Your options for shipping $102,580 of machine parts from Baltimore to Kuala Lump
ID: 405598 • Letter: Y
Question
Your options for shipping $102,580 of machine parts from Baltimore to Kuala Lumpur, Malaysia, are (1) use a ship that will take 32 days at a cost of $3,7400, or (2) truck the parts to Los Angeles and then ship at a total cost of $5,110. The second option will only take 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 $4,210 and also takes 20 days, what is your most economical plan? Assume 365 days per year.
The daily cost of Alternative 1 is $__, the daily cost of faster shipping with Alternative 2 is $__, the daily cost of faster shipping with Alternative 3 is $__.
Which among alternative 1,2,3 is more economical:_________
Enter your response rounded in two decimal places.
Explanation / Answer
HOLDING COST = 102580*30% = 30774
30774/365 = 84.31
1)
37400/32 = 1168.75
2) 5110/20 = 255.5
255.5+84.31 = 339.81
3) 4210/20 = 210.5
210.5+84.31 = 294.81
The daily cost of Alternative 1 is $ 1168.75
the daily cost of faster shipping with Alternative 2 is $ 339.81
the daily cost of faster shipping with Alternative 3 is $ 294.81
OPTION 3 is more economicaL
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