BMO 2201 Lecture Notes - Lecture 13: Fixed Cost, Variable Cost, Consignee
24 Dec 2018
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Document Summary
Transport functionality primarily consists of product movement services: product movement is the movement of inventory to specified destinations, transportation consumes time, financial, and environmental resources. Transportation is more than 60% of the cost of logistics. One of largest consumers of oil and gas. Transport also functions as storage services for products while in a vehicle: in-transit inventory is captive in the transport system. Managers strive to reduce in-transit inventory to a minimum: product can also be stored in vehicles at origin or destination (trailers, trucks, railcars, etc. ) Usually more expensive than traditional warehousing: must pay rental or demurrage charges on vehicles used for storage, diversion occurs when a shipment destination is changed after a product is in transit. Two fundamental transport principles: economy of scale is the cost per unit weight decreases as the size of the shipment increases. At least until you totally fill the carrying vehicle!
