| Course | OPM-4150 Logistics |
|---|---|
| Module | Module 1 |
| Paper type | Module 1 written assignment: the logistics system |
| Length | About 590 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | B.S.B.A. in Operations Management |
| Updated | October 2026 |
Free sample paper for OPM 4150 Module 1
One Warehouse or Two? The Total Cost Concept at a Restaurant Supply Distributor
Student Name
B.S.B.A. in Operations Management, Thomas Edison State University
OPM-4150: Logistics
Mentor Name
Month Day, Year
One Warehouse or Two? The Total Cost Concept at a Restaurant Supply Distributor
Logistics as a System
Gourdin (2006) presents logistics as a set of interrelated activities, transportation, inventory, warehousing, order processing and customer service, whose costs and performance depend on one another. Managing them separately leads to decisions that lower one cost while raising others. The total cost concept holds that the right logistics decision is the one that minimizes the combined cost of all activities for a given level of customer service, not the one that minimizes any single cost.
Bowersox et al. (2013) describe the same idea as integrated logistics: a firm's logistics performance comes from the coordination of its network design, information, transportation, inventory and warehousing, and trade-offs among these are the central problem of logistics management.
The Decision
Our customers, independent restaurants and small chains, order kitchen supplies, disposables and small equipment, and most want next-day delivery. From Paulsboro, we reach 71 percent of customers by the next morning; restaurants in central Pennsylvania and western Maryland wait two or three days, and some buy from competitors instead. Losing those customers matters beyond their own orders: chains that operate in both states prefer one supplier for all their locations, so slow service in Pennsylvania puts our New Jersey business with those chains at risk too. Management must decide whether a second warehouse in Harrisburg, Pennsylvania, is worth adding.
Total Cost Comparison
The components move in opposite directions. A second warehouse adds $500,000 in warehousing costs and $250,000 in inventory carrying cost, because each warehouse must hold safety stock; Coyle et al. (2017) describe the square root rule, under which splitting inventory between two locations raises total safety stock by roughly 40 percent, and our estimate of a 28 percent rise in average inventory reflects that, softened by lower cycle stock at each site. Against those increases, transportation falls $600,000, because trucks travel shorter distances, and lost sales fall $250,000.
The total cost of the two-warehouse network is $100,000 lower, and service improves sharply. A decision based only on warehousing cost would have rejected Harrisburg; a decision based only on transportation would have overstated its benefit.
| Cost component | One warehouse (Paulsboro) | Two warehouses (Paulsboro and Harrisburg) |
|---|---|---|
| Transportation | $2,900,000 | $2,300,000 |
| Warehousing | $1,100,000 | $1,600,000 |
| Inventory carrying (25 percent of average inventory) | $900,000 | $1,150,000 |
| Lost sales from slow delivery (estimated margin) | $400,000 | $150,000 |
| Total | $5,300,000 | $5,200,000 |
| Customers reached next day | 71 percent | 94 percent |
Logistics and Strategy
Gourdin emphasizes that logistics can be a source of competitive advantage when it supports what customers value. For restaurants, which keep little storage space and run out of supplies quickly, next-day delivery is an order winner. The second warehouse would let the distributor compete for customers it now loses on speed. Speed also supports the growth plan, since the owners want 40 percent more sales within three years, most of it from the regions now served slowly.
Risks and Assumptions
The lost sales estimate is the least certain figure: it assumes that half of the customers lost to competitors in Pennsylvania would return with next-day service. If only a quarter returned, the two networks would cost about the same, and the decision would rest on growth plans. The analysis also assumes stable fuel prices; higher fuel costs would favor the two-warehouse network further.
Conclusion
The total cost concept shows that the second warehouse lowers combined logistics costs slightly while raising next-day coverage from 71 to 94 percent. The case for Harrisburg rests on the system as a whole, not on any single cost.
References
Bowersox, D. J., Closs, D. J., Cooper, M. B., & Bowersox, J. C. (2013). Supply chain logistics management (4th ed.). McGraw-Hill.
Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. J. (2017). Supply chain management: A logistics perspective (10th ed.). Cengage Learning.
Gourdin, K. N. (2006). Global logistics management: A competitive advantage for the 21st century (2nd ed.). Blackwell.
OPM 4150 Module 1 instructions, in plain terms
Across its five modules, OPM-4150 sets fifteen written assignments carrying 30 percent of the grade, along with five forums, a proctored midterm and a final project delivered in two parts. Each written assignment focuses on a concept and asks you to explain and apply it in your own words. This one covers the logistics system and the total cost concept. You will show how logistics activities trade off, compare options on total cost and service and say what the comparison means for strategy. Draw mainly on the textbook, adding outside sources where they strengthen the answer. Use a table to set the cost components side by side for each alternative, and add customer service as a row, since the total cost concept compares costs at a stated level of service.
Inside the OPM 4150 Module 1 example
The paper explains logistics as a system and the total cost concept, with a second source on integrated logistics. It sets out the network decision, then a table compares four cost components and next-day coverage for two networks. The text explains why components move in opposite directions, citing research on inventory centralization. Later sections tie the decision to strategy and flag the assumptions that could flip it, and the conclusion returns to the systems view. The section on risks names the lost sales estimate as the least certain figure and shows how a smaller estimate would change the answer, which keeps the recommendation honest. Both networks are compared at their stated service levels.
OPM 4150 Module 1 rubric: what earns full marks
Credit goes to accurate explanation of concepts, correct application, sound reasoning and clear prose in your own words. Papers that show cost components trading off, rather than a single cost falling, demonstrate the total cost concept. Including customer service alongside cost shows the full logistics view. Naming the least certain assumption, and how it would change the decision, shows analytical honesty. A recommendation that states how it depends on uncertain estimates, such as lost sales, shows mature judgment. Linking the network choice to what restaurants value connects logistics to strategy, as the textbook asks. Clear tables and plain prose in the student's own words complete a strong answer.
OPM 4150 Module 1 help from the desk
Students lose points by comparing alternatives on one cost, by ignoring customer service or by copying textbook definitions without applying them. Others present totals without showing the components. Show each cost component for each alternative. Explain why each moves as it does. Include service, not only cost. Identify the assumption that matters most. Say which estimate is least certain and how the answer would change if it were wrong, and connect the decision to what customers care about. Keep the systems view throughout: every change in one activity ripples into the rest. A free first sample on your own OPM-4150 written assignment is available on request.
Write yours, or have the desk draft it
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OPM 4150 Module 1 questions, answered
Where can I find a free OPM 4150 Module 1 sample paper?
A restaurant supply distributor's total cost comparison of one warehouse and two is the assignment above.
What is the total cost concept in logistics?
The idea that logistics decisions should minimize the combined cost of all activities for a given service level, not any single cost.
Why does adding a warehouse raise inventory costs?
Each location must hold its own safety stock, so total inventory rises when stock is split among more sites.
What is the square root law of inventory?
A rough rule that total safety stock climbs with the square root of the warehouse count.
What textbook does OPM-4150 use?
Gourdin's second edition text on global logistics management as a source of competitive advantage.