Your options for shipping $100 comma 570100,570 of machine parts from Baltimore

Question

Your options for shipping

$100 comma 570100,570

of machine parts from Baltimore to Kuala Lumpur, Malaysia, are (1) use a ship that will take

3030

days at a cost of

$3 comma 5703,570,

or (2) truck the parts to Los Angeles and then ship at a total cost of

$4 comma 7004,700.

The second option will take only

1818

days. You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at

3030%

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.)

Problem S11.14 E Question Help tal cost of $4,700. The second option will take only 18 da Your options or shipping $100 570 of machine parts om Baltimore to Kuala Lumpur Malaysia, are 1 use a ship that wil take 30 days at a cost of $3570 or 2 truck the parts to Los Ageles and then ship at a 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. ' is more economical with a daily holding cost of S (Enter your respanse rounded fo Mwo dec mal places

Explanation / Answer

Daily cost of holding the product= (Annual holding cost x Product value) / 365

= (.30 x $100,570)/365=82.66

Using option 1 =$3570 + ($82.66 x 30) = 3570+2479.8 = $6,049.8

Using option 2 =$4,700 + ($82.66 x 18) = 4700 + 1487.88= 6187.88

Alternative 1 is more economical, with a daily holding cost of 82.66

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