Fall+2011+M412+Class15

Fall+2011+M412+Class15 - M412 Physical Distribution and...

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M412 Physical Distribution and Logistics Management Prof. Mark Frohlich mfrohlic@iupui.edu Office BS 4042
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Today’s Class Chapter 10: Managing the Flow of the Supply Chain (Part 2 of 3)
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Industry Overview Current competitive environment Intramodal (between railroads) Oligopoly, few places served by multiple railroads Large financial barriers to entry Intermodal (between modes) Intense Railroads adapt service and pricing
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Operating and Service Characteristics, cont’d Intermodal Service innovations Piggyback service: directed to non-bulk, manufactured products Combines cost-efficiency of RR long haul with flexibility of truck pick-up and delivery Explosive growth
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Intermodal Traffic Flows
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Rail Cost Structure High % of indirect fixed costs in short run 30% of costs do not vary with volume High % of long-lived (durable) assets Semi variable costs: over 40% of total costs Includes maintenance of rights-of-way, structures and equipment Deferred during financial difficulties Variable costs Labor: 30% of each revenue dollar Fuel: locomotives increasingly productive and fuel efficient ~ 485mpg!!!
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Major facilitator of international trade 81% international freight movement 19% coastal, inland, and Great Lakes traffic High variable and low fixed cost Options include Container ships Bulk carriers Tankers General cargo ships Roll-on, roll-off (RO–RO) vessels Water http://video.google.com/videoplay?docid=-733093936342632521&q
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Fall+2011+M412+Class15 - M412 Physical Distribution and...

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