Supply Chain Management SS 23
Case Study: Burlington Northern
1. Based on the given shipper information calculate the total cost of logistics of the
current rail and a truck shipment.
Formula used:
▪ Average in-transit inventory = (transit time (T) * demand rate (D))/30,4375
▪ Average cycle inventory = Q/2
▪ Average safety stock = (P * D) / 30,4375
▪ Average total inventory = Average in-transit inventory + Average cycle inventory
+ Average safety stock
%
25
𝑦𝑒𝑎𝑟
▪ Average Total Inventory Costs = ATI * Holding cost = ATI * ( 𝑚𝑜𝑛𝑡ℎ𝑠 ) * 20 $/case
12
𝑦𝑒𝑎𝑟
▪ Transportation Costs = (D/Q) * p
▪ Total Logistics Cost = Inventory Cost + Transport Cost + Blocking & Bracing
1
Case Study: Burlington Northern
1. Based on the given shipper information calculate the total cost of logistics of the
current rail and a truck shipment.
Formula used:
▪ Average in-transit inventory = (transit time (T) * demand rate (D))/30,4375
▪ Average cycle inventory = Q/2
▪ Average safety stock = (P * D) / 30,4375
▪ Average total inventory = Average in-transit inventory + Average cycle inventory
+ Average safety stock
%
25
𝑦𝑒𝑎𝑟
▪ Average Total Inventory Costs = ATI * Holding cost = ATI * ( 𝑚𝑜𝑛𝑡ℎ𝑠 ) * 20 $/case
12
𝑦𝑒𝑎𝑟
▪ Transportation Costs = (D/Q) * p
▪ Total Logistics Cost = Inventory Cost + Transport Cost + Blocking & Bracing
1
