1. Discuss the ways to logistics contribute to economic value in the economy and in an organization?

Logistics plays a key role in the economy in two significant ways. First, logistics is one of the major expenditures for businesses, thereby affecting and being affected by other economic activities. Second, logistics supports the movement and flow of many economic transactions; it is an important activity in facilitating the sale of virtually all goods and services. To understand this role from a systems perspective, consider that if goods do not arrive on time, customers cannot buy them. If goods do not arrive in the proper place, or in the proper condition, no sale can be made. Thus, all economic activity throughout the supply chain will suffer. One of the fundamental ways that logistics adds value is by creating utility. From an economic standpoint, utility represents the value or usefulness that an item or service has in fulfilling a want or need. There are four types of utility: form, possession, time, and place. Time and place utility, are intimately supported by logistics. While form and possession utility are not specifically related to logistics, neither would be possible without getting the right items needed for consumption or production to the right place at the right time and in the right condition at the right cost. These ''five rights of logistics" are the essence of the two utilities provided by logistics: time and place utility. Manufacturing organizations have traditionally used long production runs as a means to gain cost advantage in the marketplace. The current approach to manufacturing is to have shorter production runs and more setups.

2. Manufacturing organizations have traditionally used long production runs as a means to gain a cost advantage in the marketplace. What is the impact of long production runs on logistics? The current approach to manufacturing is to have shorter production runs and more setups. Balance economies of long production runs against increased costs of high inventories. Long run productions usually result in higher inventories of certain finished goods and limited supplies of others. This is due in part to the infrequent change of line set ups or changeovers. Having long run production also allows for a constant flow of raw materials and other components for inbound into a manufacturing physicality that are adequate to meet production schedules. This leads to conservative carrying costs. Because of the need for this type of coordination, many organizations have shifted this responsibility from production scheduling in manufacturing to logistics. This is a pull system of products in the supply chain. Some firms us JIT (Just in Time) or lean manufacturing approaches to inventory and scheduling. This leads to a push system for products in the supply chain. Many organizations

today tend toward shorter production runs and do whatever it takes to reduce time and expense normally associated with changing productions lines from one product to another. The production manager wants to minimize the effects of seasonal demands for products. What are the tradeoffs? The tradeoff here is between carrying cost and production costs. Logistics in conjunction with manufacturing must be prepared to accept seasonal that can be to accumulate up to three months in advance of the event. A shortage or stock out could result in shutdown in a manufacturing facility or an increase in production costs. The pull approach is more likely to have erratic demand that is difficult to predict and that might place emergency demands on the logistics system. Pricing, advertising, packaging and promotion all play into this erratic demand. What impact does this approach have on logistics costs? Dollar Value - product value increases, cost of warehousing, transportation and inventory increases. Density- higher the density, more efficient use of warehouse and transportation space. Damage -greater the risk of damage, higher the transportation and warehousing cost Competition via customer service Manufacturing cost? Order Cycle shorter order cycle, less inventory required; Substitution more substitutable product, higher customer service level required; Inventory Effect increase inventory, reduce cost of lost sales; Transportation Effect increase transportation costs, reduce cost of lost sales t. 3. Compare and Contrast the static analysis of logistics systems with dynamic analysis? Short-Run/Static Analysis look at short run situation and select the system with the lowest overall cost. Long-Run/Dynamic Analysis mathematically calculates the point of equality between the two systems. Spatial Relationships are extremely significant to logistics is spatial relationships, the location of fixed points in the logistics system with respect to demand and supply points. Spatial relationships are very important to transportation costs, since these costs tend to increase with distance which is completed from using nodes and links. The nodes are fixed spatial points where goods stop for storage or processing. The links represent the transportation network and connect the nodes in the logistics system. The regularity, predictability and volume flow of goods entering and leaving and moving within the system.