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To develop an EOQ based model to quantify the benefit accrue due to coordination for the one supplier and n retailer supply chain system and concept to share the benefits derived from coordination.

An intensive literature review has been done in the area of supply chain coordination covering both marketing and operational perspective. The analysis of literature has shown that models to quantify the benefits for supply chains consisting of a single supplier who supplies a product to multiple heterogeneous buyers are very limited. To fill this critical research gap the benefit sharing mechanism is derived based on optimal order quantity of the supply chain system.

This paper demonstrates the benefits of coordination to the supply chain system in terms of cost saving and generating the surplus money. It also suggests a way to find the range of prices to facilitated coordination. Under the developed pricing policy, no partner after coordination had to bear a loss. So in that sense we can say that the benefits of coordination are distributed to all the partners.

The proposed model for benefit sharing protects the interest of all supply chain partners and hence will be profitable to all. The pricing scheme suggested will motivate retailers to increase ordering quantity per order, thereby reducing the joint ordering and holding costs.

The paper is unique in terms of quantifying and sharing the benefits of coordination for one supplier – multi heterogeneous buyer supply chain system.

The classical definition of PDM focuses on the broad spectrum of distribution activity, from the inbound raw materials; to the finished product flow; and to the end user. The definition is often stated as “all of the activities involved in the flow of goods from the manufacturer to the consumer which include inventory control, transportation, warehousing, order processing, materials management, and purchasing”. But despite the broad view described in the definition, little attention is given to the raw materials flow and to the entire area of Materials Management. Physical Distribution managers tend to disregard the inbound flow and regard it as the responsibility of some other management group in the company, specifically purchasing and/or production. The need for a well co‐ordinated and efficient distribution system demands that the PD manager pay more attention to the inbound material flow. The outcome of the decisions that a PD manager makes depends to a great degree on how well materials management and PDM are co‐ordinated in a firm:

Consolidation, the grouping of several small shipments into one at a designated location, can reduce total logistics cost. Total logistics cost includes consolidation, transportation and inventory costs. Identifying where cost‐saving opportunities exist is often confused by the interrelated nature of these various costs.

The purpose of this research paper is to help managers improve their understanding of logistics costs and the accounting for those costs in order to optimize use of the total cost approach to managing logistics processes. This paper will discuss the history and evolution of logistics management and activity‐based costing (ABC), the driving cost factors affecting the key logistics activities, and the use of ABC systems to help improve the allocation of logistics costs to specific cost objects. This paper also includes several important managerial implications and implementation techniques for an ABC system.

Logistics has always been a central and essential feature of all economic activity and yet paradoxically it is only in recent years that it has come to receive serious attention from either the business or academic world. One very obvious reason for this neglect is that, whilst the functions that comprise the logistics task are individually recognised, the concept of logistics as an integrative activity in business has only really developed within the last 20 years.

The provision of availability will naturally incur costs for the supplier. One of the major problems facing logistics management is that of accurately identifying the total costs of the logistics activity. Many of the costs are either hidden or are shared between different activities or cost centres thus making a proper allocation extremely difficult. Nevertheless such problems must be overcome if the company is to develop cost‐effective customer service policies. Often management may not be aware of the true costs of customer service strategy and thus be led to make inappropriate decisions.

It is sometimes suggested that the role of distribution is to provide “time and place utility” in the transfer of goods and services between buyer and seller. Put another way, there is no value in a product or service until it is in the hands of the customer or consumer. It follows that making the product or service “available” is what, in essence, the distribution function of the business is all about. “Availability” is in itself a complex concept, impacted upon by a galaxy of factors which together constitute customer service. These factors might include delivery frequency and reliability, stock levels and order cycle time, for example, as they all impact upon availability. Indeed, it could be said that ultimately customer service is determined by the interaction of all those factors that affect the process of making products and services available to the buyer.

Inventory carrying costs, the costs associated with the quantity and value of inventory stored, represent a large portion of the expense attached to distribution activities. These costs also are influenced by the configuration of the physical distribution system utilised. Therefore, accurate assessment of inventory carrying costs is essential to not only controlling the cost area, but also for the analysis of the cost effectiveness of different physical distribution systems. Traditionally, managers who do consider the cost of holding inventory use estimates, industry benchmarks that range from 12 to 35 per cent of the value of the inventory, or textbook figures of 25 per cent. Many sources have quoted the 25 per cent figure and have not changed it in the last 30 years, thus ignoring the impact of inflation on the cost of capital. Also, it is believed that many firms do not even consider inventory carrying costs.

At a time when “out of stock” is rapidly becoming a way of life there is merit in attempting to assess the cost to the business. This article suggests some of the areas which should be considered.

In general, distribution costs fall into two discrete areas: staff/administration costs, i.e. those cost centres associated with supporting the line distribution functions; and line/operational costs, i.e. those cost centres dealing with the functional areas in a logistics operation. Identification of these costs is essential if a manager is to manage his logistics operation correctly. Planning for budgets, the development of those plans and the setting of standards to judge performance are based on tracking these costs. The relationships between these cost groups have to be identified and functional accounts set up to keep track of them.