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Appendix 2

α β Dis λ m w V Ti

= = = = = = = =

Fixed costs of transportation Variable cost of transportation (for example, fuel, maintenance) Average distance covered in the period Load factor of truck Moving inventory cost Warehouse(d) inventory cost Value per shipment Mean time taken by step i

Di

=

Distance covered during step i

Ttrans

=

Usage of transportation vehicle (including waiting time and return)

P(t) T D N

= = = =

Probability distribution of lead time (for one or several steps in the chain) Total lead time (random variable) Distance covered in transit (one-way) Number of trips of transit vehicles (per month)

Freight Transportation Costs For modeling purposes, we assume that the shipper or consignee is operating its own fleet (the transport operators are passing the cost on to the customer). The total cost is decomposed into Fixed costs and Variable costs. The equation is as follows: α + β × Dis : Cost of operating per truck over the period (α is the fixed cost). Dis*λ : Average distance covered with a commercial load.

α β + λ × Dis λ

(A2.1)

is the ton per kilometer (TKM) transport cost charged to the user. The TKM is widely used in developing countries as a reference (including in freight contracts). The transport cost depends on how the market is organized as follows: 1. Efficient trucking market. An efficient sector, though not specialized in transit operations. The user pays for truck usage based on the time of immobilization in the transit operation Ttrans (as if the shipper were renting the truck) and the variable cost adjusted for the load factor. The transit takes place over a distance D:

α × Ttrans +

β ×D λ

(A2.2)

where Ttrans =

∑ t + return_time (1 − λ ) i

i

(A2.3)

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...

The Cost of Being Landlocked  

This book proposes a new analytical framework to interpret and model the constraints faced by logistics chains in landlocked countries. The...