Examination Paper of Distribution & Logistics Management

IIBM Institute of Business Management

Examination Paper MM.100

Distribution & Logistics Management

Section A: Objective Type & Short Questions (30 marks)

 This section consists of Multiple Choice & Short Note type questions.
 Answer all the questions.
 Part one carries 1 mark each & Part Two carries 5 marks each.

Part One:

Multiple Choices:

1. It deals with the movement of finished goods from the last point of production to the point of
consumption.
a. Marketing Channel Management
b. Logistics Management
c. Boundaries
d. Relationships

2. Which conflict is one of the major bottleneck in the development & maintenance of partnering
channel relationship
a. Channel conflict
b. Management conflict
c. Logistics conflict
d. Distribution conflict

3. The phase of externally integrated business function era (1990s onwards) is recognized as the era
of
a. Logistics Management
b. Human Resource Management
c. Financial Management
d. Supply Chain Management

4. ___________ may be conducted from time-to-time or at least once in a year to know about
change in the expectation levels & actual performance
a. Customer Service Monitoring cell
b. Formal Customer Satisfaction Survey
c. Customer Conference
d. Customer Feedback System

5. The firm’s incomplete or inaccurate knowledge of customer’s service expectations is known as

a. Market Information Gap
b. Service Standards Gap
c. Service Performance Gap
d. Internal Communication Gap

IIBM Institute of Business Management

Examination Paper of Distribution & Logistics Management

6. This gap exist between the present level of customer service offered and the corporate vision
about customer service
a. Gap 1
b. Gap 2
c. Gap 3
d. Gap 4

7. This stock refers to window display of an inventory in order to stimulate demand and act as a
silent salesman
a. Decoupling stock
b. Psychic stock
c. Pipeline stock
d. None

8. This stock is also known as cycle or lot size stock

a. Working stock
b. Safety stock
c. Anticipation stock
d. None

9. In this system manufacturer is given the responsibility for monitoring & controlling inventory
levels at the retail store level
a. Quick Response
b. Continuous Replenishment
c. Vendor-managed Inventory
d. Customer Relationship

10. This mode of transport is a very significant one but with a very restricted scope. It is used
primarily for the shipment of liquid & gas
a. Airways
b. Railways
c. Pipelines
d. Seaways

Part Two:

1. What is Containerization and also mention the main features of Containerization.

2. What is Third Party Logistics?

3. Differentiate between Public & Private Warehouse.

4. What is Logistics Information System?

END OF SECTION A

Section B: Caselets (40 Marks)

IIBM Institute of Business Management

Examination Paper of Distribution & Logistics Management

 This section consists of Caselets.

 Answer all the questions.
 Each caselete carries 20 marks.
 Detailed information should form the part of your answer (Word limit 150 to 200 words).

Caselete 1

Superior Medical Equipment Company supplies electrical equipment that is used as components in the
assembly of MRI, CAT scanners, PET scanners, and other medical diagnostic equipment. Superior has
production facilities in Phoenix, Arizona, and Monterrey, Mexico. Customers for the components are
located in selected locations throughout the United States and Canada. Currently, a warehouse, that
receives all components from the plants and redistributed them to customers, is located at Kansas City,
Kansas. Superior’s management is concerned about location of its warehouse since its sales have
declined due to increasing competition and shifting sales levels among the customers. The lease is
about to expire on the current warehouse, and management wishes to examine whether it should be
renewed or warehouse space at some other location should be leased. The warehouse owner has offered
to renew the lease at an attractive rate of $2.75 per sq. ft. per year for the 200,000 sq. ft. facility. It is
estimated that any other location would cost $3.25 per q. ft. for a similar-size warehouse. A new or
renewed lease will be for five years. Moving the inventory, moving expenses for key personnel, and
other location expenses would result in a one-time charge of $3, 00,000. Warehouse operating costs are
expected to be similar at any location.
In the most recent year, Superior was able to achieve sales of nearly $70 million. Transportation costs
from the plants to the Kansa warehouse were $2,162,535, and from the warehouse to customers were
$4,819,569. One million dollars was paid annually as warehouse lease expenses. To study the
warehouse location question, data shown in Tables 1 and 2 were collected.
Although transport costs are not usually expressed on a $/cwt./mile basis, given that the outbound
transportation costs for the most recent year were $4,819,569, the weighted average distance of the
shipments was 1128 miles, and the annual volume shipped was 182,100 cwt., the estimated average
outbound rate from a warehouse is $0.0235/cwt./mile.

Table 1 Volume, Rate, Distance, and Coordinate Data for Shipping from Plants to the Kansas City
Warehouse in Truckload Quantities (Class 100) for the Most Recent Year.

PLANT ANNUAL TRANSPORT DISTANCE, GRID

LOCATION VOLUME, RATE, $/CWT. MILES Coordinatesa
CWT.b X Y
Phoenix 61,500 16.73 1163 3.60 3.90
Monterrey 120,600 9.40 1188 6.90 1.00
Total 182,100
a
Miles =230 X coordinate
distance bCwt.=100 lb.

Table 2 Volumes, Rate, Distance, and Coordinate Data for Shipping from Plants to the Kansas City
Warehouse in Truck in 5,000 lb Quantities (Class 100) for the Most Recent Year.

IIBM Institute of Business Management

Examination Paper of Distribution & Logistics Management

ANNUAL GRID
PLANT VOLUME, TRANSPORT DISTANCE, Coordinatesa
RATE,
LOCATION CWT.b $/CWT. MILES X Y
Seattle 17,000 33.69 1858 0.90 9.10
Los Angeles 32,000 30.43 1496 1.95 4.20
Denver 12,500 25.75 598 5.60 6.10
Dallas 9,500 18.32 560 7.80 3.60
Chicago 29,500 25.24 504 10.20 6.90
Atlanta 21,000 19.66 855 11.30 3.95
New York 41,300 26.52 1340 14.00 6.55
Toronto 8,600 26.17 1115 12.70 7.80
Montreal 10,700 27.98 1495 14.30 8.25
Total 182,100
Kansan City 8.20 6.00

Questions:

1. Based on information for the current years, is Kansas City the best location for a warehouse? If
not, what are the coordinates for a better location>? What cost improvement can be expected
from the new location?

2. If by year 5 increases are expected of 25 percent in warehouse outbound transport rates and 15
percent in warehouse inbound rates, would your decision change about the warehouse
location?

Caselete 2

Personal Care limited (PCL) is a large and premier FMCG company in India with a turnover of about
Rs 1,200 crore. It has 25 production plants and 10 contract manufacturers spread over the whole
country, producing about 120 products ranging from personal care to household goods. Again out of
120 products, about 60 percent have different variants as well as package sizes.
The company has four own central warehouses situated in the four zones of north, south, east and west
that receive products from almost all the plants on a regular and consignment basis in container by
road. These warehouses are responsible for taking care of stocks, order placement for next arrivals,
loading and unloading, protective storage, stock recording, apart from order processing and
replenishment of good to distributors of respective zone whose numbers come around 150 per
warehouse.
After receiving goods from various plants, these warehousing are first entered into the computer for
inventory recording purposes. Suitable storage location spaces are then assigned after taking into
consideration the quantity to be stored, the physical dimension, characteristics of items, frequency of
flow, and availability of the space, which is quite variable and flexible. For storage of goods, a flexible
racking system is used so that the size of a rack’s space can be changed as per the size on the product’s
package. Furthermore, racing is back-to-back in pallet blocks which are 5-storied, and in one block
there are about 400 back-to-back racks.

In certain area, for selected heavy weight and bulky items, 50 selectors drive forklift trucks and in the
remaining area, as many as 350 selectors pick the goods manually and use hand trolley. Selectors are
normally less educated and highly experienced, who have well-defined areas of selection.
With this existing system, there have been a lot of practical problems, such as underutilization of space,
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Examination Paper of Distribution & Logistics Management

traffic congestion in between the racks as one selector blocks another’s progress while he is picking item
from a location, wrong assortment, difficult to track goods, difficult to fill one single order as it contains
a variety of items, etc. this result into frequent complaints lodged by distributors.
Furthermore, a trucker is required to collect items from different places of the warehouse to make up the
order. Frequently, they have to wait for a full load. Then, the driver has to collect challan and other
required papers. Normally, this whole process takes seven to ten days, subject to ready availability of the
goods in stock. In the case of stock-out item, it may goes anywhere between 15 and 30 days. That is why
replenishment cycle time for nearby distributors is about 10-15 days and for others, it comes to around 3
weeks.
Due to a gradual increase in the quantum of competition and increasing customer expectations, along
with increasing awareness about the overwhelming contribution of logistics in cost reduction and service
improvement, the top management of PCL have appointed highly qualified and experienced
professionals at all four warehouses with the following objectives:

 To improve the efficiency of the warehouses

 To reduce the replenishment cycle time by percent
 To reduce the total logistical costs by 10 per cent
 To have transparency in dispatch of premium products.

The chief warehouse manager, who joined the north zone warehouse as had a very successful career of 25
years. He wants to redefine the whole warehouse operating system.

Questions:

1. How should the chief warehouse manager of PCL approach this problem?

2. Develop a warehousing operational strategy to overcome the problem and fulfill the redefined
objectives of the firm.

END OF SECTION B

Section C: Applied Theory (30 Marks)

 This section consists of Long Questions.

 Answer all the questions.
 Each question carries 15 marks.
 Detailed information should from the part of your answer (Word limit 200 to 150 words).

1. Information technology had the major effects on all areas of business. Explain the effective use of
Information Technology in Distribution Management.

2. Explain what Partnering Channel Relationship is and also state the reasons for developing
Partnering Channel Relationship.

END OF SECTION C

IIBM Institute of Business Management