NOW FOR THE REAL
LOGISTICS is NOT about
transportation; it IS about providing!
THE DEVIL IS IN THE DETAILS!
• For want of a nail the shoe was lost.
• For want of a shoe the horse was lost.
• For want of a horse the rider was lost.
• For want of a rider the battle was lost.
• For want of a battle the kingdom was lost.
• And all for the want of a horseshoe nail!
LOGISTICS deals with details, including problem details in
depth. Problem factors present in most LOGISTICS
operations may be referred to by the acronym RAM-T:
R) Reliability: Can the product or instrument mentioned be relied upon to
perform at all times and under all conditions?
A) Availability: How much time elapses between the time of delivery and the
time the product has been assembled adequate to do the job?
M) Maintainability: Can the product be returned to near its original level of
efficiency and reliability by careful and timely maintenance regime?
T) Transportability: Can the product be transported by normal means?
SIX SIGMA APPROACH TO PROBLEM SOLVING
& PROJECT MANAGEMENT
• DEFINE the problem
• MEASURE the problem
• ANALYZE the problem
• IMPROVE the situation
• CONTROL the situation
SEA FREIGHT AIR FREIGHT
Ocean Freight charges 4205Air freight 8894
Pre-carriage to Port of Loading 3800
Pier Delivery at Port 421Airport delivery 150
Forwarding Fees 125 35
Insurance 1200 25
Customs formalities 125 90
Pier pick-up Port of Discharge 300Final delivery 100
On-carriage inland dest. 350
TOTAL DDU 10525 9294
FIRST 12 MONTHS A COSTS B COSTS
PLANNED MAI NT S 45 PER MO 540 30 PER MO 360
DOWNTIME 5HRS/MO(d)SlOO/hr 6000 2HRS/MO 2400
PETROL S 300 PER MO 3600 240 PER MO 2850
TOTAL FIRST YEAR 10140 5640
THIRD SIX MONTHS
PLANNED MAINT 45 PER MO 270 30 PER MO 180
DOWNTIME 5 HRS/MO 3000 2 HRS/MO 1200
ENERGY CONSUMP 300 PER MO 1800 240 PER MO 1440
FOURTH SIX MONTHS
PUNNED MAINT 45 PER MO 270 30 MR MO 1811
DOWNTIME 5 HRS/MO 3000 2 HRS/MO
ENERGY CONSUMP 300 PER MO 1800 140 PER MO 1440
UNPLANNED MAIN 3HRS 1800
TOTAL SECOND YEAR 11940 5640
PLANNED MAINT 45 PER MO 540 30 PER MO 180
DOWNTIME 5 HRS/MO 6000 2 HRS/MO 1200
ENERGY CONSUMP S 320 PER MO 3840 240 PER MO 1440
UNPLANNED MAIN 5 MRS 6000 2 HRS/MO 2400
TOTAL THIRD YEAR 16380 5220
RE-SALE -300 -3000
TOTAL FOURTH YEAR -800 -3000
ONE-TIME EXPENSES 17000 25000
TOTAL LIFE CYCLE EXPENSES 37660 13500
TOTAL COST OF OWNERSHIP 54660 38500
FORMULA: EOQ = √2PD/CV
• P = ordering cost (dollars per order)
• D = annual demand or usage of product
(number of units)
• C = annual inventory carrying cost (as a
percentage of product cost or value)
• V = average cost or value of one unit of