Black Bear Outfitters is an international supplier of outdoor gear for families. Currently, the company uses a
Question:
Black Bear Outfitters is an international supplier of outdoor gear for families. Currently, the company uses a logistical provider to provide warehouse services and handle packages destined for ground delivery. The contract calls for $9 million in annual fixed charges, which covers the provider’s overhead and warehouse costs, and variable costs of $15 per package shipped. Recently Black Bear Outfitters found a warehouse it could lease at a cost of $16 million per year, which includes tease costs, labor, and management oversight. Further, the company found another provider who would deliver packages from the warehouse for $6.00 per package- Considering only costs how many packages must Black Bear Outfitters ship to make the vertical integration into warehouse operations beneficial?
Step by Step Answer:
Operations management processes and supply chain
ISBN: 978-0136065760
9th edition
Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra