Exam questions Flashcards
List and briefly discuss the three main activities within a logistic system.
The three main activities are:
1) Order processing
2) Inventory management (adds time-value to products)
3) Freight transportation (adds place-value to products)
Define make-to-order policy and compare it qualitatively with other possible ones.
Push versus Pull systems:
1) Make-to-order (PULL): products are made only when customers want them.
+ low/null inventory at manufacturer
- high transportation costs
2) Make-to-stock (PUSH): production is based on forecasts and demand is anticipated.
+ low transportation costs
- high inventory costs at manufacturer
3) Make-to-assembly (MIXED): push-based production to assembly flows. Pull-based flows to customers.
Which are the main benefit of a “vertically integrated” supply chain?
In a vertically integrated supply chain, all components (raw material sources, plants, transportation systems, etc.) belong to the same firm. The company control everything, not only the product quality but also the customer relationship.
Disadvantages: non-flexible, cannot adapt to demand decreased- Hard to reduce.
What is crossdocking and when is it appropriate.
Crossdocking (just in time distribution) is the practice of unloading incoming goods in a transhipment facility for sorting (material intended for different destinations), consolidation (combine material from different origins) into transport vehicles and transferred directly to outgoing trailers without intermediate storage or order picking. Shipments spend just a few hours at the facility.
Crossdocking requires:
1) High volume and low variability of demand (otherwise it is difficult to match suppls and demand)
2) Easy-to-handle products (possible product demage)
3) Suitable information systems to coordinate inbound and outbound flows (impossible without).
Other inventory/transportation strategies include direct shipment and warehousing.
What is direct shipment?
Goods are shipped directly from the manufacturer to the end-user- No DC-related costs and reduce lead times.
Not suitable if a typical customer shipment size is small and customer are dispersed - large fleet of small vehicle traveling not filled.
What is Warehousing?
Store goods; perform reception of the incoming goods, storage, order picking and shipping.
Storage and order picking are the most expensive tasks because space and labor.
Centralized (single) versus decentralized (regional).
Reduction of lead times versus reduction of safe stock.
Which are the types of freight consolidation that can be performed?
There are 3 types:
1) Facility Consolidation: UPS consolidates individual shipments at hubs for joint transportation between hubs.
2) Multi-stop Consolidation: Fedex delivers individual shipments to their final destinations on routes serving several customers.
3) Temporal Consolidation: shipment schedules may be adjusted forward or backward in time to ship large quantities periodically.
Make examples of strategic, tactical and operational decisions within SCM.
1) Strategic decisions:
- Horizon: up to several years
- Data: very imprecise and incomplete
- Decision maker: top management
- E.g.: Facility location and layout, capacity sizing
2) Tactical decisions:
- Horizon: up to a year
- Data: disaggregated data available
- Decision maker: middle management
- E.g.: resource allocation, production and distribution planning.
3) Operational decisions:
- Horizon: days
- Data: precise data available
- Decision maker: lower management
- E.g.: order picking, vehicle dispatching
Which are the difference between single and multi-echelon?
Single-echelon location problems are single-type problems such that either the material flow coming out or the material flow entering the facilities to be located is negligible.
Forecasts demand and determines required inventory for each echelon separately.
In multiple-echelong problems, both inbound and outbound commodities are relevant. This is the case for example when DCs have to be located taking into account both the transportation cost from plants to DCs and the transportation cost from DCs to customers. Here, constraints aiming at balancing inbound and outbound have to be considered.
Optimize inventory across the end-to-end supply-chain.
Which are the difference between single and multi-commodities?
In single-commodity problems it can be assumed that a single homogeneous flow of materials exist in the logistics system.
In multi-commodity problems, there are several items, each with different characteristics. Each commodity is associated with a flow pattern.
Which are the main reasons for holding an inventory?
Reasons for holding a inventory include:
1) demand seasonality
2) improving customer service level
3) price seasonality
4) explore economies of scale in freight transportation
5) cope with demand and lead-time randomness
6) cover inefficiencies in managing the logistics system
But inventories may be expensive! For each stocking point along the supply chain, decide when and how much to order to minimize expected toal cost while meeting a service level.
What is the Economic Order Quantity?
Economic Order Quantity is the order quantity that minimizes total inventory holding costs and ordering costs. EOQ applies when:
- demand for a product is constant over the year
- each new order ir delivered in full when inventory reaches zero
- there is a fixed cost for each order placed, regardless of the number of units ordered
- cost for each unit held in storage (holding cost) sometimes expressed as percentage of purchase cost of a item.
Which are the main operation occuring at a warehouse and how is generally structure a warehouse?
Warehouses provide shelter for inventories and allow handling (separations and consolidation) of shipments. Warehouse operations depend on type of incoming and outgoing shipments:
1) Central Distribution Center (CDC): mainly storage of large quantities (full pallets).
2) Regional Distribution Center (RDC): large stocks are received and stored, shipments to customers with small quantities are assembled (order picking, product sorting, consolidation).
Internal warehouse structure depend on physical characteristics of the products, the number of products, and the volume to be handle. Generally, a tipical structure have:
- Receiving zone
- Storage zone (reserve/forward)
- Shipping zone (one or more)
Which are the differences between dedicated and random storage policies?
Dedicated Storage Policy: each product is assigned a pre-established set of positions. Easy to implement but causes an underutilization of the storing space. The space required is equal to the sum of the maximum inventory for each product line.
Random Storage Policy: item allocation is decided dynamically on the basis of the current warehouse occupation and on future arrivel & requests forecast. Therefore, the positions assigned to a product are variable in time. Allows a higher utilization of the storage space, but requires each item be automatically identified (bar code, RFID) and a database of the current position of all items kept at stock is update at every storage and every retrieval.
What are truckload and less-than-truckload transportation models?
Truckload transportation service moves a full load directly from its origin to its destination in a single trip.
Less-than-truckload: when shipments add up to much less than vehicle capacity, is more convenient to resort to several trucking services in conjunction with consolidation terminal (rather than use direct shipments).
