Question: Your options for shipping 100 000 of machine parts from Baltimo

Your options for shipping $100,000 of machine parts from Baltimore to Kuala Lumpur, Malaysia, are (1) use a ship that will take 30 days at a cost of $3,800, or (2) truck the parts to Los Angeles and then ship at a total cost of $4,800. The second option will take only 10 days. You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at 30% of the value per year.
(a) Which option is more economical?
(b) What customer issues are not included in the data presented?

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  • CreatedJuly 23, 2013
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