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Physical distribution analysis for the traffic manager Schmirler, David Joseph

Abstract

The physical distribution concept recognizes the interrelationships between transportation, materials handling, warehousing and the other processes that are involved in the physical flow of traffic from the source of raw materials, through production and distribution facilities, to the firm's customers. The essence of the concept is that it is the total cost of the several processes, rather than the cost of individual processes, that must be taken into account in decisions in which there are alternatives for the physical movement of materials and products. Physical distribution analysis involves the formulation and comparison of the alternatives for traffic flow. This thesis is concerned primarily with the development of a procedure for physical distribution analysis that may be useful in the formulation of decisions that are within the Traffic Manager's sphere of responsibility. In order to identify the nature of these decisions and in order to develop a suitable framework for the Traffic Manager's analyses, the second chapter describes the major decisions in which physical distribution principles should be applied; relates these applications to successive planning intervals; and considers the scope of these decisions in terms of the authority that is necessary for their implementation. The author suggests that the major applications of the physical distribution concept include long-term decisions related to the spatial allocation of production capacities, intermediate-term decisions involving changes in the fixed facilities for physical distribution, and short-term decisions concerning the utilization of existing production and physical distribution facilities. Of these applications, it is only the short-term decisions that are likely to be made by the Traffic Manager. Chapters three to five, therefore, are concerned with the procedures for formulating and comparing short-term alternatives. To facilitate presentation, the author deals specifically with the development of a procedure for analysis for two of the short-term physical distribution problems -- the day-to-day problem of meeting customer orders out of inventories that are on hand at distribution warehouses; and the problem of allocating short-term output among the firm's plants. The author recommends the linear programming technique as the method for selecting the optimum alternative for each of these problems. The application of this technique is described in detail in Chapter V. The major determinants of physical distribution alternatives, the identification of feasible alternatives, and the development of unit variable costs required by the linear programming models are dealt with in Chapters III and IV.

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