Ignoring inventory costs when making transportation decisions can result in choices that worsen the performance of a supply chain.

Question

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Ignoring inventory costs can lead to excess inventory or stockouts, both of which can negatively impact the performance of a supply chain. For example, choosing a cheaper mode of transportation that takes longer to deliver goods may result in the need for higher levels of inventory to be held, increasing holding costs. Conversely, choosing a more expensive mode of transportation that delivers goods quickly may result in stockouts if inventory levels are not correctly managed, leading to lost sales and dissatisfied customers. Therefore, considering inventory costs when making transportation decisions is crucial for optimizing supply chain performance.

Ignoring Inventory Costs When Making Transportation Decisions Can Result in Choices