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BUSINESS LOGISTICS SYSTEMS ANALYSIS

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Department of Engineering Management. University of Missouri-Rolla. Lecture 3: Logistics Planning ... Revenue. Revenue. SAFETY STOCK LEVELS. Total cost ... – PowerPoint PPT presentation

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Title: BUSINESS LOGISTICS SYSTEMS ANALYSIS


1
BUSINESS LOGISTICS SYSTEMS ANALYSIS
Lecture 3 Logistics Planning
  • H. E. METZNER, Ph.D.
  • Department of Engineering Management
  • University of Missouri-Rolla

2
LEVELS OF LOGISTICS PLANNING
  • Strategic
  • Operational
  • Tactical

3
FOUR MAJOR PLANNING AREAS OF LOGISTICS
  • Customer service goals
  • Facility location
  • Inventory
  • Transportation

4
Inventory Strategy
Transport Strategy
Customer Service Goals
Location Strategy
LOGISTICS DECISION MAKING
5
Customer Service Goals
  • The Product
  • Logistics Service
  • Information systems

6
Location Strategy
  • Location Decisions
  • Network Planning Process

7
Inventory Strategy
  • Forecasting
  • Storage fundamentals
  • Inventory decisions
  • Purchasing and supply scheduling
  • Storage decisions

8
Transport Strategy
  • Transport fundamentals
  • Transport decisions

9
WHEN TO PLAN
  • Demand shifts level or geography
  • Customer service goals change
  • Product characteristics change
  • Logistics cost relationships change
  • Pricing policies impact logistics costs

10
TOTAL COST CONCEPT
Total costs
Logistics Cost
Cost of transportation
Inventory cost
Rail Truck
Air
Transportation Service
11
CUSTOMER SERVICE LEVEL
Total cost
Cost
Transportation costs
Lost sales cost
0
100
Improved customer service
12
PRODUCTION RUN SEQUENCING
Revenue
Total costs
Cost
Revenue
Inventory costs
Transportation costs
  • Product run length

13
SAFETY STOCK LEVELS
Total cost
Cost
Inventory carrying cost
Lost sales cost
Average inventory level
14
PRODUCTION RUN SEQUENCING
Total costs
Cost
Inventory carrying costs
Production costs
  • Product run length

15
DIFFERENTIATED DISTRIBUTION
  • Different customer classifications need different
    levels of customer service
  • By sales volume
  • By sales velocity
  • Mixed strategies

16
POSTPONEMENT
  • Labeling
  • Packaging
  • Assembly
  • Manufacturing
  • Time

17
POSTPONEMENT CHARACTERISTICS
  • Technology process characteristics
  • Product characteristics
  • Market characteristics
  • Consolidation
  • Standardization

18
Business Systems Logistics Analysis
Inventory Strategy
Transport Strategy
  • Forecasting
  • Storage fundamentals
  • Inventory decisions
  • Purchasing and supply
  • scheduling decisions
  • Storage decisions
  • Transport fundamentals
  • Transport decisions

Customer Service Goals
  • The product
  • Logistics service
  • Information systems

Location Strategy
  • Location decisions
  • The network planning process

Next Lecture Logistics Product
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