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BP255 Logistics And Supply Chain Management

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1. Describe the importance of demand management for effective supply chain management.

2. There are four types of products and services that are purchased with varying degrees of importance. Name all four, and choose two to discuss in terms of risk and value.

3. Discuss the nature and importance of the four logistics-related elements of customer service.

4. Describe with examples, five (5) characteristics of a good measure for supply chain performance.

5. Explain the role and importance of reverse logistics in contemporary supply chains.

6. Discuss the role of fourth-party logistics in supply chain.   

7. Explain the role of transportation in the logistics management and supply chain management.


  1. Discuss how to mitigate bullwhip effect. 
  2. Discuss how seasonality can affect inventory.

9. Samsung’s flagship mobile phone product, S8 was just launched recently. One component material that Samsung requires for the manufacturing of its S8 mobile phones is the microprocessor chip. The information for the annual use of the microprocessor chips are given below:

  • Number of pallets used in a year: 3600
  • Number of microprocessor chips in a pallet: 160
  • Unit price of microprocessor chip: $36.00
  • Inventory carrying cost (annual): 16%
  • Cost per order to replenish inventory: USD $2000.00

Refer to the information given. Demonstrate your working clearly (also include the formula/s used) and give your answer to the nearest whole number:

  1. Calculate the EOQ (Economic Order Quantity).
  2. How many pallets are required for the EOQ calculated?
  3. How much is the ordering cost per year?
  4. What is the total cost (not considering transportation-related costs) of the EOQ?
  5. Considering the EOQ amount, how many orders should be processed per year? Assuming a 288-day work year, what is the expected time between orders


1. Synchronizing and forecasting is what demand management is about.. It comprises of six sub-process which aimed at designing of an operational system for matching supply and demand and the processes are very strategic.

2. Food

Household appliances

Trips and packages


Health and Food- Consumers would prefer food and health services simply because  of the physical risk which occurs when something is wrong and unpleasant.  They don’t consider their values since this can have impact on their life.                      .

 3. Customer service basic aspects-Services that are very common to customers.  These services motivate customers and even ensures that they stick with the    company.

Customer service activities which are inevitable. -It’s all about receiving, sorting  tasks and also handling items within the store. Companies modernize them so as to  reduce the cost of servicing customers. Promoting customer service-It’s all about activities and works and on how these are  being implemented since these services require high costs, hence resulting in an  increase on sales. Customers additional service- -Is the use of computer systems within the store. It            enables electronic payments and keeping various.  

4. Quantitativity - Is the expression of the measure as an objective value.

Visibility- During the measuring process the impact of the measure are readily apparent to all involved.

Understanding it is easy-What is being measured can be seen easily.

Use economies of effort- Advantages of measure outweigh the costs of collection.

Facilitate trust- It validates participation among several parties.

5. Coordination and cooperation- These processes leads to a decrease in costs and  an increase in the level of services.

Centralization- creates an efficient network for various transportation services.

Consolidation-promotes consolidated delivery in harmony hence facilitating logistics activities.

6. Fourth party logistics is about the external companies being used to perform logistics functions that traditionally have been performed by organizations. It aids in intensifying global competition.

7. For logistics activities to be efficient, a good transportation system must be provided, and this reduces operation costs, promote service quality and ensure better competition.

8. Bullwhip effect can be reduced by reducing knots of supply chain so as to ensure accuracy of information. It can be reduced by using efficient supply chain management system.

Seasonal variations in demand and supply can place great pressure in growing business. Supply shock can break fragile supply chains causing input prices to rise and stockouts. Peak season demand result in pressure as business struggle to satisfy customers expectations with limited stock.

9. EOQ=√(2RA/S)                                                                                                                               

                         = (2*3600*2000)/5.76)                           


                                           No. of pallets required= R/Q



                                           Ordering cost=A(R/Q)



                                       Total cost=(Q/2)*S+A*(R/Q)



No of orders processed/year=(R/working days/year)*365



Expected time between orders=(working days/year)/No of pallets required





H.F. Guo, X.Y.Huang, impact of vendor or Managed Inventory on the Bullwhip Effect, Control Engineering,1 (2007)111-114.

R.Q.Chen, S.H Ma, Production and operations management, third ed, Higher Education Press, Beijing,2011.

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