Course: GSCM550 – Logistics, Distribution and Warehousing
Assignment: Chapter 2 - Study Question – 1, 4 Chapter 3 – Study Question – 2, 4
Chapter 2
Question 1: Illustrate a common trade-off that occurs between the work areas of logistics.
According to Bowersox (2012) “trade-offs between procurement, manufacturing, and logistics is to understand that the trade-off is between the cost and risk associated with anticipatory manufacturing and the loss of economy of scale resulting from introducing flexible procedures”.
The illustration of trade-off that occurs between the functional areas of logistics, the common trade-offs discussed in our textbook are:
Order processing – main importance to meet customer requirements
Inventory –achieving customer service with lowest inventory requirements
Transportation - costs to deliver the products directly to customers
Warehousing – materials handling and packaging
Facility network – facility required to accomplish logistic effort (function)
The above functional areas are basically costs involved in logistic trade-offs to combine a system solution for integrated logistics where the main function is the facility network to achieve logistics. Without these trade-off cost, the nature of the supply chain will not be possible.
Tradeoff is mainly a situation of exchange and in supply chain it is not an exception. The main objective is to increase customer satisfaction and it is necessary to accept the trade-off of work areas in logistics.
