TRL3707
ASSIGNMENT 2
2022
SEMESTER 2
, DECLARATION
I…………………………………………………. the undersigned, hereby
declare that the work contained in this assignment is my own original
work and that I have acknowledged all additional sources I have used
and/or quoted directly.
TABLE OF CONTENTS
Introduction Page 02
Factors that can influence the transportation cost Page 02
Material handling systems Page 05
Economic justification of establishing a warehouse Page 10
Conclusion Page 19
References Page 19
, Introduction
This assignment discusses factors influencing cost of transportation, material handling
systems for the effective handling of goods used by Takealot.com. Further, it
discusses the establishing a warehouse based on its economic justification.
3. Discuss the factors that can influence the transportation cost. 4 marks
Value – cost (Variable n fixed costs) /risk = performance
The primary factors are distance, weight, and density from perspective of a shipper.
Economy of Distance (km)
Distance directly contributes to variable expense such as labour, fuel, and
maintenance as a major influence on transportation cost.
The general relationship between distance and transportation cost.
Fixed costs are linked with shipment pickup and delivery regardless of distance;
therefore, the cost curve does not begin at zero.
The Takealot group anticipates over 4 000 000km of travelling distance while
delivering orders from Black Friday until 24 December.
As a function of distance, the cost curve increases at a decreasing rate characteristic
known as the principle of tapering.
Economy of Weight (kg)
Weight of shipment economies of scale exist for most transportation movements like
other logistics activities. As load size increases, transport cost per unit of weight
decreases. Incremental weight limited by the transportation vehicle size is spread over
the fixed costs of pickup, delivery, and administration.
Available already on the warehouse shelves is around 80% of the ordered items
while 20% of orders coming in are ordered and bought from distributors by
Takealot.com.
Small loads should be consolidated into larger loads to maximize economies of scale
as the managerial implication.
Economy of Density
Product density is defined as mass over volume, the combination of volume and
weight.
ASSIGNMENT 2
2022
SEMESTER 2
, DECLARATION
I…………………………………………………. the undersigned, hereby
declare that the work contained in this assignment is my own original
work and that I have acknowledged all additional sources I have used
and/or quoted directly.
TABLE OF CONTENTS
Introduction Page 02
Factors that can influence the transportation cost Page 02
Material handling systems Page 05
Economic justification of establishing a warehouse Page 10
Conclusion Page 19
References Page 19
, Introduction
This assignment discusses factors influencing cost of transportation, material handling
systems for the effective handling of goods used by Takealot.com. Further, it
discusses the establishing a warehouse based on its economic justification.
3. Discuss the factors that can influence the transportation cost. 4 marks
Value – cost (Variable n fixed costs) /risk = performance
The primary factors are distance, weight, and density from perspective of a shipper.
Economy of Distance (km)
Distance directly contributes to variable expense such as labour, fuel, and
maintenance as a major influence on transportation cost.
The general relationship between distance and transportation cost.
Fixed costs are linked with shipment pickup and delivery regardless of distance;
therefore, the cost curve does not begin at zero.
The Takealot group anticipates over 4 000 000km of travelling distance while
delivering orders from Black Friday until 24 December.
As a function of distance, the cost curve increases at a decreasing rate characteristic
known as the principle of tapering.
Economy of Weight (kg)
Weight of shipment economies of scale exist for most transportation movements like
other logistics activities. As load size increases, transport cost per unit of weight
decreases. Incremental weight limited by the transportation vehicle size is spread over
the fixed costs of pickup, delivery, and administration.
Available already on the warehouse shelves is around 80% of the ordered items
while 20% of orders coming in are ordered and bought from distributors by
Takealot.com.
Small loads should be consolidated into larger loads to maximize economies of scale
as the managerial implication.
Economy of Density
Product density is defined as mass over volume, the combination of volume and
weight.
