Order Size Transportation Costs And Economic Order Quantity

Topics: Transport, Cargo, Economic order quantity, Shipping, Costs / Pages: 4 (846 words) / Published: Jul 29th, 2015
Order Size, Transportation Costs, and Economic Order Quantity
Jerome Benedict
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Prepare answers to the following questions prior to class. In class you will be given time to discuss your findings in small groups. Be prepared to present your findings either individually, or as a group, to the class.

This discussion exercise is worth 2.5% of the overall mark for this module.

1. Is it reasonable to think order sizes are infinitely variable? How does this relate to LTL (less-than-truckload) versus FTL (full-truckload), the use of unit trains, and to containers? In other words, how does the size of a single shipment or order relate to the size of the vehicle carrying it? And, how can a full truckload be directed to a single destination for efficient routing and scheduling?

Order sizes definitely variable, unless you are purchasing the same item/Amount every time without variable changes. Using a FTL could reduce your cost for shipping and would help guarantee shipment amounts and reduce issues with customs. If your product is being shipped in LTL then it can be stopped and held if other items in the shipment are not verifiable.

The size and weight of the shipment directly relates to the size of vehicle carrying it, these parameters can change costs as they change. Shipping one carton can be expensive as the transport company must pickup, track, handle/trans-ship, deliver and invoice for such a small volume. Transportation companies would lower rates for larger shipments as they could be directed to one shippers address rather than having to make multiple stops on their route.

If a single truck load can pick up from one destination and direct it to a single drop of point, the costs associated to the shipment would be reduced. Having a LTL would increase scheduling and routing costs as attention would have to be paid to multiple units. Man power and fuel costs would increase.

2. How are stock costs determined, and how do transport costs vary

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