Business Logistics Homework 4 Questions.doc [Compatibility Mode] Q Search in Doc
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Business Logistics Homework 4 Questions.doc [Compatibility Mode] Q Search in Document Home InsertDesign Layout References Mailings Review View Times New Ro 12 , A A AS , AaBbCcDdEABbCcDdEAaBbCcD AaBbCcDdE Paste Heading 2 Styles Pane Heading 1 Title Business Logistics Homework 4 Questions - Please Show All Work 1. A manufacturer is considering the cost of establishing a warehouse for a market in which it currently ships all products directly to the customer. The current cost for an average direct-to- customer shipment of 1000 lbs. is $7.00 per cwt (hundredweight). The cost for volume shipments (10,000+ lbs.) to the market warehouse is S3.00 per cwt, and the cost for local delivery within the market from the warehouse is S2.50 per cwt. Can the manufacturer justify the use of a warehouse in this situation? Please show all work to arrive at your decision. Assumptions and alternatives are summarized below: " Manufacturer direct ship to customer aAverage shipment- 1000 lbs Freight rate to customer = $7.00 per cwt OR Ship to warehouse market at " Volume transport rate - S3.00 per cwt o a For shipments 10,000+ lbs o Local delivery within market $2.50 per cwt Page 1 of 2 363 Words English (US) + 160 %Explanation / Answer
Let us calculate the total cost of shipment for shipments of 10,000 lbs using both the alternatives:-
Direct Shipment to Customer
Average shipment to customer=1000 lbs
Freight Rate to Customer = $7 per cwt (hundred weight)
Total cost for shipping 1000 lbs= $7 X 10=$70
Total cost for shipping 10,000 lbs= $70 X 10= $700
Shipping to warehouse and then to the local market
Shipping rate to warehouse=$3 per cwt
Shipping rate from warehouse to local market=$2.5 per cwt
Total shipping rate = $3 + $2.5=$5.5
Total cost for shipping 10,000 lbs= $5.5 X 100=$550
Therefore it is cheaper if the parcel is shipped to the warehouse and from there to the customer.
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