The "total cost approach" to physical distribution management:
A) seeks to eliminate the storing function.
B) seeks to minimize the cost of transportation.
C) might suggest a high-cost transporting mode if storing costs could be reduced enough to lower total distribution costs.
D) ignores inventory carrying costs.
E) All of these alternatives for the "total cost approach" are correct.

Question

Quizplus · Accepted Answer

The total cost approach to physical distribution management takes into account all the costs associated with distributing products, including transportation, storing, and inventory carrying costs. Therefore, it may suggest using a higher-cost transportation mode if it can reduce storing costs enough to lower the overall total distribution costs. This approach seeks to minimize the overall cost of distribution rather than just a single element, such as transportation costs. Option A is incorrect because the storing function cannot be completely eliminated, and option B is incorrect because minimizing transportation costs alone may not result in the lowest total distribution costs. Option D is incorrect because inventory carrying costs are considered in the total cost approach. Therefore, option E is also incorrect.

The "Total Cost Approach" to Physical Distribution Management