Models in Logistics Management

Various quantitative models from the Operation Research Literature can be used to address the decision areas in Logistics.
Location models:- These models help in planning the optimal location of plant or warehouses, considering the inbound and outbound transportation costs and infrastructure cost at the locations. 
  • Allocation models:- These models help in optimally allocating commodities from sources to destinations in a multiple sources, multi destination environment. The costs consider for optimization are the production cost, transportation cost and warehousing.
  • Distribution network design models:- These models are usually comprehensive in nature deciding between a two, three or even four stage distribution network, location of warehouses and break bulk points and sometimes even the transport mode choice.
  • Inventory models:- Inventory models play a key role in Logistics Management. The inventories that are directly affected due to outbound logistics are 
  1. Finished Goods Inventory
  2. Pipeline Inventory
  3. Warehousing Inventory
  4. Retail Inventory
The typical cost trade-offs between inventory and other decisions in Logistics would be
  1. Inventory vs Transportation Costs
  2. Inventory vs Stock out Costs
  3. Inventory vs Spoilage and Materials Handling Costs
  • Routing models:- These models allow optimal routing on a transportation network from a given source to a destination. The simplest model is scales the Shortest Path Problem.
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