Costs of inbound logistics: Towards a decision support model for production system design

Abstract

Global competition forces companies to constantly increase the efficiency in their production systems. One important factor affecting the production performance is the inbound materials handling system. When designing or relocating a manufacturing system, the cost of the material handling system is one of many things to take into consideration. In connection with on-going research a comprehensive decision support for production location, both work procedures and model and tools for strategic and economic analyses are developed. A case study was conducted, at a supplier to the heavy vehicle industry, in order to develop cost models for inbound logistics. The results were two cost models of different accuracy giving the cost per part, where the comprehensive model is taking the process and equipment into consideration. In addition, the study also revealed the proportion between inbound logistics costs and assembly costs at the company studied. The result in this article is part of the development of making models for calculating the total production part cost.