2guidelinescm2009 - Prof.Dr. Füsun Ülengin, 2009 1...

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Unformatted text preview: Prof.Dr. Füsun Ülengin, 2009 1 Logistics Strategy The 4 problem areas of supply chain planning- Customer service levels- Facility location- Inventory decisions- Transportation decisions When to plan?- No distribution network currently exists.- There has been no re-evaluation in 5 years.- When costs are changing rapidly, especially transport & inventory.- When markets have shifted.- When current distribution economics encourage shifts.- When there has been a major policy shift in logistics such as in price, customer service, or investment level. Recall the logistics strategy triangle 2 Prof.Dr. Füsun Ülengin , 2009 Six Concepts for Logistics Strategy Formulation Total cost concept Tradeoff conflicting costs at optimum Differentiated distribution Not all products should be provided the same level of customer service Mixed strategy A pure strategy has higher costs than a mixed strategy Postponement Delay formation of the final product as long as possible Shipment consolidation Smaller shipment sizes have disproportionately higher transportation costs than larger ones Product standardization Avoid product variety since it adds to inventory 3 Prof.Dr. Füsun Ülengin, 2009 Six Concepts for Logistics Strategy Formulation 4 Prof.Dr. Füsun Ülengin, 2009 Total cost concept Tradeoff conflicting costs at optimum Cost of transportation service Inventory cost (includes storage and intransit Total cost Rail Truck Air Cost, in dollars Transportation service (greater speed and dependability) A Cost Conflict in Logistics 5 Prof.Dr. Füsun Ülengin, 2009 More Cost Conflicts Improved customer service 100% (a) Setting the customer service level Cost Lost sales cost Transportation, order processing, and inventory costs Total costs Increasing number of stocking points (b) Determining the number of warehouses in a logistics system Cost Transportation costs Total costs Inventory costs Revenue Revenue Average inventory level (c) Setting safety stock levels Lost sales cost Total costs Inventory carrying costs Cost Product run length and product sequencing...
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This note was uploaded on 11/10/2009 for the course LOGISTICS 20091 taught by Professor Fusunulengin during the Spring '09 term at Istanbul Technical University.

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2guidelinescm2009 - Prof.Dr. Füsun Ülengin, 2009 1...

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