Question

Arts N Crafts Industries manufacturers high-end light fixtures which it sells internationally. The company is responsible for paying for shipping its product to a distributor located in Atlanta, Georgia. Due to the high cost of shipping, the company is considering shipping its products unassembled, but will include detailed assembly instructions in each package. By shipping unassembled products, Arts N Crafts will be able to shrink the size of its cartons and thereby increase the number of products per pallet from 16 (4 rows of 4) to 25 (5 rows of 5). This change will not appreciably increase each product’s 8 pound shipping weight. Furthermore, since individual fixtures will be packed more tightly, they will be less susceptible to damage and easier to handle. Thus, the company expects the freight class to decrease from 85 to 70. Currently the company ships 400 units per week.
a. Using Table, assess the impact of the proposed change in packaging on weekly shipping cost.


b. How will your analysis change if demand for the product increases to 500 units perweek?


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  • CreatedNovember 07, 2013
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