BUSINESS LOGISTICS SYSTEMS ANALYSIS

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BUSINESS LOGISTICS SYSTEMS ANALYSIS
Lecture 18STORAGE
H. E. METZNER, Ph.D. Department of Engineering
Management University of Missouri-Rolla
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REASONS FOR STORAGE

• Reduce transportation-production costs
• Coordinate supply and demand
• Assist in production process
• Assist in marketing process

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STORAGE SYSTEM FUNCTIONS

• Storage functions
• Materials handling functions

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STORAGE FUNCTIONS

• Holding
• Consolidation
• Break-Bulk
• Mixing

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MATERIALS HANDLING FUNCTIONS

• Loading and unloading
• Movement to and from storage
• Order filling

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REASONS FOR HAVING STORAGE HOLDING SYSTEMS

• Gives customer assurance of availability
• Hedge against unexpected surge and price
  promotions
• Await shipment to fill a definite order
• Await shipment to fill an expected order
• Handle production variations
• Hold materials to make economical run sizes
• Allow batch production
• Allow flexibility in production scheduling
• Hold off increasing capacity
• Permit more flexibility in raw materials
  scheduling

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REASONS FOR HAVING STORAGE HOLDING SYSTEMS

• Permit raw materials storage
• Take advantage of favorable raw materials prices
• Take advantage of distribution cost factors
• Hold material that is a by-product
• Store overruns and misruns
• In case of cancellation, return or damage
• To keep storage equipment operational
• To allow for errors in measurement and recording
• To protect against strikes and work stoppages
• To protect against hurricanes and acts of God
• To speculate against price and cost changes

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Figure 8-3a Holding Warehouse Emphasis on
Long-Term Storage
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Figure 8-3b Distribution Warehouse Emphasis on
Short-Term Storage, Mixing, and Material Flow
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Figure 8-4 Distribution, or Pool Point,
Warehouse Used to Break-Bulk
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Figure 8-5 Generalized Example of Using a
Distribution Warehouse for Product Mixing
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Business Systems Logistics Analysis
Inventory Strategy
Transport Strategy

• Forecasting
• Storage fundamentals
• Inventory decisions
• Purchasing and supply
• scheduling decisions
• Storage decisions

• Transport fundamentals
• Transport decisions

Customer Service Goals

• The product
• Logistics service
• Information systems

Location Strategy

• Location decisions
• The network planning process

Next Lecture Storage Alternatives