A manager must make a decision on shipping. There are two shippers, A and B. Bot
ID: 453450 • Letter: A
Question
A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $526 and B for $532. In addition, A offers a three-day rate of $470 and a nine-day rate of $411, and B offers a four-day rate of $459 and a seven-day rate of $412. Annual holding costs are 34 percent of unit price. Three hundred and fourty boxes are to be shipped, and each box has a price of $148. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the "$" sign in your response.)
A
B
Select one:
A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $526 and B for $532. In addition, A offers a three-day rate of $470 and a nine-day rate of $411, and B offers a four-day rate of $459 and a seven-day rate of $412. Annual holding costs are 34 percent of unit price. Three hundred and fourty boxes are to be shipped, and each box has a price of $148. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the "$" sign in your response.)
A
B
Option Cost Option Cost 2 days $________ 2 days $_________ 3 days $________ 4 days $_________ 9 days $________ 7 days $_________
Select one:
Explanation / Answer
Answer:
the holding cost per day: 340 * 148 * .34 / 365 = $46.87
Cost = FC + days x H
Therefore
A's
2 day cost = 526 + 2 x 46.87 = 619.74
4 day cost = 470 + 4 x 46.87 = 657.48
7 day cost = 459 + 7 x 46.87 = 787.09
B's
2 day cost = 532 + 2 x 46.87 = 625.74
4 day cost = 411 + 4 x 46.87 = 598.48
7 day cost = 412 + 7 x 46.87 = 740.09
So ship 4 days using B
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