# Material Flow Optimization as a Tool for Improving Logistics Processes in the Company
## 4 Research Background
### Material Flow Cost Calculation  
To optimize material flow with the primary goal of increasing its efficiency, it is essential to gather sufficient information and data, map out the processes, and conduct an analysis based on these findings. For the calculation of material flow, it is crucial to determine the volume of handled material in measurable units, in this case, the tons per year, handling distance, and, most importantly, handling costs. **Handling Costs**  
The total handling costs, in this case, include the operating expenses of forklifts and pallet trucks, transportation costs between FG and SF warehouses, and personnel costs. Additionally, these costs also cover the rental expenses of the Fruta warehouse, where the material maturation process takes place. **Handling Equipment Costs**  
The costs associated with pallet trucks and forklifts are easily identifiable, as the company acquires these resources through long-term leases. For its operations, the company utilizes handling equipment from Linde, specifically eight E20 forklifts and three T16 pallet trucks. Table 1 presents the handling equipment costs in the company. The monthly cost for one forklift is EUR 739.89, while the cost for one pallet truck is EUR 267.96. The total annual cost amounts to EUR 80,676.43. The handling equipment is leased under a full-service agreement. **Personnel Costs**  
The total payroll costs cover all expenses related to employees, including contributions, training, protective equipment, and medical check-ups. The factory operates on a continuous 24/7 schedule, and all operations involved in material flow follow this regime. Fruta Warehouse operates from Monday to Friday in a two-shift system (6:00 AM-10:00 PM) with morning and afternoon shifts. On Saturdays, it operates from 6:00 AM to 6:00 PM, while on Sundays, its schedule aligns with truck traffic restrictions. FG Warehouse operates in a single-shift system from 6:00 AM to 6:00 PM. Table 2 shows the personnel costs in the company. \begin{table}
\begin{tabular}{c c c c c} \hline \hline
**Item** & **Units** & **Cost per Unit (EUR)** & **Total per Month (EUR)** & **Total per Year (EUR)** \\ \hline Forklift & 8 & 739.89 & 5919.16 & 70,029.87 \\ Pallet truck & 3 & 267.96 & 803.88 & 9646.55 \\ Total & 11 & & 6723.04 & 80,676.43 \\ \hline \hline \end{tabular}
\end{table} 
Table 1: Handling equipment costs. \begin{table}
\begin{tabular}{c c c c c} \hline \hline
**Personnel Costs for Handling** & **Quantity** & \
\begin{tabular}{c} **Costs for the Section** \\ **per Month (EUR)** \\ \end{tabular} &
\begin{tabular}{c} **Costs for the Section** \\ **per Year (EUR)** \\ \end{tabular} & **Shift Work** \\ \hline section 1 & 4 & 6378.67 & 76,544.09 & 24/7 Non-stop \\ End of the line & 4 & 6378.67 & 76,544.09 & 24/7 Non-stop \\ Unloading of semi-finished goods (SF) & 4 & 6378.67 & 76,544.09 & 24/7 Non-stop \\ Finished goods (FG) from the line & 4 & 6378.67 & 76,544.09 & 24/7 Non-stop \\ Finished goods (FG) for transport & 2 & 3189.34 & 38,272.05 & Day shift 12 \\ Fruta & 4 & 6378.67 & 76,544.09 & Morning/Afternoon \\ Total & 22 & 35,082.71 & 420,992.50 & - \\ \hline \hline \end{tabular}
\end{table} 
Table 2: Personnel costs. Costs for SF and FG Transfers  
A significant portion of expenses consists of the cost of transferring SF to the Fruta Warehouse and transporting FG to distribution warehouses in Ceske Budejovice. The cost of a single SF transfer is EUR 39.67, with an average total of 19 truck movements (\(\mathrm{OUT+IN}\)) per day. This results in daily costs of EUR 753.70, with a cost per full truck cycle of EUR 79.34. The transport provider operates two trucks, which are exchanged at ramps and shuttle between the factory location and the Fruta Warehouse. Table 3 presents the costs associated with SF transport from the factory to Fruta. The cost for a single FG transport (Table 4) averages EUR 79.34. There are two trucks in operation, continuously moving between the FG Warehouse and distribution centers from 6:00 AM to 6:00 PM.