RightChain Nodes User Guide

5.2 Transportation Cost Modeling RightChain Nodes uses a cost minimization approach to find the optimal facility locations based on the “Location Contribution Factor” and the distance to each location. Transportation costs may be computed using a "universal rate" or a "rate table". Additional rate formats may be made available upon request. Universal Rates The universal rate assumes that shipping activity can be multiplied by a constant number to compute the transportation cost. For example, shipping 1lb over 100 miles at a rate of $0.20 per lb-mile would cost $20, while shipping 5lbs over 5 miles would cost $4. Universal rates depend upon many factors including the transportation mode (full truckload, less-than truckload, parcel, air, ocean, rail, etc.), the unit of measure for shipping activity (weight, cube, distance, units, etc.), and prevailing/negotiated transportation rates. RightChain has employed its universal rate approach very successfully in nearly every major industry, geography, and mode of transportation. Lane Rates Lane Rates assume that each lane either has a fixed cost or a similar structure to the universal rate calculations. This transportation costing approach assumes that the “Transportation Rate Table” has been uploaded and that all possible lanes have been enumerated, and rated.

Example transportation cost computation using a universal rate.

RightChain Nodes

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