| Course | MT434 Logistics and Distribution Management |
|---|---|
| Unit | Unit 7 |
| Paper type | Third-party logistics evaluation |
| Length | About 1,100 words, 7 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Business Administration |
| Updated | October 2026 |
Free sample paper for MT434 Unit 7
Cheaper, If It Can Be Watched: An MT434 Unit 7 Third-Party Logistics Evaluation for an Indianapolis Site
[Student Name]
Purdue University Global
MT434: Logistics and Distribution Management
Unit 7 Third-Party Logistics Evaluation
[Instructor Name]
[Date]
Petrie Rowing, the provider, its fee schedule and the in-house estimate are composite; contract terms are illustrations for the exercise, and the sources cited are real.
The Volume
The Unit 4 network study assigned the Midwest, South and Northeast to Indianapolis, 27,300 rowers a year. The site will also ship about 41,000 parts orders a year to customers and dealers in those regions. It must hold about 880 pallet positions of stock, including rowers six to a pallet and parts.
Part One: Cost
The provider's fee schedule is priced against those volumes, line by line. Storage at $17.50 a pallet a month on 880 pallets is $184,800 a year. Receiving at $8.25 a pallet on 4,550 inbound pallets is $37,538. Order handling is $5.90 per rower order, $161,070, and $2.85 per parts order, $116,850. Account management is $3,500 a month, $42,000. A $65,000 implementation fee, spread over a three-year contract, adds $21,667 a year. The total is about $563,924.
Running the site in house means leasing a 40,000-square-foot building at $5.90 a square foot, $236,000 a year, plus a site manager and a supervisor, a warehouse management system, lift trucks and maintenance, together about $410,000 of fixed cost. Labor adds about $7.10 per rower order and $1.65 per parts order, $193,830 and $67,650. The total is about $671,480.
The provider is cheaper by about $107,556 a year, a margin of about 16 percent of the in-house cost, large enough that small errors in the estimates would not reverse it. The comparison sets the provider's full bill against the full in-house cost, lease and systems included; setting it against in-house labor alone would make the provider look far more expensive than it is.
The provider's advantage comes mainly from fixed cost. It already runs the building, the systems and a manager for several clients and spreads them across all of them, while Petrie would carry them alone. Selviaridis and Spring (2007) found that cost savings from shared assets and expertise are the most common reason firms outsource logistics, and also that the expected savings are often eroded when performance is not managed.
Part Two: Control
The cost advantage is worth having only if Petrie can tell whether the provider is meeting its obligations. The contract should set six measures, each with a target, a data source and a monthly report.
Order accuracy, the share of orders shipped with the right items and quantities, should be at least 99.7 percent, measured from returns coded as wrong item. Same-day shipping for rower orders received by 1 p.m. should be at least 99 percent, from the warehouse system's timestamps. Dock-to-stock time, from trailer arrival to stock available for orders, should be within 24 hours on at least 98 percent of receipts. Inventory accuracy, from monthly cycle counts, should be at least 99.5 percent by location. Damage caused in the warehouse should be no more than 0.2 percent of units shipped. Parts orders should ship the next business day on at least 99.5 percent.
A provider that is cheaper and unmeasured is not cheaper; it is a cost Petrie has chosen not to see.
The measures are chosen to cover the points where a provider's failure would reach Petrie's customers: wrong items, late shipments, missing stock and damage. Each measure missed in a month earns Petrie a credit of 2 percent of that month's fees, capped at 10 percent. If any measure is missed three months in a row, Petrie may terminate the contract without paying the unamortized implementation fee. A quarterly business review covers trends, root causes and corrective plans, and it should include a walk of the site by Petrie's operations manager rather than a slide presentation alone.
Rushton et al. (2022) recommend that outsourcing contracts tie service levels to measurable targets and to consequences, rather than to promises of good performance, because a provider serving many clients will give the most attention to the clients who measure it.
Part Three: Exit
The contract must also say how Petrie leaves. Three terms matter most.
Notice: after the first year, either party may end the contract with 90 days' notice; earlier termination for convenience requires Petrie to pay the unamortized implementation fee.
Stock ownership: Petrie owns all inventory at all times. Because warehouse operators can hold a lien on stored goods for unpaid charges, the contract should limit any lien to charges on the specific goods and require the provider to release stock within ten days of notice once undisputed fees are paid.
Data return: the provider must deliver all item, location, order and history data in a standard file format within 30 days of notice and assist with the transfer to a new operator at the agreed fee schedule.
The Hidden Costs of Outsourcing
The fee comparison leaves out costs that fall on Petrie either way. Someone at Petrie must manage the provider: read the monthly report, run the quarterly review, audit inventory counts and resolve disputes about credits. That is roughly a quarter of one person's time, perhaps $25,000 a year. Systems must be connected so orders flow to the provider and shipment data flows back, a one-time cost Petrie would also face running its own site. And moving to a provider means Petrie's own staff will not learn to run an eastern warehouse, which matters if the company later wants to bring the work back in house. Even with $25,000 of management time added, the provider remains cheaper by about $82,500 a year.
What Would Change the Answer
The cost advantage depends on volume. If eastern rower orders fell by a third, the provider's variable fees would fall with them, while Petrie's in-house fixed cost would not, so outsourcing would look even better. If volumes doubled, Petrie could spread its own fixed cost across twice the orders, and the in-house option would likely become the cheaper one. Marasco (2008), reviewing two decades of research on logistics outsourcing, found that the relationship has to be managed and revisited as conditions change rather than set once, which argues for a three-year term followed by a rebid.
Recommendation
Outsource the Indianapolis site to the provider on a three-year contract, provided the contract includes the six measures with credits, the termination right for repeated failure, the stock and lien terms and the data return clause. Without those terms, the $107,556 saving would rest on trust rather than on a contract.
References
Marasco, A. (2008). Third-party logistics: A literature review. International Journal of Production Economics, 113(1), 127-147. https://doi.org/10.1016/j.ijpe.2007.05.017
Rushton, A., Croucher, P., & Baker, P. (2022). The handbook of logistics and distribution management (7th ed.). Kogan Page.
Selviaridis, K., & Spring, M. (2007). Third party logistics: A literature review and research agenda. International Journal of Logistics Management, 18(1), 125-150. https://doi.org/10.1108/09574090710748207
What the MT434 Unit 7 assignment asks for
The seventh unit asks students to decide whether to outsource a warehouse to a third-party provider. Instructors expect the provider's fee schedule applied to the correct volumes, line by line, and compared with the full cost of running the site in house, including lease, management and systems, not only labor. The control section should set specific measures with numeric targets, data sources and consequences such as credits and termination rights. The exit section should cover notice periods, ownership of inventory and data, and how stock and records come back. Costs the shipper carries either way, such as managing the provider, should be named. The recommendation should be conditional on the contract terms that make the cost advantage real.
How this MT434 Unit 7 example is built
This sample states the volumes first. The cost part prices each line of the provider's schedule and the full in-house alternative, explains why the comparison uses full cost and cites Selviaridis and Spring on where savings come from. The control part lists six measures with targets and sources, under a highlighted line on unmeasured savings, then sets credits, a termination right and a quarterly review, citing Rushton and colleagues. The exit part covers notice, stock and lien terms, and data return. A section adds the hidden cost of managing the provider. Another explains how volume changes would move the answer, with Marasco on revisiting the relationship. The recommendation makes outsourcing conditional on the control and exit terms.
Where the points sit in the MT434 Unit 7 rubric
One question tends to decide an outsourcing paper: how the shipper will tell whether the provider is meeting its targets. A cost comparison, however careful, earns only part of the credit if monitoring is a single line promising regular reviews. Fee schedules applied to the wrong volumes cost accuracy, and so does setting the provider's full bill against in-house labor alone, leaving out the lease and systems a company would carry itself. Rubrics reward measures with numbers, data sources and consequences. Credit goes to exit terms covering inventory, data and notice. Naming the cost of managing the provider shows realism. A conditional recommendation scores better than a plain verdict, supported by a fee table and a measures table.
MT434 Unit 7 help from the desk
The most frequent weak evaluation compares the provider's fees with in-house wages and declares the provider expensive. Another common error applies per-order fees to the wrong volume, such as total company orders instead of those through the site. Students often write that performance will be reviewed regularly without naming a measure. Exit terms are usually missing, though they decide how reversible the choice is. Many forget that someone at the shipper must manage the provider. Before submitting, imagine the provider misses its accuracy target for three months running and read your paper to see what happens next. If the paper does not say, the control section needs a credit and a termination right.
Get an MT434 Unit 7 example written to your instructions
Provider quotes, your in-house cost data and the Unit 7 prompt with its rubric are the right starting set. The composite evaluation sent back splits fixed from variable cost, finds the volume at which the answer changes, and writes measurable performance terms. No charge applies to the first custom sample, which normally takes 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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MT434 Unit 7 questions, answered
What performance measures should a 3PL evaluation include?
Common ones are dock-to-stock time, order accuracy, on-time shipment, inventory accuracy and damage rates, each with a numeric target. Choose measures tied to what your customers actually notice. A strong paper also says how often they are reviewed, what happens when a target is missed, and who inside the shipper owns the relationship with the provider.
Is outsourcing always cheaper for a new facility?
Not always. Providers spread fixed costs across many clients, which helps at low volume, but their per-order fees keep rising as you grow. A company's own site carries more fixed cost and less per order. Comparing the two at several volumes, or finding the volume where they cross, usually makes a recommendation far more convincing than one year's figure.
Do exit terms really matter in a course assignment?
They often do, because an outsourcing decision is only as reversible as its contract. Notice periods, ownership of inventory and data, and the cost of moving to another provider or back in house all affect the real risk. A short section on exit terms shows you see the decision as a contract with an end, not a permanent handover.
Where can I find a free MT434 Unit 7 sample paper?
The full MT434 Unit 7 evaluation is here, weighing an Indianapolis provider's fee schedule against a leased site on cost, control and exit.
How much cheaper is the provider in the MT434 Unit 7 sample?
About $107,556 a year before management time, and about $82,500 after allowing $25,000 for Petrie's own oversight of the contract.