ETS Chapter 4 Flashcards
What are the two main types of costs in transportation?
time-dependent costs (e.g., wages, taxes, insurance)
stretch-dependent costs (e.g., fuel, tires, repairs).
Example: A truck driver’s salary is time-dependent, while fuel costs depend on distance traveled.
What is the difference between fixed and variable costs in transportation?
Fixed costs are costs that do not change with the level of activity (e.g., vehicle depreciation)
variable costs change with activity (e.g., fuel costs).
Example: A truck’s insurance is fixed, but fuel costs vary with distance.
What are the four types of costs when consolidating transportation?
1) Direct line and supply costs (e.g., fuel, wages),
2) Terminal costs (e.g., handling, administration),
3) Time costs (e.g., tied-up capital),
4) External and social costs (e.g., environmental impact).
Example: Consolidating shipments reduces fuel costs but increases terminal handling costs.
What is the difference between specific and common costs?
Specific costs are directly tied to a particular transport (e.g., fuel for a specific trip),
common costs are shared across multiple transports (e.g., driver training for multiple routes).
Example: Fuel for a single trip is specific, while a driver’s license is a common cost.
What are perceived vs. actual costs in transportation?
Perceived costs are what users think they are paying (e.g., fuel costs),
actual costs include hidden expenses (e.g., wear and tear on vehicles).
Example: A driver may only consider fuel costs but not the long-term maintenance costs of the vehicle.
What is the role of terminal costs in transportation?
Terminal costs include handling, storage, and administration at terminals.
Example: Loading and unloading goods at a warehouse incurs terminal costs, which increase with larger shipments.
How do external costs impact transportation pricing?
External costs, like environmental damage, are not directly paid by the transporter but affect society.
Example: Pollution from trucks may lead to higher taxes or regulations to offset environmental damage.
What is the significance of time costs in transportation?
Time costs refer to the cost of tied-up capital and delays in transportation.
Example: If goods are stuck in transit for a week, the company loses potential revenue from selling those goods sooner.
