AC

Logistics, Distribution, and Transportation - Chapter 15

Logistics: the art and science of obtaining, producing, and distributing material and product in the proper place and in the proper quantities

Why is it important?

  • Ensures efficient use of resources, reducing costs and time delays.

International logistics: managing these functions when the movement is on a global scale

Third-party logistics company: an outside company used to manage all or part of another company’s logistics functions

Transportation Modes:

  • Truck (highway)

  • Ship (water)

  • Plane

  • Rail (Train)

  • Pipeline

  • Hand delivery

Issues in Facility Location

• Proximity to customers

• Business climate

• Total costs

• Infrastructure

• Quality of labor

• Suppliers

• Other facilities

• Free trade zones

• Political risk

• Government barriers

• Trading blocs

• Environmental regulation

• Host community

• Competitive advantage

Plant Location Methods

  1. Factor Rating System - a quantitative method used to evaluate potential plant locations by assigning weights to various factors such as transportation costs, labor availability, and proximity to markets

  2. Transportation method of linear programming - a mathematical technique used to determine the most efficient way to transport goods while minimizing costs and meeting supply and demand constraints

    • Minimize costs of shipping n units to m destinations, x<=

    • Maximize profit of shipping n units to m destinations, x>=

  3. Centroid method - a location analysis technique that determines the optimal location of a facility by minimizing transportation costs based on the distribution of demand and supply across different locations

In this example, for the Long Beach location (the first location), dix coordinate= 325, diy coordinate= 75, and Vi = 1,500 15-26