1. Explain the following concepts
1. Extended enterprise
2. Terminal delays
3. Reorder level
5. Pipeline inventory
Read the case and answer the following questions
Mumbai Flour mills provide high-quality bakery flours to commercial bakers as well as to the consumer market. The commercial buyers have consistent demand and brand-loyalty, whereas consumers have minimal brand-loyalty but also generally prefer known names over store brands. Demand is seasonal for the flours with the annual break occurring just before Diwali and slacking off dramatically during January and February. To offset these both, Mumbai Flour Mills and its major supermarket chain-accounts carry out special deals and sales promotions. The Production planning Dept. of the company located at Akola, Maharashtra, has the responsibility for controlling the inventory levels at the plant warehouse at Nagpur as well as three distribution centres located at Nasik in Maharashtra, Bhopal in Madhya Pradesh and Hyderabad in Andhra Pradesh. Planning has been routinely based on past experience and history. No formal forecasting is performed. Distribution centres get their requirements by rail from Nagpur.
The lead time of replenishment from Nagpur to distribution centres is 7 days. The replenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used. In case of any emergency demand, eighteen pallets can be made available by truck with a 3 days transit time. Recently the company has experienced two major stock out for its consumer-size 5 Kg. sacks of refined quality white flour. One of these was due to problems in milling operations, the other occurred when marketing initiated a “buy one, get one free” coupon promotion. Since these events, the planning has become overly cautious and errs on the side having excess inventories at the distribution centres.
Additionally, two other events have affected Distribution Centre’s throughput: (1) implementation of direct factory supply for replenishing the five largest super market chains, and (2) a price increase making Mumbai Flour more expensive than its national brand competitors such a Pillsbury or TATA Maida. Of 1500 pallets in the Hyderabad Distribution Centre the Mumbai Flour Mills shows only 396 pallets for open orders. This has led the company to use outside overflow storage, where there are another 480 pallets. Flour is easily damaged; hence, Mumbai Flour Mills prefers to minimise handling.
Over stocking at Distribution centres alone cost Rs. 1.85/- per pallet for outside storage to which must be added Rs. 4.25 per pallet extra handling and Rs. 225 per truckload for transportation. Similar scenarios are being played out at the other DCs as well. Mr. Mohan, the distribution manager is contemplating various approaches to solving the inventory problem. It is clear that the product must be in place at the time a consumer is making a decision to buy the product, but the company cannot tolerate the overstocking situation and the stress that it is putting on facilities and cash flow. Mr. Mohan’s first thought is “a better information system” which will provide timely and accurate information throughout the organisation. On the basis of above case answer the following:
(1) Evaluate the alternative solution that could be considered by Mr. Mohan.
(2) What additional solution do you propose?
(3) Examine the transportation system and its drawbacks.
Section 2- answer any 3 questions
3a. Explain the difference between 3 PL and 4PL
3b. What should a logistics focused organization do for customer service? 4a. Explain the concept of containerization and explain its significance in transportation 4b. Explain some important factors that decide the location of a warehouse 5a. Explain the significance of ABC analysis of inventory management 5b. Explain the significance of inventory management
6. Short notes on any 2
1. Activity based costing
2. Internal measures of performance management
3. Modern logistical infrastructures