Friday, 2 September 2016

ANALYSIS OF GIVEN SITUATIONS IN THE CHOICE OF TRANSPORT





1. Lim Trading, a wholesaler; wishes to send goods regularly to his customers who are mainly small retailers located in the same city and the surrounding suburbs. State) with reasons, which mode of transport he would use. The city and the surrounding suburbs are served with a good system of light rail transport.
Choice of transport recommended: Road, preferably own lorry

Reasons for choice


(a) It is convenient because delivery of goods is made right up to a customer's doorsteps. No unloading or reloading is required, which is necessary if rail were to be used. There are less chances of pilfering and damage to goods since the goods are sent by the company's own workers.
(b) It is flexible as Lim Trading can schedule his time of delivery at a time convenient to him and his customers. He can get a full load for most trips since all his customers are in the same city and the surrounding suburbs. This will ensure that his lorry is used economically. If he were to use rail, he may have to follow the railway timetable. If he were to used a hired lorry, he would have to depend on the availability of hauliersi lorries.
(c) It is more economical than rail delivery since goods are sent short distances, in small quantities.

2. HKL Ltd, a factory producing computer disc drives located in Singapore, has found that one of its machinery has broken down suddenly. As a result, all production has come to a halt since the spare part has to be specially ordered from the manufacturer in the UK. The Production Manager of HKL Ltd has confirmed through the e-mail that the particular spare part is available. He, however has 2 options as to the choice of the most suitable form of transport: air or sea cargo. Which one should he use? Advise him, giving your reasons for your choice.

Choice of transport recommended: Air cargo

Reasons for choice


(a) Air transport is much faster than sea transport. As the spare part is needed urgently, time is of utmost importance. Without the spare part, there can be no production. If production is affected, it means HKL Ltd may not be able to fulfil its customers' orders for computer disc drives. This would mean a loss of customer goodwill, and it would affect its good standing with the affected customers whose own plans would be adverse affected. This would in turn reduce HKL future sales.
(b) In the meantime, HKL Ltd has to pay its workers and other factory overheads even though production is nil.
(c) It is true that the cost of freight is much higher for air transport compared to the cost of freight by sea. However, the above advantages far outweigh the factor of cost in this instance.

3. Cool Cut, a diamond cutting factory located in Singapore, has to import uncut diamonds from Johannesburg, South Africa. Suggest a suitable mode of transport, giving reasons for your choice.

Choice of transport recommended: Airline, possibly personally brought in by the exporter himself or a trusted agent

 

Reasons for choice

(a) Diamonds are very expensive, small and light. There is great risk of theft. The factor of security of such valuable goods is very important. That is why they may have to be brought in by somebody trustworthy, rather than be sent by air cargo.
(b) The factor of speed is also very important. The faster such precious gems reach its destination, the safer it is. Thus, the choice is air transport since it is the fastest means of transport.
(c)  The factor of cost is secondary although there is no doubt that the cost of air transport plus the personal travelling expenses of the courier is very high.

4.    Sheik Farouk, an oil exporter located in Kuwait wants to send his crude oil to Japan. Advise him, giving your reasons.

Choice of transport recommended: Sea transport using oil tanker

 

Reasons for choice

(a) Crude oil is fluid and heavy, normally exported in bulk and there is enough to fill one ship. It is not a perishable item. It is best to use sea transport in special carriers, specially designed to carry oil even though the journey takes a long time.
(b)  Kuwait and Japan are very far apart and are separated by huge oceans. So sea transport has to be used. It is impossible to use rail or road transport.
(c)  It is cheaper to send the crude oil by sea and it is not suitable to use air transport. Crude oil is not sent in small quantities but in bulk. There would not be enough space in an airplane to carry all the crude oil. Only items which are light, small and valuable are suitable to be sent by air transport. On the other hand, crude oil is very heavy.







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