MGMT400 Assignment 5 – Chapters 7 & 11 (Show your work to receive credit) 

1. Suppose you have been given the task of reducing inventory in your company, without
   negatively impacting customer service.
   (a) What are some actions you might be able to take to reduce cycle stock? (b) What are some actions you might be able to take to reduce safety stock?
    
2. (a) Why should one company in a supply chain consider total supply chain inventory as well as its own inventory levels? How does the inventory value change as an item moves in the supply chain?
   (b) What is the bullwhip effect? What are the causes of the bullwhip effect?
    
3. What are the two types of trade-offs that are of concern to logistics managers? Provide examples of each type of trade-off, beyond those discussed in class.
    
4. What is transportation consolidation? How do consolidation strategies take advantage of the basic economic characteristics of transportation?
    
5. Suppose Jones Company has orders from three customers located in the same market area. One order has a total weight of 4,000 pounds, the second weighs 8,000 pounds, and the third weighs 14,000 pounds. The transportation carrier quotes the following rates:
   If the orders are combined into one shipment, the carrier will charge $200 for each stop it is required to make. Should Jones consolidate the three shipments?
    

Shipment Weight 

Cost per 100 Pounds 

1,000-4,999 lbs. 

$20.00 

5,000-9,999 lbs. 

$18.00 

10,000-14,999 lbs. 

$16.50 

15,000-19,999 lbs. 

$15.00 

20,000 lbs. or more 

$13.50