Richard’s Sporting Goods needs to fill an online order for 160 hockey sticks. Th
ID: 368032 • Letter: R
Question
Richard’s Sporting Goods needs to fill an online order for 160 hockey sticks. The manager is considering shipping the order by truck to the customer in Wisconsin, at a carrier charge of $95. The delivery will take ten days and the order is paid on delivery (Richard’s doesn’t get paid until the sticks are received). The hockey sticks are valued at $75 for each stick and Richard’s uses a 30 percent annual inventory carrying charge.
a. What will be the total shipping and transit inventory cost of the shipment? (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 2 decimal places.)
b-1. If the shipment could be delivered in only 2 days at a cost of $180, then what will be the total shipment cost? (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places.)
b-2. If the manager chose the above option, how much money would be saved or lost? (Round your answer to 2 decimal places.)
Transit inventory cost Total costb-1. If the shipment could be delivered in only 2 days at a cost of $180, then what will be the total shipment cost? (Use 365 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places.)
Total costb-2. If the manager chose the above option, how much money would be saved or lost? (Round your answer to 2 decimal places.)
If the manager chose this option, the company wouldExplanation / Answer
Answer a)
The total shipment cost will be = No of Sticks * Carrying Cost + $95 (transport cost)
= 160 * (10/365 * (0.3 * 75)) + $95
= 160* (0.03 * 22.5) + $95
= 108 + 95
= $ 203 = Total transportation cost
Answer b)
The total shipment cost will be = No of Sticks * Carrying Cost + $180 (transport cost)
= 160 * (2/365 * (0.3 * 75)) + $180
= 160* (0.005 * 22.5) + $180
= 18 + 180
= $ 198 = Total transportation cost
Answer c)
Total Money Saved = Previous Cost - New Cost
= 203 - 198
= $5
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