Measurement of the economic-financial impacts of trade-offs between inventory carrying costs and transport costs

Abstract

The economic-financial performance is affected by logistics and, thus, the logistics area seeks solutions that best address the balance between incurred costs and services offered. This balance is achieved only when the potential logistics results are exploited with an evaluation that assesses total cost and cost trade-offs. As logistics research is used to emphasizing operational aspects of trade-offs, this paper attempted to deal with another dimension: the economic-financial one. In this context, the goal of the present study was to offer a model for the measurement of the economic-financial impacts of trade-offs between inventory carrying costs and transport costs. A measurement model was in fact proposed and employed in a simulated example of logistics solution. The results of this paper offer the arrangement for the measurement of the potential effects on economic result and on cash flow of trade-offs between inventory carrying costs and transport costs. The results also show that these effects change depending on the logistics solution.