Task: Imagine that you are the logistics manager of a firm supplying fashion clothes to the big stores. Being able to reliably assign costs to activities is a crucial management tool. However, the kind of transaction data traditionally used in logistics can present problems for activity-based costing.
Questions:
1. What are the main factors affecting the optimal level of product availability in manufacturing organization? Give practical examples to show how technology can help the inventory manager to improve the balance between the costs of over- and under-stocking in the business.
2. What are the main difficulties involved in assigning meaningful costs to the activities in warehouses? How can these difficulties be overcome and cost savings achieved?