Your options for shipping $95,020 of machine parts from Baltimore to Kuala Lumpu

Question

Your options for shipping $95,020 of machine parts from Baltimore to Kuala Lumpur, Malaysia, are (1) use a ship that will take 32 days at a cost of $3,370, or (2) truck the parts to Los Angeles and then ship at a total cost of $5,050. The second option will take only 20 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. If you have a third option and it costs only $4.420 and also takes 20 days, what is your most economical plan? The daily holding cost of Alternative 1 is S(Enter your response rounded to two decimal places.) The daily cost of faster shipping with Alternative 2 is $--(Enter your response rounded to two decimal places.) The daily cost of faster shipping with Alternative 3 is $ (Enter your response rounded to two decimal places.) | is more economical. Alternative 2 Alternative 3

Explanation / Answer

Price 95020 Annual holding cost (250 days) 28506 Cost Days Total cost Daily holding cost Daily total cost Alt 1 3370 32 holding cost 3648.768 7018.768 114.024 219.3365 Alt 2 5050 20 holding cost 2280.48 7330.48 114.024 366.524 Alt 3 4420 20 holding cost 2280.48 6700.48 114.024 335.024 Ans 1 114.024 Ans 2 366.524 Ans 3 335.024 Ans 4 Alt 3

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