Logistica

Discussion Question 1

The location and size of Amazon’s warehouses will have a strong impact on the inventory, transportation and facility costs experienced by the company, and also, they will drastically affect the provided service level (this effect will be particularly strong for Amazon since the company fills the customer orders directly from its warehouses). In general, more warehouses in more locations will increase customer service levels and bring down transportation costs. However, this will also increase the company inventory costs and will incur a higher fixed cost for building the facilities and variable costs for maintaining the warehouses.

While making this decision, Amazon should take into account various

• Strategic factors (what should be the best trade-off between the average response time to be experienced by the customers and the quoted prices),

• Technological factors (current state-of-the-art in warehouse systems and practices),

• Infrastructure factors (availability of essential infrastructure like roads, access to shipping services / couriers, etc.),

• Macroeconomic factors (cost of land / facilities, labor and taxes in various locations),

• Competitive factors (might try to exploit positive externalities with other firms), and

Discussion Question 2

Import duties and exchange rates have significant influence on global supply chains. Firms would like to manufacture in places with undervalued currencies and low import tariffs for their raw materials. If local currency is over valued and tariffs are high, firms would not like to set up plants locally, and instead they might opt for off-shoring to cut costs.

Import duties are also a protectionist tool used by local governments in their effort to support their local industry. High duties inflate the price of imported products and make them less competitive on the local market. In their effort to avoid this effect, foreign companies that want to compete in a market protected by high import duties, might opt to set up for local production (e.g., Japanese car makers setting assembly plants in US in the 80’s and 90’s).

Discussion Question 5

A key advantage for McMaster Carr’s strategy is that demand can be met with a smaller volume of inventory (due to the pooling effect; i.e., centrally kept inventory is available over a broader span of the supply chain). Also, facility costs will be lower. On the other hand, the company will experience increased transportation costs, and possible longer delays in its shipments. Finally, it will be really hard for the company to interact with its customers on a more personal basis, e.g., in case that a product needs to be returned or it needs some service. These effects will be reversed for W. W. Grainger.

Discussion Question 6

Dell’s production is quite

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