The document discusses various logistics concepts including transportation, details, reliability, availability, maintainability, transportability, problem solving, project management, and economic order quantity calculations. It provides examples of costs for sea freight vs air freight shipments and total costs of ownership for equipment over multiple years. Formulas for economic order quantity are presented to calculate the optimal order size to minimize total inventory costs.

1. NOW FOR THE REAL
ECONOMY
LOGISTICS is NOT about
transportation; it IS about providing!

2. THE DEVIL IS IN THE DETAILS!
• For want of a nail the shoe was lost.
• For want of a shoe the horse was lost.
• For want of a horse the rider was lost.
• For want of a rider the battle was lost.
• For want of a battle the kingdom was lost.
• And all for the want of a horseshoe nail!

3. LOGISTICS deals with details, including problem details in
depth. Problem factors present in most LOGISTICS
operations may be referred to by the acronym RAM-T:
R) Reliability: Can the product or instrument mentioned be relied upon to
perform at all times and under all conditions?
A) Availability: How much time elapses between the time of delivery and the
time the product has been assembled adequate to do the job?
M) Maintainability: Can the product be returned to near its original level of
efficiency and reliability by careful and timely maintenance regime?
T) Transportability: Can the product be transported by normal means?

4. SIX SIGMA APPROACH TO PROBLEM SOLVING
& PROJECT MANAGEMENT
• DEFINE the problem
• MEASURE the problem
• ANALYZE the problem
• IMPROVE the situation
• CONTROL the situation

6. SEA FREIGHT AIR FREIGHT
Ocean Freight charges 4205Air freight 8894
Pre-carriage to Port of Loading 3800
Pier Delivery at Port 421Airport delivery 150
Forwarding Fees 125 35
Insurance 1200 25
Customs formalities 125 90
Pier pick-up Port of Discharge 300Final delivery 100
On-carriage inland dest. 350
TOTAL DDU 10525 9294

7. FIRST 12 MONTHS A COSTS B COSTS
PLANNED MAI NT S 45 PER MO 540 30 PER MO 360
DOWNTIME 5HRS/MO(d)SlOO/hr 6000 2HRS/MO 2400
PETROL S 300 PER MO 3600 240 PER MO 2850
TOTAL FIRST YEAR 10140 5640
SECOND YEAR
THIRD SIX MONTHS
PLANNED MAINT 45 PER MO 270 30 PER MO 180
DOWNTIME 5 HRS/MO 3000 2 HRS/MO 1200
ENERGY CONSUMP 300 PER MO 1800 240 PER MO 1440
FOURTH SIX MONTHS
PUNNED MAINT 45 PER MO 270 30 MR MO 1811
DOWNTIME 5 HRS/MO 3000 2 HRS/MO
ENERGY CONSUMP 300 PER MO 1800 140 PER MO 1440
UNPLANNED MAIN 3HRS 1800
TOTAL SECOND YEAR 11940 5640
THIRD YEAR
PLANNED MAINT 45 PER MO 540 30 PER MO 180
DOWNTIME 5 HRS/MO 6000 2 HRS/MO 1200
ENERGY CONSUMP S 320 PER MO 3840 240 PER MO 1440
UNPLANNED MAIN 5 MRS 6000 2 HRS/MO 2400
TOTAL THIRD YEAR 16380 5220
FOURTH YEAR
RE-SALE -300 -3000
PLANNED MAINT
DOWNTIME
ENERGY CONSUMP
TOTAL FOURTH YEAR -800 -3000
ONE-TIME EXPENSES 17000 25000
TOTAL LIFE CYCLE EXPENSES 37660 13500
TOTAL COST OF OWNERSHIP 54660 38500

8. FORMULA: EOQ = √2PD/CV
Where:
• P = ordering cost (dollars per order)
• D = annual demand or usage of product
(number of units)
• C = annual inventory carrying cost (as a
percentage of product cost or value)
• V = average cost or value of one unit of
inventory.

9. EOQ CALCS
Order Qty # of orders Cost of order Inventory Total
(D/Q) P*(D/Q) 1/2Q*C*V
40 120 4,800 500 5,300
60 80 3,200 750 3,950
80 60 2,400 1,000 3,400
100 48 1,920 1,250 3,170
120 40 1,600 1,500 3,100
140 35 1,400 1,750 3,150
160 30 1,200 2,000 3,200
200 24 960 2,500 3,460
300 16 640 3,750 4,390
400 12 480 5,000 5,480