SCMN 3710 Ch 3

What are the 7 R's of Logistics?

Product, customer, quantity, condition, place, time, cost

Need for special handling (e.g. refrigeration, heating, or strapping) will usually increase warehousing, transportation, and packaging costs.

Special handling requirements.

Explain the Transportation Effect.

Cost of lost sales can be reduced by spending more on transportation service to improve customer service.

What level are logistics costs relative to GDP?

8.3% of GDP in 2014

Weight/space ratio affects transportation and warehousing costs. As density increases for a product, its transportation and warehousing costs tend to decrease.

Density.

The product's dollar value typically affects warehousing costs, inventory costs, transportation costs, packaging costs, and even materials-handling costs.

Dollar value.

Explain the Inventory Effect.

Increasing inventory costs can reduce the cost of lost sales.

What is the definition of logistics from a business perspective and how does this fit in to the supply chain concept?

Part of supply chain that plans, implements, and controls the flow and storage of goods, services, and related information.

The greater the risk of damage to a product, the higher the transportation and warehousing cost.

Susceptibility to damage.

Why are spatial relationships important in logistics?

Where you are located makes all the difference in the world. The location of fixed points in the logistics system with respect to demand and supply points are very important to transportation costs.