UNIVERSITY OF CENTRAL PUNJAB

FALL 2020

TRANSPORTATION AND DISTRIBUTION PLANNING

SPRING 2021
Course Title: Transportation & Distribution Planning
Course Code: MGMT 4673

Assignment No. 2

Name of Course Instructor: Sayda Uzma Tahira

Section: A Program: BBA Date: 15th April, 2021

Submission Date: 22nd April, 2021 Maximum Marks: 10

Program Objective: PO4 Course Objective: CO3 Course Learning Outcome: CLO3
ID FULL NAME
l1f19bbam0232 Abuzar
L1F17BBAM0098 MUHAMMAD DANISH JAVED

Instructions:
 This is a group assignment
 The assignment must be a typed document of at least three to five pages excluding title
page and references
 The document must contain a title page, main text and references
 The formatting must be as Times New Roman, font Size12, line spacing 1.5, all justified
header footer 0.5 each
 Headings must be bold with font size14
 Marks will be deducted for late submission and poor formatting.
 Zero marks will be awarded in case of cheating or copy paste.
Assignment Topic & Details:
Assignment Topic: Logistics Infrastructure and Transportation
Detail: Answer the following questions.
1) Compare the transportation and inventory costs for an online business such as Amazon
 and a bricks and mortar retailer such as Al Fatah when selling kitchen utensils.
Ans
In certain nations, transport is by and large less expensive than the expense of working and holding
stock. This is on the grounds that street foundation is of great, however property is costly because
of the lack of accessible land to create stockrooms and other dispersion resources. The vehicle
variable of driver, vehicle and street expenses can be stood out from the expense of holding stock
in distribution centers, the cost and accessibility of land and work.

BIG CARTEL, an approach to figure whether transport or moving geological area is the best
compromise. This uses the presumption of trunk transportation from the first stock area to a
provincial area and afterward using neighborhood conveyance to move to the client. This expense
of trunk transport to capacity to nearby conveyance is contrasted and the immediate conveyance
from the first topographical stock area to the client.

The compromise among stock and transportation costs is tied in with amplifying material
development while limiting development costs. The way to augmenting material stream and
limiting development costs is amassing material development. Incessant material development
diminishes stock conveying costs by lessening the need to hold stock. On the off chance that items
are continually being moved among the production network and sold often, stock levels can be
kept up at negligible and transportation expenses can be expanded.

BIG CARTEL can keep up low stock levels pertinent to request and limit transportation costs by
utilizing an arrangement of incessant item developments. BIG CARTEL will move items among
their dissemination habitats comparative with client interest. Item developments are not limited to
simply sold items. An unsold, saw item is taken care of in similar way as sold items. The items are
amassed with "sold" items and moved to the nearest dissemination focus where the request
occurred. In the event that the item sells prior to arriving at its objective, the item is quickly off-
stacked

The compromise between item assortment and stock is straightforward, the more item
assortment offered, the bigger the stock level required. Item assortment furnishes an organization
with the capacity to satisfy a bigger client need by offering more item assortment, in any case; item
assortment additionally fits an expansion in inventory network intricacy with estimating and
arrangement of the item all through the framework. An organization offering a huge item
assortment should distribution center large numbers of the items because of the sensible suspicion
that not the entirety of the items will turnover at a similar rate. The equivalent can be expected
while adding extra variety to existing item contributions, as new items are presented and nothing
eliminated, stock will increment to oblige the option. BIG CARTEL offers an enormous choice of
items through an online web store.

2) Do you expect aggregation of inventory at one location to be more effective when a

company such as Dell sells computers or when a company such as Amazon sells books?
Explain by considering transportation and inventory costs.
 Ans
Amazon has a Fulfillment by Amazon (FBA) program for sellers who do not want to manage their order
fulfillment. Sellers who use Amazon FBA have their items stored, and their orders are picked, packed,
and shipped. All Amazon FBA sellers need to do is to send their products to the Amazon warehouse.

There are lots of complicated and variable costs associated with the Amazon FBA program and the
storage fees are costly and can eat straight through your profits if you are not careful. 

First of all be clear about what the Amazon inventory storage fee is.

Amazon charges sellers for any space your inventory occupies in the Amazon fulfillment center. The fee
depends on the space occupied by the products and is calculated per cubic foot and the time the products
spent in the warehouse. Fees are raised during the busy selling season. Large products that sit in the
warehouse for a long period of time will incur a higher cost. Amazon employs a First in First Out method
which considers the oldest remaining items to be sold first

For example 10 copies of the same book were sent in through FBA in February 2019 and 8 of them were
bought within 3 months then you decided to re-stock 5 more copies in May 2019 which brought your total
to 7 copies. However once February 15 2020 hit you only paid for the two copies that were originally sent
to the fulfillment center in February 2019 the fee for the other 5 new copies would not kick in until May
15 2020.

Monthly Inventory Storage Fee

Monthly inventory storage fees typically are charged between the 7th and 15th day of the month
following the month for which the fee applies. For example, to see your inventory storage fee for January,
refer to the February Payments report for transactions from February 7-15. Fees vary by the product-size
tier and the time of year. Although standard-size products are smaller than oversize products, they require
more complex and costly shelving, drawers, and bins for storage. Fees are charged by cubic foot so
overall storage fees for standard-size products may be less than those for oversize products based on
volume.

Month Standard size Oversize

Jan-sep $0.75 per cubic foot $0.48 per cubic foot
Oct-Dec $2.40 per cubic foot $1.20 per cubic foot
Monthly Inventory Storage Fees for Dangerous Goods

Items that can be sold only through the FBA Dangerous Goods program require special handling and
hazardous materials hazmat storage. The table below shows the new monthly inventory storage fees for
dangerous goods sold through that program. You can look up the ASIN to check the classification status
of your ASIN and whether you need to be in the FBA Dangerous Goods program to sell it.

Month Standard size Oversize

Jan-sep $0.99 per cubic foot $0.78 per cubic foot
Oct-Dec $3.63 per cubic foot $2.43 per cubic foot