Determine which shipping alternative would be most economical to ship 60 boxes o
ID: 443182 • Letter: D
Question
Determine which shipping alternative would be most economical to ship 60 boxes of parts when each box has a price of $230 and holding costs are 33 percent of price, given this shipping information: overnight, $360, two-day, $290, six-day, $200. (Round your intermediate calculations to 2 decimal places.)
Two-day
Which one of the three is correct ?
Determine which shipping alternative would be most economical to ship 60 boxes of parts when each box has a price of $230 and holding costs are 33 percent of price, given this shipping information: overnight, $360, two-day, $290, six-day, $200. (Round your intermediate calculations to 2 decimal places.)
Explanation / Answer
Assuming holding cost per day
holding cost = 0.33 * $230 = 75.9
Number of Boxes = 60
Total cost when shipping overnight = [(Holding cost* Number of boxes * Number of day) + Shipping Cost]
= [ (75.9 * 60 * 1) + 360] = $(4554 + 360) =$4914
Total cost when shipping two day = [(Holding cost* Number of boxes * Number of day) + Shipping Cost]
= [ (75.9 * 60 * 2) + 290] = $(9108 + 290) = $9398
Total cost when shipping six day = [(Holding cost* Number of boxes * Number of day) + Shipping Cost]
= [ (75.9 * 60 * 6) + 200] = $(27324 + 200) = $27524
Comparing shipping cost for all three available option we get that shipping overnight is economical.
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