Question: 1 6 . A two - wheeler manufacturing company based in Pune serves primarily two markets, Mumbai and Surat and accordingly sends two wheelers to

16. A two-wheeler manufacturing company based in Pune serves primarily two markets, Mumbai and Surat and accordingly sends two wheelers to two depots located at Mumbai and Surat. Weekly demand at each of these depots is 100 units. The distances of Mumbai and Surat depot from Pune manufacturing facility are 200 and 350 kms respectively. The distance between Mumbai and Surat depot is 250 kms.The company is considering TWO strategies for shipping the finished products from its plants to the depots, viz. (i) Direct shipping and (ii) Shipping through milk run.For this purpose, the company uses truck through FTL shipment. A truck can carry 200 two-wheelers in FTL shipment. The transportation cost is Rs.12 per km for FTL shipments. To obtain economies of scale, the company has decided to work with FTL shipments. The inventory carrying cost both of a two-wheeler is Rs.2500 per unit per year. Consider 50 weeks in a year.

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