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Selecting Choice of Transportation Model

By : sneh chandel
Selecting Transportation Mode

To select a mode of transport for your supply chain, these are the parameters one needs to keep in mind:

  1. Cost of transport
  2. Speed of delivery
  3. Size of Shipment
  4. Variance & Reliability
However, what one needs to keep in mind is that the decision for mode of transport will affect for supply chain costs in the form of inventory carrying costs:

  1. Cycle stock inventory carrying costs
  2. Pipeline inventory-carrying costs
  3. Safety Stock inventory costs
  4. Misc. Costs (Losses, damage, obsolescence)
The above-mentioned costs are associated with the parameters of speed of delivery, reliability, administration and associated costs to selected mode of transport.

Thus, the decision to select a mode of transport from point A (Manufacturer) to point B (Warehouse) can be modeled to a cost minimization equation for total cost:

Total Cost = Transportation cost + Cycle stock inventory carrying cost + Pipeline invnetory carrying costs + Safety stock inventory costs + Misc. Costs

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