Characteristics of the transportation project
Transportation project is concerned with the problem of transporting different amounts of a homogenous product that are initially stored at different origins to various destinations. It is a logistics issue in which the product is transported in a way that minimizes the total transportation cost. A transportation project has various characteristics. One of the features of this project is that every destination demands a fixed unit of the product. Additionally, the project will have possible solutions if all supplies equal all demands. The total demand must be obtained from the sources involved. Also, the cost of transporting the products from a certain source to a certain destination is directly related to the units of products transported (Ghosh, 2016).
The purpose of the analysis
The transportation project involves different costs depending on the destination of the product. Since the objective of the business is to operate efficiently, a critical analysis of the project is necessary. The main purpose of the project analysis is to obtain the minimum possible cost of transporting the product and to avoid spoilage.
The base case of the transportation alternative
The base case entails the conditions that would prevail if the project is not implemented. Since the project is intended to prevent the spoilage of in transit by groceries, the base case is that transportation cost will be high, and spoilage will occur. The possible transportation alternatives to access a company in Manhattan involve the use of cycling, shipment, and motor vehicle depending on the source of the products.
The study area
A study area entails the logistical, cultural, political, or geographical area. In a transportation project, the study area involves the geographical area with its political, historical and cultural makeup that is covered by the project (Ghosh, 2016). The area involved in the project is Manhattan, which was founded in 1963. This area is a borough in New York in the United States and it is bounded by rivers, an island, and Marble Hill (Morgan, 2013). The area has a strong financial and cultural history since it is the host of UN headquarters.
Appropriate analysis period for the study
The analysis period entails the time during which the relevant data is collected to facilitate the project analysis. Since the results of the analysis will be used for long-term decisions making, an appropriate analysis period is five to ten years to allow the collection of valid data when the business is at peak.
The impact type for the evaluation
The impact evaluation is essential to evaluate the effectiveness of the project. It forms the basis for assessing the significance of the project (Ulukan & Ucuncuoglu, 2010). An appropriate impact evaluation in this project will be to measure the cost differences before and after carrying out the analysis and making the relevant changes in the transportation network.
An appropriate economic efficiency criterion for the evaluation
The best criterion for evaluating the impacts of the project is the BCR (benefit cost ratio), which involves determining the ratio of benefits to costs associated with the project over a specified period.
Characteristics of the transportation system under various alternative scenarios
Road transport is the most common transport system that is involved in most local businesses. As such, cost is relatively high and has a high traffic flow. Water transport has low traffic volume and a high degree of reliability. Additionally, the costs involved in water transport are quite sustainable.
Calculation of economic impact of the project using data
The impact of the project implementation can be evaluated using benefit –cost ratio analysis. The formula used is B/C =[B0/(1+I)0 +Br/(1+i)r ÷[C0/(1+i)0 +CR/(1+I)R]
Suppose the time for the project is five years and the interest rate is 10%, the economic efficiency would be evaluated as follows from the current time year zero to year five.
Total benefits = $ 15, 837
Total benefits = $ 15, 837
Total costs= $ 12,529 therefore, benefit cost ratio is B/C= 15,837/12529=1.26. Since the ratio of benefits to cost is positive, benefits exceed costs. Therefore, the project is economically efficient.
References
Ghosh, D. (2016). Logistics Cost Minimization, An approach with Operations Research Models. Indian Journal of Applied Research, 5(12).
Morgan B. (2013). The World's Most Expensive Billionaire Cities. Forbes. Retrieved July 23, 2016 from http://www.forbes.com/pictures/mhj45eddhg/1-hong-kong-china/#6524edc65545
Ulukan, Z., & Ucuncuoglu, C. (2010). Economic analyses for the evaluation of is projects. JISTEM-Journal of Information Systems and Technology Management, 7(2), 233-260.
