in some cases! T0ell is paying penalty fees that range into the thousands of dollars. Students can -e encouraged to thin' a-out alternati#es that accomplish the same purpose as -ri-es! -ut =ould not -e considered -ri-es from a legal perspecti#e. &T II 5"65C(&T 78STI"S C(&T 13: L"9ISTICS SSTMS C"T"LS 1. iscuss ho= accountants and logisticians differ in terms of their approach to accounting controls. ccountants measure in#entory in terms of its dollar #alue! =hereas logisticians measure in#entory in terms of the num-er of stoc'5'eeping units DS8sE. These different measurements can result in managerial disconnectsF for e@ample! if one has in#entory of grain! its monetary #alue fluctuates -ased on the appropriate commodity e@change rates! e#en though the actual ?uantity and ?uality remain unchanged. In addition! in times of inflation! identical items added to in#entory at different times means that each unit has a different cost! and e#en though in#entory le#els are not affected! it ma'es a difference =hether an organi0ation uses historic cost or current #alue as an indicator of the in#entory;s total #alue. 2. hat is acti#ity5-ased costing DJCE< hat are the fi#e steps of the JC process< cti#ity5-ased costing DJCE attempts to trace an e@pense category to a particular cost o-Hect. ith JC! cost o-Hects consume acti#ities and acti#ities consume resources. JC consists of fi#e steps: Identify acti#ities etermine cost for each acti#ity etermine cost dri#ers Collect acti#ity data Calculate product cost
3. efine =hat is meant -y producti#ity. iscuss ho= producti#ity can -e impro#ed. t a -asic le#el! producti#ity can -e defined as the amount of output di#ided -y the amount of input. n understanding of this relationship leads to the recognition that there are -ut three =ays to impro#e producti#ity: 1E reduce the amount of input =hile holding output constantF 2E increase the amount of output =hile holding input constantF or 3E increase output =hile at the same time decreasing input. 4. hat is short5inter#al scheduling< Short5inter#al scheduling in#ol#es loo'ing at each =or'er;s acti#ity in small time segments. n amount of time is assigned to each unit of =or'! and then the indi#idual;s =or' is scheduled in a manner that utili0es as much of each =or'er;s time as possi-le and ma@imi0es output for each =or'er.
%. In =hat =ays can unioni0ed =or'forces -e a challenge to impro#ing producti#ity< 8nion =or' rules are often #ery specific in the sense that Ho- descriptions spell out in e@acting detail the responsi-ilities associated =ith a particular Ho-. lthough detailed specifications help create additional Ho-s! the relati#e lac' of =or'er fle@i-ility can potentially hinder producti#ity -y increasing inputs De.g.! additional =or'ers! hence additional la-or costsE =hile also decreasing output. $. hy does dri#er super#ision tend to -e more difficult than super#ision of =arehouse =or'ers< 6or one! dri#ers are generally remo#ed from immediate super#ision -y the nature of their Ho-s. Truc' dri#ers can fall -ehind schedule or -e delayed for a #ariety of reasons such as traffic conditions! a -ottlenec' at a loading doc'! or perhaps too much time sociali0ing =ith fello= dri#ers a particular truc' stop. Initially! all a super#isor can do is accept the dri#er;s e@planation of schedule glitches. ,. iscuss ho= dri#er producti#ity can -e impro#ed =ith glo-al positioning systems and geographic information systems. 9lo-al positioning systems D9&SE use satellites that allo= companies to compute #ehicle position! #elocity! and time! =hereas graphical information systems D9ISE allo= companies to produce digital maps that can drill do=n to site5specific ?ualities such as -ridge heights and customer locations. 9&S and 9IS are e#ol#ing to=ards a situation in =hich instant updates can -e pro#ided to 9IS data-asesGdata that can -e le#eraged to pro#ide real5time route planning that can direct dri#ers a=ay from accidents and other traffic -ottlenec's. ). escri-e some =ays in =hich transportation companies might reduce their fuel consumption. Transportation companies are more closely e@amining their current operations in an effort to reduce fuel consumption! hence! fuel prices. These include reducing #ehicle idling times! Hoining fuel purchasing net=or's! implementing route optimi0ation systems! and implementing fuel purchase optimi0ation systems. +. escri-e the three critical factors in managing returned goods. "ne factor is =hy products are returned. &roducts are returned for a #ariety of reasons! such as the customer ma'ing an error in ordering! the shipper ma'ing an error in filling an order! and customers not -eing a-le to get =hat they -ought to =or'. The second factor in#ol#es ho= to optimi0e returned goods management and one -asic decision concerns the design of re#erse goodsGre#erse logistics systems. The third factor in managing returned goods is =hether they should -e managed internally or outsourced to a third party. There are tradeoffs -et=een internal management and outsourcing returned goods management. 1/. hat 8.S. federal agencies are in#ol#ed in product recalls and =hat are their respecti#e Hurisdictions< The 6ood and rug dministration is concerned =ith food! drugs! and cosmetics! =hile the Consumer &roduct Safety Commission focuses on -anning the sale of products deemed ha0ardous! such as flamma-le fa-rics. The ational (igh=ay Traffic Safety dministration is concerned =ith #ehicles and their accessory partsF it does not actually engage in recalls -ut is
responsi-le for causing the manufacturer to notify purchasers that a defect has -een disco#ered. The 6ood Safety and Inspection Ser#ice of the 8.S. epartment of griculture inspects meat! poultry! and eggs and relies on #oluntary recalls. 11. iscuss practice recalls Dfire drillsE. ell5managed firms ha#e practice recalls to determine the speed! degree of co#erage! and effecti#eness they can effect. ll actions that firms ta'e to prepare for a hypothetical recall are important for t=o reasons. 6irst! they allo= for -etter performance =hen a real emergency arises. Second! in case the recall is not completely successful and la=suits result! a portion of the firm;s defense might -e the precautionary actions it had underta'en. 12. hat are the reasons for =hy logisticians might -e concerned =ith theft< #en though insurance =ill reim-urse an organi0ation for the mar'et #alue of the stolen items! the time and costs De.g.! documentationE associated =ith theft tend not to -e co#ered -y insurance. second logistical concern is that theft results in the planned flo= of goods -eing interrupted and can lead to stoc'outs in the distri-ution channel. Theft can also factor into the facility location decision in the sense that many organi0ations =ill a#oid locating their facilities in areas characteri0ed -y high crime rates. It is also possi-le for the stolen products to reappear in the mar'et at a lo=er price to compete =ith products that ha#e mo#ed through traditional channels. 13. @plain ho= logistics managers can attempt to control pilferage. Control -egins =ith the hiring process and one of the -est =ays to manage pilferage is to a#oid hiring people =ho are predisposed to steal! such as people =ith credit! alcohol! or drug pro-lems. Some organi0ations utili0e psychological tests as part of the hiring process in an effort to identify prospecti#e employees =ho might pilfer. "rgani0ations can -etter control pilferage if they ha#e clearly articulated and enforced pilferage5related policies. @perts recommend that the -est pilferage policy should -e -ased on 0ero tolerance -ecause pro-lems ine#ita-ly arise for those companies that tolerate a Asmall amountB of pilferage. 14. In =hat =ays are goods mo#ing in international commerce more #ulnera-le to theft than goods mo#ing in domestic commerce< ntire shiploads of cargo can Adisappear.B Some #anish! only to appear under a ne= name and a ne= flag. Some are di#erted to a different port! =here the cargo is sold to the highest -idder. &iracy is also a threat! particularly in certain regions of the =orldGand today;s pirates use speed-oats! cell phones! and automatic =eapons. 1%. iscuss three electronic de#ices that can -e used to pro#ide -uilding5related security functions. Closed5circuit tele#ision cameras can -e used to #ie= different areas of a particular facility. 8nfortunately! organi0ations sometimes fail to acti#ate or monitor their closed5circuit cameras! =hich defeats their purpose. second type of electronic de#ice is used to control access to
particular facilities. n e@ample is a magnetically encoded tag that each employee must insert into a sensing de#ice that records the e#ent and determines =hether the door or gate should -e unloc'ed. third category of electronic de#ices is in#isi-le photo5electronic -eams and many types of listening de#ices that can record unauthori0ed mo#ements. 1$. (o= is #ehicle security in the early t=enty5first century a mi@ture of relati#ely lo=5 and high5 technology alternati#es< ith respect to lo=5technology alternati#es! num-ers are painted on the top of truc' trailers to ma'e them easier to spot from the air if they are stolen. Some truc'5leasing companies attempt to th=art truc' theft -y etching a #ehicle identification num-er in up to 4/ different locations on each #ehicle. some=hat more high5technology approach in#ol#es cameras and #ideo screens. Some companies ha#e e?uipped their tractors and trailers =ith multiple cameras that can pro#ide nearly 3$/ degrees of co#erage and real5time data to dri#ers. adio fre?uency identification D6IE is emerging as a #alua-le technology for managing #ehicle securityF transponders Da small de#ice that responds to radio signals from an outside sourceE can -e placed on #ehicles! and glo-al positioning systems can -e used to monitor the location of the transponder.
1,. escri-e the t=o issues that managers face =ith respect to computer and data security. "ne issue in#ol#es de#eloping -usiness practices that reduce the li'elihood of employees losing critical data files De.g.! =hat a company can do to decrease the chance of a laptop -eing lost or stolenE! =hereas the second see's to protect the data files that are stored on! or can -e accessed through the laptop De.g.! the use of fire=alls and data encryptionE. 1). hat are t=o e@amples of ho= the terrorist attac's of Septem-er 11! 2//1 ha#e affected the management of logistics systems< The storage and transport of ha0ardous materials in today;s =orld is managed =ith an eye to potential terrorist considerations. &etroleum tan' truc's and ocean tan'ers ha#e the potential to -e mo-ile -om-s. In-ound containers are recei#ing much greater scrutiny than prior to Septem-er 11th and the result has -een a series of legislati#e proposals in recent years focused on increasing the inspection of in-ound containers. 1+. hat are some =ays in =hich the Transportation Security dministration is attempting to impro#e the security of the 8.S. transportation system< The Transportation Security dministration DTSE is the agency that conducts passenger screenings at 8.S. commercial airports. The TS also plays a num-er of roles =ith respect to freight security! such as using dogs to screen airfreight. In addition! the TS is in the process of de#eloping a Transportation or'er Identification Credential DTICE that is meant to -e a common credential to identify =or'ers across all modes of transportation.
2/. iscuss the Customs Trade &artnership gainst Terrorism DC5T&TE. In C5T&T! 8.S. Customs and Jorder &rotection DCJ&E and pri#ate organi0ations De.g.! retailers and manufacturersE =or' together to pre#ent terrorism against the 8.S. through imports and transportation. &ri#ate organi0ations apply to CJ& for C5T&T certification! and the process in#ol#es demonstrating that organi0ations ha#e impro#ed the physical security of their containeri0ed shipments as =ell as the a-ility to trac' people =ho ha#e access to the containeri0ed shipments. lthough the go#ernment5pro#ided -enefits to C5T&T certification include fe=er security inspections of in-ound containers along =ith faster processing through customs! many companies ha#e disco#ered that the C5T&T process has also led to a reduction in cargo theft.
&T III KMITI" 78STI"S Multiple Choice 7uestions 1. refers to measurement that ensures conformity =ith an organi0ation;s policies! procedures! or standards. a. Moti#ation -. Management c. Metrification d. Control e. one of the a-o#e DdF p. 32+E 2. #ie= control mechanisms in terms of monetary costs or #alue! =hereas #ie= control mechanisms from either a monetary or nonmonetary perspecti#e. a. ccountantsF financiers -. 6inanciersF logisticians c. ccountantsF logisticians d. 6inanciersF accountants DcF p. 33/E 3. costs in#ol#e t=o steps: first! one must esta-lish accepta-le costs for each acti#ityF and second! one must determine accepta-le de#iations from these costs. a. ele#ant -. Controlla-le c. Indirect d. Standard e. one of the a-o#e DdF p. 331E 4. If the standard cost of handling one pallet is R2! and %!/// pallets are handled in a gi#en time period! then should -e -udgeted for handling pallets. a. R1/!/// -. R,!%// c. R%!/// d. R2!%// e. Cannot -e determined DaF p. 331E
%. ith ! cost o-Hects consume acti#ities and acti#ities consume resources. a. financial accounting
-. acti#ity5-ased costing c. cost accounting d. standard costing D-F p. 331E $. hich of the follo=ing is not a step associated =ith acti#ity5-ased costing< a. collect acti#ity data -. determine cost for each acti#ity c. identify acti#ities d. determine cost dri#ers e. all are steps associated =ith acti#ity5-ased costing DeF p. 331E ,. hat is the first step in the acti#ity5-ased costing process< a. collect acti#ity data -. identify acti#ities c. determine cost for each acti#ity d. determine cost dri#ers D-F p. 331E ). refers to the amount of output di#ided -y the amount of input. a. Control -. Monitoring c. &roducti#ity d. Input5output analysis DcF p. 332E +. hich of the follo=ing is a =ay to impro#e to producti#ity< a. increase the amount of input =hile holding output constant -. decrease the amount of output =hile holding input constant c. increase input =hile at the same time decreasing output d. increase output =hile holding input constant DdF pp. 3325333E
1/. The t=o most fre?uent uses of la-or in logistics are and . a. -. c. d.
order managementF =arehousing transportationF customer ser#ice transportationF =arehousing order managementF customer ser#ice
DcF p. 333E 11. &roducti#ity impro#ement efforts in logistics are often directed to=ards . a. reducing input =hile increasing output -. reducing input =hile holding output constant c. increasing output =hile holding input constant d. increasing output -y a greater percentage than inputs are increased DcF p. 333E 12. Short5inter#al scheduling is a common techni?ue used in logistics systems -ecause it helps managers to: a. analy0e a =or'er;s acti#ity in small time segments -. ma'e efficient use of scarce loading doc' space c. eliminate unproducti#e union =or' rules d. minimi0e =aste associated =ith shipping dunnage DaF p. 333E 13. hat is the most important purpose of =arehouse =or' rules< a. to control pilferage -. to 'eep employees from engaging in unproducti#e and potentially destructi#e acti#ities c. to protect companies from union grie#ance procedures d. to gi#e managers control o#er =arehouse =or'ers D-F p. 33%Eoo 14. hich of the follo=ing statements is false< a. union =or' rules are often #ery specific -. in =arehousing! super#isors can -e physically present to monitor =or' acti#ities c. contracts that are negotiated =ith unioni0ed =arehouse =or'ers increasingly contain performance5related standards d. to -e effecti#e! =or' rules must -e enforced e. all of the a-o#e are true DeF p. 33%E 1%. is a de#ice used to monitor and control the actions ta'en -y a dri#er and hisher #ehicle. a. tachometer -. tachograph c. speedometer d. regulator D-F p. 33,E 1$. The t=o areas in logistics systems =here most energy costs occur are and . a. customer ser#iceF =arehousing
-. pac'agingF transportation c. materials handlingF pac'aging d. =arehousingF transportation DdF p. 33+E 1,. ith respect to the design of =arehouses! one suggestion for energy sa#ings is to ma'e sure that doc' doors are not placed on the side of a -uilding. a. north -. south c. east d. =est DaF p. 33+E 1). S'ylights and large =indo=s that incorporate solar energy can reduce energy usage in a =arehouse -et=een and >. a. 1%F 2% -. 3/F 4/ c. 4/F $/ d. %/F $% e. one of the a-o#e DcF p. 33+E 1+. Transportation accounts for appro@imately of all petroleum consumption in the 8nited States. a. three5?uarters -. t=o5thirds c. one5half d. one5third D-F p. 34/E 2/. hich of the follo=ing is not a fuel reduction option currently -eing pursued -y motor carriers< a. reducing #ehicle idling times -. implementing route optimi0ation systems c. Hoining fuel purchasing net=or's d. remo#ing paint from tractors and trailers e. all of the a-o#e are options DdF p. 34/E 21. hich of the follo=ing is not one of the three critical factors associated =ith the process of managing returned goods< a. =hy products are returned -. ho= many products are returned c. =hether returned goods should -e managed internally or outsourced to a third party d. ho= to optimi0e returned goods management D-F p. 341E
22. ith respect to product recalls! =hich agency does not engage in recalls< Instead! they are responsi-le only for causing the manufacturer to notify purchasers that a defect has -een disco#ered< a. the 6ederal Trade Commission -. the 6ood and rug dministration c. the Consumer &roduct Safety Commission d. the ational (igh=ay Traffic Safety dministration DdF p. 343E 23. hich 8.S. federal go#ernment agency does not ha#e authority o#er product recalls< a. 6ederal Trade Commission -. ational (igh=ay Traffic Safety dministration c. Consumer &roduct Safety Commission d. 6ood and rug dministration e. ll these agencies ha#e product recall authority DaF p. 343E
24. ll of the follo=ing are reasons =hy logisticians should -e concerned a-out theft e@cept: a. stolen products may reappear to compete =ith other products -. time and costs associated =ith theft aren;t al=ays co#ered -y insurance c. some organi0ations =ill a#oid locating their facilities in areas characteri0ed -y high crime rates d. theft can lead to stoc'outs in the distri-ution channel e. all of the a-o#e are reasons DeF p. 34%E 2%. The materials stolen in are usually for the employee;s o=n use. a. theft -. non5monetary compensation c. pilferage d. demurrage DcF p. 34%E 2$. hat is the primary difference -et=een pilferage and theft< a. there is no difference -et=een the t=o -. theft refers to stolen merchandise =orth more than R%// c. pilferage refers to stolen merchandise =orth more than R%//
d. pilferage in#ol#es a firm;s o=n employees! =hile theft in#ol#es efforts from outsiders e. none of the a-o#e DdF pp. 344534%E 2,. in#ol#es chartering an aged ship that is loaded =ith goods =orth more than the ship. fter setting sail! it ma'es an unscheduled stop! sells off the cargo to the highest -idder and e@changes the regular cre= for a scuttling cre=. a. Tramp shipping fraud -. ust -uc'et fraud c. espatch d. Lo=er order fraud D-F p. 34%E 2). hich country e@perienced the most pirate attac's in 2//%< a. Jra0il -. China c. Indonesia d. India DcF p. 34%E 2+. hat is #ie=ed as a -asic foundation for controlling theft< a. technology -. company policies c. sufficient organi0ational resources d. common sense DdF p. 34,E 3/. hich of the follo=ing statements is false< a. products at rest are particularly suscepti-le to theft -. security e@perts suggest that closed5circuit tele#ision and alarms are highly effecti#e in controlling pilferage c. electronic de#ices can -e used to pro#ide -uilding5related security functions d. there is #irtually no limit to the sophistication or cost of security de#ices that can -e used for -uilding security e. all of the a-o#e are true D-F pp. 34,534+E 31. Truc' leasing companies! in an effort to th=art truc' theft! no= etch #ehicle identification num-ers in up to different locations on each #ehicle. a. 4/ -. 3/ c. 2/ d. 1/ DaF p. 34+E
32. Transponders . a. allo= for prepayment of custom duties -. permit electronic su-mittal of international documentation c. can -e #alua-le for managing #ehicle security d. plan the routes of for'lift truc's DcF p. 34+E 33. T=o of the most important 8.S. go#ernment agencies incorporated into the epartment of (omeland Security =ere the Transportation Security gency and . a. epartment of Transportation -. 6ederal Maritime Commission c. Surface Transportation Joard d. Customs and Jorder &rotection DdF p. 3%1E 34. hich of the follo=ing is false< a. the Transportation Security dministration conducts passenger screening at 8.S. commercial airports -. the Transportation or'er Identification Credential is to contain -oth personal and -iometric data c. the Transportation Security dministration is in#ol#ed in the Container Security Initiati#e d. the Transportation or'er Identification Credential is not yet fully operational e. all of the a-o#e are true DcF pp. 3%153%2E 3%. ll of the follo=ing are potential -enefits to the Customs Trade &artnership gainst Terrorism e@cept: a. lo=er costs -. fe=er security inspections c. reduction in cargo theft d. faster processing time through Customs e. all of the a-o#e are potential -enefits DaF p. 3%2E True56alse 7uestions 1. Control refers to measurement that ensures conformity =ith an organi0ation;s policies! procedures! or standards. DTrue! p. 32+E 2. "ne difference -et=een accounting and logistics is that accountants count in#entory in dollars =hereas the logistics staff counts in#entory in terms of stoc'5'eeping units. DTrueF p. 33/E 3. Standard costs are synonymous =ith a#erage costs. D6alseF p. 331E
4. If the standard cost of handling a pallet is R1.2% and 4// pallets are handled in a particular time period! then R%// should -e -udgeted for handling pallets. DTrueF p. 331E %. 6ully allocated costing has -ecome popular in logistics in recent years. D6alseF p. 331E $. ith acti#ity5-ased costing! cost o-Hects consume acti#ities! and acti#ities consume resources. DTrueF p. 331E ,. etermining a cost for each acti#ity is the first step in acti#ity5-ased costing. D6alseF p. 331E ). &roducti#ity can -e defined as the amount of output di#ided -y the amount of input. DTrueF p. 332E +. &roducti#ity efforts in logistics are often directed at increasing the amount of output =hile holding input constant. DTrueF p. 333E 1/. Short5inter#al scheduling is a techni?ue that ma@imi0es the use of a#aila-le doc' space. D6alseF p. 333E 11. In an effort to impro#e =or'er performance! many super#isors use a three5part approach consisting of peer re#ie=! feed-ac'! and positi#e reinforcement. D6alseF p. 33%E 12. The most important function of =or' rules is to protect management from =or'er grie#ances. D6alseF p. 33%E 13. 8nion =or' rules are often #ery specific in the sense that Ho- descriptions spell out the responsi-ilities associated =ith a particular Ho-. DTrueF p. 33% E 14. Contracts that are negotiated =ith unioni0ed =arehouse =or'ers increasingly contain performance5 related standards. DTrueF p. 33%E 1%. s a general rule! the same types of super#ision can -e used for -oth =arehouse =or'ers and truc' dri#ers. D6alseF . 33%E 1$. The tachograph is a recording instrument that produces a continuous! timed record of the truc'! its speed! and its engine speed. DTrueF p. 33,E 1,. ireless communications! glo-al positioning systems! and graphical information systems offer tremendous opportunities to impro#e dri#er producti#ity. DTrueF p. 33)E 1). arehousing and pac'aging are the t=o areas in logistics systems =here most energy costs occur. D6alseF p. 33+E 1+. ith respect to energy controls! =arehousing design suggests that doc' doors should not -e placed on the =est side of a -uilding. D6alseF p. 33+E 2/. oof color is often o#erloo'ed as an area for =arehousing energy control. DTrueF p. 33+E 21. Transportation accounts for a-out one5half of all petroleum consumption in the 8nited States. D6alseF p. 34/E
22. num-er of companies are li'ely to reconfigure their modal allocations gi#en that R$/ per -arrel oil prices are proHected to -e the norm through 2/12. DTrueF p. 34/E 23. Many third5party logistics companies offer e@pertise in returned goods management. D6alseF p. 342E 24. Some types of product recalls are more serious than others. DTrueF p. 342E 2%. The main o-Hecti#e of the Consumer &roduct Safety Commission is to -an the sale of products deemed ha0ardous. DTrueF p. 343E 2$. It is a good idea for companies to ha#e practice! or Afire drill!B recalls to determine their speed! degree of co#erage! and effecti#eness. DTrueF p. 344E 2,. &roduct recalls may offer an e@cellent opportunity for ser#ice reco#ery. DTrueF p. 344E 2). s a general rule! logisticians should not -e concerned a-out theft -ecause many organi0ations carry insurance to compensate themsel#es in case of theft. D6alseF p. 34%E 2+. &ilferage refers to stolen goods #alued at more than R1!///. D6alseF p. 34%E 3/. @perts recommend that the -est pilferage policy should -e -ased on 0ero tolerance. DTrueF p. 34%E 31. Tramp shipping fraud in#ol#es chartering a ship =ith cargo =orth more than the ship itself! di#erting the cargo! and scuttling the ship. D6alseF p. 34%E 32. &iracy is still a threat in some shipping lanes. DTrueF p. 34%E 33. 9oods at rest De.g.! sitting in =arehousesE are more #ulnera-le to theft than goods in motion. DTrueF p. 34$E 34. Security e@perts suggest that closed5circuit tele#ision and alarms are highly effecti#e in controlling pilferage. D6alseF p. 34)E 3%. Oehicle security is a particularly acute issue in the truc'ing industry -ecause theft in#ol#es 1E the #ehicle itself and 2E the #ehicle;s contents. DTrueF p.34+ E 3$. Transponders can -e used to impro#e -uilding security. D6alseF p. 34+E 3,. Information security is the most important technology issue that companies face today. DTrueF p. 34+E 3). 6rom a logistics perspecti#e! the Transportation Security dministration and the epartment of Transportation are t=o of the most important go#ernment entities that =ere incorporated into the epartment of (omeland Security. D6alseF p. 3%1E 3+. Customs and Jorder &rotection is responsi-le for securing 8.S. -orders to protect the merican people and the 8.S. economy. DTrueF p. 3%1E
4/. Companies that participate in the Customs Trade &artnership gainst Terrorism are e@empt from all import tariffs and all import ?uotas. D6alseF p. 3%2E
&T IO CS S"L8TI"S CS 1351: JT 6U C"M& 7uestion 1: hen comparing performance during the first fi#e months of 2//4 =ith performance in 2//3! =hich =arehouse sho=s the most impro#ement< St. Louis is the only one sho=ing any impro#ement! using cost per unit shipped as the performance criterion. The cost for the first fi#e months of 2//3 =as R+.+, and for the first fi#e months of 2//4! it fell to R+./,. 7uestion 2: hen comparing performance during the first fi#e months of 2//4 =ith performance in 2//3! =hich =arehouse sho=s the poorest change in performance< The =orst change is the company;s o=n =arehouse Dlocated in 6argoE! =here costs per unit shipped increased 31>. mong the pu-lic =arehouses used! en#er =as the =orst in terms of cost per unit handled. It is also the most e@pensi#e pu-lic =arehouse that Jrant uses. 7uestion 3: hen comparisons are made among all eight =arehouses! =hich one do you thin' does the -est Ho- for the Jrant Company< hat criteria did you use< hy< 8sing the cost per unit handled criterion! St. Louis does the -est Ho-! closely follo=ed -y Chicago. 7uestion 4: P.7. is aggressi#e and is going to recommend that his father cancel the contract =ith one of the =arehouses and gi#e that -usiness to a competing =arehouse in the same city. P.7. feels that =hen =ord of this gets around! the other =arehouses they use =ill Ashape up.B hich of the se#en should P.7. recommend -e dropped< hy< en#er has the lo=est #olume and highest unit costs among all the pu-lic =arehouses used. In addition! it had -een closed -y a stri'e =hich must ha#e incon#enienced the Jrant Company. It may -e that the =arehouse =or'ers; unions are strong in the en#er area. P.7. should pro-a-ly chec' out rates and producti#ity measures of other en#er =arehouses -efore deciding to drop its current =arehouse there. 7uestion %: The year 2//4 is nearly half o#er. P.7. is told to determine ho= much the firm is li'ely to spend for =arehousing at each of the eight =arehouses for the last si@ months of 2//4. o his =or' for him. There is not enough information to do a #ery precise forecast. P.7. assumes that the proportion of costs occurring during the first fi#e months of 2//3 should -e in the same proportion in 2//4.
arehouse location
D1E > 2//3 costs occurring in first fi#e months
D2E D3E ctual costs for &roHected total first fi#e costs in 2//4 months of 2//4 DRE DRE
D4E &roHected costs in the last si@ months of 2//4 DRE
tlanta Joston Chicago en#er 6argo Los ngeles &ortland St. Louis
22.)) 44.// %3.43 3%.// %4.// ,2.2/ 4+.3/ 44.)/
4/!22) 2+!41$ 141!222 14!+// +!$/% +3!2)/ 42!$1$ 1+!1+1
1,%!)22 $$!))% 2$4!312 42!%,1 1,!,), 12+!1+, )$!442 42!)3,
11$!2/4 32!/)% 1/%!%%$ 23!,14 ,!/12 3/!,)1 3,!%%+ 2/!2
%$The proHected costs in 2//4 Dcolumn 3E are calculated -y di#iding the actual costs for the first fi#e months of 2//4 Dcolumn 2E -y the percent of 2//3 costs that occurred in the first fi#e months Dcolumn 1E. 6or e@ample! tlanta;s actual 2//4 costs of R4/!22) di#ided -y 2//3;s 22.))> yields proHected 2//4 costs of appro@imately R1,%!)22. The proHected costs in the last si@ months of 2//4 Dcolumn 4E are calculated -y su-tracting the actual costs for the first fi#e months of 2//4 Dcolumn 2E from 2//4;s proHected total costs Dcolumn 3E. This gi#es us the proHected costs for the last se#en months of 2//4. (o=e#er! =e are only interested in the last si@ months of 2//4! so this num-er is multiplied -y $,! or .)%,. Continuing =ith tlanta! 2//4;s proHected total costs of R1,%!)22 minus the first fi#e months; actual costs of R4/!22) e?uals R13%!3+4. Multiplying this -y $, yields proHected si@ months; costs of appro@imately R11$!2/4. 7uestion $: hen comparing 2//3 figures =ith the 2//4 figures sho=n in @hi-it 135! the amount -udgeted for each =arehouse in 2//4 =as greater than actual 2//3 costs. (o= much of the increase is caused -y increased #olume of -usiness Dunits shippedE and ho= much -y inflation< There are se#eral =ays to approach this ?uestion. "ne in#ol#es calculating the #olume difference and inflation difference for each =arehouse! as follo=s: Oolume difference V 2//3 unit costs @ D2//4 units shipped 2//3 units shippedE Inflation difference V 2//4 units shipped @ D2//4 unit costs 2//3 unit costsE 6or e@ample! tlanta;s #olume and inflation differences are: Oolume difference: R).++ @ D1)!/// 1,!431E V R).++ @ %$+ V R%!11% Inflation difference: 1)!/// @ DR+.+, 5 R).++E V 1)!/// @ R.+) V R1,!$4/ 7uestion ,: &repare the firm;s 2//% =arehousing -udget! sho=ing for each =arehouse the anticipated num-er of units to -e shipped and the costs. gain! this can -e done in se#eral =ays. "ne is to assume that the 2//4 to 2//% increases =ill -e e@actly the same amount as the 2//3 to 2//4 increases D=ith units shipped rounded to the nearest hundred! and costs rounded to the nearest R%//E. This =ould yield the follo=ing results:
ifferences in units shipped arehouse -= 2//3 location and 2//4 tlanta $// Joston 3// Chicago 1!+// en#er 1// 6argo / Los %// ngeles &ortland ,// St. Louis 2!1//
8nits shipped in 2//4 1)!/// ,!2// 3/!/// 3!1// 2!/// 1,!/// +!/// )!///
ifference in &roHected =arehouse &roHected units costs -= arehouse =arehouse shipped in 2//3 and costs in costs in 2//% 2//4 DRE 2//4 DRE 2//% DRE 1)!$// 21!/// 1,)!/// 1++!/// ,!%// +!%// ,3!/// )2!%// 31!+// 3)!%// 2)%!/// 323!%// 3!2// 3!/// 31!/// 34!/// 2!/// %// 1,!/// 1,!%// 1,!%// 24!/// 1,$!/// 2//!/// +!,// 1/!1//
12!/// 4!///
)%!/// %$!///
+,!/// $/!///
nother method =ould use percentage changes. 7uestion ): hile attending classes at the uni#ersity! P.7. had learned of logistics partnerships. Should Jrant 6ree0er Company attempt to enter into a partnership relationship =ith these =arehouses< If so! =hat approach should it use< ssuming that a partnership approach =as to -e used! Jrant =ould ha#e to thin' of some sort of sharing of potential ris's and profits. "ffhand! the case does not pro#ide much information to go on! other than cost containment or reduction is an issue.
CS 1352: S&"T MTS C"M& 7uestion 1: (o= should 6osdic' respond to the immediate situation< 6osdic' is on the spot and must respond immediately. &ro-a-ly the -est thing for him to do is refuse the sand=ich! indicate his surprise atGand clear disappro#al ofGthe pilferage! and continue on his =ay to the restaurant. 7uestion 2: hat controls! of the types discussed in this chapter! might ha#e -een used -y ed Spot Mar'ets to reduce or eliminate the pro-lems discussed in the case< Closer controls on =or'er producti#ity and on pilferage =ould ha#e helped. 7uestion 3: hat longer5range steps should 6osdic' ta'e to control the operations of the &ro#idence distri-ution center< (e should implement a management style =here-y he! rather than Jigelo=! determines the pace of the =arehouse =or'. (o=e#er! this is much easier said than done! particularly -ecause of Jigelo=;s almost o#erpo=ering influence. 7uestion 4: hat longer5range steps should 6osdic' ta'e to impro#e the &ro#idence distri-ution center;s producti#ity< 6osdic' should first consult =ith aster to determine =hether the company is going to 'eep or dump Jigelo=. Jigelo= appears to hold the 'ey to the =arehouse =or'force;s producti#ity and fe= schemes to increase output =ill succeed =ithout his -lessings. 6osdic' and aster might also attempt to incorporate producti#ity measures into the distri-ution center;s ne@t la-or contract. 7uestion %: hat longer5range steps can 6osdic' ta'e to reduce the distri-ution center;s high rate of shrin'age< gain! after consulting =ith aster! a decision must -e reached as to ho= ?uic'ly and ho= forcefully the company is going to end the AfreeB lunch program! -ecause that appears to -e a main cause of the shrin'age. 6osdic' and aster might also incorporate a shrin'age target into the ne@t la-or contract and perhaps lin' performance -onuses to this target. 7uestion $: ssume that 6osdic' decides that the practice of free lunches from the open cases of goods must -e stopped. e#elop and present arguments he should gi#e in a meeting =ith a union shop ste=ard. (e might say that the practice is a form of stealing and clearly unaccepta-le to the company. If there are -eha#ior clauses in the union contract! 6osdic' might in#o'e them. (e could emphasi0e that the pilferage has made &ro#idence a high cost =arehouse and if these high costs are not impro#ed =ithin a certain time frame! then the facility could -e shut do=n. 7uestion ,: DThis is a continuation of ?uestion $.E ssume! instead! that you are the union shop ste=ard. e#elop and present your argument that the free lunches represent a long5standing employee
-enefit enHoyed -y the distri-ution center;s employees! and that management;s attempt to stop them is a -reach of an un=ritten contract and =ill -e resisted. ou might argue that management has 'no=n a-out the practice for a long time and! -y not eliminating it! has tacitly accepted it. ou could also argue that the practice is not much different from management;s use of company phones and company cars for personal acti#ities. 7uestion ): Much of the situation descri-ed in the case seems to re#ol#e around the personality of T.. Jigelo=. (o= should he -e treated< hy< This ?uestion may generate a =ide #ariety of responses and the discussion can -ecome ?uite intense. Some students may argue that Jigelo= should -e fired. "thers may argue that he should see' assistance for his apparent su-stance a-use pro-lem! possi-ly through an mployee ssistance &rogram Dif ed Spot has such a programE. Still others may argue for a Adi#ide and con?uerB approach in the sense that Jigelo=! despite his ina-ility to count and spotty attendance! should -e made some type of super#isor -ecause of his a-ility to get the =arehouse employees to =or'. Such an approach could turn Jigelo= into an AenemyB of the hourly =or'ers! in that he =ould no longer -e one of them. &T II 5"65C(&T 78STI"S C(&T 14: "9IUI9 LUI9 L"9ISTICS SSTMS 1. iscuss se#eral issues that influence the organi0ation of logistics acti#ities =ithin a firm. The organi0ation of logistics acti#ities =ithin a firm depends on a num-er of factors! including the num-er and location of customers! as =ell as an organi0ation;s si0e. The num-er and location of customers might influence =hether a firm adopts a centrali0ed or decentrali0ed logistics organi0ation. n organi0ation;s si0e might influence the organi0ing of logistics acti#ities in the sense that there are limitations in the degree of speciali0ation of managerial talent in small firms. 2. Compare and contrast the fragmented and unified logistical organi0ational structures. In a fragmented logistics structure! logistics acti#ities are managed in multiple departments throughout an organi0ation. In such a structure! it is possi-le for the #arious logistics acti#ities to -e managed in t=o! three! four! or more departments. Jecause effecti#e and efficient logistics is predicated on a high degree of coordination among logistics acti#ities! such coordination can -ecome difficult =hen the logistics acti#ities are spread throughout an organi0ation. In a unified logistics structure! multiple logistics acti#ities are com-ined into! and managed as! a single department. The unified structure can -e further classified -ased on the num-er and type of acti#ities assigned to the department. egardless of ho= many! or =hat type! of logistics acti#ities are managed! the unified logistics structure should -e -etter positioned than the fragmented structure to achie#e coordination across the #arious acti#ities. 3. hat are the differences -et=een a centrali0ed and a decentrali0ed logistics department<
centrali0ed logistics organi0ation implies that the corporation maintains a single logistics department that administers the related acti#ities for the entire company from the home office. decentrali0ed logistics organi0ation means that logistics5related decisions are made separately at the di#isional or product group le#el and often in different geographic regions. There are ad#antages to -oth approaches! =ith a primary ad#antage of centrali0ation -eing its relati#e efficiency! =hereas a primary ad#antage of decentrali0ation is its customer responsi#eness. Centrali0ation allo=s an organi0ation to ta'e ad#antage of the cost sa#ings that can arise from #olume5creating opportunities. Many glo-al firms need to decentrali0e operations -ecause of geographic and time differences from the home office. 4. iscuss the process! mar'et! and information logistics strategies. In a process strategy! traditional logistics acti#ities are managed as a #alue5added system. mphasis is on achie#ing ma@imum efficiency! the primary goal is to cut costs! and the focus is on rationali0ing comple@ acti#ities into an efficient #alue5added system. ith a mar'et strategy! a limited num-er of traditional logistics acti#ities are managed across -usiness units. mphasis is on achie#ing synergy from coordinated physical distri-ution! the primary goal is to ser#e common customers from #arious -usiness units! and the focus is on reducing the comple@ity faced -y customers. In an information DchannelE strategy! a di#erse group of logistics acti#ities! together =ith other acti#ities! are managed as a channel system. mphasis is on the coordination and control of dealer and distri-ution net=or's! and the focus is on achie#ing interorgani0ational coordination and colla-oration through logistics and information management. %. escri-e the hierarchical and matri@ organi0ational design. (ierarchical! or functional! organi0ational design has its foundations in the command5and5 control military organi0ation! =here decision ma'ing and communication often follo= a top5 do=n flo=. ach employee reports to one! and only one! super#isor. In a matri@ design! one employee might ha#e cross5functional responsi-ilities. 6or e@ample! the manager of small appliances at one organi0ation might report to logistics! mar'eting! and production e@ecuti#es! and the small appliance manager =ould ha#e responsi-ility for the production! mar'eting! and logistics of small appliances. $. 6rom a logistics perspecti#e! ho= is net=or' organi0ational design manifested in terms of rele#ancy! responsi#eness! and fle@i-ility< ele#ancy! =hich refers to satisfying current and emerging customer needs! can -e facilitated -y de#eloping mutually -eneficial relationships =ith 'ey customersF at a minimum! these relationships should pro#ide an understanding of customer needs and =ants. esponsi#eness reflects the degree to =hich an organi0ation can accommodate uni?ue or unplanned customer re?uestsF responsi#eness can -e achie#ed =hen the appropriate decision ma'ers are pro#ided =ith -oth rele#ant information and the authority to address uni?ue or unplanned re?uests. 6le@i-ility! =hich can -e defined as an organi0ation;s a-ility to address une@pected operational situations! is predicated on a#oiding early commitment to an irre#ersi-le course of action. "ne e@ample of logistics fle@i-ility =ould -e the postponement of assem-ly! la-eling! and so on until e@act customer re?uirements are 'no=n.
,. efine logistics systems analysis. hy is friction inherent =hen performing logistics systems analysis< Logistics systems analysis refers to the orderly and planned o-ser#ation of one or more segments in the logistics net=or' or supply chain to determine ho= =ell each segment and the entire system function. 6riction is inherent =hen performing logistics system analysis! in part -ecause of different #ie=points and perspecti#es. Top management might #ie= systems analysis as an opportunity to identify policies and practices that could impro#e logistical effecti#eness and efficiency. "perating personnel might #ie= systems analysis as an e@cuse to modify e@isting =or' rules or to reduce the hours or num-ers of =or'ers needed. ). hat is industry systems analysis< hat is its #alue< Industry systems analysis is performed -y a trade association! professional organi0ation! or other entity on an industry=ide -asis. The participating firms can use the findings to determine ho= their performance compares to the industry as a =hole or to #arious other industry segments. +. hat is partial systems analysis< hy is it used< &artial systems analysis refers to analysis that is relati#ely narro= in scope! =ith the focus loo'ing at a single aspect of logistics! such as a time5and5motion study of indi#iduals =ho handle incoming freight at a recei#ing doc'. &artial systems analysis is used -ecause it contri-utes to=ard an understanding of ho= an entire system functions. In addition! it is difficult to measure the o#erall performance of a system =ithout measuring and understanding the performance of indi#idual components. 1/. iscuss customer profita-ility analysis. Customer profita-ility analysis DC&E refers to the allocation of re#enues and costs to customer segments or indi#idual customers to calculate the profita-ility of the segments or customers. C& suggests that different customers DsegmentsE consume differing amounts and types of resources and has -een facilitated -y acti#ity5-ased costing. Customer profita-ility analysis e@plicitly recogni0es that all customers are not the same and that some customers are more #alua-le than others to an organi0ation. C& can -e used to identify different groups of customers from a profita-ility perspecti#e and such a grouping can -etter help in allocating organi0ational resources. 11. @plain ho= =arehousing producti#ity can -e impro#ed =ithout significant in#estment in technology! or mechani0ed! or automated e?uipment. "ne suggestion for impro#ing =arehousing producti#ity in#ol#es a re#ie= of e@isting procedures and practices to identify the tas's that are creating the largest inefficiencies and then de#eloping methods to reduce or eliminate the efficiencies =ithout adding to or upgrading present technology or e?uipment. "rgani0ations can also e@amine their facility layoutsF long hori0ontal runs and fre?uent -ac'trac'ing could -e the symptoms of layout pro-lems. Something as -asic as adding cross aisles could reduce the length of hori0ontal runs as =ell as the length of -ac'trac'ing.
12. (o= ha#e ad#ances in information technology facilitated transportation cost analysis< Some truc'ing companies can e@amine in-ound or out-ound deli#eries for a representati#e period of time using data gathered from a customer;s paid freight -ills. This can allo= -oth the carrier and the customer to determine =hether indi#idual shipments or shipment patterns can -e impro#ed. It is also possi-le to conduct sensiti#ity analysis to determine the transportation costs for #arious le#els of transportation ser#ice. 13. @plain the compounding nature of pac'aging inefficiency. hat cost sa#ings and ser#ice impro#ements can occur =ith -etter pac'aging efficiency< The -uilding -loc's concept is useful for analy0ing pac'aging inefficiency in the sense that pac'aging inefficiency tends to -e compounded as one mo#es from a #ery small unit to a smaller unit! to a small unit! and so on. The te@t pro#ided an e@ample of inefficient case and pallet utili0ation that resulted in less than 2%> of a#aila-le pallet space -eing occupied -y actual product. The -oo' also cited an e@ample of a company =here impro#ed pac'aging efficiency has resulted in lo=er transportation and =arehousing costs as =ell as a reduction in damaged product. 14. (o= might goals! o-Hecti#es! and constraints facilitate decisions a-out ho= to conduct a comprehensi#e systems analysis< Systems goals must -e realistic and systems o-Hecti#es must -e achie#a-le =ithin the conte@t of a firm;s operational scope. Monetary constraints might mitigate against the use of outside consultants D-ecause of the e@penseE! =hereas time constraints might argue for a small Din terms of the num-er of peopleE analysis team. 1%. iscuss ho= the channels audit might identify the need for distri-ution or channel rearrangement. ith respect to distri-ution rearrangement! the -oo' discusses the recorded music industry! =here customers historically -ought physical products such as record al-ums! cassettes! or compact discs that =ere distri-uted through retail outlets such as music stores or mass merchandisers. Today! -y contrast! technological ad#ances allo= for digital distri-ution of songs! meaning that there is less demand for prerecorded cassettes or compact discsGand less need for the respecti#e retailers. s for channel rearrangement! the Internet offers some organi0ations the option of a direct distri-ution channel Di.e.! from producer to consumer =ith no intermediaries in -et=eenE. The logistics associated =ith direct distri-ution are different from the logistics associated =ith indirect distri-ution De.g.! the orders are smaller and less predicta-le =ith direct distri-utionE. 1$. hy should the competition audit identify -oth current and potential competitors< &otential competitors may present more formida-le challenges than do current competitors. The -oo' cites al5Mart as an e@ample -ecause its superior logistical capa-ility often causes tremendous uphea#al =hen it e@pands into product lines that ha#e -een dominated -y certain retailers. 6or instance! al5Mart is no= the =orld;s largest toy retailer and this has led to -an'ruptcies and restructurings among long5standing toy retailers.
1,. @plain =hy the facilities audit should consider the age and capacity of production plants and storage facilities. facility;s age can -e important to 'no= -ecause older facilities tend to reflect the pre#ailing engineering and technological =isdom at the time they =ere constructedGand it;s safe to say that there are ad#ances in engineering and technological 'no=ledge through time. Moreo#er! older facilities may not -e in compliance =ith contemporary health! safety! and en#ironmental regulations. facility;s capacity can -e e#aluated across dimensions such as its total capacity and percent of capacity -eing used. The percent of capacity -eing used pro#ides insights into the efficiency or inefficiency of capacity utili0ation in the sense that e@cessi#e unused capacity can -e ?uite costly to an organi0ation. 1). (o= can the product audit -e helpful in e#aluating decisions a-out adding ne= products or ne= product lines< The -oo' presents an e@ample in#ol#ing &rocter and 9am-le;s D&9E ac?uisition of 9illetteF this has allo=ed &9 to -roaden its product mi@ -y adding a num-er of personal care products that are largely targeted to males D&9;s personal care products tend to -e targeted to=ards femalesE. There appears to -e a great deal of synergy -et=een the t=o companies -ecause their products are distri-uted in the same channels! and the products ha#e similar production! pac'aging! handling! transportation! and =arehousing re?uirements.
1+. escri-e se#eral dimensions of the social responsi-ility audit. The -oo' presents si@ dimensions of the social responsi-ility auditGthe en#ironment! ethics! di#ersity! safety! philanthropy! and human rights. ny com-ination of these can -e descri-ed. In terms of the en#ironment! for e@ample! organi0ations might focus on reusing and recycling products! reducing the amount of pac'aging! impro#ing fuel efficiency! and reducing #arious types of pollution. 2/. ame the se#en types of comprehensi#e logistics systems audits that should -e performed. hich do you #ie= as the most important< The least important< hy< The se#en types of comprehensi#e audits that should -e performed are channels! competition! customer! facilities! product! social responsi-ility! and supplier audits. ny of the se#en might -e #ie=ed as the most or least important.
&T III KMITI" 78STI"S C(&T 14: "9IUI9 LUI9 L"9ISTICS SSTMS Multiple Choice 7uestions 1. and are the t=o -asic organi0ational structures associated =ith logistics. a. Centrali0edF hierarchical -. 6ragmentedF centrali0ed c. 6ragmentedF unified d. 8nifiedF hierarchical DcF p. 3$2E 2. In a logistics structure! logistics acti#ities are managed in multiple departments throughout an organi0ation. a. unified -. fragmented c. decentrali0ed d. matri@ D-F p. 3$2E 3. "ne pro-lem =ith a logistics structure is that -ecause logistics acti#ities are scattered throughout the firm! they li'ely remain su-ser#ient to the o-Hecti#es of the department in =hich they are housed. a. fragmented -. matri@ c. decentrali0ed d. hierarchical DaF p. 3$2E 4. In a logistics structure! multiple logistics acti#ities are com-ined into! and managed as! a single department. a. hierarchical -. centrali0ed c. matri@ d. unified DdF p. 3$2E %. logistics organi0ation implies that the corporation maintains a single logistics department that administers the related acti#ities for the entire company from the home office. a. hierarchical -. unified
c. centrali0ed d. command5and5control DcF p. 3$3E $. logistics organi0ation means that logistics5related decisions are made separately at the di#isional or product group le#el. a. fragmented -. decentrali0ed c. fle@i-le d. agile D-F p. 3$3E ,. primary ad#antage of logistics is its relati#e efficiency! =hereas a primary ad#antage of logistics is its customer responsi#eness. a. unifiedF fragmented -. unifiedF decentrali0ed c. fragmentedF centrali0ed d. centrali0edF decentrali0ed DdF p. 3$3E ). hich of the follo=ing is an ad#antage of a decentrali0ed logistics organi0ation< a. less e@pensi#e than a centrali0ed organi0ation -. good opportunities for freight consolidation c. can -e responsi#e to customer ser#ice re?uirements d. -etter control o#er company data DcF p. 3$3E +. hich of the follo=ing is an ad#antage of a centrali0ed logistics organi0ation< a. less e@pensi#e than a decentrali0ed organi0ation -. good opportunities for freight consolidation c. can -e responsi#e to customer ser#ice re?uirements d. easier to manage than a decentrali0ed organi0ation D-F p. 3$3E
1/. hich of the follo=ing is not one of the three strategic logistical orientations< a. centrali0ed -. mar'et c. information d. process DaF pp. 3$353$%E 11. In a strategy! traditional logistics acti#ities are managed as a #alue5added system.
a. process -. mar'et c. #alue chain d. information DaF p. 3$3E 12. ith a strategy! a limited num-er of traditional logistics acti#ities are managed across -usiness units. a. process -. lin'ing pin c. mar'et d. information DcF p. 3$%E 13. In aDnE strategy! a di#erse group of logistics acti#ities! together =ith other acti#ities! are managed as a channel system. a. supply chain -. mar'et c. process d. information DdF p.3$% E 14. organi0ational design has its foundations in the command5and5control military operation! =here decision5ma'ing and communication often follo= a top5do=n flo=. a. Centrali0ed -. 8nified c. Matri@ d. (ierarchical DdF p. 3$%E 1%. organi0ational design attempts to create an organi0ation that is responsi#e to the parameters of the contemporary -usiness en#ironment. a. matri@ -. net=or' c. decentrali0ed d. unified D-F p. 3$%E 1$. 'ey attri-ute of net=or' organi0ational design is a shift from to . a. functionF process -. centrali0ationF decentrali0ation c. processF function
d. decentrali0ationF centrali0ation DaF p. 3$$E 1,. refers to satisfying current and emerging customer needs. a. esponsi#eness -. 6le@i-ility c. ele#ancy d. ccommodation DcF p. 3$$E 1). can -e defined as an organi0ation;s a-ility to address une@pected operational situations. a. ele#ancy -. 6le@i-ility c. ccommodation d. esponsi#eness D-F p. 3$$E 1+. The orderly and planned o-ser#ation of one or more segments in the logistics net=or' or supply chain in order to determine ho= =ell each segment and the entire system function refers to . a. trade5offs -. supply chain management c. systems analysis d. optimum cost relia-ility analysis DcF p. 3$$E
2/. Systems analysis can -est -e thought of as: a. the usage of operations research and other sophisticated ?uantitati#e techni?ues to determine the optimum synergistic tendencies of logistics #ersus other functional areas such as mar'eting and production -. an orderly and planned o-ser#ation of one or more segments in the logistics net=or' to determine ho= =ell each segment and the entire system is functioning c. the use of outside consultants to determine the pro-lem areas =ithin a firm d. an analysis of ho= =ell the #arious functional areas such as mar'eting! production! and logistics =or' together to=ard achie#ing company goals D-F p. 3$$E 21. "utside consultants are sometimes employed in systems analysis -ecause: a. -. c. d.
they can -e more o-Hecti#e they are more cost effecti#e than company employees they are more 'no=ledgea-le a-out the firm -eing studied they are more 'no=ledgea-le a-out operations research and other sophisticated ?uantitati#e techni?ues
DaF p. 3$)E 22. analysis is performed -y a trade association! professional organi0ation! or other organi0ation on an industry=ide -asis. a. Macro industrial -. &eer supported c. Industry systems d. Sponsored DcF p. 3$)E 23. n ad#antage of partial systems analysis is that . a. it can -e completed -y current company employees! =ithout the use of outside consultants -. it is often not possi-le to do a total system analysis! and thus the only feasi-le alternati#e is partial systems analysis c. it can often -e completed =ithout using sophisticated ?uantitati#e techni?ues d. it almost al=ays significantly increases the effecti#eness of the order management function D-F p. 3$)E
24. refers to the allocation of re#enues and costs to customer segments or indi#idual customers to calculate the profita-ility of the segments or customers. a. Customer profita-ility analysis -. Tailored logistics c. irect customer contri-ution margin d. Customer relationship management DaF p. 3$)E 2%. Customer &rofita-ility nalysis DC&E has -een facilitated -y the acceptance of: a. 9enerally ccepted ccounting &rinciples -. Oendor5managed in#entory c. Supply chain management d. cti#ity5-ased costing DdF p. 3$+E 2$. hich of the follo=ing is not a potential measure of =arehousing producti#ity< a. a#erage =arehouse capacity used -. pallets shipped per person c. for'lift capacity used d. cases shipped per person e. all are measures of =arehousing producti#ity DeF p. 3$+E
2,. ecent =arehousing industry statistics indicate a median of cases D=ithin fi#eE shipped per hour. a. 1%/ -. 12% c. 1// d. ,% DcF p. 3$+E 2). is pursuing a Aemi@B distri-ution strategy that strongly encourages its #endors to =or' =ith logistics ser#ice pro#iders to consolidate less5than5truc'load shipments into truc'load shipments. a. (e=lett5&ac'ard -. &rocter 9am-le c. Target d. al5Mart DdF p. 3$+E 2+. hat has -een descri-ed as the last frontier of logistics sa#ings opportunities< a. materials handling practices -. pac'aging inefficiencies c. in#entory turno#er d. =arehousing producti#ity e. none of the a-o#e D-F p. 3,1E 3/. ll of the follo=ing are one type of comprehensi#e audit that should -e performed in logistics systems analysis! e@cept: a. competitor -. supplier c. channels d. product e. all are audits that should -e performed DeF p. 3,3E 31. isintermediation refers to: a. the remo#al of channel le#els -. a lac' of coordination among channel mem-ers c. a -rea'do=n in la-or negotiations d. a supply chain disruption DaF p. 3,3E 32. The information re?uired for the audit is generally not a#aila-le =ithin a company;s o=n records.
a. product -. competition c. facilities d. channels D-F p. 3,4E 33. hich of the follo=ing statements a-out the facilities audit is false< a. facility age should -e considered -. changing trade patterns necessitate periodic analysis of facility location c. a facility;s capacity can -e e#aluated across dimensions such as total capacity and percent of capacity -eing used d. facility layout is the most important configuration consideration e. all the statements are true DdF p. 3,%E 34. hich of the follo=ing is not rele#ant to a supplier audit< a. assessment of supplier ?uality -. supplier costs c. the num-er of suppliers d. the typeDsE of suppliers e. all are rele#ant to a supplier audit DeF pp. 3,$53,, E 3%. fter completing the #arious audits associated =ith comprehensi#e systems analysis! the ne@t step is to: a. =rite a report and present it to top management -. e@amine and analy0e the collected data c. redesign the logistics system d. conduct partial systems analysis D-F p. 3,,E True56alse 7uestions 1. The organi0ation of logistics acti#ities =ithin a firm depends on a num-er of factors! including the num-er and location of customers and an organi0ation;s si0e. DTrueF p. 3$1 E 2. In a decentrali0ed logistics structure! logistics acti#ities are managed in multiple departments throughout an organi0ation. D6alseF p. 3$2E 3. "ne pro-lem =ith a fragmented logistics structure is that -ecause logistics acti#ities are scattered throughout the firm! they li'ely remain su-ser#ient to the o-Hecti#es of the department in =hich they are housed. DTrueF p. 3$2E
4. In a unified logistics structure! multiple logistics acti#ities are com-ined into! and managed as! a single department. DTrueF p. 3$2E %. Leading edge organi0ations are more li'ely to use a unified! as opposed to fragmented! logistics structure. DTrueF p. 3$2E $. centrali0ed logistics organi0ation generally results in -etter customer responsi#eness than a decentrali0ed organi0ation. D6alseF p. 3$3E ,. Most 6ortune %// companies employ a chief logistics officer DCL"E. D6alseF p. 3$3E ). The primary goal in a mar'et strategy is to cut costs. D6alseF p. 3$3E +. In an information strategy! a di#erse group of logistics acti#ities! together =ith other acti#ities! are managed as a channel system. DTrueF p. 3$%E 1/. The dominant contemporary emphasis in logistics in#ol#es ma@imi0ing efficiency! =hich is associated =ith a process strategy. DTrueF p. 3$%E 11. Societal changes are relati#ely easy to accommodate in a hierarchical! or functional! organi0ational design. D6alseF p. 3$%E 12. matri@ organi0ational design can -e #ery responsi#e to customer re?uirements. DTrueF p. 3$%E 13. 6rom a logistics perspecti#e! a net=or' organi0ational design in logistics is manifested in terms of rele#ancy! responsi#eness! and fle@i-ility. DTrueF p. 3$$E 14. esponsi#eness refers to satisfying current and emerging customer needs. D6alseF p. 3$$E 1%. The postponement of product assem-ly and la-eling until e@act customer re?uirements are 'no=n is an e@ample of responsi#eness. D6alseF p. 3$$E 1$. Systems analysis refers to the orderly and planned o-ser#ations of one or more segments in the logistics net=or' or supply chain in order to determine ho= =ell each segment and the entire system function. DTrueF p. 3$$E 1,. 6riction is inherent in any attempt to analy0e and redesign a supply chain. DTrueF p. 3$$E 1). Some firms prefer to use outside consultants to conduct logistics systems analysis! in part -ecause consultants can -e more o-Hecti#e than internal employees. DTrueF p. 3$)E 1+. &eer5supported analysis is generally performed -y a trade association. D6alseF p. 3$)E 2/. &artial systems analysis can -e used to impro#e an entire system. D6alseF p. 3$)E 21. Customer profita-ility analysis is one type of partial systems analysis. DTrueF p. 3$)E 22. Customer profita-ility analysis has -een facilitated -y the acceptance of #endor5managed in#entory. D6alseF p. 3$+E
23. Customer profita-ility analysis recogni0es that some customers are more #alua-le than others to an organi0ation. DTrueF p. 3$+E 24. Increases in =arehousing producti#ity generally are not possi-le =ithout significant in#estment in technology! or mechani0ed or automated e?uipment. D6alseF p. 3$+E 2%. Transportation cost analysis has tended to focus more on in-ound! rather than out-ound! freight costs. D6alseF p. 3,/E 2$. al5Mart is pursuing a Aemi@B distri-ution strategy that strongly encourages its #endors to =or' =ith logistics ser#ice pro#iders to consolidate less5than5truc'load shipments into truc'load shipments. DTrueF p. 3,/E 2,. arehousing producti#ity has -een descri-ed as the last frontier of logistics sa#ings opportunities. D6alseF p. 3,1E 2). System constraints in#ol#e factors in the system that cannot -e changed for #arious reasons. DTrueF p. 3,2E 2+. Channel audits are used today to determine =hether some channels can -e shortened. DTrueF p. 3,3E 3/. isintermediation refers to a ?uality management techni?ue that is used -y =orld5class logistics firms. D6alseF p. 3,3E 31. The information for a competition audit is generally not a#aila-le =ithin a company;s o=n data-ase or records. DTrueF p. 3,4E 32. The competition audit should focus more hea#ily on current! rather than potential! competitors. D6alseF p. 3,4E 33. The customer audit pro#ides a 'ey input for systems analysis -ecause! in the end! each system is designed to satisfy the needs and re?uirements of a firm;s customers. DTrueF p. 3,%E 34. facilities audit =ould not include e#aluations of =or' cre=s or performance ratings of managers or super#isors. D6alseF p. 3,%E 3%. Changing trade patterns necessitate periodic analysis of the location of an organi0ation;s production plants and storage facilities. DTrueF p. 3,%E 3$. The information re?uired for a product audit is generally not a#aila-le =ithin a company;s o=n records. D6alseF p. 3,$E 3,. The rele#ant dimensions for a social responsi-ility audit are generally similar across the supply chains of different industries. D6alseF p. 3,$E 3). The supplier audit e#aluates an organi0ation;s suppliers of ra= materials! component parts! and professional ser#ices. DTrueF p. 3,$E
3+. fter completing the #arious audits associated =ith comprehensi#e systems analysis! the ne@t step is to =rite a report and present it to top management. D6alseF p. 3,,E 4/. lthough comprehensi#e systems analysis is concerned =ith logistical effecti#eness and efficiency! it is rare that a logistics system is completely redesigned at one time. DTrueF p. 3,,E
&T IO CS S"L8TI"S CS 1451: C"L8MJI L8MJ &"8CTS C"M& 7uestion 1: ra= a ne= organi0ation for Colum-ia Lum-er &roducts Company DCL&CE that you feel o#ercomes -est the directors; criticisms of CL&C;s present DPanuary 31! 1++$E organi0ation. Indicate the geographic location of all operations sho=n on the ne= chart. @plain =hy you esta-lished the organi0ation chart the =ay you did. There is no single solution. Oarious ans=ers can -e compared. 7uestion 2: ssume that the firm should -e reorgani0ed in a manner that emphasi0es sales and mar'eting. This =ould include a physical distri-ution system! =hich =ould support the mar'eting effort. ra= an organi0ation chart that you thin' =ould accomplish this aim. Indicate the geographic location of all operations on the ne= chart and e@plain =hy you dre= the chart as you did. There =ould li'ely -e a mar'eting department! headed -y a #ice president or senior #ice president. ithin it =ould -e a physical distri-ution function that has direct lin'ages to mar'eting and distri-ution efforts throughout the country. 7uestion 3: ssume that the firm =ants to reorgani0e into a highly centrali0ed form! closely managed from a single home office. ra= a ne= chart that ta'es this into account. Indicate the geographic location of all operations on the chart and e@plain =hy you organi0ed it as you did. This =ould mo#e mostGor allGfunctions no= performed out in the field into the home office. 7uestion 4: ssume! instead! that the firm =ants to reorgani0e into a highly decentrali0ed form! =here many important decisions can -e made out in the field. ra= up a ne= chart! including the geographic location of all acti#ities. @plain =hy you dre= it up as you did. The ans=er to this =ould -e almost the e@act opposite from the ans=er to ?uestion 3. decentrali0ed organi0ation =ould ha#e allGor nearly allGthe functions performed out in the field. 7uestion %: oung Ir=in Juchanan III! the firm;s senior traffic manager! heard rumors that the num-er of #ice presidents =as to -e reduced. (e felt that this =ould reduce his chances of e#er achie#ing #ice presidentialGor presidentialGstatus. Luc'ily! he had access to some money in a family trust fund. (e =ondered =hether he should propose to form a separate! third5party firm to contract =ith CL&C to perform CL&C;s logistical operations. hat functions should it offer to perform< (e might consider offering to perform those functions that he -elie#es that CL&C;s top management has al=ays had trou-le controlling. (e =ould ha#e to con#ince CL&C;s management that a third5party firm could perform -etter! and =ith fe=er headaches to CL&C. CL&C has little to lose -y listening to Juchanan;s proposals! although some of the pro-lems listed in the case =ill not -e sol#ed -y a third5party logistics firm.
7uestion $: DThis is a continuation of the situation descri-ed in ?uestion %.E ssume that young Juchanan does decide to form an outside firm to handle CL&C;s logistics operations. raft his letter to CL&C;s management containing such a proposal. Such a letter could address the ad#antages of forming an outside logistics firm and then contracting =ith it! such as the a-ility for CL&C to focus on their core competencies. The letter =ould also need to include information that =ould con#ince CL&C;s management that young Juchanan is capa-le of leading and managing the ne= firm. In addition! the letter =ould need to -e diplomatic =ith respect to discussing CL&C;s present logistical inade?uacies! in part -ecause Juchanan had pro-a-ly contri-uted to some of these inade?uacies.
CS 1452: TI9" K&"T C".! LT. The pricing of products for e@port sale is co#ered here! =ith logistics practices and costs ha#ing considera-le influence. 7uestion 1: Uiola;s e@port pac'aging materials consisted of at least 4/> recycled contents. Should this -e mentioned in the ?uotation gi#en to the potential Jra0ilian -uyer< It =ould not hurt in case some-ody re#ie=ing the -id happened also to -e interested in en#ironmental protection. (o=e#er! note that they are -uying tractors to use in Jra0il. 7uestion 2: ach pac'age in this shipment =ill -e -ar coded. Is this an e@ample of supply5chain integration< hy or =hy not< It is an e@ample of supply5chain integration! although one again is uncertain ho= useful this might -e in the Jra0ilian mar'et for tractors. 7uestion 3: hat price should -e ?uoted for 4/ tractors< ote that 24 tractors can -e carried inside a 2/5foot container. (ere are the costs of shipping 4/ tractors: Type of cost Tractors D4/ @ R,//E ail to (alifa@ D2 containersE "cean freight Insurance on land D1> of R2)!///E Insurance on sea D2> of R2)!)//E ocumentation Su-total
Cost DRE 2)!/// )// 4!4// 2)/ %,$ 2%/ 34!3/$
Interest D.12 @ 2%3$%b @ 34!3/$E Su-total
2)2 34!%))
1/> mar'up Total
3!4%+ 3)!/4,
R3)!/4, di#ided -y 4/ tractors e?uals R+%1.1) per tractor
7uestion 4: hat price should -e ?uoted for 1// tractors< (ere are the costs of shipping 1// tractors: Type of cost Tractors D1// @ R,//E ail to (alifa@ D% containersE "cean freight Insurance on land D1> of R,/!///E Insurance on sea D2> of R,2!///E ocumentation Su-total
Cost DRE ,/!/// 2!/// 11!/// ,// 1!44/ 2%/ )%!3+/
Interest D.12 @ 2%3$%b @ R)%!3+/E Su-total
,/2 )$!/+2
1/> mar'up Total
)!$/+ +4!,/1
R+4!,/1 di#ided -y 1// e?uals R+4,./1 per tractor 7uestion %: Is there another ?uantity -et=een 4/ and 1// =here the costs per tractor are lo=er< If so! =hat is it< hat are its costs per tractor< "ne area =here a change might -e possi-le is to sell in ?uantities that result in full containers. 6or e@ample! if =e choose to sell +$ tractors! only four containers =ould -e needed. The rele#ant costs =ould -e as follo=s: Type of cost Tractors D+$ @ R,//E ail to (alifa@ D4 containersE "cean freight Insurance on land D1> of R$,!2//E Insurance on sea D2> of R$)!)//E ocumentation Su-total
Cost DRE $,!2// 1!$// )!)// $,2 1!3,$ 2%/ ,+!)+)
Interest D.12 @ 2%3$%b @ R,+!)+)E Su-total
$%, )/!%%%
1/> mar'up Total
)/%$ ))!$11
R))!$11 di#ided -y +$ e?uals R+23./3 per tractor 7uestion $: 6or ho= long into the future should the price ?uotes -e made Di.e.! Trigo agree to deli#er at a certain priceE< hy<
