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The real costs of distribution must be identified when management deals with a company’s cost structure.Distribution is an important aspect of company’s marketing and production effort and the costs of distribution bear on the final delivered cost of any product.In one sense,any major distribution decision can affect every cost center in the business because all costs are related to other costs.Experience indicates that the following cost elements and interrelationships are the ones that are most likely to prove critical in evaluation of alternative distribution strategies and the effect on total costs and overall profits.
Transportation costs.Both inbound and outbound transportation costs must be considered.The most used mode of transportantion is highway motor transport.It advatages of motor transport are flexibility,short-haul capability,and the ability to handle variable capacities.Rail transport can be less costly than motor,but large volumes are required and there is a loss

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