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Posted on Sep 24, 2000 08:15:27 AM

The most obvious question to be answered by managers of an international distribution company, regards the choice of method (or methods) of transportation to deliver goods firms from their place of origin to their destination. This choice implies a clear trade-off between time and cost. Fast modes of transportation such as air transport and road transport more expensive slower, such as shipping, railways, pipelines and barges. However, the method of transportation affects the cost of inventory companies, the level of service, as well as the effective period of storage of goods, the likelihood of damage to the goods on delivery, packaging requirements. International air travel, for example, are characterized by high scores on all these indicators, and maritime transport, on the contrary, very low.

Consider the effect of mode of transport for inventory value of the firm and the level of service. If the firm relies on the slow

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