A producer-supplier of fresh seafood knows airfreight is the highest priced method of transportation. He Also knows the quicker he can move inventory, the lower his inventory costs will be, and the fewer sales he will lose due to out-of-stock conditions or product perishability. In designing his physical distribution system, he is using _____ to look at the big picture.

Question

Quizplus · Accepted Answer

The total cost concept involves looking at the entire cost of the distribution system rather than focusing on individual components, such as transportation. By considering how quicker inventory movement can reduce overall costs and prevent sales loss, the producer-supplier is applying this concept to optimize the balance between transportation costs and inventory costs.

A Producer-Supplier of Fresh Seafood Knows Airfreight Is the Highest