Description of Figure 9. Generalized Cost Trade-offs for Transportation Services

This schematic diagram illustrates the scenario of a firm with a central production plant and a single warehouse located in its market area to show the effects of travel time and travel-time variability on total logistics costs.

The x axis is labeled Transportation Service. The y axis is labeled Cost in Dollars. Five lines represent different factors: Total Cost, Direct Transportation Costs, In-transit Inventory Costs, Buyer's Costs, and Ordering Costs.

The Total Cost line is a parabolic curve beginning at the top of the y axis and dipping to its vertex about a third of the way across the x axis before rising again. The Total Cost curve is the only line that does not intersect with another line. The Direct Transportation Costs line is a straight diagonal line that rises from the bottom left at a 45-degree angle. The Ordering Costs line is flat and horizontal. The In-transit Inventory Costs line is a descending straight diagonal beginning about one-fifth of the way across the x axis and about one-third of the way down the y axis. The Buyer's Inventory Costs line is a descending slightly bowed curve beginning near the left side of the x axis and about a third of the way down the y axis.