978-0134519258 Chapter 2 Solution Manual

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PART II

ANSWERS TO END-OF-CHAPTER QUESTIONS

CHAPTER 2: LOGISTICS AND INFORMATION TECHNOLOGY

2-1. In what ways can information be helpful in logistics and supply chain management?

There are a number of ways in which information can be helpful in logistics and supply-chain

management. These include, but are not limited to, greater knowledge and visibility across the supply

chain, which makes it possible to replace inventory with information; greater awareness of customer

2-2. List the six general types of information systems, and give one logistics application for each one

that you’ve named.

One general type is office automation systems, and a logistics application could be spreadsheets that

calculate optimal order quantities. A second is communication systems; one logistics application

involves global positioning systems. Transaction processing systems are a third general type, with

2-3. Do you view the spreadsheet as the most relevant general software package for logisticians? Why

or why not?

The text indicates that spreadsheets are indeed the most relevant general software package for

logisticians. Today’s spreadsheets have developed to the point that they are able to solve for basic

2-4. How can communication systems facilitate logistics management in the aftermath of situations

such as terrorist attacks and natural disasters?

One example involves the substitution of information for inventory. The total shutdown of the U.S.

aviation system following the terrorist attacks of September 11, 2001 caused many air shipments to be

2-5. What are some of the advances in telecommunications technology that have occurred since this

book was first published? How do these advances help logistics managers?

Advances in telecommunications technology since the first edition of this book include fax machines,

personal computers / tablets, cell phones / smart phones, and wireless communication. One example of

wireless communication involves global positioning systems (GPS), and GPS systems can help

2-6. Discuss how global positioning systems have become quite valuable in transportation

management.

Global positioning systems (GPS) have become quite valuable in transportation management because

of high fuel costs and the relentless pressure to improve efficiency and productivity. Indeed,

transportation companies that have implemented GPS have reported an increase in worker productivity,

2-7. Discuss the benefits and drawbacks of EDI.

Potential benefits to EDI include reductions in document preparation and processing time, inventory

carrying costs, personnel costs, information float, shipping errors, returned goods, lead times, order

2-8. Discuss the relationship between automatic identification technologies and point-of-sale systems.

Automatic identification systems are an essential component in point-of-sale (POS) systems; the idea

behind POS systems is to provide data and enhance managerial decision making, and automatic

2-9. Why are some companies hesitant to adopt RFID technology?

A major drawback to RFID adoption involves the costs of installing the related hardware and software,

which can range from $100,000 for smaller companies to $20 million for larger companies. Another

fruits and vegetables.

2-10. Discuss the importance of timely and accurate information to a logistics information system.

Timely information can involve several dimensions. For example, “timely” can refer to the up-to-date

status of information, which can be influenced by a company’s collection and analyses procedures.

Although such information should ideally involve internal and external sources, internal sources of

2-11. What benefits are associated with transportation management and warehouse management

systems?

Organizations that have implemented transportation management systems have reported decreased

empty vehicle miles, reduced fuel consumption, and reduced transportation expenditures. Potential

benefits to warehouse management systems include dramatic reductions in data entry errors as well as

2-12. What is data mining? How might it be used in logistics?

Data mining can be defined as the application of mathematical tools to large bodies of data in order to

extract correlations and rules; it uses sophisticated quantitative techniques to find “hidden” patterns in

2-13. Discuss advantages and disadvantages of enterprise resource planning systems.

ERP systems are attractive because they offer the potential for lower costs and both increased

productivity and customer satisfaction. In theory, ERP systems provide an opportunity for all

functional areas within a firm to access and analyze a common database. This should allow for

2-14. Refer back to the logistical activities listed in Chapter 1; pick two that you’re interested in and

research how they have been influenced by the Internet. Are you surprised by your findings? Why or

why not?

2-15. From a logistical perspective, what are some of the differences between online and in-store

retailing?

For one, the orders associated with online shopping tend to be more plentiful and in much smaller

quantities that those associated with in-store retailing. As such, online retailing requires an order

2-16. Why is a “one size fits all” logistics strategy not likely to facilitate effective or efficient online

shopping?

Rather than “one size fits all,” a variety of logistics strategies might need to be applied to online

shopping and it’s important to recognize the potential trade-offs with these strategies. For example, one

2-17. Discuss the advantages and disadvantages of cloud computing.

Its pay-per-use formula allows customers to avoid high capital costs and thus becomes a viable option

for many companies that could not afford to purchase, install, and maintain application-specific

software. Other advantages include faster and less costly installation, a smaller information technology

2-18. Discuss the benefits and drawbacks to electronic procurement.

Four types of benefits—transactional, compliance, management information, and price—are associated

with electronic procurement. As an example, transactional benefits measure the transactional benefits,

such as a reduced invoice-to-payment time, that come from e-procurement. One concern with e-

2-19. What is the Internet of things (IoT)? How can it potentially affect logistics management?

The Internet of things (IoT) refers to the sensors and data-communication technology that is built into

physical objects that enables them to be tracked and controlled over the Internet. The IoT can provide

2-20. What are some of the macro-level information technology challenges that managers face?

The text identifies three macro-level information technology challenges, the first of which is that

information technology is a tool that can help managers to address organizational problems and not a

PART IV

CASE SOLUTIONS

CASE 2-1 TO INVEST OR NOT INVEST? THAT IS THE QUESTION

Question 1: Should the team take into account any other costs or benefits from implementing the

WMS? If so, what are they?

The team is currently focused on issues surrounding the costs of the WMS, the potential benefits of the

WMS, and implementation risks. Beyond these issues, students should be able to identify a variety of

additional considerations that could be helpful when examining WMS implementation. For example, it

could be helpful to dig deeper into the functionality that would be provided by the system and how this

Question 2: Should the team take into account any other costs or benefits from implementing the

TMS? If so, what are they?

Initial responses to the TMS question may be similar to the ones provided to the preceding WMS

question. Instructors should push for additional insights into transportation-specific functionality as

opposed to warehousing-specific functionality. For example, whether the TMS is flexible enough to

Question 3: What are the advantages and disadvantages of implementing both technologies

simultaneously?

Although these two technologies have traditionally been implemented separately by different groups,

the potential integration could lead to improved coordination and planning across these two critical

logistics activities. Because each technology supports a part of the order cycle, coordinating

Question 4: If both technologies are adopted, what changes, if any, should occur in the relationships

between Pallotta’s firm and his suppliers of components? His transportation providers? Discuss.

It is important for students to understand that the decision to implement a WMS or a TMS should

involve clear communication with other members of one’s supply chain. As the company undertakes

these implementations, it will be critical to clearly set expectations with affected suppliers and

Question 5: What would you recommend the team decide to do? Why?

Instructors may want to start with a general vote as to what the students would suggest the firm does in

this situation. Students typically have varying opinions on what is best to do. Some will focus on the

idea of starting where the firm is currently feeling the pressure (WMS) and then move on to the TMS

implementation. Others will focus on the simplicity of implementing separately and focus on financial