Problem 11-2 The table below provides shipping rates for packages using UPS next

Question

Problem 11-2 The table below provides shipping rates for packages using UPS next day air or ground service options. The rates vary according to both the weight of the package and the distance of the shipment (larger numbered zones are farther away). Note that the zone number also indicates the number of days required to deliver a package using ground service. For example, it would take three days and cost $7.40 to send a 10-pound package to zone 3 using ground service. 0 Next Day Service Weight Domestic Zones 2 1 Lbs S 16.25 19.25 22.75$ 24.7527.00 S 28.25 S 29.00 $ 17.25 20.75 $ 25.50 27.75 30.25 S 31.25 S 32.00 S 19.0021.75 $ 28.25 30.50 S 33.50 S 34.75 S 35.50 $ 20.00 22.75 $ 31.00 33.50 $ 36.50 S 37.75 S 38.50 S 21.2524.25 33.50 36.25 S 39.50 S 40.75 S 41.75 $ 22.00$ 25.25 $ 36.00 39.00 $ 42.75 S 44.00 45.00 S 22.7527.00 $ 38.50 42.00 S 46.00 S 47.00 S 48.25 S 23.75$ 28.25 $ 41.00 $44.75 S 49.25 S 50.25 S 51.25 S 24.5029.75 $ 43.75 47.50 S 52.50 S 53.75 S 54.50 S 25.25 31.00 $ 46.25 $50.25 S 55.25 S 56.75 57.75 S 26.25 32.50 $ 48.75 52.75 S 58.00 S 60.00 60.75 S 27.00 33.50 $ 51.25 $55.50 $ 60.75 S 63.00 63.75 S 27.7534.75 53.75 58.00 63.25 S 65.75 S 66.50

Explanation / Answer

Weight 7 pounds Shipped to 2 Shipping days 2 days Value 14500 $ Annual Holding cost @40% 5800 for 365 days Daily Holding cost 15.89041 $ A-1 TIA Transit inv cost air 27 $ from table Ans Day 1 day HCA Holding cost 15.89041 $ (TIA+HCA) Total cost air 42.89 $ Ans TIG Transit inv cost ground 6.15 $ from table Ans Day 2 days HCG Holding cost 31.78082 $ (TIG+HCG) Total cost ground 37.93 $ Ans A-2 Ground is cheaper Ground Ans Cheaper by Total cost (Ground-Air) 4.96 Ans 42.89-37.93 B TC So difference in Transit cost 20.85 HC Difference in Holding cost (14500*X%)/365 For finding X Diff(TC)= Diff(HC) so X= 20.85*365/14500 52%    Ans

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