Search results

Addresses a number of issues relating to determining whether products should be ordered independently and therefore shipped as a single‐product order, or co‐ordinated and shipped as a group, or multiproduct, order from a single source. Factors which might influence the decision include the level or volume of demand, the distribution of demand across products, the weight of items and the attractiveness of the quantity discount offered. Uses an optimal inventory‐theoretic model, that incorporates transport weight breaks and quantity discounts, to assess when product orders should be combined and what products should be ordered separately. The effects of these decisions on the order interval, the number of order groupings, the proportion of items ordered independently, the proportion of attractive discounts forgone in favour of consolidation, and the relative cost savings, are examined using an extensive set of simulated data that are based on a firm in the automobile industry supply chain.

Key components of the logistics mix are described in an effort to create an understanding of the total logistics concept. Chapters include an introduction to logistics; the strategic role of logistics, customer service levels, channel relationships, facilities location, transport, inventory management, materials handling, interface with production, purchasing and materials management, estimating demand, order processing, systems performance, leadership and team building, business resource management.

The purpose of this paper is to present the results of South Africa’s national freight demand model and related logistics cost models, and to illustrate the application of the modelling outputs to inform macrologistics policy.

Spatially and sectorally disaggregated supply and demand data are developed using the input-output (I-O) model of the economy as a platform, augmented by actual data. Supply and demand interaction is translated into freight flows via a gravity model. The logistics costs model is a bottom-up aggregation of logistics-related costs for these freight flows.

South Africa’s logistics costs are higher than in developed countries. Road freight volumes constitute 80 per cent of long-distance corridor freight, while road transport contributes more than 80 per cent to the country’s transport costs. These challenges raise concerns regarding the competitiveness of international trade, as well as the impact of transport externalities. The case studies highlight that domestic logistics costs are the biggest cost contributor to international trade logistics costs and can be reduced through inter alia modal shift. Modal shift can be induced through the internalisation of freight externality costs. Results show that externality cost internalisation can eradicate the societal cost of freight transport in South Africa without increasing macroeconomic freight costs.

Systematic spatially disaggregated commodity-level data are limited. There is however a wealth of supply, demand and freight flow information collected by the public and private sector. Initiatives to create an appreciation of the intrinsic value of such information and to leverage data sources will improve freight demand modelling in emerging economies.

A spatially and sectorally disaggregated national freight demand model, and related logistics costs models, utilising actual and modelled data, balanced via the national I-O model, provides opportunities for increased accuracy of outputs and diverse application possibilities.

It is often stated that a trade‐off occurs when a cost increase in one field is over‐compensated by a cost reduction in another field, resulting in an overall improved situation. Economic Trade‐offs (ETOs) are calculations intended to support decision making in respect of business activities. In this respect an ETO is, of course, only an aid and not a goal in itself.

This chapter demonstrates how the ‘golden rule’ can be applied by operators of flexible transport services to improve investment and pricing decisions.

The chapter explains why an appropriate decision making framework is particularly important for operators of flexible transport services and compares the traditional economic framework of fixed versus variable costs to the decision-oriented approach that analyses the activities of a firm in terms of costs that are avoidable (i.e. specific to a particular activity) and costs that are shared amongst a number of activities. The chapter introduces the ‘golden rule’ of decision making and discusses issues in implementing the rule.

An economic framework for decision making is particularly important for smaller scale transport operations (such as flexible transport services) because ‘lumpy’ investment costs are more significant than for larger operators. The traditional economic approach divides costs into fixed costs and those which vary by patronage. A better framework for decision making divides costs into those which are specific to a particular activity and, therefore, avoidable if that activity ceases, and those costs which are common to more than one activity.

Using this framework allows operators to apply the ‘golden rule’ in pricing their services so that the avoidable costs of each activity are recovered and the enterprise covers its shared costs overall.

This chapter will be useful to operators of flexible transport services who are new to the industry or are reacting to changes in the funding environment.

After the terrorist attack on the World Trade Center in New York on 11 September 2001 there is an increased fear of terrorism. The transport sector seems to be a main target for terrorism. Not only air‐traffic, but also main traffic junctions such as tunnels and bridges may be possible targets of terrorists. The horrific attacks on several trains in Madrid in 2004, illustrate ones more the credibility of these threats. This paper addresses the question how to measure the indirect effects of a terrorist attack on transport infrastructure via an increase in transport costs, and discusses a approach how a government may find the economically most vulnerable links in the infrastructure network. It is proposed to use a spatial applied general equilibrium model in the new economic geography tradition to measure the indirect economic effects.

The choice of the transport mode is a fundamental part of distribution management which should be analysed carefully because of the impact upon a company's operational efficiency. Failure to identify the most appropriate transport mode may incur higher costs than are necessary and may provide a lower customer service level than is potentially possible. The decision upon the choice of the transport mode is extremely complex because of the vast volume of choice available together with the numerous methods of examination and evaluation of each choice.

Discusses part of a project conducted by the authors into the logistics planning and management and costs of supplying biomass fuels to biomass‐fired power stations in the UK. Defines biomass fuels and the reasons for the growth in interest in their use for electricity generation. The activities and parties involved in the biomass fuel supply chain are discussed together with the management of the chain in order to achieve smooth and consistent flow of biomass fuel to power stations. Explains the approach used to modelling the delivered costs of biomass fuels for four types of biomass fuel included in the project: forest fuel, short rotation coppice, straw and miscanthus. Comments are given on the environmental impacts of the fuel supply chains. The results indicate that straw supply systems are capable of producing the lowest delivered costs of the four fuels studied. Short rotation coppice and miscanthus, two new energy crops, are likely to have the highest delivered costs at present. This is due to the cost of growing these fuels and the financial incentives required by farmers to persuade them to grow these crops. Logistics costs (i.e. transport, storage and handling) are shown to represent a significant proportion of total delivered cost in biomass supply. Careful supply chain planning and logistics management will be of central importance to the success of the biomass industry.

With the use of a two-region monopolistically competitive model, the paper primarly studies how unilateral changes in a country's intra-regional and/or inter-national transport costs affect its own and its trading partner's welfare. Moreover, by considering a three-region monopolistically competitive model that consists of an external region and two integrated regions, with the one having a location advantage with respect to the external market, the paper studies how within-country asymmetries in transport costs affect trading partner's welfare.

This paper examines how investments in the infrastructure affect welfare in the home country and in its trading partner by primarily using a model with direction-specific intra-regional and inter-national trade costs. Moreover, it focuses on the within-country asymmetries in transportation costs and their impacts on trading partners' welfare.

The first model shows that a unilateral reduction in a country's transport costs is beneficial for its domestic firms, while it hurts firms located in its trading partner country. Other findings show that an equal bilateral reduction in inter-national transport costs is a Pareto improvement, since it is beneficial for both countries. The second model shows that a reduction in intra-regional transport costs benefits the two integrated regions, while it has no impact on the welfare of the external region.

Two monopolistically competitive models are considered, in order to study how investments in the infrastructure affect welfare in the home country and in its trading partner. Interestingly, the models sheds light on an important mechanism, that of firm-delocation effect.