TYBMS QB Logistics Sem5!19!20

Tilak Education Society’s
S.K College of Science and Commerce, Nerul

TYBMS Vth Sem Question Bank Solution
Subject: Logistics
Unit- 1
Q1 Write a note on Green logistics.
Ans Green logistics describes all the attempts to measure and minimize the ecological impact of
logistics activities. This includes all activities of the forward and reverse flows of
products, information and services between the point of origin and the point of
consumption. It is the aim to strike a balance between economic and environmental
efficiency. Thus, Green logistics refers to procedures and step instituted by a logistics
company to minimize its waste and other negative effects on the environment.
How to Achieve Green Logistics :

1. Network Optimization :
After studying the volumes and frequencies of each of the transportation location,
the company should adopt optimal transport network by aggregating the entire
loads to be delivered. This will help to achieve full capacity utilisation of vehicles and
reduce the number of trips. This will help in reducing fuel consumption and reducing
the emissions.
2.Alternative Mode of Transportation :
Over the years, the share of rail transport has decreased drastically, while the share of
road transport has increased to a great extent. Restoring rail as a primary mode of
transport, in particular for freight, would be essential as rail emissions are at least five
times lesser than road emissions. Thus, in order to reduce emissions, we need to adopt
intermodal transport, i.e focusing more in railways with roads providing only the last –
mile delivery.
3. Alternative Fuel :
Replacement of fossil fuel based on technology with bio-fuel based one or even
with alternatives like CNG, battery operated vehicles, electronically powered
vehicles, etc.
4.Building Bypass Roads :
Buildings by pass roads for speeding up traffics another solution. This helps
in reducing emission due to optimal speed.
5.Paper Usage Reduction :
Paper usage reduction is another alternative to adopt green logistics. Many of
the e-retailers no longer provide paper receipts to enhance their green image.
6.New Fleet Induction:
Another initiative is to replace older vehicles with higher emissions and lower
fuel efficiencies with newer vehicles that are fuel efficient and low on
emissions.
7.Waste Recycling and Scientific Disposal :
The left out materials, used products and wrappers waste pose severe
environmental hazards; thus, proper steps should to be taken for recycling of
wastes. Hence, in many
countries, governments have devised laws making recycling mandatory.
Moreover, company should take appropriate steps to ensure scientific disposal
of product.
Benefits of Green Logistics:
1: Green logistics can help the firm to reduce overall business costs.
2: Green logistics helps to reduce waste and improve disposal, it also helps in
reducing emissions and improve fuel efficiency,
3: It helps to enhance CSR activities of the company.
4: Green logistics helps companies to cope up with changing marketing environment.
5: Green logistics can help the companies to differentiate themselves from competitors
by creating brand distinction and recognition.
Q2 Explain various functions of logistics/logistical Mix

1. 1. Order Processing:- Customers’ orders are very important in logistics management. Order processing includes
A activities for receiving, handling, filing, recording of orders. Herein, management has to ensure that order
processing is accurate, reliable and fast.
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2. Inventory Management: The basic objective of inventory management is to minimize the amount of working
capital blocked in inventories; and at the same time to provide a continuous flow of materials to match
production requirements; and to provide timely supplies of goods to meet customers’ demands.
3. Transportation: Transportation is that logistical activity which creates place utility. It is needed for:
Movement of raw-materials from suppliers to the manufacturing unit, Movement of work-in-progress within
the plant, Movement of finished goods from plant to the final consumers. The choice of a particular mode of
transportation is dependent on a balancing of following considerations: Speed of transportation system, Cost
involved in transportation, Safety in transportation, Reliability of transportation time schedules and Number of
locations served etc.
4.Warehousing: Storage or warehousing is that logistical activity which creates time utility by storing goods
from the time of production till the time these are needed by ultimate consumers. Here, the management has
to decide about: the number and type of warehouses needed and the location of warehouses. The above two
decisions depend on the desired level of customer service and the distance between the supply source and
final destination i.e. markets.
5.Material Handling: It involves the activities of handling raw-materials, parts, semi-finished and finished goods
into and out of plant, warehouses and transportation terminals. Management has to ensure that the raw-
materials, parts, semi-finished and finished goods are handled properly to minimize losses due to breakage,
spoilage etc. Further, the management has to minimize the handling costs and the time involved in material
handling.
6.Packaging and Labeling: Packaging and labeling are an important aspect of logistics management. Packaging
implies enclosing or encasing a product into suitable packets or containers, for easy and convenient handling of
the product by both, the seller and specially the buyer. Packaging facilities the sale of a product. It acts as a
silent salesman.
7.Procurement: It is related to obtaining materials from outside suppliers. It includes supply sourcing,
negotiation, order placement, inbound transportation, receiving and inspection, storage and handling etc. Its
main objective is to support manufacturing, by providing timely supplies of qualitative materials, at the lowest
possible cost.
8.Information Management: It is an invisible element but important aspect of logistics. It includes Design and
administration of systems to controls the flow of material, work- in – process, and finished inventory to support
business unit strategy. It involves managing of a system in order to control the flow of material and information
throughout a corporation.
Q3 Explain the difference between Logistics and Supply chain management

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Explain the Logistical Performance cycle with suitable diagram
The logistical integration through performance cycles provides interface and link the suppliers, the firm and its
customers by means of communication and transportation.
1. Procurement Performance Cycle
The procurement operations are identified as inbound logistics. International procurement often requires
large shipments necessitating the use of barges, ocean going vessels, trains and multiple truckloads for
transportation. The lower value of materials and components as compared to finished product implies
greater trade-off between higher cost of maintaining inventory in transit and the use of low cost modes of
transport. As the cost of maintaining inventory in the pipeline is less per day than the cost of maintaining
finished inventory, there is no benefit for paying higher freight rates for faster inbound transport.
Procurement performance cycles are invariably longer excepting in those cases where the value of material
or component may justify paying higher freight rates for faster inbound transport. A critical issue in
procurement is uncertainty in respect of price change, and/or supply discontinuity.
2. Manufacturing Support Performance Cycle
It provides production logistics being positioned between the physical distribution and procurement
operations of a firm. Movement and storage of product, materials, and semi-finished parts and
components between enterprise facilities represent the responsibility of manufacturing support logistics.
In context of wholesale & retail trade, it implies selection of assortment of inventory to be moved to the
next level of value chain. Basically, supports what, where and when of the production and not how. It is
also known as In-Process Logistics.
3. Physical distribution performance cycle
As it links a firm with its customers, it helps create marketing and manufacturing initiatives into an integrated
effort. It resolves conflicting interface between marketing & manufacturing. As marketing is dedicated to
delighting customers, it would like to maintain broad product line with high inventory regardless of each
product’s profit potential. By doing so, any customer’s requirement, no matter how small or large would be
satisfied.
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Q5 What is a customer service? Explain the various elements of customer service
Ans Customer service has multifunctional interest for a company – but, from the point of view of the logistics
function, we can view customer service as having four traditional dimensions: Time, Dependability,
Communication and Convenience.
1. Time: The time factor is usually order cycle time particularly from the perspective of the seller looking at
customer service. On the other hand the buyer usually refers to the time dimension as the lead time, or the
replenishment, time Regardless of the perspective or the terminology, several basic components or variables
affect the time factor.
2. Dependability: To some customers dependability can be more important than lead time. The customer can
minimize its inventory levels if lead time is fixed. i.e., a customer that knows with 100% assurance that lead
time is 10 days could adjust his inventory levels to correspond to the average demand (usage) during the ten
days and would have no need for safety stock to guard against stock outs resulting fluctuations in lead time.
- Cycle time: Lead time dependability then directly affects the customers' inventory and stock out cost.
Providing a dependable, lead time reduces some of the uncertainty a customer faces. A seller, who can assure
the customer of a given level of lead time, plus some tolerance, distinctly differentiates its product from that of
its competitors. The seller that provides a dependable lead time permits the buyer to minimize the total cost of
inventory, stock outs, order processing and Production scheduling.
- Safe delivery: An order's safe delivery is the ultimate goal of any logistics system. The logistics function is the
culmination of the selling function. If goods arrived damaged or are lost, the customer cannot use the goods as
intended. A shipment containing damaged goods aggravates several customer cost centres, inventory,
production and marketing.
- Correct orders: Finally, dependability embraces the correct filling of orders. A customer who has been
anxiously awaiting the arrival of a urgently needed shipment may discover upon receiving the shipment that
the seller made an error in filling the order. The customer who has not received what was requested may face
potential lost sales or production.
3. Communication: The two logistics activities vital to order fulfillment are the communication of customer
order information to the order filling area and the actual process of picking out of inventory the items ordered.
In the order information stage the use of EDI or internet enabled communications can reduce errors in
transferring order information from the order to the warehouse receipt. The seller should simplify product
identification such as product codes in order to reduce order picking errors.
4. Convenience: This is another way of saying that the logistics service levels must be flexible. From the logistics
operations stand point, having one of a few standard service levels that apply to all customers would be ideal;
but this assumes that all customers' logistics requirements are homogeneous. In reality, this is not the
situation. E.g.: one customer may require the seller to palletize and ship all shipments by rail another may
register a truck delivery only, with no palletization, still others may request special delivery times. Basically
logistics requirements differ with regards to packaging, the mode and the carrier the customer requires,
routing and delivery times. Convenience recognizes customers' different requirements.
Q6 What is 7R rule? Explain its significance in Customer Service.

Ans The seven R's rule offers a simple description of how integrated logistics creates customer service. The seven
R's mean having
1.The Right Product: A company who offers this kind of service must first know the kind of products that they
are going to handle and transport. Having the right knowledge will give you an advantage to properly and
efficiently manage both your time and resources.
2. The Right Quantity : Knowing and specifying the right quantity is also one of the key in a successful LMS.
Since most of the providers are third party, companies that relies on their service must be careful in sending
the right amount or quantity of goods to be delivered. Thanks to our modern technological developments that
3PLs can now manage all quantities of goods to ship/deliver.
3.The Right Condition : Every product or goods that are to be entrusted by the customers to LMS providers
must be stored and delivered with the right condition. This is where the specifications must be referred to in
order to place it on required facilities to maintain its quality.
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4. Right Place: The right product must be delivered to the right place. Courier services provided by an LMS
company must have knowledgeable drivers as well as a systematic delivery system and tracking. Both customer
and the provider must have a synchronized location tracking to ensure that the products are delivered to the
right place.
5. Right Time : Time is very important when it comes to logistics, clients are more concern on the time of
delivery. That is why every service provider must know the right time to deliver the products and in a very
efficient way. Every system has a tracking functionality to monitor all deliveries and making sure that they
arrive on time.
6.For The Right Consumer : Every LMS Provider must know their target market to identify the right customers.
If they will offer their services to the right market, they have more chances of gaining leads and customers that
will most likely to avail them. Some uses the traditional marketing while others use digital marketing to reach
more customers around the globe.
7. At The Right Cost: Pricing is very essential and all products and services. They must have an appropriate
price value in order to track the company income and expenses. A good system for storing and updating the
right prices ensures success in LMS.
Q7 What is Demand Forecasting? Explain the techniques of Demand Forecasting.

Ans “Forecasting is a projection / prediction made, on the basis of relevant logical assumptions, of
the volume likely to be produced, transported and sold”.
Forecasting Methods:-
1)Qualitative Methods:
a) Jury of executive methods: Jury of executive opinion method involves taking

opinion of a small group of high-level managers and results in a group estimate of demand.
b) Consumer Survey Method: Market research method or consumer survey method
determines consumer interest in a product or service by means of a consumer survey.
c) Assessment by Sales Personnel: Sales force composite method is based on
estimate of expected sales by sales persons.
d) Naïve Approach: It assumes that demand in the next period is the same as demand in
the most recent period. In other words, if sales of a product, say, Reliance WLL phones, were
100 units in
January, we can forecast that February’s sales will also be 100 phones. Does this make any
sense? It turns out that for some product lines, selecting this naïve approach is a cost-
effective and efficient forecasting model.
e) Delphi Method: The Delphi method is a systematic, interactive forecasting method
which relies on a panel of expert. The experts answer questionnaires in two or more
rounds. After each round, a facilitator provides a small summary of each experts forecasts
from the previous round as well as the reasons they provided for their judgments. Thus,
experts are encouraged to revise their earlier answers in light of the replies of other
members of their panel. It is believed that during this process the range of the answers will
decrease and the group will coverage towards the “correct” answer.
2)Time Series Method
a) Simple average: Simple average forecasting uses an average of the most recent period’s
sales. The average may contain any number of previous time periods. Generally one, three,
four and twelve-period averages are common.
b) Weighted average method: This is more logical since recent data is given more
weightage than older data. Averaging over long period can give greater smoothing effects.
c) Exponential Smoothing: Exponential smoothing is a concept implying estimation of
future sales on a weighted average of previous demand and forecast levels. The new
forecast is an aggregate outcome of older forecasts made adding to it actual level of sales
realized.
(Basic Model + Trend + Seasonality)
3)Casual Technique: The assumption behind a causal or relational forecast is that, simply put, there is
a reason why people buy our product. If we can understand what that reason (or set of reasons) is,
we can use that understanding to develop a demand forecast. For example, if we sell umbrellas at a
sidewalk stand, we would probably notice that daily demand is strongly correlated to the weather –
we sell more umbrellas when it rains. Once we have established this relationship, a good weather
forecast will help us order enough umbrellas to meet the expected demand.
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Q8 What is Bullwhip Effect? How do you minimize it?
Ans The bullwhip effect is a concept for explaining inventory fluctuations or inefficient asset allocation as
a result of demand changes as you move further up the supply chain. As such, upstream
manufacturers often experience a decrease in forecast accuracy as the buffer increases between the
customer and the manufacturer.
How Do You minimize the bullwhip effect?

Every industry has its own unique supply chain, inventory placements, and complexities.
However, after analyzing the bullwhip effect and implementing improvement steps,
inventories in the range of 10 to 30 percent can be reduced and 15 to 35 percent reduction
in instances of stock out situations and missed customer orders can be achieved. Below are
some of the methods to minimize the bullwhip effect.
1. Accept and understand the bullwhip effect: The first and the most important step towards
improvement is the recognition of the presence of the bullwhip effect. Many companies fail
to acknowledge that high buffer inventories exist throughout their supply chain. A detailed
stock analysis of the inventory points from stores to raw material suppliers will help uncover
idle excess inventories. Supply chain managers can further analyze the reasons for excess
inventories, take corrective action and set norms.
2. Improve the inventory planning process: Inventory planning is a careful mix of historical
trends for seasonal demand, forward-looking demand, new product launches and
discontinuation of older products. Safety stock settings and min-max stock range of each
inventory point need to be reviewed and periodically adjusted. Inventories lying in the entire
network need to be balanced based on regional demands. Regular reporting and early
warning system need to be implemented for major deviations from the set inventory norms.
3. Improve the raw material planning process: Purchase managers generally tend to order in
advance and keep high buffers of raw material to avoid disruption in production. Raw
material planning needs to be directly linked to the production plan. Production plan needs
to be released sufficiently in advance to respect the general purchasing lead times.
Consolidation to a smaller vendor base from a larger vendor base, for similar raw material,
will improve the flexibility and reliability of the supplies. This, in turn, will result in lower raw
material inventories.
4. Collaboration and information sharing between managers: There might be some inter-
conflicting targets between purchasing managers, production managers, logistics managers
and sales managers. Giving more weight to common company objectives in performance
evaluation will improve collaboration between different departments. Also providing regular
and structured inter-departmental meetings will improve information sharing and decision-
making process.
5. Optimize the minimum order quantity and offer stable pricing: Certain products have high
minimum order quantity for end customers resulting in overall high gaps between
subsequent orders. Lowering the minimum order quantity to an optimal level will help
provide create smoother order patterns. Stable pricing throughout the year instead of
frequent promotional offers and discounts may also create stable and predictable demand.
Unit 2
Q9 What are the main functions of Transportation?
Ans
Transportation functionality:
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Transportation is the most visible of all functions of logistics and high contributor to logistics
cost. We can see trucks, containers and wagon loads of material being moved from place to
place as an activity directly associated with trade and business. We should also appreciate that
this is an activity that adds highest amount of cost to the activity of making inputs and outputs
available to consumers. Transportation function moves the products to meet customer
expectations at minimum cost.
The functions of transportation in Logistics Transportation Functionality provides two

major functions which are described below:
Product Movement
To move various types of products whether it is raw materials, components, semi- finished
goods, packaging material, scrap, and so on, transportation is very essential. While moving semi-
finished goods or W.I.P., transportation moves them to the next stage in manufacturing, whereas
while moving finished goods, it plays a role of physically bringing the goods closer to the ultimate
consumers.
• Transportation of a product involves the use of temporal (time) resources. A particular
product is inaccessible while it is in-transit. Such types of products, are called in-transit
inventories. These products are significantly important because they influence a variety of
supply chain decisions.
• Transportation of a product involves the use of financial resources. Transportation of
a product involves various costs such as cost of driver, cleaner, fuel, taxes, repairs/
maintenance, etc.
• Transportation of a product also uses environmental resources either directly or indirectly.
In direct terms, transportation uses a, very large amount of energy in terms of fuel and oil.
In indirect terms transportation creates environmental expenses in terms of congestion, air-
pollution and noise pollution.
Product storage
One of the functions of transportation is temporary storage of goods. This function may be
called as the secondary function of transportation as transportation is not meant for storage of
goods. E.g.: In case the goods have to be moved once again within just a few days. It is advisable
to keep them stored in the transport vehicle themselves. This will avoid the cost of unloading and
loading as well as the possible damage to goods during such operations.
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Subject: Logistics
Q10 Explain Multi modal modes of transportation with help of examples

Ans: Intermodal Transportation:
Intermodal transportation is the use of more than one mode of transport to move a shipment to
its destination. A variety of intermodal combinations are possible depending upon the type and
amount of goods, the time of delivery, the pricing factor, etc. the most common combination is that
of the motor carrier and railway.
Intermodal combination of transport has also helped to increase the revenue of each of the
modes of transport. On land it has been found that a combination of truck and rail mode of
transport offer a better deal in terms of cost and time rather than transport by truck alone. In
general, therefore intermodal means of transport helps to bring together different modes of
transport to create a price and /or service offering that may not be matched by any single mode
transport.
Various Intermodal combinations

1) Piggyback / railroad: It is a specialized form of containerization in which rail and and road
transport co-ordinate. In piggyback, the carrier places the motor carrier trailer on a rail
flatcar, which moves the trailer by rail for a long distance. A motor carrier then moves to
trailer for short-distance pickups and deliveries.
2) Fishy back/ Containership/ trainship: Containership, Fishy back, trainship and example of the
oldest form of intermodal transport. They utilize waterways, which e of the least expensive
modes for product movement. The Fishy back, trainship and containership concept loads a
truck trailer, railcar, or container onto a barge or ship for the shipment.
3) Birdy back: Birdy back is a combination of air and road transport. The consingnment is placed
on the Airbus / Air truck / Air cargo at the airport of origin and then transported by Airways
upto Airport of destination.
Q11 What are the economic and service benefits of having a warehouse?
Ans: Benefits from warehousing / warehousing functionality / operations:
Benefits from warehousing are classified on the basis of economics (cost) and service .
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Subject: Logistics
Economic Benefits:
Warehousing helps to reduce the overall logistical cost. This can be done in four ways
1. Consolidation of materials: The warehouse can be used to receive material from many
plants. This material received can then be consolidated to supply to a single customer or a
single destination. This helps to supply many small shipments to a single, destination as a
single large shipment. This helps in reducing the overall cost of transportation, Example, if a
courier company wants to send a lot of packages from different sources in Mumbai to
London, it brings all the packages to a single warehouse where all the packages, (in a given
time period) are consolidated and sent as a single large package.
2. Breaking of bulk materials: The warehouse receives materials from the manufacturing plant to
supply to a number of customers. The warehouse thus breaks the bulk material into smaller packages
and supplies it to individual customers. Thus instead of the manufacturer sending the material to
individual customers, it sends to a central warehouse close to the market area which then forwards
the materials to the customers. This helps in saving on the transportation cost. McDonalds in Mumbai
gets its raw materials from various parts of India to a central warehouse. Here it breaks the bulk
material and supplies it to individual outlets in Mumbai.
3.
Processing: Warehouse could help in final processing such as labeling, finishing touches, etc.
This helps to postpone shipment of final products. Example, if the manufacturer has many
customers demanding for the same product, but the finishing for each customer is different,
then the manufacturer can produce the goods and keep it in the warehouse and do the final
finishing touches in the warehouse as and when the customer demands for the product. In this
way the manufacturer does not have to keep a separate inventory for each and every customer.
This helps to reduce inventory and thus saves on cost.
4. Storing: Storing is essential for all the goods, especially seasonal goods. If the demand is in a
particular time of the year, the goods can still be produced throughout the year and stored. This
helps in uniform production throughout the year thus saving on production cost. Example, in the
paints industry in India, the demand is very high during Diwali time. But the companies
produce throughout the year and store the goods in the warehouse.
Service Benefits:
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Subject: Logistics
These benefits are mainly intended to improve the service of the logistics and may or may
not reduce cost. The service benefits are as follows:
1. Reducing delivery time: Warehouses can be located near the key market areas when the
demand is high in order to reduce the time required to deliver to the market. Thus the goods
that are manufactured can be warehoused at a location close to the market where the demand
is identified in advance. This is specially true for seasonal industries as it helps them to cater to
the market when the season arrives.
2. Assortment: Here the warehouse stores Various goods in anticipation of customer demands. It
supplies to the customer the mixture of goods required by him. This allows larger shipment quantities to
the customer thus reducing transportation cost. It also reduces the number of suppliers the customer
has to deal with. This is true with distributors, who store goods from different suppliers which are
supplied to the retailer when required. Thus the retailer does not have to interact with each and every
supplier and can deal with the distributor for a number of goods.
3. In transit mixing/Cross Dock : The various bulk materials are broken down and then mixed so
that goods can be taken to the customer as per his requirement. For example there are lots of
retail outlets in the city who may require different quantities of coca cola, fanta, thums- up, etc.
Coca Cola as a company has a central warehouse where truckloads of various products (coke,
fanta, thums-up, etc.) arrive. Here the goods are broken down to crates and are supplied to
different retail outlet as per the requirement. This saves on the transportation cost and also
caters to the exact requirements of the customer.
4. Manufacturing support: In order to get economies of scale in production, a continuous flow of

raw materials is required. If there is a disruption in the supply of raw materials for any reason, it may
cause the production to stop. In order to maintain continuous production and have economies of
scale, the raw materials are stored in a warehouse.
5. Market Presence: By having a warehouse close to the market, the company can cater to the
market well and thus avoid any stock outs. The company can thus be more responsive towards
customer needs.
Q12 Explain the different types of warehouses with examples

Ans: Warehouse options (Types of Warehouses)
The decision on which type of warehouse to select will depend on various financial and non -
financial factors. Financial factors include Operational Cost (cost: of, running the warehouse) and
Capital cost (cost of setting up the warehouse). Non-financial factors include control, customer
service, expertise and perceived risks.
1. Private Warehouse: A private warehouse is operated by the firm owning the product. The facility
(land and building) could be either owned or leased. It is recommended to go in for a private
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Subject: Logistics
warehouse when the utilization of the warehouse is expected to be high so that the unit cost of
warehousing would be low. The advantages of having a private warehouse are that the
company can design the warehouse to suit its specific requirements. Also the company has a
great deal of control and flexibility on the warehouse operations. The company can claim
depreciation on the flexibility asset and if there is excess space the company can look at renting
the space out to get some extra revenue. But the capital cost of a private warehouse is very
high. Due to which the funds of the company could get blocked (which could be used for other
profitable use). Also the operating cost per unit of goods would be high if not utilized properly.
2. Public Warehouse: If an enterprise does not want to own a warehouse, it can go for public
warehouse. These are warehouses whose facility can be hired by anyone. It gives marketing
flexibility as the company can change the location and size depending on the market demand.
As a public warehouse caters to many clients, economies of scale could be achieved which
could reduce cost. Public warehouse are into the business of providing warehouse operations
and hence provide expertise in the field. The different types of public warehouses are general
merchandise, refrigerated, special commodity (special handling), bonded and household
goods. Bonded warehouses are used to store goods before the tax are paid and is uses
extensively in international business during exports and imports.
3. Contract Warehouse: There is a long-term contract signed between the company and a
party providing warehousing services. The long-term contract could help in lowering the cost.
Apart from providing lower cost (cost divided over number of clients), it provides for expertise
in warehousing and flexibility. Normally contract warehouse also provide for additional
services such as transportation, order processing, customer service, etc.
Q13 What are the factors affecting the location of a warehouse?

Ans: The primary considerations while locating the warehouse are:
Cost – Warehouse may be located near production plant to reduce operating cost.
Customer Service – Warehouse may be located near market to serve the customer well.
Steps in Site Selection of Warehouse

While deciding the location of warehouse following factors are to be considered:
• Desired level of customer service
• Nature of product i.e. seasonal, perishable etc.
• Presence of Competitor’s warehouse
• Marketing oriented – closer to market
• Production oriented – closer to plant
• Cost of distribution to market area
• Availability of transportation facilities and its cost
• Availability and cost of basic infrastructure i.e. power, water, gas, sewerage etc.
• Availability and cost of labour supply
• Local taxation levied by the local authority in the area.
• Potential for further expansion of warehouse.
• Geographical hazards like floods, earthquake etc.
Q14 What are the objectives of material handling?
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Subject: Logistics
Ans: Meaning:
Material handling is an important element, which determines the productivity of a
warehouse. Material handling is highly labor intensive as compared to any other operations in
a warehouse. Therefore the personnel cost in material handling is usually high. Most of the
activities in material handling require significant manual handling and hence has little benefits
from computerization and improved information technology.
Objectives / Roles:
1. Handling: The primary handling objective in a warehouse is to sort inbound shipment
according to precise customer requirements. The three handling activities are receiving, in-
storage handling and shipping.
2. Receiving: When material reaches the warehouse it has to be received by the warehouse.
One of the important activities here is to unload the goods from the transportation vehicle.
Most of the time unloading is done manually. Containerized or unit-load shipments
considerably reduce the unloading time.
3. In-storage Handling: In-storage handling consists of all movement within a warehouse
facility. The two types of in-storage handling are transfer and section.
Various transfers of goods happen within the warehouse. The goods as soon as they are received
in the warehouse are transferred to the storage area. The second transfer may be required during order
selection where goods are transferred from storage area to order selection area. The final transfer of
goods takes place when the goods are finally shipped from the warehouse. Here the goods are
transferred from the or election to the shipping or outbound area.
Selection activity basically involves selecting different materials and is grouped to meet
the, customer demand. The idea of using warehouse as a selection area is to reduce the
overall transportation cost.
4. Shipping: Shipping consists of checking and loading orders onto transportation vehicles.
As in receiving, shipping is manually performed in most systems.
Q15 What are the guiding principles for selection of material handling system?
Ans: Material handling principles:
The principles of materials handling which ensures effective and efficient handling of material are as
follows:
1. Planning Principle: All material handling should be the result of a deliberate plan. Non-plan
movement of materials should be avoided as far as possible.
2. Standardization Principle: Material handling equipment, controls, and software should be
standardized. While standardizing it should be ensured that performance objectives and flexibility in
operations are not sacrificed.
3. Work Principle: Material handling work should be minimized without sacrificing productivity.
4. Ergonomic Principle: human capabilities and limitations must be taken into consideration while
designing material handling tasks and equipments.
5. Unit Load: Unit load should be properly determined so that it accommodates all materials and
material handling becomes easier.
6. Space Utilization Principle: Effective and efficient use must be made of all available space.
7.System Principle: Material handling and storage should be fully integrated so that there is a
smooth
flow of materials in the warehouse.
8. Automation Principle: Material handling operations should be mechanized and/or automated
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Subject: Logistics
where feasible in order to improve operational efficiency. This will reduce potentially unsafe
manual labor operations.
9. Environmental Principle: Environmental impact and energy consumption such as petrol, diesel,
should be considered as criteria when designing or selecting material handling systems.
10. Life Cycle Cost Principle: Cost of equipment throughout its entire lifecycle and not only its
initial cost should be considered before selecting it.
Q16 What are the Logistical functions of Packaging?

Ans: Meaning:
Packaging though an integral part of logistics, also affect marketing and production function.
Packaging helps in promotion of products and size, shape, material of the package affects
production labour efficiency.
Logistical Functions of Packaging:

How packaging helps reducing overall costs and value addition?
1) Containment: Packaging provides containment for products.
2) Protection: Protection from environment, pilferage, shocks of handling and moving.
3) Cube Minimization: Reducing the space occupied by the product to cut the freight
charge. E.g. Round containers, oval shaped containers and square shaped bottles, etc.
4) Weight minimization: Reducing the weight of the consignment to fully utilize the
capacity of the truck. E.g. Liquids are packed in plastic bottles rather than glass bottles.
5) Apportionment: Grouping goods into convenient unit for distribution. E.g. mangos in
boxes, milk bags in crates.
6) Facilitating handling & using: fruit juices in tetra packs, handling and consumption by users
7) Convenience: Facilitating handling, storage & reuse. E.g. ink cartridges for printers,
reusable corrugated boxes, bottles and refill packs.
8) Communication:
• Content Identification – Product, manufacturer, universal code etc.
• Tracking: Bar codes and scanners.
• Handling Instructions: Fragile, This side up, temperature restrictions,
environment concerns, potential dangers etc
Q17 What factors are to be taken into consideration before selecting material handling equipments?
Ans: The selection of materials handling equipment requires the attaining of proper balance between
the production problem, the capabilities of the equipment available, and the human element
involved. The ultimate aim is to arrive at the lowest cost per unit of material handled.
Equipment factors to be taken into consideration may well include the following:
1. Adaptability: the load carrying and movement characteristics of the equipment

should fit the materials handling problem.
2. Flexibility: Where possible the equipment should have flexibility to handle more than
one material, referring either to class or size.
3. Load capacity: Equipment selected should have great enough load-carrying characteristics
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Subject: Logistics
to do the job effectively, yet should not be too large and result in excessive operating costs.
4. Power: Enough power should be available to do the job.
5. Speed: Rapidity of movement of material, within the limits of the production

process or plant safety, should be considered
6. Space requirements: The space required to install or operate materials handling

equipment is an important factor in its selection.
7. Supervision required: As applied to equipment selection, this refers to the

degree of automaticity designed into the equipment.
8. Ease of maintenance: Equipment selected should be easily maintained at reasonable

cost. Environment: Equipment selected must conform to any environment regulations.
9. Cost: The consideration of the cost of the equipment is an obvious factor in its selection.
10. ENGINEERING FACTORS: Selection of equipment also depends on engineering factors

like door and ceiling dimensions, floor space, floor conditions and structural strength.
11. EQUIPMENT RELIABILITY Reliability of the equipment and supplier reputation and the after
sale service also plays an important role in selecting material handling equipments.
Unit- 3
Q18 What are the functions of inventory?
Ans: Inventory functionality:
A major portion of the investment of the company is in inventory. Hence, the company must assure
itself of at least a minimum amount of return on this investment. As the same time, experts in
the field of accounts have found it difficult to exactly quantify the trade -off between the
amounts invested in the inventory and the service levels, and operating efficiencies. In other
words, it cannot be exactly quantified as to the amount of 'loss' suffered with regard to service
offered to client, or how much other operating efficiencies have gone down, because of the
money invested in inventory. Due to this, many enterprises carry an average amount of
inventory that can exceed their basic requirement. This can be understood better by studying
four prime functions underlying inventory commitments.
1. Geographical Specialization : Because of the requirements of factors of production such as
power, materials, water and labor, the economical location for manufacturing is often at a
considerable distance from the major market.
For example: for an automobile industry, components such as tyres, batteries, transmission,
and springs are essential components but a tyre industry prefers to be located at a place when
materials for tyre manufacturing are easily available because this minimizes transportation cost
for that industry. Same is the case regarding the manufacturer of other components. This
geographical separation of the components manufacturing units will reduce the cost of the
components produced. But, for the final assembly, these components have to be transported to
the main' assembly plant of the automobile company.
Geographical separation also requires manufactured goods from various locations to be collected at a
stage warehouse. These are then combined as a mixed product shipment and sent to the required
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Subject: Logistics
destination.
For example: Procter and Gamble uses its distribution centers to combine products from its laundry,
food, and health care divisions to offer the customer a single integrated shipment. For an enterprise
geographical separation, permits economic specialization between the manufacturing and distribution
unit. Let us once again consider the case of automobile factory. Because of the proximity of the
availability of power, water, materials and labor the tyre plant, the spring manufacturing plant will be
located at different geographical points. Each geographical location of course will require its basic
inventory. The economies gained through geographical specialization are expected to more than offset
increased inventory and transportation cost, in case the company had decided to manufacture all the
required components at it main assembly plant.
2. Decoupling: A second inventory function, decoupling provides maximum operating efficiency
within a single manufacturing facility by stockpiling work-in-progress between production operations.
Decoupling processes permit each product to be manufactured and distributed in economic lot sizes
that are greater than market demands. For example, let us consider a tyre - manufacturing unit. This unit
once the production operation begins will continue to produce a certain type of tyre till an economic lot
size is produced. There may not be a market demand for the entire lot of production. But the production
of the lot was carried out keeping in mind the future demand as well as the economies of production.
Customer can be sent large shipments with full-load capacity of trucks at minimum freight cost. In a way,
therefore, decoupling tends to "buffer" or "cushion" the operations of an enterprise from uncertainty.
Decoupling, therefore, enables increased operating efficiency at a single location. In contrast,
geographical specialization looks at the operating efficiency at multiple locations because from these
multiple locations, goods have to be dispatched to the main manufacturing unit.
3. Balancing supply and demand: A third inventory function, balancing, is concerned with the elapsed
time between consumption and manufacturing. Balancing inventory means the availability of supply is
attempted to reconcile or match with the demand for the product. The most notable example is seasonal
production and year-round consumption. In the West, Orange juice is consumed to a great extent
throughout the year. But the production (i.e., reaping or harvesting) of oranges is basically seasonal. So
the seasonal availability of oranges has to be reconciled to the year-round demand for orange juice.
Balancing of inventories, therefore, attempts to link the economies of manufacturing with the variations
of consumption. When the demand for a product is concentrated in a very short selling season,
manufacturers, wholesalers, and retailers are forced to plan about stocking of goods in advance of the
point of selling period. In our country we can take the example of a particular festival season, say Diwali.
Every retailer, wholesaler and manufacturer expects a boom for gift articles, sweet and new clothes. But
these enterprises have to plan out the amount of goods and products that are required to be
manufactured, and stockpiled. There should be a proper balance between the expected demand and the
availability of supply. This is to minimize the risk of carryover into the next selling season. If such situation
arises then the quality of goods and its marketability will be the problems for its sale.
4. Buffer uncertainties: The safety stock or buffer stock function concerns short range
variation in either demand or replenishment. The safety stock requirement results from
uncertainly concerning future sales. Safety stocks protects against two types of uncertainties:
• Demand can be in excess of the forecast, during the performance cycle.
• Dealys in the length of the performance cycle itself.
In the first type of uncertainly the customer may demand more than what he had actually planned. It
can also happen that the demands from the customer may also fall, which can also upset inventory. In
the second type of uncertainly, there can be delay in order-receipt from the customer,
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Subject: Logistics
or delay in processing of the order, or delay in transportation of required material. This brings
about an uncertainly in the length of the performance cycle.
To tide over these uncertainties, there are statistical and mathematical techniques which
help managers to plan the levels of safety or buffer stock. With these available techniques,
the probability and the magnitude of each type of uncertainly can be reasonably estimated,
The function of buffer or safety stock 9nventory is to provide a specified degree of
protection against this type of uncertainty.
5. Service level: The service level is the target specified by the management. It defines
the performance objectives, which the inventory function must be capable of
achieving. The service level can be defined in terms of an order cycle time, case fill
rate, line fill rate, order fill rate, or any combination of these. • The order cycle time
(performance cycle) is the elapsed time between the release of a purchase order by
a customer and the receipt of the corresponding shipment.
• A case fill rate defines the percentage of cases or units ordered that can be shipped as
requested. For example, a 95 percent case fill rate indicates that, on an average 95 cases
out of 100 could be filled from available stock. The remaining 5 cases would be back-
ordered or deleted.
• A line fill rate is the percentage of order lines that could be filled completely. Each
line on an order is a request for an individual product, so an order may have multiple
lines. For example, when a customer order is received for 80 units of product A and
20 units of product B, the order contains 100 cases and 2 lines. If there are only 75
units of product A available and all 20 units of product B, the case fill would be 95
percent [(75 + 20) / (80 + 20)] and the line fill would be 50 percent (1/2).
• Order fill rate is the percentage of customer orders that could be filled completely. In the
above example, the order could not be completely filled. So the resulting order fill
would be zero.
Q19 Write a short note on RORO & LASH.

Ans:
Transportation infrastructure
Transportation infrastructures consist of:
• The rights-of-way – Roads, Rail Network, Airports, etc. are called as rights of way.
Without this infrastructure transportation cannot take place. This infrastructure is usally
provided by the government.
• Vehicles
• Carrier organizations
That offer transportation services on hire basis or internal basis. The nature infrastructure
required determines the mode of transportation that would be adopted by the company.
Roll-on/roll-off (RORO or ro-ro) ships are vessels designed to carry wheeled cargo such as
automobiles, trucks, semi-trailer trucks, trailers or railroad cars that are driven on and off the
ship on their own wheels. This is in contrast to lo-lo (lift on lift off) vessels which use a crane to
load and unload cargo.
RORO vessels have built-in ramps which allow the cargo to be efficiently “rolled on” and “rolled off’
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Subject: Logistics
the vessel when in port. While smaller ferries that operate across rivers and other short distances still
often have built-in ramps, the term RORO is generally reserved for larger ocean-going vessels. The
ramps and doors may be stern-only or bow and stern for quick loading.
The lighter aboard ship (BASH) system refers to the practice of loading barges (lighters) aboard a
larger vessel for transport. It was developed in response to a need to transport lighters, a type of
unpowered barge, between inland waterways separated by open seas. Lighters are typically towed or
pushed around harbors, canals or rivers and cannot be relocated under their own power. The carrier
ships are known variously as LASH carriers, barge carriers, kangaroo ships or lighter transport ships.
Q20 What is EOQ? State the assumptions of the same and the limitations.
Ans: EOQ (Economic Order Quantity):
There are different EGQ Models. The most classical model was first proposed by Wilson
in 1928. It is popularly known as EOQ (Economic Order Quantity) Model or "Wilson's Lot Size
Formula".
Basic (or Wilson) EOQ Model
Concept of Economic order Quantity (EOQ):

One of the major inventory control problems to be resolved is how much inventory should
be added when inventory is replenished. If the firm is buying raw materials, it has to decide lots in
which it has to be purchased on each replenishment. These problems are called order e1quantity
problems, and the task of the firm is to determine the optimum or Economic Order Quantity.
Determining an optimum inventory level involves 2 types of costs: (a) Ordering Cost and, (b)
Carrying Cost. The Economic Order Quantity is that inventory level which minimizes the total of
ordering and carrying cost.
a) Ordering Cost: The term ordering cost is used in case of raw material and includes the
entire cost of acquiring raw materials. They include cost incurred in the following
activities: Requisitions, Purchase Ordering, Transporting, Receiving, inspecting and
Storing. Ordering cost includes the number of orders; thus the more frequently
inventory is required, the higher the firms ordering cost. On the other hand, if the firm
maintains large inventory levels, there will be few orders placed and ordering cost will
relatively small. Thus ordering cost decrease with increasing size of the inventory.
b) Carrying Cost: Cost incurred on maintaining a given level of inventory are called carrying costs.
They include storage, insurance, taxes, deterioration and obsolescence, etc. Carrying cost vary
with inventory size. The economic size of inventory would thus depend on trade
off between carrying cost and ordering cost.
The Economic Order Quantity which is determined by the interaction of the above costs
can be found out graphically as given below.
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Subject: Logistics
In the figure, costs - carrying cost and ordering cost are plotted on vertical axis and horizontal
axis is used to represent the order size. Total carrying cost increase as the: girder size increases,
because on an average a larger inventory level will be maintained, and ordering cost decline
with increase in order size because larger order size means less number of orders. The
Economic Order Quantity is determined at the point where there is an intersection of the
carrying cost and the ordering cost. Thus the firm's operating profit is maximum at point Q.
Assumptions underlying the EOQ model:

i. The demand of the item occurs uniformly over the period at a know rate.
ii. The replenishment of the stock is instantaneous.
iii. The time that elapses between placing a replenishment order and receiving the item into
stock, called lead time is zero.
iv. The price per unit is fixed and is independent order size.
v. The cost of placing an order and processing of the delivery is fixed and does not vary with
the lot size.
vi. The inventory carrying charges vary, directly and linearly with the size of the inventory and
are expressed as a percentage of average inventory investment.
vii. The item can be produce in the quantities desired, there being no restriction of any kind. viii.
The item has fairly long shelf life, there being no fear of deterioration or spoilage.
Nowadays EOO technique is not much in use because an open order with delivery schedule
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Subject: Logistics
can be placed on a supplier for all future periods. This keeps down the purchasing cost. With the
availability of computer links (Networking techniques / E mail / E - commerce, M - commerce, C -
commerce, etc.) between the buyer and the supplier, there is no need to physically raise a purchase
order. This helps in avoiding major purchasing cost. At the same time computer helps in ensuring
Just in Time inventory.
Limitations of EOQ:
1. The assumptions listed above may not come true in real life situations, thus limiting the use of
this model.
2. Price off materials may not remain same throughout the year.
3. Availability of materials is another constraint. Material can only be purchased at the time when it
is available.
4. There can be delays in real situation in placing orders since many times the calculated EOQ is an
inconvenient number and some time is wasted in taking decision for rounding off this number. In
real situations, suppliers receive an irregular stream of orders since the use of EOQ usually leads to
orders at random points.
5. If suppliers are allowing discounts after purchasing quantities above a particular level, the
discount will also have to be taken into consideration for fixing the ordering quantity. Also
purchasing costs are nowadays reduced to a great extent because of computer links between buyer
and seller. So in practice purchasing cost and inventory carrying cost are not exactly opposite to
each other. Often the inventory carrying cost and purchasing cost cannot be identified accurately
and sometimes cannot be even identified properly.
Q21 COMPARISON BETWEEN DRP & MRP.

Ans:
DRP MRP
1.Scope Outbound logistics Inbound logistics
2.Dependence for Market Production Schedule worked
planning inputs out based on past data in the
organization
[forecast based on past data]
3. Coordination Once the finished goods are Up to Finished Goods
responsibility produced. starting from raw materials
production.
4. Nature of plan Short term and accurate
5. What is forecast? Finished goods Dependent demand
6. Planning Tool Schedule prepared for Production schedule
delivery of supplies in the
outbound logistical net
work.
7. Inventory SKUs Raw Materials, components
management of?
8. Planning availability of Market[retailers] & Raw material stores,
stock at? warehouses Conversion process &
finished goods store
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Subject: Logistics
Q22 What is Selective Inventory Control? What are various methods adopted in Selective
Inventory Control policy?
Ans: Inventory control
Each item of inventory used by an organization has its own criteria of importance. A check or control has
to be kept on each of these items. It is obvious that depending upon the type of the item, there will be
variations in the type of controls employed. That is the controls applied are on a selective basis. This is
selective control. Selective control car, be divided into the following categories:
ABC Analysis: Criterion Employed – usage value. Statistically speaking, in any industry in general, there
are a few items only that form the major or expenditure on materials. Hence, in ABC analysis, depending
upon the annual usage of the materials, items are broadly classified as A, B or C. Such a categorization
helps the company to give only the necessary importance that is required for an item.
A) Items: On a general basis, it is found that 5 to 10% of the total items with an
organization account for about 70 to 75% of the total amount of money spent on materials.
Quite naturally, a strict control has to be kept on their usage. Because of their high cost, these
items have to be preferably stocked in smaller quantities. This will automatically mean that
they have to be procured or re-ordered more frequently in smaller batch quantities.
B) Items: Broadly, they form 10 to 15 % of the total items and represent about 10 to 15 % of
the total expenditure on the materials. These items are intermediate in nature regarding their
importance. Hence, the controls applied on these items need not be as rigid and detailed as in
the case of A-items.
C) Items: These items are numerous. They may form as much as 70 to 80 % no of the total
number of items. Again, relatively speaking they are inexpensive contributing about say 5 to 10
% of the total annual expenditure on materials. They are, therefore, insignificant in the sense
that they do not require any rigid control over them as compared to the A and B items. In terms
of their procurement, the policy adopted is generally reverse of that applied for the A items.
That is, C items are procured in sufficiently large quantities and not very frequently.
ABC analysis can be applied to every aspect of materials management it can be applied in the
case of( a) purchasing, (b) receiving, (c) inspeotion, (d) store-keeping (e) issuing of stores, (f),
verification of bills, (g) inventory control, (h) value analysis. The purpose of A-B-C analysis can
be enumerated as follows :
To separate out the items, normally in terms of their annual consumption.
i. To avoid wasteful expenditure.
ii. To have a selective control on the various items of usage.
iii. To have a more rationale purchasing policy. That is, priority is given to A-
items regarding their purchase etc.
iv. To have a better analysis of cost and item before any purchase is made.
v. There is better follow-up regarding the purchase and the usage of the items.
vi. An effective value analysis about the items used by the company is created.
HML Analysis: Criterion Employed - only unit price of the item.

Items are classified into three groups labeled as High - Medium - Low. The HML analysis is very similar to
the ABC Analysis, the difference being instead of usage value, the price criterion is used. In their
classification, the items used by the company are arranged in descending orders of their unit price. After
this, the management of the company uses its discretion and judgment to decide the cut off lines for
deciding the three categories. For example, the management may decide that all items of unit price value
above Rs 500 should be categorized as H items, items whose, unit price falls
20
Subject: Logistics
between Rs 50 and Rs 500 should be categorized as M items and items whose unit price falls
below Rs 50 should be categorized as L items. The categorization therefore is decided by the
management. HML analysis helps an organization to take decisions on the following:
a) It helps to assess the security requirements and the type of storage for high priced
items. For example, expensive ball bearings can be kept under lock and key in a cupboard.
b) The frequency of stock checking is decided on the basis of the cost item. In other words,
more expensive the item, more frequent will be its stock-checking.
c) A control on purchases and buying policies can be exercised by the company. This means H and
M items will not be ordered in excess of the required minimum quantity. However, in the case of L
items, they may be purchased in bulk in order to avail the benefits of bulk purchase.
VED Analysis: Criterion Employed – criticality of the item. VED Analysis attempts to classify the
items used into three broad categories, namely Vital, Essential, and Desirable. The analysis
classifies items on the basis of their criticality for the industry or company.
• Vital: Vital category items are those items without which the production activities or any
other activity of the company, would come to a halt, or at least be drastically affected.
• Essential: Essential items are those items whose stock - out cost is very high for
the company.
• Desirable: Desirable items are those items whose stock-out or shortage causes only a minor
disruption for a short duration in the production schedule. The cost incurred is very
nominal.
VED Analysis is very useful to categorize items of spare parts and components. In fact, in the
inventory control of spare parts and components it is advisable, for the organization to use a
combination of ABC and VED Analysis. Such control system would be found to be more effective
and meaningful.
SDE Analysis: Criterion Employed – Procurement diff100711160`14e. how easy or difficult it

is to procure each of these, items.
S-D-E stands for Scarce, Difficult and Easy. It attempts to classify items on the basis of its
availability or procurement such as
a) Its non-availability.
b) How scarce it is.
c) Does it have a longer lead time?
d) Where is the geographical location of the suppliers of the item, i.e. close by, or very far away.
e) How reliable (or unreliable) ,after the suppliers of the item, etc.
• Scarce: These are generally short in supply, or are channelized through government
agencies. If the company feels that a lot of time as well as expenditure is involved in
procuring these items, it would be advisable for the company to procure these items,
say once a year.
• Difficult: These items are available indigenously, but are difficult to procure. "Difficult"
categorization also includes those items which are procured from far off places and whose
suppliers cannot be relied upon. Sometimes it may happen that certain items are difficult to
manufacture and further, there may be only one or two companies who manufacture this item.
In order to procure such items in time for production, the manufacturers may have to be given
an order well in advance. Such items are also classified under "difficult" Category.
• Easy: As the name suggests, these items are easily and readily available. They include all those
items that are produced according to commercial standards, items which are able to
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Subject: Logistics
be procured locally without any difficulty, etc.
G-NG-LF Analysis/ GOLF Analysis: Criterion employed – Source of procurement, that is, foreign, local,
government, etc. G-NG-LF Analysis, or also called GOLF Analysis, categorizes items based on the nature
of suppliers. The nature is fixed or determined on the basis of quality of suppliers, lead time of supply,
terms of payment, continuity and regularity of supply, extent of administrative work involved in the
procurement, etc. The analysis classifies items into four broad groups – G, NG (O), L and F. it is similar to
the grouping made under the SIDE analysis.
G group covers all those items which are procured from government suppliers, namely State
trading Corporation. Minerals and Metal Trading Corporation (MMTC) and various public sector
undertakings. The procurement transactions with these category of suppliers normally involves
a long lead time. Many times these suppliers demand payment for goods in advance.
NG (which is represented by the letter 0 in the word GOLF) comprises of all those items which
are procured from various Non-Government, or, Ordinary suppliers. Transactions pertaining to
purchase of items under this category involve purchase from those suppliers who deliver goods
in a moderately reasonable time. Further, the suppliers also offer credit which may range from
to 45 days.
L group consists of those items which are purchased from local suppliers. These items
generally consist of cash purchases.
F group consists of items purchased from foreign suppliers the transactions with such
suppliers involve the following:
a) There is a lot of administrative and paper work involved before the actual delivery of
goods takes place.
b) The company may have to search for reliable foreign suppliers.
c) Opening of letters of credit, procuring necessary bank guarantees etc. will have
to be obtained.
d) The company may have to make necessary arrangements for shipping, port clearance
and transport.
S-OS Analysis: Criterion. time Dyed – seasonality of goods and their procurement during those
periods. The letter S stands for seasonal, and the letters OS stand for off seasonal. SOS analysis
deals with the availability or purchase of items during season, or during Off -season. Items
which are required to be purchased are normally identified as follows:
a) Specific seasonal items which are available only for a limited period of time. For
example agricultural products like raw mangoes, certain raw materials for cigarette
and paper industries etc. Since such items are available only for a limited period of
time, they are procured and stored to last till the next season.
b) Many items are seasonal but they are normally available throughout the year. However, the
purchase price of these items is generally lower during the harvest time. Because of this, the
company has to predetermine the quantity of these items to be purchased. In other words, the
company has to compare the cost savings accrued due to purchase of the items when the price
is lower against the inventory carrying costs for the remaining part of the year.
c) Non-seasonal items pertain to those items, which a company requires to procure when
they are not in season. The reason for this may be that the company found it very
expensive and non-profitable to purchase and stock these items in bulk when they were
available during the season.
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Subject: Logistics
F-S-N Analysis: Criterion employed: Rate of consumption of items in terms of rate of their issue
from stores.
In F-S-N analysis, items are classified according to their rate of consumption. The items are
classified broadly into three groups: F – means Fast moving, S – means Slow moving, N – means
Non-moving. The FSN analysis is conducted generally on the following basis:
• The last date of receipt of the items or the last date of the issue of items, whichever is
later, is taken into account.
• The time period is usually calculated in terms of months or number of days and it
pertains to the time elapsed seems the last movement was recorded.
a) The items to be considered to be "active" may be reviewed regularly on more

frequent basis.
b) Items whose stocks at hand are higher as compared to their rates of consumption.
c) Non-moving items whose consumption is "nil" or almost in significant.
X-Y-Z Analysis: Criterion employed: Amount invested in the inventory of each of the items XYZ
analysis is based upon the value of the stocks, which are held. In other words, the investment made
in the inventory of each of the items is detailed, Those items, whose inventory investments values
are high, are called as X items. Y items consist of those items whose investment inventory values are
moderate. While Z items are those items whose investment inventory values are low. Normally XYZ
analysis is used along with either the ABC analysis or with HML analysis.
Q23 Explain what is Logistical Performance Measurement with reference to Internal & External
Performance measures.
Ans: Logistical Measurement
Increased competition and many times, slow economic growth has compelled many
enterprises to develop an efficient and effective logistical system within their organization. The task
of the logistics manager, or logistics controller, is to continuously keep measuring the performance
of the firm. In order to carry out this measurement process, the logistics manager or controller
focuses his attention on the development of the various resources of the firm and the attainment of
goals and targets.
Internal Performance Measurement:

Internal performance measurement basically focuses on the comparing of activities and processes
to previous operations and/or goals. For example a firm may compare the customer service with last
year's performance as well as this year's goals or target. Logistics performance measures are
classified into the following categories.
1) Cost: The most direct reflection of logistics performance is the actual cost incurred to
accomplish specific operating objectives. Logistics cost performance is normally
measured in terms of total amount of rupees spent, or terms of percentage of sales, or
in terms of cost per unit volume etc.
2) Customer Service: The measures of internal performance are designed evaluate ability of a firm
to evaluate ability of a firm to satisfy its customers. Common customer service measures are
done with the help of customer surveys, obtaining cusf8mpr feedback, obtaining feedback from
the company's sales force, evaluating the extent of stock outs, etc.
23
Subject: Logistics
3) Productivity Measures: Productivity is a relationship (usually a ratio or an index) between

output (goods and/or services) produced and quantities of inputs (resources) utilized by the
system to produced that output. If a company has a logistical system, which clearly identifies
and measures output as well as inputs, the calculation of productivity is quite routine for the
company. At the same time, however, the calculation of productivity can be
difficult in following cases:
(i) When both the outputs and inputs are difficult to measure for a given period of time.
(ii) The input as well as the output "mix" keeps on changing (iii) Data regarding inputs
and outputs are difficult to obtain.
Conceptually there are three basic productivity measures.
If all the inputs and all the outputs are over a given period of time are included in
the calculation of the value of productivity, we get what is called as total factor static
productivity ratio. The ratio is considered static because it is based on only one measurement,
i.e., figures pertaining to one period of time only.
If outputs and inputs in a system compare static productivity ratios from one
period to another period. We get what called a dynamic productivity index.
For example (Outputs for 2011) / (inputs for 2011)
(Outputs for 2010) / (inputs for 2010)
The third measure of productivity is the surrogate productivity measure. This includes factors
that are not directly included in the formula for the calculation of the productivity ratio, but are
highly correlated with productivity. Some of these factors that definitely influence productivity
are customer satisfaction, quality of the product, efficiency of the personnel, profits of the firm,
etc. Many logistics manager take the help of these factors to make the understanding and
interpretation of productivity more realistic and practical.
4) Asset Management It focuses on the utilization of capital investments in various facilities and
equipments. It also includes working capital utilized for purchasing inventory. The
investments are basically done to achieve the logistics goals fixed by the company.
Asset measurement is important because logistics,, equipments and inventory can
represent a substantial segment of the firths assets. Measure adopted for asset
management focus on the return on the investment generated by liquid assets (such as
inventory turnover) and fixed assets. The performance measures adopted for asset
management are inventory carrying cost, inventory levels (in terms of number of days
of supply), obsolete inventory return on net assets, etc.
5) Quality: Measures relating to quality are specially process oriented evaluation. They are
designed to determine the effectiveness of series of activities rather than an individual
activity. Quality however is difficult to measure. The logistics performance measure
includes the following frequency of damage, damage quantified in terms of rupees,
number of returns from customers,, cost of goods returned, etc. Delivery of, perfect
order is the ultimate measure of quality in logistic operations. Perfect order measures
whether an order proceeds smoothly through every step with regard to order entry,
credit clearance, inventory availability, accurate picking, on time delivery, correct
invoicing and payment without deductions.
Perfect order represents ideal performance. A perfect order should meet the following standers :
1. Complete delivery of all items requested.
2. Delivery to customers request date, say with maximum one days tolerance.
3. Complete and accurate documentation supporting the order, including the packing slip, bill of
24
Subject: Logistics
lading.
4. Perfect condition of the product that is faultlessly installed, correct configuration, customer
ready with no damage.
Today some companies have reported achieving about 55% of the perfect order but many
companies have reported achieving only 20% of the perfect order. This shows that achieving
the target of a perfect order is extremely difficult.
External performance measurement:

External performance measures are very necessary to monitor, understand, and maintain a
focused customer perspective and to gain innovative insight from other industries.
1) Customer perception measurement: Regular measurement of customer's perceptions is
necessary to have a leading edge in logistical performance. Such measures can be obtained
through surveys or by systematic order follow-up. Such survey asks questions regarding the
firms and competitors performance, in general or for specific order. A typical survey
incorporates the measurement of customer's perception regarding availability of
products/goods, performance cycle time, information availability regarding the product,
solution to problems faced by the customer's etc. the type of survey required may be
developed by the company itself or by professional consultant in the field.
2) Reengineering: Reengineering implies changes of various types and depth to a system, from a
slight renovation to a total overhaul. Business process reengineering (BPR) began as a private,
sector technique to help organizations fundamentally rethink how they do their work in order to
dramatically improve customer service, cut operational costs, and become world-class
competitors. A key stimulus for reengineering has been the continuing development and
deployment of sophisticated information systems and networks.
Q24 What is Activity-Based Costing?

Ans: The fundamental concept of activity – based costing is that expenses need to be assigned to the activity
that consumes a resource rather than to a budget unit. Activity based costing is based on the concept
that business activities are made up of a series of process that cause or consume costs. Managers can
determine the costs of possible alternative action by tracing the costs to their origin.
Example:
• Two products, produced in the same manufacturing facility, may require different
assembly and handling procedures.
• Out of the two products, one may need additional equipment or labour for
assembly or packaging operations.
• If total labour and equipment costs are allocated to the products on the basis of sales
or the number of units produced then both the items will be charged for additional
assembly and packaging operations require by only one of them.
• This will reduce the profitability of that product which did not require additional equipment or
labour because this product will be paying for the operations it did not need.
In the case of logistics, the key event is ultimately the customer. In other words, in logistical
activity –based costing, we determine if specific customer, order, product or service is
ultimately profitable to the company. This earns that the revenue has to be matched with the
specific costs. That is the logistics managers have to identify whether it is worth incurring the
costs in relation to the amount of revenue earned with regard to specific products.
25
Subject: Logistics
The logistics manager can use the results of activity based costing system to weigh possible
alternatives, improve decision making and also to improve efficiency and competitiveness of
the firm.
Assumptions made in ABC (Activity Based Costing) system: Two primary assumptions
that accompany an ABC system are:
(i) Individual costs in each part of the activities must be fairly homogeneous activities
(ii) Costs are proportional to the activities being measured.
Both these assumptions must be kept in mind when the system is designed. Further, the success of
entire system depends on the accurate tracing of costs to activities. If the firm can accurately trace the
costs to specific causes such as products, customers, supply channels and logistics activities, the results
of the ABC system can be more insightful and effective in implementation.
Features of Activity Based Costing:

1. It out performs more traditional approaches by providing better operational performance.
2. It develops information about cost drivers and the causal relationship these drivers have
with overhead resource consumption.
3. It gives a more accurate picture of expenses and helps management to make strategic
decisions about cost centers such as general marketing or integrated logistics.
4. It identifies potential areas for process improvement within cost areas such as labour,
equipment and supervision.
5. It can significantly enhance the effectiveness and efficiency of internal audit operations.
6. It helps managers to assess the performance of a business unit by examining
productivity, flexibility, quality, order cycle time and customer satisfaction.
Unit- 4
Q25 Write a short note on EDI (Electronic data Interchange)
Ans: EDI (Electronic data Interchange):
Electronic data Interchange (EDI) is the electronic, computer to computer transfer of standard
business documents between organizations. EDI is used extensively in LIS (Logistics Information
System) to enhance the breadths, timeliness, and quality of data. EDi applies to almost every aspect
of integrated Logistics ranging from paperless documentation flows to warehouse management with
barcode scanner. EDI transmission allows a development to be directly processed and acted upon by
the organization which receives the information. EDI replaces traditional transmission of documents
such as mail, telephone and even fax.
Advantages of EDI:
1. Cost reduction
2. Productivity gains
3. Faster order cycle times
4. Better focus on the customer
5. Reduced clerical work, paper and postage
6. Means to achieve a competitive edge, better working relationships with trading partners.
Q26 Explain the principles of Logistics Information System.

Ans: Principles of Logistics Information System:
26
Subject: Logistics
1) Availability: Logistics information must be readily and consistently available.

Information may be regarding order status, inventory status, etc Rapid availability is
very important to respond to decisions. Information availability can reduce customer
requirements and improve management uncertainties in operations and planning
2) Accuracy: Logistics information must reflect the current status of all the activities like
inventory levels, customer orders etc. E.g.: The actual level of inventories should match
with the LIS reported inventory levels. However if there is a large difference between
the actual inventories and those indicated by the information system inventory levels,
buffer stock or safety stock would be required to cover up the uncertainty.
3) Timeliness: The logistics information must be timely to provide quick management feedback.
Timeliness is measured in terms of delay that takes place between the commencement and
occurrence of an activity and when the activity is actually visible in the logistical information
system. E.g.: a company may receive a certain order which a customer desires to be executed
urgently. However, the database information system of the company is not fed with the details
regarding the urgency of the order for whatever reasons. This will cause delay in the actual
execution of the order. This delay indicates ineffectiveness in the planning process. Similar
delays can occur when the goods are moved from VVIP to finished goods. All this calls for timely
management controls so that corrective actions can be taken to minimize loss. Hence timely
information is very necessary to reduce uncertainty.
4) Exception based LIS: Logistics operations have to deal with a large number of customers,
products, suppliers, etc. E.g.: the status regarding inventory level for each product regarding the
amount of stock available, where the stock is located, etc. must be known. Another activity
whose status requires to be reviewed several times is the outstanding replenishment orders.
Such activities whose status requires a continuous review are considered as exceptions in the
logistical information system. Other examples of exception situations that LIS should highlight
are a) very large orders b) products having little or no inventory c) delayed shipments d)
decrease in operating productivity
5) Flexibility: LIS must contain the capability to be flexible in order to meet the needs of both,
the system users and the customers. E.g.: A particular retailer may want invoices for
each of his retail stores. Another retailer may require only one invoice for all his retail
stores. The LIS must be flexible to accommodate both the retailers.
6) Appropriate format: Logistics reports must be appropriately formatted so that they contain
the right information in the right structure and the right sequence. E.g.: If a company
has five distribution centres, then on one computer screen, the details of inventory
at all the five distribution centres should be available. The combined data on one
screen helps to make the better decisions.
Q27 What are the modern logistics infrastructures that could act as a boon for
organisation?
Ans:
GOLDEN QUADRILATERIAL
1) The Golden Quadrilateral is a highway network in India connecting Delhi, Mumbai,
Kolkata and Chennai, thus forming a Quadrilateral of sorts.
2) The largest highway project in India, initiated by Atal Bihari Vajpayee, is in the first
phase of the National Highways Development Project (NHDP) and consists of building
5,846km of four/six lane express highways at a cost of Rs.60,000 Cr.
27
Subject: Logistics
LOGISTICS PARKS
A Logistics Park is a logistic organization and management nodes relative
concentration of construction and development, with economic development nature
of urban logistical functional areas, it is also replying on related logistics services and
facilities to reduce logistics cost and improve logistics efficiency and improve the flow
of business services processing, raw material procurement, to facilitate direct contact
and consumption in the production and other activities, with the economic function
of the nature of industrial development zones.
DEDICATED FRIEGHT CORRIDOR
A network of more than 40 terminals, offering scheduled and on demand rapid rail
and road services between the hinterland and ports, and between major metros.
A Deep Water port is defined as “any fixed or floating man-made structures other
than a vessel, or any group of such of such structures, located beyond the territorial
sea and off the coast and which are used or intended for use as a port o r terminal
for the loading or unloading”.
Inland Container Depot (ICD) & Container Freight Station (CFS)
1) Facilities set up for handling and temporary storage of export / import laden
containers as well as empty containers
2) It is a common user customs controlled facility with public authority status, equipped
with warehousing space, adequate handling equipments and IT infrastructure
3) CFSs / ICDs provide an integrated platform for activities such as loading /
unloading, transporting and stuffing / de-stuffing of containers
4) CFS and ICD service providers also extend value-added services, including customs
clearance, less than container consolidation, refrigerated warehousing, hub-and-
spoke services, etc.
1) Maritime transport involves the shipment of goods (cargo) and people by sea and
other waterways
2) The dominant mode for international trade both for bulk transport of commodities
and containerized cargo
3) This is on account of its capacity to carry large quantities of cargo over long distances at
low cost
4) Maritime Logistics is the planning and performance of sending a shipment by sea and
other waterways from point a to point b in time and at a reasonable cost
5) One of the most globalized industries
1) Double stack container is a form of Intermodal freight transport where two containers
are stacked on rail cars
2) Introduced in North America in 1984, double stack has become increasingly common
3) Using double stack technology, a freight train of a given length can carry roughly twice as
many containers, sharply reducing costs per container
Unit Trains
1) Also known as Block train.
28
Subject: Logistics
2) Is a train in which all the wagons making it up are shipped from the same origin to the
same destination, without being split up or stored en route
3) It also enables railways to compete more effectively with road and water transport
4) This saves time and money, as well as the hassle, delays and confusion associated with
assembling and disassembling trains at rail yards near the origin and destination
5) However, unit trains are economical only for high-volume customers
6) Unit trains are usually used for the transportation of bulk goods such as coal, iron ore,
crude oil, cars etc
Q28 What is Inland container Depot (ICD’s).

Ans:
ICDs are dry ports. Dry ports at a distance far away from the shoreline handle all the import export formalities.
ICDs act like deep-water, ports installed inland or interior where the natural benefit of shoreline is non -
existing. This a large warehouse where containerized cargo is accepted for export. The exporter books his
cargo at an ICD and completes all export formalities. Thereon ICD moves the containers by mov ement
consolidation to natural port.
Functions of ICDs
 Receipt and dispatch / delivery of cargo

 Stuffing and stripping of containers
 Transit operations by rail / road to and from serving ports
 Customs clearance
 Temporary storage of cargo and containers
 Reworking of containers
 Maintenance and repair of container units
Benefits of ICD :
1. ICD connects major ports to hinterland.
2. ICD facilities customs clearance, export import formalities. ICDs ensure that business pers on does
not have to go to the deep water
3. ICD serves as consolidation facility and has handling equipment ports. Facility to group
small consignment and create container loads needs handling equipment.
4. Inter model transfer is a major operation in an ICD.
5. ICD increases the export potential of industries.
6. ICD decongests major ports.
7. Benefits of containerization can be fully availed only when we have a good net work of ICDs.
Q.31 Explain Global Issues & Challenges in logistics & Supply Chain Management.
Ans:
 Conflict in Business Objective & Requirement: A primary challenge is that each company in
the chain is likely to have conflicting business objectives and requirements. For example, a
supplier of raw materials would prefer a manufacturing company to purchase large amounts of
29
raw products on a regular basis. The supplier will also want the best possible price for its raw
product.
 Political Difference: Political actions in another country can have dramatic effects on the supply
chain; natural disasters might have a major impact on shipping and transportation; and wars,
labour strikes, or civil unrest can result in low productivity. The supply chain can also be
affected by shortages of raw materials or product components and transportation problems. Costs
of raw products and components also tend to vary over time.
 Fluctuation in Customer Demand: Global supply chain management also faces the challenge
of variations in customer demand that occur seasonally and over longer time periods. Managing
the production and transportation of goods over large distances to meet the peak period of
demand can be very difficult.
 Currency fluctuations: When dealing with suppliers or customers overseas, companies must
plan for fluctuating charges and income from foreign exchange rate variations.
 Maintaining intellectual property protection: A company might be able to have a product
assembled overseas more cost effectively than assembling it domestically. However, some
countries have less stringent laws regulating protection of intellectual property.
 Identifying and assuring the reliability of international business partners: With suppliers,
distributors, customers and business partners located in many regional areas of the world, it can
be difficult for companies to monitor the business practices and financial stability of all
organizations in the supply chain.
 Accessing finance and insurance: Financial transactions conducted internationally are always
more complicated than domestic transactions. Companies must establish lines of credit with
banks and work with other members of the supply chain to identify preferred methods of
payment. Obtaining the correct insurance to protect foreign property and shipments is also
essential.
 Compliance with international regulations and standards: Quality standards, import and
export restrictions, safety and packing regulations and labelling regulations vary around the
globe. For companies new to international trade, ensuring that materials provided by a foreign
supplier will meet all domestic entry regulations can be a daunting undertaking.
Q.32. Difference between Third party Logistics & Fourth Party Logistics.
30
OBJECTIVES
Q.1 Fill in the blanks:
Unit 1:
1) Forward logistics is concerned with movement of raw materials/finished
goods/funds/information in forward direction.
2) Supply Chain Management is a set of organizations directly linked by one or more of the
upstream & downstream.
3) Extended enterprise is a loosely coupled, self-organizing network of firms that combine
their economic output.
4) Customer Service is the key link between logistics & marketing.
5) Trends is the component of forecasting.
Unit 2:
6) Transportation creates Place utility.
7) Warehousing creates time utility by storing the product until they are needed.
8) In case of contract warehousing the client is expected to enter into a contract for a specific
period of time.
31
9) Hoists are devices which move material vertically & horizontally in a limited area.
10) When the master cartons are grouped together it is called as Unitization.
Unit 3:
11) KANBAN is a Japanese word meaning card.
12) The ordering system in which period is fixed is known as Period System.
13) Mission based costing is target based or budgetary costing.
14) Performance measurement is necessary to evaluate whether logistics activities are efficient
and effective.
15) The Lash System refers to the practice of loading barges aboard a large vessel for transport.
Unit 4:
16) Bar code Scanners are most visible in the checkout counter of super market.
17) Dedicated Freight corridor is a railway route which is dedicated to freight traffic
movement only.
18) 3PL generally owns and manages the assets (like manpower, warehouse, fleet etc.)
19) Port delays are common as ships wait for others to clear harbor facilities.
20) RFID is the use of an object applied to or incorporated into a product for the purpose of
identification and tracking using radio waves.
Q.2) Match Up:
1) GATI a)Pre-Transaction
2) Bullwhip Effect b)Moving Average Techniques
3) Customer Service Element c)We deliver anything anywhere
4) Quantitative method d)Upstream logistics
5) Inbound Logistics e)Demand Variability
6) Birdy back f)Principle of Material Handling
7) Consolidation g) Conveyor Systems
8) Pneumatic Conveyor h) Multimodal Transport
9) Automated guided vehicle i) Economical for transportation
10)Pallets j)Flat tray
11) S-D-E Analysis k) Cost
12) Activity Based Costing l) Consolidating Shipments to multiple stores on a
single truck
13) Internal Performance Measure m) Procurement Difficulty
14) LASH n) Reactive in nature
15) Milk Runs o) Kangaroo Ships
16) EDI p) Provide common data regarding global customers
17) Golden Quadrilateral q) Computer to Computer exchange of business
documents in standard formats.
18) Deep Water port r) National Highway Authority of India
19) 4PL s) Pumping Stations, Service platform etc.
20) Global ERP Systems t) Consulting Firm
Answers:-
1) We deliver anything anywhere
2) Demand Variability
3) Pre-Transaction
4) Moving Average Techniques
32
5) Upstream logistics
6) Multimodal Transport
7) Economical for transportation
8) Principle of Material Handling
9) Conveyor Systems
10) Flat tray
11) Procurement Difficulty
12) Reactive in nature
13) Cost
14) Kangaroo Ships
15) Consolidating Shipments to multiple stores on a single truck
16) Computer to Computer exchange of business documents in standard formats.
17) National Highway Authority of India
18) Pumping Stations, Service platform etc.
19) Consulting Firm
20) Provide common data regarding global customers
Q.3) True or False:
1) Green logistics aims to move and deliver products and raw material at lowest possible cost
while minimizing the environmental impact. True
2) Base line integration tries to reduce its own cost only. Reduction gained by one is offset by
another department. True
3) Convenience does not recognize customer’s different requirements. False
4) The forecasted information is always accurate. False
5) Increasing Product obsolescence cost is one of the reasons for forecasting. False
6) Product storage is also known as indirect or implied function. True
7) A variation of public warehousing is contract warehousing. True
8) Material handling also creates time and place utility. True
9) Packaging does not enable communication regarding the contained materials or products.
False
10) Decoupling does not relate to manufacturing, operation lead times which may differ in order
to enable production economies. False
11) Cycle inventory is also known as base stock or lot size stock. True
12) Traditional accounting method fails to satisfy logistical costing that is allocating cost for
each logistical activity. True
13) Quality is the degree to which a product or service do not meets customer requirements and
expectations. False
14) Network design do not determine the number of locations of all types of facilities required to
perform logistics. False
15) RO-RO stands for Roll On & Roll Off. True
16) Information flow within the organization is termed as internal information system. True
17) ICD & CFS are one and the same. False
18) The main purpose of CFS is decongestion of a port. True
19) Outsourcing is same as contracting. False
20) Economic growth will not come from new geographies. False
33

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Tilak Education Society’s

S.K College of Science and Commerce, Nerul

How to Achieve Green Logistics :

Benefits of Green Logistics:

Q2 Explain various functions of logistics/logistical Mix

Q3 Explain the difference between Logistics and Supply chain management

1. Procurement Performance Cycle

2. Manufacturing Support Performance Cycle

3. Physical distribution performance cycle

Q6 What is 7R rule? Explain its significance in Customer Service.

Q7 What is Demand Forecasting? Explain the techniques of Demand Forecasting.

a) Jury of executive methods: Jury of executive opinion method involves taking

2)Time Series Method

How Do You minimize the bullwhip effect?

The functions of transportation in Logistics Transportation Functionality provides two

Q10 Explain Multi modal modes of transportation with help of examples

Various Intermodal combinations

4. Manufacturing support: In order to get economies of scale in production, a continuous flow of

Q12 Explain the different types of warehouses with examples

Q13 What are the factors affecting the location of a warehouse?

Steps in Site Selection of Warehouse

Q14 What are the objectives of material handling?

Q16 What are the Logistical functions of Packaging?

Logistical Functions of Packaging:

1. Adaptability: the load carrying and movement characteristics of the equipment

4. Power: Enough power should be available to do the job.

5. Speed: Rapidity of movement of material, within the limits of the production

6. Space requirements: The space required to install or operate materials handling

7. Supervision required: As applied to equipment selection, this refers to the

8. Ease of maintenance: Equipment selected should be easily maintained at reasonable

10. ENGINEERING FACTORS: Selection of equipment also depends on engineering factors

Q19 Write a short note on RORO & LASH.

Concept of Economic order Quantity (EOQ):

Assumptions underlying the EOQ model:

Q21 COMPARISON BETWEEN DRP & MRP.

HML Analysis: Criterion Employed - only unit price of the item.

SDE Analysis: Criterion Employed – Procurement diff100711160`14e. how easy or difficult it

be procured locally without any difficulty, etc.

a) The items to be considered to be "active" may be reviewed regularly on more

Internal Performance Measurement:

3) Productivity Measures: Productivity is a relationship (usually a ratio or an index) between

External performance measurement:

Q24 What is Activity-Based Costing?

Features of Activity Based Costing:

Q26 Explain the principles of Logistics Information System.

1) Availability: Logistics information must be readily and consistently available.

Q28 What is Inland container Depot (ICD’s).

 Receipt and dispatch / delivery of cargo

1. ICD connects major ports to hinterland.

4. Inter model transfer is a major operation in an ICD.

5. ICD increases the export potential of industries.

6. ICD decongests major ports.

Q.1 Fill in the blanks:

Q.2) Match Up:

Q.3) True or False:

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