Total cost of manufacturing
•
Total cost of manufacturing (TCM)
includes:
–
Procurement and production activities
–
Inventory and warehousing activities
–
Transportation activities
•
TCM generally expressed as cost per unit
•
Procurement and production costs go down
as volume goes up
•
Inventory and warehousing costs go up as
volume goes up
•
Transportation costs go down as volume goes
up, but level off at high volumes