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Question 517 - CSCP discussion

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Which of the following transportation modes has the highest fixed cost and the lowest variable cost structure?

A.
Rail
Answers
A.
Rail
B.
Truck
Answers
B.
Truck
C.
Air
Answers
C.
Air
D.
Pipeline
Answers
D.
Pipeline
Suggested answer: D

Explanation:

Among the listed transportation modes, pipelines have the highest fixed cost and the lowest variable cost structure. Pipelines require significant investment in infrastructure, including the construction of the pipeline itself and the necessary pumping stations, which contribute to high fixed costs. However, once the infrastructure is in place, the cost of transporting goods (usually liquids or gases) through pipelines is relatively low, resulting in low variable costs. In contrast, modes like rail (A), truck (B), and air (C) have lower fixed costs but higher variable costs associated with fuel, labor, and maintenance.

Coyle, J. J., Novack, R. A., Gibson, B. J., & Bardi, E. J. (2015). Transportation: A Supply Chain Perspective. Cengage Learning.

Rodrigue, J.-P., Comtois, C., & Slack, B. (2013). The Geography of Transport Systems. Routledge.

asked 16/09/2024
Roberto Garavaglia
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