14. "Just in time" model. The possible reflection of the model in contracts.

The essence of the concept of JIT is that at any point in the logistics system must be in stock as long as this link can process at the present time and no more. All resources should act on the principle of "just in time" to the right place at the right time and right quantity.Ideally, a company that uses a system of JIT, daily buys as much raw material as it is necessary to work in one day. Moreover, by the end of the day in its shops there will be work in progress, and all manufactured products are sent to customers. Thus, the stock does not stay any finished product. If you do JIT system and nowhere for anyone not perform until you get an order from a customer. This allows the company to avoid creating a safety stock of a resource and not to withdraw money from circulation in its procurement and storageKey elements of the JIT* The company must learn to rely on multiple vendors, with whom she associated long-term contracts.* Selected providers must be prepared to supply raw materials and often in small lots. Such purchases require a constant and direct contact between the company and suppliers.* The company must develop and implement a comprehensive system of quality control of components and materials. This means that no defects are not acceptable, since one or two defective components can stop the entire production line.* Workers must have a multi-disciplinary skills. In the framework of JIT machinery and equipment are arranged in groups to allow different technological operations with one kind of product.Benefits of JITA. Dramatically reduced the cost of storing inventory that allows the use of freed resources for other purposes of the company.Two. Vacated warehouses can be used with greater efficiency.Three. A comprehensive quality control reduces marriage to a minimum, sometimes eliminating it entirely.4. Labor productivity increases and the time for setting up machines is reduced. This contributes to the stability of the production process and reduce production time.

15. Function of total costs.

The concept of total cost. In this concept of logistics functions are considered as a whole and not individually. Logistics includes the following functions: transport of goods, warehousing of inventory, optimizing inventory placement and suppliers, inventory control of material resources and finished goods, material handling, maintenance of information flows, etc. The essence of the concept of total costs is the fact that all costs are considered as carried out simultaneously to ensure the required level of service. When comparing costs of alternative approaches according to some of the features, costs will increase, according to some –decrease or remain at the same level. The aim is to find an alternative, which is characterized by the lowest overall cost.

It should be pointed out that these costs depend on many factors. Some of these include

i) who owns the inventory and who manages the inventory at each point in the

pathway from the production of goods until they arrive in the importer’s regional

distribution centre. For the most part, we deal with the simplest case where the

ownership of the goods is from one owner throughout the supply chain from

origin to destination.

ii) the nature of the goods themselves. High value goods imply high opportunity

costs for goods tied up in inventory. Spare parts may require high off the shelf

availability and high inventory safety factors.

iii) time value of money and the resulting opportunity cost on inventory.

iv) the variability in the demand process. This can be due to two effects, the

seasonality of demand and the inherent variability of demand relative to the

demand forecast.

v) the ability to forecast demand. New products and style goods may be very

difficult to forecast and the time duration of the supply chain in this case can be

an important issue in determining the preferred route. Long supply chains can

easily result in obsolete inventory for style goods.

vi) coordinated replenishment and shipment across several items. This can lower

transportation costs in the cases where the replenishment amounts of a single

item may not be sufficient to fill a container or a truck.

vii) damage to goods and other shrinkage