CASE $9-2$: BASEBALL CARD EMPORIUM

DATA

R $6,000$ units Annual demand, cases of cards

V $ $96$ Case Value Price

W $30\%$ Inventory carrying cost

A $ $75$ Cost per Order to replenish inventory

Y $18\%$ In Transit inventory carrying cost

Motor transit time $($MTT$)4$ Transit Time using motor carrier

Motor cycle time $($MCT$)7$ days Cycle Time using motor carrier

Air transit time $($ATT$)1$ days Transit Time using air carrier

Air cycle time $($ACT$)2$ days Cycle time using air carrier

Freight Motor $1\mathrm{.}20$ per unit Motor carrier rate per cwt $(100$ lbs$.)$

Freight Air $ $2\mathrm{.}50$ per unit Air carrier rate per cwt $(100$ lbs$.)$

Weight $50$ pounds Unnit Weight per case

S$=$VW $ $29$ Inventory carrying cost per unit per year $($$ per unit per year$)$

Motor cwt $0\mathrm{.}60$

Air cwt $1\mathrm{.}25$

Days per year $365$

Order Cycle $($OC$)$ dias $($Days per year$*$Q$)/$R

QUESTION $1$: EOQ for Nittany Fans in units? In pounds?

Q $=$ SQRT $(2$RA$/$VW$)$

Q$=$ units

Q$=$ pounds

QUESTION $2$: Total Cost $($not considering transportation$-$related costs$)$ of the EOQ

TAC $=((1)/(2))*$ QVW $+$ AR$/$Q

TAC$=$

QUESTION $3$: Total Cost for using motor carrier transportation

TIC motor carrier $=(1)/(2)$ QVW $+$ AR$/$Q $+($MTT$/$OC$)*$QVY

TAC motor $=$ TIC Motor $+$ Motor cwt $*$ R

TIC motor$=$

TAC motor$=$

QUESTION $4$: Total Cost for using air carrier transportation

TIC air $=(1)/(2)$ QVW $+$ AR$/$Q $+($ATT$/$OC$)*$QVY

TAC air $=$ TIC air $+$ Air cwt $*$ R

TIC air$=$

TAC air$=$

QUESTION $5$: Which alternative should BBE use?

Please put a check mark in your recommendation

Air Carrier

Motor CarrierVW

RA

Q $2$

$=$Q

R

AQVWTAC $+=2$

$1$