Logistics Review
Identify the proper sequence of the three "flows" in the supply chain. 1. Product 2. Cash 3. Information
1, 3, 2
The Trade Act of 2002 requires exporters to electronically submit shipping documents to U.S. Customs _____ hours after delivery to a port.
24
(Continue from the above Profit-and-loss question) Given the same sales volume, the competition's pressure forces the company to decrease its sales price by 5%. The firm in turn successfully presses its suppliers and decreases the purchase costs by 5% too. What would be resulted profit then?
3
The top ten countries account for almost _____ of the total world population.
75%
Given the following profit-and-loss statement of firm with gross sales of $100 million and a profit of $5 million. Current (in $million) Sales $100 Purchased goods and services 60 Labor and salaries 10 Overhead 25 Profit $5 The company spends 60% of its sales (on a unit basis) on purchased goods and services and 10% of its sales (on a unit basis) on labor and salaries. Overhead is relatively fixed regardless of sales volume (units) or sales price. If the sales volume increases by 10% over the year given the same price, what would be resulted profit then?
8
What are at least TWO types of certifications and registrations that a supplier could pursue in quality programs in order to attract potential buyers? What do they signify, and why are they important? Please EXPLAIN.
A topic of interest to many buyers of products and services is the extent to which potential suppliers have achieved excellence in terms of process management and continuous improvement. As a result, over time several techniques and approaches have been developed that address issues relating to soundness of processes, results achieved, and continuous improvement. A few of the more prevalent approaches are: Total Quality Management—Arising in the 1980s in response to Japanese competition and the teachings of Dr. W. Edwards Deming, TQM represented a strategy in which entire organizations were focused on an examination of process variability and continuous improvement. This approach, which was very popular into the mid-1990s, included a goal of improving a company's quality to only three defects per million through systematic incremental change in processes and careful statistical measurement of outcomes. Six Sigma—is similar to TQM in its focus on techniques for solving problems and using statistical methods to improve processes. But whereas TQM emphasizes employee involvement for the total organization, the Six Sigma approach involves training experts (known as green belts and black belts) who work on solving important problems while they teach others in the company. ISO 9000—is a program started in 1987 by the International Organization for Standardization. It has an objective of making sure that companies have standard processes in place that they follow: "Document what you do and do what you document." ISO 9000 involves a third-party registration program certifying that companies are following documented processes. "Lean" processes—This refers to a more general commitment to eliminating wasteful practices and improving efficiency. Ideally, the lean process should focus on the improvement of products and services based on what customers want, need, and value. Aside from the fact that these approaches typically require very significant commitments in terms of time, effort, and expense, buying organizations need to look closely to make sure that participation in these programs actually produces results that are of tangible value. While it is encouraging to know that certain potential suppliers have committed their organizations to approaches such as these, one needs to be sure to document the benefits and improvements that are likely to be created as a result.
Which of these is not a trend in today's logistics environment that may have significant effects on decisions involving logistics facility location?
Addition of many wholesaler/distributor operations
According to class discussions, when is the best time to conduct logistical planning?
All of the above*
Complexity in the supply chain is caused by:
All of these answers
Which of the following is a significant intended outcome of the United States-Mexico-Canada Agreement (USMCA), which recently replaced the older North American Free Trade Agreement (NAFTA)?
All of these answers
Which one of the countries below is not part of NAFTA?
Argentina
Where is a megacity most likely to develop?
Asia
According to prediction, _____, _____, and _____ will all house so called "Megacities", whereas _____ will not have any cities of this size.
Asia; Latin America; North America; Europe
What supplier selection criteria are described by production capability, labor relations, and operating controls?
Capability
Kelly's firm processes and packages organic nuts and nut butters. Last year, the firm started selling its products to Costco, the discount retailer, in addition to traditional retail chains. This new opportunity is wonderful for Kelly's firm, but the Costco-bound products require different packaging, and the volume and frequency of the Costco orders have placed a strain on the firm's resources. Kelly may need to re-evaluate the firm's supply chain network design due to which significant trend?
Changes in customer service requirements
Which two countries account for approximately 36% of the total world population?
China and India
_____, _____, and _____ are the top three recipients of exports from the United States, in that order.
China, Canada, and Mexico
Which major locational determinant considers locating near the competition?
Company preference
Which is an advantage of the grid technique for facility location?
Computationally, it is relatively easy to use.
Don is comparing quotes from two different shippers. One shipper has offered a lower price but will require three weeks to ship his products, while the other has offered to deliver the goods to his customer in 10 days, but for a higher price. Don is evaluating:
Cost versus value
In the Item Procurement Importance Quadrant, what is described as high risk, high value?
Criticals
Marketers have begun to recognize the strategic value of place in the marketing mix, as well as the benefits resulting from high-quality logistical services. As a result, which has been recognized as the interface activity between marketing and logistics?
Customer Service
What is true about deregulation over the last three decades?
Deregulation empowers creativity and competition as it encourages new firm entry and pricing freedom
What supplier selection criteria are described by attitude, cultural compatibility, training aids, packaging, and repair service?
Desirable qualities
Using specific examples if possible, please explain what differentiated distribution means for logistics managers at Proctor and Gamble serving a large variety of customers.
Differentiated distribution means that logistics managers could providedifferent levels of customer services to customers, based on factors such asdifferent service requirements, different product characteristics, or differentsales levels etc. For instance, the managers could accumulate all the orders forslow-moving items before shipping them out in a large truckload, while sendingthose fast-moving items out immediately. Perhaps the shipments go through a similarflow pattern, but the customers do not receive the same service.
To help guide the strategic sourcing process, five core principles are recognized as key drivers to achieve the desired levels of value. Which of the following is not one of those core principles?
Drive continuous savings
Which of the following is not an advantage of e-procurement?
Easier access to secure information
Three months ago, the new operations manager at Acme Fastener and Tool's manufacturing plant implemented a system for measuring the total volume of output each week. He discovered that the plant's weekly capacity was averaging about 83%, which he would like to raise to closer to 90%. What type of metric is this manager concerned with at the moment?
Efficiency manufacturing
Three months ago, the new operations manager at Acme Fastener and Tool's manufacturing plant decided to increase the plant's production volume so that machines were operating at a higher capacity, even though the previous levels were sufficient to meet all of the company's orders. How would you characterize this manager's mistake?
Encouraging an incorrect outcome
Kelly's firm processes and packages organic nuts and nut butters, and it has just landed a new contract with Costco, the discount retailer. As wonderful as this new opportunity is, the Costco-bound nut butters demand a change in the supply chain network. These products require larger containers (24 oz. containers instead of the usual 16 oz. jars), which in turn require larger shipping cartons. Kelly is currently testing the various containers available from a range of suppliers to determine which are most compatible with the firm's production line. Which step in the supply chain network redesign process is Kelly performing?
Examining the supply chain network alternatives
"Distinctives" are low-risk, high-value items that are fundamental to the company's finished product.
False
. The Regional Trade Agreements (RTAs), the establishment of the General Agreement on Tariffs and Trade (GATT), and its 1995 successor, the World Trade Organization (WTO), have together led to multilateral trade promotion and lowered barriers to international business transactions.
False
According to the Factor Endowment Theory, a country that lacks one or more of the four major production factors—land, labor, capital, and entrepreneurship—will not be able to successfully participate in global trade.
False
Advancements in technology and the growth of transportation services have prevented many smaller, less developed countries from participating in global supply chains.
False
Beginning in the late 1970s and into the 1980s, the US transportation industry was deregulated. The net result was a less competitive environment.
False
Companies now use strategies that are lean, flexible, or adaptive; they wait for customers to push products to the market.
False
In terms of volume of exports, the United States is the world's leader in global trade flow.
False
Jeris Products is evaluating two logistics systems for the distribution of its products. The cost of system 1 is $0.18 per unit regardless of volume. System 2 cost is $0.22 per unit regardless of volume. System 2 should be selected because its higher cost indicates that the quality of service provided is better
False
Routing flexibility is a term used in connection with how spare parts move through the supply chain.
False
Strategies such as compression and lean supply chains take the same amount of work to achieve in the global environment as in the domestic environment.
False
The quality of life locational determinant is most important to companies that must attract and retain an unskilled, static work force.
False
U.S. ports play a major role in global supply chains since over 50 percent of global trade passes through them.
False
Summarize the advantages and potential drawbacks of e-procurement. If you were responsible for procuring supplies for a firm, how would you guard against the concerns?
Figure 5.11 lists the advantages and concerns related to e-procurement. Advantages include lower operating costs, improved procurement efficiency, reduced procurement expenses, improved communications, and greater access to more suppliers. However, students' answers will need to address plausible precautions for guarding against potential drawbacks, including cybersecurity issues and other technology-related concerns, as well as the lack of face-to-face relationship building between buyers and suppliers.
What supplier selection criteria are described by price and financial stability?
Financial
Which of the following is not one of the essential factors for economic growth and increased development of global trade flows?
Geo-political standing
In general, increasing the number of stocking points would lead to
Higher inventory-related costs but lower transport costs
Use the shampoo manufacturing of P&G as a background, please explain the benefits and drawbacks of the company offhshoring its production to an Asian country.
In terms of product characteristics, shampoo belongs to low margin, high logistics cost product that requires larger volume production and shipping in order to achieve economies of scale. If producing it in Asia, it is more suitable to sell in the local and regional market, instead of shipping it back to U.S. So, offshoring the shampoo manufacturing to an Asian country should primarily be used as a strategy to capture local market. However, high-end (high margin) shampoo products still have the potentials of being imported back to U.S. market because the frequent, large volume container shipping available from Asia to U.S. In this case, the general pros and cons of offshoring outlined below apply. (From the textbook) Generally speaking, moving production offshore raises transportation costs, inventory carrying costs of goods in transit, customs costs, and some hidden expenses. As production spreads out among multiple facilities in different countries, it becomes more difficult to maintain visibility and synchronize activities. Finally, companies may lose control over quality, intellectual property rights, and customer relationships. Given these challenges, combined with the rising potential for trade wars, some manufacturers are pursuing the concepts of on-shoring and nearshoring. On-shoring seeks to return production to the home country while nearshoring focuses on production in nearby or neighboring countries.
In general, increasing the number of stocking points would provide a better customer service, and thus usually causes the revenue to
Increase but at a slower rate gradually
Southwest Auto Parts already had a massive distribution center in Utah serving its 147 stores scattered across seven U.S. states when it decided to start selling auto parts online. The firm's management wanted to minimize startup costs by consolidating order fulfillment under the same roof, so which model of order fulfillment did the firm's managers decide to use?
Integrated
The challenge to develop and sustain an efficient and effective supply chain(s) requires organizations to address a number of issues. Which of the following is not included in them?
Inventory carrying costs
Explain the interfaces of logistics with operations [Hint: You may want to give one or two examples for the kind of interfaces you are referring to. For instance, you could comment on how different production run lengths or quantities may affect the inventory cost of logistics function.
Logistics interfaces with operations include: length of the production run, seasonal demand, supply-side interfaces, packaging, foreign sourcing, and third-party alternatives. Long production runs with infrequent line changes can lead to excessive inventories of some products and limited inventories of others. The advantages of long and short production runs have to be evaluated. Production in anticipation of seasonal demand can result in an increase of storage costs in holding the inventory. Supply-side interfaces involve the storing raw materials and inputs to maintain production schedules, but in small enough quantities to reduce inventory carrying costs. Packaging is required to protect products from damage. Foreign sourcing is becoming popular to procure materials and production inputs. Third-party alternatives involve co-packers to produce or assemble some or all of a firm's finished products. -------------------------- Kefeng's further comments: You may want to give one or two examples for the kind of interfaces you are refering to. For instanc, you could comment on how different production run lengths or quantities may affect the inventory cost of logistics function.
In anticipation of strong sales, Apple manufactures mass quantities of its popular iPhone and ships them to Apple stores around the world. Which assembly process is Apple using in this situation?
MTS
What activity is described as the movement of goods into a warehouse, the placement of goods in a warehouse, and the movement of goods from storage to order-picking areas and eventually to dock areas for transportation out of the warehouse?
Materials handling
Which of the following is an important issue for economic development and vitality of the economy?
Migration
What are fixed spatial points where goods stop for storage or processing?
Nodes
Which of the following flows only one way as illustrated in the Integrated Supply Chain—Basics figure?
None of these answers
In an MRP system, this document identifies all of the components required to assemble an independent demand item.
None of these answers (Inventory status file, master production schedule, bill of materials)
This type of fulfillment model has the manufacturer delivering its products directly to the retailers' stores.
None of these answers*
Which of the following is true regarding optimization models?
Optimization models are based on precise mathematical procedures that are guaranteed to find the "best" solution for the problem under evaluation.
Logistics creates which utility through the movement of goods from production points to markets where there is a demand for the finished product?
Place utility
Monitoring the amounts of raw materials stored in inventory and available for production is a specific example of which core function of an MES?
Resource management
In logistics planning, which level of decision does determining the number, size, and location of warehouses and plants belong to?
Strategic
(c) (Continued from above) At 45000 units, which system should be used based on total costs?
System 3
Which is correct regarding tapering rates?
The principle is based on the carrier's ability to spread certain fixed shipment costs over a greater number of miles.
Adam Smith in his renowned treatise, The Wealth of Nations, provided not only a rationale for a market economy based upon competition, but also advanced a rationale for trade among nations called the:
Theory of Absolute Advantage
A national drug store chain arranging to have Valentine greeting cards and candies in its stores by mid-January is an example of which utility?
Time utility
Which approach represents a strategy in which the entire organization is focused on the examination of process variability and continuous improvement?
Total Quality management
(b) (Continued from above) What is the trade-off point (volume) between System 2 and System 3? What is the related total cost at the trade-off point?
Trade-off point at 30000 units, $59000 cost.
A firm is considering three different logistics systems (public warehousing, joint-warehousing, private-warehousing). The following is the cost information for the systems with changing volume. System Fixed costs Variable costs/Unit 1 $20000 $1.00 2 $35000 $0.80 3 $50000 $0.30 (a)What is the trade-off point (volume) between System 1 and System 2? What is the related total cost at the trade-off point?
Trade-off point at 75000 units, $95000 cost
What is often the largest component of logistics costs?
Transportation costs
When a blanket rate structure is used, which factor is eliminated as a locational determinant?
Transportation rate
An organization practicing sustainable supply chain management expects its suppliers to conform to the same sustainability standards it holds.
True
An organization's omni-channel strategy must align with its "go to market" strategy, which dictates how consumers will be able to gain access to the firm's products or services.
True
Commodities are items or services that are low in risk but high in value.
True
From a customer service perspective, one of the four important characteristics for global markets and strategy is that companies need to attempt to standardize to reduce complexity, but they have to recognize that global markets need some customization.
True
Labor-intensive industries place significant emphasis on the availability and cost of labor.
True
Machine flexibility provides the ability to produce different types of products as well as change the order of operations executed on a product.
True
Many countries hope to improve trade by engaging in Regional Trade Agreements (RTAs), the best-known example of an RTA is the European Union (EU).
True
Offshoring is a term that means relocating an activity to a contract manufacturer in another country.
True
One could argue that the external role of technology in recent years has moved ahead of globalization as an agent or driver of change.
True
Operating globally has become easier to accomplish for even individuals and small companies, because of the advances in information/communications technology.
True
Procurement serves as a critical link between members of the supply chain.
True
Reduced order cycle time has become an important part of supply chain management since it can lead to lower inventory levels for customers, improved cash flow, lower current assets, and accounts receivable.
True
Sustainability reporting is a growing practice, either mandatory or voluntarily, due to the demand for transparency in the supply chains.
True
The underlying logic of Adam Smith's theory was used to advance the rationalization that he called specialization of labor.
True
Water desalinization and fracking for oil and gas production are examples of technologies that can unleash resources and contribute to economic advantage.
True
We discussed a number of major logistical activities that a logistics manager is responsible for. Please choose any 2 major activities and explain what they involve.
Typical activities which a logistics manager is responsible for include:Transportation.Production planning.Inventory Management/ Warehousing & Storage Purchasing.Industrial Packaging.Customer service.Materials handling.Site location.Order fulfillment.Forecasting.Other activities.For instance, transportation involves the physical movement or flow of rawmaterials or finished goods and involves the transportation agencies that provideservice to the firm. Warehousing and storage involves two closely relatedactivities - inventory management and warehousing (of materials and goods). Adirect relationship exists between transportation, the level of inventory andnumber of warehouses required. For instance, a high frequency of transportationwould allow a low level of inventory to be maintained.
Which of the answers below is an example of the creation of form utility by a logistics activity?
When bulk products are broken and repackaged at a distribution center
Corporate strategy should be formulated based on the assessment of needs, strengths and weaknesses of
a firm itself, and its customers, suppliers, and competitors
A project layout is:
a fixed location layout where the product remains in place for the duration of production.
A newly launched twenty-first century addition to production strategy which leverages lean manufacturing strategies, Six Sigma best practices, and real-time actionable intelligence from the factory floor is called:
adaptive manufacturing.
Simulation models:
allow the decision maker to test the effects of alternative locations.
Heuristic models:
are able to accommodate broad problem definitions.
The grid technique:
assumes that the raw materials sources and finished goods markets are fixed.
Most retailers are essentially supply chain companies since they:
buy products produced by others
The grid technique is used to determine a fixed facility location that represents the least-cost center for moving incoming materials and outbound product within a geographic grid. This least cost center is also referred to as a:
center of gravity
In the Implement Sourcing Strategy step, the most important thing is to:
choose a supplier or suppliers, depending on the objectives of the sourcing decision.
Logistics, in its simplest form,
combines inbound logistics with the outbound logistics of physical distribution.
As a firm spends more on transportation service, cost of lost sales:
decrease
As the dollar value of a product decreases, its transportation cost:
decreases
Ten years ago, Southwest Auto Parts would ship a standard number of various parts to all of its 147 locations once a month. Today, Southwest's more sophisticated inventory system monitors the stock at each location and adjusts the number of each part accordingly in the monthly shipment to each store in order to prevent under- or overstocking the stores on any given part. Within an integrated supply chain, this is an example of change in:
demand flow
Zahira, the CEO of a regional chain of bread bakeries, wants to ensure healthy relationships with all of her firm's suppliers, which is why she routinely invites account executives and other members of her suppliers' teams to visit the bakeries, sample the products, and understand as much as they can about her business. This is Zahira's way of:
developing close relationships.
Strategic sourcing as a process is far more broad and comprehensive than procurement. Overall, the process starts with the:
development of a planning committee.
A _____ analysis examines a logistics system over a long time period or range of output.
dynamic
Processes that can produce a range of products are said to have:
economies of scope.
Please list and EXPLAIN at least 5 major reasons why most products distributed in consumer goods industry require some form of packaging, using examples if any? Which of these reasons are related to logistics management?
essay*
The classic objective of a network design model has been to:
establish the number, location, and size of finished goods distribution centers and associated product flows.
In the short run, the firm's network is _____ while in the long run it is _____.
fixed; variable
The value that is added to goods through a manufacturing or assembly process is:
form utility
Henderson Air used to source all of their supplies from three suppliers. However, to remain competitive in recent years, Henderson has started to source supplies from more suppliers in order to obtain the best prices. Some of these suppliers are overseas. As a result, the firm's inventory levels:
have increased.
In general, improving customer service level through inventory and transportation would lead to
higher inventory and transport costs but lower lost sales costs
For American firms, foreign outsourcing typically leads to
higher logistics and tariffs costs but lower labor costs
In the Evaluate Supply Sources step, the firm:
identifies all possible suppliers that might be able to satisfy the user's needs.
Application of the grid technique to the location of a city warehouse:
incorporates a blanket rate structure that applies the same rate from an origin to any point within the city or commercial zone.
As the dollar value of a product increases, packaging costs:
increase
As suggested, the aging populations in more developed countries will result in _____ health care costs and/but _____ in the size of the working population or labor pool.
increased; a reduction
As the weight density of a product decreases, transportation cost per pound:
increases
Henderson Air manufactures heating and air conditioning units. Once a day, Henderson's computerized inventory system monitors the number of bolts and other fasteners the company needs to maintain production. If the amount of any type of fastener in inventory dips below preset standards, the computer automatically sends an order for more fasteners to Acme Fastener and Tool. This is an example of:
information flowing backward from the customer to the supplier
Acme Fastener and Tool had a six-hour work stoppage yesterday, which means the company does not have its usual number of fasteners stored in inventory. Concerned that the inability to fulfill all current orders may have an adverse effect on some customers, Acme's account executives are notifying all customers, including Henderson Air, that there could potentially be a small delay in delivering some orders. This is an example of:
information flowing forward from the supplier to customer
A(n) _____ relationship exists between the cost of lost sales and inventory cost.
inverse
The Supply Chain Concept:
is developed from the previous Physical Distribution concept.
Central to the scope and design of logistics system is trade-off analysis based on the total system cost concept. If so, choosing a transportation service based on lowest rates available may not be the best logistics management approach, because
it does not necessarily lead to lower logistics system cost.
Performance measurement is important because:
lower-level metrics in an organization must connect directly to the high-level performance to achieve goals.
Carrie, the logistics manager of an appliance manufacturer, has been tasked with designing the warehouse at the company's new facility. At the moment, she is working out where trucks will deliver raw supplies and pick up finished products for shipment, which is an important element of:
materials handling
Outsourcing involves:
obtaining materials, parts, and products from other companies
A type of e-commerce site where product or service information is provided by multiple third parties, such as Amazon or Expedia, is called a(n):
online marketplace.
Bonanza is a website that enables sellers to hold auctions for their items or products. Bonanza is an example of a(n):
online trading community
The _____ includes activities such as order transmission, order receipt, order processing, order preparation (picking and packing), and order shipment.
order cycle
The optimization model is based on:
precise mathematical procedures.
The utility that is created by delivering the proper quantities of an item to where it is demanded is referred to as _____ utility.
quantity
An important sustainability issue that has received much more scrutiny in recent years is the:
reduction in packaging waste by using alternate materials.
In the flow of logistics strategic planning, one should only start the integrated logistics planning after
setting the business goals/strategies and customer service requirements
When a specific point in time, or level of production, is chosen and costs are developed for the various logistics cost centers, it is called:
short-run analysis
In assemble-to-order (ATO) production:
the finished product is a combination of standard and custom-designed components that meet unique needs of a specific customer.
A push-based strategy works well for supply chains that focus on:
the immediate delivery of off-the-shelf, low-cost, standardized goods.
Organizational Power has shifted over the past two decades plus in supply chains from
the manufacturer to the retailer
Capacity is:
the maximum amount of work that an organization is capable of completing in a given period of time.
A critical outcome of the supply chain is to deliver
the right product to the right place
The concept that represents the sum of all costs associated with making and delivering products to the point where they are needed is called:
total landed cost.
The most important trade-off in logistics is between:
transportation and inventory