Question: A manager must make a decision on shipping. There are two shippers: A and B. Both offer a two-day rate: A for $508, and B
A manager must make a decision on shipping. There are two shippers: A and B. Both offer a two-day rate: A for $508, and B for $533. In addition, A offers a three-day rate of $474 and a nine-day rate of $410, and B offers a four-day rate of $451 and a seven-day rate of $430. Annual holding costs are 31 percent of unit price. Three hundred and thirty boxes are to be shipped, and each box has a price of $152. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places.)
These are ALL WRONG ANSWERS! Given that 330 boxes are to be shipped, the total cost for each option can be calculated as follows: Option A: Two-day rate: $508.55 x 330 = $167,946.50 Three-day rate: $474.83 x 330 = $156,534.90 Nine-day rate: $413.51 x 330 = $136,501.30 Total cost for Option A: $461,982.70
Option B: Two-day rate: $533.55 x 330 = $175,876.50 Four-day rate: $452.10 x 330 = $149,163.00 Seven-day rate: $432.06 x 330 = $142,098.60 Total cost for Option B: $467,138.10
Therefore, based on the calculations above, it appears that Option A is the most cost-effective option, with the nine-day rate being the cheapest shipping option available. These are wrong!!!
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