Chapter 11, Problem 18AA

To determine

To discuss: The factors to be considered while choosing a method of transportation of goods.

Answer to Problem 18AA

The factors to be considered when choosing a method of transportation of goods for sale are cost of transportation, reliability and regularity of service, safety, characteristic of goods being transported, etc.

Explanation of Solution

The factors to be considered when choosing a method of transportation of goods for sale are:

Cost- This factor needs to be kept in mind when choosing the right mode of transport as cost of transportation is important in determining the cost of goods. Air transport is the most expensive mode of transportation and is therefore usually used for transportation of valuable, perishable goods requiring quick delivery. Heavy bulks goods may be transported using waterways or inland road and railways.

Reliability and Regularity- The urgency and speed by which goods need to be delivered should be considered when determining the mode of transportation. Roadways and railways are the most reliable modes whereas waterways and airways face disturbances and delays during bad weather conditions.

Safety- Safety and security of goods needs to be kept in mind when choosing the mode of transportation. Roadways are usually preferred over railways on account of greater losses in the latter. Waterways is also considered as a risky mode due to the risks involved when transporting through sea. Also, proper packaging needs to be done which may further add to the cost of goods.

Characteristic of goods- Nature, size, weight, complexity, durability of goods determine the mode of transport. Usually light, perishable and small items are transported via road or air whereas for heavy bulky items waterways or railways are used.

Other factors such as location of buyer, facilities available at destination, terms of sale contract, storage, warehousing and packaging facilities required for the product needs to be considered when deciding the mode of transportation.

Economics Concept Introduction

Introduction:

Transportation- It refers to the act of moving or carrying people or goods from one place to another via air, land, water and various other modes depending upon the nature of object being transported.