CHAPTER 2: LOGISTICS AND INFORMATION TECHNOLOGY Logistics and Distribution

23. Efficient data mining is dependent upon ____.

d. data warehouses

19. Which of the following is not a logistics-related decision support system?

d. electronic data interchange

2-9. Why are some companies hesitant to adopt RFID technology?

A major drawback to RFID adoption involves the costs of installing the related hardware and software, which can range from $100,000 for smaller companies to $20 million for larger companies. Another drawback to RFID adoption involves privacy concerns, such as the inappropriate use of the technology. Yet another drawback is that data accuracy can be lower items with high moisture content, such as fruits and vegetables.

2-8. Discuss the relationship between automatic identification technologies and point-of-sale systems.

Automatic identification systems are an essential component in point-of-sale (POS) systems; the idea behind POS systems is to provide data and enhance managerial decision making, and automatic identification technologies can be very helpful in so doing. Operationally, POS systems involve scanning Universal Product Code (UPC) labels, either by passing the product over an optical scanner or recording it with a handheld scanner.

4. ____ provide effective ways to process organizational business data, to perform calculations, and to create documents.

d. office automation systems

2-12. What is data mining? How might it be used in logistics?

Data mining can be defined as the application of mathematical tools to large bodies of data in order to extract correlations and rules; it uses sophisticated quantitative techniques to find "hidden" patterns in large volumes of data. Data mining has allowed Wal-Mart to discover that when hurricanes are projected to hit the state of Florida, there is a dramatic increase in demand for beer and Kellogg's Pop Tarts®. As a result, Wal-Mart makes sure that additional stocks of these products are available when hurricanes are projected to hit Florida.

2-13. Discuss advantages and disadvantages of enterprise resource planning systems.

ERP systems are attractive because they offer the potential for lower costs and both increased productivity and customer satisfaction. In theory, ERP systems provide an opportunity for all functional areas within a firm to access and analyze a common database. This should allow for enterprise-wide coordination of relevant business processes. One of the most frequently mentioned shortcomings involves the costs of installation, and companies often fail to consider relevant costs such as upgraded hardware and employee training. Moreover, ERP implementation can be quite time consuming; actual implementation times may be 2 to 4 times longer than vendor estimates. A third shortcoming of ERP systems is that they initially lacked strong application-specific logistical capabilities such as transportation or warehouse management systems.

30. Which of the following statements is false?

d. online retailing and in-store retailing experience similar rates of product return

2-15. From a logistical perspective, what are some of the differences between online and in-store retailing?

For one, the orders associated with online shopping tend to be more plentiful and in much smaller quantities that those associated with in-store retailing. As such, online retailing requires an order management system capable of handling high volumes of orders. Because of smaller order quantities, online shopping is characterized by open-case, rather than full-case picking; open-case picking is facilitated by materials handling equipment such as totes and push carts. In addition, the smaller order quantities occasioned by online retailing tend to favor transport companies with extensive delivery networks and expertise in parcel shipments.

2-18. Discuss the benefits and drawbacks to electronic procurement.

Four types of benefits, transactional, compliance, management information, and price, are associated with electronic procurement. As an example, transactional benefits measure the transactional benefits, such as a reduced invoice-to-payment time, that come from e-procurement. One concern with electronic procurement involves the security of information that is being transmitted; there is a risk that sensitive or proprietary information could end up in the wrong hands. Another concern is that e-procurement can be impersonal in the sense that human interaction is replaced by computer transactions.

2-6. Discuss how global positioning systems have become quite valuable in transportation management.

Global positioning systems (GPS) have become quite valuable in transportation management because of high fuel costs and the relentless pressure to improve efficiency and productivity. Indeed, transportation companies that have implemented GPS have reported an increase in worker productivity, reduced operating costs, and improved customer relations. One study found that GPS implementation allows transportation companies to recapture nearly one hour per day of their drivers' time, which translates into labor savings of approximately $5,500 per employee.

2-19. What is an online reverse auction? Why do buyers like them?

In a reverse auction, a buyer (rather than seller) invites bids from multiple sellers, and the seller with the lowest bid is generally awarded the business. Buyers tend to like reverse auctions because they aim to generate low procurement prices and the online nature of reverse auctions allows buyers to drill down to a seller's low price very quickly.

2-17. Discuss the advantages and disadvantages of cloud computing.

Its pay-per-use formula allows customers to avoid high capital costs, and thus becomes a viable option for many companies that could not afford to purchase, install, and maintain application-specific software. Other advantages include faster and less costly installation, a smaller information technology staff, and regular upgrades and updates from the software provider. One drawback is that the regular upgrades and updates can be too frequent and numerous, and customers struggle to keep up with them. There are also limited opportunities for customization and because the Internet is the primary transaction medium, security issues such as data protection can be a concern.

33. Which of the following is not a type of benefits that comes from electronic procurement?

d. production benefits

2-4. How can communication systems facilitate logistics management in the immediate aftermath of situations such as terrorist attacks and natural disasters?

One example involves the substitution of information for inventory. The total shutdown of the U.S. aviation system following the terrorist attacks of September 11, 2001 caused many air shipments to be diverted to trucks—thus adding to delivery times. Airfreight companies such as FedEx used their communication systems to inform customers that their shipments were being diverted and when the shipments would be arriving.

2-2. Name the six general types of information systems, and give one logistics application for each one that you've named.

One type is office automation systems, and a logistics application could be spreadsheets that calculate optimal order quantities. A second is communication systems; one logistics example is voice-based order picking. Transaction processing systems are a third general type, with point-of-sale systems being a logistics application. Management and executive information systems are a fourth general type of information systems; a logistics application involves logistics information systems. A fifth general type of information system is decision support systems, with warehouse management systems being a logistics-related application. The sixth, and final, general type of information system is the enterprise system, represented by logistics modules of enterprise resource planning systems.

2-11. What benefits are associated with transportation and warehouse management systems?

Organizations that have implemented transportation management systems have reported decreased empty vehicle miles, reduced fuel consumption, and reduced transportation expenditures. Potential benefits to warehouse management systems include dramatic reductions in data entry errors as well as dramatic reductions in the travel distances for order picking. Other benefits to warehouse management systems include reduced operating expenses, fewer stockouts, increased inventory accuracy, and improved service to customers.

2-7. Discuss the benefits and drawbacks of EDI.

Potential benefits to EDI include reductions in: document preparation and processing time; inventory carrying costs; personnel costs; information float; shipping errors; returned goods; lead times; order cycle times; and ordering costs. In addition, EDI may lead to increases in: cash flow; billing accuracy; productivity; and customer satisfaction. Potential drawbacks include a lack of awareness of its benefits; high setup costs; lack of standard formats; and incompatibility of computer hardware and software.

2-16. Why is a "one size fits all" logistics strategy not likely to facilitate effective or efficient online shopping?

Rather than "one size fits all," a variety of logistics strategies might need to be applied to online shopping and it's important to recognize the potential trade-offs with these strategies. For example, one way of addressing the last-mile issue of customer unavailability would be to install some type of receptacle for the product at the customer's residence. However, these receptacles might not be feasible for large items (such as a refrigerator), perishable items (such as certain types of food), or extremely valuable items (such as jewelry).

2-5. What advances in telecommunications technology do you view as being most beneficial to logistics management? Why?

The answer to this question is likely to vary from student to student. Certainly cell phones, e-mail, smart phones, and wireless communications would be popular choices.

2-20. What are some of the macro-level information technology challenges that managers face?

The text identifies three macro-level information technology challenges, the first of which is that information technology is a tool that can help managers to address organizational problems and not a panacea for them. Security is a second macro-level concern, and it's important that websites be as secure as possible from computer viruses or computer hackers. A third information technology challenge involves human resource issues, and employee resistance has been identified as a major cause of information technology implementation failure.

2-3. Do you view the spreadsheet as the most relevant general software package for logisticians? Why or why not?

The text indicates that spreadsheets are indeed the most relevant general software package for logisticians. Today's spreadsheets have developed to the point that they are able to solve for basic logistics optimization models. These spreadsheet-based optimization models provide a method for logisticians to conduct a variety of "what-if" analysis in support of their decision making.

2-1. In what ways can information be helpful in logistics and supply-chain management?

There are a number of ways in which information can be helpful in logistics and supply-chain management. These include, but are not limited to, greater knowledge and visibility across the supply chain, which makes it possible to replace inventory with information; greater awareness of customer demand via point-of-sale data, which can help improve planning and reduce variability in the supply chain; better coordination of manufacturing, marketing, and distribution through enterprise resource planning systems; streamlined order processing and reduced lead times enabled by coordinated logistics information systems.

2-14. Refer back to the logistical activities listed in Chapter 1; pick two that you are interested in and research how they have been influenced by the Internet. Are you surprised by your findings? Why or why not?

There is any number of acceptable answers for this question.

2-10. Discuss the importance of timely and accurate information to a logistics information system.

Timely information can involve several dimensions. For example, "timely" can refer to the up-to-date status of information, which can be influenced by a company's collection and analyses procedures. Although such information should ideally involve internal and external sources, internal sources of logistics information are not always as plentiful as would be desired. "Timely" can also refer to how quickly a manager receives the requested information; this is influenced by a company's retrieval and dissemination procedures. Faster and more powerful technology has helped to reduce retrieval and dissemination times.Accurate information may reflect the effectiveness and efficiency of a company's logistics information system. This means that a logistics information system needs to consider the nature and quality of the relevant data. For example, although the Internet can be a very cheap source of external information, some Internet information is of questionable validity.

31. The worldwide public cloud services market grew by approximately ____ percent between 2011 and 2012?

a. 20

15. Which of the following statements about radio-frequency identification (RFID) is false?

a. RFID only offers read capabilities

16. A logistics information system begins with:

a. a logistics manager requesting information

21. Which of the following is not a potential benefit of transportation management systems?

a. fewer stockouts

9. ____ refers to a network of satellites that transmits signals that pinpoint the exact location of an object.

a. global positioning systems

25. The origins of contemporary ERP systems can be traced back to logistics and ____.

a. manufacturing

5. The most relevant general software package for logisticians is ____.

a. spreadsheets

28. Approximately ____ percent of the world's population currently uses the Internet.

b. 35

12. Which of the following statements about EDI is not true?

b. EDI can result in increased inventory carrying costs

3. ____ refers to the collection of large amounts of near-real-time data collected through a variety of sources such as sensors and smart phones, among others.

b. big data

7. ____ help various stakeholders—employers, suppliers, customers—work together by interacting and sharing information in many different forms.

b. communication systems

24. ____ create and maintain consistent data processing methods and an integrated database across multiple business functions.

b. enterprise systems

17. All of the following statements about logistics information systems are true, except:

b. internal sources of logistics information are relatively plentiful

13. Automatic identification systems are an essential component in ____.

b. point-of-sale systems

8. What has emerged as the measuring stock for logistics information technology in the 21st century?

b. the Internet

10. Electronic data interchange represents what general type of information management system?

b. transaction processing system

32. What has emerged as the most popular application of on-demand logistics software (cloud computing)?

b. transportation management systems

29. The return rates for online purchases is approximately ____ percent

c. 30

26. Which of the following statement about ERP is false?

c. ERP's origins can be traced back to finance and manufacturing

2. How do data and information differ?

c. data are simply facts; information is a body of facts in a format suitable for decision making

22. ____ refers to the application of mathematical tools to large bodies of data in order to extract correlations and rules.

c. data mining

20. Warehouse management systems represent an example of what general type of information management system?

c. decision support system

11. ____ refers to the computer-to-computer transmission of business data in a structured format.

c. electronic data interchange

34. In a reverse auction, ____.

c. one buyer invites bids from multiple sellers

18. The primary advantage of ____ is that enables a firm to test the feasibility of proposed changes at relatively little expense.

c. simulation

35. ____ has been identified as the biggest information technology challenge that companies face today.

c. the cost of technology

14. The most popular automatic identification system currently in use is ____

d. bar code scanners

6. Which of the following is not considered a general software package?

e. all are general software packages

1. Which of the following is not a benefit to utilizing information in logistics?

e. all of the above are benefits

27. All of the following are potential costs associated with ERP implementation, except:

e. all of the above are costs