Question 9 (1 point) You are shipping 500 computers to a customer located 2,000
ID: 422601 • Letter: Q
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Question 9 (1 point) You are shipping 500 computers to a customer located 2,000 miles away. Each computer is worth $1500. You can ship via Air for $1000 and it will take 2 days, or you can ship via ground for $300 and it will take 5 days. Inventory Carrying cost for inventory in transit is 20%. Your customer will immediately transfer funds to your bank account on receipt of the shipment. Using the air carrier would save approximately how much money in total cost? Use 365 days as the number of days in a year. Round answer to nearest whole dollar Question 9 options: S1233 C S533 C $700 It would be cheaper to ship via ground. Save Question 10 (1 point) as the A product experiencing economies of distance refers to a number of miles/kilometers delivered increases. Question 10 options Decrease in total cost of shipping Decrease in per mile/per kilometer cost of shipping for each additional unit of distance Increase in total cost of shipping Increase in per mile/per kilometer cost of shipping for each additional unit of distanceExplanation / Answer
Answer to question 9 :
Value of 500 computers = $1500 / computer x 500 computers = $750,000
Annual inventory carrying cost = 20% of $750,000 = $150,000
Total cost of any mode of shipment
= Shipment cost + Inventory carrying cost
= shipment cost + Annual inventory carrying cost x ( Number of days of transit/ 365 days )
= shipment cost + ( $150,000/365) x Number of days of shipment
Therefore,
Total cost of air shipment = $1000 + (150,000/365) x 2 = $1000 + $821.91 = $1821.91
Total cost of shipping via ground = $300 x ( 150,000/365) x 5 = $300 + $2054.79 = $2354.79
Therefore , savings for using air carrier
= $2354.79 - $1821.91
= $532.88 ( $533 rounded to nearest whole number )
ANSWER : $533
Answer to question 10 :
Transportation economy of distance is also referred to as tapering principle since rates or charges taper with distance. The rationale of distance economies is similar to that for economies of scale. Longer distances allow the fixed expenses to be spread over more miles, resulting in lower overall per mile charge.
Therefore, correct answer would be “ Decrease in per mile/ per kilometre cost of shipping for each additional unit of distance “
ANSWER : DECREASE IN PER MILE / PER KILOMETER COST OF SHIPPING FOR EACH ADDITIONAL UNIT OF DISTANCE
ANSWER : $533
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