A manager must make a decision on shipping. There are two shippers, A and B. Bot
ID: 326037 • Letter: A
Question
A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $530 and B for $525. In addition, A offers a three-day rate of $470 and a nine-day rate of $401, and B offers a four-day rate of $458 and a seven-day rate of $416. Annual holding costs are 40 percent of unit price. Four hundred and ten boxes are to be shipped, and each box has a price of $156. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the "$" sign in your response.) Cost Option 2 days 4 days 7 days Cost Option 2 days 3 days 9 days Ship two-day using B OShip four-day using B Ship seven-day using B Ship two-day using A Ship three-day using AExplanation / Answer
PLEASE FIND BELOW ANSWER TO FIRST QUESTION :
Total value of410 boxes = $156 x 410 = $63960
Annual holding cost ( @ 40 percent ) =0.40 x $63960 =$25584( 1 year = 365 days)
Daily holding cost for 330 boxes = $25584/365 = $70.09
Total cost of any shipping option
= Freight + Holding cost
= Freight ( for 410 boxes ) +Daily holding costfor 410 boxes ( i.e $70.09 )x Number of days of shipment
Below tablepresents Total cost of all shipping options as per formula written above
Shipping option
SHIPPER A
SHIPPER B
Holding cost($)
Total cost ($)
Freight ($)
Holding cost($)
Total cost ($)
2 day rate
3 day rate
4 day rate
7 day rate
9 day rate
As it is evident from above, the LEAST “Total cost” is $665.18 as offered by Shipper B for 2 day shipping option and hence this shipping alternative should be recommended
SHIPPING ALTERNATIVEOF SHIP 2 DAYUSING B IS RECOMMENDED
Shipping option
SHIPPER A
SHIPPER B
Holding cost($)
Total cost ($)
Freight ($)
Holding cost($)
Total cost ($)
2 day rate
3 day rate
4 day rate
7 day rate
9 day rate
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