Because global sourcing increases the distance that components and inputs must be moved,managers must consider the trade-off between transportation and holding costs.

Question

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Global sourcing involves moving components and inputs over long distances, which increases transportation costs. However, sourcing globally may also result in lower input costs, which can reduce holding costs. Managers must weigh these trade-offs and consider the overall costs involved in global sourcing.

Because Global Sourcing Increases the Distance That Components and Inputs