I need help answering question #4. I have already answered questions 1-3. Please

Question

I need help answering question #4. I have already answered questions 1-3. Please show how to answer question #4 so I can understand.

Here are the answers for questions 1-3

1) Q= Square rt of( 2DS/H)

Q= Square rt of(2 X 6,000 X 75/ 28.8)

Q= Square rt of(31,250)

Q= 176.77

economic order= 177 cards

177 X 50lbs= 8850lbs

EOQ in lbs= 8850lbs

2) Total cost w/o transportation= 177/2 (28.8) + 6,000/177 (75)

Total cost w/o transportation= $10,182.32

3) total cost w/ transportation= 10,182.32 + 212.4 + 3,600= $13,994.72

total cost w/ transportation= $13,994.72

CASE 9.2 Baseball Card Emporium Baseball Card Emporium (BBE) of Lewistown, Pennsylvania, is a distributor of baseball cards to sports card retailers. Its market area encompasses most of Pennsylvania, eastern Ohio, and New Jersey. The cards are printed in Neenah, Wisconsin, and currently shipped to Lewistown via motor carrier transportation. Kenny Craig, vice president of logistics, has asked his staff to evaluate using air carrier service to ship the cards. Nick Gingher, director of distribution, has collected the following information: .Annual demand: 6,000 cases of cards Case value (price): $96 each Inventory carrying cost (annual): 30% Cost per order to replenish inventory: $75 In-transit inventory carrying cost:18% Transit time using motor carrier (parcel ground: 4 days Cycle time using motor carrier (parcel ground): 7 days Transit time using air carrier: 1 day · Cycle time using air carrier:2 days Motor carrier rate: $1.20 per cwt. (100 lbs.) Air carrier rate: $2.50 per cwt. Unit weight: 50 lbs. per case

Explanation / Answer

1) EOQ = 2*6000*75/(96*0.3)) = 176.77 ~ 177

2) Total cost w/o transportation = (177/2)*28.8 + (6000/177)*75 = $ 5,091

3)

Inventory carrying cost of transit inventory = (6000*4/365)*96*0.18 = $ 1136

Motor carrier cost = 6000*50*1.2/100 = $ 3600

Total cost with transportation = 5091+1136+3600 = $ 9,827

4)

Inventory carrying cost of transit inventory = (6000*1/365)*96*0.18 = $ 284

Motor carrier cost = 6000*50*2.5/100 = $ 7500

Total cost with transportation = 5091+284+7500 = $ 12,875

5) Total cost motor transportation is lesser. Therefore, BBE should use motor transportation.

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