A logistics manager is considering a cost trade-off between transportation and the amount of inventory held in a warehouse. Transportation, receiving, inventory, warehousing costs, and the level of customer service will be impacted. The objective of the cost trade-off analysis is to ________.
1) Minimize the cost of each logistics function (transportation, receiving, inventory, warehousing costs, and the level of customer service).
2) Possibly increase some costs such as transportation to achieve a more than offsetting cost reduction in other areas such as inventory to lower overall logistics costs while achieving the customer service objective.
3) Reduce logistics costs to the absolute minimum that will be tolerated by customers.
4) Reducing customer service and total cost by making cost trade-offs between the different functions (transportation, receiving, inventory, warehousing costs, and the level of customer service).