CII Institute of Logistics

Post Graduate Diploma in Supply Chain Management

Semester II Assignment II
Warehousing & Inventory Management
Answer all questions

1. One of the considerations to determine the location of a warehouse should be:

a. Product storage
b. volume of the products handled
c. market service area and the cost of distribution from the warehouse to the
market service area
d. type of material handling equipment
2. One of the factors affecting the number of warehouses is:
a.
b.
c.
d.

capital expenditure for material handling equipment

warehousing costs
procurement costs
packing costs

3. Cross-docking requires:
a.
b.
c.
d.

more storage space

less storage space
no storage space
none of the above

4. Maintaining stock availability for order picking is named as

a.
b.
c.
d.

Order picking
Sortation
Receiving
Replenishment

5. RDC refers to
a.
b.
c.
d.

Reliable dispatch center

Return dispatch center
Regional distribution center
Random distribution center

6. The most common measure of picking performance is

a.
b.
c.
d.

Fill rate
Perfect order fulfillment
Pick rate
Binning rate

7. Which activity cost holds the major cost in warehousing activity?

a.
b.
c.
d.

Receiving
Storage
Put away
Picking

8. ABC Analysis in inventory control is based on

a.
b.
c.
d.

Cost of the material

Stock quantity in hand
Annual consumption value of the items
None of the above

9. Re order level system is a

a.
b.
c.
d.

Independent demand system

Dependant demand system
Periodic ordering system
None of the above

10. The true multi-echelon system would reduce the cycle inventory in the whole
supply chain.
(True/False)

Answer any Three Questions

1. Describe in detail the various performance metrics for material handling

equipments?
2. Describe in detail the various analyses and measures to control inventory?
3. Describe in detail the Independent Demand System as well as Dependent
Demand System?
4. Describe in detail the true multi-echelon system?

Part C
Study the question carefully and answer all questions . Your answers may be
supported with any diagrams, models or algorithms, as may be necessary. Neatness,
brevity and clarity in the answers will be appreciated and recognized appropriately.
A Case Study ALL WELL COMPANY
All Well Company (AMC) manufactures two products (Alpha and Beta). AWC has 20
sales districts all over India. All products inventories are maintained locally and
replenished from Mumbai every four weeks using a carrier service ( Golden Transport
GT) .The replenishment lead-time is one week. GT charges at the rate of Rs.
0.5+0.25X (where X is the quantity shipped in Kgs)
product

Alpha
Beta

Weekly demand
(mean,SD):
Normally
distributed
4.5
16.5

Unit weight

Unit cost

0.1kg
0.05kg

Rs 300/ unit
Rs75 /unit

Annual inventory holding rate is 20% service level is 99.97% (corresponding to 3

sigma level) .AWC is considering the following two options:

Alternative A:
Keep the current structures but start replenishing inventories every week rather than
every four weeks.
Alternative B:
Eliminate inventories at sales districts, aggregate all inventories in a finished goods
warehouse at Mumbai and replenish the warehouse once a week. If inventories are
aggregated at Mumbai, orders will be shipped by DTDC courier service which charges
at Rs7.0 + 0.70X ( X= quantity shipped in kgs). An average customer order is for 1
nit of Alpha and 10 units of Beta. Mumbai plant requires one weeks lead time to
replenish goods at the Mumbai warehouse.
Questions:
Advise AWC on which alternative (existing or alternative A or alternative B) is to be
chosen. You may compare these alternatives based on the following criteria. Number
of stocking locations, re-order level, inventory for Alpha, Beta, Annual Inventory Cost
for Alpha, Beta( A), shipment weight, Annual Transportation cost (B), and Total cost
(A+B).

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