Question

Determine which shipping alternative would be most economical to ship 80 boxes of parts when each...

Determine which shipping alternative would be most economical to ship 80 boxes of parts when each box has a price of $200 and holding costs are 25%of price, given this shipping information: overnight, $300; two day, $260; six day, $160.

*Please show the calculations

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Homework Answers

Answer #1

Overnight = $300

Since there is no holding or carrying of the inventory, the total cost will.be $300 only.

Two day : shipping cost + holding cost for 2 days

260 + 21.91=$281.91

(saves 18.09 against option of overnight)

Holding cost = 0.25*80*200*2/365=$21.91

Six day cost : shipping cost + holding cost for 6 days

$160+65.75=$225.75 ( saves $56.15 against option of two day shipping )  

Holding cost= 0.25*80*200*6/365=65.75

(note : holding cost = 25% of 200*80* number of days/365)

We can clearly see that option C or six day option is the most economical option by $56.15 (281.91-225.75)

Dear student, I hope this helps you. If you have any query regarding this just comment.

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