Final answer:
Shifting from domestic to offshore production likely increases in-transit costs due to longer shipping distances and the need for higher safety stock to manage the variability and delays associated with international transportation.
Step-by-step explanation:
If a company shifts from domestic to offshore production, the following statements can be assessed for their likelihood:
- In-transit costs: These are likely to increase because shipping finished goods over longer distances, especially over international waters or through congested trade routes, can lead to higher transportation costs.
- Transit costs: These would not remain constant for the reason mentioned above; longer distances and potential delays in international shipping can elevate costs.
- Safety stock costs: With longer lead times and higher variability inherent in offshore production, companies generally need to maintain higher levels of safety stock, which increases costs associated with inventory holding.
Moreover, considering that production locations near uncrowded freeways allow for more cost-effective transportation options, relocating production offshore could indeed disrupt these efficiencies. Additionally, changes in market dynamics, such as an increase in the market price leading to higher marginal revenue, would affect production levels and, consequently, related costs and revenues. Independent trucking, typically characterized by perfect competition, might also influence the transport costs depending on the availability and rate fluctuations.
Therefore, the correct answar is c.Safety stock costs increase.