Final answer:
Transportation and logistics, involving shipping finished goods, generally contribute the most to cost overhead for manufacturing facilities, especially when dealing with congested traffic networks. Rail or water transport can provide cost efficiencies, and the selection of the optimal production technology, balancing labor and capital based on costs, is crucial.
Step-by-step explanation:
The highest contributor to cost overhead for manufacturing facilities is often transporation and logistics. This includes expenses associated with shipping finished goods over congested street networks and jammed freeways, which increases costs and reduces profits. Efficient locations can mitigate these costs, with ideal spots being near uncrowded freeways, or where rail or water transport access is available, as these options can be more cost-effective.
Moreover, different modes of transportation have different efficiencies measured in kilowatt-hours per kilometer, with mass and speed influencing the cost.
For instance, container ships and airplanes require significant amounts of energy to operate. When transportation involves large distances, such as in air travel, the total energy expenditure increases substantially, thereby affecting the overhead costs.
Selecting the appropriate production technology can also influence the overall costs. Technologies with the lowest total cost are preferable, often involving a strategic balance between labor and capital, contingent on the cost dynamics of these factors over time.