Question

After evaluating all the alternatives and the costs of each, Vegpro Kenya decided the most efficient way to quickly get its fresh vegetables from Nairobi to European cities was to use air freight. Which of the following approaches was used by the firm in making this decision?

Answer 1

total cost approach

Step-by-step explanation:

The total cost approach to physical distribution management establishes that some high costs can offset other costs by reducing or totally avoiding them. In this case, Vegpro Kenya analyzed all their possible shipping systems to Europe and decided that air freight was the best choice. But air freight is also the most expensive choice.

They decided to use air travel because even if it is the most expensive transportation system, it reduces storing costs and losses due to wasted products. That reduction in other costs were enough to offset the high costs of air freight.