World's Leading Assignment Library
LSC802 - Trade-off Analysis
1. Annual Transport Cost
The annual transport cost will be calculated for all the given transport services.
Transportation Cost = R*D
From the calculations,it is clear that the transportation cost of transmitting goods through rails is the least. Through rail, the cost of transporting goods is the minimum, which is $30000. The cost of transport through the air is the maximum in this case and the cost of transportation is the main component for the selection of the mode of transport for transporting goods.The transportation cost is added or calculated in this case to determine which transport facility to be used by the company for transporting its products from the plant to the warehouse. The company will avail that transport facility, which will incur less cost than the other transport mediums.
2. Cost of Inventory
Plant inventory = I*C*Q/2
In-transit inventory = (I*C*T*D)/365
Warehouse Inventory cost = I*C'*Q/2, where C' = C+R
From the excel table, it can be seen that the cost of goods differs at different stages of transportation. In the plant, the inventory cost is the same for every transport service, but the costs differ when it is in transit and when it reaches the warehouse. The in-transit cost is the minimum in case of air service than that of ra