Mini Case Study: Analyzing the Integrated Logistics Decisions

Background: ABC Company is a medium$-$sized manufacturing firm operating in the consumer electronics industry. The company produces a range of electronic gadgets and distributes them through various retail channels. As part of its operations, ABC Company faces challenges in managing its logistics effectively, particularly in terms of freight, inventory, and warehouse management.

Objective: The objective of this case study is to analyze the combined effect of freight, inventory, and warehouse management on the overall operational efficiency and cost$-$effectiveness of ABC Company's logistics operations. Students are tasked with making integrated logistics decisions based on a synthetic dataset provided, which includes data on freight costs, inventory levels, and warehousing expenses.

Dataset:

Month Freight Costs $($$$)$ Inventory Costs $($$$)$ Warehousing Costs $($$$)$

Jan $10,00020,00015,000$

Feb $12,00022,00016,000$

Mar $11,50021,50015,500$

Apr $11,20020,80015,200$

May $12,50022,50016,500$

Jun $13,00024,00017,000(3).$ Based on the data from Table $1,$ and knowing that you have two ways to analyze this: $($a$)$ for each $5\%$ reduction in Transportation costs, by increasing the size of trucks, inventory grows $7\%$ and warehousing grows $1\mathrm{.}5\%,$ up to $20\%$ total possible reduction. Also, $($b$)$ for each $5\%$ reduction in inventory costs, by reducing the quantity to store, there is a reduction on warehousing costs of $2\%,$ but this relates to at an increase of $5\%$ in transportation costs due to more frequent transportation, up to a total reduction of $10\%$ in inventory costs, and then it grows $10\%$ every $5$ extra points in inventory cost reduction, up to a total of $25\%$ in inventory cost reduction.

a$)$What would you suggest the ABC company to focus more on$?$ Use references from the open literature to help you answer this question.

b$)$Use infographics to show the AS$-$IS scenario $($table values$)$

c$)$Make a small sensitivity analysis on the three components, moving the costs down and up on each one of the three areas, i$.$e$.,$ Freight, Inventory and Warehousing costs for the two cases given $($a$)$ and $($b$).$ Use infographics too so as to show this analysis.

An infographic is a visual representation of information, data, or knowledge designed to present complex information quickly and clearly. Typically, infographics combine text, images, and graphics to convey a message or tell a story in a concise and visually appealing manner. They are often used to make dense or complicated information more understandable and engaging for audiences. Infographics can cover a wide range of topics, from statistical data and scientific concepts to instructional guides and marketing materials.