Transport Mode – The most critical decision is the selection of appropriate mode of transport. This fixes two basic elements of distribution function:
a) Transit time or time lapse between production and sale;
b) Level of transportation costs.
There is an inverse relationship between transit time and transport cost – the lower the transit time, the higher the transport cost. However, a decision that takes into account only one cost factor cannot be justified. An evaluation of the effect of transit time on other costs must also be considered. Unsold production represents a high cost, and the longer the transit time, the higher the level of unsold production.
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