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Chapter 1


Learning Objectives After you have studied this chapter, you should be able to: Understand at a high level the domains of supply chains and logisticstheir characteristics and components. Know various types of supply chain objectives, constraints, and costs. Know common supply chain definitions and acronyms. Know the various types and levels of supply chain planning. The overall focus of this book is the application of engineering design and scientific management methodologies to the domains of supply chains and logistics. This introduction summarizes some of the definitions and characteristics of these domains. The general principles of engineering planning and design are discussed in the next chapter.

1.1 The Supply Chain and Logistics Domains Logistics 1.1.1 

Logistics is concerned with the organization, movement, and storage of material and people. The term logistics was first used by the military to describe activities associated with maintaining a fighting force in the field and, in its narrowest sense, describes the housing of troops. The term gradually spread to cover business and service activities. There exist a multitude of formal definitions. The Council of Supply Chain Management Professionals (CSCMP), formerly known as the Council of Logistics Management (CLM), is a large trade association in the United States that promotes the practice and education of logistics. Their definitions are probably the most widely used.
Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers requirements. M. Goetschalckx, Supply Chain Engineering, International Series in Operations Research & Management Science 161, DOI 10.1007/978-1-4419-6512-7_1, Springer Science+Business Media, LLC 2011 1

1 Introduction

It identifies the following planning activities as part of logistics management:

Logistics Management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third-party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and execution strategic, operational, and tactical. Logistics Management is an integrating function, which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions including marketing, sales manufacturing, finance and information technology.

It is worthwhile to expand on some of the characteristics of logistics. Foremost is the fundamental principle that logistics takes a holistic view of all the activities that belong to its domain. Logistics is a mission-oriented discipline that will encompass and coordinate all the activities necessary to achieve its mission, which can be summarized as providing time and space utility to an organization. A business organization has the goal of incorporating the following values into its products: form and function, time and space, and ownership. The form and function values are generated by both its research and design and its production activities. Providing customers with the right product, in the right place, at the right time, generates the time and space values, which is the domain of the logistics activities. Finally, the ownership value is created and enhanced by the marketing activities. Logistics activities and systems have a significant impact on the economy and even on basic human existence. Numerous examples exist, but one of the most striking one occurred in 1990 when the former Soviet Union produced a bumper crop of potatoes, enough to feed its people, ( Atlanta Journal Constitution, January 6, 1991), but at the same time a widespread shortage of potatoes was expected in the Soviet Union during the winter season of 19901991, ( Time Magazine, December 3, 1990). In fact, most of the potato crop was stored in warehouses and railroad cars and rotted before it could be delivered to its intended customers. In this case, logistics systems and activities suffered a major breakdown. Logistics focuses on three types of flows: material flows, information flows, and monetary flows. The most traditional flow is the physical material flow, where the material can range from traditional products, through services, to livestock, and people. The flows can refer to material in motion, indicating the space utility typically associated with transportation, or to material at rest, indicating the time utility typically associated with storage and inventory. The second important flow in logistic activities is the flow of information. Sharing information on the status of physical flows across various organizations executing the logistics functions can dramatically decrease the magnitude of the physical material flows. This has led to implementation of massive software packages for Enterprise Resource Planning (ERP) that provide such information first within a single organization and now among all the organizations in a supply chain. Finally, the increasingly global nature of trade and logistics has sharpened the focus on monetary flows in logistics. Currency fluctuations and fiscal regulations of trade

1.1 The Supply Chain and Logistics Domains

associations such as the European Union (EU) and North American Free Trade Association (NAFTA) can dramatically change the feasibility and efficiency of the physical flows.

1.1.2  Supply Chain

Very closely related to logistics is the concept of a supply chain. A supply chain is a network of functional organizations that through their activities perform the logistics functions. Again many alternative definitions exist.
A supply chain is a network of organizations that are involved through upstream and downstream linkages in the different processes and activities that produce value in the form of products and services in the hands of the ultimate customer. (Christopher 1998)

The CSCMP (2005) identifies the following planning activities as part of Supply Chain Management (SCM).
Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the Logistics Management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance, and information technology.

The following definition is a distillation of several definitions: A supply chain is an integrated network of resources and processes that is responsible for the acquisition of raw materials, the transformation of these materials into intermediate and finished products, and the distribution of the finished products to the final customers. It includes among others vendors, manufacturing and distribution facilities, forwarders, distributors, and wholesalers, third-party logistics providers, and all other entities involved with the sourcing, transformation, and transportation of products until they reach the customer. At the most elemental level, one can think of supply chain operations as production activities in addition to logistics operations. The linkages consist of material, information, and financial flows. The supply chain is usually not a single or simple chain but a complex network with many divergent and convergent flows. Because of the current focus of companies on their core competencies, there are typically many different organizations in a supply chain. If all these organizations belong to the same (multinational) corporation, information flows usually are more complete and powerful and decision making is easier, but the fundamental nature of the supply chain remains unchanged. In other words, there is no difference in the definition of a supply chain depending on the fact if one or more corporations are involved.

1 Introduction

For an organization to become part of a supply chain requires this to be a beneficial relationship or winwin situation in the long run for the organization and for the rest of the supply chain. There exist an enormous variety of supply chain implementations. In the manufacturing industries, examples are the manufacturing and distribution of consumer goods, the assembly of limited-quantity goods such as aircraft and locomotives, or the construction of telephone switching centers. In the service industries, supply chains take the form of hospital and provider networks, functionality and location of banking outlets, and hub-and-spoke networks by major airlines to offer seats on flights. In the defense organizations, supply chains correspond to personnel, equipment, and bases functions and locations. While many different manifestations and configurations exist, the underlying structure of any supply chain remains a network of capacitated production, storage, and transportation assets to provide customer service by the timely delivery of goods and services to the customers at the lowest possible cost. Stadtler and Kilger (2008) define supply chain management as
the task of integrating organizational units along a supply chain and coordinating materials, information, and financial flows in order to fulfill the demands of the ultimate customer with the aim of improving competitiveness of a supply chain as a whole.

1.1.3  Importance of Logistics

A snapshot of the size and importance of some components in the total business logistics costs in the United States for the years 20022006 is given by Trunick (2003, 2004, 2005, 2006), Wilson (2007), and Blanchard (2010), and shown in Tables1.1 and 1.2. Trends in logistics costs in absolute values and relative to the gross domestic product (GDP) are shown in Table1.2 and in Figs.1.11.3. Figure1.1 shows the evolution of inventory costs; Fig.1.2 shows the absolute costs for logistics activities in billion $ per year; Fig.1.3 shows the relative importance of the logistics activities as a fraction of the GDP of the United States. Comparable figures for other areas of the world are difficult to obtain and validate. In Fig.1.1, the left axis shows the value of business inventory in billions of dollars and the right axis shows the inventory carrying rate on an annual basis. The decline until 2004 in the absolute value of the inventory costs and the fraction of the GDP represented by inventory costs can be explained by three factors: (1) a downturn in the overall economic climate, e.g., the slowdown starting in 2001 after the bursting of the dot-com bubble; (2) continuing growth of low-inventory supply chain practices by corporations such as just-in-time part deliveries; (3) a low short-term interest rate that made holding inventory less expensive. The decline in transportation costs can be explained by the same downturn in the overall economic climate, but also by an erosion or net decrease of transportation prices due to very strong competition. However, due to the increased economic activity, carriers were able to introduce a price increase in 2004. Coupled with strongly increasing fuel

Table 1.1 U.S. business logistics costs 20022009 2002 2003 2004 Category Costs Fraction Costs Fraction Costs 2005 Fraction Costs Fraction $5 $233 $58 $245 $93 $252 2006 Fraction Costs 2007 Fraction Costs 2008 Costs 2009 Fraction Costs Fraction $23 $227

$23 $197

$17 $205

$78 $298 32.6 $1,451 0.0 0.0

$78 $300 32.1 $1,492

$82 $332 32.7 $1,627

$90 $393 33.2 $1,763

$101 $446 34.2 $1,857

$119 $357


1.1 The Supply Chain and Logistics Domains

Inventory Interest* Taxes, obsolescence, depreciation, insurance Warehousing Total inventory (*Business inventory value) Transportation Intercity motor carriage Local motor carriage Rail carriage International water carriage $335 $174 $42 $22 $5 $9 $15 $15 $29 $28 $10 $688 61.4 0.6 3.8 100.0 0.0 0.0 0.0 $1,396 100.0 $5 $5 $394 $189 $48 $29 $432 $203 $54 $32 $542 $50 $29

$300 $162 $37 $21

$315 $167 $38 $21



Domestic water $6 carriage International air $7 carriage Domestic air carriage $20 Forwarders $14 Oil pipelines $9 Total Transportation $576 Shipper costs $6 Administration $35 Total logistics costs $915 Costs in B$, Fractions in % 63.5 0.6 3.8 100.0 $22 $18 $9 $636 $8 $39 $1,015 62.7 0.8 3.8 100.0 62.2 0.7 3.9 100.0 $25 $22 $9 $736 $8 $46 $1,183 $23 $27 $10 $801 $8 $50 $1,305

63.0 0.7 3.8 100.0

$21 $10 $9 $594 $6 $36 $936


0.0 0.0 0.0 100.0

$51 $1,096

62.8 0.0 4.7 100.0

Table 1.2 U.S. business logistics costs over a twenty-six year period Year GDP Business invenInventory carrying Inventory tory value ($B) rate (%) costs Transportation costs 228 222 243 268 274 281 294 313 329 351 355 375 396 420 441 467 503 529 554 590 581 577 600 644 736 809 19 18 18 20 20 20 21 23 24 25 24 24 25 27 30 31 33 34 35 39 37 35 36 39 54 50 8.3 7.2 6.0 6.1 5.4 4.9 4.7 4.9 5.2 4.9 4.3 3.7 3.6 3.8 4.1 3.9 3.8 3.7 3.6 3.8 3.2 2.9 2.8 2.8 3.2 3.4 7.3 6.8 6.9 6.8 6.5 6.3 6.2 6.1 6.0 6.1 5.9 5.9 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 5.8 5.5 5.6 5.5 6.0 6.1 16.2 14.5 13.3 13.4 12.4 11.6 11.4 11.5 11.7 11.4 10.6 10.1 9.9 10.1 10.4 10.3 10.2 10.1 9.9 10.2 9.3 8.7 8.5 8.6 9.7 9.9 10.1 688 51 Administration costs Total logistics costs Inventory cost % of GDP (%) Transport costs % of GDP (%) Logistics Cost % of GDP (%) 259 234 211 240 227 217 225 251 282 283 256 237 239 265 302 303 314 321 333 374 320 300 300 332 393 446

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 357

3,130 3,260 3,540 3,930 4,210 4,450 4,740 5,110 5,440 5,800 5,990 6,320 6,640 7,050 7,400 7,810 8,320 8,780 9,270 9,870 10,080 10,470 10,759 11,802 12,216 13,182

747 760 758 826 847 843 875 944 1005 1041 1030 1043 1076 1127 1211 1240 1280 1317 1381 1478 1403 1451 1494 1627 1763 1857 1966

34.7 30.8 27.9 29.1 26.8 25.7 25.7 26.6 28.1 27.2 24.9 22.7 22.2 23.5 24.9 24.4 24.5 24.4 24.1 25.3 22.8 20.6 20.1 20.4 22.3 24.0

1 Introduction

506 474 472 528 521 518 540 587 635 659 635 636 660 712 773 801 850 884 922 1003 938 912 936 1015 1183 1305 1396 1340 1096

1.1 The Supply Chain and Logistics Domains


40.0% 35.0%

Business Inventory Value ($B)

Inventory Carrying Rate

2000 30.0% 1500 25.0% 20.0% 1000 15.0% 10.0% 500 5.0% 0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0.0%

Fig. 1.1 Business inventory value and carrying rate Fig. 1.2 Business logistics costs
1600 1400 1200 Costs (B$) 1000 800 600 400 200 0 1981 1984 1987 1990 1993 1996 1999 2002 2005





18.0% 16.0% Cost as % of GDP 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1981 1984 1990 1996 1999 2002 1987 1993 2008




Fig. 1.3 Business logistics costs as fraction of the gross domestic product



1 Introduction

prices in 2005 and 2006 and the accompanying fuel surcharges, the fraction of the GDP attributed to transportation costs increased in 2005 and again in 2006. In addition, the inventory quantities and the interest rates and corresponding inventory carrying cost increased in 2005 and again in 2006. As a consequence, the fraction of the GDP attributable to logistics, after many years of decline, grew to close to 10% in 2005, nearly 10% in 2006, and fractionally higher than 10% in 2007. In 2006 the increase in transportation costs was mainly caused by the rise in fuel costs. The increase in inventory costs was due to an increase of inventory held, higher warehousing costs, and the increase in the interest rate for carrying inventory. The statistics for 2009 show a decrease of more than $244billion and a combined decrease in 2008 and 2009 of $300billion. These decreases are due to the severe recession of 20082009, indicating that logistics cost are strongly dependent on the overall economic level of the United States. Typically, annual logistics data become available in July or August of the following year. The statistics on the importance of logistics costs for other areas of the world are much harder to obtain and validate. The following statistics have been collected from a variety of publications in the trade literature. Logistics cost are estimated to make up 14% of the GDP of the European Union. Vachine (2008) reports that logistics in India is a $100billion industry in 2008, which is expected to reach $120billion by 2010. Since the statistics may have been collected differently from statistics for the United States, any side-by-side comparison should be carefully validated.

1.1.4  Information Technology, Computers, and Communications

The fundamental physical technologies for transporting and storing materials have remained relatively unchanged during the last five decades. However, information technologies and especially the recent widespread use of the Internet have had a tremendous impact on the control and information flows in logistic systems. For the first time there exists a two-way and up-to-date communication between the end customers, their vendors, and logistics services providers. At the same time, the development of relatively inexpensive tags that can be placed in or on the product and that can be interrogated and updated without physical contact through radio waves (RFID) allow individual product items to store a variety of information on their supply chain history and future. This capability has created several new logistics tools and systems such as mass customization, yield management, end-to-end product and product history availability, and service auctions. For example, Fig.1.4 illustrates the information presented to an end customer when the package, containing a single customer order, is shipped. The current location and the transportation history of the shipment are reported in detail. This allows the receiver to better plan its activities and provides detailed transactional data to the carrier to optimize its network and operations. In essence, the availability of accurate information has allowed the decrease of just-in-case material inventory without reducing the customer service level.

1.2 Logistics Planning and Decisions Support Fig. 1.4 UPS shipment tracking report over the internet

A virtual logistics enterprise temporarily combines various logistics service providers and requesters into a single organization for the execution of a particular logistics mission. After the mission has been completed, the component companies become independent again. A particular company may at the same time be a partner with another company for one logistics mission and a competitor for another mission. Such virtual enterprises have only recently become feasible because of the dramatic growth in information technology.

1.2 Logistics Planning and Decisions Support 1.2.1  Three Levels of Logistics Planning
To maximize the value along a supply chain, a large variety of planning decisions have to be made, ranging from the simple warehouse-floor decision of which item


1 Introduction

to pick next to fulfill a customer order, to the corporate-level decision to build a new manufacturing plant. Supply chain planning supports the full range of those decisions related to the design and operation of supply chains. The focus of this book is on the use of normative models and mathematical solution algorithms to support supply chain planning. Such models and algorithms require the identification and quantitative specification of objectives, constraints, and alternatives. In order for the solution generated by the algorithms to be implementable, it has to be based on accurate data for that particular problem instance. If either of the instance data, the decision support model, or the solution algorithm is incorrect, then the generated decisions will be of little practical value. There exists a vast amount of literature, software packages, decision support tools, and design algorithms that focus on isolated components of the supply chain or isolated planning in the supply chain. Some examples are production planning in manufacturing, vehicle dispatching in transportation, and warehouse management systems in distribution operations. However, maximization of the potential for adding value along the supply chain requires an integrated and comprehensive planning approach. The supply chain considered should extend from the suppliers of the raw materials, through the various transformation stages, to the final consumers. In recent years, the recovery and recycling operations and processes of post-consumer products are also included in the supply chain and its planning. In the last few decades, several companies have developed Enterprise Resource Planning (ERP) systems in response to the need of global corporations to plan their entire supply chain. Two major examples of such software vendors are Oracle and SAP. ERP systems integrate the data of one or more principal business functions such as accounting, human resources, production planning, and sales. In their initial implementations, the ERP systems were primarily used for the recording of transactions rather than for the planning of resources on an enterprise-wide scale. Their main advantage was to provide consistent, up-to-date, and accessible data to the enterprise. In recent years, the original ERP systems have been extended with Advanced Planning Systems (APS). The main function of APS is the planning of enterprisewide resources and actions. The goal of APS is to find feasible, near-optimal plans across the supply chain as whole, while potential bottlenecks are considered explicitly (Stadtler and Kilger 2008). This implies a coordination of the plans among several organizations and geographically dispersed locations. APS are responsible for planning, while ERP systems are still required as the transaction and execution system. APS use or extract data stored in the ERP to support algorithm-based decision making and then store the plans back into the ERP. APS do not substitute for ERP but supplement existing ERP systems. APS typically comprise several planning modules ranging from strategic network planning, through intermediate demand planning and master planning, to operational material requirements planning (MRP), production planning, distribution requirements planning (DRP), and transportation planning. At the current time, the major emphasis in APS is on the operational planning and execution levels. The planning modules for strategic decisions are still in their infancy in current

1.2 Logistics Planning and Decisions Support Fig. 1.5 Organization of supply chain planning modules



Stratetic Enterprise Planning

Strategic Demand Planning Tactical Demand Planning

Tactical Master Production and Distribution Planning

Material Operational Production Distribution Operational Requirem. Demand Planning Planning Planning Planning Vehicle Demand Dispatching Monitoring

Execution Purchasing Scheduling

implementations. The organization of the various planning modules in supply chain planning and the relations between them are shown in Fig.1.5. More details on the hierarchy of planning tasks and on APS can be found in Stadtler and Kilger (2008) and Fleischmann and Meyr (2001). Software to plan the supply chain that has been created outside the ERP system many times is called Supply Chain Management software. The individual planning tasks in an APS constitute in themselves very difficult planning problems. Sophisticated optimization algorithms, such as mixed integer programming (MIP), constraint programming techniques, and heuristic algorithms may be used. Since decisions are made at different times, by different decision makers, and in different locations, no single integrated and comprehensive planning model and corresponding planning algorithm exist. Most often, the overall planning task is solved using hierarchical decomposition or hierarchical planning. Examples of major software houses offering APS or SCM are J. D. Edwards, and SAP. Several of these companies also provide the ERP system, while others rely on third-party ERP systems. The modules in these APS, their capabilities and functionalities, change continuously and dramatically. Many times, the only available information is based on marketing and promotional materials provided by the software vendors. The detailed assumptions, constraints, and objectives of the strategic models and algorithms are particularly hard to determine. Previously, Anderson Consulting, in cooperation with the CLM annually compiled a database of software packages used for the planning and scheduling of logistics operations; see Haverly and Whelan (2000) for one of the most recent editions. Strategic Planning The decisions made at the strategic planning level are characterized by their permanence and importance to economic survival of the company. Examples in manu-


1 Introduction

facturing are the construction of a manufacturing plant, the sizing and location of production capacity, the switch from company-owned to third-party logistics, the selection of distribution channels, and the identification and ranking of product customer pairs. Examples in the service industry are the decision for two banks or hospitals to merge and again the identification of desirable productcustomer pairs. Finally, examples in the defense sector are the configuration of the armed forces, the deployment of a new weapon system, and the decisions on location or closure of bases. A third characteristic of strategic planning is the lack of quantitative and validated data for the full time horizon of the decision. A manufacturing plant typically has a useful life of twenty years or more, while the products manufactured in the facility may have a life cycle of less than a year. Many times the decision has to be based on external data that are forecasted with a huge amount of uncertainty, especially for time periods further and further into the future. Examples are the evolution of population and wages in various areas of the country or the world and the forecasts for the acceptance and use of technologies and products. The opportunities for success and the penalties for mistakes can mean the survival or demise of the corporation for several years or even permanently. Compared to tactical and operational planning, the strategic planning process is much more intermittent and much more decoupled from the data stored in ERP systems. Tactical Planning The decisions made at the tactical planning level typically have a permanence of three months to a year. Examples are the production schedule for the next three months, the long-term contract with a supplier or a transportation company, and the determination of the level of customer service. Tactical decisions are typically based on a mixture of internal and external data. Internal data may comprise sales forecasts based on historical sales and questionnaires. External data may include the overall health of the economy, the exchange rates between various currencies, and the season of the year. An external or corporate forecasting department typically creates the sales forecast in a periodic fashion. The configuration of the supply chain determined at the strategic level now translates into a number of constraints at the tactical level. The consequences of success or failure can have dramatic impact on the share price of the corporation. Operational Planning The decisions made at the operational planning level typically have a permanence of one day to one week. Examples are the weekly production schedule, the amount of product to be picked and shipped to a customer, and the amount of product purchased from a supplier. The data available to support operational planning is most often internal data which is known with great detail and accuracy. The more recent use of

1.4  Exercises


ERP systems has provided planners with extensive operational data. The savings and penalties associated with operational decisions typically impact the performance measures of a facility or a department in a facility. Execution The decisions made at the execution level typically have a permanence of a few minutes to a few hours. Examples include which part to produce next, which part to pick next in a distribution center, or which customer is delivered to next by a vehicle. The data for the execution decisions is often known with certainty since it is based on direct observations of the physical world. The impact of a single execution decision is often very small or negligible, but since so many execution decisions are made, their aggregate impact determines the cost and resource consumption rates used at the higher planning levels. In general, decisions made at higher planning levels transform into constraints at the lower planning levels. The result of planning at the lower levels in turn provides more accurate estimates or aggregate data for the characteristics of the operations. The engineering design and planning methodology uses those improved aggregate data in the next iteration of the higher level planning.

1.3 Summary and Conclusions

This chapter started off with the definition of supply chains, supply chain components, and various supply chain planning and design problems. One of the most important classifications of supply chain planning and design problems is their planning level. The higher the level of the planning problem, the more comprehensive and the integrated the problem becomes, the more uncertain the data becomes, and the larger the variety of the design goals becomes. Uncertain data and multicriteria goals yield an especially complex engineering design problem.

1.4 Exercises
True/False Questions 1. Besides the material flow and the monetary flow, logistics is mainly concerned with the transportation flow in the logistics system (T/F) _____. 2. Strategic logistics planning is based on accurate transactional data (T/F) ______. 3. Tactical logistics planning can change the configuration of the logistics network (T/F) _____. 4. The sole focus of logistics planning is inventory management (T/F) _____.


1 Introduction

World Trade Organizations Doha Round of Negotiations The negotiations in the framework of the current WTO Doha development round have proven to be very difficult, and progress towards reaching an agreement has been very slow because of the different goals of the different types of nations. Identify for each of the following nations, groups, or types of nations one area in which they want trade barriers lowered and free trade rules established and one area in which they prefer protectionist rules and regulations. The parties are the United States, the European Union, Japan, BRIC countries, and underdeveloped third-world countries. Explain in a single and succinct sentence why each of those countries wants to promote or obstruct free trade in areas that you have identified. Describe in a single paragraph the underlying principles that govern the global trade aspirations for the different types of nations and the different segments of their economy.

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