CLT cheat sheet

Logistics cost as a share of GDP is estimated by summing inventory carrying costs, transportation costs, and administrative costs relative to national output.

The seven rights of logistics: the right product, in the right quantity, in the right condition, to the right place, at the right time, to the right customer, at the right cost.

Inventory carrying cost per year is typically modeled as holding rate times average inventory value; holding rates commonly fall in a 15-30% annual range depending on capital, storage, obsolescence, and risk assumptions.

Economic order quantity: EOQ = sqrt(2DS/H), where D = annual demand, S = order cost per order, H = annual holding cost per unit.

Reorder point = lead-time demand + safety stock; safety stock rises with lead-time variance, demand variance, and target service level.

Total landed cost = unit price + freight + duties/tariffs + insurance + handling + inventory carrying cost + risk cost.

The order-to-cash cycle covers order receipt, credit check, picking, packing, shipping, invoicing, and collection; the cash-to-cash cycle = days inventory outstanding + days sales outstanding - days payable outstanding.

Incoterms define who bears cost and risk at named points; EXW places minimum obligation on the seller, DDP places maximum obligation on the seller.

Modes ranked by typical cost per ton-mile from lowest to highest: pipeline/ocean, rail, truck, air; speed generally reverses that order.

Cycle service level relates to the fill rate through the normal loss function: expected shortage per replenishment cycle = sigma_L times L(z), and fill rate = 1 - (expected shortage / order quantity).

Safety stock for a periodic-review system: SS = z times sigma of demand over review period plus lead time; for continuous review, SS = z times sigma over lead time only.

Newsvendor critical ratio = Cu / (Cu + Co), where Cu is underage (lost margin) cost and Co is overage (excess) cost; optimal order quantity sets P(demand <= Q) equal to that ratio.

Transportation economies: consolidation lowers cost per unit by raising vehicle utilization; shipment size and frequency trade off against inventory and lead-time costs.

Warehouse slotting assigns SKUs by velocity and cube; ABC analysis by pick frequency typically places the highest-throughput SKUs in the most accessible locations.

Cross-docking transfers inbound to outbound with minimal storage; it requires synchronized inbound/outbound schedules and accurate advance shipment notices.

Distribution network design compares transportation cost, facility fixed cost, and inventory cost across candidate numbers of warehouses; total cost is usually convex with an interior minimum.

Bullwhip effect drivers include demand signal processing, order batching, price fluctuation, and rationing/shortage gaming; information sharing and shorter lead times dampen amplification.

Perfect order metrics combine on-time delivery, in-full delivery, damage-free delivery, and correct documentation into a single multiplicative measure.