Question

Temporal aggregation of demand results in a reduction of transportation costs because it entails larger shipments and reduces the variation in shipment sizes from one shipment to the next. It does, however, hurt customer response time.

a) True
b) False

Answer 1

The statement is True. Temporal aggregation of demand can reduce transportation costs by combining smaller shipments into larger ones. However, it can hurt customer response time.

Step-by-step explanation:

The statement is True.

Temporal aggregation of demand can result in a reduction of transportation costs because it involves combining smaller shipments into larger ones. This allows for more efficient use of transportation resources and economies of scale, leading to cost savings. By reducing the variation in shipment sizes, temporal aggregation also helps to streamline transportation operations and reduce costs further.

However, one downside of temporal aggregation is that it can negatively impact customer response time. As shipments are combined and scheduled based on aggregated demand, it may take longer for individual customer orders to be fulfilled. This can lead to longer lead times and potentially dissatisfied customers.