1. A regional home goods store has outlets in Atlanta, Birmingham, Charleston, and Jacksonville, and Chattanooga. Products are sent to these facilities in weekly LTL shipments to fulfil their orders from a DC in Savannah (sends total volume of 80 FTL of European import goods), a DC in Fort Worth (200 FTL Asian and Central American Import Goods), and a manufacturing facility in Greenville, SC (that sends 180 FTL of fabrics and carpet).

Management has located a facility in Macon, Georgia that is well suited to breakbulk operations for their products. It could be leased for $50,000 per month and would have $750,000 in annual operating costs (including triple net costs of tax, maintenance and insurance). The current and estimated shipping costs are provided in a table below.

Route	LTL ($)	FTL ($)
Savannah - Atlanta	800	na
Savannah – Birmingham	1300	na
Savannah – Charleston	600	na
Savannah – Jacksonville	600	na
Savannah - Chattanooga	1400	na
Savannah - Macon	600	900
Greenville - Atlanta	600	na
Greenville – Birmingham	1000	na
Greenville – Charleston	800	na
Greenville – Jacksonville	1600	na
Greenville - Chattanooga	900	na
Greenville - Macon	900	1200
Ft. Worth - Atlanta	4000	na
Ft. Worth – Birmingham	3500	na
Ft. Worth – Charleston	4500	na
Ft. Worth – Jacksonville	4500	na
Ft. Worth - Chattanooga	3800	na
Ft. Worth - Macon	4200	5000
Macon - Atlanta	600	800
Macon – Birmingham	900	1100
Macon – Charleston	1000	1300
Macon – Jacksonville	1000	1300
Macon - Chattanooga	1000	1300

1. Assuming 100% of the shipments are LTL, what is the current annual cost of shipping to all outlets from:
   1. the Savannah DC
   2. the Greenville factory
   3. the Ft. Worth DC
   4. all sources combined
2. Assuming all of the shipments would be FTL, what would be the annual cost of shipping from the current sources to the proposed warehouse?
3. What would be the annual cost of shipping from the proposed warehouse to all destinations, if:
   1. a). All such shipments are FTL and occur once each two weeks
   2. b). All such shipments are LTL and occur once each week
4. c). If they can assume that 100% of the shipments from the break bulk DC would be at the FTL rate and that orders could be combined so that only every other week shipments would be required to the stores from the breakbulk warehouse, how much per year would the firm be willing to pay to lease the warehouse?
5. d). If the firm prefers to send weekly shipments to the stores from the breakbulk facility and these are all expected to be LTL shipments, how much per year would the firm be willing to pay to lease the warehouse?
6. e). What are the pros and cons of the alternative in part e) compared to the approach in part d)?

Answer rating: 100% (QA)

ANSWER a Current Annual Cost of Shipping to all outlets from Savannah DC 80013006006001400 52 468800 Greenville factory 60010008001600900 52 643200 Ft ... View the full answer