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Logistics Technology and Management
Master of Business Administration
(Global Logistics & Supply Chain Management)
UNIT - III
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Why study Business Logistics?
Wide career prospect
Manufacturing & trading firms
Service firms e.g. 3PL, freight forwards
Learning institutions
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Government agencies
Other service institutions e.g. restaurants, hospitals, etc
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Logistics Management
The process of planning, implementing and controlling the
efficient, effective flow and storage of goods, services, and
related information from point of origin to point of
consum tion for the ur ose of conformin to customer
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requirements.
Council of Logistics Management
a leading organization for logistics professionals
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Logistics Management
many names including:
Business logistics
Channel management
Distribution
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Logistical management
Materials management
Physical distribution
Quick-response systems
Supply chain management Supply management
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Systems Approach/Integration
Logistics is, in itself, a system
It is a Network of activities with the purpose of managing
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the orderly flow of materials and personnel within the
logistics channel.
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The system approach
All functions or activities need to be understood in terms of how they
affect, and are affected by, other activities.
The sum, or outcome of a series of activities, is greater than its individual
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. Eg. High inventory level good or bad?
-Bad: warehouse cost, obsolete, cash flow, insurance, currency fluctuation
-Good: support demand
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Logistics role in the Economy
Logistics is an important component of GDP
Adds value by creating TIME and Place Utility(value)
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4 Ps of the Marketing Mix
Products- the set of utilities or characteristics a customer
receives as a result of a purchase
(quality, features, customer service, warranty)
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Price- the amount of money a customer pay for a product or
service
(discount, rebates, customers)
Promotion- a product or service encompasses both personal
selling and advertising
Place- component of the marketing mix support the levels of
customer service provided by the organization
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Types of Utility
Logistics Types of Utility
Time utility
value created by making product or service availability when it is needed
Place utility
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value created or added to product or service availability where it is needed
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Logistics allows efficient movementto the customers
7 Rights of Logistics
Move the Right Materials/Products
In the Right Quantity
In the Right Service
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At the Right Time
To the Right Place
At the Right Cost
To the Right Customers, Associates, Suppliers and Stockholders.
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The Logistics Evolution
Fragmentation1960
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Evolving Integration 1980
Total Integration2000
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Factors Impacting theDevelopment of Logistics
Advances in Computer Technology
Quantitative techniques
Development of the systems approach
Total cost analysis concept
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Recognition of logistics role
Erosion offirms profits
Profit leverage
Economic condition
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Key Logistics Activities
Customer Service
Demand forecasting
planning
Parts & Service Support
Plant & warehouse site
selection
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Inventory management
Logistics
Communications
Material handling
Order processing Packaging
Procurement
Return goods handling
Reverse logistics
Traffic & transportation
Warehousing & storage
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CONTENTS
Introduction
Problem Statement
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Results
Conclusion
References
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Traffic Telematics ?
Structure of Telecommunications and
Informatics
Also known as ICT (Information and
Communications Technology)
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s e sc ence o sen ng, rece v ngand storing information thru devices
(telecommunication).
It have been applied specifically GPS
technology integrated with
Information processing system and
mobile communications technology in
Automotives Systems.
The primary standard that addresses
and enhances as (ITS).
Source: http://www.whnet.com/4x4/radio/contitel01.jpg
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Some practical applications of Traffictelematics
Vehicle tracking
Trailer
Tracking
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Fleet management
Satellite navigation Mobile data & Television
Emergency warning system
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Some practical applications of Traffictelematics
Intelligent vehicle technologies
Car clubs
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Problem Statement
Major urban transport problems in India
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Traffic injuries and fatalities
Roadway congestionInadequate public transport
To reduce congestion, pollution, fuel use
fuel use
Environmental pollution
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Problem Statement
Traffic Congestion is probably the most Visible,
Pervasive and Immediate transport problem in Indias
cities on a daily basis
It affects all modes of transportation and all
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For Example
Speeds for motor vehicles in Mumbai fell by half from
1962 to 1993, from 38 km/h to only 1520 km/h
(Gakenheimer, 2002)
In Delhi, speed fell from 2027 km/h in 1997 to only
15 km/h in 2002 (Times of India, 2002)
Moreover, the periods of peak congestion in Delhi
now last 5 h: from 8:30 to 10:30 in the morning andfrom 4:30 to 7:30 in the evening.
In Chennai, average speed is 13 km/h
Kolkata it ranges from 10 to 15 km/h overall but falls
to only 7 km/h in the center (Times of India, 2003)
In Hyderabad, average speed is 14 km/h (The Hindu,
2006)
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Problem Statement
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Source: http://www.seas.harvard.edu/TransportAsia/workshop_papers/Padam-Singh.pdf
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Problem Statement
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India's proved oil reserves are currently estimated (as of January 2005) at about 5
billion barrels, or about 4.5% of the world total
Source: http://www.cslforum.org/india.htm
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Vehicle Sales
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Automotive Investments in India
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http://www-03.ibm.com/industries/automotive/doc/content/bin/auto_inside_india.pdfhttp://www-03.ibm.com/industries/automotive/doc/content/bin/auto_inside_india.pdf -
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Percent distribution of urban trips
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Source: http://policy.rutgers.edu/faculty/pucher/FINALarticleTransportPolicy.pdf (Pendakur
2002 and World Bank 2002.)
http://policy.rutgers.edu/faculty/pucher/FINALarticleTransportPolicy.pdfhttp://www-03.ibm.com/industries/automotive/doc/content/bin/auto_inside_india.pdfhttp://policy.rutgers.edu/faculty/pucher/FINALarticleTransportPolicy.pdfhttp://www-03.ibm.com/industries/automotive/doc/content/bin/auto_inside_india.pdf -
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Solution
Transportation systems worldwide are undergoing a shift from
supply side techniques to demand management
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Road Pricing in Urban Region
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Road Pricing in Urban Region
What is it ?
Road pricing: used to cover the various charges
includes fuel taxes, license fee, tolls and congestion
charges, where applied for the use of roads
Road pricing has two distinct objectives Charge for
use of road or area
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Fixed or time-of-day fees
Paid in a variety of ways:
Electronic payment
Cash payment
Prepayment
Revenue
generation such
as Tolls Roads
Congestion pricing
like (HOT) lanes or
restricted area of a
city
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Why ?
Curb traffic demand to reduce
congestion, pollution, fuel use
Manage road space for highest
productive capacity to reduce
con estion, ollution, GHG emissions,
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and fuel use
Generate revenue for roads, public
transportation, impact mitigation, other
things
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Aim
Discouraging Driving: Making journeys less polluting and more efficient
Management: Congestion pricing/value pricing. Controlling when and
where people drive, e.g. London congestion charge, peak/off-peak charges
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Financing: raising money to pay back the construction of the road, or to
build new facilities for the public
SOME DISADVANTAGES
Perceptions of fairness: is charging for a once free good unfair
Burden falls more heavily on the poor drivers than the rich regressive taxation
New toll roads in a largely free system may be seen as unjust
Revenue use can consumers be sure that their money is being well
spent
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Why Implement Congestion Pricing?
To boost the environmental performance
To reduce the illness rate.
If we consider the Stockholm, as an example their implemented the same
telematic solution to reduce the congestion and pollution level. The
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outcome result is as follows: Traffic reduced overall by
Queue times down 30-50%
Emissions down 14%
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Why & Where Road Pricing andCongestion Charging
Traveler response to changes in price of travel changes:
When travel is done
How travel is done
Where goods and people travel
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nc ence o tota trave Urban centers facing serious traffic congestion
Motorways where current or future congestion threatens loss of peak period
capacity
Corridors or regions where added revenue is needed from vehicle users
Corridors where road user fees may achieve other objectives e.g., emission
based fees to manage pollution hot spots, truck tolls to divert goodsmovement to rail or other corridors
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Road Pricing and Congestion Charging:How Much?
Coin machine & attended toll collection: 300 vehicles/hour capacity
Automated toll collection: 1600+ vehicles/hour per lane capacity
using Direct Short Range Communication (DSRC) transponders
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RESULTS Some Recent Developments
1970s: Singapore cordon charge, full electronic road pricing (ERP) in 1996
1986: Bergen, Norway, toll ring
1990-2003: Oslo, Trondheim & other Norwegian cities adopt toll rings
1995-96: Southern California high occupancy toll lanes (I-15, SR-91)
2000: Congestion pricing of NY bridges
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2002-2004: Swiss, Austrian truck tolls
2004: London cordon charge
2005: Germany tolls autobahn trucks
2006: Stockholm congestion charge
2005: Minnesota, Colorado HOT lanes
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Approaches for congestion charging
Cordon entry permit
Payment at toll plaza e.g. Norway cordon systems
Area License
Paper license or Transit Pass for visual inspection, database option e.g.,
Singapore 1970s
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Virtual license with digital camera enforcement e.g., London CongestionCharge
Electronic Road Pricing e.g., truck pricing systems Swiss, Austrian, German
Corridor or spot tolls approach - e.g., most toll lanes
Workplace parking levy, parking excise tax, and cash-in-lieu-of-parking incentives
How much they charge
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Some Cost-Effectiveness Matters
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For Implementing Road Pricing steps
Articulate system objectives
Affirm legal authority: who can implement? Under what conditions? On
which facilities?
Determine implementation framework: Area license fee? Cordon
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charge? Corridor time-of-day tolls? Use of toll revenues? Design & evaluate road pricing plan
Adopt system plan, financing scheme
Procure management & technology services: system development,
integration, operation, enforcement, evaluation, marketing
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CONCLUSION
The development of cooperative telematics services increases the value of
telematics services and can speed up the above mentioned expansion of
the market.
The key challenge is to overcome the network effect and it requires a
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comp ex partners p etween t e var ous sta e o ers nc u ng pu cauthorities to create conditions for the establishment of a mass market.
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E Lo istics and Su l
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Chain Management
Coordination
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Supply Chain: a network of activities that deliver a finished
product or service to the customer.
The connected links of external suppliers, internal
E-Commerce, Logistics and Supply ChainManagement
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ExternalSuppliers
InternalFunctions
ExternalDistributors
INFORMATION
, .
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Logistics
The process of planning, implementing, and controlling the
efficient, cost-effective flow and storage of goods,
services, and related information, from point of origin to
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po n o consump on, or e purpose o con orm ng ocustomer requirements.
Components of an Integrated Logistics System
External Supply: links suppliers to operations process
Internal Operations: manages in-process material
flow
Physical Distribution: links operations process to
customers
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External Suppliers
External suppliers provide the necessary raw materials,services, and component parts.
Purchased materials & services frequently represent 50% (ormore of the costs of oods sold.
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Suppliers are frequently members of several supply chains often in different roles.
Tier one suppliers: Directly supplies materials or servicesto the firm that does business with the final customer
Tier two suppliers: Provides materials or services to tier
one suppliers Tier three suppliers: Providers materials or services to tier
two suppliers
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Developing a Supply Base
Criteria for Choosing Suppliers
Cost: Cost per unit & transaction costs
Quality: Conformance to specifications
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On-time delivery: Speed & predictability
Size of Supplier Pool: 1 or many per item
Partnering with Suppliers
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One Supplier per Item
May only be one practical source for the item
Patent issues, geography, or quality considerations
The supply chain is integrated to support JIT or EDI
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Making multiple suppliers impractical Availability of quantity discounts
Supplier may be more responsive ifits guaranteed all your
business for the item
Contract might bind you to using only one supplier
Deliveries may be scheduled more easily
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Multiple Suppliers per Item
No single supplier may have sufficient capacity
Competition may result in better pricing or service
Multiple suppliers spreads the risk of supply chain
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n errup on Eliminates purchasers dependence on a single source of
supply
Provides greater volume flexibility
Government regulation may require multiple suppliers
Antitrust issues Allows testing new suppliers without risking a complete
disruption of material flow
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Partnering with Suppliers
Involves developing a long-term, mutually-beneficial
relationship:
Requires trust to share information, risk, opportunities,
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& investing in compatible technology Work together to reduce waste and inefficiency &
develop new products
Agree to share the gains
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Internal Functions
Vary by industry & firm, but might include:
Processing
Purchasing
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Production Planning & Control Quality Assurance
Shipping
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Distribution
Getting the right material to the right place at the right time in the
right quantity:
Traffic Management:
The selection, scheduling & control of carriers (e.g.:
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materials & products Distribution Management:
The packaging, storing & handling of products in
transit to the end-user.
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Trends in Logistics Management
Increased awareness of strategic benefits of integrated logistics
management
Third-party logistics services
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Environmental sensitivity
NOW: Supply chains create tremendous amounts of waste material toprotect goods in shipment and storage.
FUTURE: Distribution will use reverse logistics, the recycling orproper disposal of cardboard, packing material, strapping, shrink wrap,pallets, etc...
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upp yChain for
MilkProducts
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Supply Chain Management
A philosophy that describes how organizations should managetheir supply chains to achieve strategic advantage
The objective is to synchronize requirements of the finalcustomer with the flow of materials and information along the
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supply chain to reach a balance between high customer serviceand low cost
Supply Chain Management entails:
Coordinating the movement of goods and delivery ofservices.
Sharing information between members of the supply chain.
For example: sales, forecasts, promotional campaigns,and inventory levels.
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SCM: the need to reduce variability or the impact ofvariability on the supply chain
Supply network variability
late deliveries: weather, equipment breakdown
quality problems
Manufacturin rocess variabilit
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machine reliability and equipment failure
changeovers / setups / part expediting
design and quality problems
Customer network variability
cancellations and irregular orders
equipment failure scheduling
Carrying safetyinventories are the mostcommon approach to
dealing with variability
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Mobilit Services in Urban Re ion
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Objective
Required progress in human transit to achieve a more efficiency and to
meet the minimum service level of different stakeholders have different
objectives
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e serv ce s ou cover t e w o e r an rea
Reduction ofnon - full driving vehicles
Safe journey with minimal price
Provide service till End User
Optimize the transit services by considering thecosts and benefits of schemes, within both
urban and intercity area by using well informed
quality services Source: http://w ww.camden.gov.uk/ccm/cms-service/stream/image/?image_id=338326
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Introduction
Transport, or Transportation, is the movement of people and goods
from one place to another
Two kinds of transportation
Freight transportation
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Load with goods As a ship, or vehicle of any kind, for transporting
Provide reliable delivery and pick up of goods
Traveler transportation
Urban Transit
Intercity Transit International Transit
Source: http://ocw.mit.edu/NR/rdonlyres/9576C84F-B3CB-
4926-BC7D-10050C2F4BB2/0/chp_transport.jpg
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Introduction (2)
Transit commonly refers to Public transport, the passengers use transportationsystems to travel
Alternative calls: Public Transit or Mass Transit
Transit can usefully be classified in a variety of ways (wikipedia.org):-
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uses Metro/underground, bus, taxi, tram and ferry Smaller urban areas
uses buses and taxis
Rural areas
rely on buses, taxis and share taxis
Inter-urban and regional transport
based on the train, coach and the plane Long haul destinations
uses the plane
Alternative infrastructure (Road, rail, water and air)
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Introduction (3)
Confusion about Urban Terms
The City as a Municipality or Local Authority Area
The City as a Metropolitan Area
The City as an Urban Area
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r an rea means
Never be the same as a municipality
It include many municipalities, though in the case of many geographically
large municipalities
The urban area will be smaller than the core city
Traveler
One who travels or has traveled, as to distant places
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Stakeholders in Transportation
Stakeholders are groups, who have an interest in the business activities
In Transport, stakeholders objectives include:
Passengers or freight users:
desire low prices/costs and reliable safe predictable journeys
Employees:
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w o see g wages an goo wor ng con ons
Operators: who want minimum costs, maximum profits and also to meet government targets
Managers:
who seek bonuses and promotion
Shareholders or Owners:
who want maximum profits, dividends and growth
Local communities:
who want excellent transport infrastructure and services with minimal negative externalities
Government: who want satisfied voters, investment in new infrastructure (from the private sector) low expenditure and high
tax receipts Source: http://tutor2u.net/default.asp
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Stakeholders in Transportation (2)
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Stakeholders in Transportation (4)
Travel/Trip time
Flexibility
Comfort
Availability
Cost Customer
Represented in simplified form
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Unmotorized
Motorized
CO2
Noise
Providing space
Society
Reliability
Business gains
Service
Operators
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Problem Identified
Consider the existing and future urban traffic
Problems identified:
Traffic Congestion and environmental effects
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Inflexibility for traveler Imbalance for customer demand and available service
In urban mobility service, stakeholders causing conflicts because of having
different service objectives
Fixed tariff even in having less demand
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An example...
Consider an issue which shows necessity of
logistics in urban areas for human mobility:
Mr.X wish to travel from University to sdpark.
To reach his destination having different mobility
sources
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IfX takes cab, it costs around 50 & 30 minsjourney time
IfX walks to bus stop and takes bus, it costs
around 30 & 50 mins journey time
IfX travel by train, it costs around 40 & 35 mins
journey time
IfX rent a car then it costs around 100 & 20
mins journey time.
Finally, Mr.X has to reach his destination with lessmonetary value, comfortable journey with
minimum travel time.
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Motivation
If customer make out his objectives
Less pay even in urgency
Comfort
Any time service accessibility
Quality based service
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The other stake holders were unable to meet their objective Traffic congestion
Air pollution
Parking problem with more custom vehicles
More usage of natural resources like petrol, diesel
Environmental effects like pollutants, noise level
Increasing accidents
Stakeholder conflicts
Different stakeholders have different objectives
Optimize stakeholder objectives
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Various Modes
The action of human mobility in urban area
Why to move
Continuous change required in the position of a body relative to a
reference point.
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Where to move home, workplace, stadium, production facility, warehouse,
department store, with that destination always being the place of
activity, e.g. staying at home, working, running, producing, storing,
distributing.
Mobility is not a static concept it always unstable and change position
from one place to another.
Various modes of mobilityPedestrian Motor cycle Taxi Bus
Bicycle Personal car Rent a car Car pool
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Present urban area structure
Population (billions)
Year 1950 1975 2000 2005 2030
Total 2.52 4.07 6.09 6.46 8.20
Urban 0.73 1.52 2.84 3.15 4.91
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In the last 50 years, 30% of the worlds population is increased
Closely 750 million people were city-dwellers
People run their own vehicles to meet their objectives
Due to this society gets effect with increase traffic and environment effects
Getting business loss for transport service providers
Rural 1.79 2.56 3.24 3.31 3.29
Urban %
29.0 37.2 46.7 48.7 59.9
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An Overview
Let us evaluate the level of services
Travel/Trip time
Flexibility
Comfort
Unmotorized
Motorized
Travel/Trip time
Flexibility
Comfort
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va a y
Cost
Customer
va a y
Cost
Customer
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An Overview
Let us evaluate the level of services
Conceived stakeholders with Human mobility modes
Travel/Trip time
Flexibility
Comfort
Availability
Unmotorized
Motorized
Travel/Trip time
Flexibility
Comfort
Availability
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CostCustomer
CO2
Noise
Providing space
Society
Cost Customer
CO2
Noise
Providing space
Society
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An Overview
Let us evaluate the level of services
Conceived stakeholders with Human mobility modes
Travel/Trip time
Flexibility
Comfort
Availability
Unmotorized
Motorized
Service
Operators
Travel/Trip time
Flexibility
Comfort
Availability
Service
Operators
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CostCustomer
CO2
Noise
Providing space
Society
Reliability
Business gains
Cost Customer
CO2
Noise
Providing space
Society
Reliability
Business gains
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A R t f C fli t
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A Root for over Conflicts
Since research began by conceiving the issues like car emissions, traffic congestion,time delay and cost criteria for urban people etc., from which developed a conceptcalled car pooling
Car Pooling
It is ridesharing of individuals who are going to the same destination
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It saves economy (fuel, parking, road investment) Social benefits (car accidents reduction, socialization benefits)
Some of the most identified benefits points are:
Economize money on the costs of running personal car and buying fuel
Economize on parking cost Riding can be quite stressful, both mentally and physically, but this service can give an
interruption from stress
Be like a passenger and can go other things like paper reading, have a relax or do somework etc
Reduction in pollution and congestion.
Travel Time Less Comfort Better CO2 Minimum Space required
Flexibility Possible Availbility Some time Noise Minimum Business gain to provider and customer
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A R t f C fli t (2)
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A Root for over Conflicts (2)
Here typical variable costs for a 3.7-miles (6 km) round trip for
different modes:
From the previous example
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2 10 3 4 1.5
Noise, safety and security issues are same as personalcar, but concept is to reduce the personal cars and tocontrol the congestion from their
The additional benefits like
Provides cost savings
Reduces parking problems
Reduces congestion and pollution
Provides a more sociable commute
Reduces the number of single occupancy cars
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A model
74
A transport model is a simplified representation of a complex transport system
Trip Generation
Trip Distribution
Modal choice
Traffic Assignment
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Four-Step Transportation Model
Divide study area into study zones
4 steps
Trip Generation
Decision to travel for a specific purpose (eat lunch)
Trip Distribution
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o ce o est nat on a part cu ar restaurant e nearest restaurant
Mode Choice Choice of travel mode (by bike)
Network Assignment
Choice of route or path (Elwood to Lincoln to US 69)
Trip Generation
Trip Distribution
Modal spilt
Traffic Assignment
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Trip generation
Trip Generation to predict the number of trips beginning from
and destined for each zone based on population
Model estimation
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Perform statistical tests to measure significance of differencesbetween existing and new rates
Model structure options
New variables like travelers, distance, trip purpose etc.,
Model implementation
Identify weaknesses and improve functionality
Determine desired interface and program features
Recode existing program with new input data
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Trip generation Model
Calculate number of trips generated in each zone 500 Households each making 2 morning trips to work (avg. trip ends ~ 10/day!)
Worker leaving job for lunch
Calculate number of trips attracted to each zone Industrial center attracting 500 workers
McDonalds attracting 200 lunch trips
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um er o r ps a eg n rom or en n eac zone
Trips for a typical day
Trips are produced or attracted
3 variables related to the factors that influence trip production and attraction (measurablevariables)
Density of land use affects production & attraction Number of dwellings, employees, etc. per unit of land
Higher density usually = more trips
Social and socioeconomic characters of users influence production Average family income
Education Car ownership
Location Traffic congestion
Environmental conditions
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i i d l (2)
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Trip generation Model (2)
Trip purpose
Zonal trip making estimated separately by trip purpose
School trips
Work trips
Shopping trips
Recreational trips
Travel behavior depends on trip purpose
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School & work regular (time of day)
Recreational & shopping - highly irregular
Forecast # of trips that produced or attracted by each zone for a typical day
Usually focus on Monday Friday
Forecast function of other variables
Attraction
Number and types of retail facilities
Number of employees
Land use
Production
Car ownership
Income
Population (employment characteristics)
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E l t i bl i t i ti d l
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Explanatory variables in trip generation model
Socio-economic variables
Car ownership
Number of persons
Age of head of household
Distance
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Land use variables
Offices
Industry
Commerce
Shops
Education and health
Public buildings
Open space Transport and utilities
Vacant land
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Other Models
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Other Models
Trip Distribution
Predicts where trips go from each TAZ
Determines trips between pairs of zones
Tij: trips from TAZ i going to TAZ j
Different methods but gravity model is most popular
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Mode Choice/Split
In most situations, a traveler has a choice of modes
Transit, walk, bike, carpool, motorcycle, drive alone
Mode choice determines # of trips between zones made by auto or other mode, usually
transit
Trip Assignment
Trip makers choice of path between origin and destination
Path: streets selected Transit: usually set by route
Results in estimate of traffic volumes on each roadway in the network
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T h i l i f t t
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Technical infrastructure
The following structure defines the service flow between demander and Offerer
Demander - 1 Demander - 2 Demander - 3
Desktop, PC, Laptop, Mobile Pagers,
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Integrate with other
providers
Other issues (weather forecasting,Routing, Entertainment)
Terminal softphoneDemande
rInterface
Database
ServiceProvider
Offerer - 1 Offerer - 2 Offerer - 3
Desktop, PC, Laptop, MobilePagers, Terminal softphone
OffererInterfac
e
BanksPaymentService
UsingWeb
Services
AGENTS
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Conclusion
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Conclusion
Increasing mobility generates economic development,welfare and social
freedom
It remove negative effects in terms of congestion, environmental, noise,
energy use, space use, accessiblity and other problems
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Developing this type of service is not only for human mobility and even
for goods to improve the heavy vehicle congenstion in city areas and canimprove the financial growth
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Future Work
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Future Work
Continuous data updation such as demander
information, offeror information, other
clients
Make connectivity for different
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commun cat on sources suc as mo e,
internet etc.) Generating different reports such as daily
profit, daily credits earned by each service
provider and all other transactions
Affiliate with reputed banks to make better
customer payment transaction
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