Business Logistics
Length: 2,200 words ± 10%
Referencing System: Harvard 2002 UTAS system. Question numbers must be clearly shown beside each answer. References MUST be provided in-text and in a reference list. Please also include a Table of Contents. However, there is NO requirement to include an abstract, introduction or conclusion.
TASK DESCRIPTION & REQUIREMENTS:
Question 1
The Kangeroo Gift Co. (KGC) expects to sell 44,000 plush wombat toys this year. KGC acquires the toys for $7.50 each from Happy Factory. Happy Factory charges $80 for processing each order. KGC estimates its inventory carrying cost to be 12 percent annually.
a) Find KGC’s economic order quantity for plush wombat toys. [5 Marks]
b) Assume KGC must arrange for inbound transport of goods. Quantities of fewer than 4,000 units cost 5 cents each for shipping. Quantities of 4,000 units or more cost 4 cents each for shipping. Determine the difference in total costs associated with the quantity of 4,000 units and the economic order quantity found in part a when transportation costs must be considered. [5 Marks]
c) Given the information above and the low-cost order quantity determined in part b, use the period-order-quantity logic to determine the number of orders KGC needs to place each year and the time interval between orders. [3 Marks]
Question 2
You are the Logistics Manager for a storage provider in Australia. Your organisation builds new warehouses at industrial parks. The warehouses are then leased to the surrounding businesses. The executive management team is investigating the feasibility of a possible international expansion to the United States of America. The executive management team asked you to explain the key logistics-related issues that will need to be considered. [12 Marks]
Question 3
Consider that you have been recently appointed as the logistics manager for a new company in the country with which you are familiar. The company will manufacture and assemble a range of good quality furniture, including lounge suites and bookcases, from domestic inputs. The products will not be sold overseas but will be sent to large stores in major cities. The manufacturing plant is in the capital city. The CEO is deciding whether to ship the products already assembled or to manufacture the parts and then assemble them in the major cities ready for distribution to the stores. Explain key considerations relating to the logistics system for these two options and indicate what additional information would be required to finalise the decision. Assume there is no difference in the cost of assembly related to locations. [15 Marks]