Determine which shipping alternative would be most economical to ship 70 boxes o

Question

Determine which shipping alternative would be most economical to ship 70 boxes of parts when each box has a price of $220 and holding costs are 27 percent of price, given this shipping information: overnight, $340, two-day, $290, six-day, $250. (Round your intermediate calculations to 2 decimal places.)

Determine which shipping alternative would be most economical to ship 70 boxes of parts when each box has a price of $220 and holding costs are 27 percent of price, given this shipping information: overnight, $340, two-day, $290, six-day, $250. (Round your intermediate calculations to 2 decimal places.)

Explanation / Answer

Holding costs = number of boxes*price*holding costs

= 70*220*.27 = 4158 $

Overnight cost = 340 $

two-day = 290 $ + (Holding costs/365)*no. of holding days

= 312.78

six-day = 250 $ + no. of holding days*price*holding costs

= 318.35 $

Hence two-days is the lowest cost.

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