Certified Supply Chain Professional (CSCP) Practice Exam

What does landed cost include?

1. Only the cost of the product at the manufacturing site

2. Product cost plus the cost of logistics

3. Direct production costs without shipping

4. Costs related just to transportation

The correct answer is: Product cost plus the cost of logistics

Landed cost represents the total cost of a product when it arrives at its final destination. This concept encompasses not only the initial product cost at the manufacturing site but also additional expenses that contribute to bringing the product to that location. Therefore, the correct answer incorporates both the product cost and all associated logistics costs. These logistics costs can include shipping, freight forwarding, customs duties, insurance, and any other charges incurred in transporting the goods to the buyer. By considering these factors, businesses can gain a comprehensive understanding of the true expense of acquiring products, which is crucial for effective pricing, budgeting, and inventory management in supply chain operations. The other options narrowly define the costs involved: - Focusing solely on the cost of the product at the manufacturing site ignores the significant expenses incurred during transportation and handling. - Direct production costs alone do not reflect the additional costs from logistics that must be accounted for when calculating the landed cost. - Limiting the definition to transportation costs excludes essential factors such as customs duties and other fees that are part of the overall landed cost calculation. In summary, the emphasis on both product costs and logistics costs gives a complete view of what it truly costs to land a product, providing essential insight for businesses in their supply chain management strategies