These discounts are normally reflected as a percent

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Managerial Economics
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Chapter 14 / Exercise 2
Managerial Economics
Froeb/McCann
Expert Verified
from the rate itself. These discounts are normally reflected as a percent to be deducted from the base rate. These discounts may be subject certain restrictions.Loading and unloading allowances are granted to shippers by LTL carriers when these companies perform the work which would normally be done by the carrier's personnel.Aggregate tender rates are given as an incentive for the shipper to tender two or more shipments to the same carrier at the same time. The reduction in the rate offered by the carrier reflects the reduced cost the carrier enjoys when picking multiple shipments at the same location.Freight All Kinds (FAK) rates are also called all commodity rates. The rate applies to all commodities that the customer ships and is very useful for firms that ship a wide variety of goods.Released rates reflect the fact the shipper has agreed to accept a lower than actual value for their product in the event of loss or damage. Since the carrier is not liable for the full value of the products they can offer a lower rate to the shipper, reducing the shipper's cost.Empty haul rates are usually for transporting the shipper's empty equipment to the point of next loading.Two or Three way rates are those rates which apply for either round trip or a triangular move where thecarrier is assured of few if any empty miles between loaded moves.Spot market rates are something new since deregulation. Carriers are now permitted to make "on the spot" rates to adjust for excess capacity or fill idle equipment. Since service cannot be 'stored', it is in the carrier's best interest to sell the unused capacity at a discount.Menu pricing also reflects the changes under deregulation. Carriers have "unbundled" their pricing andthis allows customers to pick and choose which services they wish.
PTS:1DIF:MediumREF:Pages 122-1259.Describe the three categories of the major pricing decision made by carriers.
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Managerial Economics
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Chapter 14 / Exercise 2
Managerial Economics
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PTS:1DIF:MediumREF:Page 128

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