LOGISTICS MANAGEMENT

Submitted By Hina Firdous

F2019087008
Submitted To Asher Ramish

Date: March 25, 2020

UNIVERSITY OF MANAGEMENT AND TECHNOLOGY

LAHORE
Logistics is playing an increasingly vital role in value creation, revenue enhancement, capital
consumption, and expense control. As a result, logistics financial performance is playing a bigger
role in corporate financial performance. Measuring and improving logistics financial
performance is increasingly important in measuring and improving corporate financial
performance. Logistics performance can be determined through,

Return on Logistics Assets

REVENUE−COST
ROLA = ASSETS

Revenue

Revenue that is generated from the logistics operations and their contribution to sale.

Logistics Expenses (LE)

Logistics expenses are dominated by labor expenses but also include telecommunications,
inbound and outbound freight, fuel, fees to third parties, and leased or rented space.

Logistics Asset Value (LAV)

The logistics asset value is the sum total of the value of assets deployed in logistics including
inventory, logistics facilities, transportation fleets, material handling systems, logistics
information systems, and so on. The valuation is typically based on book value, replacement
value, and the capitalization of logistics assets.[ CITATION SAM17 \l 1033 ]

Logistics Capital Charges (LCC = LAV *ACR)

Logistics capital charges are computed as the product of the investment in logistics assets and the
asset carrying rate (ACR). The ACR is used to annualize the holding cost of fixed assets
Total Logistics Cost (TLC = LE + LCC)

Cost includes all the cost related to logistic operations and we can determined the cost .Total
logistics costs (TLC) is defined to include expense and capital costs in the five logistics
processes: The total logistics costs are made up of the following:

i. Total response cost (TRC)

ii. Total inventory costs (TIC)
iii. Total supply costs (TSC)
iv. Total transportation costs (TTC)
v. And total warehousing costs (TWC).

Logistics Profit (LP = R - LE)

Logistics profit is computed simply as revenue minus logistics expenses. The computation of
logistics profit per item, per category, or per location is helpful in determining the business
viability of an item, category, or location.

Return on Logistics Assets (ROLA = P/LAV)

The return on logistics assets is computed simply as the ratio of corporate profit (P) to LAV. The
ratio can demonstrate the difference between the return on logistics assets versus the return on
overall corporate assets or the assets deployed in the other areas of the business.
References
ABERHAM, D. (June 2017). AN ASSESSEMNT OF LOGISTICS PERFORMANCE OF THE ETHIOPIAN ELECTRIC
POWER (EEP) .

Skowron-Grabowska, B. (n.d.). PERFORMANCE MEASUREMENT IN LOGISTICS CENTERS. Advanced

Logistic Systems.

TEMESGEN, S. (2017). EFFECTS OF SOURCING STRATEGY ON OUTBOUND LOGISTICS PERFORMANCE, IN

THE CASE OF ETHIOPIAN AIRLINES.