Assignment #1: Chapter 1 Questions

1.1 Distinguish between possession, form, time, and place utility.

Possession is value or usefulness that comes from the customer having possession of the
product, form is a product being used by the customer or is of value to the customer, time is having
the products ready for the customer, and place is having the products in place where ever the
customer needs them.
1.2 How does logistics contribute to time and place utility?
Logistics contributes to time and place utility by making sure consumer goods are where
they always need to be. It is a system that helps with supply and demand for various companies.
1.3 How can a particular logistics system be effective but not efficient?
The system may be effective by having expedited shipping but not efficient because this
leads to cost increase because of transportation provided to get it there on time.
1.4 How has a reduction in economic regulation contributed to the increased importance of logistics?
It has allowed individual carriers flexibility in pricing and service. It gives companies the
ability to put into play tailored logistics so that they can specify different logistics services levels
and prices could be adjusted accordingly.

1.5 What is the systems approach to problem solving? How is this concept applicable to logistics
management?
The company’s objectives can be realized by recognizing the mutual interdependence of
the major functional areas of the firm.
1.6 Distinguish between materials management and physical distribution.
Materials management refers to the movement and storage of materials into a firm
while physical distribution refers to the storage of finished product and movement to the
customer.
1.7 Explain what is meant by the total cost approach to logistics.
Total cost approach to logistics is built on the premise that all relevant activities in
moving and storing products should be considered as a whole and not individually.
1.8 Define what is meant by a cost trade-off. Do you believe that this concept is workable? Why or why
not?
A cost trade off recognizes that changing activities or patterns of distribution would only
result in increase of certain costs while decreasing certain other costs. The net effect of such
action leads to an overall cost reduction for providing a certain level of consumer service. I
believe it works because it leads to cost reduction.
1.9 Discuss the postponement concept as it relates to the production and logistics interface.
The postponement concept means the delay of value-added undertakings like
assembling something producing and packaging till the last moment. The more units produced
the price per unit will be divided and it will be cheaper.
1.10 Define what is meant by a landed cost and explain its relevance for pricing decisions.
 Landed cost refers to the price which includes both the cost involved in transportation
of a product to a buyer and in the production of that product. It is important for pricing
decisions as it can help the manufacturer fix a price where he can make profit and not suffer loss
while transferring the goods to its customers.
1.11 Briefly discuss the ownership, negotiations, financing, promotions, and logistics channels.

The ownership channel covers movement of the title to the goods; the goods
themselves might not be physically present or even exist. The negotiations channel is
the one in which buy 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, while the promotions channel is concerned with
promoting a new or an existing product. The logistics channel handles the physical flow
of the product.

1.12 Discuss five activities that might be part of a company’s logistics department.
Logistics management activities typically include inbound and outbound transportation
management, fleet management, warehousing, materials handling, order fulfillment, logistics
network design, inventory control, supply and demand planning, and management of third-
party logistics service providers.

Chapter 2 Questions
2.1 List the six general types of information management systems, and give one logistics application
for each one that you’ve named.
1. office automation systems, and a logistics application could be spreadsheets that
calculate optimal order quantities. 2. Communication systems; voiced based order picking.
Transaction processing systems are the 3rd type, with point of sale systems being a logistics
application. Management and executive information systems are the 4 th type of information
systems; a logistics application involves logistics information systems. The 5 th type of information
systems is decision support systems, with warehouse management systems being a logistics
related application. The 6th and final general type of information system is the enterprise system
represented by logistics modules of enterprise resource planning systems.

2.2 What advances in telecommunications technology do you view as being most beneficial to
logistics management? Why?
Any wireless communication because the world we live in today is fast paced and the
fact that a logistics manager can keep an eye on all products from a phone, tablet or laptop is
extremely beneficial.
2.3 Discuss how global positioning systems have become quite valuable in transportation
management.
 Companies that have transitioned to GPS have reported an increase in worker
productivity, reduced operating costs, and improved customer relations.
2.4 Discuss the benefits and drawbacks of EDI.
Benefits of EDI are document preparations, processing time, inventory carrying costs,
personnel costs, information float, shipping errors, returned goods, lead times, order cycle
times, and ordering costs. Draw backs may be a lack of awareness of its benefits, high setup
costs, lack of standard formats, and incompatibility of computer hardware and software.
2.5 Discuss the relationship between automatic identification technologies and point-of-sale
systems.
They are an essential component in point of sale systems; the idea behind POS systems
is to provide data and enhance managerial decision making, and automatic identification
technologies can be helpful. POS systems involve scanning Universal Product Code labels either
passing the product over an optical scanner or recording it with a handheld scanner.
2.6 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. Another drawback is privacy concerns and inappropriate use of the technology.
Data accuracy can be lower in items with high moisture content, such as fruits and vegetables.
2.7 What benefits are associated with transportation management and warehouse management
systems?
Organizations that have implemented transportation management systems have
reported decreased empty vehicle miles, 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 benefit to warehouse
management systems include reduced operating expenses, fewer stockouts, increased inventory
accuracy, and improved service to customers.
2.8 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 Walmart 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, Walmart makes sure that additional stocks of these
products are available when hurricanes are projected to hit Florida.
2.9 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. 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.
2.10 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.
2.11 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.
2.12 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.