The decision-making on an in-house logistic division's operation strategies

This paper mathematically proves under which situations a firm should run its in-house logistic division as a cost center, as a profit center, or as an outsourced logistic to 3PL providers. By studying the effects of queuing delays and users' related costs on the decision of a time-sensitive in-house logistics division, this research concludes that to maximize the value of an organization as a whole, the in-house logistics division should work as a deficit center. If operated as a profit center, an in-house logistic division will bring quicker service to its customers, but at a higher price and lower utilization.