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PART II

ANSWERS TO END-OF-CHAPTER QUESTIONS

CHAPTER 1: AN OVERVIEW OF LOGISTICS

1. Did it surprise you that logistics can be such an important component in a country’s economic system? Why or why not?

The answer to this question likely depends on a student’s prior exposure to logistics. A “typical” student in an undergraduate basic logistics course likely has had limited exposure to and knowledge about logistics and thus would likely be unaware as to logistics’ impact on a country’s economic system. As such, she/he might be pleasantly surprised to learn that logistics often accounts for at least 10% of a country’s GDP and also is important for economic growth and development.

2. Distinguish between possession, form, time, and place utility.

Possession utility refers to the value or usefulness that comes from a customer being able to take possession of a product and can be influenced by the relevant payment terms. Form utility refers to a product’s being in a form that (1) can be used by the customer and (2) is of value to the customer. Time utility refers to having products available when they are needed by customers while place utility refers to having products available where they are needed by customers.

3. How does logistics contribute to time and place utility?

Logistics contributes to time utility by recognizing that different products have different sensitivities to time. For example, a three-day late delivery of bananas likely has more serious consequences than a three-day late delivery of a box of pencils. As for place utility, logistics facilitates products being moved from points of lesser value to points of greater value.

4. How can a particular logistics system be effective but not efficient?

Effectiveness can be thought of as “how well a company does what they say they’re going to do;” efficiency focuses on how well (or poorly) company resources are used to achieve what a company promises they...