Final answer:
Yes, applying the total cost concept within logistics includes accounting for intangible costs, such as markdowns or lost sales. Breaking down total costs into various categories is essential for providing insights into the firm's logistical and financial performance.
Step-by-step explanation:
Applying the total cost concept within logistics does often mean trying to account for intangible costs, such as markdowns or lost sales. This is indeed true. The reasoning behind this is that logistics is not just about the explicit costs associated with production and distribution—like materials, labor, and shipping—but also about the broader implications on a firm's economics, which include intangible or indirect costs. For example, if goods are not delivered on time, a firm may incur costs due to lost sales or have to reduce prices through markdowns to sell products, affecting the overall profitability. These intangible costs are significant in managing the firm's logistics as they directly impact financial performance.
Breaking down total costs into categories such as fixed cost, marginal cost, average total cost, and average variable cost is crucial for firms. It provides unique insights that allow for more sophisticated decision-making that is in line with maximizing profits and minimizing losses, taking into account both tangible and intangible factors.