Impact of Cost-Benefit Analysis on Industry Decision Making: Transportation

3381 Words Dec 4th, 2010 14 Pages
Impact of Cost-benefit analysis on industry decision making: Transportation
Cost-benefit analysis (CBA), in essence, is a tool for decision making. It can be applied to almost any kind of decision in any kind of field. In its most pure form, a CBA will aggregate the pros and cons (positive and negative effects) of a proposal, and, if the pros (benefits) outweigh the cons (costs), the proposal is viable. Usually, the analyst will assign monetary values to each of the costs and benefits, hence making the analysis easier to calculate, even if the cost and benefits per se are intangible, and thus, not directly expressible in money values. Problems often arise in how to assess the monetary values of both tangible and intangible effects, which
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Any threat to the reliability of the transportation network constitutes a vulnerable spot, a weakness. This is of particular concern when considering sparse, rural networks, because what by urban standards is a minor degradation (i.e. car accident, resulting in queuing, delays and diversions) may have severe consequences if occurring in a rural setting (i.e. blocking the only access road for hours).
In the most common manner of speaking, the reliability of a transportation network can be defined as the probability that one or more of its links functions, or rather: does not fail to function, according to a set standard of operating variables. A non-functioning, or at best, badly-functioning link will impose costs on the user in terms of loss of time, additional operation costs or other costs as a result of delays and diversions. Transporters of perishable goods will also experience a loss of value. Few will question that the sender, the recipient, the freight hauler, or society at large, experience additional costs when goods or people cannot reach their destinations in time or in space (Husdal, 2004).
The increase in just-in-time (JIT) manufacturing operations has made a reliable travel time an important economic factor. JIT relies on the transportation system to take advantage of lowcost labor and manufacturing plant development costs. Producing components in several manufacturing plants and

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