International Journal of Physical Distribution & Logistics Management

Lisa M. Ellram

1995 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600039510099928

Total cost of ownership is a methodology and philosophy which looks beyond the price of a purchase to include many other purchaserelated costs. This approach has become increasingly important as organizations look for ways to better understand and manage their costs. Examines case studies of 11 firms which use total cost of ownership concepts in purchasing. Based on the case study data and the literature, barriers and benefits associated with the total cost of ownership approach are discussed. The total cost of ownership models used by the case study firms are classified by type as dollar‐based or value‐based, and an example of each is shown. The total cost of ownership models are then further classified by their primary usage: supplier selection or supplier evaluation. This cross classification reveals a strong relationship between model type and model usage. Concludes with a comparison of the models, recommendations for practitioners and a discussion of future research directions.

Gwo‐Hshiung Tzeng; Ming‐Jiu Hwang; Shih‐Chan Ting

1995 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600039510099937

Concerns the logistics system of the Taiwan power company, Taipower, and the problem it faces of coal allocation and fleet deployment of dedicated coal carriers. The coal allocation problem can be viewed as a multi‐index transportation problem requiring the formulation of a coal allocation model. Owing to the high uncertainty of shipping operations, formulates a dynamic fleet assignment model to dispatch vessels and maximize ship usage. An integrated coal allocation and fleet assignment decision support system based on these models was developed to assist the decision maker. It not only guides Taipower marine operations management in annual schedule planning, but also assists operating personnel to allocate vessels to the schedules and to make rapid adjustments. Demonstrates the potential for substantial cost improvement in Taipower coal trade.

B.A. Murtagh; J.W. Sims

1995 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600039510099955

Describes a procedure for modelling the costs of production and distribution between several production facilities with economies of scale and many customers who are widely dispersed. The problem takes the form of a large transportation problem on which is superimposed a cost minimization problem involving variable production quantities. These costs involve fixed costs for initiating production and variable costs with diminishing returns to scale. Models the problem as a non‐linear integer programming problem and then solves it using a recently developed non‐linear integer algorithm. Describes two applications in Australia and New Zealand and illustrates how comparison with a mixed‐integer linear programming formulation shows a significant improvement.

Mark W. Speece; Yukiko Kawahara

1995 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/09600039510099964

Aims to provide an outline of current transportation conditions to prepare companies considering entry to the Chinese market for the realities they will inevitably confront there. The transportation sector has not kept up with China′s rapid economic growth. Transportation has become a major bottleneck to further development of foreign business operations in China. As reforms have freed the economy, more goods are being shipped for longer distances. Railways, highways and shipping are now swamped beyond their capacity. In addition to inadequate infrastructure, transport companies, mostly state owned, operate inefficiently under near monopolistic conditions. Bureaucratic inefficiency and corruption make the movement of products even more difficult. Within the last year, Beijing has finally begun to take problems in the transport sector seriously, but it will likely be decades before transport operations in China run smoothly.