The Need for a Revised Conceptual Framework
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Quantitative Model of a Transit Supply Chain To assess the impact of facilitation measures or changes in business patterns related to trade and transport along corridors, we developed a quantitative supply chain model identifying the impacts of cost, lead time, and uncertainty in lead time. The details of the model structure are detailed in Appendix 2, and the following chapters focus on some of the key elements of the chain, apart from transport costs, which were tackled in Chapter 2. The shipper in a landlocked country bears the transit cost of inland logistics operations from and to the port and to and from the warehouse or factory. The transit chain is broken into steps. Some are transport-related (moving goods between borders), but many are not (container storage in the port terminal, transit documents, customs processing and warehousing at the operator’s facilities). For simplicity, we consider one mode of transport in transit. The various elements are defined in table 3.4.
Table 3.4 O A
Notations and Definitions
a b Dis l m w V Ti
= Transit overheads = Administrative costs of organizing transit operations: internal costs or costs paid to logistics providers (for example, to arrange small shipments) = Average lead time (days) of transit operation, for instance: Ex ship to consignee (imports) Shippers to FOB (exports) = Average time (days) between identical shipments required by the level of demand for such shipment (replenishment cycle) = 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 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
= = = =
Tmean
S
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)
Source: Authors. Note: FOB = free on board.