Overview of Logistics

Overview of Logistics 1.Read Chapter 2 in your Textbook (Logistics and Information Technology) Book: Contemporary Logistics, 11th edition, Paul R. Murphy and A. Michael Knemeyer, Pearson Prentice Hall, ISBN:  978-0-13-295346-7 Chapter Objectives: - To Understand the types of Information Management Systems - To Understand the Internet's Influence on Logistics - To Understand Information Technology Challenges Assignments: 1. Complete the seven questions for Case 2-1, "Just-in-Time in Kalamazoo" (Pages-38-40)  Submit these questions in this assignment link and click submit when finished. 2.  Show your work using tables, charts, or math equations so I can provide feedback to you for correct answers. Helpful Information to complete this case. The easiest way to do this problem is to try using a spreadsheet or make columns on paper and do it by hand.  Make a list of all the Headings.  Here is the breakdown for the columns for spreadsheet  (Current system) 1- Items 2. Average Distance from vendor (in miles) 3. Number of units used each week 4. Current lot size purchased 5. Unit cost 6. Average freight cost per unit 7. Safety stock 8. Average inventory 9. Total inventory 10. Inventory cost 11. Inventory carrying charges 12. Inventory maintenance cost - Total this column to get your Total Inventory maintenance cost per year. Then do the same for the JIT system and  get your total inventory maintenance cost per year. The spreadsheet columns for the JIT system will be: 1- item 2. JIT lot size 3. Unit cost 4. Average freight cost per unit (Surface) 5. Inventory maintenance cost - Total this column to get your Total inventory maintenance cost per year. Current System Using JIT Item Distance from vendor (in miles) Average number of units used each week Current lot size purchased Unit cost Average freight cost per unit JIT lot size Unit cost Average freight cost per unit (surface) Gas range 1,145 10 200 100 $20 10 $105 $22 Toilet 606 10 2-1(- 80 1.-', 10 100 18 Pump 26 56 125 16 3 7 15 4 Refrigerator (large) 22 6 120 110 20 6 113 25 Refrigerator (small) 22 7 15 95 15 1 85 15 Foam cushion 490 675 1,500 8 2 75 7 3 DVD player (type D) 1,800 9 24 136 11 3 130 26 Dome lights 3 824 1,720 2 0 36 4 0 Awning Brackets 48 540 1,200 4 1 60 5 1 Insect Screens 159 570 1,240 7 1 50 7 2 EXHIBIT 2.A Ten Percent Random Sample of Component Inventory Note: The plant operates 52 weeks per year and produces 10 mini motor homes per week. use of each item, the current lot size purchased, and so on. Before figuring the total costs under the present and JIT systems, two additional facts must be noted. First, Ballenger's inventory carrying costs are assumed to be 20 percent per year on the average investment in inventory on hand, including its acquisition and transportation costs. Second, under the current system, the number of units of each type of component kept in stock is calcu-lated as follows: For those items purchased from vendors more than 500 miles away, a safety stock representing four weeks of use is maintained. For items from vendors between 100 and 500 miles away, a safety stock repre-senting two weeks of use is maintained. For items from closer sources, a safety stock representing one week of use is maintained. In addition to safety stocks, the average inventory of any item is the current lot size purchased, divided by 2. If you are familiar with Excel or other spreadsheet software, you might try using it here, although it is not necessary. Questions 1. What is the total annual cost of maintaining the components inventory under the present system? 2. What would be the total annual cost of maintaining the components inventory under the JIT system (assuming no safety stocks)? 3. Should Ballenger take into account any other costs or benefits from the JIT system? If so, what are they? 4. If the JIT system is adopted, are there safety stocks of any item that should be maintained? If so, which ones and how much? 5. If the JIT system is adopted, what changes, if any, should occur in the relationships between Ballenger's firm and his suppliers of components? Discuss. 6. Assume that Ballenger has switched to the JIT system and that he receives a surprise phone call from a competitor who is going out of business. The competitor wants to sell Ballenger 7,000 dome lights of the type listed in Exhibit 2.A. Should Ballenger buy them? If so, at what price? 7. Carrying costs are 20 percent. Is there a level of carrying costs at which both Ballenger's present system and a JIT system have similar costs? If so, what is it? As wi no to de tic ex the thi 1BI Dil 2IA Jo&