Final Examination Semester 2/ Year 2012

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1 Final Examination Semester 2/ Year 2012 COURSE : WAREHOUSE MANAGEMENT COURSE CODE : LOGT 3003 TIME : 2 1/2 HOURS DEPARTMENT : MANAGEMENT LECTURER : HO SOK CHING Student s ID : Batch No : Notes to candidates: 1) The question paper consists of 1 page and 5 questions. 2) Students are required to answer Only Four Questions. 3) Return the question paper with your answer booklet.

2 1. Discuss 5 critical factors that the manufacturing firms should take into consideration when designing a warehouse operational system that can lead to a firm s meeting the objectives of maximizing production flow and minimizing the cost of investment. (25 marks) 2 (a) What are the advantages and disadvantages of private warehousing? (10 marks) (b) Discuss why contract warehousing is becoming the preferred alternative for many organizations. 3 (a) List any three reasons for why warehousing might be concerned with pilferage. (b) Explain how warehousing managers can attempt to control pilferage. (10 marks) 4 In terms of warehousing design, give examples of trade-offs involving space, labor, and mechanization. (25 Marks) 5 (a) Discuss any five of the value-added activities that can be performed by warehouses and distribution centers. (b) Distinguish between warehouses and distribution centers. (10 marks) 1/

3 Final Examination Semester 2/ Year 2011 Marking Scheme COURSE : WAREHOUSE MANAGEMENT COURSE CODE : LOGT 3003 TIME : 2 1/2 HOURS DEPARTMENT : MANAGEMENT LECTURER : HO SOK CHING

4 1. Discuss 5 critical factors that the manufacturing firms should take into consideration when designing a warehouse operational system that can lead to a firm s meeting the objectives of maximizing production flow and minimizing the cost of investment? (25 marks) Location or arrangement of everything within & around buildings Maximize capacity without lending to waste Cost effectiveness, ex maximizing the utilization of space, equipment, & people Employee morale & safety Site selection 2 (a) What are the advantages and disadvantages of private warehousing? (10 marks) One disadvantage to private warehousing is that they are characterized by high fixed costs which necessitates high and steady demand volumes. In addition, a high fixed cost alternative becomes less attractive in times of high interest rates because it is more costly to secure the necessary financing. Private warehousing may also reduce an organization s flexibility with respect to responding to changes in the external environment. As for advantages, private warehousing offers users a great deal of control over their storage needs. More specifically, private warehouses can be constructed to meet user specifications and companies can also control product placement within a facility. In addition, private warehousing offers access to products when an organization needs or wants them. (b) Discuss why contract warehousing is becoming the preferred alternative for many organizations. Contract warehousing simultaneously mitigates the negative aspects and accentuates the positive aspects of public and private warehousing. For instance, contract warehousing allows a company to focus on its core competencies, with warehousing management provided by experts. Contract warehousing also tends to be more cost effective than private warehousing, with potentially the same degree of control because key specifications can be included in the relevant contract. 1/3

5 3 (a) List any three reasons for why warehousing might be concerned with pilferage. Even though insurance will reimburse an organization for the market value of the stolen items, the time and costs (e.g., documentation) associated with pilferage tend not to be covered by insurance. A second logistical concern is that pilferage results in the planned flow of goods being interrupted and can lead to stockouts in the distribution channel. Theft can also factor into the facility location decision in the sense that many organizations will avoid locating their facilities in areas characterized by high crime rates. It is also possible for the stolen products to reappear in the market at a lower price to compete with products that have moved through traditional channels. (b) Explain how warehousing managers can attempt to control pilferage. (10 marks) Control begins with the hiring process and one of the best ways to manage pilferage is to avoid hiring people who are predisposed to steal, such as people with credit, alcohol, or drug problems. Some organizations utilize psychological tests as part of the hiring process in an effort to identify prospective employees who might pilfer. Organizations can better control pilferage if they have clearly articulated and enforced pilferage-related policies. Experts recommend that the best pilferage policy should be based on zero tolerance because problems inevitably arise for those companies that tolerate a small amount of pilferage. 4 In terms of warehousing design, give examples of trade-offs involving space, labor, and mechanization. (25 marks) Spaciousness may not always be advantageous because the distances that an individual or machine must travel in the storing and retrieving functions are increased. On the other hand, cramped conditions can lead to inefficiencies such as the product damage that can be caused by forklift puncture and movement bottlenecks caused by inefficient aisle width. 2/3

6 5 (a) Discuss any five of the value-added activities that can be performed by warehouses and distribution centers. These value-added activities include assembly, custom labeling, light manufacturing, product testing, repackaging, and reverse logistics considerations, among others. (b) Distinguish between warehouses and distribution centers. (10 marks) Warehouses emphasize the storage of products and their primary purpose is to maximize the use of storage space. In contrast, distribution centers emphasize the rapid movement of products through a facility and thus attempt to maximize throughput (the amount of product entering and leaving a facility in a given time period). 3/

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