uestion of 4) Save & Exit Submit 10.00 points Problem 11-5 You are shipping 160
ID: 364081 • Letter: U
Question
uestion of 4) Save & Exit Submit 10.00 points Problem 11-5 You are shipping 160 diamonds to a customer located 2.000 miles away. The average value of each diamond is $1,050. You can ship via air for $360 and the diamonds will arrive in two days or you can ship via a specialty ground carrier for $130 and the diamonds will arrive in six days. You figure your inventory carrying cost is 17 percent. Your customer will immediately transfer funds to your bank account on receipt of the shipment What is your total cost if you use the ground carrier and the air carrier? (Use 365 days in a year. Do not round intermediate calculations. Round your answers to 2 decimal places.) Total cost using air carrier Total cost using ground carrier Worksheet Difficulty: 2 Medium Learning Objective: 11-03 Choose efficient transportation modes and carriers Problem 11-5Explanation / Answer
Given:
Total cost by Air Carrier:
Total value of diamonds = 160*$1050 = 168,000
Inventory Carrying Cost for a year = 0.17* 168000 = $28,560
For 2 days of travel time in air the total inventory carrying cost = $28560 * (2/365) = $156.49
There for the total cost incurred by carrying diamond through air is = $500+$156.49 = $656.49
Total cost by Ground Carrier:
Total value of diamonds = 160*$1050 = 168,000
Inventory Carrying Cost for a year = 0.17* 168000 = $28,560
For 6 days of travel time by grounf the total inventory carrying cost = $28560 * (6/365) = $469.47
There for the total cost incurred by carrying diamond through air is = $130 + $469.47 = $599.49
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