Black Bear Outfitters is an international supplier of outdoor gear for families. Currently, the company uses a

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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?


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Operations management processes and supply chain

ISBN: 978-0136065760

9th edition

Authors: Lee J Krajewski, Larry P Ritzman, Manoj K Malhotra

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