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Transportation costs

Why do transport costs initially decrease as the number of warehouses in a system increases? Why do transportation costs eventually increase as the number of warehouses increase? Why do inventory costs increase as the number of warehouses in a system increases?

Compare and contrast the focus of business, marketing, and operations planning. How does S&OP mediate conflict?

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Why do transport costs initially decrease as the number of warehouses in a system increases? Why do transportation costs eventually increase as the number of warehouses increase? Why do inventory costs increase as the number of warehouses in a system increases?

As the number of warehouses in a system increase, there is a decrease in the cost of transport. The general reason is that there are economies of scale. In particular, when an order is to be executed and we assume that the product is available at each location, the order is shipped from the warehouse closest to the customer. This reduces transportation costs. Moreover, when goods are shipped to the warehouses, one truckload can service more than one warehouse reducing transportation costs. Finally, when a product is manufactured a part of the production is shipped directly to the warehouse closest to the plant; another part of the production is shipped to the warehouse second closest to the plant ...

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