Problem 15-3 B for $527 A manager must make a decision on shipping. There are tw
ID: 347275 • Letter: P
Question
Problem 15-3 B for $527 A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $510 and In addition, A offers a three-day rate of $478 and a nine-day rate of $409, and B offers a four-day rate of $459 and a seven-day rate of $420. Annual holding costs are 35 percent of unit price. Three hundred and eighty boxes are to be shipped, and each box has a price of $148 Which shipping alternative would you recommend? (Round your intermediate calculations to 3 answers to 2 decimal places. Omit the "$" sign in your response.) option 2 days 3 days 9 days option 2 days 4 days 7 days Cost Cost Ship two-day using A O Ship three-day using A O Ship two-day using B O Ship four-day using B O Ship seven-day using BExplanation / Answer
Annual Holding cost = 35% of unit price = 0.35*148 = 51.8
Daily cost of holding (Storing) the product = (Annual Holding cost x Product value)/365
= (0.35 x 148)/365 = 0.142
Daily cost of storing 380 boxes = 380*0.142 = $ 53.96
Option A (2 days) = 510+ (2*53.96) = 617.92
Option A (3 days) = 478 + (3*53.96) =639.88
Option A (9days) = 409 + (9*53.96)= 894.64
Option B (2 days) = 527 +(2*53.96) = 634.92
Option B (4 days) = 459 +(4*53.96) = 674.84
Option B (7 days) = 420 +(7*53.96) = 797.72
Recommend option is Option A (2 days)
Ship two-day using A