Cost-effective transport choices for wholesaler-distributors using transport probability

Logistics choices will have an increasingly larger impact on wholesaler-distributors. Transportation costs must be balanced against inventory and stock-out costs within service contraints to achieve optimum mode choice. Transport Probability Analysis (TPA), a method which can be used effectively by wholesaler-distributors to achieve and to monitor this balance, is briefly described. A summary and results of a study conducted at Alfred University which compares the cost effectiveness of two competing modes of transportation, truck and piggyback, are presented. The study used TPA and computer simulation to compare costs associated with buffer stock, stock-outs, and holding costs. Results contradict preconceived notions that trucks are always superior to rail in terms of cost-effectiveness and flexibility, showing increasing cost savings for piggyback service for longer distances.