Total Logistics Costs Research Articles

Reverse Logistics Network Design under the Risk of Hazardous Materials Transportation

ABSTRACTAn effective reverse logistics network design (RLND) has several implications, such as decrease in logistics costs and environmental damage. Some products in the RL may contain hazardous substances. In such cases, the environmental aspects of RLND should be identified considering the risks of hazardous materials transportation.In this study, a holistic approach is employed involving the forecasting of return amount of products, risk modeling of hazardous materials transportation, and capacitated plant location modeling under risk. An application for the reverse logistics of large household appliances in Turkey, which is aiming to implement the European Union directive for waste electric and electronic equipment, is presented. First, the decisions of suitable places for treatment facilities and the assignments of the returned products to these facilities are made without considering the risk factor. In this case, the objective is to minimize the total logistics costs. In the second case, risk factors are incorporated in the model and the objective is defined as the minimization of the costs and hazmat transportation risks. It is seen that different locations and allocation decisions are obtained for the case without considering the risk and the case under risk of hazmat transportation.

Optimization of the dimensions of dry bulk ships: The case of the river Rhine

A significant part of the cost of maritime transport is incurred at the start and end of the logistics chain, the hinterland transport. For this transport leg, the price of transport is a crucial decision driver for shippers. Since the European market for the transport of dry bulk goods is highly competitive the average price and cost of transport will be nearly equal over extended time periods. This implies that if a transport operator can lower his costs, he will improve his competitive position. In order to do so, operators have tried to maximize economies of scale by building bigger inland ships, but it is unclear whether the biggest ship leads to the largest benefits. In this article, the optimal dimensions of dry bulk ships intended for operation on the river Rhine, the main waterborne freight corridor in Europe, are established. The optimization is performed for two criteria: the ship-related elements of the freight rate and the total logistic costs. The results of this article suggest that the benefits of increasing the maximum allowed length of dry bulk ships on the Rhine will be limited but that wider ships can lead to a reduction in costs.

Hub-and-spoke logistics network design for third party logistics service providers

Third Party Logistics service providers (3PLs) are playing an increasing role in the management of supply chains. 3PLs offer a wide range of logistics services, e.g. warehousing and transportation services. We consider a 3PL company that is responsible for managing the inbound logistics of raw materials and components from multiple suppliers to several manufacturing plants. In this paper, we consider the hub-and-spoke logistics network design problem for 3PL companies. Our purpose is to decide on the number, location and operation of hub facilities so as to minimize the total logistics costs for the network. We formulate the problem as a mixed integer nonlinear programming model and linearize it using a step-by-step approach. Linearization of the model makes it possible to solve it to optimality using a standard optimization package. Numerical results reveal substantial cost saving as a consequence of using the hub-and-spoke network configuration compared to a direct shipment strategy.

Integrated method of analysing logistics costs in supply chain

Logistics and supply chain management (SCM) is in its development process, progressing stage after stage. The development process at the very first stage considers an evaluation criterion for evaluating effectiveness using minimum total logistics costs (TLC), which underlines the fact that, an important criterion in the development process is complete customers' satisfaction in services, or the 'level of service' (SL). At the same time, the question remains open as to how to quantify the impact of logistics operations and functions on the performance results of TLC and SL. The main aim of this paper is to develop a methodical approach and to come up with a computational approach to assessing the impact of different logistics operations factors (for example, transportation, storage, orders, etc.), on TLC and SL.

Role of Mathematical Modelling in Transportation Sciences

A logistics network consists of suppliers, manufacturing centres, warehouses, distribution centres, and retail outlets as well as channels for the flow of raw materials, work-in-process inventory, and finished products between the facilities. In many cases, the problems of each logistics functions are treated as isolated functions. There are network design; information flow; transportation; inventory; and warehousing, material handling, and packaging. Whereas, the basis of performance improvement in integrated logistics network is total cost analysis. That is minimising the total cost of transportation, warehousing, order processing and information, lot quantity, and inventory carrying cost. In this paper, we consider an integrated logistics problem in minimising the total logistics cost and provide model for logistics network optimisation in form of a mathematical programming model. To solve a cost optimisation problem in those problem both production and distribution cost are significant and inter-related. An integrated model of logistics network minimises total physical distribution costs by simultaneously determining optimal plants and warehouse locations, flows in the resulting network, shipment compositions and shipment frequencies in the network using heuristics methodology. The objective is to optimise the production and distribution plan so as to minimise its total logistics cost.

Single machine serial batching and scheduling problem with deteriorating jobs for production-distribution supply chain under discrete due-date constraints

We study serial batching scheduling of deteriorating jobs in a production-delivery supply chain to minimise the total logistics cost. Each job should be delivered to customer within its guarantee period. We define that if a job which is finished before its departure date or delivered to the customer before its due date will incur respectively a work-in-process or customer inventory cost. We first formulate the problem as a general model and prove its complexity in a general way. Then we study a special case of the problem and propose a tabu algorithm for solving it. In order to evaluate the proposed tabu algorithm, we compare it with CPLEX solver for small size problem instances, and with a lower bound for large size problem instances. The results of experiments indicate that the proposed tabu algorithm is efficient for the randomly generated problems in terms of both solution quality and time efficiency. [Received 31 January 2015; Accepted 16 September 2015]

A model to take advantage of Physical Internet for vendor inventory management

This paper investigates inventory management problems for fast-moving consumer goods (FMCG) with the Physical Internet (interconnected logistic services) where goods are stored and distributed in an interconnected and open network of hubs. Unlike current hierarchical inventory model where the source assignment is predetermined for each replenishment order either from the retailers or from the warehouses, the PI-inventory model enables multiple source selection options to each order and transshipments of inventories among hubs, resulting in complete pooling of inventories within the network. We adopt a continuous review (Q, R) ordering policy for each facility and propose four dynamic source selection strategies related to the supplying nodes’ inventory levels, the distance and lead time between the supplying and the ordering nodes. The objective is to determine the optimal replenishment policies for hubs in order to minimize the total logistic costs of the distribution system. A nonlinear optimization model is proposed and a heuristic using simulated annealing is applied. A simulation study based on two categories of FMCG is taken to evaluate the performance of the proposed inventory control policies. Our results suggest that compared to current centralized inventory control policy, the PI-inventory control model with proposed source selection strategies can significantly reduce the total costs as well as the average inventory level of the network of hubs while reaching the same end customer service level.

Product Allocation Planning with Safety Compatibility Constraints in IoT-based Warehouse

Abstract One of the most relevant topics in warehouse management system (WMS) is the security issue and concerns the optimal placement allocation of products with respect of product and human safety in a sustainable system. Knowing that differences often exist between virtual view of products placements in centralized WMS and the real situation in the facility due to unplanned movements resulting from human errors or products’ misplacements, we propose a reactive and compatibility constraint approach for product storage allocation. Our aim is to reduce the size of floating locations largely used in WMS and to avoid the inherent risks of hazardous accidents which can be generated by incompatibility between products and then to minimize the total logistic costs and to guarantee higher warehousing service levels in a safety monitored environment. This work proposes a multi-agent architecture for product allocation planning with compatibility constraints (PAP/CC), which uses a decision mechanism for product's placement, based on negotiations between agents associated to compatibility tests. This approach represents an improvement key for decentralized management of warehouses in a dynamic and reactive environment. Negotiations mechanisms relying on an Internet of Things (IoT) infrastructure and multi agent systems are defined in order to solve security problem of product allocation operations. Industrial deployment of IoT platform represents an ideal solution for decentralized management and to support collaboration between products and shelves. A simulation case of the proposed interactions mechanisms is provided with the use of NetLogo environment which offers many advantages to control agents and to describe their interactions in a graphical environment.

Transporte verde: eficiencia y reducción de CO2 integrando gestión, tecnologías de información y comunicaciones (TIC) y un metaheurístico

Introduction. Transportation represents a ratio between 30 % and 70 % of total logistic costs, plus a direct impact on client´s satisfaction. It is also a considerable source of CO2 emissions, thus affecting the environment. Objective. Design and validate a model for green transportation management, increasing the process´ efficiency, reducing CO2 emissions and implementing environmentally friendly green practices in this logistic process. Materials and methods. The Green transportation model integrates a management component (objectives, strategy and characterization), information and communication technologies (ICT) and a mathematical modeling of the routing problem that considers a fleet of heterogeneous trucks, solved by the use of a metaheuristic. Results. In the validation in a meat company the solution to the routing problem was achieved by means of a genetic algorithm, through which the process´ efficiency increased up to a ratio between 9,89 and 12, 86 %, reducing transportation time in the routes in 4410 minutes a month if compared to the routing rule the company had before. With a green model, a reduction of 2791 kg of CO2, equivalent to 11,70 % of the current emissions generated by transportation there, was achieved. This way, we can have a quantitative assessment of the contribution the green transportation management model makes to this research area, to the efficiency of the process and to environmentally friendly practices.

Optimal inventory control in a multi-period newsvendor problem with non-stationary demand

The optimal control of inventory in supply chains plays a key role in the competiveness of a corporation. The inventory cost can account for half of company’s logistics cost. The classical inventory models, e.g., newsvendor and EOQ models, assume either a single or infinite planning periods. However, these models may not be applied to perishable products which usually have a certain shelf life. To optimize the total logistic cost for perishable products, this paper presents a multi-period newsvendor model, and the problem is formulated as a multi-stage stochastic programming model with integer recourse decisions. We extend the progressive hedging method to solve the model efficiently. A numerical example and its sensitivity analysis are demonstrated.

A simulation-based robust biofuel facility location model for an integrated bio-energy logistics network

Purpose: The purpose of this paper is to propose a simulation-based robust biofuel facility location model for solving an integrated bio-energy logistics network (IBLN) problem, where biomass yield is often uncertain or difficult to determine. Design/methodology/approach: The IBLN considered in this paper consists of four different facilities: farm or harvest site (HS), collection facility (CF), biorefinery (BR), and blending station (BS). Authors propose a mixed integer quadratic modeling approach to simultaneously determine the optimal CF and BR locations and corresponding biomass and bio-energy transportation plans. The authors randomly generate biomass yield of each HS and find the optimal locations of CFs and BRs for each generated biomass yield, and select the robust locations of CFs and BRs to show the effects of biomass yield uncertainty on the optimality of CF and BR locations. Case studies using data from the State of South Carolina in the United State are conducted to demonstrate the developed model’s capability to better handle the impact of uncertainty of biomass yield. Findings: The results illustrate that the robust location model for BRs and CFs works very well in terms of the total logistics costs. The proposed model would help decision-makers find the most robust locations for biorefineries and collection facilities, which usually require huge investments, and would assist potential investors in identifying the least cost or important facilities to invest in the biomass and bio-energy industry. Originality/value: An optimal biofuel facility location model is formulated for the case of deterministic biomass yield. To improve the robustness of the model for cases with probabilistic biomass yield, the model is evaluated by a simulation approach using case studies. The proposed model and robustness concept would be a very useful tool that helps potential biofuel investors minimize their investment risk.

Switching Transport Modes to Meet Voluntary Carbon Emission Targets

The transport sector is the second-largest carbon emissions contributor in Europe, and its emissions continue to increase. Many producers are committing themselves to reducing transport emissions voluntarily, possibly in anticipation of increasing transport prices. In this paper we study a producer that has outsourced transport and has decided to cap its carbon emissions from outbound logistics for a group of customers. Setting an emission constraint for a group of customers allows for taking advantage of the portfolio effect. We focus on reducing emissions by switching transport modes within an existing network, because this has a large impact on emissions. In addition, the company sets the sales prices, which influence demand. The problem is solved by decomposing the multiproduct problem into several single-product problems, which we then analyze separately. Using the single-product solutions, we create an efficient frontier that reflects the trade-off between total carbon emissions and the total profit. It is observed that a diminishing rate of return applies in reducing emissions by switching transport modes. In a case study, we apply our method to a producer of bulk liquids and find that emissions can be reduced by 10% at only a 0.7% increase in total logistics cost.

Logistics cost analysis of rice residues for second generation bioenergy production in Ghana

This study explores the techno-economic potential of rice residues as a bioenergy resource to meet Ghana’s energy demands. Major rice growing regions of Ghana have 70–90% of residues available for bioenergy production. To ensure cost-effective biomass logistics, a thorough cost analysis was made for two bioenergy routes. Logistics costs for a 5MWe straw combustion plant were 39.01, 47.52 and 47.89USD/t for Northern, Ashanti and Volta regions respectively. Logistics cost for a 0.25MWe husk gasification plant (with roundtrip distance 10km) was 2.64USD/t in all regions. Capital cost (66–72%) contributes significantly to total logistics costs of straw, however for husk logistics, staff (40%) and operation and maintenance costs (46%) dominate. Baling is the major processing logistic cost for straw, contributing to 46–48% of total costs. Scale of straw unit does not have a large impact on logistic costs. Transport distance of husks has considerable impact on logistic costs.

Análisis del tamaño de empaque en la cadena de valor para minimizar costos logísticos: un caso de estudio en Colombia

This paper presents a case study of a Colombian consumer packaged goods company, in order to minimize the costs related to its logistics operations by using different sizes of packages. Two optimization models were formulated: the first model is aimed at determining the 5 secondary package sizes that diminish the need to open closed packages to meet customer orders. The second model defines which of these packages are the most appropriate to serve each sales channel while minimizing the total logistics cost. The analysis shows useful findings on how optimizing the secondary package sizes could change the costs along the supply chain, leading to an average savings of 8.2%.

Rice straw supply chain for electricity generation in Malaysia: Economical and environmental assessment

Rice straw supply costs were estimated and the supply potential was analyzed to determine the optimum amount of recourses and rice straw power plants. The logistic cost consists of rice straw collection, transportation to collection centre, collection centre cost and transportation to power plant. The total logistic cost, ready at power plant is found to be between RM 39.95 per bale and RM 65.80 per bale. The carbon emission and the environmental impact are analyzed throughout the life cycle involved in each process. Life cycle emission of logistic system is between 0.0234tCO2-Eq±0.11 percent per bale, ready at 10MW power plants. Climate change has a significant impact on environment compared to other parameters like toxicity and acidification. For a small power plant having a capacity of less than 10MW, the number of collection centres is not significant with respect to the total transportation cost parameter.

Design of a Logistics Network in an Organisation for Optimising Logistics Cost and Inventory Using RSM and Genetic Algorithm

The competitive environment of global markets has forced many manufacturers to select the most appropriate logistics for the optimisation of total logistics costs, time and inventory. Cost and time are the two important factors in the competitive market that are often not addressed comprehensively by the researchers. In this study, the genetic algorithms (GAs) and the fuzzy logic techniques are used for optimising a novel mathematical model of the logistics network. The objective of the proposed model is to minimise the costs of production, distribution, holding and backorder. In addition to the optimization of logistics costs, the model can also determine the economic production quantity (EPQ), and with help of the GAs and the Fuzzy logic solver with probability parameters and various dimensions for validation of the studied model in real-life situations, and we compared the outputs to demonstrate the performance of the two optimization techniques . Using Genetic Algorithm and fuzzy logic, the optimized value of the logistics cost, and volume of the logistics network were obtained.

The Optimization of Logistics and Distribution

Distribution is an important function of enterprise logistics. Through efficient distribution activities, it can reduce the total cost of logistics enterprises and improve logistics efficiency and service levels. Therefore, the rationality of the logistics and distribution system design will directly affect the survival and development of enterprises. In this dissertation uses a retail business distribution network for the study, to study its distribution optimization models and methods, using a variety of algorithms for analysis, to understand its distribution network efficient mode of operation.

Automated multi-objective construction logistics optimization system

Abstract Construction logistics planning entails the coordination of supply and site activities by integrating their decisions and recognizing existing interdependencies to minimize the total material management cost. Despite the preliminary estimates of its benefits to the construction industry, few contractors adopted logistics management because of its demand for detailed data and decision of material supply and site operations. This paper presents the development of a new automated multi-objective construction logistics optimization system (AMCLOS) that would support the contractors in optimally planning material supply and storage. AMCLOS provides a holistic framework of automatically retrieving project spatial and temporal data from existing scheduling and BIM electronic files, seamlessly integrating relevant contractor and suppliers' data, and optimizing material supply and site decisions to minimize total logistics costs. The performance of AMCLOS was validated against a previous construction logistics planning model, which provided useful insights on material supply and storage logistics in congested and spacious sites. The developed system is envisioned to increase the implementation of logistics management practices and early integration and coordination of construction supply and site processes.

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.

Lot sizing and scheduling problem for production-delivery system with job volume and due date considerations to minimise the total cost while guaranteeing a certain customer service level

This paper considers a lot sizing and scheduling problem where jobs are processed on a batching machine, and then delivered to a customer by a capacitated transporter. Each job is associated with a due date and a volume. In order to guarantee customer service level, each job has to be delivered to customer before or on its due date. It is assumed that the job which is delivered to customer before its due date will occur an earliness penalty. The objective is to minimise the total logistics cost under two kinds of due-date conditions. We formulate the problem as a non-linear model, then develop a Tabu algorithm. To verify performance of this algorithm, we establish a dominance-related exact algorithm for the small-size problems and a lower bound for the large-size problems. Numerical experiments show that the proposed Tabu algorithm performs efficiently in terms of both solution quality and running time.