Modelling the Cost Performance of a Given Logistics Network Operating Under Regular and Irregular Conditions

Abstract

This paper develops an analytical model for the assessment of the cost performance of a given logistics network operating under regular and irregular (disruptive) conditions. In addition, the paper aims to carry out a sensitivity analysis of this cost with respect to changes of the most influencing factors. In particular, this is expected to investigate the vulnerability of this network with respect to particular disruptive events. The logistics network under consideration consists of the manufacturers and retailers/consumers as the origin and destination nodes of the goods flow concerned, and the transport system (links and services) connecting them. The nodes are characterized by the goods’ production and consumption rates, and the level of inventories, and related costs. The transport system is characterized by the transport mode that is exclusively used in the network, its frequency of service, the goods’ delivery time (speed), and the related costs. Irregular conditions are characterized by the intensity of the impact and duration of the disruptive event, which, in the given case, is assumed to completely cut off the transport services in the network. The model uses inputs reflecting these characteristics. The output consists of the network’s total and average cost per unit of goods, which is estimated depending on the type and delivery frequency of the transport mode that is exclusively used, and on the duration of the disruptive event. The model is applied to the generic hypothetical logistic network using data from the European logistics networks.