Case Study No 1

Super Dolls is a toy manufacturing company which is in the business for the past two decades The manufacturing unit is situated in Mumbai while its sales and marketing are spread over a large geographical area especially in the major cities across the country Over the years a number of competitors have sprung in the field Far from childrsquos play the company found that the toysrsquo sector is a tough business Some of the problems faced by it areThere is a massive sale during the festival seasons If the companyrsquos product is delayed the valuable market is missedldquoFashionrdquo or ldquocultrdquo status products influence the market Any wrong decision in this matter means loss of sales and build-up of unwanted inventoryThere are high marketing and promotional costs If these programs go out the sales drop massively Any misjudge of the market can also mean closing down of the companyThe company has problems regarding stock holding at its distribution centers This is mainly due to wrong inputs from feedbacks and improper surveys The company relies mainly on hired fleet of road transport The services are not up to the mark in terms of delivery schedules safety of goods from pilferagetheft and mishandling of product

Marketing strategies are far from adequate They are not effective enough to counter the strategies adopted by the competitors

You are called upon by the management of Super Dolls to head their logistics operations You are required to study and guide the company regarding the following matters

a) Warehousing at distribution centers and large retailers to cut down inventory costs plus other suggestions in order to reduce inventory carrying costsb) Advantages of outsourcing in terms of preparing girlsrsquo and boysrsquo toys toys in local languages toys for different age ranges packaging effecting savings on damagestransport responding fast to customersrsquo requests etcc) Alternatives with regard to having own fleet of trucksd) How to cut down cost on advertisement campaigns by alternative forms of spreading awarenesse) Suggestions to counter competitorsrsquo strategies

Case Study No 2

The management of Yummy Noodles Company was contemplating on introducing 200 grams pack of savory noodles into the Indian market at Rs 10 per pack This was only for one month which was construed to be as a test marketing period During this period the Company wanted to have a ldquoblitzrdquo strategy of flooding the market with their product In the subsequent month the management of Yummy Noodles Company had planned to raise the price of the pack to Rs 15 while the weight of the pack was to be fixed at 250 grams A free gift in the form of a plastic bowl with a spoon was also planned

Two months before the launch of the actual production the marketing department of the company brought out advertisements regarding the savory noodles The advertisements were displayed on bill-boards TV radio print media Schools and colleges were also targeted to rope in students and children to buy the product Production of the noodles was planned to be started along with the marketing program The forecast of the number of expected packets that could be sold for the first month was around 75000 and 125000 for the second month The production was required to be started earlier to meet the target of projected demand as well as to account for the changeover in the pack-size in the second month

You are appointed as a logistics consultant by the Company You are required to guide the Company regarding the following

a) The Company is very keen that its product must be well-received in the market What coordination is required between the production marketing and other departments of the Company (Note You are required to spell-out the various departments (namely warehousing production quality control packaging etc) that are expected to be required in the Company)b) Explain the role of the Logistics Department in the introductory phase [Note This pertains to Logistics Planning and Process]c) Highlight the necessity of information sharing between the various departments [Note This relates to productivity increase due to Logistics Process]d) As a logistics consultant you are required to foresee the type of difficulties which the company could face during the changeover Give suggestions to the Company to tide over these difficultiese) Critically examine the free gift scheme and marketing strategy adopted by the company

Case Study No 3

Food Savories Limited is engaged in the manufacturing of various types of fast food items that are ready-to-eat variety It has been in the business for the past 12 years It has its factory as well as the processing unit in Navi Mumbai The raw materials required are mainly vegetables chicken which the company procures from either the local vendors or from various suppliers situated at Nasik Pune and other districts The required materials are procured with the help of hired transporters However the hired transporters do not care much about the preservation of the goods Hence about 20 of the goods are lost due to damage deterioration pilferage etc Again the hired transporters are unreliable with regard to their availability as well as prompt delivery schedules

The companyrsquos products are quite popular with the customers who are situated in Mumbai Navi Mumbai Pune etc However the company stands to lose the market due to erratic supply schedules which do not cater promptly to the customers The packaging of the products is attractive but it does not preserve the product for a long time The shelf-life isonly about 5 hours if the goods are not properly refrigerated Loss on this account is about 10

The company has about 10 distribution centres But there does not seem to be the much coordination between these centres Logistical information system is not adequate Due to this the company is unable to expand its business In fact due to competition there is fear that the company may stand to lose its existing clientele Due to mismanagement the company is unable to meet increase in the demands during festival seasons and holidays

You are appointed as a logistics consultant You are required to put forward your suggestions with regard to

1 Setting-up of proper effective logistical information system to improve coordination [Note Discuss about Logistics as an integrated process ensuring proper planning]2 Effective forecasting system to reduce inventory carrying cost wastages damages pilferages [ Note Forecasting can be in terms of door-to-door surveys questionnaires telephonic interviews For marketsstores that are close-by think of JIT strategies]3 Setting-up of effective purchasing and distribution system [Note Quality control with regard to purchases is required Prefer those suppliers who can supply goods in their own transport]4 Improved system of storage handling and packaging [Note Study warehousing material handling system and packaging Writediscus relevant points relating to the question]5 Alternative modes of transport to reduceeliminate wastages [Note Study has to be made regarding capital investment in having own fleet of specialized trucks and related variable costs versus hiring specialized fleet of trucks In case of hired trucks agreement should be made with regard to compensation to be paid by the transport company in case goods are damagedpilfered by them]6 Ways and means to tackle and counter competitorsrsquo strategies [Note Analysis as to why competitors are having a ldquocutting edgerdquo Improvement in the companyrsquos performance vis-agrave-vis performance in inbound logistics processing packaging storagewarehousing marketingsales programmes Quality and taste of the product may be altered to suit various sections of customers Different sizes of packets to suit customersrsquo budget]

Case Study No 4

Shoppersrsquo Paradise has a swanky mall at Andheri Mumbai They have a complete range of whorsquos who of shopping items It was shop-in-shop based on international standards The shop area is nearly 3 50000 square feet and about 25000 customers visit the mall daily Fierce competition has driven Shoppersrsquo Paradise to tie-up with music companies popular food outlets etc This ensures at least a certain percentage of sales Again to ensure that no stock-outs take place Shoppersrsquo Paradise has built a warehouse close to its mall The warehouse has sufficient storage capacity Based on the consumption patterns the warehouse is stocked with the required inventory

Shoppersrsquo Paradise basically targets higher income groups Therefore it prefers to use roadways for transport of goods from the vendors Though expensive as compared to railways roadways have advantages in terms of door-to-door delivery quicker decisions regarding change in routes or change in delivery schedules etc Shoppersrsquo Paradise physically opens the packs received from the vendors It sorts out the goods and puts the necessary price tags on them The goods are then repacked to be appropriately stacked for final delivery as and when required Since no heavy inventory has to be transported mechanized material handling is not used since it would involve heavy capital investment Pallets and crates are used extensively Again when goods are returned by the customers due to defects Shoppersrsquo Paradise sends the goods to the warehouse from where the goods are sent back to the concerned vendor The cost of return is borne by the vendors

In case of new arrivals of stock the sales department of Shoppersrsquo Paradise puts bill-boards about the new stock early in the morning before the customers rive This makes it convenient for the customers to know about the new arrivals Shoppersrsquo Paradise is very keen to ensure that the customers get the right product at the right time At the same time the management of Shoppersrsquo Paradise desires to reduce the overall cost

You are appointed as a Logistics Consultant Suggest ways to improve the performance of Shoppersrsquo ParadiseQuestionsa) Study and discuss the implications of logistics network designb) Discuss the modes of inventory sourcingc) Analyze the alternative modes of communicationd) Study various in which Shoppersrsquo Paradise can increase productivity

Case Study No 5(Mumbai Univ Nov 2001)

Ms Britecolor Paints Ltd (BPL) is a manufacturer of decorative paints for households commercial premises and industrial applications

a) Ms BPL has embarked on a policy of satisfying every possible customer in respect of shades delivery and durability Thus it went ahead and created twenty-five depots one in almost every city The manufacturing base was however maintained in Pune The factory received information in connection with stocks from depots once a week and there was no intercommunication between the depots Since they were in the competitive market price was pre-determined ie the manufacturer had no liberty to price the product as per his own choiceb) In their enthusiasm and effort to satisfy their customers Ms BPL strived to manufacture every possible shade by combining various primary shades and would await the prospective customer to carry out the purchase It ensured that these shades were available at each and every depot even at the cost of transportation incurred in sending goods in less than full truck load lots This certainly provided a very high service level and the customers would get their shades as per their desires and thus they were fully satisfiedc) While on one hand Ms BPL had a population of very highly satisfied they had almost 50 of their total domestic sales lying as finished goods inventory at various depots on the other handd) Industrial paints though not very customized the respective industrial customer was quite satisfied Consequently the inventory of finished goods was very low in this segment But at the same time realization was also lower due to stiff competition from other industrial paint manufacturers than the domestic markete) Nevertheless the economic runs of industrial paints were always assured due to high off-take by the industrial customersf) The objective of the manufacturer was to increase the realization taking into account economic runs inventory seasonality and individual choices of domesticindustrial customers

If Ms BPL appoints you as their Logistics Consultant how would you advice them in respect of the followinga) How can the company achieve economy in transportation by maintaining almost the same service levelb) Demand forecasting technique to take care of seasonality as well as reduction in inventoryc) Information technology to substitute maintenance of high inventory without affecting customer service leveld) Connectivity between factory and depots (networking diagram)

Case Study No 6(Mumbai Univ Nov 2002)ABCL Ltd is a leading Fast Food Processing Company operating from Thane It is involved in the fast food business since last 10

years and has a tie up with a foreign firm operating in the same field It handles both vegetable as well as non-vegetable products forwhich it arranges the required vegetables and chickens from local vegetable vendors and poultry farms as well as from far off placeslike Nasik Pune and Aurangabad It has very good markets in Mumbai Pune and the surrounding cities The products are sold in thebrand name of Nasta which is very popular brand among the young collegians and office goers It has its most modern kitchen at NewMumbai to cater to the needs for fresh Nasta Vegetables and chicken items are transported from the procurement centres of NasikPune Aurangabad using hired trucks While transporting vegetables and chickens there were shortages damages and decompositionproblems which varies from 10 to 15 and there is inconsistency in the transit time the reliability of the raw material transporters isvery lowPackaging of Nasta is very good and attractive but it is not long lasting type However the quality and taste are the reasons for itspopularity Nasta is sold in three different packs ndash party family and individual Nasta loses its taste and flavour after 8 hours if it isnot preserved in refrigeration Nasta is distributed through 25 distribution centres including three at its main procurement centres ofNasik Pune and AurangabadLogistics Information Network is not up to the mark The procurement centres directly communicate to the operating centre at ThaneDue to lack of proper co-ordination at different distribution centres it has started creating problems of stocks spoilage pilferage andwastage of raw materials as well as finished goods at certain distribution and procurement centresTransportation and storage problems are identified as the main culprits for the heavy losses being incurred at some centres Holidaysfestivals and collegians put a lot of pressure on the existing demand and supply situations of Nasta seasonally resulting inmismanagement and losses Entry of multinationals into the market has increased the competition and put a pressure on Nasta TheManaging Director of the company has formed a team consisting of senior executives to suggest a concrete plan to fight the growingcompetition and overcome problems of transport storage and other related problems so as to increase the market share and marginThe team of senior executives has recommended your name as a Logistics Consultant You are required to put forward yoursuggestions for the followinga) Proper transportation policy to ensure minimum transportation loss of vegetables of vegetables and poultry products andreduction in the packaging costs Advice on the company owning its own fleet of transportb) Demand forecasting techniques to take care of the seasonality as well as reduction in the inventory overcoming shortages aswell as other related problemsc) Suggestions for improving Purchases and Distribution policiesPage 5Prof Parshuram 2660678026605814Case Study No 7(Mumbai Uni Nov 2003)Ms Modern Garments is the manufacturer of ladies and gents garments such as tops shirts undergarments etc Their manufacturing

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

The management of Yummy Noodles Company was contemplating on introducing 200 grams pack of savory noodles into the Indian market at Rs 10 per pack This was only for one month which was construed to be as a test marketing period During this period the Company wanted to have a ldquoblitzrdquo strategy of flooding the market with their product In the subsequent month the management of Yummy Noodles Company had planned to raise the price of the pack to Rs 15 while the weight of the pack was to be fixed at 250 grams A free gift in the form of a plastic bowl with a spoon was also planned

Two months before the launch of the actual production the marketing department of the company brought out advertisements regarding the savory noodles The advertisements were displayed on bill-boards TV radio print media Schools and colleges were also targeted to rope in students and children to buy the product Production of the noodles was planned to be started along with the marketing program The forecast of the number of expected packets that could be sold for the first month was around 75000 and 125000 for the second month The production was required to be started earlier to meet the target of projected demand as well as to account for the changeover in the pack-size in the second month

You are appointed as a logistics consultant by the Company You are required to guide the Company regarding the following

a) The Company is very keen that its product must be well-received in the market What coordination is required between the production marketing and other departments of the Company (Note You are required to spell-out the various departments (namely warehousing production quality control packaging etc) that are expected to be required in the Company)b) Explain the role of the Logistics Department in the introductory phase [Note This pertains to Logistics Planning and Process]c) Highlight the necessity of information sharing between the various departments [Note This relates to productivity increase due to Logistics Process]d) As a logistics consultant you are required to foresee the type of difficulties which the company could face during the changeover Give suggestions to the Company to tide over these difficultiese) Critically examine the free gift scheme and marketing strategy adopted by the company

Case Study No 3

Food Savories Limited is engaged in the manufacturing of various types of fast food items that are ready-to-eat variety It has been in the business for the past 12 years It has its factory as well as the processing unit in Navi Mumbai The raw materials required are mainly vegetables chicken which the company procures from either the local vendors or from various suppliers situated at Nasik Pune and other districts The required materials are procured with the help of hired transporters However the hired transporters do not care much about the preservation of the goods Hence about 20 of the goods are lost due to damage deterioration pilferage etc Again the hired transporters are unreliable with regard to their availability as well as prompt delivery schedules

The companyrsquos products are quite popular with the customers who are situated in Mumbai Navi Mumbai Pune etc However the company stands to lose the market due to erratic supply schedules which do not cater promptly to the customers The packaging of the products is attractive but it does not preserve the product for a long time The shelf-life isonly about 5 hours if the goods are not properly refrigerated Loss on this account is about 10

The company has about 10 distribution centres But there does not seem to be the much coordination between these centres Logistical information system is not adequate Due to this the company is unable to expand its business In fact due to competition there is fear that the company may stand to lose its existing clientele Due to mismanagement the company is unable to meet increase in the demands during festival seasons and holidays

You are appointed as a logistics consultant You are required to put forward your suggestions with regard to

1 Setting-up of proper effective logistical information system to improve coordination [Note Discuss about Logistics as an integrated process ensuring proper planning]2 Effective forecasting system to reduce inventory carrying cost wastages damages pilferages [ Note Forecasting can be in terms of door-to-door surveys questionnaires telephonic interviews For marketsstores that are close-by think of JIT strategies]3 Setting-up of effective purchasing and distribution system [Note Quality control with regard to purchases is required Prefer those suppliers who can supply goods in their own transport]4 Improved system of storage handling and packaging [Note Study warehousing material handling system and packaging Writediscus relevant points relating to the question]5 Alternative modes of transport to reduceeliminate wastages [Note Study has to be made regarding capital investment in having own fleet of specialized trucks and related variable costs versus hiring specialized fleet of trucks In case of hired trucks agreement should be made with regard to compensation to be paid by the transport company in case goods are damagedpilfered by them]6 Ways and means to tackle and counter competitorsrsquo strategies [Note Analysis as to why competitors are having a ldquocutting edgerdquo Improvement in the companyrsquos performance vis-agrave-vis performance in inbound logistics processing packaging storagewarehousing marketingsales programmes Quality and taste of the product may be altered to suit various sections of customers Different sizes of packets to suit customersrsquo budget]

Case Study No 4

Shoppersrsquo Paradise has a swanky mall at Andheri Mumbai They have a complete range of whorsquos who of shopping items It was shop-in-shop based on international standards The shop area is nearly 3 50000 square feet and about 25000 customers visit the mall daily Fierce competition has driven Shoppersrsquo Paradise to tie-up with music companies popular food outlets etc This ensures at least a certain percentage of sales Again to ensure that no stock-outs take place Shoppersrsquo Paradise has built a warehouse close to its mall The warehouse has sufficient storage capacity Based on the consumption patterns the warehouse is stocked with the required inventory

Shoppersrsquo Paradise basically targets higher income groups Therefore it prefers to use roadways for transport of goods from the vendors Though expensive as compared to railways roadways have advantages in terms of door-to-door delivery quicker decisions regarding change in routes or change in delivery schedules etc Shoppersrsquo Paradise physically opens the packs received from the vendors It sorts out the goods and puts the necessary price tags on them The goods are then repacked to be appropriately stacked for final delivery as and when required Since no heavy inventory has to be transported mechanized material handling is not used since it would involve heavy capital investment Pallets and crates are used extensively Again when goods are returned by the customers due to defects Shoppersrsquo Paradise sends the goods to the warehouse from where the goods are sent back to the concerned vendor The cost of return is borne by the vendors

In case of new arrivals of stock the sales department of Shoppersrsquo Paradise puts bill-boards about the new stock early in the morning before the customers rive This makes it convenient for the customers to know about the new arrivals Shoppersrsquo Paradise is very keen to ensure that the customers get the right product at the right time At the same time the management of Shoppersrsquo Paradise desires to reduce the overall cost

You are appointed as a Logistics Consultant Suggest ways to improve the performance of Shoppersrsquo ParadiseQuestionsa) Study and discuss the implications of logistics network designb) Discuss the modes of inventory sourcingc) Analyze the alternative modes of communicationd) Study various in which Shoppersrsquo Paradise can increase productivity

Case Study No 5(Mumbai Univ Nov 2001)

Ms Britecolor Paints Ltd (BPL) is a manufacturer of decorative paints for households commercial premises and industrial applications

a) Ms BPL has embarked on a policy of satisfying every possible customer in respect of shades delivery and durability Thus it went ahead and created twenty-five depots one in almost every city The manufacturing base was however maintained in Pune The factory received information in connection with stocks from depots once a week and there was no intercommunication between the depots Since they were in the competitive market price was pre-determined ie the manufacturer had no liberty to price the product as per his own choiceb) In their enthusiasm and effort to satisfy their customers Ms BPL strived to manufacture every possible shade by combining various primary shades and would await the prospective customer to carry out the purchase It ensured that these shades were available at each and every depot even at the cost of transportation incurred in sending goods in less than full truck load lots This certainly provided a very high service level and the customers would get their shades as per their desires and thus they were fully satisfiedc) While on one hand Ms BPL had a population of very highly satisfied they had almost 50 of their total domestic sales lying as finished goods inventory at various depots on the other handd) Industrial paints though not very customized the respective industrial customer was quite satisfied Consequently the inventory of finished goods was very low in this segment But at the same time realization was also lower due to stiff competition from other industrial paint manufacturers than the domestic markete) Nevertheless the economic runs of industrial paints were always assured due to high off-take by the industrial customersf) The objective of the manufacturer was to increase the realization taking into account economic runs inventory seasonality and individual choices of domesticindustrial customers

If Ms BPL appoints you as their Logistics Consultant how would you advice them in respect of the followinga) How can the company achieve economy in transportation by maintaining almost the same service levelb) Demand forecasting technique to take care of seasonality as well as reduction in inventoryc) Information technology to substitute maintenance of high inventory without affecting customer service leveld) Connectivity between factory and depots (networking diagram)

Case Study No 6(Mumbai Univ Nov 2002)ABCL Ltd is a leading Fast Food Processing Company operating from Thane It is involved in the fast food business since last 10

years and has a tie up with a foreign firm operating in the same field It handles both vegetable as well as non-vegetable products forwhich it arranges the required vegetables and chickens from local vegetable vendors and poultry farms as well as from far off placeslike Nasik Pune and Aurangabad It has very good markets in Mumbai Pune and the surrounding cities The products are sold in thebrand name of Nasta which is very popular brand among the young collegians and office goers It has its most modern kitchen at NewMumbai to cater to the needs for fresh Nasta Vegetables and chicken items are transported from the procurement centres of NasikPune Aurangabad using hired trucks While transporting vegetables and chickens there were shortages damages and decompositionproblems which varies from 10 to 15 and there is inconsistency in the transit time the reliability of the raw material transporters isvery lowPackaging of Nasta is very good and attractive but it is not long lasting type However the quality and taste are the reasons for itspopularity Nasta is sold in three different packs ndash party family and individual Nasta loses its taste and flavour after 8 hours if it isnot preserved in refrigeration Nasta is distributed through 25 distribution centres including three at its main procurement centres ofNasik Pune and AurangabadLogistics Information Network is not up to the mark The procurement centres directly communicate to the operating centre at ThaneDue to lack of proper co-ordination at different distribution centres it has started creating problems of stocks spoilage pilferage andwastage of raw materials as well as finished goods at certain distribution and procurement centresTransportation and storage problems are identified as the main culprits for the heavy losses being incurred at some centres Holidaysfestivals and collegians put a lot of pressure on the existing demand and supply situations of Nasta seasonally resulting inmismanagement and losses Entry of multinationals into the market has increased the competition and put a pressure on Nasta TheManaging Director of the company has formed a team consisting of senior executives to suggest a concrete plan to fight the growingcompetition and overcome problems of transport storage and other related problems so as to increase the market share and marginThe team of senior executives has recommended your name as a Logistics Consultant You are required to put forward yoursuggestions for the followinga) Proper transportation policy to ensure minimum transportation loss of vegetables of vegetables and poultry products andreduction in the packaging costs Advice on the company owning its own fleet of transportb) Demand forecasting techniques to take care of the seasonality as well as reduction in the inventory overcoming shortages aswell as other related problemsc) Suggestions for improving Purchases and Distribution policiesPage 5Prof Parshuram 2660678026605814Case Study No 7(Mumbai Uni Nov 2003)Ms Modern Garments is the manufacturer of ladies and gents garments such as tops shirts undergarments etc Their manufacturing

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Food Savories Limited is engaged in the manufacturing of various types of fast food items that are ready-to-eat variety It has been in the business for the past 12 years It has its factory as well as the processing unit in Navi Mumbai The raw materials required are mainly vegetables chicken which the company procures from either the local vendors or from various suppliers situated at Nasik Pune and other districts The required materials are procured with the help of hired transporters However the hired transporters do not care much about the preservation of the goods Hence about 20 of the goods are lost due to damage deterioration pilferage etc Again the hired transporters are unreliable with regard to their availability as well as prompt delivery schedules

The companyrsquos products are quite popular with the customers who are situated in Mumbai Navi Mumbai Pune etc However the company stands to lose the market due to erratic supply schedules which do not cater promptly to the customers The packaging of the products is attractive but it does not preserve the product for a long time The shelf-life isonly about 5 hours if the goods are not properly refrigerated Loss on this account is about 10

The company has about 10 distribution centres But there does not seem to be the much coordination between these centres Logistical information system is not adequate Due to this the company is unable to expand its business In fact due to competition there is fear that the company may stand to lose its existing clientele Due to mismanagement the company is unable to meet increase in the demands during festival seasons and holidays

You are appointed as a logistics consultant You are required to put forward your suggestions with regard to

1 Setting-up of proper effective logistical information system to improve coordination [Note Discuss about Logistics as an integrated process ensuring proper planning]2 Effective forecasting system to reduce inventory carrying cost wastages damages pilferages [ Note Forecasting can be in terms of door-to-door surveys questionnaires telephonic interviews For marketsstores that are close-by think of JIT strategies]3 Setting-up of effective purchasing and distribution system [Note Quality control with regard to purchases is required Prefer those suppliers who can supply goods in their own transport]4 Improved system of storage handling and packaging [Note Study warehousing material handling system and packaging Writediscus relevant points relating to the question]5 Alternative modes of transport to reduceeliminate wastages [Note Study has to be made regarding capital investment in having own fleet of specialized trucks and related variable costs versus hiring specialized fleet of trucks In case of hired trucks agreement should be made with regard to compensation to be paid by the transport company in case goods are damagedpilfered by them]6 Ways and means to tackle and counter competitorsrsquo strategies [Note Analysis as to why competitors are having a ldquocutting edgerdquo Improvement in the companyrsquos performance vis-agrave-vis performance in inbound logistics processing packaging storagewarehousing marketingsales programmes Quality and taste of the product may be altered to suit various sections of customers Different sizes of packets to suit customersrsquo budget]

Case Study No 4

Shoppersrsquo Paradise has a swanky mall at Andheri Mumbai They have a complete range of whorsquos who of shopping items It was shop-in-shop based on international standards The shop area is nearly 3 50000 square feet and about 25000 customers visit the mall daily Fierce competition has driven Shoppersrsquo Paradise to tie-up with music companies popular food outlets etc This ensures at least a certain percentage of sales Again to ensure that no stock-outs take place Shoppersrsquo Paradise has built a warehouse close to its mall The warehouse has sufficient storage capacity Based on the consumption patterns the warehouse is stocked with the required inventory

Shoppersrsquo Paradise basically targets higher income groups Therefore it prefers to use roadways for transport of goods from the vendors Though expensive as compared to railways roadways have advantages in terms of door-to-door delivery quicker decisions regarding change in routes or change in delivery schedules etc Shoppersrsquo Paradise physically opens the packs received from the vendors It sorts out the goods and puts the necessary price tags on them The goods are then repacked to be appropriately stacked for final delivery as and when required Since no heavy inventory has to be transported mechanized material handling is not used since it would involve heavy capital investment Pallets and crates are used extensively Again when goods are returned by the customers due to defects Shoppersrsquo Paradise sends the goods to the warehouse from where the goods are sent back to the concerned vendor The cost of return is borne by the vendors

In case of new arrivals of stock the sales department of Shoppersrsquo Paradise puts bill-boards about the new stock early in the morning before the customers rive This makes it convenient for the customers to know about the new arrivals Shoppersrsquo Paradise is very keen to ensure that the customers get the right product at the right time At the same time the management of Shoppersrsquo Paradise desires to reduce the overall cost

You are appointed as a Logistics Consultant Suggest ways to improve the performance of Shoppersrsquo ParadiseQuestionsa) Study and discuss the implications of logistics network designb) Discuss the modes of inventory sourcingc) Analyze the alternative modes of communicationd) Study various in which Shoppersrsquo Paradise can increase productivity

Case Study No 5(Mumbai Univ Nov 2001)

Ms Britecolor Paints Ltd (BPL) is a manufacturer of decorative paints for households commercial premises and industrial applications

a) Ms BPL has embarked on a policy of satisfying every possible customer in respect of shades delivery and durability Thus it went ahead and created twenty-five depots one in almost every city The manufacturing base was however maintained in Pune The factory received information in connection with stocks from depots once a week and there was no intercommunication between the depots Since they were in the competitive market price was pre-determined ie the manufacturer had no liberty to price the product as per his own choiceb) In their enthusiasm and effort to satisfy their customers Ms BPL strived to manufacture every possible shade by combining various primary shades and would await the prospective customer to carry out the purchase It ensured that these shades were available at each and every depot even at the cost of transportation incurred in sending goods in less than full truck load lots This certainly provided a very high service level and the customers would get their shades as per their desires and thus they were fully satisfiedc) While on one hand Ms BPL had a population of very highly satisfied they had almost 50 of their total domestic sales lying as finished goods inventory at various depots on the other handd) Industrial paints though not very customized the respective industrial customer was quite satisfied Consequently the inventory of finished goods was very low in this segment But at the same time realization was also lower due to stiff competition from other industrial paint manufacturers than the domestic markete) Nevertheless the economic runs of industrial paints were always assured due to high off-take by the industrial customersf) The objective of the manufacturer was to increase the realization taking into account economic runs inventory seasonality and individual choices of domesticindustrial customers

If Ms BPL appoints you as their Logistics Consultant how would you advice them in respect of the followinga) How can the company achieve economy in transportation by maintaining almost the same service levelb) Demand forecasting technique to take care of seasonality as well as reduction in inventoryc) Information technology to substitute maintenance of high inventory without affecting customer service leveld) Connectivity between factory and depots (networking diagram)

Case Study No 6(Mumbai Univ Nov 2002)ABCL Ltd is a leading Fast Food Processing Company operating from Thane It is involved in the fast food business since last 10

years and has a tie up with a foreign firm operating in the same field It handles both vegetable as well as non-vegetable products forwhich it arranges the required vegetables and chickens from local vegetable vendors and poultry farms as well as from far off placeslike Nasik Pune and Aurangabad It has very good markets in Mumbai Pune and the surrounding cities The products are sold in thebrand name of Nasta which is very popular brand among the young collegians and office goers It has its most modern kitchen at NewMumbai to cater to the needs for fresh Nasta Vegetables and chicken items are transported from the procurement centres of NasikPune Aurangabad using hired trucks While transporting vegetables and chickens there were shortages damages and decompositionproblems which varies from 10 to 15 and there is inconsistency in the transit time the reliability of the raw material transporters isvery lowPackaging of Nasta is very good and attractive but it is not long lasting type However the quality and taste are the reasons for itspopularity Nasta is sold in three different packs ndash party family and individual Nasta loses its taste and flavour after 8 hours if it isnot preserved in refrigeration Nasta is distributed through 25 distribution centres including three at its main procurement centres ofNasik Pune and AurangabadLogistics Information Network is not up to the mark The procurement centres directly communicate to the operating centre at ThaneDue to lack of proper co-ordination at different distribution centres it has started creating problems of stocks spoilage pilferage andwastage of raw materials as well as finished goods at certain distribution and procurement centresTransportation and storage problems are identified as the main culprits for the heavy losses being incurred at some centres Holidaysfestivals and collegians put a lot of pressure on the existing demand and supply situations of Nasta seasonally resulting inmismanagement and losses Entry of multinationals into the market has increased the competition and put a pressure on Nasta TheManaging Director of the company has formed a team consisting of senior executives to suggest a concrete plan to fight the growingcompetition and overcome problems of transport storage and other related problems so as to increase the market share and marginThe team of senior executives has recommended your name as a Logistics Consultant You are required to put forward yoursuggestions for the followinga) Proper transportation policy to ensure minimum transportation loss of vegetables of vegetables and poultry products andreduction in the packaging costs Advice on the company owning its own fleet of transportb) Demand forecasting techniques to take care of the seasonality as well as reduction in the inventory overcoming shortages aswell as other related problemsc) Suggestions for improving Purchases and Distribution policiesPage 5Prof Parshuram 2660678026605814Case Study No 7(Mumbai Uni Nov 2003)Ms Modern Garments is the manufacturer of ladies and gents garments such as tops shirts undergarments etc Their manufacturing

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Shoppersrsquo Paradise has a swanky mall at Andheri Mumbai They have a complete range of whorsquos who of shopping items It was shop-in-shop based on international standards The shop area is nearly 3 50000 square feet and about 25000 customers visit the mall daily Fierce competition has driven Shoppersrsquo Paradise to tie-up with music companies popular food outlets etc This ensures at least a certain percentage of sales Again to ensure that no stock-outs take place Shoppersrsquo Paradise has built a warehouse close to its mall The warehouse has sufficient storage capacity Based on the consumption patterns the warehouse is stocked with the required inventory

Shoppersrsquo Paradise basically targets higher income groups Therefore it prefers to use roadways for transport of goods from the vendors Though expensive as compared to railways roadways have advantages in terms of door-to-door delivery quicker decisions regarding change in routes or change in delivery schedules etc Shoppersrsquo Paradise physically opens the packs received from the vendors It sorts out the goods and puts the necessary price tags on them The goods are then repacked to be appropriately stacked for final delivery as and when required Since no heavy inventory has to be transported mechanized material handling is not used since it would involve heavy capital investment Pallets and crates are used extensively Again when goods are returned by the customers due to defects Shoppersrsquo Paradise sends the goods to the warehouse from where the goods are sent back to the concerned vendor The cost of return is borne by the vendors

In case of new arrivals of stock the sales department of Shoppersrsquo Paradise puts bill-boards about the new stock early in the morning before the customers rive This makes it convenient for the customers to know about the new arrivals Shoppersrsquo Paradise is very keen to ensure that the customers get the right product at the right time At the same time the management of Shoppersrsquo Paradise desires to reduce the overall cost

You are appointed as a Logistics Consultant Suggest ways to improve the performance of Shoppersrsquo ParadiseQuestionsa) Study and discuss the implications of logistics network designb) Discuss the modes of inventory sourcingc) Analyze the alternative modes of communicationd) Study various in which Shoppersrsquo Paradise can increase productivity

Case Study No 5(Mumbai Univ Nov 2001)

Ms Britecolor Paints Ltd (BPL) is a manufacturer of decorative paints for households commercial premises and industrial applications

a) Ms BPL has embarked on a policy of satisfying every possible customer in respect of shades delivery and durability Thus it went ahead and created twenty-five depots one in almost every city The manufacturing base was however maintained in Pune The factory received information in connection with stocks from depots once a week and there was no intercommunication between the depots Since they were in the competitive market price was pre-determined ie the manufacturer had no liberty to price the product as per his own choiceb) In their enthusiasm and effort to satisfy their customers Ms BPL strived to manufacture every possible shade by combining various primary shades and would await the prospective customer to carry out the purchase It ensured that these shades were available at each and every depot even at the cost of transportation incurred in sending goods in less than full truck load lots This certainly provided a very high service level and the customers would get their shades as per their desires and thus they were fully satisfiedc) While on one hand Ms BPL had a population of very highly satisfied they had almost 50 of their total domestic sales lying as finished goods inventory at various depots on the other handd) Industrial paints though not very customized the respective industrial customer was quite satisfied Consequently the inventory of finished goods was very low in this segment But at the same time realization was also lower due to stiff competition from other industrial paint manufacturers than the domestic markete) Nevertheless the economic runs of industrial paints were always assured due to high off-take by the industrial customersf) The objective of the manufacturer was to increase the realization taking into account economic runs inventory seasonality and individual choices of domesticindustrial customers

If Ms BPL appoints you as their Logistics Consultant how would you advice them in respect of the followinga) How can the company achieve economy in transportation by maintaining almost the same service levelb) Demand forecasting technique to take care of seasonality as well as reduction in inventoryc) Information technology to substitute maintenance of high inventory without affecting customer service leveld) Connectivity between factory and depots (networking diagram)

Case Study No 6(Mumbai Univ Nov 2002)ABCL Ltd is a leading Fast Food Processing Company operating from Thane It is involved in the fast food business since last 10

years and has a tie up with a foreign firm operating in the same field It handles both vegetable as well as non-vegetable products forwhich it arranges the required vegetables and chickens from local vegetable vendors and poultry farms as well as from far off placeslike Nasik Pune and Aurangabad It has very good markets in Mumbai Pune and the surrounding cities The products are sold in thebrand name of Nasta which is very popular brand among the young collegians and office goers It has its most modern kitchen at NewMumbai to cater to the needs for fresh Nasta Vegetables and chicken items are transported from the procurement centres of NasikPune Aurangabad using hired trucks While transporting vegetables and chickens there were shortages damages and decompositionproblems which varies from 10 to 15 and there is inconsistency in the transit time the reliability of the raw material transporters isvery lowPackaging of Nasta is very good and attractive but it is not long lasting type However the quality and taste are the reasons for itspopularity Nasta is sold in three different packs ndash party family and individual Nasta loses its taste and flavour after 8 hours if it isnot preserved in refrigeration Nasta is distributed through 25 distribution centres including three at its main procurement centres ofNasik Pune and AurangabadLogistics Information Network is not up to the mark The procurement centres directly communicate to the operating centre at ThaneDue to lack of proper co-ordination at different distribution centres it has started creating problems of stocks spoilage pilferage andwastage of raw materials as well as finished goods at certain distribution and procurement centresTransportation and storage problems are identified as the main culprits for the heavy losses being incurred at some centres Holidaysfestivals and collegians put a lot of pressure on the existing demand and supply situations of Nasta seasonally resulting inmismanagement and losses Entry of multinationals into the market has increased the competition and put a pressure on Nasta TheManaging Director of the company has formed a team consisting of senior executives to suggest a concrete plan to fight the growingcompetition and overcome problems of transport storage and other related problems so as to increase the market share and marginThe team of senior executives has recommended your name as a Logistics Consultant You are required to put forward yoursuggestions for the followinga) Proper transportation policy to ensure minimum transportation loss of vegetables of vegetables and poultry products andreduction in the packaging costs Advice on the company owning its own fleet of transportb) Demand forecasting techniques to take care of the seasonality as well as reduction in the inventory overcoming shortages aswell as other related problemsc) Suggestions for improving Purchases and Distribution policiesPage 5Prof Parshuram 2660678026605814Case Study No 7(Mumbai Uni Nov 2003)Ms Modern Garments is the manufacturer of ladies and gents garments such as tops shirts undergarments etc Their manufacturing

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Ms Britecolor Paints Ltd (BPL) is a manufacturer of decorative paints for households commercial premises and industrial applications

a) Ms BPL has embarked on a policy of satisfying every possible customer in respect of shades delivery and durability Thus it went ahead and created twenty-five depots one in almost every city The manufacturing base was however maintained in Pune The factory received information in connection with stocks from depots once a week and there was no intercommunication between the depots Since they were in the competitive market price was pre-determined ie the manufacturer had no liberty to price the product as per his own choiceb) In their enthusiasm and effort to satisfy their customers Ms BPL strived to manufacture every possible shade by combining various primary shades and would await the prospective customer to carry out the purchase It ensured that these shades were available at each and every depot even at the cost of transportation incurred in sending goods in less than full truck load lots This certainly provided a very high service level and the customers would get their shades as per their desires and thus they were fully satisfiedc) While on one hand Ms BPL had a population of very highly satisfied they had almost 50 of their total domestic sales lying as finished goods inventory at various depots on the other handd) Industrial paints though not very customized the respective industrial customer was quite satisfied Consequently the inventory of finished goods was very low in this segment But at the same time realization was also lower due to stiff competition from other industrial paint manufacturers than the domestic markete) Nevertheless the economic runs of industrial paints were always assured due to high off-take by the industrial customersf) The objective of the manufacturer was to increase the realization taking into account economic runs inventory seasonality and individual choices of domesticindustrial customers

If Ms BPL appoints you as their Logistics Consultant how would you advice them in respect of the followinga) How can the company achieve economy in transportation by maintaining almost the same service levelb) Demand forecasting technique to take care of seasonality as well as reduction in inventoryc) Information technology to substitute maintenance of high inventory without affecting customer service leveld) Connectivity between factory and depots (networking diagram)

Case Study No 6(Mumbai Univ Nov 2002)ABCL Ltd is a leading Fast Food Processing Company operating from Thane It is involved in the fast food business since last 10

years and has a tie up with a foreign firm operating in the same field It handles both vegetable as well as non-vegetable products forwhich it arranges the required vegetables and chickens from local vegetable vendors and poultry farms as well as from far off placeslike Nasik Pune and Aurangabad It has very good markets in Mumbai Pune and the surrounding cities The products are sold in thebrand name of Nasta which is very popular brand among the young collegians and office goers It has its most modern kitchen at NewMumbai to cater to the needs for fresh Nasta Vegetables and chicken items are transported from the procurement centres of NasikPune Aurangabad using hired trucks While transporting vegetables and chickens there were shortages damages and decompositionproblems which varies from 10 to 15 and there is inconsistency in the transit time the reliability of the raw material transporters isvery lowPackaging of Nasta is very good and attractive but it is not long lasting type However the quality and taste are the reasons for itspopularity Nasta is sold in three different packs ndash party family and individual Nasta loses its taste and flavour after 8 hours if it isnot preserved in refrigeration Nasta is distributed through 25 distribution centres including three at its main procurement centres ofNasik Pune and AurangabadLogistics Information Network is not up to the mark The procurement centres directly communicate to the operating centre at ThaneDue to lack of proper co-ordination at different distribution centres it has started creating problems of stocks spoilage pilferage andwastage of raw materials as well as finished goods at certain distribution and procurement centresTransportation and storage problems are identified as the main culprits for the heavy losses being incurred at some centres Holidaysfestivals and collegians put a lot of pressure on the existing demand and supply situations of Nasta seasonally resulting inmismanagement and losses Entry of multinationals into the market has increased the competition and put a pressure on Nasta TheManaging Director of the company has formed a team consisting of senior executives to suggest a concrete plan to fight the growingcompetition and overcome problems of transport storage and other related problems so as to increase the market share and marginThe team of senior executives has recommended your name as a Logistics Consultant You are required to put forward yoursuggestions for the followinga) Proper transportation policy to ensure minimum transportation loss of vegetables of vegetables and poultry products andreduction in the packaging costs Advice on the company owning its own fleet of transportb) Demand forecasting techniques to take care of the seasonality as well as reduction in the inventory overcoming shortages aswell as other related problemsc) Suggestions for improving Purchases and Distribution policiesPage 5Prof Parshuram 2660678026605814Case Study No 7(Mumbai Uni Nov 2003)Ms Modern Garments is the manufacturer of ladies and gents garments such as tops shirts undergarments etc Their manufacturing

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

years and has a tie up with a foreign firm operating in the same field It handles both vegetable as well as non-vegetable products forwhich it arranges the required vegetables and chickens from local vegetable vendors and poultry farms as well as from far off placeslike Nasik Pune and Aurangabad It has very good markets in Mumbai Pune and the surrounding cities The products are sold in thebrand name of Nasta which is very popular brand among the young collegians and office goers It has its most modern kitchen at NewMumbai to cater to the needs for fresh Nasta Vegetables and chicken items are transported from the procurement centres of NasikPune Aurangabad using hired trucks While transporting vegetables and chickens there were shortages damages and decompositionproblems which varies from 10 to 15 and there is inconsistency in the transit time the reliability of the raw material transporters isvery lowPackaging of Nasta is very good and attractive but it is not long lasting type However the quality and taste are the reasons for itspopularity Nasta is sold in three different packs ndash party family and individual Nasta loses its taste and flavour after 8 hours if it isnot preserved in refrigeration Nasta is distributed through 25 distribution centres including three at its main procurement centres ofNasik Pune and AurangabadLogistics Information Network is not up to the mark The procurement centres directly communicate to the operating centre at ThaneDue to lack of proper co-ordination at different distribution centres it has started creating problems of stocks spoilage pilferage andwastage of raw materials as well as finished goods at certain distribution and procurement centresTransportation and storage problems are identified as the main culprits for the heavy losses being incurred at some centres Holidaysfestivals and collegians put a lot of pressure on the existing demand and supply situations of Nasta seasonally resulting inmismanagement and losses Entry of multinationals into the market has increased the competition and put a pressure on Nasta TheManaging Director of the company has formed a team consisting of senior executives to suggest a concrete plan to fight the growingcompetition and overcome problems of transport storage and other related problems so as to increase the market share and marginThe team of senior executives has recommended your name as a Logistics Consultant You are required to put forward yoursuggestions for the followinga) Proper transportation policy to ensure minimum transportation loss of vegetables of vegetables and poultry products andreduction in the packaging costs Advice on the company owning its own fleet of transportb) Demand forecasting techniques to take care of the seasonality as well as reduction in the inventory overcoming shortages aswell as other related problemsc) Suggestions for improving Purchases and Distribution policiesPage 5Prof Parshuram 2660678026605814Case Study No 7(Mumbai Uni Nov 2003)Ms Modern Garments is the manufacturer of ladies and gents garments such as tops shirts undergarments etc Their manufacturing

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

technology is advanced and at the same time there are several players who have access to such latest technologies The supply chainfor Ms Modern Garments includes significant purchases of raw materials stitching of garments packaging of finished products andsupply of goods to its customersThe logistics functions are the key competitive elements in the market Ms Modern Garments is considering to take over the controlover its inbound and outbound logistics functions These have a direct bearing upon the inventories reduction in the losses due totransit delays and improvement in transit time and service reliability However the company has to look into the cost implications ofsuch changesMs Modern Garments have been the leader in the readymade shirts market in India for a number of years After liberalization theyentered into a joint venture with a French company to expand its business in the area of trousers and T-shirts Despite the new jointventure Ms Modern Garments still continues to manufacture its shirts at Thane near Mumbai and has started a new state-of-artgarment manufacturing plant at Pune in Maharashtra to compete with other market players The company has planned to undertakethe distribution of garments made and packed in its plants at Navi Mumbai and Kalyan so as to retain the control over the designquality and service channel of its productsAfter liberalization the market has grown more matured and the expectations of the customers towards the features of the producthave increased and also the technology and the design has improved considerably Now in the market only the garments with gooddelivery quality are acceptable All the competitors have equally good quality product in the market Presently the area of logisticsdistribution customer service and satisfaction are the areas of prime concern in order to have extra value addition to the product Theproduct defects due to stitching cutting and transportation are now under increasing scrutinyFrom the cost control point of view the amount of money held up in distribution pipeline is significant The large variety of garmentsnow means more raw materials and components are to be held in stock Presently the incoming supplies are arranged by the vendorfirms and also they may have to be persuaded to opt for jointly approved transporters Due to product variations the order fulfillmentand its processing are of considerable importance The traditional information system has become inadequate There are over 500retail outlets through which the finished products are distributed with the help of more than 50 transporters Lead-time variability iscreating problems of buffer stocks with the distributors The transit time fluctuations are due to the breakdown of trucks improperdocumentation and unfair practices of over charging of the vehicles etc Such variability has to be reduced Major portion oflogistics cost was allocated in fleet management whereas warehousing raw materials management and information networking haveinsignificant costs On the basis of the above case answer the following questionsa) Examine the possibility of alternatives in transportation of the inbound and outbound materialsb) How to reduce the cost of the inbound and outbound logistics functionsc) What could be the major problems in exploiting the inbound and outbound logistics functions

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

d) Is it advisable to have a dedicated transport system to operate packaged materials mainly for the companye) What arrangements have to be made to ensure the service quality for the customersCase Study No 8(Mumbai Univ Nov 2004)Mumbai Flour Mills provide high quality bakery flours to commercial bakers as well as to the consumer market The commercialbuyers have consistent demand and brand loyalty whereas the consumers have minimal brand loyalty They instead generally preferknown names over store brands Demand is seasonal for the flour with the annual break occurring just before Diwali It slacks offdrastically during January and February To offset both these phenomena Mumbai Flour Mills and its major super market chainaccounts carry out special deals and sales promotionsPage 6Prof Parshuram 2660678026605814The Production Planning Department of the company which is located at Akola in Maharashtra has the responsibility of controllingthe inventory level at the plant warehouse at Nagpur as well as the three distribution centres located at Nasik in Maharashtra Bhopalin Madhya Pradesh and Hyderabad in Andhra PradeshPlanning has been routinely based on past experience and history No formal forecasting is performed by the company Distributioncentres get their requirements by rail from Nagpur The lead time of replenishment from Nagpur to distribution centres is 7 days Thereplenishment rate is 48 to 54 pallets per wagon depending upon the type of wagon used In case there is any emergency demandthen 18 pallets can be made available by truck with 3 days transit timeRecently the company has experienced two major stock-outs for its consumer size 5 kg sacks of refined quality white flour One ofthese was problems in the milling operations the other occurred when the marketing department initiated lsquobuy-one-get-one-freersquocoupon promotion Ever since these events took place the planning has become excessively couscous and hence errs on the sidehaving excessive inventories at the distribution centres Additionally two other events have affected distribution centrersquos throughputs(1) implementation of direct factory supply for replenishing the five largest super market chains and (2) a price increasing making theMumbai Flour Mills more expensive than its national brand competitors such as Eillsburry or Tata maidaOut of the 1500 pallets in Hyderabad distribution centre the Mumbai Flour Mills shows only 396 pallets for open orders This hasled the company to use outside overflow storage where there are another 480 pallets Flour is easily damaged Hence the companyprefers to minimize handling Overstocking at the distribution centres alone costs Rs 185 per pallet for outside storage to which mustbe added Rs 425 per pallet extra handling charges and Rs 225 oer truck load for transportation Similar scenarios are seen at otherdistribution centres as wellMr Mohan the distribution manager is contemplating various approaches to solve the inventory problem It is clear that the productmust be in place at the time a consumer is making a decision to buy the product At the same time the company cannot tolerate theoverstocking situation and the stress that it is putting on facilities and cash flow Mr Mohanrsquos first thought is ldquobetter information

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

systemrdquo which will provide timely and accurate information throughout the organizationOn the basis of the above case answer the following questionsa) Evaluate the alternate solution which could possibly be considered by Mr Mohanb) What additional solution if any do you propose in lieu of Mr Mohanrsquos solutionc) Critically examine the transportation system of the company Enumerate its drawbacksCase Study No 9(Mumbai Univ May 2004)In the recent years Bharat Point Corporation has emerged as a very successful merchandiser of contemporary fashion apparel for menand women The company publishes a high quality catalogue that it sends to prospective customers who then place order by mail orby using a toll-free telephone number The customer base consists principally of young working couples Children are not includedas potential customers The young working couples also receive catalogue from competitive firms such as ABC Ltd etcThough catalogue business is fiercely competitive it is growing as well People who are ldquojust-to-busyrdquo to shop at retail outlets regardthis as an appealing alternative Also it is seen that purchase apparel merchandise by catalogue has an element of prestige in certainsocial circlesTo further connect with todayrsquos consumers the company has developed an internet-based capability bharatcom which provides fullcatalogue and ordering services for on-line customers The breadth of the product line is identical to that of the traditional cataloguethe companyrsquos website offers a new and effective way to interact with customersAmong companies of its kind Bharat Point Corpn is thought to offer the best product assortment product quality and customerservice Two critical customer service elements at Bharat Point Corpn are that the company receives packs and ships orders in atimely manner and that the product return procedures are ldquocustomer friendlyrdquo Although the company accommodates product returnswith ldquolittle-or-not-botherrdquo to the customer is practice is expensive and of growing concern to the higher managementPage 7Prof Parshuram 2660678026605814Bharat Point Corpn does not produce any of the merchandise that it sells Instead it contracts with local manufacturers and alsoimports from Korea Hong Kong Taiwan and Singapore to meet its largely seasonal product-line needs The company ships containerloads of labeled and pre-tagged merchandise by combination of ocean transportation and domestic inland motor freight to acentralized distribution centre in Delhi and Bangalore Subsequent movements to individual customers are made by companies likeUPS and Federal ExpressBharat Point executives consider themselves to be in the ldquologistics businessrdquo They feel that the companyrsquos logistical capabilities arethe key to its excellent reputation in the market place An area of nagging concern to the managers of Bharat Point however is thatcustomer tastes and company product preferences are beginning to change very quickly sometimes in the middle of a selling seasonOnly a continued ability to react quickly to the changing market needs will separate market leaders from the othersQuestionsa) In what ways should you consider the components of the logistic information system important to Bharat Point What

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

suggestions do you have for improving the companyrsquos logistical information systemb) What type of logistics challenges do you feel may be associated with the use of customers of the companyrsquos onlinecapability bharatcomc) What macro environmental factor will be critical to Bharat Pointrsquos future success In what specific ways can the companydevelop logistic capabilities to address these factorsCase Study No 10(Mumbai Univ May 2005)Hind Watches (HW) was established in 1962 in Bangalore as a PSU with foreign collaboration This was the first factory of its kindin India to manufacture wrist watches Since the production was very low till 1978 the sale was comparable with imported watchesIn 1978 another factory was established with two million capacity and mass production technology In order to cater to the marketdemand dealers in major cities were appointed The company was ldquoprotectedrdquo and had established its brand nameOn opening of the countryrsquos economy new players entered into the market in 1982 with new type quartz watches and with innovativemethods of advertisements and techniques which became a major threat to HW In 1990 another private manufacturer with acapability of producing two million quartz watches was started in Delhi HW had to face further tough competitionNew entrants had modern technology and more tuned products required by customers To counter competition HW changed itsstrategy It started a new distribution strategy by appointing dealers in major cities including nodal warehouses in Bangalore andDelhi resorting to institutional sales It also opened specialized showrooms to cater to customer demands Due this this the sales ofHW went up to 7 million watches in 1995 as against the total sales of only 4 million watches of all its competitors put togetherAt this juncture new management took over HW A Voluntary Retirement Scheme (VRS) was introduced A number of seniorofficers left the Organization under the VRS New Heads of Departments took charge of the organization of HW They had expertisein Capital Goods Marketing while sellingmarketing of wrist watches was essentially retail-based These changes affected the salesof HW It dropped to just 4 million while the sales of the competitorsrsquo went up to 5 million Apart from this HW had only 400models of watches while the competitors had more than 1000 models HW had a traditional management system whereas itscompetitors were having professional personnel with knowledge of modern techniques The customers began to feel that HW hasnow become old-fashioned This reduced the sales drastically which resulted in the closure of special shops and a number ofshowrooms of HWLastly the pricing of the watches manufactured by HW were based on equal distribution of expenses At present HW is operatingthrough two Nodal Warehouses whereas the sales of its competitors are effected through dealers who have their own warehouses anddistributors having their own infrastructure Further the competitors had their own specialized franchises showroomsQuestionsa)Examine the reasons for the downfall of HW

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

b)What product strategy should have been adopted by HW to sustain competition and improve customer servicePage 8Prof Parshuram 2660678026605814c)According to your analysis how did the private companies manage to have an edge over HWd)Explain the effects of organizational changes which led to the deterioration in the performance of HWe)State the remedial measures which you think would be needed to improve the performance of HWCase Study No 11 (Case (a)(Mumbai Univ November 2005)Modi Brand threads are manufactured at their plant in Mumbai and sold all over the country through their 15 area offices It catersmainly to hosiery tailoring and household segments Even though the distribution is done through their 15 area offices the customersatisfaction level was estimated at just 85 level Moreover the fill rate is also 80The market for this product is very competitive Many times there is cut-throat competition Hence to maintain its customer baseModi Brand has to maintain inventory of all its products at all time This increasing levels of inventory just to maintain the customerbase and ward off competition are a matter of great concern to the company The large levels of inventory have posed a myriad ofproblems to the company including reduction in the profitsThe treads manufactured are of two types namely cotton and polyester They come in different lengths strengths and shades Thereare 100 varieties of these shades in each shade Considering about 20 different shades the total product range works out to 2000 stockkeeping units (SKUs)One carton of each colour is to be kept in stock to meet the varied demands of the customers The cost of one such carton works outto Rs 2000 for Modi thread Thus 2000 SKUs multiplied with Rs 2000 works out to Rs 40 lakhs If this has to be stocked at eachof the 15 centres the total stock value to be kept on hand at any time works out to Rs 600 lakhs or Rs 6 crores This is very highhigh for the company by any standardsThe company is also facing problems of warehousing and transportation At present the company has contracted trucks for deliveryof stocks to the various centres But the company faces problems of reliability and consistence with these trucks Warehousingproblems pertain to storage pilferage and damage due to weather conditionsQuestionsa)Identify and analyze each of the basic problems faced by Modi Threadb)What steps would you suggest to reduce the inventory levels at the Regional Officesc)Suggest alternative distribution system taking into consideration the problems of warehousing and transportation alsoCase Study No 12 Case (b)(Mumbai Univ Nov 2005)Cambridge has become a trademark of gents clothing Initially the company started marketing quality shirts for the common man atan affordable price The concept of the company was ldquooffer better products at a cheaper pricerdquo The strategy clicked There was aboom in sales and Cambridge shirts became a rage with the general publicBut over the years the Company wanted to increase its market segment It therefore began offering clothing for both the middle as

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

well as the higher level income groups of gents customers Buoyant with their success Cambridge expanded their product range toinclude pants trousers shirts and other accessoriesThe basic philosophy of the company is outsourcing The cloth thread and other materials are supplied by Cambridge to the garmentfactories The labour required is also outsourcedPage 9Prof Parshuram 2660678026605814But outsourcing brought in various problems Cambridge did appoint its own quality control personnel to ensure the requisite qualityof the finished products offered to the customers But the expertise and the experience of the quality control inspectors werequestionable The company heavily depended upon them to ensure the qualityThe products required by the customers are produced in standard acceptable sizes They were produced in bulk to economy of scalein production But whether all the goods produced in such large scale would be sold with definitely was in doubt It was a risk sincecustomers tastes change rapidly What is of value today for a customer maybe absolutely useless tomorrowIn all there are about 20 company-owned outlets spread over the city and suburbs of Mumbai The stocks at these outlets arereplenished by the central stores of the company as per the demand and the forecasts made by these outlets Sometimes delays in thedelivery of supplies occur due to unforeseen inadequacy of stocks The company has its own fleet of tempos to deliver the finishedproducts In fact these tempos are used for both inbound as well as outbound activities Presently the tempos are handling morethan 50 stock keeping unitsSKUs of various gents attire enjoy a strong brand image which the company has build But fierce competition is making it extremelydifficult to maintain the sales But Cambridge believes that their strength lies in their quality This they believe will ward off thethreat from its competitorsQuestionsa) Analyze the various factors that have contributed to the growth of Cambridgeb) Discuss the various reasons which has enabled the company to keep its prices lowc)I n the context of future looming threats suggest the strategies which the company must adopt to stsy in the marketd) Discuss whether the company should replace their tempos with trucks having a larger capacityCase Study No 13Superb Automobiles a Nasik-based heavy vehicle manufacturing company designed developed and produced a deluxe car which itcalled Satisfaction This vehicle was meant for the elite of the Indian corporate world and other higher income group customers Foran Indian vehicle manufacturing company Satisfaction was a bold venture They companyrsquos intention was to lsquotake-onrsquo imported carswhich were higher pricedSuperb Automobiles had a market reputation Hence Satisfaction was well-received in the market without much initial fuss andskepticism At the end of the first round of booking a waiting period of average 5 years was estimated These lsquowaitingsrsquo enrichedthe companyrsquos coffers by Rs 50 croresBut when the first batch of Satisfaction hit the road problems began cropping up There was a steady flow of complaints regarding

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

the performance and road-worthiness of Satisfaction The service centres that were authorized to undertake the after-sales service onbehalf of the company were unable to meet the customersrsquo expectations regarding after-sales service The problems ranged fromavailability of spares to expertise in repairingThe customers had expected Satisfaction to be of international standards because of the reputation and image of Superb AutomobilesVery soon dissatisfied and angry customers started writing to the CEO of Superb Automobiles The CEO called for a meeting of thedifferent HODs of the company and discussed the matter The outcome of the meeting was as followsa) The R amp D department as well as the manufacturing department did not perform adequate userrsquos trials on Satisfactionb) The workshops appointed for after-sales service had no expertise to repair the faultsc) Stocks of sparescomponents were inadequate at the workshopsd) The manufacturing department of the company faced serious problems in terms of technological personnel There were alsointerface problems between the production department the marketing department the after-sales workshops and the storesdepartments Due to this production schedules were affectede) Quality control of materials was inadequate on the inbound sidePage 10Prof Parshuram 2660678026605814Questionsa) Analyze the interface problems between the various departments of the company and suggest logistical ways of solving theproblems Discuss the importance and implementation of value chain conceptb) The company is proposing to have its own service workshops instead of outsourcing the same Discus the pros and cons ofthis decisionc) Enumerate the various steps you would take to re-instill confidence in the customers and prop up the companyrsquos image as abrand of repute and confidence Suggest any effective promotion and confidence-building schemes in this regardCase Study No 14Global Engineers is a decade old engineering organization engaged primarily in the manufacturing of switchgears of various rangesIts manufacturing unit is situated in Delhi but its sales are spread all over the country Apart from Global Engineers there are twoother fierce competitors in the switchgear market who between them have captured 75 of the market shareDuring the initial years of manufacturing Global Engineers concentrated in the northern region After that it has moved towardsselling its products in the entire country For this Global Engineers required an efficient logistical distribution system It hasestablished hub warehouses at strategic geographical locations but the problem of inadequate space andor stock outs continue to posea serious problem The company is contemplating on outsourcing its distributionAs regards transport at present the company has its own fleet of transport But delivery schedules get affected due to various reasonsOne of them is absenteeism among the staff The second is that many times trucks have to leave without adequate stocks due tovarious problems in production schedules On return journey the trucks are empty The drivers delay in returning giving variousexcuses for the same

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Because of its low share in the market the pricing policy of the company has always been to charge lower than its competitorsDiscounts offered are flexible Many times the company deals directly with the customers because they can offer better pricing termsand know the customersrsquo requirements first-hand On the other hand competitors strategy has been to maintain high quality becausethey feel that the customers will not hesitate to pay a little more if they are assured of a product have better performance andefficiencyFor better sales and service the company has appointed dealers in the various regions of the country The dealers not only sell thegoods manufactured by the company but also those manufactured by the competitors The dealers sell various other engineeringproducts as well There has been a general complaint among the customers of Global Engineers that the after-sales service providedby the dealers is not satisfactory The company on receiving such complaints sends letters to the dealers to improve their servicesBeyond that nothing is doneThe dealers of the company have got together to list their problems They have stated that they want a higher rate of commission incomparison with that offered by the competitors Secondly they want the company to improve upon the quality of the product whichwill reduce the complaints by the customers Thirdly they want engineers from the company to visit them at regular intervals so thatthe dealers can apprise them directly about the requirements of the customers Fourthly the dealers want an efficient transport systemto ensure timely delivery of the products and sparesQuestionsa) Explain your views regarding establishing of an efficient distribution network for the company You have to envisage allpossible alternativesb) What improvements do you suggest for improving the performance on the inbound and manufacturing cyclesc) Discuss the various steps the company should take to win back the confidence of its customersd) Critically examine the dealersrsquo suggestion that the company must send its engineers to their service centres at regularintervalsPage 11Prof Parshuram 2660678026605814Case Study No 15Ms Good Parts is a manufacturer of automotive replacement parts The company is situated at Pune The main market for thecompany is Mumbai apart from various cities in Maharashtra The company has three main supplier who handle 80 of thecompanyrsquos component partsThe company is keen on developing a very good rapport with the suppliers so that it can reap the potential benefits of sound alliancesto improve supply chain and also reduce the total cost At present the companyrsquos products face fierce competition and any increase inthe selling price would mean substantial loss in the business The only way to improve profits is by reduction in the costs Thecompany wants to have a better reliability responsiveness and relationship with its suppliers

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Each of the suppliers has served Ms Good Parts for several years But Ms Good Parts never realized the importance of making thesesuppliers who supply their bulk of the components as virtual partners of their business Such a move would have proved beneficialto both the company as well as suppliersOne of the suppliers Ms Super Supply sent its sales representative to discuss certain problems with Ms Good Parts The salesrepresentative had the following issues to discussi) there was inefficient unloading and storing facilities at the warehouses of Ms Good Partsii) if Ms Good Parts could hire the services of third-party the handling and storage system would improveiii) the information system was inadequate with regard to instructions regarding suppliesiv) the payment terms had to be improved to enable smooth supply of componentsThe current layout and design of the unloading dock at Ms Good Parts results often in delays and mishandling Due to this MsSuper Supply has estimated that it costs them nearly Rs one lakh per year By suitable improvements Ms Super Supply feels thatMs Good Parts can help them save this amountTo confirm the claims made by Ms Super Supply Ms Good Parts contacted its other two major suppliers These two suppliersagreed with the observations made by Ms Super Supply Each of these two suppliers has estimated that it loses around Rs 50000 peryear due to the inadequate and inefficient facilities made available by Ms Good Parts All the three major suppliers are of the opinionthat larger and less frequent ships would help Ms Good Parts to reduce on transportation costsMs Good Parts hires a contractor to estimate the cost for improvements suggested The cost was estimated to about Rs 10 lakhsQuestions1) Should Ms Good Parts spend Rs 10 lakhs to reduce the cost of the suppliers or accept that the problem is of the suppliersand not theirs Does the concept of supply chain management affect this decision Explain2) Explain how to apply the total cost approach to the entire supply chain How would it be beneficial3) What steps would you propose Ms Good Parts should take to have a better relationship with its suppliers How would thisbe beneficial to the companyCase Study No 16Ms Chemtech manufactures various types of industrial chemicals at the outskirts of Chennai It has distributors located at variousplaces across the country Ms Chemtech also sells chemicals directly from its factory as wellMs Potash Ltd is a major supplier of raw materials to Ms Chemtech But Ms Chemtech is facing problems with this supplierbecause of (i) late deliveries (ii) delivery of wrong orders (iii) missing deliveries giving reasons that they had not received the orderHistorically Ms Chemtech has dealt with its supply problems by simply changing its suppliers The company now is contemplatingon further additional changesMs Potash as stated before is one of the main suppliers of Ms Chemtech Ms Potash holds a large inventory to meet the demandsof its customers But some of the vital items of inventory have to be imported The lead time for this is around 3 monthsPage 12Prof Parshuram 2660678026605814

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Now when Ms Chemtech places orders for these vital items of inventory Ms Potash is not able to meet the order immediately due tostockouts Therefore Ms Chemtech feels that Ms Potash lets it down due to which the production schedules of Ms Chemtech istotally disturbedDue to the repeated frictional relationship with Ms Potash the management of Ms Potash is wondering whether it is worth keepingcustomer relationship with Ms Chemtech Of course Ms Chemtech is one of its major buyers but the constant threats by MsChemtech has put Ms Potash on the defensive That is they fear that if they suddenly lose the business with Ms Chemtech then thismight seriously affect the operations of Ms Potash The top management of Ms Potash is seriously contemplating to change itscustomer base namely it wants to now focus on building a customer- base founded on long-tern relationship and rely less on businesswith Ms ChemtechThe present scenario between Ms Chemtech and Ms Potash is like thisAt the beginning of each month the customers of Ms Chemtech forecast their requirements for the next month Throughout themonth these customers keep telephoning their orders to Ms Chemtechrsquos marketing department The representatives of the marketingdepartment relay the requirements of the customers to the logistics department of Ms Chemtech The logistics department of MsChemtech transmits the orders to the purchase department and the purchase department in turn then orders the required stocks fromMs PotashSeveral times the customers of Ms Chemtech place expedited orders Such orders are generally not met by Ms Potash since thestock with them has already been ear-marked for other clients The customers of Ms Chemtech are dissatisfied for non-delivery ofstocks on scheduleQuestions1) Examine what are Ms Chemtechrsquos logistical problems2) Discuss how Ms Chemtech can improve its logistical operations3) What according to you should Ms Potash expect from its customers4) What tangible options are available to Ms Potash in the short-term and in the long-termCase Study No 17Ms Speedometers is a public transportation operation that was incorporated in the early 1980s in Mumbai The mission of thecompany is to provide a safe reliable and comfortable transportation service at a price that is affordable by the general public Toachieve the required service level Ms Speedometers set up a maintenance department in the second year of its operationsUnfortunately the maintenance department is having problems of spares components and other inventory as well as experiencedpersonnel who can deal efficiently with mechanical failuresDuring the recent informal visit to the maintenance workshop the managing director of Ms Speedometers overheard a frustrated staffmember complaining annoyingly to his supervisor He said that he had gone to four different storage areas to collect the requiredspares and components but managed to fill only part of the order because of the required items were out-of-stock However for somereason the materials management department of Ms Speedometers showed on record that sufficient quantity of all spares andcomponents were available on hand

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

On going through the finance books the managing director was worried about the recent steady escalation in the cost of maintenanceas well as inventory carrying costs The managing director directed the general manager of the maintenance department to study hevarious problems of his department and submit a proposal to resolve them The general manager investigated and identified thefollowing problems1) The materials management information system (MMIS) required manual updating The staff of the materials departmentoften assumed the information in the system was up-to-date when actually requisition vouchers were waiting to be enteredThis time-lag meant that the system showed inventory as available when actually it had already been used2) Many users in the workshop withdrew more material than what they actually needed so they could avoid stock-outsPage 13Prof Parshuram 26606780266058143) Most of the users set up mini-warehouses 1048902 just-in-case4) Warehouse staff were reluctant to use the computer-based system for various reasons The MMIS could provide onlinesystem information but the resistance from the warehouse staff kept that part of the system from being implemented5) No records were kept regarding materials consumption6) Users had to submit a materials requisition form for items kept in each of the four warehouses and had to collect thempersonally7) 70 of the cost of materials came from maintenance costsQuestions1) Critically examine the inventory issues presented in the above case Recommend improvements for inventory managementof the spares and components as well as reductions in the maintenance costs2) The general manager wants to appoint you as an integrated logistics manager You task is to form an integrated logisticsdepartment under the maintenance division to resolve the problems and to improve maintenance productivity Discuss indetail as to how you would perform this taskCase Study No 18Ms Ace Sports was established in the 1970s to manufacture sportswear and equipment Because of stiff competition the companyinitially generated only nominal profits After 1990s the campaign regarding ldquohealthy lifestylerdquo began gaining ground The sales ofthe company started rising steadilyTo improve performance Mr Right was appointed as the companyrsquos logistics manager Mr Right had obtained his MBA degree inlogistics from an university in the USA He also had substantial experience in logistics management abroadCurrently Ms Ace Sports consists of 5 departments headed by managers who report to the president of the company These fivedepartments are production finance marketing logistics and administration The president employs a democratic style ofmanagement where each person has a right to comment on and recommend improvements This the president believes will help thedepartments to work cohesively and assist each otherMs Ace Sports has only one plant One hundred employees work at this plant The raw materials are stored in the companyrsquos

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

warehouse which is situated near the factory The president is of the firm opinion that having a warehouse near the factory will ensuresmooth operations Packed finished goods are transferred to a public warehouse situated about 100 km from the factory From therethe products are delivered directly to the retailersMs Ace Sports distributes its products to four major retailers One of the four retailers Ms Mass Sportswear holds about 50 of themarket share Recently they have informed the logistics manager Mr Right that there are too many late deliveries from Ms AceSports that had affected Ms Mass Sportswearrsquos customer service levels Mr Right said he will look into the matterRecently the competitorsrsquo of Ms Ace Sports have built mass manufacturing and distribution facilities close to the factory of Ms AceSports These new facilities of production and distribution have caused sporting goods wholesale prices to drop Mr Right hasrealized that this threatens Ms Ace Sports and will dramatically affect its salesOne distinguishing of Ms Ace Sports was that it maintained a large supplier base The company has about 40 raw materials suppliersMr Right believes that a large supplier base is good because it encourages price competition among the suppliers and will thus givesome competitive advantage to the companyMs Ace Sports uses a private fleet of 25 trucks to deliver the products to its retailersrsquo warehouses and uses the same trucks totransport products from its own site to the public warehouseMr Right quickly had a meeting with his managers to develop a new strategy for evolving broader market base in order toprotectimprove profitability During the meeting the marketing manager pointed out that to remain competitive the company had tobecome a ldquolow-cost supplier of high-quality productsrdquo The production manager pointed out that this is a good strategy However hequestion as to how Ms Ace Sports can become a low-cost supplier when the cost of the raw materials has risen between 10 and 15Page 14Prof Parshuram 2660678026605814because of the increase in the demand for the raw materials To add to this the cost of the public warehousing has been risingClubbed together these increase in costs have raised the price of the finished productsMr Right brought up the feedback from Ms Mass Sportswear about delivery failures The administrative manager who isresponsible for order processing explained that the department is also responsible for employeesrsquo welfare and information processingBeing too busy with this work had caused delays in the delivery schedules of Ms Mass SportswearMr Right listened carefully as the managers explained their situations He knew that Ms Ace Sports did not control the raw materialcost and improve customer service sales will continue to drop After hearing from the managers Mr Right brought up a proposal toexpand into lower labor-cost markets He indicated that outsourcing would help to reduce costs In fact Mr Right was toying withthe idea of setting up a factory closer to areas where labour-cost is lowInitially the managers merely glanced at each other and said nothing But after a few minutes they all began to heartily endorse theidea However they believed that it should be studied and analyzed further The planning should be carefully done they opined

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Moreover there were a number of factors that needed to be considered namely transportation warehousing inventory and marketstrategies as well as the cost of the raw materials Mr Right agreed with the concerns of the managers and appointed the productionlogistics and marketing managers to provide him with an integrated approach to expansionQuestions1) Outline an integrated logistics function for Mr Right2) How can the delivery problems to Ms Mass Sportswear be solved3) What are the various avenues available to Ms Ace Sportswear to become a ldquolow-cost high-qualityrdquo product manufacturer4) What are the various problematic areas which the production manager the marketing manager and in particular the logisticsmanager analyse in-dept regarding setting-up of a unit in low labour-cost areas What are the possible solutions that canovercome these problematic areasCase Study No 19(Mumbai Univ April 2006)Ms Excellent Dashboard Private Limited (EDPL) is situated at Gurgaon near Delhi The company supplies dashboard assembly as a4PL supplier to Maruti Udyog Limited (MUL) since the past three years There are a number of components in the dashboard such asspeedometer fuel level gauge etc EDPL purchases these individual components from various suppliers and assembles them at theirfactory It then supplies the finished product to MULOne of the major components namely the ldquostarter switchrdquo has always been a cause of problem EDPL does not observe anySystematic Inventory Control Methods in purchasing of various items of inventory They order the required items of inventory as andwhen the demands for those inventories ariseAt EDPL dashboards are not available off the shelf Hence many times delays occur in arranging for supply of required quantity ofassembled dashboard to MUL This in turn results in a substantial financial loss to EDPL since as per the agreement signed betweenEDPL and MUL MUL can levy penalties towards delays in the supply of required quantity of dashboard assemblyThe information gathered from EDPL shows that the annual demand of the item namely starter switches is 5000 nos The unit priceof the item is Rs 50- each The ordering cost is R 40- per order The inventory carrying cost is 20 of the unit cost of inventoryQuestions1) Explain the role of Fourth Party Logistics in the above case2) Discuss various logistical ways in which EDPL can avoid penalties imposed by MUL3) Calculate the EOQ for the item under reference from available information Can this EOQ be used to decide on the levels ofstock to be kept at hand What steps should be taken to avoid faults in the starter switchesPage 15Prof Parshuram 2660678026605814Case Study No 20(Mumbai Univ April 2006)In 1997 Ms Ford Motor Company set-up their plant for manufacturing of cars in India on the outskirts of Chennai In accordancewith their purchasing philosophy the company identified certain components for purchase from local suppliersCurrently for this plant the Indian supply base provides 70 content for the car Again about 80 of their local suppliers are

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

situated in the vicinity of 50 kms This proximity of a large number of suppliers has enabled the company in successfullyimplementing the JIT concept in their purchasing activitiesThe company was satisfied with its initial experience in the manufacturing of cars in India In view of this satisfactory experience thecompany decided to develop a partnership with its Indian suppliers so as to create a strong supply chin network based on stringentquality standards and engineering support from their endAt the same time the company also has a strong supplier base situated in other countries as well It takes advantage of this forprocuring critical components like assembled engines from abroad Thus the critical components of the car are imported by thecompanyThe inbound logistics of the company is handled by TVS Lead Logistics a third party service provider The requiredmaterialscomponents are collected from all the existing 83 suppliers who are locally situated at their four hubs situated at Delhi PuneDaman and Chennai The materials are consolidated at the four hubsThe hub at Chennai collects the required materials from the suppliers on daily basis in the form of milk run and supplies the same tothe companyrsquos factory From the remaining three hubs the shipment of materials is received by the factory every second day Hencethe safety stock is maintained as per the norms prescribed by the company for the supply of the materials from the three hubsQuestions1) Discuss the logistical principles on which the plant of Ms Ford is functioning2) Enumerate the functions carried out by the hubs established by the company3) Explain the concept of milk runs and its operations4) Critically comment on the inventory policy being implemented by the company Do you have suggestions for improvementCase Study No 21Clean Corner House Limited is an Indian fast food restaurant chain It has been receiving wide attention in the media because it is oneof the only serious restaurant chains in India But international competitors have started entering the market with huge investmentsand several outlets The game is turning big in every way However the management of Clean Corner insists that it is not loosingsleep over the threat of international competitorsClean Corner is very quality conscious Moreover Clean Corner successfully adapts the fast food concept to the Indian situationClean Cornerrsquos strategy has been to use standardization up to a certain point but beyond that it allows variety in the menu takeprecedence If Clean Corner had grown faster its size would have offered it protection Instead it settled for controlled expansionbecause of the fear that growth will affect product quality It strongly believes that its strength lies in its food processing ability anduses a single central kitchen that caters to all the outlets If the central kitchen gives the chain its muscle it also holds back fromexpanding the chainClean Corner fears that expansion can create logistics of quality and distribution The company will have to invest on top qualitystorage facilities Transportation will call for heavy investments in terms of efficient delivery systems The company is apprehensiveabout stock-outs which might lead into market loss So paranoid is the company about sullying its name that even at outlets where it

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

uses franchises the company itself does the managingThe company has substantial processing facility The company can go in for expansion of products But it feels it may not be able tomanage effective storage and efficient distribution Damaged finished products can soil the companyrsquos brand imagePage 16Prof Parshuram 2660678026605814Clean Corner has surmised that the international firms will not be able to cater to Indian tastes The initial boom they experience willbe more out of curiosity on the part of the customers But subsequently their sales will drop Clean Corner also feels thatinternational players with several outlets all over the country will not be able to maintain the quality standardsQuestions1) Discuss the various strengths and weaknesses of Clean Corner2) If you were to advise Clean Corner to go in for expansion plans how would you logistically annul their fears of stock-outsdamaged foods and unsure distribution system (Note Do not give wild suggestions Discuss your points pragmatically)3) Clean Corner may foresee threats to its sales in the future from international players What strategies can you devise whichClean Corner can adopt to maintainincrease its customer baseCase Study No 22Heavy Engineers Limited manufactures major farm equipments which it sells mainly in rural India The tractor manufactured byHeavy Engineers has utility in farming activities But it is also considered as a status symbol in rural India since it is used as a meansof conveyance and transportation as wellInitially the sale of tractors was concentrated in areas like Punjab Haryana and Uttar Pradesh However the sales have now shiftedto other parts of the country as well The demand for tractors is steadily increasing all over the country This spurt in demand has puta strain on the production facilities available with Heavy Engineers Also Heavy Engineers is worried that if they do not meet theincreasing demand for tractors they would stand to lose the market as well as the customer goodwill Other players would enter andcapture the market possibly even eroding the existing market base of Heavy EngineersHeavy Engineers have established widespread and excellent dealers in northern India But other players are expected to intensifyfurther in view of expected global competition This is seen as a threat by Heavy EngineersThe CEO of Heavy Engineers called a meeting of all HODs to discuss the future plans Some of the the suggestions put forward wereas followsa) The company can expand its existing facilities by addition of new machineries as well as adopting flexible manufacturingsystems to cater to varied demands by customersb) Another suggestion was either to outsource manufacturing or to set up sister plants at strategic locations in the countryc) To effectively meet customer requirements the company will have to set up servicing workshops at its outletsd) Expansion plans will be coupled with heavy financial investments The cost of borrowed finance will increase the price ofthe tractors which can prove detrimental to the salese) In agricultural durable items rural consumers are very alert to the value of a product and are willing to research extensively

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

by comparing the product features quality and price with the various options available to themQuestions1) Explain what flexible manufacturing system is2) What logistical factors should the company look into regarding location of sister plants3) How can Heavy Engineers apply the value chain concept of Michael Porter to satisfy the demands of rural customers4) Make a total cost analysis about the expansion plans of Heavy EngineersPage 17Prof Parshuram 2660678026605814Case Study No 23Good Food Limited established in 1980 distributes a 100-item product line of canned vegetables fruits condiments and speciallyitems to wholesalers in several statesGood Food introduced a customer order policy that was designed to improve Good Foodrsquos service to its wholesalers and effectivenessof the sales representatives This program was based on two important features namely (i) freeing sales representatives from ordertaking and (ii) receiving orders from wholesalers on the basis of a predetermined scheduleThe companyrsquos sales representatives were no longer to process customer orders due to the following reason Previously they hadaccumulated wholesale orders until they had enough volume to make up a truckload then they would send the orders to the headoffice Under the new program wholesalers were to e-mail their orders directly to the head office according to a fixed schedule Ifthey missed their fixed date they had to wait for the next oneThe procedures were designed to increase the number of calls that the sales representatives could make By eliminating the need toprepare orders Good Food hoped that the sales representatives would spend more time determining sales patterns and the effect ofvarious sales promotionsUnfortunately many of the wholesalers neglected to follow the predetermined order schedule They were not accustomed to havingsomeone tell them when to order and some of them objected to the regimentation and lack of flexibility Others had becomedependent on the sales representatives to determine what their requirements were and believed that the new program made more workfor themIf the orders did not reach Good Foodrsquos head office according to the schedule the wholesaler had to wait for 2 weeks When a stockout occurred the affected wholesaler could lose from 20 to 50 of the sales of Good Foodrsquos products Good Food also suffered inthis way Wholesalers and retailers carried several product lines of other brands Hence when they ran out of Good Food brandsthey simply sold other brandsGood Food has no integrated logistics department to effectively deal with its distribution activities In the past three of its salesrepresentatives arranged for the necessary transportation When they accumulated orders worth a full truckload they would send theorders to the Good Foodrsquos head office To expedite shipment for an anxious wholesaler a sales representative in one area would try topool orders with another sales representative of a different area However the introduction of new practice meant that head officewould ship according to fixed schedule and arrange shipment with the wholesalers even if the orders totaled less than full truckload

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Questionsa) Discuss the benefits and shortcomings of the Good Foodrsquos system of taking orders Cover aspects of economy of scale andeconomy of distance in transportationb) Detail a system that will provide better service to Good Foodrsquos customers improve sales and build closer ties between GoodFood and its wholesalers Discuss in particular the necessity of long term and one-to-one relationship with wholesalersc) Suggest warehousing system for quick effective delivery of goodsCase Study No 24Ms Superfine Sulphur Limited is one of the largest producers of sulphur in the country They supply sulphur to variousindustriesconsumers requiring itThe powder and granular sulphur are primarily used for the manufacture of paper and fetiliser Superfine Sulphurrsquos managementrealized that quality packaging proper material handling and effective storage and warehousing systems are important to customerservice as well as cost control Therefore to obtain an efficient and effective logistics operations Superfine Sulphur periodicallyreviewed its systemSuperfine Sulphurrsquos products are are palletized or packed in bulk bags A pallet hold forty bags (eight layers of five bags each) eachbag weighing 20 kgs The firm ships about 85 of the finished product on pallets The company uses 2500 wooden pallets permonth each pallet costing Rs 1000- The bulk bags hold between 250 kgs to 500 kgsThe work flow is listed below for the packaging and the material handling system It consists of the following stations and machinesPage 18Prof Parshuram 26606780266058141 Automatic-drive bagging machines have three conveyor lines2 Power-driven live roller chain conveyors move the bags horizontally and at a slight elevation to the respective stations3 Automatic weight checking machines identify and reject over-weight and under-weight packages4 Metal detectors identify and reject bags with foreign metals5 Bags which have been rejected by the weight-checking machines and the metal detectors are conveyed to a panel for furtherinvestigation6 Palletizing machines automatically lift and place the packed products in the desired pattern7 After palletizing the packed products are conveyed to the semi-automatic stretch wrapping machine This machine wraps theproducts in stretch film Since this machine is semi-automatic three warehouse workers operate the machine 1048902 one tooperate the system one to put the top sheet on to the palletized goods and one to cut the end film and staple the end film onthe palletAfter stretch wrapping the products the material handlers move the palletized product to the designated storage place PresentlySuperfine Sulphur owns one private warehouse and rents two public warehouses The rent paid to each of the two public warehouseswas Rs 150- per square per month The floor area of both the public warehouses together is 50000 square feet The monthly rent tothe public warehouses is expected to double next year

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Superfine Sulphurrsquos pallets are neither customized nor standardized Hence its customers have trouble in unloading the pallets fromthe containers This takes to long to unload the pallets Also the hand pallet trucks truck rollers of the customers stick to the palletsthat is create sort of a difficulty in the unloading of the containersCustomers have also complained about the contamination of the two top layers of the product due to waterdustatmosphericconditions during transportation and storageQuestions1) The product is vulnerable to waterdustatmospheric conditions Suggest alternative methods of packaging transporting andwarehousing to ensure protection of the product2) Critically analyse the material handling systems of both the company as well as the customers and suggest suitablelogistically viable alternatives3) Study the increased cost of public warehousing and its implications on the products profitability Recommend suitableviable alternatives that should fit into the total systems concept and total cost concept of the companyCase Study No 25Out-Of-This-World is a large regional grocery chain operating in all the major cities and towns of Maharashtra State Currently thecompany has no organized way to handle returns of (a) defective products (eg spoiled food items) (b) non-defective products (eggood products returned by the purchaser for various reasons) (c) re-usable items (eg soda bottles) and (d) recyclable items (egaluminum cans plastics bags paper bags) At present the company simply allows the returns to be handled by the clerk on duty at thetime of the returns There is no set procedure for handling themThe company estimates that 4 of its sales volume is somehow tied to returns (spoiled items empty soda bottles returned forrefilling and so on) Like most grocery chains the company operates on a very thin profit margin A reverse logistics program wouldimprove customer service and also be beneficial in minimizing costs Such a reverse logistics system must be effectively designed tohandle each of the following1 Defective ProductsDefective products consist of spoiled items obsolete items improperly packed items and so on The customers must be allowed toreturn these products and the company in turn must either replace these products with non-defective or refund the cost of the itemThe particular store must then determine the causes that led to the product becoming defectivePage 19Prof Parshuram 2660678026605814Many steps in the logistics process could have been responsible for the damage to the product For instance many of the companyrsquosgrocery products require compulsory refrigeration throughout their travel through the supply chain Failure to adequately refrigeratethe product either during transportation or during storage can contribute to damaged productIf the carrier or warehouse provider is responsible for the damage the grocery store needs to receive credit since the food chain is notresponsible for the damaged product

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

If the product was defective when it was purchased the product must be returned to the wholesaler for creditRegardless Out-Of-This-World must have a logistics system designed to send the product backward through the supply chain2 Non-defective ProductsThese products are usually returned to the store in perfect condition but a consumer wants either a refund or an exchange The storeneeds to have a ldquomini-reverse logistics systemrdquo introduced so as to quickly re-stock the item in order that it can be re-sold The storealso needs to have an information system which should be sufficiently effective to track these returns track refunds and maintaininventory level records3 Re-usable itemsSome items are returned for re-use When the grocery stores sell the soda bottles the empty soda bottles are returned a credit isgiven and the empty bottles are replaced with full soda bottles The reverse logistics system for this segment of items must bedesigned to take the empty soda bottles back from the customer and return them to the soda bottling plant for credit4 Recyclable itemsThe store is also interested in contributing to the environmental consciousness of local communities The store wants to implement areverse logistics system designed to collect aluminum cans newspapers glass containers plastics items and so onQuestionsOut-Of-This-World has appointed you to help the company in designing a reverse logistics system that will successfully handle thedemands of the grocery chain The system must achieve sufficient customer service levels minimize costs provide accurate recordkeeping of return items and update information to maintain correct inventory levelsYour report should also include a graphical representation of one or more reverse logistics systems required by the companyYou should also include in your report detailed description physical flows and information flows of items traveling through thereverse logistics systemLastly your report should a detailed and concrete plan relating to an effective transportation warehousing and material handlingsystem which should fit into the total systems and total cost concept of the companyCase Study No 26A chemical company is using the following items at its factory The annual consumption of each of the items and the cost per unitof each of the items has been given Classify the items into A B and C categoriesItem Description Annual C o nsumption Cost per unit(units) (Rs)Hydrochloric Acid 4500 4 litreBenzene 650 9 kgPacking Drums 2000 15 per drumLac 5 5 10 kgWax 4000 1 kgEthylene 7000 575 kgcontdPage 20Prof Parshuram 2660678026605814Chlorine 2500 550 kgMethyl Alcohol 4000 11 litre

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

Denatured Spirit 7 5 12 litreSodium Acetate 100 13 kgCastor Oil 100 35 kgC om m er cia l C a mphor 100 6 kgCommercial gum 2 5 5 kgAmide 2500 1 kgCorrugated cartons 5 0 10 pieceLinseed Oil 100 90 kgLemon grass oil 6 0 150 kgC o m m er cial talcum powder 2 00 25 kgRed oxide 900 5 kgXylene 1000 12 kgToluene 400 7 kgEthyl acetate 5 0 13 kgKerosene oil 100 20 literPetroleum jelly 100 25 kgCoal tar 5 0 12 kgRefined charcoal 150 35 kgQuestions1) Categorize the above items into A B and C categories Show all the detailed steps of working Draw graph as well2) Discuss the details of four other inventory control techniques3) Explain the advantages and disadvantages of each of these techniquesCase Study No 27A light engineering company disclosed the following details of its stockSr Details Closing stock Opening stock Purchases Price per unit (Rs)No during the year0 1 lsquo O rsquo ri ng w as he rs 2000 2500 1500 050 p er piece0 2 M i ld St ee l w a shers 3000 2600 2000 075 p er piece03 Lubricant 300 500 500 2 per kg04 Lathe tool 500 300 600 10 per piece05 S h a p in g t ool 450 350 150 12 per piece06 E m e ry pa per 500 800 200 5 per piece0 7 D r il l ndash A ty pe 400 500 500 12 per piece0 8 H a c k s a w ndash sm a ll 300 600 400 2 per piece0 9 H a c k s a w ndash la rge 400 800 500 5 per piece1 0 S te e l s t ri p r ol ls 400 500 1000 15 per roll1 1 B r ow n Pa pe r Rolls 50 0 200 600 12 per roll12 Cartons 150 400 300 1 per piece13 Nuts 1500 1500 1700 025 per piece14 Bolts 1000 500 2500 250 per piece1 5 M as on ry D ril l 500 450 1500 15 per piece16 S t ee l p u nc h 60 70 100 5 per piece17 B al l B e a r ing s 400 500 700 25 per piece18 R o ll e r B e ar ing s 160 250 475 35 per piece1 9 S te el R iv ets ndash small 1500 2000 3000 4 per piececontdPage 21Prof Parshuram 266067802660581420 Cams 750 950 1050 3 per piece2 1 C a rb i d e T oo ls 170 Nil 800 120 per piece2 2 D ia m on d to ols 20 0 50 400 150 per piece2 3 H on i ng t oo ls 3 00 400 400 90 per unit2 5 W el d in g ro ds 4000 5000 3500 5 per piece26 F l u x m at e ria l 500 300 800 10 per kg

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain

27 Coolant 800 900 3500 15 per litre28 Guide pins 500 400 600 2 per piece29 MS Plates 300 700 1000 20 per piece30 C op p e r r o ds 400 500 600 50 per pieceQuestions1) Classify the above items into relevant categories of A B and C Show all detailed calculations Draw graph as well2) As a logistics manager the company wants you to report them about the two-bin system Economic Order Quantity andEconomic Batch Quantity Explain your report3) What are the Fixed Order and Fixed Interval Systems in Inventory Explain