Chapter 15: Logistics, Distribution And Transportation

Question 1

What is logistics?

Answer 1

The art and science of obtaining, producing, and distributing material and product

Question 2

How much of GDP does logistics account for?

Answer 2

8-9%

Question 3

What are the goals of warehousing?

Answer 3

~ minimize time “waiting” to be sent to retail store
~ minimize handling
~ consolidation of shipments from various sources to create larger shipments with a common destination

Question 4

What are the metrics of performance?

Answer 4

Accuracy
Quality
Utilization
Accountability
Timely
Inventory level
Cost
Safety

Question 5

What is cross-docking?

Answer 5

Larger shipments are broken down into smaller shipments for local delivery

Question 6

What factors go into facility location?

Answer 6

1. Proximity to customers
2. Presence of similar sized businesses and other foreign companies
3. Total cost
4. Infrastructure
5. Quality of labor
6. Suppliers
7. Other facilities
8. Free trade zones
9. Political risk in both country of location and host country
10. Government barriers
11. Trading blocks (firms locate within a block to take advantage of new markets)
12. Environment regulation
13. Host community
14. Competitive advantage

Question 7

What is the factor rating system?

Answer 7

~ most widely used plant location method system
1. List of factors is made
2. Range of points is assigned to each factor
3. Each site is rated against each factor
4. The sum of assigned points for each site is computed
5. The site with the most points wins

Question 8

What does the centroid method consider?

Answer 8

1. Existing facilities
2. Distances between existing facilities
3. Volume of goods to be shipped between facilities

Question 9

What are the assumptions of the centroid method?

Answer 9

~ assumes inbound and outbound transportation costs are equal
~ doesn’t include special shipping costs for less than a full load