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Logistics Exam 1 Questions + Answers (Kissick)

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What are the primary forces driving the rate of change in economic and political landscape?
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- By reducing Throughput time, costs may decrease allowing more competitive pricing. Inventory is more controllable and easier to prevent stockovers.

-Improved Quality, lower work in process and finished goods inventory (significant is ultimately a reduction in costs for the company)

-Less forecasting error - shorter time horizons

-Greater flexibility - in regards to production and manufacturing changes. For example, if a company detects a decrease in demand for their product, they can more effortlessly make short notice changes. (Bullwhip effect)
-value added by changing form of the product (taking raw materials and making an iPhone).

- Value added by having it available at a specific demand point and time. (Important because companies need to reduce costs. Timing is becoming more and more crucial. See "JIT Inventory")

- moving from production points to market points. (transportation)
-causes competition to INCREASE, which causes demand to DECREASE, and availability to INCREASE.

- Deliverance of the proper quantities. (too less of something could hinder sales, too much could cost more in inventory.)

- Created through basic marketing activities related to promotion and sale. (direct and indirect contact with the customer)
We are comparing two systems. System 1 has a high fixed cost and low variable costs. System 2 has low fixed costs and high variable costs. If the quantity of a product is small, which system would be preferred? if the quantity of a product is large, which system would be preferred? explain each answer briefly.