APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 119

Which of the following modes of transportation is characterized as having the highest fixed cost and lowest variable cost?

Answer options

• A. Air
• B. Water
• C. Rail
• D. Pipeline

Correct answer: D

Explanation

The correct answer is D, Pipeline, as it requires a large initial investment for construction but has lower ongoing operational costs. In contrast, Air (A), Water (B), and Rail (C) have higher variable costs associated with operations, such as fuel and maintenance, compared to pipelines.