Hub-and-Spoke Rationalization
Transportation of 1,000 cargo units from the closer port to the hub port using feeder vessel will cost 525,000; from the extreme port to hub port - 550 000 (see operational costs). To collect all cargo at the hub and to distribute it to the corresponding hub will cost 2*2*(2*525+2*550))= 8,600,000. The ocean vessel voyage from hub to hub with full load will cost 15,500,000 (see operational costs). Thus, the total transportation costs are 24,100,000.