Inventory and Private Warehousing
PART II
END-OF-CHAPTER QUESTIONS
CHAPTER 10: WAREHOUSING MANAGEMENT
1. Distinguish between warehouses and distribution centers.
Warehouses emphasize the storage of products, and their primary purpose is to maximize the use of storage space. In contrast, distribution centers emphasize the rapid movement of products through a facility, and thus attempt to maximize throughput (the amount of product entering and leaving a facility in a given time period.
2. Explain the four ways that warehousing facilitates the regrouping function.
Regrouping takes four forms: accumulating (also referred to as bulk-making), allocating (also referred to as bulk-breaking), assorting, and sorting. Accumulating involves bringing together similar stocks from different sources, while allocating involves breaking larger quantities into smaller quantities. Assorting refers to building up a variety of different products for resale to particular customers, while sorting out refers to separating products into grades and qualities desired by different target markets.
3. Discuss some of the value-added activities that can be performed by warehouses and distribution centers.
These value-added activities include assembly, light manufacturing, product testing, and affixing state tax stamps. Some goods are labeled prior to distribution to retail outlets. In addition, warehousing facilities are increasingly the places where retail point-of-sale displays are created and produced.
4. What are the advantages and disadvantages of private warehousing?
One disadvantage to private warehousing is that they are characterized by high fixed costs—which necessitates high and steady demand volumes. In addition, a high fixed cost alternative becomes less attractive in times of high interest rates because it is more costly to secure the necessary financing. Private warehousing may also reduce an organization’s flexibility with respect to responding to changes in the
END-OF-CHAPTER QUESTIONS
CHAPTER 10: WAREHOUSING MANAGEMENT
1. Distinguish between warehouses and distribution centers.
Warehouses emphasize the storage of products, and their primary purpose is to maximize the use of storage space. In contrast, distribution centers emphasize the rapid movement of products through a facility, and thus attempt to maximize throughput (the amount of product entering and leaving a facility in a given time period.
2. Explain the four ways that warehousing facilitates the regrouping function.
Regrouping takes four forms: accumulating (also referred to as bulk-making), allocating (also referred to as bulk-breaking), assorting, and sorting. Accumulating involves bringing together similar stocks from different sources, while allocating involves breaking larger quantities into smaller quantities. Assorting refers to building up a variety of different products for resale to particular customers, while sorting out refers to separating products into grades and qualities desired by different target markets.
3. Discuss some of the value-added activities that can be performed by warehouses and distribution centers.
These value-added activities include assembly, light manufacturing, product testing, and affixing state tax stamps. Some goods are labeled prior to distribution to retail outlets. In addition, warehousing facilities are increasingly the places where retail point-of-sale displays are created and produced.
4. What are the advantages and disadvantages of private warehousing?
One disadvantage to private warehousing is that they are characterized by high fixed costs—which necessitates high and steady demand volumes. In addition, a high fixed cost alternative becomes less attractive in times of high interest rates because it is more costly to secure the necessary financing. Private warehousing may also reduce an organization’s flexibility with respect to responding to changes in the