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Transshipment network modeling problems assume the costs are constant. like the costs of shipping a product...

Transshipment network modeling problems assume the costs are constant. like the costs of shipping a product from one city to another are considered fixed. In reality, over time fuel costs change. If you knew the distribution of fuel costs, how could the distribution of fuel costs be incorporated into the transshipment problem? Are there any benefits to it?

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Answer :-  If we knew the distribution of fuel costs, the distribution of fuel costs be incorporated into the transshipment problem as per the consumption basis or item to item basis.

As we all know that the fuel cost are changed day to day so if we know the distribution of fuel costs then we can calculate the today change in cost of fuel as compared to last rates and then the total expenses is distributed or added to the shipping cost.

Yes there are benefits of it . The benefits are that we can correctly estimate the cost of shipping or we can take shipping charge as per the changes in the fuel costs. Now at present we can take the fixed amount which is many times becomes unfavourable to us due to the changing in fuel rates but if we can add the changes of the cost of the fuel to the shipping charges then we can charge the favourable prices of the shipping as per the correct estimates.

jeff jeffy answered 3 years ago
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