Question

If using less-than-truckload transportation, which aspects of total cost are affected? (Check all that apply.)

a. Holding cost
b. Safety stock cost
c. Average in-transit inventory cost
d. Set up cost

Answer 1

Less-than-truckload transportation affects holding cost, safety stock cost, and average in-transit inventory cost. Set up cost is not directly related to LTL transportation.

Step-by-step explanation:

When using less-than-truckload (LTL) transportation, several aspects of total cost are affected. These include:

• Holding cost: Costs incurred for storing inventory for an extended period.
• Safety stock cost: Costs associated with maintaining a buffer stock to prevent stockouts.
• Average in-transit inventory cost: Costs tied to the value of inventory being transported and the time it takes to transport it.

Setting up costs (d. Set up cost) are typically not associated with the transportation costs of LTL shipping, but rather with the costs of preparing the production process for manufacturing goods.