Total Logistics Costs Research Articles

Factors influencing logistics cost and service quality: a survey within the Indian steel sector

Purpose – The purpose of this paper is to understand the role of economic and social factors influencing the logistics cost for the Indian steel sector and its relationship with the service quality. Design/methodology/approach – A structured questionnaire survey is used for the data collection in this research. The questionnaire included different elements of logistics cost on inbound and outbound logistics, and service quality. Findings – This research identified various significant elements of logistics cost for Indian steel sector and observed its relationship with transportation cost, warehousing cost and administrative cost. The findings of this study showed positive relationship between logistics cost and service quality. Research limitations/implications – The data for this study is cross-sectional; it is recommended that future studies can gather it longitudinally. This will help in gaining deeper understanding of the cause and effect relationship among the variables. The findings of this study are very useful in identifying the suitable training directions. Practical implications – Logistics is very critical factor in deciding the competitiveness of steel sector globally. Particularly for steel manufacturing the inbound logistics is more critical as compared to outbound logistics both in terms of volumes and costs. Social implications – For the Indian steel manufacturing companies, the logistics cost is very high as compared to other developed countries. Total logistics cost on inbound movements taken into consideration is around 16-18 per cent of material turn-over whereas; the world average is around 7-8 per cent. Originality/value – To the best knowledge of the authors, this study is the first attempt to study the relationship of logistics cost elements on the service quality in the context of Indian steel manufacturing sector. The logistics cost in steel industry is considered as one of the top performance measurement of the entrepreneur in this research.

Sustainable transportation and order quantity: insights from multiobjective optimization

This article applies multiobjective optimization to show how the tradeoffs between cost and carbon emissions may be obtained in the context of sustainable operations. We formulate a model where transportation mode selection and order quantity decisions are considered jointly. We derive structural properties of the model and develop several insights. First, we show that switching to a greener mode of transportation while continuing to optimize the total logistics costs function may lead to a dominated solution. Second, we prove that the modal shift occurs only under strong carbon emissions reduction requirements. Third, we show that the efficient frontier is non-convex and we analyze some implications. Finally, we analyze the impacts of an increase in truck capacity. The results are illustrated through an example of a French retailer.

Two models of inventory control with supplier selection in case of multiple sourcing: a case of Isfahan Steel Company

Selecting the best suppliers is crucial for a company’s success. Since competition is a determining factor nowadays, reducing cost and increasing quality of products are two key criteria for appropriate supplier selection. In the study, first the inventories of agglomeration plant of Isfahan Steel Company were categorized through VED and ABC methods. Then the models to supply two important kinds of raw materials (inventories) were developed, considering the following items: (1) the optimal consumption composite of the materials, (2) the total cost of logistics, (3) each supplier’s terms and conditions, (4) the buyer’s limitations and (5) the consumption behavior of the buyers. Among diverse developed and tested models—using the company’s actual data within three pervious years—the two new innovative models of mixed-integer non-linear programming type were found to be most suitable. The results of solving two models by lingo software (based on company’s data in this particular case) were equaled. Comparing the results of the new models to the actual performance of the company revealed 10.9 and 7.1 % reduction in total procurement costs of the company in two consecutive years.

A tuned NSGA-II to optimize the total cost and service level for a just-in-time distribution network

Distribution network planning has attracted the attention of many studies during last decades. Just-in-time (JIT) distribution has a key role in efficient delivery of products within distribution networks. In modeling of JIT distribution networks, the most frequently applied objectives are related to cost and service level. However, evaluating the impact of simultaneously minimizing total costs and balance between distribution network entities in different echelons still rarely complies with the current literature. To remedy this shortcoming and model reality more accurately, this paper develops a multi-objective mixed-integer nonlinear optimization model for a JIT distribution in three-echelon distribution network. The aims are minimization of total logistics cost along with maximization of capacity utilization balance for distribution centers and manufacturing plants. A non-dominated sorting genetic algorithm-II (NSGA-II) with three different mutation operators namely swap, reversion and insertion is employed to provide a set of near-optimal Pareto solutions. Then, the provided solutions are verified with non-dominated ranked genetic algorithm (NRGA) as well. The Taguchi method in design of experiments tunes the parameters of both algorithms, and their performances are then compared in terms of some multi-objective performance measures. In addition, a genetic algorithm is used to assess Pareto optimal solutions of NSGA-II. Different problems with different sizes are considered to compare the performance of the suggested algorithms. The results show that the proposed solution approach performs efficiently. Finally, the conclusion and some directions for future research are proposed.

A dynamic multi-plant lot-sizing and distribution problem

In this paper, we investigate a multi-plant, production planning and distribution problem for the simultaneous optimisation of production, inventory control, demand allocation and distribution decisions. The objective of this rich problem is to satisfy the dynamic demand of customers while minimising the total cost of production, inventory and distribution. By solving the problem, we determine when the production needs to occur, how much has to be produced in each of the plants, how much has to be stored in each of the warehouses and how much needs to be delivered to each customer in each period. On a large real data-set inspired by a case obtained from an industrial partner, we show that the proposed integration is highly effective. Moreover, we study several trade-offs in a detailed sensitivity analysis. Our analyses indicate that the proposed scenarios give the company competitive advantage in terms of reduced total logistics cost, and also highlight more possibilities that become available taking advantage of an integrated approach towards logistics planning. These abundant opportunities are to be synergised and exploited in an interconnected open global logistics system.

The total cost of logistics in supplier selection, under conditions of multiple sourcing, multiple criteria and capacity constraint

Article history: Received June 25, 2015 Received in revised format: October 12, 2015 Accepted December 15, 2015 Available online December 17 2015 This paper presents a mathematical model to solve a multi-objective decision making supplier selection problem. The proposed problem considers three objective functions: the first objective function minimizes the cost of purchasing the products while the second objective function minimizes the due dates and finally the third objective function maximizes the customer satisfaction. The resulted problem is formulated as mixed integer programming and, therefore, we use invasive weed optimization technique to solve the resulted problem. The performance of the proposed model is compared with NSGA II based on different criteria such as mean ideal distance and quality matrix. The preliminary results indicate that the proposed model performs relatively well compared with alternative method. Growing Science Ltd. All rights reserved. 6 © 201

A hybrid coding SA method for multi-item capacity-constrained production and delivery scheduling problem with arbitrary job volumes and customer inventory considerations

This article deals with an integrated scheduling problem for a multi-item capacity-constrained production and delivery system. The compatible jobs are firstly processed on a batching machine, and then delivered to a customer by one capacitated transporter. Each job has to be delivered to the customer before its due date. It is assumed that the job which arrives to the customer before its due date will occur an earliness penalty. The problem is to find an integrated schedule such that the total logistics cost is minimised while guaranteeing a certain customer service level. We formulate the problem as a nonlinear model, and show that this problem is intractable. Then we develop a hybrid-coding simulated annealing algorithm for solving the problem. At last, we derive a lower bound to verify performance of this proposed algorithm. Experiments show the efficiency in terms of both solution quality and running time of the proposed algorithm.

Logistics cost management: insights on tools and operations

Logistics cost are very important in the composition of company management costs. However, visible unfitness is noticed in traditional costing methods to supply adequate data for right management, making people using specific management tools: total cost of ownership, customer profitability analysis, direct product profitability and activity-based costing. Besides, over the years it was presented an incomplete view about the composition of total logistics cost. So, this article's proposal is to introduce some classifications which enable listing each of the main elements that are part of logistics cost; to discuss the use of tools that can make management easier, identifying, measuring and evincing them, considering also the existing countertrading among elements in total logistics cost determination, called trade-offs. This study is theoretical/conceptual, basic, qualitative, descriptive and bibliographic, which aimed to analyse, in periodical articles collected in relevant fonts of research, necessary and important concepts for discussion about the central topic.

Analysis of Supply Chain Management Soybean (Glycine max L. Merr ) Based on Quality and Structure Logistics Cost

<p>Supply chain management to minimize the risk of product damage and delays up to tier products. This ygstudy is aimed to determine the level of quality in each tier based on quality parameters and identify the structure of the logistics costs of logistics activity. The method is used convenience sampling through in depth interview about supply chain soybeans. The results showed a dominant logistics costs in material handling activities are 77.73 % and 19.20% of the total transportation logistic costs. Quality of soybeans in tier consumers showed that the water content of 11.4 %, 34.9% protein, size (0.4438 ± 0.0214) 10-4 m2, color L 56.053, a 4.833 and b 19.87 and texture: 96.16 N/mm 3:08. Efficient supply chain strategy is expected to reduce risk the damage to the product. </p><p><strong>Keywords</strong>: nutrition, quality, soybeans, supply chain </p>

Diseño de una red logística para una comercializadora ferretera en el centro del Valle del Cauca

The logistic network design is a way to manage the supply chain management, in the way to integrate of all activities to search an improvement of relationship in the chain, in order to achieve sustainable competitive advantages. It is the reason this paper has the goal to design an efficient distibution system in terms of total cost logistics for a hardware store marketer in Valle del cauca center. For that, a linear programming model proposed in the theory is used to minimize the total logistics cost. Additionally, this paper studies the cycle time problem and makes special emphasis in routing that involves two distibution centers and various centers of demand. In the model, two scenarios are evaluated, the first keep the actual behavior of the company and the second is a new logistic proposal. The total cost for scenario 1 were $1.739.792.680 and for scenario 2 were $1.682.708.680. On the other hand, routing results present a report that show the best feasible solution, minimizing the total distance traveled and setting stops, schedules and routes sequence. As a conclution, it`s so important to design logistics network considering the costs of logistics that minimize the operation through operational strategies in production, storage and distribution of organizations.

Maximizing Profit in Reverse Supply Chain

<p>We try to find a linear analytical model to evaluate cost maximization using reverse logistics network in recycle industry, which reduces total cost of reverse logistics. In industries that production costs or percentage of recurred goods are significantly high, reverse logistics is so important. The purpose of this research is presenting a reverse logistics model and also a mathematical model to minimize costs and maximize benefits in recycle industry. Presented model in this research is a multi-variable system which has some constraints. This model helps organizations to use appropriate production strategies.</p>

An integrated shipment planning and storage capacity decision under uncertainty

Purpose – In transportation and distribution systems, the shipment decisions, fleet capacity, and storage capacity are interrelated in a complex way, especially when the authors take into account uncertainty of the demand rate and shipment lead time. While shipment planning is tactical or operational in nature, increasing storage capacity often requires top management’s authority. The purpose of this paper is to present a new method to integrate both operational and strategic decision parameters, namely shipment planning and storage capacity decision under uncertainty. The ultimate goal is to provide a near optimal solution that leads to a striking balance between the total logistics costs and product availability, critical in maritime logistics of bulk shipment of commodity items. Design/methodology/approach – The authors use simulation as research method. The authors develop a simulation model to investigate the effects of various factors on costs and service levels of a distribution system. The model mimics the transportation and distribution problems of bulk cement in a major cement company in Indonesia consisting of a silo at the port of origin, two silos at two ports of destination, and a number of ships that transport the bulk cement. The authors develop a number of “what-if” scenarios by varying the storage capacity at the port of origin as well as at the ports of destinations, number of ships operated, operating hours of ports, and dispatching rules for the ships. Each scenario is evaluated in terms of costs and service level. A full factorial experiment has been conducted and analysis of variance has been used to analyze the results. Findings – The results suggest that the number of ships deployed, silo capacity, working hours of ports, and the dispatching rules of ships significantly affect both total costs and service level. Interestingly, operating fewer ships enables the company to achieve almost the same service level and gaining substantial cost savings if constraints in other part of the system are alleviated, i.e., storage capacities and working hours of ports are extended. Practical implications – Cost is a competitive factor for bulk items like cement, and thus the proposed scenarios could be implemented by the company to substantially reduce the transportation and distribution costs. Alleviating storage capacity constraint is obviously an idea that needs to be considered when optimizing shipment planning alone could not give significant improvements. Originality/value – Existing research has so far focussed on the optimization of shipment planning/scheduling, and considers shipment planning/scheduling as the objective function while treating the storage capacity as constraints. The simulation model enables “what-if” analyses to be performed and has overcome the difficulties and impracticalities of analytical methods especially when the system incorporates stochastic variables exhibited in the case example. The use of efficient frontier analysis for analyzing the simulation results is a novel idea which has been proven to be effective in screening non-dominated solutions. This has provided the authors with near optimal solutions to trade-off logistics costs and service levels (availability), with minimal experimentation times.

Sustainable logistics network for wood flow considering cascade utilisation

To address the growing demand for wood as a renewable resource, a trend that has arisen in recent years is to follow the principle of cascade utilisation and to use wood residues from by-products. The cascading principle represents a method supporting resource efficiency through the sequential use of the remaining quality resources from previous commodities and substances. The logistics concept deserves special attention with respect to the utilisation of wood resources and the cascading principle as logistics processes constitute the largest share of costs.This work considers a logistics network for wood flow for different products in various sectors. Examples include a logistics network for particle board in the material-based sector, pulp and paper production in the chemical sector, and wood pellets production in the energy sector using cascade utilisation and recovered wood. A transportation problem is modelled using a mixed-integer linear programming (MILP) model, and it is applied to a case study in Lower Saxony using the software CPLEX v12.5. The aim is to minimise the total logistics costs of a logistics network, including those associated with harvesting, chipping, storage and transportation, for several companies in different sectors. UMBERTO, a life cycle assessment (LCA) software, is used to investigate the potential environmental impacts of the optimised logistics network. The approach is applied to three scenarios in Lower Saxony, a state in Germany. The initial results indicate that the total cost of the considered wood logistics network does not change significantly for the cascading scenarios in comparison to that associated with fresh wood, but there would be a substantial reduction in CO2 emissions if cascade utilisation is used in the logistics network.

Emergency relief supply chain design and trade-off analysis

Purpose – Emergency relief supply chain (ERSC) design is an important strategic decision that significantly affects the overall performance of emergency management activities. The performance of an ERSC can be measured by several performance measures some of which may conflict with each other. The purpose of this paper is to propose an ERSC design framework by simultaneously taking total logistics cost (TLC), risk level, and amount of demands covered in an ERSC into consideration. Design/methodology/approach – The study considers TLC of an ERSC as the sum of logistics cost from distribution warehouses (DWHs) to Break of Bulbs (BOBs) and from BOBs to affected neighborhoods. The risk level of an ERSC is measured by estimating the expected number of disrupted relief items (EDI) distributed from DWHs through BOBs to neighborhoods. The covered demand (CDM) is defined as total populations that are supported in case of an emergency, the populations within the maximal coverage distance (MCD) from relief facilities. Based on these performance measures, the authors formulate a Goal Programming (GP) model to distribute emergency relief items to affected locations. Ideal values of these performance measures are decided, and the GP model seeks to minimize the weighted sum of the percentage deviations of those performance measures from the ideal values. The relationships among performance measures have been thoroughly analyzed through detailed trade-off studies under two realistic case studies by changing weights of each performance measure. Findings – Three performance measures are interdependent over specific values of weights. TLC and EDI have a trade-off relationship when the weight on each measure increases. TLC and CDM also have a trade-off relationship when the weight on EDI increases. However, this relationship becomes less apparent when the MCD increases. EDI and CDM also have the same trade-off relationship when the weight on TLC changes. Therefore, decision makers should thoroughly analyze these trade-off relationships when they design ERSCs. Overall, the study identified that an ERSC with higher MCD outperforms one with lower MCD in terms of TLC, EDI, and CDM. Originality/value – The study presents a design framework to generate more balanced ERSCs by simultaneously taking three conflicting performance measures into consideration, and demonstrated the feasibility of the framework through realistic case studies. The trade-off analysis provides useful insights and theoretical knowledge to researchers and practitioners in the discipline of emergency logistics management. The results from this study are expected to contribute to the development of more balanced ERSCs.

A scenario planning approach for propositioning rescue centers for urban waterlog disasters

An urban waterlog disaster can produce severe results, such as residents’ property loss, environmental damages and pollution, and even casualties. This paper presents a system specification for urban waterlog disasters according to the analysis of urban waterlog disaster risks. Then, a two-stage stochastic mixed-integer programming model is formulated. The model minimizes the total logistics cost, and risk-induced penalties. Moreover, a deterministic counterpart of the stochastic model is proposed to study the expected value of perfect information. The multi-attribute utility theory is used to build assessment functions that assess the utility of the rescue system and the degree contributed to disaster relief for each rescue center. Finally, a real example of rescue logistics is examined for the urban waterlog disasters in Pudong District of Shanghai, China. Using the proposed model, two main results can be obtained. First, the expected value of perfect information experiment reveals that an additional ¥45,005 logistics cost and an additional ¥2417 risk-induced penalties can be incurred due to the presence of uncertainty. Second, as the weight of risk-induced penalty increases from 0.1 to 0.9, the logistics cost is increased by 41.21%, which thus contributes to a decrease of risk-induced penalty by 97.44%. Some managerial implications are discussed based on the numerical studies.

Payment schemes for a two-level consignment stock supply chain system

Inventories account for almost 50% of the total logistics costs of a supply chain. Therefore, managing inventories helps organizations to reduce costs, increase profits, and satisfy customers’ demand. Different inventory models have been developed to solve transportation and warehousing issues. These models help in optimizing different supply chain systems and maximizing their total profits. Coordinating orders between players has been shown to be profitable. A Consignment Stock (CS) agreement as a coordination mechanism has been receiving attention from practitioners and academicians. This paper reflects one reality of CS agreements and investigates the effects of four different payment schemes on the total profit of the system when a consignment stock agreement is adopted between a vendor and a buyer. The results showed that adopting a scheme that makes frequent and equal payments is often better than the other payment schemes compared in this paper. It was also shown in the paper that finding the optimum number and size of payments enhances the performance of the supply chain system and its total profit.

Combining service frequency and vehicle routing for managing supplier shipments

This paper proposes a new approach to designing inbound material collection routes that considers pick-up frequency and spatial design as joint decisions to minimize total logistics (transportation plus inventory) cost. The clustering-based optimization uses an approximation to the actual cost of a routing solution without actual route construction. We show that the problem is analogous to a single-source fixed-charge facility location problem, and near-optimal solutions can be found using an efficient heuristic algorithm. Tests show the effectiveness of how this model is formulated and a case study demonstrates that substantial total cost savings can be achieved in realistic applications.

Comparing heuristics for the product allocation problem in multi-level warehouses under compatibility constraints

One of the most significant activities in warehouse management concerns the allocation of products to the storage positions. This problem is known in the literature as the Product Allocation Problem (PAP). It mainly aims to optimize both the warehouse space utilization and the products handling costs (at least 40% of the total logistics cost). This paper addresses the PAP in a multi-layer warehouse, with compatibility constraints among the product classes. It has already been addressed from a modeling point of view in the literature and it has been formulated as a Mixed Integer Linear Programming model. However, solving the problem to optimality becomes impracticable in real-life settings. To this purpose, an Iterated Local Search-based Heuristic (ILS) and a Cluster-based Heuristic (CH) have already been proposed in the literature. This paper presents a Rollout-based heuristic whose performances are evaluated on the basis of a detailed computational phase, including also a real case study and compared with those of both the ILS and the CH, in terms of the computational times and the quality of the final solutions.

Spatial analysis for an intermodal terminal to support agricultural logistics

Purpose – The purpose of this study is to address an importance of an intermodal terminal regarding container drayage trips, which have a major concern for agricultural product exporters in the Upper Great Plains. Thus, this study aims to develop a geospatial model considering travel distance and total logistics costs for determining an alternative intermodal terminal location. Design/methodology/approach – This paper develops a spatial model integrating integer linear programming to determine an intermodal facility location that minimizes total logistics costs. This research considers travel distance and total logistics costs including highway, rail and transshipment costs. Findings – The results shows that a Dilworth, Minnesota, terminal reduces vehicle miles of travel on both the highways and rail networks and decreases system-wide total logistics costs compared to the do-nothing scenario while decreasing urban congestion costs in metropolitan areas. Research limitations/implications – The major contribution of the study is that it provides an integrated tool of spatial and economic analyses to support regional decision-making. The paper will be of interest to regional planners and to those in the private business sectors including farmers and manufacturers. The future study should address demand forecasting on the containerized freight in the region. Originality/value – The novel approach of this paper is to use a link blocking constraint, considering the directions of the freight flow in a p-hub intermodal problem.

Formation of Failure Models for the Evaluation of the Reliability of Supply Chains

Abstract Logistics and supply chain management is a comparatively new scientific field which has been rapidly developing. Apart from the criterion of total logistics costs, that is used to evaluate the efficiency of supply chains, another criterion - total satisfaction of consumer needs - is being increasingly used for the same purpose. It can be explained by the transition to such new logistics concept as the sustainability of supply chains, which is characterized not only by flexibility, rate of response, strength, adaptability, but mostly by the reliability of functioning of the logistics system's elements. The paper presents critical analysis of the existing approaches to the formation of failure models in supply chains, the methodical approach and classification of failures for the key logistics functions (purchasing, order processing, transportation, storage, warehousing and materials handling) as well as some developed and improved failure models for a number of logistics functions and operations; there have been also given some examples of calculating the reliability indices for the elements of the supply chain.