Problem 11-6 has orders from three customers located in the same market area. On

Question

Problem 11-6 has orders from three customers located in the same market area. One order has a total weight of 4,300 pounds, the second weighs 9,000 pounds, and the third Suppose Jones weighs 12,800 pounds. The transportation carrier quotes a freight rate of $18 per hundredweight (or cwt.) for direct shipment to the customer for shipments weighing 1,000 to 4,999 pounds $16 per owt, for orders weighing 5,000 to 9,999 pounds, and $14 for shipments weighing between 10,000 and 15,000 pounds. Alternatively, the carrier's rate for shipments weighing more than 20,000 pounds is $10.00 per cwt. However, if the orders are combined into one consolidated shipment, the carrier will charge $330 for each stop it is required to make. a. Calculate the total cost with or without consolidated shipment charge. Total cost using separate shipments Total cost using consolidated shipment b.Should Jones consolidate the three shipments? 0 Yes No

Explanation / Answer

1. Total cost using separate shipments:

a. For 4300 pound shipment, Freight rate of $18 per hundredweight will be applied

Cost = 43*18 = $774

b. For 9000 pound shipment, freight rate of $16 per hundredweight will be applied

Cost = 90*16 = $1440

c. For 12800 pound shipment, freight rate of $14 per hundredweight will be applied

Cost = 128*14 = $1792

Total cost = 774 + 1440 + 1792

= $4006

2. Total cost using consolidated shipment:

Since for each stop the carrier will charge $330 for consolidated shipment,

Total number of stops = 3

So total cost = 3*330 = $990

3. Since the total cost using consolidated shipment is significantly less than total cost using separate shipments, hence Jones should consolidate the three shipments.

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