A tree nursery is comparing three shipping alternatives. The first alternative is to use a common carrier. There is no fixed cost with this alternative but the variable cost per shipment is $900. The second option is a contractual arrangement with a local carrier. For a yearly fixed charge of $6,000 the company would agree to handle shipments at a variable cost of $400 / shipment. The third alternative is to lease its own trucks at an annual fixed cost of $21,000. The variable cost for this option is only $150 per shipment. Alternative Fixed Cost / Year Variable Cost / Shipment 1 0 900 2 6,000 400 3 21,000 150 Above how many shipments will alternative 3 have lower total costs than alternative 2? Note that you do not need to use all the given information to answer this.

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To determine the number of shipments for which alternative 3 has lower total costs than alternativ... View the full answer