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Chapter 3: Q. 15-3DQ (page 392)

Recent figures show that almost 60 percent of the volume of freight movements in the United States ships by truck. Railroads are far more fuel-efficient on a ton-mile basis鈥擟SX advertises it can move a ton of freight 468 miles on a gallon of fuel. 2 Why is it that rail does not have a greater share of the freight market in the United States?

Short Answer

Expert verified

Railways and Roadways (trucks) are the two important modes of transportation used in the United States for logistics. These two modes are the common ways among all. Both these modes involve fuel consumption and both can be used to locate heavy goods in less time.

Step by step solution

01

Importance of Roadways

Roadways help them to connect with the locality and the area. It is more beneficial than other modes of transportation because it enables them to get in touch with the safest route even though sometimes it seems difficult to use this mode of transportation over the others.

02

Reason for rail not having a greater share of the freight market in the USA

Almost 60% of the volume of freight movements in the U.S. ships by trucks even though it consumes fuels. As with most freight movements, the demand for the trucks is more as compared to any other mode which is one of the reasons for having a great share in the freight market in the United States. For transportation of small goods such as apparel, consumer durables, equipment, etc. trucks are used.

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Most popular questions from this chapter

One of your Taiwanese suppliers has bid on a new line of molded plastic parts that are currently being assembled at your plant. The supplier has bid \(0.10 per part, given a forecast you provided of 200,000 parts in year 1; 300,000 in year 2; and 500,000 in year 3. Shipping and handling of parts from the supplier鈥檚 factory are estimated at \)0.01 per unit. Additional inventory handling charges should amount to \(0.005 per unit. Finally, administrative costs are estimated at \)20 per month. Although your plant can continue producing the part, the plant would need to invest in another molding machine, which would cost \(10,000. Direct materials can be purchased for \)0.05 per unit. Direct labor is estimated at \(0.03 per unit plus a 50 percent surcharge for benefits; indirect labor is estimated at \)0.011 per unit plus 50 percent benefits. Up-front engineering and design costs will amount to $30,000. Finally, management has insisted that overhead be allocated if the parts are made in-house at a rate of 100 percent of direct labor cost. The firm uses a cost of capital of 15 percent per year. What should you do, continue to produce in-house, or accept the bid from your Taiwanese supplier?

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