chapter 2

Question 0

Kinds of utility? (5)

Answer 0

utility means “to add value”

1. form - value added to goods through manufacturing or assembly. ex: raw mats into finished good. Forming.
2. place- moving goods from origin to customer.
3. time- good that’s at a specific spot at a time when needed. ex: having goods after marketing them.
4. quantity- delivering proper quantities of a good where needed
5. possession- increase desire of customers to possess the good. ex: advertising and marketing.

Question 1

Definition of logistics?

Answer 1

part of the supply chain that plans, implements, and controls the flow and storage of goods, services, and information from point of origin to point of consumption.

Question 2

Why would logistics communicate with marketing?

Answer 2

• price - discount schedules; what margins they can work with; what price of the good covers logistics costs
• product - physical size and dimensions; state (frozen or hot) ; numbers;
• promotion- increase in demand; special displays; when the goods must be delivered for promotion
• place- where is it going? ; retailer? wholesaler? warehouse?; how can it get there?

Question 3

why would logistics communicate with manufacturing?

Answer 3

1. price - what margins to work with
2. product - what dimensions and size
3. promotion - quantities?
4. place - where is it going?

Question 4

draw the graphs on PGs 54-59 and explain what’s happening

1. req inventory and order cycle
2. cost of lost sales to inventory cost
3. cost of lost sales to transportation costs?
4. product dollar value to logistics costs?
5. product weight density to logistics costs ?
6. product susceptibility to loss and damage to logistics costs?

Answer 4

1. req inventory and order cycle?
   - bigger the order size the longer it takes to get to the customer
2. cost of lost sales to inventory?
   - increasing inventory reduces the cost of lost sales
3. cost of lost sales to transportation costs?
   - higher transportation costs can offset lost sales if they’re more efficient.
4. product dollar value to logistics costs?
   - as the products dollar value increases, so do the various transportation and packaging costs. make sure it’s protected and arrives fast.
5. product weight density to logistics costs ?
   - as density increases for a product, it’s transportation and warehouse costs decrease .
6. product susceptibility to loss and damage to logistics costs?
   - the greater the risk of product damage the greater the logistics as transportation costs.

Question 5

How to calculate break even?

Answer 5

figure out the cost per pound for variable costs. then make them equal each other as follows:

vc(x)+fc=vc(x)+fc
this will give break even in units