Question

Which of the following supply chain cost components has the most impact on supply chain design?

Multiple Choice

• Transportation cost.

• Inventory carrying cost.

• A combination of transportation and inventory carrying cost.

• None of the choices are correct.

Answer 1

Question: Which of the following supply chain cost components has the most impact on supply chain design?

Answer: A combination of transportation and inventory carrying cost.

Explanation: Cost of the supply chain design varies according to its overall transportation and inventory cost. These two components plays an crucial role when designing a final cost of the product and the cost incurred fluctuates depending on its current logistic and inventory situations. Companies always emphasis on designing effective inventory and transportation model.

Inventory impact:

There is a risk involved in the inventory carrying limits, the product has to move out at the designated time if it doesn't the inventory cost and damage incurred will certainly increase, creating an unwanted buffer.

Transportation impact:

As inventory, transportation too has to be moved at a designated time because it will impact the supply chain and create catastrophe risk.