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Lecture Logistics management: Lecture 12 - Dr. Khurrum S. Mughal

After studying this chapter you will be able to understand: nature of the product, product pricing, per-case logistics costs as a justification for price discounts, facility location decisions, location overview, nature of location analysis, some location theory/practice. | 1-1 Logistics Management LSM 730 Dr. Khurrum S. Mughal Lecture 12 1 3-2 Nature of the Product (Cont’d) · Product characteristics - Weight - bulk ratio - Value - weight ratio - Substitutability - Risk · Product packaging · Product pricing - F.o.b. origin - F.o.b. destination - Zone pricing - Single and uniform pricing - Quantity discounts - Deals 3-3 Product Pricing Geographic pricing methods F.o.b. (free on board) pricing F.o.b. factory price F.o.b. delivery price - Zone pricing - Single, or uniform, pricing - Freight equalization - Basing point pricing Incentive pricing - Quantity discounts 3-4 0 200 300 400 100 Quantity purchased (cases) Logistical costs ($/case) Total per-case costs (transport + inventory + order processing and handling costs) Per-case inventory carrying costs Less than truckload Rail carload Truckload Transport costs Per-case order processing and handling costs Per-Case Logistics Costs as a Justification for Price Discounts 13-5 Facility Location Decisions CR . | 1-1 Logistics Management LSM 730 Dr. Khurrum S. Mughal Lecture 12 1 3-2 Nature of the Product (Cont’d) · Product characteristics - Weight - bulk ratio - Value - weight ratio - Substitutability - Risk · Product packaging · Product pricing - F.o.b. origin - F.o.b. destination - Zone pricing - Single and uniform pricing - Quantity discounts - Deals 3-3 Product Pricing Geographic pricing methods F.o.b. (free on board) pricing F.o.b. factory price F.o.b. delivery price - Zone pricing - Single, or uniform, pricing - Freight equalization - Basing point pricing Incentive pricing - Quantity discounts 3-4 0 200 300 400 100 Quantity purchased (cases) Logistical costs ($/case) Total per-case costs (transport + inventory + order processing and handling costs) Per-case inventory carrying costs Less than truckload Rail carload Truckload Transport costs Per-case order processing and handling costs Per-Case Logistics Costs as a Justification for Price Discounts 13-5 Facility Location Decisions CR (2004) Prentice Hall, Inc. Experience teaches that men are so much governed by what they are accustomed to see and practice, that the simplest and most obvious improvements in the most ordinary occupations are adopted with hesitation, reluctance, and by slow graduations. Alexander Hamilton, 1791 13-6 CR (2004) Prentice Hall, Inc. Facility Location in Location Strategy PLANNING ORGANIZING CONTROLLING Transport Strategy • Transport fundamentals • Transport decisions Customer service goals • The product • Logistics service • Ord . proc. & info. sys. Inventory Strategy • Forecasting • Inventory decisions • Purchasing and supply scheduling decisions • Storage fundamentals • Storage decisions Location Strategy • Location decisions • The network planning process PLANNING ORGANIZING CONTROLLING Transport Strategy • Transport fundamentals • Transport decisions Customer service goals • The product • Logistics service • Ord . proc. & info. sys. Inventory Strategy • Forecasting • Inventory decisions •