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This content is taken from the Coventry University's online course, What is Economics in Global Logistics?. Join the course to learn more.

Skip to 0 minutes and 8 secondsLet us think about a problem that often arises in a logistics business. Imagine yourself in the busy transport office of CV1Logistics, trying to organise the next day's deliveries and making sure you meet everyone's customer expectations. You have four vehicles of different load capacities, but you only have three drivers. In the warehouse, you have 20 different consignments that need delivering but you are not sure whether you will have enough vehicle capacity, never mind the lack of drivers to operate those vehicles! This is an everyday example in the world of global logistics of scarce resources, and how economics attempts to help with their allocation. How would you go about solving this problem of scarce resources at CV1Logistics?

Skip to 0 minutes and 59 secondsFirstly, you would need to calculate exactly the resources that are required. You need to sort the consignments into deliveries that the vehicles can carry, then work out if there is enough time in the day to travel to each customer in one journey. This activity alone is an example of allocating scarce resources - in this case, time - to each vehicle. Once you have figured out how many vehicles you can load and whether they can complete the journeys with enough time, you can then consider the issue of drivers. You might only have enough loads for three vehicles. In this situation your drivers are being fully utilised, but one of your vehicles will be sat idle at the warehouse.

Skip to 1 minute and 46 secondsBut what if there are more loads than there are vehicles? You already have a shortage of one driver and now you might need to hire more drivers, or rent additional vehicles. Suddenly you need to make a trade-off between the cost of these extra resources or whether you will deliver fewer deliveries. What should you do? This scenario is a great example of how economics can be used to help make decisions on how to allocate scarce resources. Welcome to the course.

Welcome to the course

We’re going to introduce you to the world of economics by asking why economics has a place in global logistics. To answer that question and others throughout the course, we’ll be using a scenario based on a fictional logistics business, CV1 Logistics. Watch the video to begin.

This week

Over the next two weeks, we’re going to explore key features of logistics economics. We’ll introduce key microeconomic and macroeconomic terms, and link them to the transport and logistics market.

We look forward to exploring these topics with you over the next two weeks, and providing you with tools to understand how you might improve your own area of practice.

Meet the team

Your lead educator is Nick Wright, who is a senior lecturer in logistics at Coventry University.

You can follow Nick by selecting the link to his FutureLearn profile page, then selecting follow. This will help you see all the comments that he makes.

Learning more with Coventry University

This is the first short course in Logistics Economics, which forms part of the MSc Global Logistics online degree at Coventry University. For those enrolled on the full program, over the next five short courses you’ll look at management costing and investment appraisal methods, forecasting and statistical tools, and logistical performance appraisal.

For those not enrolled in the full program, you can find out more by following the links above.

Your task

If you were the logistics manager at CV1 Logistics, how would you allocate the resources?

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This video is from the free online course:

What is Economics in Global Logistics?

Coventry University