Calculate the following and show work/formulas:

1) the current ordering process - using the current rate from the current shipper

2) and then using the new proposed rate from the current shipper

"That's an interesting proposal, Travis, but l'll have to compare it with several others that we've received recently and get back to you," Bailey Quarters said as she escorted the freight sales representative for KB Freight to the door of her office. For the first time in several weeks, Bailey, the Traffic Manager for KRP Corporation (KRP), had an opportunity early in March of 2023 to ponder several of the best proposals she had received for the transportation of induction motors to the Cincinnati, Ohio manufacturing plant operated by KRP, a manufacturer of a line of home generators for sale nationally. Among these was a proposal from the Northeastern Railroad to haul motors in piggybacked trailers on flatcars from KRP's sole supplier, Gateway Electric in Seattle, WA to Cincinnati for a rate of $13 per hundredweight with a 20,000-pound minimum on each shipment. (1) This contrasted with a competing offer by Trans-Eastern Trucking Company, received several weeks earlier, to provide service on the basis of a 10,000-pound minimum and a rate of $15 per hundredweight. (1) i.e., the minimum charge would be based on the 20,000-pound minimum, regardless of the actual weight below 20,000 pounds; a "hundredweight" is 100 pounds, and is abbreviated "cwt." Both of these offers could be compared with KRP's current practice of shipping motors by KB Freight on a sliding rate basis of $16 per hundredweight for all shipments totaling less than 15,000 pounds (with a 15,000 pound minimum charge), \$12 per hundredweight for weights over 15,000 pounds and up to 25,000 pounds, and $8 per hundredweight for weights over 25,000 and up to 40,000 pounds on a single shipment. KB Freight sales representative had just indicated that KB Freight would be willing to lower its incremental rate on larger shipments to $6 per hundredweight for weights on each shipment in excess of 25,000 pounds. In addition, Bailey had on her desk a proposal from her transportation department advocating the creation of a private trucking operation to haul the motors, involving the acquisition and operation of a truck capable of hauling up to fifty 40,000-pound loads each per year. The tractor/trailer combination was anticipated to require total annual operating costs, including depreciation as well as additional administrative overhead, of approximately $250,000. The proposal noted that KRP could provide no backhauls for the return trip to Seattle, but that it might be possible for KRP to solicit backhaul loads from other shippers if it were to purchase and operate its own trucks. KRP's motors were purchased on the basis of an annual agreement calling for a minimum volume of 100,000 motors at a price of $430 per motor. Currently, KRP's requirements were for about 120,000 motors, averaging about 10 pounds each in weight, each year. Demand had been relatively constant for several years. During the past year, KRP's shipments had averaged 3,000 motors each. It was estimated that unloading costs for the various carriers would be approximately comparable. KRP's warehouse in Cincinnati could accommodate as many as 5,000 motors. The company's purchasing department estimated that the cost to process an order to Gateway Electric (motor manufacturer) was approximately $80 each, including clerical and expediting costs. The Controller had estimated that the company's annual cost of carrying inventory, figured on the average value of product in inventory, was 12.5% (including 5% for the average cost of money and the remaining 7.5\% for the costs of insurance, taxes, and product obsolescence). Typically, piggyback shipments had required five days' total transit time from Seattle to Cincinnati for other KRP components. All of the trucking companies offered a roughly comparable three-day service. The internal private trucking proposal assumed a three-day one-way haul. Bailey was reminded of her SCM 301 class at lowa State University and how transportation costs impacted the Total Cost of Ownership (TCO). She understood that Ordering Costs and Holding Costs were key components of this cost. She knew that Economic Order Quantity would be a way to minimize the Total Annual Inventory Costs (TAIC), but how would that impact Total Cost of Ownership? So, she decided to build a spreadsheet and calculate what type of combination of transportation provider and ordering quantity would best save the company money