DMC 216

1 Ans:- Logistics management is a supply chain management component that is used to meet
customer demands through the planning, control and implementation of the effective
movement and storage of related information, goods and services from origin to destination.
Logistics management helps companies reduce expenses and enhance customer service.
The logistics management process begins with raw material accumulation to the final stage of
delivering goods to the destination.
By adhering to customer needs and industry standards, logistics management facilitates process
strategy, planning and implementation.
Logistics is like the oxygen which makes the supply chain breathe and live because without
proper logistical support, the movement of goods across a chain wouldn’t be smooth.

2 Ans:- Knowledge provides a competitive advantage to an employee as well as the

organization. The data and information which come with knowledge help organization make
an informed decision. For example, knowledge about competitors pricing model or business
strategy can help organization work towards bettering the competitor. Historical data e.g sales
data, pricing data, etc. can help organization improve existing or proposed business initiative.

Knowledge management is a highly iterative process which consists of six major tasks
like create, capture, refine store, tag and circulate. The first step is to create or capture data
and store it at appropriate location. The second step is to refine the data into meaningful
information. The third step is to transmit information to relevant stakeholders.

3.Ans:- Key issues in Supply chain management are:-

1. Consumers expecting a fast delivery and a reasonable price

Companies are outsourcing their supply chain in order to accommodate the consumers price
expectations. However global suppliers often equals extended delivery times. So while it might
result in a more cost efficient supply chain, it can also have the consequence that the consumers
expectations of a fast delivery, are difficult to meet.
2. Global suppliers can result in a loss of control
Extended delivery times can result in a lower level of control. Companies relying on global
suppliers often does not possess the same amount of overview. A high level of precision is also
essential when it comes to consumer satisfaction and if you outsource parts of the supply chain,
the risk of error could increase.
3. The expectation of innovation
Products have a shorter life cycle, because the demands of the market are constantly changing.
Also consumers expect continuous innovation. If product features have to be improved, it often
takes a restructuring of the company’s supply chain. This is a more complex task, if parts of
the supply chain have been outsourced.
4. Ans:- Just in time (JIT) is an inventory management method whereby materials, goods,
and labor are scheduled to arrive or be replenished exactly when needed in the production
process.
Just in time (JIT) is an inventory management method whereby materials, goods, and labor
are scheduled to arrive or be replenished exactly when needed in the production process.

JIT works best for companies using repetitive manufacturing functions; hospitals, small
companies, and other entities may not find JIT feasible. For example, let's assume that
Company XYZ is a small car manufacturer. On Tuesdays the company assembles the car
chassis, and the workers put the windshield in on Thursdays. With a just in
time inventory method, XYZ might have parts delivered exactly one day before they need
them. The chassis would be delivered on Monday and the windshield on Wednesdays.

The goal of JIT is to decrease costs by keeping only enough inventory on hand to meet
immediate production needs. Thus, in order to effectively employ JIT a company must
accurately forecast demand. JIT's encouragement of planning, simplification, and
standardization is aimed at reducing carrying costs by eliminating the expense of housing idle
materials and lower the costs of defective products, wasted space, extra equipment,
overtime, warranty repair, and scrap. JIT also speeds the production process, thereby
eliminating long lead times and improving delivery performance.

6 Ans:-
(A) ABC Analysis:- ABC analysis is a type of inventory categorization method in which
inventory is divided into three categories, A, B, and C, in descending value. A has the
highest value items, B is lower value than A, and C has the lowest value.

ABC analysis may be seen to share similar ideas as the Pareto principle, which states that 80%
of overall consumption value comes from only 20% of items. Plainly, it means that 20% of
your products will bring in 80% of your revenues.

ABC analysis works by breaking it down in the following ways:

 A-items: 20% of all goods contribute to 70-80% of the annual consumption value of
the items
 B-items: 30% of all goods contribute to 15-25% of the annual consumption value of
the items
 C-items: 50% of all goods contribute only 5% of the annual consumption value of the
items

In order to calculate the annual consumption value of any item or items:

Annual consumption value = annual demand x item cost per unit

(b) EOQ Analysis:-

The Economic Order Quantity (EOQ) is the number of units that a company should add to
inventory with each order to minimize the total costs of inventory—such as holding costs, order
costs, and shortage costs. The EOQ is used as part of a continuous review inventory system in
which the level of inventory is monitored at all times and a fixed quantity is ordered each time
the inventory level reaches a specific reorder point. The EOQ provides a model for calculating
the appropriate reorder point and the optimal reorder quantity to ensure the instantaneous
replenishment of inventory with no shortages. It can be a valuable tool for small business
owners who need to make decisions about how much inventory to keep on hand, how many
items to order each time, and how often to reorder to incur the lowest possible costs.

The EOQ model assumes that demand is constant, and that inventory is depleted at a fixed rate
until it reaches zero. At that point, a specific number of items arrive to return the inventory to
its beginning level. Since the model assumes instantaneous replenishment, there are no
inventory shortages or associated costs. Therefore, the cost of inventory under the EOQ model
involves a tradeoff between inventory holding costs (the cost of storage, as well as the cost of
tying up capital in inventory rather than investing it or using it for other purposes) and order
costs (any fees associated with placing orders, such as delivery charges).

7. Ans:- Kanban is a system that schedules lean manufacturing. It controls the supply chain
to realize cost savings through implementing the just-in-time inventory control system.

The term “Kanban” is a Japanese word that means “billboard, ” and it was first coined and
applied by industrial engineer Taiichi Ohno in order to improve efficiency at Toyota. Ohno
looked at the way that consumers buy goods and the way that supermarkets supply them to
develop a more efficient inventory system.

When you go shopping, you don’t stock up with enough supplies for months or years. You buy
what you need now, and the supermarket only stocks what it expects to sell now. This doesn’t
worry you because you know the supermarket will have what you need next time you shop.

In manufacturing, each process is dependent, either on a preceding process or on materials

obtained from a supplier. It’s a bit like shopping at a supermarket. It wouldn’t make sense to
take more than you need right now, and when you have taken it, the preceding process or
metaphorical “supermarket,” knows that it must stock up again for your next visit.
8 Ans:- The Marketing Information System refers to the systematic collection, analysis,
interpretation, storage and dissemination of the market information, from both the internal and
external sources, to the marketers on a regular, continuous basis.
The marketing information system distributes the relevant information to the marketers who
can make the efficient decisions related to the marketing operations viz. Pricing, packaging,
new product development, distribution, media, promotion, etc.

Every marketing operation works in unison with the conditions prevailing both inside and
outside the organization, and, therefore, there are several sources ( viz. Internal, Marketing
Intelligence, Marketing Research) through which the relevant information about the market
can be obtained.