The strategic level deals with decisions that have a long-lasting effect on the firm.

This includes decisions regarding the number, location and capacities of warehouses and manufacturing plants, or the flow of material through the logistics network. The tactical level typically includes decisions that are updated anywhere between once every quarter and once every year. This includes purchasing and production decisions, inventory policies and transportation strategies including the frequency with which customers are visited. The operational level refers to day-to-day decisions such as scheduling, routing and loading trucks. Production Planning A manufacturing facility must produce to meet demand for a product over a fixed finite horizon. In many real-world cases it is appropriate to assume that demand is known over the horizon. This is possible, for example, if orders have been placed in advance or contracts have been signed specifying deliveries for the next few Months. Production costs consist of a fixed amount, corresponding, say to machine set-up costs or times, and a variable amount, corresponding to the time it takes to produce one unit. A holding cost is incurred for each unit in inventory. The planners objective is to satisfy demand for the product in each period and to minimize the total production and inventory costs over the fixed horizon. Obviously, this problem becomes more difficult as the number of products manufactured increases. Cross Docking Wal-Marts recent success story highlights the importance of a logistics strategy referred to as cross docking. This is a distribution strategy in which the stores are supplied by central warehouses which act as coordinators of the supply process, and as transshipment points for incoming orders from outside vendors, but which do not keep stock themselves.We refer to such warehouses as cross docking points. The questions are obvious: how many cross docking points are necessary? What are the savings achieved using a cross docking strategy? How should a cross docking strategy be implemented in practice? Truck Routing Consider a truck that leaves a warehouse to deliver products to a set of retailers. The order in which the retailers are visited will determine how long the delivery will take and at what time the vehicle can return to the warehouse. Therefore, it is important that the vehicle follow an efficient route. The problem of finding the minimal length route, in either time or distance, from a warehouse through a set of retailers is an example of a Traveling Salesman Problem (TSP). Clearly, truck routing is a subproblem of the fleet management example.