Final answer:
It is true that modes of transportation with higher costs can be justified if they lead to lower inventory costs. Managers must evaluate unit, cycle, safety, and in-transit inventory costs, considering factors such as energy efficiency and economies of scale. The ideal choice optimizes overall supply chain efficiency and profitability. Therefore, the correct option is A.
Step-by-step explanation:
When selecting a mode of transportation, managers must indeed account for various costs associated with each option. This includes unit costs, which are the direct costs of moving goods; cycle costs, referring to the frequency and reliability of shipments; safety costs, which encompass insurance and potential for loss or damage; and in-transit inventory costs, representing the capital tied up in goods while they are being transported. It is true that modes with higher transportation costs may be justified if they result in significantly lower inventory costs. This trade-off must be carefully evaluated as it can impact the total cost of logistics. Factors such as speed, reliability, and the carrying capacity of different transportation modes affect these costs. For example, air freight, while being more expensive per unit of weight, can be more cost-efficient for high-value, low-volume goods that benefit from quick delivery times, thereby reducing inventory costs. Selecting the most efficient mode of transportation requires a comprehensive analysis of all associated costs and benefits. Factors such as energy efficiency, economies of scale in operations, and the physical characteristics of the transport mode play crucial roles. Ultimately, the choice should be aimed at optimizing overall supply chain efficiency and profitability.