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problem1) Consider a firm redesigning its logistics network. What are the advantages of having a small number of centrally located warehouses? What are the advantages to having a larger number of warehouses closer to the end customer?

problem2) What factors must a manger consider while deciding to go for Fixed Order Quantity Approach (Condition of Certainty); Fixed Order Quantity Approach (Condition of Uncertainty). Describe with appropriate ex.


Case Study

KLM Catering Services is the largest provider of aircraft catering and supply at Schiphol Airport near Amsterdam. Every day company, which employs 1200 people, prepares around 30000 meals and services 200 flights for KLM and about 35 for other operators. It is now far more than just the food preparation operation, most of its activities involve organizing all on board services, equipment food and drinks, newspapers, towels, earphones, and so on.

KLM Catering Services places considerable emphasis on working in unison with cleaning staff, baggage handlers and maintenance crews to make sure that aircraft are prepared quickly for departure. Normally, no more than 40 minutes are allowed for all these activities, so complete preparation and well ordered sequence of working are necessary. These needs for speed and total dependability will be difficult enough to achieve in the stable environment, but there is the wide range of uncertainties to be managed. Though KLM Catering Services is advised of likely members of passengers for each flight ( forecasts are given 11 days, four days and 24 hours in advance), actual minimum number of passengers for each class is only fixed six hours before take-off (though numbers could still be increased after this, due to late sales ). The agreed menus are normally fixed six months periods, but the actual needs for each flight depend on destination, the type of aircraft and mix of passengers by ticket class. At last, flight arrivals are sometimes delayed, putting pressure on everyone to reduce turnaround times, and upsetting work schedules.

An extra problem is that, though KLM uses standardized items (like food trolleys, cutlery, trays and disposables), other airlines have completely different needs. The inventory of all this equipment is moved around with planes. Some gets damaged or lost, and it could easily accumulate at the remote airport. If the aircraft arrives without full inventory of equipment and other items, the company is obliged to fill the gaps from its local inventory, which amounts to over 15000 different items.


problem1) Why will the airline use KLM Catering services rather than organize its own onboard services?

problem2)  What are the major supply chain issues which the case talks about for KLM to manage?

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