Final Exam (Take-Home) Summer - 2020

Student Name: Ayesha Abdul Samad Reg. ID: 14869

Program: MBA Instructor: Zeeshan A.
Ganatra
Subject: Logistics Management Max. Marks: 50
Q. No. 1 2 3 4 5 6 7
Total Marks 6 6 6 6 6 10 10
Obtained Marks

Answer 1:
Diagnose the symptoms of poor inventory management
There are many signs through which we will diagnose that inventory management is poor
and getting worse. Some of these signs are:
1) High cost of inventory
2) Turnover rate of inventory is low
3) High storage cost
4) Errors in spread sheet entry
5) Wrong item shipment to the customers.
6) Lower warranty recovery because of an inability to trace coverage, resulting in missing
claims.
7) Number of backorders are increasing
8) Lack of space for storage.
9) Cancellation of order.
10) High customers’ turnover rate.
Importance of JIT (just in time):
The just-in-time (JIT) inventory system is a strategy that aligns raw-material orders from
suppliers directly with production schedules.
JIT is vital in inventory management because JIT framework decreases wastage, improves
proficiency and efficiency, and contributes to smoother production flows. A shorter
production cycle can decrease financial costs, inventory costs and labor costs. It helps in
examining the particular stock level in supply chain and also determine the optimum stock level.
1) It provides better customer service.
2) Decrease wastage
 3) Low inventory holding cost and warehouse cost
Variable to be considered while implementing JIT:
1) Organization’s culture.
2) Management commitment
3) Employees involvement and commitment
4) Work design
5) Quality
6) Product planning
7) Supply chain integration
8) Economic order quantity
9) Lead time

Answer 2:
Network Design:
Network design involves in designing location strategy and building transport around the
customer service goals, ensuring that the entire package achieves the most effective service at
very cheap cost.
Importance of network design:
Network designing is so much important to achieve the targets and to accomplish long-term
strategic objectives. It’s important because:
1. It is cost effective.
2. It has fastest modes to retrieve raw material.
3. It will offer you more mileage.
4. More customer’s excellence in customer service.
5. Ease and comfort to rearrange the skillful staff and labor.
6. It gives cost mileage in terms of buying land.
7. It gives mileage in readily available infrastructure.
8. Easy to turn around and connecting the national and global level.
Challenges for selecting wrong warehouse location:
1. Higher labor cost because the location of warehouse is on distance place.
2. It will increase the transportation cost because of the movement of products and raw
material from warehouse to final destination.
3. Suppliers will not be able to deliver raw material at the specific cost which will
result in increase in the cost of raw material
4. Technological complexities can occur if warehouse is far from cities.
 5. When manufacturers don't have full visibility to their inventory, they face the issues of
either running out of stock or having excessive amount of inventory which leads in
increase in expense.
Answer 3:
Responsive logistic management:
Responsiveness can be identified as the capacity of the supply chain to react deliberately and
timely to customers’ demands or changes within the marketplace.
1) In responsive logistic management production is excess all the time to meet customer’s
demand which ends up in higher cost.
2) Many smaller plants are located in order to deliver goods to customer timely, this also
increase cost.
3) Fast and versatile mode of transport is being used for quick delivery.
4) Primary goal is quick response.
5) Strategy of having Buffer inventory is applied.
Effective logistic management:
Logistic management is said to be efficient if the main focus is on cost reduction and resources
are also not wasted on non-value added activities. It ensures that raw material reach at
manufacturing production facilities on time, it prevents the need to source additional materials
from alternative sources, subsequently avoiding higher prices and preventing lower profitability.
1) Greater supply chain flexibility.
2) Lower inventory, transportation and warehousing and packaging cost.
3) Higher revenue
4) Improved customer service
5) Increase performance and profitability
Challenges in logistic operations:
The main challenges faced in 21st century in logistic operations are:
1) Cost of fuel: Prices of fuel increase the cost of transportation which results in increase of
expense.
2) Improvement in business process: Bringing advancement into the business for staying
on top is also a key challenge.
3) Customer service: Customers seems to be unwilling to pay extra for fast delivery and
shipping.
4) Shortage of driver and retention is also a minor level of challenge.
5) Government regulation: Fulfilling all regulation in service, accountability, compliance
and safety will be a real hassle.
6) Economy: Inflation is rising which is also a challenge.
Answer 4:
RISK:
Chances of harm or loss and uncertainty in business is called risk. It measures the uncertainty
that an investor is willing to take to achieve a gain from the investment.
RISK MANAGEMENT:
Risk management is about identifying, analyzing risks and drawing up plans to reduce its effects
on brand or business. It is a probability that some adverse circumstances will occur. Effective
risk management means attempting to control to the possible extent, future outcomes by acting
proactively rather than reactively. Risk management process is based on firstly identifying risk
then assessing risk after that taking step to regulate risk and final is to review the control.
Risk in logistic operations will be calculated through formula which is:
Risk management= Likelihood * severity
Likelihood and severity will be calculate on 1-5 Likert scale by multiplying likelihood with
severity we will get to know the probability of risk. If it is one on Likert scale then it means it is
negligible and risk increase along with number, 5 means it is better to stop because there is a
high risk.
Risk can come from within the company or through the factors which are beyond the control of
company. Risk can be financial, strategic, and operational or hazard risk.
Treatment of Risk:
These are the options to treat risk
1. No risk no game
2. Eliminate the risk.
3. Reduction of the risk.
4. Financial burden sharing
ANSWER 5:
Vertical Integration:
In vertical integration company owns or control their suppliers, distributors or retail locations for
controlling its value. It benefits the corporate by improving efficiency and reducing cost. Vertical
integration Benefits Company by allowing them to manage its process reduces costs and improve
efficiencies.
Challenges faced by organization in vertical integration:
1) Higher cost for initial investment in upstream and downstream company.
2) Maintenance of the strong leadership with a mixed set of culture.
 3) Flexibility is less for change because all partners are relying on same product’s
performance.
4) Weakened incentives for suppliers to check quality and control price due to the lack of
competition and guaranteed sale.
5) Potential loss of strategic core competencies through over expansion.

Vertical integration is highly recommended for the product where the chances of changes are low
and also, when company need flexibility during challenging market conditions, when profits are
under pressure.
Answer 6:
Part 1:
Issues in FMC Company
1. Management inventory system is not up to date due to which they don’t have proper data
of inventory.
2. They don’t have proper recording of material consumption.
3. Inventory was withdrew by users more than requirement, which means excessive
issuance of inventory.
4. Inventory was not categorized properly
5. No automation system is available, every time users have to submit form and had to
collect them personally.
6. Increase into material cost due to mismanagement of inventory information.
Recommendation for improvement in inventory management system of FMC Company:
1. There should be a proper check and balance of material.
2. Training should be given to staff for making them aware about new technology.
3. Proper recording of material should be done through software.
4. Policies should be made to order staff to update information and data on time in MIS
system.
5. For reducing maintenance cost ABC analysis should be done.
6. Senior management should examine the whole process time to time for confirming that
the process of material consumption and delivery is running smoothly and effectively.
Part 2:
Yes, I think Mr. Right proposal will work, because by appointing a logistic manager for
department, they will be able to have proper check and balance of activities and this will help in
increasing the productivity of department, it will help in reducing maintenance cost by getting
reports of the inventory available and out of the stock. Further they will be aware of how much
inventory is required for future which will result in availability of stock, By appointing manager
they will be able to do proper tracking of inventory which is the main issue faced by FMC
company. Out of the stock issue will be solved and they will be able to deliver inventory
according to the required demand. Problem of having excessive inventory will also be solve
when they will have a proper system of keeping a check on inventory system, the fluent flow of
material will ensure the reduction of holding cost of inventory.
Everything will be reported to manager therefore the department will be under control which will
result in improving efficiency and also helps in solving problems which are faced by FMC
Company.
Answer 7:
CJ Industries:
(1)
First issue is the production of bilge pumps in nine months. Ms. Stanly should research on it
whether it would be a good investment for CJI because it would require the investment of
$500,000 along with other costs.
Ms. Stanly should also look into the two other manufacturers of pumps and ponder whether it
would be wise to work with them since it would be the first time and that they are located 500
miles away from the CJI warehouse.
Ms. Stanly should research on the issue that whether caolinn Pumps would be able to deliver 50
pumps per month to one of CJI’s warehouses.
The quality of the product is another issue since they did not use to have performance records back
when demands were low and occasional although there were no complications up to date about
caolinn pump.
Another issue is that the production for caolinn pump would be more expensive because of
additional equipment, labor, and other costs needed for production.
(2)
If we assume that CJI chooses to keep utilizing services by caolinn pump than they will be
guaranteed of quality, because caolinn is providing pumps to them from long time. Beside
quality confirmation, the simplicity of realizing that they will be not confronted with issues
regarding to delivery, signing of contract and any other problems when it comes to transacting.
Since CJI is a loyal client of caolinn, planning and dealing with measures wouldn't be a lot of an
issue. On the other hand, if they choose to proceed with caolinn then there will not be enough
pumps because caolinn did not produce pump in bulk quantity and their supply is limited, which
will result in the shortage of pumps to be delivered by CJI to its customers. Therefore choosing
this option will be risky because if CJI would choose his option then it will not be able to meet
the demand of Great lakes.
Second option is the production of in house pump by CJI, but for producing pumps, CJI would
need a huge amount of investment, but if they will produce pump by themselves then they will
be assured of quality and also they will be able to meet the demands of pump by Great Lake. The
problem is that they are not experienced in making pump so there are the chances that they will
not be able to meet the expectations of Great Lake about pumps. It is risky to invest large amount
of money on making pumps because they are not experience but if they will hire skillful labor
after research then they there will be a chance of profit for firm in long run.
Third alternative is about looking for other suppliers; it seems to be a good decision because time
duration is short of nine months, so after selecting other suppliers they will be able to meet
demand of Great Lake and will not suffer from short supply. Problem in choosing this option is
again the assurance of quality and also delivery cost because no suppliers are near to the CJI
warehouse. Here is also the risk of quality compromise and investment for contract with
suppliers.
Last alternative is that CJI could make their own pumps and also acquire pumps from caolinn
pump. They can also take the pumps from other company for testing purpose, to weigh all their
possibilities and see what the most effective solution is. This option will help them to understand
which one is the best option for CJI. Problem in selecting this option is that this will consume too
much time, money and research because this option required testing etc. and CJI is already facing
shortage of time. Therefore there is a risk of time shortage and money wasting for CJI, unless they
come up with a plan that will pull off this alternative such as scheduled doing of all these three
alternatives
(3)
The CJI can assure by providing pumps on agreed time and by ensuring the high quality of their
pumps. CJI can further ask the details by Great Lake in order to meet their desires related to
products and also by responding to the queries of Great Lake; it can maintain its relation in future
too. CJI would be able to work well with Great Lake by implementing proper supply chain
management. In this way, both CJI and Great Lakes will be able to secure further business with
each other.