Logistics

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Report on International Logistics

I. Introduction

This report focuses on. the type of inventory decisions that ZK would have to make. the factors the company would take into account when choosing its transport methods. how the company would take into account customer needs when deciding on warehousing facilities.

II. Findings

1. The type of inventory decision that ZK would have to make

Inventory control is the supervision of supply, storage and accessibility of items in order to ensure an adequate supply without excessive oversupply.

It can also be referred as internal control - an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc.

Your business's basic stock should provide a reasonable assortment of products and should be big enough to cover the normal sales demands of your business.

Insufficient inventory means lost sales and costly, time-consuming back orders. Running out of raw materials or parts that are crucial to your production process means increased operating costs, too.

The cost of inventory

In business management, holding cost is money spent to keep and maintain a stock of goods in storage.

The most obvious holding costs include rent for the required space; equipment, materials, and labor to operate the space; insurance; security; interest on money invested in the inventory and space, and other direct expenses. Some stored goods become obsolete before they are sold, reducing their contribution to revenue while having no effect on their holding cost. Some goods are damaged by handling, weather, or other mechanisms. Some goods are lost through mishandling, poor record keeping, or theft, a category euphemistically called shrinkage.

ZK company also have the opportunity cost of reduced responsiveness to customers' changing requirements, slowed introduction of improved items, and the inventory's value and direct expenses, since that money could be used for other purposes.

Stock levels

Comprised of base inventory level and target inventory level. Base inventory level is made up of aggregate lot-size inventory plus the aggregate safety stock inventory. It does not take into account the anticipation inventory that will result from the production plan. The base inventory level should be known before the production plan is made. The target inventory is equal to the order point plus a variable order quantity. It is often called an order-up-to inventory level and is used in a periodic review system.

ZK companies should in order to reduce unnecessary consumption, control inventory levels. Reduce inventory levels, but not less than the safety standards.

Promotion

ZK need to produce a promotional strategy, recommends that companies use push-pull strategy.

Marketing theory distinguishes between two main kinds of promotional strategy - "push" and "pull".

Push

A “push” promotional strategy makes use of a company's sales force and trade promotion activities to create consumer demand for a product.

The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers.

A "push" strategy tries to sell directly to the consumer, bypassing other distribution channels (e.g. selling insurance or holidays directly). With this type of strategy, consumer promotions and advertising are the most likely promotional tools.

Pull

A “pull” selling strategy is one that requires high spending on advertising and consumer promotion to build up consumer demand for a product.

If the strategy is successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the producers.

Push-pull strategy is most suitable for ZK's promotion strategy. It can be the largest of the company's products to promote.

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