After completing this chapter, students will be able to: Costs relevant to inventory management, the storage and handling system, storage fundamentals in inventory strategy, the storage system, consolidation warehouse, space comparison, the materials handling system, storage/handling systems. | 1-1 Logistics Management LSM 730 Dr. Khurrum S. Mughal Lecture 27 1 9-2 CR (2004) Prentice Hall, Inc. Costs Relevant to Inventory Management Procurement Costs Carrying costs Out-of-stock costs 11-3 The Storage and Handling System CR (2004) Prentice Hall, Inc. “The day soldiers (subordinates) stop bringing you their problems is the day you have stopped leading them.” Colin Powell 11-4 CR (2004) Prentice Hall, Inc. 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. . | 1-1 Logistics Management LSM 730 Dr. Khurrum S. Mughal Lecture 27 1 9-2 CR (2004) Prentice Hall, Inc. Costs Relevant to Inventory Management Procurement Costs Carrying costs Out-of-stock costs 11-3 The Storage and Handling System CR (2004) Prentice Hall, Inc. “The day soldiers (subordinates) stop bringing you their problems is the day you have stopped leading them.” Colin Powell 11-4 CR (2004) Prentice Hall, Inc. 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 • Purchasing and supply scheduling decisions • Storage fundamentals • Storage decisions Location Strategy • Location decisions • The network planning process Storage Fundamentals in Inventory Strategy 11-5 The Storage System Except where customer service is a concern: Storage is an economic convenience, not a necessity Reasons for storage · Transportation and production costs can be reduced · Better coordination of supply and demand · Storage can be an integral part of the production process · Storage may enhance sales Storage Functions · Holding · Consolidation · Break-bulk · Mixing (merge-in-transit) 11-6 CR (2004) Prentice Hall, Inc. The Storage System (Cont’d) Storage Space Alternatives · Ownership · Leasing · Rental · In - transit Note Storage functions are performed in an attempt to reduce transportation, production, and purchasing costs, which justify their added expense. Consolidation warehouse A A B C D B C D Manufacturer A .
