Consider a freight consolidation problem where a supplier located in Kansas City (KC) delivers merchandise to two retailers (customers) located in Denver and Los Angeles. The daily shipment volumes for the two customers for three consecutive days are as follows.

LB

Day1 Day2. Day3

Denver 6,500 20,000 27,000

Los Angeles 46,500 35,500. 57,500

The transportation rates ($/cwt) from KC to customer locations are as follows (1 cwt = 100 lbs).

0-99 100-199 200-399. 400+

Denver 11.62 9.5. 7.78 6.09

Los Angeles 19.21 16.05. 14.23 12.97

The supplier currently has dedicated trucks for each of the two customers and delivers daily to each of them.

A) (6points) The total (i.e., for 3 days) transportation cost for the customer in Denver, CO, under the current system, where the supplier delivers daily, is approximately equal to__________.

B) (6 points) The total (i.e., for 3 days) transportation cost for the current system, where the supplier delivers daily, is approximately equal to__________.

Next consider a temporal consolidation scenario, where the shipments for the three days for each customer are consolidated into a single shipment to be delivered on Day 1. However, supplier still has dedicated trucks for each of the two customers. This means that each of the two customers receive shipments enough to cover 3 days of demand on Day 1 through dedicated trucks (i.e., one truck going to Denver, and a second one going to Los Angeles). No additional shipments are delivered on Day 2 and Day 3.

C) (8 points) The total savings in transportation cost (over the current system) due to temporal freight consolidation is approximately equal to__________.