Question

15. How do transportation decisions affect inventory costs?“

Answer 1

The inventory costs are ideally more when the Cost of holding or carrying is high. Hence, more the inventory stored at the warehouse, more shall be the inventory costs pertaining to the maintenance of the same. In this regard, transportation decisions have a direct impact upon the inventory costs. For example, if there is a delay of transporting the perishable finished goods stored in the warehouse to the retailers in the market, more shall be the cost of maintaining the freshness of those goods in the inventory, besides various other expenses of carrying the same. On the contrary, if the transportation of just goods is promptly undertaken, then it shall help control the inventory of the same.