The main purpose of this study was to determine the logistics
opportunity costs of using road transport within a mining
firm that is typically more suitable for rail transport due to the
bulk nature of its product, high volumes and the relatively
long distances over which products must be transported.
The case study approach that was followed in this study
required that:
• Firm A’s logistics operations costs be described
and calculated for the period in which rail was the
predominant mode of transport utilised in its operation
(2006–2009).
• A discussion be held about Firm A’s operational decisions
to incorporate road transport.
• Logistics costs be described and analysed from the time
the decision was made to incorporate road transport as a
major contributor to its logistics operations (2009–2011).
• A comparison be done of the two scenarios, and the
logistics opportunity costs of using road transport be
determined.
• The financial position of Firm A be analysed against
varying levels of inventory investments as an alternative
strategy to increased road transport cost.
A case study provides an in-depth analysis of a specific
situation, which results in an enhanced understanding of
the circumstances (Burton & Bartlett 2005). The case study
framework that was used in determining the logistics
opportunity costs is depicted in Figure 4.