7.2. Conclusion and contribution
The Korea auto-parts industry has limited experience operating in a globalised environment; rather, it has focused primarily on maximising revenue from component exports. Comparative analyses of transport routes that the industry commonly uses to export goods to the US are thus timely. In particular, the inventory-theoretic model illuminates the importance of inventory costs, which have been overlooked, because inventory costs can be a decisive factor in selecting an appropriate transport route. Our study also shows how changes in input variables, and in the global economy, can affect transport choices.
The contributions of our study to the literature are as follows. First, we adopted the inventorytheoretic model for an empirical analysis of transport mode and routeing choices. Compared to classical economic models that consider only transport costs, our model considers both transport costs and inventory costs. In other words, we convert the transit time into a tangible cost term, making it possible to compare several routes using one cost measure. This model has shed light on the importance of time in transport choice by showing how transit time can influence the total annual cost structure. Second, we applied the inventory-theoretic model to real transport data. Unlike classic economic models, which have a strong empirical research stream, the inventorytheoretic model has been applied to empirical research to only a limited degree despite its long history, perhaps because the main objective of managing day-to-day international transport operations is reducing direct transport costs. When the perspective is widened to a firm level, however, the in-transit and warehouse inventory costs are significant additions to the direct transport costs. We have shown that the transport choice can be altered when the inventory costs and changes in variable costs are considered. Third, we conducted both static and sensitivity analyses on transport choice.
