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UNIT - II (1) 

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LogisticsLogistics

Management of Inventory in motion & at rest.

Logistics Management

³Coordination of projected requirement, procurement, physical

movement, & storage of components, parts, raw materials, &

semi-finished & finished goods, to achieve optimum demand-

service level at minimum cost.´

That part of the Supply Chain process that plans, implements,

and controls the efficient, effective flow and storage of goods,

services and related information from the Point of Order to the

 Point of Consumption in order to meet the customer demand.

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Objectives of  Logistics Mgmt.Objectives of  Logistics Mgmt.

Delivering customer services

Reducing total distribution costs

Reducing cycle time

Rapid response

Minimum variance Minimum inventory

Movement consolidation

Quality improvement

Life-cycle support

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Logistics SubLogistics Sub--syst emssyst ems

Functions

Order Processing

InventoryManagement

Warehousing

TransportationMaterialHandling

LogisticalPackaging

Information

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Bullwhip E ff ect Bullwhip E ff ect 

Unplanned Demand Oscillations ± ³l ump of demand´

Small changes in consumer demand result in large variations

in orders placed upstream

Dramatic order size variation

Amplification of order size as one moves up the supply chain

Supplier Manufacturer Distributor Retailer Customer

Buys 10Orders 15

Delay 2 weeksDelay 2 weeks

Orders 25

Delay 2 weeks

Orders 40

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Inbound & Out boundInbound & Out bound

 I nbound ± receiving, storing,

& disseminating incoming

goods or material for use.

Outbound ± movement of 

material associated with

storing, transporting, &

distributing a firm¶s goods to

its customers.

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Logistics ModelsLogistics Models

Forecasting Model

Mathematical Programming Models

Location Model

Allocation Model

Distribution network design models

Inventory Models

Routing Models

Scheduling Models

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Logistics CostsLogistics Costs

The total cost of meeting the desired logistic objectives & of the

various inputs involved in meeting these outputs.

Factors affecting logistics costs:

Competition via customer service

Order Cycle Transportation effect

Choices available

Lot size

Losses & Damages

Distance Factor 

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DistributionDistribution

Steps taken to move and store a product from supplier to

customer 

Design Options

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WarehousingWarehousing

Warehousing is the function of storing goods to bridge the time

gap between their production and demand, leads to time and place

utility.

Functions:

Receipt Inspection

Verification

Storage of goods

Protection of goods

Risk bearing

Processing (Grading and branding)

Transportation

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 NEED:

Seasonal production

Seasonal demand

Large-scale production

Quick supply

Continuous production BENEFITS:

Economic benefits

Consolidation

Break bulk and cross dock 

Processing/postponement

Stockpiling

Service benefits

WarehousingWarehousing ( cont d.)

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