BALLOU07 - 7-1Transport DecisionsChapter 7If you are...

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Unformatted text preview: 7-1Transport DecisionsChapter 7If you are planning for one year, grow rice. If you are planning for 20 years, grow trees. If you are planning for centuries, grow men.A Chinese proverb7-2Transport Decisionsin Transport StrategyPLANNINGORGANIZINGCONTROLLINGTransport Strategy Transport fundamentalsTransport decisionsCustomer service goals The product Logistics service Ord. proc. & info. sys.Inventory Strategy Forecasting Inventory decisions Purchasing and supply scheduling decisions Storage fundamentals Storage decisionsLocation Strategy Location decisions The network planning processPLANNINGORGANIZINGCONTROLLINGTransport Strategy Transport fundamentalsTransport decisionsCustomer service goals The product Logistics service Ord. proc. & info. sys.Inventory Strategy Forecasting Inventory decisions Purchasing and supply scheduling decisions Storage fundamentals Storage decisionsLocation Strategy Location decisions The network planning process7-3Just a few of the many problems in transportationTypical Transport DecisionsMode/Service selectionPrivate fleet planning- Carrier routing - Routing from multiple points - Routing from coincident origin-destination points - Vehicle routing and scheduling Freight consolidation7-4Mode/Service SelectionThe problem-Define the available choices -Balance performance effects on inventory against the cost of transport Methods for selection-Indirectly through network configuration -Directly through channel simulation -Directly through a spreadsheet approach as follows: Alternatives Cost types Air Truck RailTransportation In-transit inventory Source inventory Destination inventory 7-5Mode/Service Selection(Contd)ExampleFinished goods are to be shipped from a plant inventory to a warehouse inventory some distance away. The expected volume to be shipped in a year is 1,200,000 lb. The product is worth $25 per lb. and the plant and carrying costs are 30% per year.Other data are:TransportchoiceRate, $/lb.Transit time, days Shipmentsize, lb.Rail 0.11 25 100,000 Truck 0.20 13 40,000 Air 0.88 1 16,000 Include transport rateTransport Selection AnalysisCosttypeCompu-tationRailTruckAirTrans-portationRD.11(1,200,000)= $132,000.20(1,200,000)= $240,000.88(1,200,000)= $1,056,000In-transitinventoryICDT365[.30(25)1,200,000(25)]/365= $616,438[.30(25) 1,200,000(13)]/365= $320,548[.30(25) 1,200,000(1)]/365= $24,658PlantinventoryICQ2[.30(25) 100,000]/2= $375,000[.30(25) 40,000]/2= $150,000[.30(25) 16,000]/2= $60,000WhseinventoryIC'Q2[.30(25.11) 100,000]/2= $376,650[.30(25.20) 40,000]/2= $151,200[.30(25.88) 16,000]/2= $62,112Totals$1,500,088$ 861,748$1,706,770Improved service7-67-7...
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BALLOU07 - 7-1Transport DecisionsChapter 7If you are...

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