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4 (Saturation (Utilization Rate) refers to the optimal balance between…
4
Saturation (Utilization Rate) refers to the optimal balance between weight and volume in transport to maximize efficiency.
Optimal load density = ratio [between the maximum capacity (in weight) and the maximum capacity (in volume)] that fully uses both limits.
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Helps:
Choose transport mode (e.g., air = volume-based, sea/road = weight-sensitive)
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Goal: Companies must calculate optimal load density to avoid wasted space or exceeding weight limits.
The Complexity of Globalization. The degree of globalization in production, sourcing, and marketing directly influences logistics decisions. Other trade-offs in global logistics:
Materials
Local sourcing: reliable supply, fewer geopolitical risks, + costs
Global sourcing: - costs, access to rare materials, longer lead times and supply chain risks
Transportation
More distance, more costs
Less distance, less costs
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Inventory
more inventory, - risk of stockouts + storage costs
less inventory, - storage costs + COLS
Centralized warehousing: few large warehouses, - costs, longer shipping times
Decentralized warehouses: many smaller warehouses, faster deliveries, + operational costs
The Logistics Dilemma: challenges that companies face in global logistics and trade-offs between 3 key factors (only optimize 2 out of 3 of these factors)
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Weight/Volume Ratio. Density = Weight / Volume (kg/m³). This ratio determines how much space a product takes up relative to its weight and it affects both transportation and storage costs.
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Storage Cost Impact
Low-density items require more storage space, leading to higher warehouse costs.
High-density items are easier to store as they occupy less space per unit of weight, reducing storage needs.
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