A medical equipment manufacturer has decided to use airways due to its being the least costly means of physical distribution. The firm is aware that airways have the highest transportation costs. Which concept does this strategy illustrate?

Question

Quizplus · Accepted Answer

The total-cost approach focuses on minimizing the total costs associated with the physical distribution of products, rather than just the transportation costs. In this case, even though airways have the highest transportation costs, if they result in the lowest overall distribution costs (considering factors like speed, reduced inventory holding costs, etc.), this approach would justify their use.

A Medical Equipment Manufacturer Has Decided to Use Airways Due