Business Logistics/
Supply Chain
Management
Planning, Organizing, and Controlling the Supply Chain
Fifth Edition
Instructor’s Manual
Ronald H. Ballou
Weatherhead School of Management
Case Western Reserve University
,CONTENTS
Preface iii
Chapter 1 Business Logistics/Supply ChainA Vital Subject……… 1
2 Logistics/Supply Chain Strategy and 2
Planning……………
3 The Logistics/Supply Chain Product...…………………… 4
4 Logistics/Supply Chain Customer Service…..…………… 9
5 Order Processing and Information Systems………………. 13
6 Transport Fundamentals………………………………….. 14
7 Transport Decisions………………………………………. 17
Fowler Distributing Company………………………….. 35
Metrohealth Medical Center……………………………. 41
Orion Foods, Inc………………………………............... 48
R & T Wholesalers……………………………………... 52
8 Forecasting Supply Chain Requirements…………….…… 65
World Oil……………………………………………….. 84
Metro Hospital …………………………………………. 88
9 Inventory Policy Decisions……………………………….. 94
Complete Hardware Supply, Inc….…………………….. 121
American Lighting Products……………………………. 124
American Red Cross: Blood Services………………….. 131
10 Purchasing and Supply Scheduling Decisions……………. 134
Industrial Distributors, Inc……………………………… 144
11 The Storage and Handling System………………………... 147
12 Storage and Handling Decisions………………………….. 148
13 Facility Location Decisions………………………………. 162
Superior Medical Equipment 186
Company……………….... 190
Ohio Auto & Driver’s License Bureau…………………. 198
Southern Brewery ………………………………………
14 The Logistics Planning Process…………………………... 204
Usemore Soap 208
Company………………….…………….. 217
Essen USA………………….……………..
15 Logistics/Supply Chain Organization……………………. 229
16 Logistics/Supply Chain 230
Control……………..…………….
ii
,PREFACE
This instructor's guide provides answers to the more quantitatively oriented problems at
the end of the textbook chapters. If the questions or problems are for discussion or they
involve a substantial amount of individual judgment, they have not been included.
Solutions to the cases and exercises in the text are also included. These generally
require computer assistance for solution.
With the text, you are provided with a collection of software programs, called
LOGWARE, that assist in the solution of the problems, cases, and exercises in the text.
The LOGWARE software along with a user’s manual is available for downloading from
the Prentice Hall website or this book. The user’s manual is in Microsoft Word or
Acrobat .pdf formats. This software, along with the user’s manual, may be freely
reproduced and distributed to your classes without requiring permission from the
copyright holder. This permission is granted as long as the use of the software is for
educational purposes. If you encounter difficulty with the software, direct questions to
Professor Ronald H. Ballou
Weatherhead School of Management
Case Western Reserve University
Cleveland, Ohio 44106
Tel: (216) 368-3808
Fax: (216) 368-6250
E-mail:
Web site: www.prenhall.com/ballou
iii
, CHAPTER 1
BUSINESS LOGISTICS/SUPPLY CHAINA VITAL SUBJECT
12
(a) This problem introduces the student to the evaluation of alternate channels of
production and distribution. To know whether domestic or foreign production is least
expensive, the total of production and distribution costs must be computed from the
source point to the marketplace. Two alternatives are suggested, and they can be
compared as follows.
Production at Houston:
Total cost = Production cost at Houston + Transportation and storage costs
= $8/shirt100,000 shirts + $5/cwt. 1,000 cwt.
= $805,000/year
Production at Taiwan:
Total cost = Production cost in Taiwan
+ Transportation and storage costs from Taiwan to Chicago
+ Import duty + Raw material transportation cost from Houston
to Taiwan
= $4/shirt100,000 shirts + $6/cwt. 1,000 cwt. + $0.5/shirt100,000 shirts
+ $2/cwt. 1,000 cwt.
= $458,000/year
Producing in Taiwan would appear to be the least expensive.
(b) Other factors to consider before a final decision is made might be:
(i) How reliable would international transportation be compared with domestic
transportation?
(ii) What is the business climate in Taiwan such that costs might change in favor of
Houston as a production point?
(iii) How likely is it that the needed transportation and storage will be available?
(iv) If the market were to expand, would there be adequate production capacity
available to support the increased demand?
1
Supply Chain
Management
Planning, Organizing, and Controlling the Supply Chain
Fifth Edition
Instructor’s Manual
Ronald H. Ballou
Weatherhead School of Management
Case Western Reserve University
,CONTENTS
Preface iii
Chapter 1 Business Logistics/Supply ChainA Vital Subject……… 1
2 Logistics/Supply Chain Strategy and 2
Planning……………
3 The Logistics/Supply Chain Product...…………………… 4
4 Logistics/Supply Chain Customer Service…..…………… 9
5 Order Processing and Information Systems………………. 13
6 Transport Fundamentals………………………………….. 14
7 Transport Decisions………………………………………. 17
Fowler Distributing Company………………………….. 35
Metrohealth Medical Center……………………………. 41
Orion Foods, Inc………………………………............... 48
R & T Wholesalers……………………………………... 52
8 Forecasting Supply Chain Requirements…………….…… 65
World Oil……………………………………………….. 84
Metro Hospital …………………………………………. 88
9 Inventory Policy Decisions……………………………….. 94
Complete Hardware Supply, Inc….…………………….. 121
American Lighting Products……………………………. 124
American Red Cross: Blood Services………………….. 131
10 Purchasing and Supply Scheduling Decisions……………. 134
Industrial Distributors, Inc……………………………… 144
11 The Storage and Handling System………………………... 147
12 Storage and Handling Decisions………………………….. 148
13 Facility Location Decisions………………………………. 162
Superior Medical Equipment 186
Company……………….... 190
Ohio Auto & Driver’s License Bureau…………………. 198
Southern Brewery ………………………………………
14 The Logistics Planning Process…………………………... 204
Usemore Soap 208
Company………………….…………….. 217
Essen USA………………….……………..
15 Logistics/Supply Chain Organization……………………. 229
16 Logistics/Supply Chain 230
Control……………..…………….
ii
,PREFACE
This instructor's guide provides answers to the more quantitatively oriented problems at
the end of the textbook chapters. If the questions or problems are for discussion or they
involve a substantial amount of individual judgment, they have not been included.
Solutions to the cases and exercises in the text are also included. These generally
require computer assistance for solution.
With the text, you are provided with a collection of software programs, called
LOGWARE, that assist in the solution of the problems, cases, and exercises in the text.
The LOGWARE software along with a user’s manual is available for downloading from
the Prentice Hall website or this book. The user’s manual is in Microsoft Word or
Acrobat .pdf formats. This software, along with the user’s manual, may be freely
reproduced and distributed to your classes without requiring permission from the
copyright holder. This permission is granted as long as the use of the software is for
educational purposes. If you encounter difficulty with the software, direct questions to
Professor Ronald H. Ballou
Weatherhead School of Management
Case Western Reserve University
Cleveland, Ohio 44106
Tel: (216) 368-3808
Fax: (216) 368-6250
E-mail:
Web site: www.prenhall.com/ballou
iii
, CHAPTER 1
BUSINESS LOGISTICS/SUPPLY CHAINA VITAL SUBJECT
12
(a) This problem introduces the student to the evaluation of alternate channels of
production and distribution. To know whether domestic or foreign production is least
expensive, the total of production and distribution costs must be computed from the
source point to the marketplace. Two alternatives are suggested, and they can be
compared as follows.
Production at Houston:
Total cost = Production cost at Houston + Transportation and storage costs
= $8/shirt100,000 shirts + $5/cwt. 1,000 cwt.
= $805,000/year
Production at Taiwan:
Total cost = Production cost in Taiwan
+ Transportation and storage costs from Taiwan to Chicago
+ Import duty + Raw material transportation cost from Houston
to Taiwan
= $4/shirt100,000 shirts + $6/cwt. 1,000 cwt. + $0.5/shirt100,000 shirts
+ $2/cwt. 1,000 cwt.
= $458,000/year
Producing in Taiwan would appear to be the least expensive.
(b) Other factors to consider before a final decision is made might be:
(i) How reliable would international transportation be compared with domestic
transportation?
(ii) What is the business climate in Taiwan such that costs might change in favor of
Houston as a production point?
(iii) How likely is it that the needed transportation and storage will be available?
(iv) If the market were to expand, would there be adequate production capacity
available to support the increased demand?
1
