Logistics PDF

# Logistics "Logistics is getting the product & Services where they are needed & when they are desire at a lower cost" - Right time - Right Place - Right Price ## Types of Logistics 1. Forward Logistics 2. Backward Logistics 3. Green Logistics - loss / Profit for the product. 4. Business Lo...

# Logistics "Logistics is getting the product & Services where they are needed & when they are desire at a lower cost" - Right time - Right Place - Right Price ## Types of Logistics 1. Forward Logistics 2. Backward Logistics 3. Green Logistics - loss / Profit for the product. 4. Business Logistics - Deciding the Design. 5. Military Logistics 6. Event Logistics ### Forward Logistics Company -> Distributor -> Retailer/wholeseller -> Customer ### Backward Logistics Customer -> Retailer/wholeseller -> Distributor -> Company ## Importance of Logistics 1. Needs to Customer Satisfaction 2. Integrated logistical Activities. (step by step) 3. Competitive Edge. 4. Logistics wins or losses wars. 5. Supporting critical functions like operations & Marketing. 6. Logistical Cost. ## Objectives of Logistics 1. Rapid Response 2. Minimum variance (OTO - on time Delivery) 3. Minimum inventories. 4. Movement consolidation 5. Quality 6. Lifecycle Supports. ## Functions of Logistics. 1. Information system 2. Warehousing 3. Inventory 4. Transportation 5. Network Design. 6. Logistical mission ## Role of Planning in Logistic Management 1. Central to logistic management 2. Plan & Co-ordinate. 3. Planning for a Right Framework. 4. Integration of various Resources. ## Scope of Logistic 1. Inbound logistic 2. Operation 3. Outbound. ## Integrated Logistics Purchasing which tries to purchase at minimum price at the cost of what is needed by operations. It is like trying to solve a puzzle. (Customer -> Inventory Flow -> Suppliers) ### Achieving Logistic Competency (levels). 1. The Inbound logistic 2. Operation 3. Outbound logistic 4. Customer service - logistic service. ## Logistics & Marketing Interface 1. Price 2. Place 3. Product 4. Promotion ## 3 C's Module. 1. Customer 2. Competitors. 3. Company. ## Performance Cycle of Structure of Logisticstic. 1. Procurement of goods (Purchase of R.M) 2. Manufacturing Support Performance cycle) 3. Physical Distribution cycle (Ex:- water Bottle). ## Green Logistics It describes all attempts to measure & minimize the ecological of logistical activity. It is an aim to create a sustainable company value using a balance of economic & environmental efficiency (The resources to be use for a longer time) ### Pros/Advantage 1. Better Resource management 2. Less Pollution. 3. local Production of energy. ### Con's/Disadvantage. 1. Lack of Support 2. Customer attitude problem 3. Costiler products ## Changing Logistical Environment:- 1. Customer service explosion 2. Time compression 3. Globalization of Industries. 4. Organizational integration ## Supply Chain Management Supply chain management is moment & work in progress inventory & finished goods from point of origin to the point of consumption. ### Objective of Supply chain 1. Solving suppliers problems 2. Performance Improvement of customer service. 3. Minimizing variance (COTD) 4. Product quantity 5. Achieving maximum efficiency. ## Barriers to Supply Chain 1. Organizational Barriers 2. Lack of visibility 3. Less Skills 4. Attitude problems 5. Inadequate information flow 6. Distrust. ## Participants of Logistic Supply Chain 1. Vendor 2. Supplier 3. Manufacture 4. Customer 5. Distributor ## Function of Supply Chain 1. Defining business bounderies & Relation 2. Managing demand & Supply 3. Strengthening logistic 4. Supply chain 5. Selling system interface 6. Product Design Interface 7. Manufacturing Interface. ## Function Differeance between Logistics & Supply Chain | Logistics | Supply Chain | | --- | --- | | Getting goods & logistics Raw material | Getting goods & Services meet to the end user | | It's focus on management of resources within the organization | Supply chain is focus on profit | | Logistics is concern with internal integration. | It is concern with both. | ## Bull Whip Effect (Customer < Retailer < manufacturer) - Lack of coordination Ex lack of communication between the supply chain management. ### Causes of Bull Whip Effect 1. Lack of communication between each member in the Supply chain. 2. Lack of co-ordination between various supply chain members. 3. Demand forecast. (manufacturer) 4. Delay in the flow of info & material among chain members. ### Impact of Bull Whip effect 1. Manufacturing cost will increase. 2. Inventory cost will increase decrease. 3. Negative effect of performance at every stage. 4. Replenishment lead time. ### Solutions of Bull Whip effect 1. Understand the Demand of customers. 2. Proper forecast. 3. Better flow of information. 4. Free Return Policy. 5. Reducing the lead time of the supplier. (Just-in-time) ## Extended Enterprise [Amazon] [Transportation] [Warehousing] [Courier] Extended Enterprise is a cell organizing network of firm that combines their economic output to provide products & service offering to the market. The success of a firm depends on its performance, but it is actually based on the performance of networks of the firm. ### Stages/Phases of supply chain management S.N | Stages ---|---| 1 | Base line 2 | Functional 3 | Internal 4 | External ## Channel Management & Channel Integration. A Supply chain is a network of organizations that are having linkage both upstream and downstream. Channel Management is all about managing relationships with all channel members. ## Customer Service Customer service is a series of activity designed to enhance the level of customer satisfaction - that is feeling that a product or service has met the customer Expectations. ### Obiectives of customer service 1. Ensuring Perfect order to improve customer. 2. Improve customer satisfaction 3. Increase sales 4. Retain existing customers. 5. Improve market position. 6. To retain customer loyalty. ### Elements of customer service - **Pre transaction element** - Customer Service Policy - System Flexibility - Organisation Structure. - **During Transaction Element** - Product availability. - Current order status information. - Goods consistency in order cycle time. - Substitute products. - **Post transaction Element** - After sale service - Product tracing - Customer Grievances. - Product loaning. ## Level of Customer Service - Customer service as an activity. - Customer service as a performance nature. - Customer service as a philosophy. ## Rights of customer services 1. Right product 2. Right Quantity 3. Right condition 4. Right Place 5. Right time 6. Right price 7. Right customer. ## Strategies to improve customer services 1. Developing customer service vision 2. Assessment of customer means 3. Hiring the Right employees 4. Customer service board 5. Training 6. Accountability 7. Reward & Recognition. (Praised) ## Perfect Order A Perfect order is a customer order which is fulfilled in all aspects such as time, place, quantity, & quality. ### Causes / failure in perfect order 1. Invoicing error 2. Late arriving 3. Late shipment. 4. Damaged shipment. 5. Order entry error. 6. Error in payment processing. ## Demand Forecasting Forecasting involves predicting the future. Demand forecasting is a prediction made on the basis of relevant logical assumptions of the value likely to be produced, transported, and sold. ### Reasons for forecasting 1. Increase customer satisfaction 2. Reducing stock outs. 3. Scheduling production efficiently 4. Managing Price (Ex: Promotion in a better way) 5. Improving shipping. ### The Approaches to forecasting - **Top-Down Approach** - National -> State -> Region - **Bottom UP Approach** - Region -> Distributor -> National -> State ## Components of forecasting 1. Base demand 2. Seasonal factors. 3. Trends 4. Cyclic factor. 5. Promotion ## Techniques of Forecasting ### Qualitative Forecasting Method This method is useful when past data unavailable. Qualitative methods are judgemental methods where expert opinion is used to make the forecast. Qualitative techniques involve the following methods: - Jury of executive methods. - Consumer survey method. - Assessment by sales person. - Naive Approach. - Delprimethod. ### Quantitative Method of Forecasting A quantitative method is based on statistical technique projection about the future which uses numerical facts, and is known as a quantitative method. - Time series method. (S.D) - Moving average. ## SMA (Simple Moving Average) $A_1 + A_2 + A_3....$ $N = Total No of years.$ ## Forecasting for April month = 220 **Determine the trend for the following data** **Also calculate moving average for 2 years.** | Year | Sales | 2 Yearly MA | 3 Yearly MA | |---|---|---|---| | 1995 | 45 | - | - | | 1996 | 52 | - | - | | 1997 | 83 | 48.5 | - | | 1998 | 92 | 67.5 | 60 | | 1999 | 98 | 87.5 | 75.67 | | 2000 | 115 | 95 | 91 | | 2001 | 125 | 106.5 | 101.67 | | 2002 | ? | 120 | 112.67 | **From the following info calculate 4 period moving average.** | Year | Sales | 4 Yearly MA | |---|---|---| | 2009 | 125 | - | | 2010 | 140 | - | | 2011 | 188 | 130 | | 2012 | 195 | - | | 2013 | 205 | 162 | | 2014 | 212 | 182 | | 2015 | 235 | 200 | | 2016 | ?? | 212 | **From the following info calculate a 3 period & 5 period moving average, also forecast demand for the 11th period.** | Class | Demand in units | 3 Yearly MA | 5 Yearly MA | |---|---|---|---| | 1 | 100 | - | - | | 2 | 110 | - | - | | 3 | 125 | - | - | | 4 | 132 | 112 | - | | 5 | 145 | 129 | - | | 6 | 151 | 134 | 122 | | 7 | 164 | 143 | 133 | | 8 | 170 | 153 | 143 | | 9 | 188 | 162 | 152 | | 10 | 197 | 174 | 164 | | 11 | ? | 185 | 174 | **From the following data calculate a 3rd period weighted Average from the 4th month to 18th month with weights as 3, 2 & 1.** | Month | Demand | WAMA 3th | |---|---|---| | 1 | 120 | - | | 2 | 130 | - | | 3 | 145 | - | | 4 | 160 | 136 | | 5 | 170 | 150 | | 6 | 190 | 168.3 | | 7 | 200 | 178 | | 8 | ? | 192 | **From the given following info find out 3 monthly MA & Umonthly MA.** | Month | Demand | 3 monthly MA | Umonthly MA | |---|---|---|---| | 1 | 100 | - | - | | 2 | 150 | - | - | | 3 | 225 | - | - | | 4 | 240 | 158 | - | | 5 | 170 | 205 | 179 | | 6 | 280 | 212 | 196 | | 7 | 300 | 230 | 299 | | 8 | 300 | 250 | 248 | | 9 | 320 | 293 | 263 | | 10 | 330 | 307 | 300 | | 11 | 350 | 317 | 313 | | 12 | ? | 333 | 325 | $4th = \frac{3 \times145+2 \times130+1 \times120}{3+2+1} = \frac{435+260+120}{6}= 136$ $5th = \frac{3 \times160+2 \times145+1 \times130}{3+2+1} = \frac{480+290+130}{6}=150$ $6th = \frac{3 \times170+2 \times160+1 \times145}{3+2+1} = \frac{510+320+145}{6}=168.3$ $7th = \frac{3 \times190+2 \times170+1 \times160}{3+2+1} = \frac{570+340+160}{6} = 178$ $8th = \frac{3 \times200+2 \times190+1 \times170}{3+2+1} = \frac{600+380+170}{6} = 192$ **On the following data calculate a 3 Period WMA & with weights as 3,2,1 also forecast demand for the *11th* period.** | Month | Demand | 3 period WMA | |---|---|---| | 1 | 100 | - | | 2 | 120 | - | | 3 | 130 | - | | 4 | 135 | 122 | | 5 | 145 | 131 | | 6 | 150 | 139 | | 7 | 160 | 145 | | 8 | 175 | 154 | | 9 | 180 | 166 | | 10 | 190 | 175 | | 11 | ? | 184 | $4th = \frac{3 \times130+2 \times120+1 \times100}{3+2+1} = \frac{390+240+100}{6}=122$ $5th = \frac{3 \times135+2 \times130+1 \times120}{3+2+1} = \frac{405+260+120}{6}=131$ $6th = \frac{3 \times145+2 \times135+1 \times130}{3+2+1} = \frac{435+270+130}{6} = 139$ $7th = \frac{3 \times150+2 \times145+1 \times135}{3+2+1} = \frac{450+290+130}{6} = 145$ $8th = \frac{3 \times160+2 \times150+1 \times145}{3+2+1} = \frac{480+300+145}{6} = 154$ $9th = \frac{3 \times175+2 \times160+1 \times150}{3+2+1} = \frac{525+320+150}{6} = 166$ $10th = \frac{3 \times180+2 \times175+1 \times160}{3+2+1} = \frac{540+350+160}{6} = 175$ $11th = \frac{3 \times190+2 \times180+1 \times175}{3+2+1} = \frac{570+360+175}{6} = 184$ **Calculate a 5 period WMA with weights as 5,4,3,2,1** | Month | Demand | 5 Period WMA | |---|---|---| | 1 | 100 | - | | 2 | 120 | - | | 3 | 130 | - | | 4 | 135 | - | | 5 | 145 | - | | 6 | 150 | 133 | | 7 | 160 | 141 | | 8 | 175 | 149 | | 9 | 180 | 159 | | 10 | 190 | 168 | | 11 | ? | 178 | $6th = \frac{5 \times150 + 4 \times145 + 3 \times135+2 \times130+1 \times120}{5+4+3+2+1} = \frac{750+580+405+260+120}{15} = 133$ $7th = \frac{5 \times160 + 4 \times150 + 3 \times145+2 \times135+1 \times130}{5+4+3+2+1} = \frac{800+600+435+270+130}{15} = 149$ $8th = \frac{5 \times175 + 4 \times160 + 3 \times150+2 \times145+1 \times135}{5+4+3+2+1} = \frac{875+640+450+290+135}{15} = 159 $ $9th = \frac{5 \times180 + 4 \times175 + 3 \times160+2 \times150+ 1 \times145}{5+4+3+2+1} = \frac{900+700+480+300+145}{15} = 168$ $10th = \frac{5 \times190 + 4 \times180 + 3 \times175+2 \times160+ 1 \times 150}{5+4+3+2+1} = \frac{950+720+525+320+150}{15} = 178 $ **From the following data calculate a 5 period WMA with weight 4, 3, 2, 1 & 1** | Month | Demand | 5 Period WMA | |---|---|---| | Jan | 100 | - | | Feb | 120 | - | | March | 130 | - | | April | 120 | 123 | | May | 125 | 124 | | June | 135 | 124 | | July | 145 | 129 | | Aug | 150 | 139 | | Sept | 140 | 146 | | Oct | 130 | 144 | | Nov | 140 | 136 | | Dec | 150 | 136 | | Jan | ? | 144 | $March = \frac{4 \times130+3 \times120+1 \times100}{4+3+2+1} = \frac{520+360+100}{8} = 123$ $April= \frac{4 \times120+3 \times130+1 \times120}{4+3+2+1} = \frac{480+390+120}{8}= 124$ $June= \frac{4 \times125+3 \times120+1 \times130}{4+3+2+1} = \frac{500+360+130}{8} = 124$ $July= \frac{4 \times135+3 \times125+1 \times120}{4+3+2+1} = \frac{540+375+120}{8} = 129$ $Aug = \frac{4 \times141 + 3 \times135+1 \times125}{4+3+2+1}= \frac{580+405+125}{8} 129$ $Sept = \frac{4 \times150+3 \times145+1 \times135}{4+3+2+1} = \frac{600+435+135}{8} = 146$ $Oct = \frac{4 \times140+3 \times150+1 \times145}{4+3+2+1} = \frac{560+450+145}{8} = 144$ $Nov = \frac{4 \times130+3 \times140+1 \times150}{4+3+2+1} = \frac{520+420+150}{8} = 136$ $Dec = \frac{4 \times140+3 \times130+1 \times140}{4+3+2+1} = \frac{560+390+140}{8} = 136$ $Jan = \frac{4 \times150+3 \times 140+1 \times130}{4+3+2+1} = \frac{600+420+130}{8} = 144 $ **Find the forecast value for the 9th year from the following data, Calculate 2 year & 3 year moving average.** | Year | Sales | 2 Year MA | 3 Year MA | |---|---|---|---| | 2010 | 881 | - | - | | 2011 | 901 | - | - | | 2012 | 1003 | 891 | - | | 2013 | 1007 | 1002 | 927 | | 2014 | 1051 | 1050 | 1017 | | 2015 | 1080 | 1065 | 1046 | | 2016 | 1118 | 1099 | 1080 | | 2017 | ? | 1118 | 1099 | **From the following data calculate 4 years demand forecast for 2014. 1) 3-period MA & 2) 4th year moving Average. The weighted average ratio is 3:2:1.** | Year | Sales | 3 Period | 4th Year | |---|---|---|---| | 2001 | 120 | - | - | | 2002 | 124 | - | - | | 2003 | 126 | - | - | | 2004 | 122 | 123 | 123 | | 2005 | 128 | 124 | 125 | | 2006 | 130 | 125 | 127 | | 2007 | 132 | 127 | 128 | | 2008 | 138 | 130 | - | | 2009 | 132 | 134 | 133 | | 2010 | 136 | 135 | 134 | | 2011 | ? | 136 | 135 | Weighted average. | 3 Period | 4th Year | |---|---| | 124 | - | | 124 | - | | 126 | - | | 128 | - | | 131 | - | | 135 | - | | 135 | - | | 136 | - | $4th = \frac{3 \times126+2 \times124+1 \times 120}{3+2+1} = \frac{378+248 +120}{6}=124$ $5th = \frac{3 \times122 + 2 \times126+1 \times124}{3+2+1} = \frac{366+252 +124}{6}=124$ $6th = \frac{3 \times128+2 \times122+1 \times126}{3+2+1} = \frac{384+244 +126}{6} = 126$ $7th = \frac{3 \times130+2 \times128+1 \times122}{3+2+1} = \frac{390+256+122}{6} = 128$ $8th = \frac{3 \times132+2 \times130+1 \times128}{3+2+1} = \frac{396+260+128}{6} = 131$ $9th=\frac{3 \times138+2 \times132+1 \times130}{3+2+1} = \frac{414+264+130}{6} = 135$ $10th = \frac{3 \times134+2 \times138 + 1 \times 132}{3+2+1} = \frac{402+276+132}{6} = 135$ $11th = \frac{3 \times 136 + 2 \times134+1 \times138}{3+2+1} = \frac{408 +268 +138}{6} = 136$ **From the following data calculate a 3 Period weighted moving average with base as 3:2:1 & forecast demand for the 11th period.** | Year | Demand in u | 3 Period | |---|---|---| | 2001 | 100 | - | | 2002 | 125 | - | | 2003 | 130 | - | | 2004 | 140 | 118 | | 2005 | 150 | 126 | | 2006 | 165 | 143 | | 2007 | 175 | 156 | | 2008 | 190 | 168 | | 2009 | 195 | 181 | | 2010 | ? | 190 | | 2011 | 190 | - | $ 4th = \frac{3 \times 100 + 2 \times 115 + 1 \times 100}{3+2+1} = \frac{300+230+100}{6} =118 $ $5th = \frac{3 \times 130 + 2 \times 100 + 1 \times 115}{3+2+1} = \frac{390+250+115}{6} = 126$ $6th = \frac{3 \times 140 + 2 \times 130 + 1 \times 125}{3+2+1} = \frac{420+260+125}{6} = 134$ $7th = \frac{3 \times 150 + 2 \times 140 + 1 \times 130}{3+2+1} = \frac{450+280+130}{6} = 143$ $8th = \frac{3 \times 165 + 2 \times 150 + 1 \times 140}{3+2+1} = \frac{495+300+140}{6} = 156$ $9th = \frac{3 \times 175 + 2 \times 165 + 1 \times 150}{3+2+1} = \frac{525+330+150}{6} = 168$ $10th = \frac{3 \times 190 + 2 \times 175 + 1 \times 165}{3+2+1} = \frac{570+350+165}{6} = 181$ $11th = \frac{3 \times 195 + 2 \times 190 + 1 \times 175}{3+2+1} = \frac{585+380+175}{6} = 190$ ## Exponential Smoothning Method $Ft = a. (Dt-1)+(1-a)(F+-17$ $Ft = a. (dt-1)+(1-a) + (FL-1)$ $(Ft-1) = Forecast for time period 't-1'$ $Ft = Forecasted sales of time period 't'$ $(at-1) = actual demand for time period 't-1'$ a = alpha factor for Smoothning constant. **From the following data calculate exponential Smoothning alpha as 0.80 (2018 - 2019 was 600000 Unit) forecast for the Year 2019** **Actual sales were 500000 unit. Calculate the forecast for 2020-21.** $ft = 0.8 \times 500000+(1-0.8) \times(600000)$ **From the following data calculate 2 yearly or five yearly moving Aug. Also find forecasted value for the 9th year** | Year | No. of Pensions | 2 Yearly | 5 Yearly | |---|---|---|---| | 1 | 6 | -| - | | 2 | 12 | - | - | | 3 | 18 | 9 | - | | 4 | 24 | 15 | 12 | | 5 | 30 | 18 | 18 | | 6 | 36 | 21 | 21 | | 7 | 42 | 27 | 24 | | 8 | 60 | 33 | 36 | | 9 | ? | 39 | 46 | | Forecasted | Error | Forecasted | Error | |---|---|---|---| | for 2 years | Error | for 3y | Error | | 9 | 9 | 12 | 144 | | 9 | 9 | 12 | 144 | | 9 | 9 | 12 | 144 | | 9 | 9 | 12 | 144 | | 21 | 9 | 24 | 576 | | 27 | 9 | 34 | 1152 | $Mean^2 error for 2 years = 846/6 = 141$ $= 846-141 = 705 Error$ **Forecasting error = demand - forecast** **Mean^2 error for 3 years = 1152/5 = 230** **Total = 1152 - 230 = 922** ### Advantages of forecasting - Effective handling of uncertainties. - Better labor relations. - Balance workload. - Minimizing in the fluctuation of production. - Better use of production facilities. - Better material management. - Good customer service. - Optimum utilization of resources. ### Disadvantages of forecasting. - Forecasted information not accurate. - Forecasted info is not reliable. **Forecast for the year 2020-22 was 10 lakh & actual sales were 9 lakh units. Calculate the forecast for 2021-22 using exponential smooth with alpha as 0.50.**