Integration in Logistics Planning and Optimization

Publication Type:
Chapter
Citation:
Logistics Operations and Management, 2011, pp. 371 - 391
Issue Date:
2011-12-01
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Logistics planning (LP) is the process of integrating and utilizing suppliers, manufacturers, warehouses, and retailers so that products are produced and delivered at the right quantities and at the right time while minimizing costs and satisfying customer requirements. Implementation of LS has crucial impacts on a company's financial performance and LP optimization is essential to achieve globally optimized operations. The six major cost components that form the overall logistics costs are raw material costs, costs of raw material transportation from vendors to manufacturing plants, production costs at manufacturing plants, transportation costs from plants to warehouses, inventory or storage costs at warehouses, and transportation costs from warehouses to end users. In a logistics optimization model, the overall systemwide costs are to be minimized through effective procurement, production, distribution, and inventory management. It is widely acknowledged that many benefits can be achieved by treating a logistics network as a whole (integration in LS) for optimization purposes, which requires the simultaneous minimization of all systemwide costs. © 2011 Elsevier Inc. All rights reserved.
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