Solution and Answer Guide for Transportation A Global Supply Chain Perspective, 10th Edition Robert by welldoneassistant

Solution and Answer Guide for: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 1: Global Supply Chains: The Role and Importance of Transportation

Solution and Answer Guide for Transportation A Global Supply Chain Perspective, 10th Edition Robert A. NovackBrian GibsonYoshinori Suzuki Chapter 1-13

NOVACK, T RANSPORTATION : A GLOBAL SUPPLY CHAIN PERSPECTIVE , 10E, 2024, 9780357908549; CHAPTER 1: GLOBAL SUPPLY CHAINS: T HE ROLE AND IMPORTANCE OF T RANSPORTATION

TABLE OF CONTENTS Content Type ............................................................................................................................................... 1 [Study Questions]...................................................................................................................................... 1 END OF SECTION EXERCISE SOLUTIONS .................................................................................................... 4 [CASE QUESTIONS].................................................................................................................................... 4

CONTENT TYPE [STUDY QUESTIONS] 1.

Transportation has sometimes been described as the glue that holds global supply chains together. What is the meaning of this statement and do you agree? Why or why not? Solution: Most students will probably agree that transportation is the ―glue‖ of the supply chain since it connects the individual parts of the chain. Still, they should point out that information is also important to hold the supply chain together. The essence of the statement is that supply chains are extended enterprises with many parts, and the final outcome is a product delivered on time to a particular location without damage or delay. Transportation and information flows are key to this outcome. They should also point out that transportation and information can provide a strategic advantage, so they should be an important part of the planning process. Overall, supply chains play an important role in helping organizations gain a strategic advantage in the global economy of the 21st century.

During the last 20 to 30 years, there have been a number of countries whose economies have experienced important economic expansion and development. One group of countries has been labeled the BRIC countries and the other the VISTA countries. Identify each of the nine countries and provide some insights about their economies and economic importance. Solution: BRIC countries are Brazil, Russia, India, and China. The VISTA countries are Viet Nam, Indonesia, South Africa, Turkey, and Argentina. The BRIC group is generally considered to be the most advanced economy. China is clearly the most important, as indicated by the grade flow data in the chapter. They are important for manufactured production well as resources. India has advanced rapidly through their

Transportation A Global Supply Chain Perspective, 10th Edition Robert A. NovackBrian GibsonYoshinori Suzuki: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 1: Global Supply Chains: The Role and Importance of Transportation

educated and industrious citizens and technology, and organizations in India have become an important part of many supply chains. Russia and Brazil both have vast resources that can be the basis for funds, but they are also developing more advanced manufacturing sectors. They are challenged by their geography, size, and political factors. The VISTA countries have established themselves as countries for sourcing some basic manufacturing because of low labor costs. They also provide agricultural products and other resources for exporting. The key dimension for both the BRIC and VISTA countries is that establishing global supply chains has allowed them to be a part the global economies. There is abundant information about the BRIC and VISTA countries on the internet if you want to make this question a special assignment or extra credit. 3.

The theories of absolute and comparative advantage have been offered as an economic rationale for trade between and among regions and countries. Compare and contrast the two concepts. Which of the two do you think is more important for explaining the growth in global trade during the last 25 years? Why? Solution: Both theories are offered as a rationale for expanded trade between and among regions and countries to promote growth and development. Absolute advantage is the oldest concept and easiest to explain, since each country has an advantage in the production of one or more products in the two-country scenario. Comparative advantage postulates that even if one country has an advantage in both products, trade can still be advantageous. Comparative advantage has probably been the most important for overall development in our complex global economy since countries can produce so many products that are competitive with other countries, to some degree. However, complete advantage is still important to rationalize some major work flows, especially for basic materials and agricultural products. There are also seasonal and weather-related factors that provide advantages at particular times of the year for different regions.

The overall growth of global trade has more than doubled since 2000. Why? What has been the most important factor prompting this growth? Is this rate of growth likely to continue in the future? Why or why not? Solution: There are several reasons for this growth. Some of it can be explained by population growth and improved education systems in developing countries. Capital for development has become more widely available from private and public sources. There is also more acceptance of products manufactured in other countries. But probably the most important reasons are trade agreements and lower tariffs on imported products. These have been greatly expanded because of the recognition of how important global trade can be to economic development and the health and welfare of the citizens of the country. One of the biggest challenges to progress in promoting global trade is the political instability and terrorism that have developed in some areas of the world, such as Africa and parts of the Middle East. These factors undermine the benefits that can accrue from the growth in global trade. One can argue that the growth will continue because of the economic and political forces at work in the global economy, but there will be ups and downs or bumps along the road because of human error and greed.

The size of a country’s population and the associated age distribution can be causal factors for economic growth. Why is the size of the population important to economic development? Can size be a disadvantage? Why is age distribution important? Solution: The sheer size of the population can be very important because labor is one of the prime factors for economic growth, and population numbers indicate the availability of labor. The size of the population can also indicate the market size and potential for selling products. Size can be a disadvantage if the economy cannot provide employment opportunities. Large size can also challenge the education system and may require government resources to sustain the basic needs of the citizenry. Age distribution affects the size of the labor pool of available employees. Also, older populations require more medical assistance and other services, which can drain the resources of individuals or government agencies. The population data and commentary in the chapter provide the basis for some interesting discussion. Again, this topic has abundant

information available on the internet and could be the basis of a special assignment. The differences in population size, growth rates, age distribution, and education levels are all factors for economic development. 6.

Energy, food, and water are frequently cited resources that are critical for economic development. Explain the importance of each one to economic development. What disparities exist among countries with respect to these three resources? How can these challenges be resolved? Solution: Energy is a primary ingredient to support agriculture, manufacturing, and transportation. Consequently, if much of the needed energy has to be imported, it will increase the cost of producing products and may put a country at a disadvantage in producing and exporting products. Food is almost self-explanatory since it is needed to sustain the citizenry of the country. When there is a food shortage, a country will be challenged unless it can offset this shortage with advantages in other areas, such as mineral resources or labor productivity. Water is a critical resource for individuals, agriculture, manufacturing, and other businesses and organizations. The absence of an adequate water supply is one of the most debilitating conditions for an economy. There are major differences around the globe regarding the availability and quantity of these resources. Technology may be able to solve some degree of this problem, but not all of it.

Technology can impact economic development on both a macro and a micro level. What types of technology do we need to have such impacts on a macro basis? On a micro basis? Solution: On a macro basis, technology is needed to increase the productivity of agriculture and manufacturing in many parts of the world. Improvements can also be made in the supply chains, especially in transportation. On a micro basis, technology can improve the quality of life for many people through medical treatment, safety, and aids for seniors. We have made significant progress with technology, but some individuals feel that we have only scratched the surface of the potential to improve economic development. The supply chain has been the beneficiary of technology, especially information technology, to improve efficiency, effectiveness, and execution. However, in the last decade, technology's ―hard side‖ has been receiving more attention in transportation, warehousing, and manufacturing to improve efficiency and effectiveness.

Robotics has attracted more attention in recent years. Why? How are robots being used in supply chains? Solution: Robotics has indeed received more attention in many areas, especially health care, manufacturing, and distribution. Some people see robotics as a replacement for labor, but now robots are being viewed as complementary. It will improve manufacturing, distribution, health, and welfare of the population. Robots are being used in warehouses for shelving, order picking, loading, and unloading. Robots have potential in other areas of the supply chain, especially transportation.

The economic integration associated with globalization can provide an opportunity for more widely dispersed development. Why is this possible? What are the major stumbling blocks to such integration? Solution: Economic integration can release the power of comparative advantage and provide more growth, development, and prosperity. The major stumbling blocks are ―fear‖ and ―terror,‖ which are associated with individuals and groups who will exercise their ability to thwart trade flows for selfish or self-serving agendas. Collaboration among organizations in a global supply chain can be a driving force for more efficiency and effectiveness.

10. Supply chain management has enabled some companies to operate more efficiently and compete more effectively on a global basis. What inherent characteristics of supply chain management contribute to these outcomes? Solution:

Supply chains that are efficient, effective, and well executed can make companies more competitive. The basis of this outcome is related to systems analysis and trade-off analysis, which allow organizations to do what they can do best and depend on other organizations to provide the rest. The coordination and collaboration that should be inherent in supply chains are important ingredients for efficiency and effectiveness.

END OF SECTION EXERCISE SOLUTIONS [CASE QUESTIONS] Case 1-1 Off-Shoring? Near-Shoring? On-Shoring? 1.

Discuss the advantages and disadvantages of off-shoring, near-shoring, and on-shoring for these three industries. Solution: From a supply chain perspective, the advantages/disadvantages will be the same for the three industries. Off-shoring The obvious advantage of off-shoring is the labor cost advantage many other countries have. Another advantage is that the suppliers for these three industries have developed technical expertise and gained economies of scale in their production processes. The biggest disadvantage, as seen as a result of the pandemic, is the distance to U.S. markets. Couple this with borders being shut down and U.S. tariffs on certain imports, and it is easy to see why off-shoring can present challenges. Near-Shoring The advantage of bringing suppliers back to North America is the trade agreements the U.S. has with Canada and Mexico. These agreements facilitate border crossings and eliminate/minimize tariffs and duties. Another advantage is the relatively short distance among the three countries. The disadvantage could be the lack of qualified suppliers and/or production processes in Canada and Mexico that could fulfill the needs of these three industries. On-Shoring The obvious advantage to bringing production back to the U.S. is distance and the avoidance of border closings and tariffs. The disadvantage could be the lack of qualified suppliers/production processes available in the U.S.

What could the federal government do to convince firms in these industries to change their global trade patterns? Solution: The biggest incentive the federal government could give firms in these industries would be tax breaks to relocate. The government could also provide subsidies, or seed money, to incentivize firms to relocate production to the U.S.

CASE 1-2 TEA Logistics Services, Inc. 1.

What opportunities do you see for TEA to expand globally, specifically to South Africa? Solution:

Solution and Answer Guide: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 2: Transportation And The Economy

Many U.S. companies are global in scope and need 3PL services wherever they locate. Following Systa’s move to South Africa gives TEA the opportunity to expand its current domestic operations. South Africa is particularly attractive because of the expected growth of global manufacturing that will be positioned there. 2.

What challenges do you see facing TEA in making this operating expansion? Solution: When locating operations in another country, several issues might face TEA. First is the availability and condition of the transportation infrastructure to be able to move products inland and to the ports. Second is the availability and skill level of the local workforce. Third is the ability to secure both transportation equipment and warehousing space. Fourth is the cultural differences in South Africa that could pose problems for TEA. Finally, government regulations in South Africa might not be conducive to conducting business as a 3PL.

If TEA were to accept the offer, how would you suggest that TEA enter the South African market when establishing operations? Solution: TEA could partner with an existing 3PL in South Africa to begin operations.

Solution and Answer Guide NOVACK, T RANSPORTATION : A GLOBAL SUPPLY CHAIN PERSPECTIVE , 10E, 2024, 9780357908549; CHAPTER 2: T RANSPORTATION AND T HE ECONOMY

TABLE OF CONTENTS Content Type ............................................................................................................................................... 6 [Study Questions]...................................................................................................................................... 6 End of Section Exercise Solutions.............................................................................................................. 9 [Case Questions] ....................................................................................................................................... 9

Solution and Answer Guide: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 2: Transportation And The Economy

CONTENT TYPE [STUDY QUESTIONS] 1.

There is much discussion on the local, state and federal levels about the need to repair and improve the Interstate Highway System. Provide rationale for meeting this need. Solution: Investing in an improved transportation system would have an overall positive impact on multiple sectors of society. With transportation being key to economic stimulation, better infrastructure would improve businesses' ability to make products and provide services. It would ensure more efficient versatility in transportation opportunities, providing flexibility to determine the best routes and costs. Having the right products in the right place at the right time enables companies to maximize their revenue opportunities by adding extra value to their process. Transportation providers also play an influential role in national defense by moving military supplies domestically and internationally. Improved infrastructure ensures that our national defense forces can attain the supplies they need to protect our country in a timely matter. Furthermore, improved infrastructure is necessary for the world to continue its push towards a more environmentally friendly society. When companies can save transportation costs, they can invest in areas that reduce their environmental impacts. Finally, an improved transport system results in social benefits. Socially, a good transportation system can enhance the health and welfare of a population. Though it is not a significant problem in the United States, having the ability to transport food and other necessities throughout the country in an efficient manner can influence poverty and famine levels. Well-developed transportation also contributes to improved health and education delivery systems and effective communications among regions of a country.

―Transportation is the most important factor in economic development.‖ Do you agree or disagree with this statement? Why or why not? Solution: Transportation systems provide critical links between producers and consumers domestically and globally. The citizens of industrialized countries depend on transportation systems to move products from distant locations where they are produced to markets where they are needed. It has long been recognized that one of the critical ingredients for underdeveloped countries to improve economically is investment in transportation infrastructure. This investment is frequently referred to as social capital; that is, society is the beneficiary of such investment because of the economic benefits associated with new businesses, higher wages, and more jobs.

The opening of the Erie Canal and the building of the transcontinental railroad in the 19th century were described as significant milestones for economic development in the United States. Explain their importance individually and collectively. Solution: The Erie Canal provided a link from the East Coast (specifically New York) to the Upper Great Lakes Region, which provided access to the Midwest. It was a bonanza for the manufacturers of the East to access those markets, and a pipeline to Midwest agriculture and mineral resources. While the Erie Canal was a ―man-made‖ public works, it was built cheaply (mostly with prison labor), and the tolls were minimal. The success of the Erie Canal spurred interest in other canals, but as pointed out in the text, none of them were as successful, and the railroads soon provided a more efficient and effective alternative to canals. The transcontinental railroad had essentially the same impact, connecting the eastern manufacturers with markets for their products and a supply of food and other resources for the more densely populated Eastern Seaboard. It was a classic win-win, but had some ―bumps and bruises‖ with political and individual greed leading to excesses. The Transcontinental rail system had a much larger impact when completed in 1866 than had the Erie Canal. Still, both were monumental stepping stones for the economic development and

Solution and Answer Guide: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 2: Transportation And The Economy

growth of the United States, along with the social and political impact of connecting the citizenry of the country. 4.

The highways and other metropolitan transportation services are frequently described as the lifelines of metropolitan areas. Do you agree with this statement? Why or why not? Solution: Transportation systems have a major impact on population patterns and urban economic development. A city would not be able to survive without its internal transportation system and the connecting transportation system to external markets and producers. Even the suburban areas surrounding the city are dependent on transportation systems. Transportation services add value to the goods shipped from the urban areas to markets, and provide the economic livelihood of the urban areas. On the other hand, urban areas need food and other supplies to sustain their populations. The cities could not exist without the efficiency of transportation systems into and out of the city.

Compare and contrast time and place utility, and explain how they contribute to the value of products. What is the importance of time and place utility in our global economy? Solution: Place utility is created when a product is moved from a point where it is produced to a point where there is demand for it, and the buyer is willing to pay a price that covers the landed cost of the product and sufficient profit for the producer. The more efficient the method of transportation, the greater the potential market area and the greater place utility. Reductions in transportation cost permit market areas to purchase products from distant suppliers that might otherwise only be produced locally at a higher price. Time utility is aligned with place utility. The demand for a particular commodity may only exist during certain periods of time. If a product arrives in a market at a time when there is no demand for it, then it possesses no value. Effective transportation can create time utility by ensuring that products arrive WHERE (place utility) and WHEN (time utility) they are needed. The increased emphasis on just-in-time and scheduled deliveries and lean inventories has heightened the importance of time utility, especially for high-value products and emergency shipments. Time and place utility are even more important for global supply chains, which face many challenges and more uncertainty because of the greater distances.

Adam Smith stated the specialization of labor was limited by the extent of the market and that transportation helps to expand the market. Explain the meaning and importance of this statement. Solution: The concept of geographic specialization assumes that each nation, state, or city produces products and services for its citizens with its capital, labor, and raw materials. Since most areas cannot produce all of the needed products for their citizens, transportation is necessary to exchange (buy and sell) the goods that can be produced more efficiently at another location in return for different goods produced locally. Gain from the specialization of goods will be mutually advantageous when the cost ratios of producing two commodities differ in other areas. The development of specialization usually leads to lower prices and increased productivity (read greater output). If there is insufficient demand for the increased output, the producer will have an excess supply with no value. The availability of efficient transportation networks to move the products/output to other geographical markets justifies the specialization and the advantages of scale economies. In other words, without the transportation system, the production efficiencies from specialization would be lost. The raw materials for production need to be transported to a manufacturing facility, and the finished products must be transported out of an area at reasonable costs to markets and consumers.

Economists often point to the impact of improved transportation on land values and related economic development. What is the nature and significance of the transportation impact? Solution: Transportation improvements can enhance an area's economy and increase the value of land adjacent to or served by transport improvements because the land becomes more accessible and potentially useful. Suburban centers provide excellent examples. The value of the land in these areas has increased to reflect

Solution and Answer Guide: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 2: Transportation And The Economy

the advantageous lifestyles that the new or improved transportation systems have made possible. The land values within the city are also enhanced by economic development. Another good example is along the major interstate highway systems that pass through remote, undeveloped areas. However, when you reach an interchange area, you usually see evidence of commercial establishments such as hotels, restaurants, service stations, shopping centers, and even industrial activity. The land at those interchanges greatly increased in value when the highway was developed and the interchange was established. The Erie Canal and the transcontinental railroads mentioned previously had a major impact on land values in areas contiguous to these transportation systems. This was particularly true of the transcontinental railroad, which opened up the Western States as market areas and the source of many agricultural and mineral products. 8.

While improved transportation systems provide economic benefits, there may be some associated environmental costs. What are the major environmental costs associated with transport systems and what are their potential negative impacts? Solution: Noise, air quality, and pollution are most frequently mentioned as potential negative impacts of transportation systems. If these impacts are too negative, they can negate the economic benefits of improved transportation. Sustainability and Green systems are frequently mentioned today, and there is no question that transportation and related supply chain activities have a major impact here. Much effort is underway to reduce the carbon footprint of transportation and supply chain activities through reduced truck miles, fewer packaging materials, etc. While not usually considered an environmental factor, transportation safety is also an issue and can have a negative impact on modern transportation systems. Transportation systems can pollute the environment and exploit natural resources. The debate about the overall benefits provided by transportation exceeding the costs continues. The environmental challenges of the future will be to assess the relationship between industrial and consumer benefits, and to compare the construction and external societal costs of transportation improvements. Green supply chains – the balance between a sound and efficient transportation system and a safe and clean environment – have become part of our vocabulary. Pollution from internal combustion engines, acid rain which contains more pollutants from industrial and commercial processes, vehicle emissions, oil spills, and ship-generated garbage all have and will continue to have adverse effects on the environment.

―Improved transportation systems can also have social and political significance.‖ Why are these important considerations for evaluating existing or proposed additions to the transportation system? Solution: A good transportation system can enhance the health and welfare of a population and offer educational opportunities and effective communications among regions of a country. Adequate transportation is needed to create national unity; the transportation network permits government leaders to travel rapidly to and communicate with the people they govern. Information technology has enhanced opportunities to communicate and help unify a nation. Transportation also plays a role in bringing people together and exposing them to products and services from other regions of the country, which helps reduce regional social and political barriers.

10. The service characteristics of freight movements are considered by some shippers to be as important as or more important than the freight rate. Discuss the various service characteristics for freight demand. Do you agree with the statement that they may be as important as or even more important than the freight rate? Why or why not? Solution: Service characteristics of carriers have become much more important to shippers over the last thirty years, as they have recognized the cost trade-offs for improved service, such as lower inventory costs, reduced warehousing costs, lower loss and damage, lower landed cost, fewer stock outs, and better customer service. In effect, the freight rate had to be evaluated along with the service provided to determine the best alternative. Three modes of transportation usually have an advantage in terms of the lowest line-haul rates

Solution and Answer Guide: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 2: Transportation And The Economy

between two points—rail, water carrier, and pipeline. Still, in general, they are at a disadvantage with respect to service. Whereas the motor and air carriers have some advantages for service, their rates are higher than the other three, especially the air carrier. As the value of the products increases, the importance of the service characteristics increases because the trade-offs are greater for inventory cost, warehousing, customer service, etc. The freight rate gets the most attention when the product values are low; e.g., coal, crude oil, and agricultural products.

END OF SECTION EXERCISE SOLUTIONS [CASE QUESTIONS] Case 2.1 Bipartisan Infrastructure Law 1.

The President has asked you to create the ―master plan‖ for implementation of these improvements. Assuming that funding is available for all of them, which one(s) would you start first? Why? Which one(s) could wait until the end of the timeline (2026) to implement? Why? Solution: There is no one answer to this question. The students are being asked what order the improvements should be made. The students must provide an objective rationale for their answers. Another part of the answer should be ―who‖ in the government will be responsible for the implementation? Even though it is federal funding, it will be provided to the states to invest. The questions below should be answered. 1) Does the federal government or the state governments decide the priority and amount? 2) Which government committee(s) will be responsible for making these decisions?

Are there any areas of ―infrastructure‖ not included for funding in this law that you think should be? Explain your answer. Solution: As in question 1, there is no correct answer to this question. The student will need to use creativity to decide what should be added. ―Infrastructure‖ can be loosely defined for this answer. Pipelines are not covered in the original law but could be eligible for public investment, even though they are privately owned. The school system, even though it is not transportation related, has infrastructure that, in many areas of the U.S., is in significant physical decline.

Case 2.2 Transportation and Economic Activity Also unique to these two cities was their manufacturing specialization: steel in Pittsburgh and automobiles in Detroit. Using the information contained in this chapter: 1.

Explain what role transportation played in the development of these two cities. Solution: Both cities have access to the Great Lakes and the river system to move raw materials to their production facilities. Both also have access to the rail system as well as the highway system to move raw materials and finished goods.

Discuss what factors would lead to their manufacturing specialization. Detroit was where automobile assembly began in the United States. As such, it enjoyed comparable wages and manufacturing skills in its labor force. Pittsburgh has local access to bituminous coal, which is used in the making of steel.

Identify any other benefits to a city or geography that manufacturing specialization would create.

Solution and Answer Guide: Novack, Transportation: A Global Supply Chain Perspective, 10e, 2024, 9780357908549; Chapter 3: Transportation Technology and Systems

• • • • • •

Pittsburgh manufactured steel (place and time utility). Detroit manufactured automobiles and therefore needed a supply of steel. Transportation characteristics such as transit time, reliability, accessibility, and capability all made Pittsburgh a cornerstone in providing steel to Detroit’s auto plants. Geography also played a large role – proximity of Pittsburgh to Detroit. Coal plays a large role in steel production, and PA had coal. Canals, rivers, railroads, and Lake Erie all played roles in the manufacturing specialization, as Pittsburgh could fairly easily ship steel to Detroit via those modes.

Solution and Answer Guide NOVACK, T RANSPORTATION : A GLOBAL SUPPLY CHAIN PERSPECTIVE , 10E, 2024, 9780357908549; CHAPTER 3: T RANSPORTATION T ECHNOLOGY AND S YSTEMS

TABLE OF CONTENTS Content Type ............................................................................................................................................. 10 [Study Questions].................................................................................................................................... 10 END OF SECTION EXERCISE SOLUTIONS .................................................................................................. 14 [CASE QUESTIONS].................................................................................................................................. 14

CONTENT TYPE [STUDY QUESTIONS] 1.

Discuss the role of transportation information and how it supports network visibility, control, and service consistency. Solution: - Visibility is key to maintaining cross-chain knowledge, assessing situations, and taking appropriate corrective actions; correct information is a must for visibility. - Information is needed to maintain control and promote safe, timely, and cost-efficient transportation. - Rapid delivery service is the norm in many supply chains; access to transportation information must expand.

Describe the attributes of information quality and how they impact transportation decision making. Solution: Information quality is a critical characteristic of the vast amounts of data flowing across a transportation network. Value trumps volume, and transportation professionals must be sure that they are basing decisions on correct information.