Purchasing decisions and transportation cost

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Written by:

Beverly F


Date added:

May 15, 2014








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2 / 310


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Keeping inventory is consequently a costly operation for any business. Therefore many attention has been given in optimal decisions for inventory management, where holding costs of carrying inventory is weighed against ordering costs of placing new orders. This optimal decision making is based on the economic order quantity of an organisation...
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An instance is the transportation cost associated with the delivery of orders. Most companies assume transportation costs fixed per delivery, without knowing the exact impact of the number of units ordered on the transportation cost. The economic order quantity actually not only depends on holding and fixed ordering costs, but other factors like transportation might also have an impact...
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