Your options for shipping ?$101 comma 040 of machine parts from Baltimore to Kua
ID: 331413 • Letter: Y
Question
Your options for shipping ?$101 comma 040 of machine parts from Baltimore to Kuala? Lumpur, Malaysia, are? (1) use a ship that will take 29 days at a cost of ?$3 comma 640?, or? (2) truck the parts to Los Angeles and then ship at a total cost of ?$4 comma 670. The second option will take only 22 days. You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at 30?% of the value per year. ?a) ? Alternative 2 Alternative 1 is more? economical, with a daily holding cost of ?$ nothing. ?(Enter your response rounded to two decimal? places.)
Explanation / Answer
Total cost = cargo cost + holding cost
Option 1 - Cost = 3.640 + 29 /365 x 101.40 x0.3 = 3.64+ 2.416 = 6.05
Option 2 - Cost = 4.670 + 22/365 x 101.40x0.3 = 4.670+1.83 = 6.5
Option 1 is more economical as the total cost is lower.
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