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Problem

Describe a situation in which total logistical costs might be reduced by doubling transportation costs.

Step-by-step solution

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Step 1/3

Logistic cost includes transportation cost, fleet management, undamaged product delivery and timely delivery. Transportation cost is not the only cost incurred in logistic management and timely delivery is considered even more important for effective supply chain management.

Step 2/3

Sometimes companies even pay double the amount for transportation in order to ensure faster delivery of the product. In such cases transportation cost is double but overall logistic cost is reduced by timely and reliable deliver.

Step 3/3

Even in such cases the transportation company arranges all the logistic facility and they charge higher price for transportation. In such cases company save all the other expenses associated with the logistic and so reduces the cost of logistic.