Research On Logistics Cost Management Of Company A Based On Monte-Carlo Simulation

Logistics management is a hot issue currently in the fields of both business and academy.And in it effective management and the control of logistics cost are fundamental.As logistics cost is regarded as “the third profits source”,it is an essential topic for the logistics departments and enterprises to control the logistics cost and provide as excellent services with a possibly lowest cost.Some scholars think that an important step to promote the development of economy is to find out the theoretical reasons of the ever-lasting high logistics cost and then distribute resources reasonably so as to lower the logistics cost.From 1991 to 2013,China's logistics index has risen from 1.4 to 3.5,which means demand of logistics is increasing while a unit of GDP is produced.Also,China's ratio of logistics cost in to GDP is 18% while the ratio is 8% to10% in developed countries,which indicates big problems in China's logistics cost management.Logistics cost is an important index to measure their performance for logistics enterprises.Logistics industry is booming in China in recent years.However,it is still on the primary stage compared with those developed countries like the USA and Japan.As a result,most of Chinese logistics enterprises of small and medium size should think about how to survive and grow stronger in the market of low marginal income and fierce competition.Various factors could infect logistics cost,such as the change of market environment and the coming-out of public policy,which could have effects on business operation to varying degrees.This article is on the background of business of Company A in Wuxi,Jiang Su.Firstly,it introduces the problems in the process of cost accounting and controlling and analyzes possible reasons.Secondly,it analyzes each cost element which contains uncertainty in the process of its highway transportation business and estimates the logistics cost of Company A by using Monte-Carlo simulation.Finally,we hope to find the main factors that infect logistic cost and offer a reasonable proposal on logistic cost management based on reality for those small and medium-sized logistics enterprises.