stro ndustries o Minneapo s mesota makes weekly shipments to 10 customers n the
ID: 331181 • Letter: S
Question
stro ndustries o Minneapo s mesota makes weekly shipments to 10 customers n the Dalas area. Each customers order we ghs on ? erage 2.500 pounds. Acirect uckship en tom Minneapols to Dalas costs $1.700 . The total cost for Agzro to make direct, single crdar shipments to all cf its customers is per weok. Enter your epone se 3 whoic number) The average truck utilitation level r the sr e-cra er shipment c tion is ?%. Enter youresponee rounded fo one deana oace) b. Supposc ? Dalas based warehous ngfimm nas agreed to run break bulk warehousing operation for Astro at cost o S50 per hundred we t. Local de venes to eacn customer would tack on anat cr S50 per customer per week. The total cost cf the break-bulk warehousing option is $ per week Entoryour response as ??? wala number) By gang wth a break-bulk solution. Astro could s9e 5 per week. fEnter your response 898 sahale number e maximum oad per truck ?s 35.000 pounceExplanation / Answer
Average weight for each customer: 2500 pounds
Total number of customers: 10
Total shipment weight per week: 25000*10 = 25000 pounds
Maximum load per truck: 35000 pounds
This means a single truck journey will be sufficient per week
Thus total cost per week: $1700 per week (However I think there is a typo and it should be $17,000 in the given question)
Average truck utilisation: 25,000/35,000*100 = 71.43%
Break bulk fare for full week: 25000/100*50 = $12500 per week
Extra cost for delivery to customer: 50*10 = $500
Total cost per week: $13000
According to the given figures Asro will go into a loss of 13000-1700 = $11300
However I think there is a typing error and the cost per shipment is $17000 pper shipment. If this is the case the total savin would be 17000-13000 = $4000
For the break bulk to be no more attractive, let the warehousing price is X
It would no more be attractive if the price of shipment is equal to the price with direct shipment. (I will take 17,000 for calculations)
Thus 25000/100*X+500=17000
X = $66 per hundred weight
Thus, if the warehousing price is equal to or more than $66 it will no more remain attractive option for Astro.
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