Your company is selecting between two different transportation modes (trucking a

Question

Your company is selecting between two different transportation modes (trucking and rail) for a specific lane. All the relevant costs are the same, but the average and standard deviation of transit times differ. Trucking transit time: = 5 days, = 3 days. Rail transit time: = 7 days,

= 1 day. Which of the following statements are true:

Select all correct answers
Using rail will lead to lower safety stock.
Using trucking will lead to lower pipeline inventory.
Cycle stock will remain constant regardless of the transportation mode selected.
Using rail will lead to lower cycle stock.
Using trucking will lead to lower cycle stock.
None of the above.

Explanation / Answer

High transit time means high Safety Stock

Pipeline inventory- the inventory on route. The inventory capacity of rail is higher than truck

Cycle stock is the available inventory. This usually depends on the lead time between orders and the time between 2 orders. Lead time of rail is high, so cycle stock will also be high. Lead time of truck is low, so cycle stock will also be low.

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