Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. i

Question

Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Handfield has daily shipments of a power-steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard shipment is $260,060. Monczka-Trent has two options: (1) its standard 2-day shipment or (2) a subcontractor who will team drive overnight with an effective delivery of 1 day. The extra driver costs $190. Handfield's holding cost is 35% annually for this kind of inventory. a) Y is more economical, with a daily cost of s(Enter your response as a whole number.) b) What production issues are not included in the data presented? O A. The varying fuel costs of alternative 1 and 2. O B. Handfield's cost of holding the item for an additional day if it chooses to ship in 2 days instead of 1 O C. Potential delay in the production process. O D. All of the above. OE. Only A and B

Explanation / Answer

Holding cost=35% annually

Daily Holding cost =($260060/365)*0.35=249.37

Extra cost =$190

The benefit to the subcontractor the work where the team will drive overnight with an effective delivery 1 day = $249.37-$190 =$59.37

Answer B:-

All of the above

Answer:- Subcontractor is more economical with a daily cost of $59.37

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