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PART II
ANSWERS TO END-OF-CHAPTER QUESTIONS
CHAPTER 4: ORGANIZATIONAL AND MANGERIAL ISSUES IN LOGISTICS
4-1. Discuss several issues that influence the organization of logistics activities within a firm.
The organization of logistics activities within a firm depends on a number of factors, including the
number and location of customers, as well as an organization’s size. The number and location of
4-2. Compare and contrast the fragmented and unified logistics organizational structures.
In a fragmented logistics structure, logistics activities are managed in multiple departments throughout
an organization. In such a structure, it is possible for the various logistics activities to be managed in
In a unified logistics structure, multiple logistics activities are combined into, and managed as, a single
department. The unified structure can be further classified based on the number and type of activities
4-3. What are the differences between a centralized and a decentralized logistics department?
A centralized logistics organization implies that the corporation maintains a single logistics department
that administers the related activities for the entire company from the home office. A decentralized
There are advantages to both approaches, with a primary advantage of centralization being its relative
efficiency, whereas a primary advantage of decentralization is its customer responsiveness.
4-4. Describe the hierarchical and matrix organizational design.
Hierarchical, or functional, organizational design has its foundations in the command-and-control
military organization, where decision making and communication often follow a top-down flow. Each
4-5. From a logistics perspective, how is network organizational design manifested in terms of
relevancy, responsiveness, and flexibility?
Relevancy, which refers to satisfying current and emerging customer needs, can be facilitated by
developing mutually beneficial relationships with key customers; at a minimum, these relationships
should provide an understanding of customer needs and wants. Responsiveness reflects the degree to
4-6. Define what is meant by productivity and discuss the ways in which productivity can be improved.
At a basic level, productivity can be defined as the amount of output divided by the amount of input.
An understanding of this relationship leads to the recognition that there are but three ways to improve
4-7. In what ways can a unionized workforce be a challenge to improving productivity?
Union work rules are often very specific in the sense that job descriptions spell out in exacting detail
the responsibilities associated with a particular job. Although detailed specifications help create
4-8. Discuss how technological considerations can help in managing truck drivers and their
productivity.
Some firms photograph or videotape drivers as the drivers are making pickups at their loading docks.
Alternatively, a tachograph is a recording instrument that is installed inside a truck and produces a
4-9. What are some potential challenges to improving productivity by getting more output from
existing assets?
The book offers two suggestions for improving productivity by getting more output from existing
assets. One recommendation is to use assets more during the course of a day, such as Southwest
Airlines’ capability to fly more trip segments per day. One challenge with increased usage during the
4-10. Discuss the reasons why logisticians might be concerned with theft.
Even though insurance will reimburse an organization for the market value of the stolen items, the time
and costs (e.g., documentation) associated with theft tend not to be covered by insurance. A second
logistical concern is that theft results in the planned flow of goods being interrupted, which can lead to
stockouts in the distribution channel.
4-11. How can logistics managers attempt to control pilferage?
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.
4-12. Explain why piracy attacks on ships are a potentially serious issue for today’s logistics manager.
Approximately 20 percent of all pirate attacks in recent years has involved petroleum tankers, which is
of concern because of the potential for an environmental accident as well as the fact that some tankers
4-14. What are some ways in which the Transportation Security Administration is attempting to
improve the security of the U.S. transportation system?
The Transportation Security Administration (TSA) is the agency that conducts passenger screenings at
U.S. commercial airports. The TSA also plays a number of roles with respect to freight security, such
4-15. In what ways is the legislation requiring 100 percent scanning of U.S.-bound containers likely to
be disruptive to international trade?
A number of nondomestic ports currently do not have the technology required to scan containers. These
ports would have to acquire and install the relevant scanning technology (which is quite expensive),
4-16. Discuss the Customs Trade Partnership Against Terrorism (C-TPAT).
In C-TPAT, U.S. Customs and Border Protection (CBP) and private organizations (e.g., retailers and
manufacturers) work together to prevent terrorism against the United States through imports and
transportation. Private organizations apply to CBP for C-TPAT certification, and the process involves
demonstrating that organizations have improved the physical security of their containerized shipments
4-17. Describe some potential logistics social responsibility dimensions.
The text identifies various logistics social responsibility dimensions, including the environment, ethics,
diversity, safety, philanthropy, and human rights. Students can describe one or more of these
4-18. How can warehouses control their energy usage in terms of design, lighting, and roofing
considerations?
With respect to design, facilities might be positioned so that dock doors aren’t placed on the north side
of building (most cold winds blow from the north). In terms of lighting, skylights, large windows that
4-19. Discuss reasons why products might be returned.
Products are returned for a variety of reasons, such as the customer making an error in ordering or the
shipper making an error when filling an order. Goods may also be returned because of a product recall,
4-20. What are some types of how increasing complexity is affecting logistics activities in a firm?
The book discusses network complexity, process complexity, and range complexity, and range
complexity and provides examples of how these complexities are affecting logistics activities in a firm.
PART III
CASE SOLUTIONS
CASE 4-1: RED SPOT MARKETS COMPANY
Question 1: How should Fosdick respond to the immediate situation?
Fosdick is on the spot and must respond immediately. Probably the best thing for him to do is refuse
Question 2: What controls, of the types discussed in this chapter, might have been used by Red Spot
Markets to reduce or eliminate the problems discussed in the case?
Closer controls on worker productivity and on pilferage would have helped.
Question 3: What longer-range steps should Fosdick take to control the operations of the Providence
distribution center?
Fosdick should implement a management style whereby he, rather than Bigelow, determines the pace
of the warehouse work. However, this is much easier said than done, particularly because of Bigelow’s
almost overpowering influence.
Question 4: What longer-range steps should Fosdick take to improve the Providence distribution
center’s productivity?
Fosdick should first consult with Easter to determine whether the company is going to keep or dump
Bigelow. Bigelow appears to hold the key to the warehouse workforce’s productivity, and few schemes
Question 5: What longer-range steps can Fosdick take to reduce the distribution center’s high rate of
shrinkage?
Again, after consulting with Easter, a decision must be reached as to how quickly and how forcefully
the company is going to end the free lunch program, because that appears to be a main cause of the
within a certain time frame, then the facility could be shut down.
Question 7: (This is a continuation of Question 6.) Assume, instead, that you are the union shop
steward. Develop and present your argument that the free lunches represent a long-standing employee
benefit enjoyed by the distribution center’s employees and that management’s attempt to stop them is a
breach of an unwritten contract and will be resisted.
You might argue that management has known about the practice for a long time and, by not eliminating
Question 8: Much of the situation described in the case seems to revolve around the personality of T.
D. Bigelow. How should he be treated? Why?
This question may generate a wide variety of responses, and the discussion can become quite intense.
Some students may argue that Bigelow should be fired. Others may argue that he should seek
assistance for his apparent substance abuse problem, possibly through an Employee Assistance
