CPIM Practice Exam

Which factor favors use of the road mode of transport over other modes?

1. Dispersed market

2. Lowest carrying cost

3. Low variable costs

4. High capital cost

The correct answer is: Dispersed market

The preference for using road transport is significantly influenced by the nature of the market and the distribution of the goods. A dispersed market refers to a situation where demand for goods is spread out over a wide geographic area, making it challenging for other modes of transport, such as rail or air, to efficiently reach all potential customers. Road transport is particularly advantageous in this scenario because it provides the flexibility to easily access various locations, including rural and remote areas, where other transport modes may have limited reach. Additionally, road transport allows for door-to-door service, facilitating the last mile delivery, which is essential in a dispersed market. While other factors, such as costs, may come into play when considering the most suitable transportation mode, the key advantage of road transport in a dispersed market scenario highlights its ability to provide accessible and flexible service where traditional bulk transport methods may struggle.