A manager must make a decision on shipping. There are two shippers, A and B. Bot

Question

A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $508 and B for $533. In addition, A offers a three day rate of $474 and a nine-day rate of $410, and B offers a four-day rate of $451 and a seven day rate of $430. Annual holding costs are 31 percent of unit price. Three hundred and thirty boxes are to be shipped, and each box has a price of $152. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the "$" sign in your response.) Ship two-day using A Ship three day using A Ship two-day using B Ship four-day using B Ship seven-day

Explanation / Answer

Daily cost of storing the product = (Annual Holding cost x Product value)/365

= (0.31 x 152)/365 = 0.129

Daily cost of storing 330 boxes = 330*0.129 = $ 42.601

Option A (2 days) = 508+ (2*42.6) = 593.203

Option A (3 days) = 474 + (3*42.6) =601.805

Option A (9days) = 410 + (9*42.6)= 793.415

Option B (2 days) = 533 +(2*42.6) = 618.203

Option B (4 days) = 451 +(4*42.6) = 621.407

Option B (7 days) = 430 +(7*42.6) = 728.212

Recommend option is Option A (2 days)

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