TRL3707
F1 CONCESSION
MAY/JUNE
1.1
A logistics forecast is necessary for a company to effectively manage its supply chain and
make informed decisions about its operations. Here are five reasons why a logistics forecast
is necessary:
1 Demand Planning: By forecasting demand, a company can plan its production,
procurement, and transportation activities accordingly, ensuring that the right products
are available in the right quantities at the right locations, and at the right time.
2 Capacity Planning: By forecasting demand, a company can plan its capacity needs in
terms of transportation, storage, and handling facilities, as well as the workforce required
to meet the demand.
3 Inventory Management: By forecasting demand, a company can plan its inventory levels
and reduce the risk of stock-outs or overstocks, which can lead to increased costs and
reduced customer satisfaction.
4 Cost Control: By forecasting demand, a company can optimize its logistics operations to
minimize transportation costs, reduce inventory carrying costs, and increase efficiency in
its supply chain.
5 Customer Satisfaction: By forecasting demand, a company can ensure that it has the right
products available at the right time and location, improving customer satisfaction and
increasing sales.
Here are five examples from the case study of why a logistics forecast is necessary:
1 Peak Season Demand: The company experiences a significant increase in demand during
peak season, which requires careful forecasting and planning to ensure that there is
enough inventory available to meet the increased demand.
2 New Product Launch: The company is launching a new product, and accurate forecasting
is necessary to ensure that there is enough inventory available to meet demand, without
overstocking and increasing inventory costs.
, 3 Supply Chain Disruptions: The company experiences supply chain disruptions due to port
congestion and labor strikes, making accurate forecasting essential to ensure that
inventory is available when needed.
4 Transportation Costs: The company is experiencing high transportation costs, which can
be optimized through accurate forecasting and planning of transportation needs based
on demand.
5 Seasonal Trends: The company experiences seasonal trends in demand, and accurate
forecasting is necessary to ensure that inventory levels are adjusted accordingly to meet
demand without incurring additional costs.
1.2 Risk of holding inventory by Mr. Price:
Inventory holding is a critical aspect of logistics management, and it involves the acquisition,
storage, and management of goods or products for future use. Holding inventory can be
advantageous to an organization in many ways, including meeting demand fluctuations,
ensuring product availability, and reducing lead times. However, there are also risks
associated with holding inventory, including carrying costs, obsolescence, and damage or
theft.
The three main risks associated with holding inventory are:
Carrying Costs: Carrying costs are the costs associated with holding inventory over a
given period. These costs include storage, handling, insurance, taxes, and
depreciation. Holding inventory for extended periods increases the carrying costs and
reduces the profitability of the organization.
Obsolescence: Obsolescence refers to the risk of holding inventory that is no longer in
demand, has expired, or has been replaced by new technology or products. Obsolete
inventory takes up valuable warehouse space and ties up capital that could be
invested in other areas of the business
Damage or Theft: Holding inventory increases the risk of damage or theft. These risks
can lead to increased costs and negatively impact customer service levels, especially if
the damaged or stolen inventory is in high demand.
Examples of the risks of holding inventory in the case study are:
F1 CONCESSION
MAY/JUNE
1.1
A logistics forecast is necessary for a company to effectively manage its supply chain and
make informed decisions about its operations. Here are five reasons why a logistics forecast
is necessary:
1 Demand Planning: By forecasting demand, a company can plan its production,
procurement, and transportation activities accordingly, ensuring that the right products
are available in the right quantities at the right locations, and at the right time.
2 Capacity Planning: By forecasting demand, a company can plan its capacity needs in
terms of transportation, storage, and handling facilities, as well as the workforce required
to meet the demand.
3 Inventory Management: By forecasting demand, a company can plan its inventory levels
and reduce the risk of stock-outs or overstocks, which can lead to increased costs and
reduced customer satisfaction.
4 Cost Control: By forecasting demand, a company can optimize its logistics operations to
minimize transportation costs, reduce inventory carrying costs, and increase efficiency in
its supply chain.
5 Customer Satisfaction: By forecasting demand, a company can ensure that it has the right
products available at the right time and location, improving customer satisfaction and
increasing sales.
Here are five examples from the case study of why a logistics forecast is necessary:
1 Peak Season Demand: The company experiences a significant increase in demand during
peak season, which requires careful forecasting and planning to ensure that there is
enough inventory available to meet the increased demand.
2 New Product Launch: The company is launching a new product, and accurate forecasting
is necessary to ensure that there is enough inventory available to meet demand, without
overstocking and increasing inventory costs.
, 3 Supply Chain Disruptions: The company experiences supply chain disruptions due to port
congestion and labor strikes, making accurate forecasting essential to ensure that
inventory is available when needed.
4 Transportation Costs: The company is experiencing high transportation costs, which can
be optimized through accurate forecasting and planning of transportation needs based
on demand.
5 Seasonal Trends: The company experiences seasonal trends in demand, and accurate
forecasting is necessary to ensure that inventory levels are adjusted accordingly to meet
demand without incurring additional costs.
1.2 Risk of holding inventory by Mr. Price:
Inventory holding is a critical aspect of logistics management, and it involves the acquisition,
storage, and management of goods or products for future use. Holding inventory can be
advantageous to an organization in many ways, including meeting demand fluctuations,
ensuring product availability, and reducing lead times. However, there are also risks
associated with holding inventory, including carrying costs, obsolescence, and damage or
theft.
The three main risks associated with holding inventory are:
Carrying Costs: Carrying costs are the costs associated with holding inventory over a
given period. These costs include storage, handling, insurance, taxes, and
depreciation. Holding inventory for extended periods increases the carrying costs and
reduces the profitability of the organization.
Obsolescence: Obsolescence refers to the risk of holding inventory that is no longer in
demand, has expired, or has been replaced by new technology or products. Obsolete
inventory takes up valuable warehouse space and ties up capital that could be
invested in other areas of the business
Damage or Theft: Holding inventory increases the risk of damage or theft. These risks
can lead to increased costs and negatively impact customer service levels, especially if
the damaged or stolen inventory is in high demand.
Examples of the risks of holding inventory in the case study are:
