Physical Distribution

$369$

$14\mathrm{.}7.$ A company in Calgary serves a market in the northwestern United States. Now it ships LTL at an average cost of $$30$ per unit. If the company establishes a distribution center in the market, it estimates the TL cost will be $$15$ per unit, inventory carrying costs will be $$5$ per unit, and the local LTL cost will average $$7$ per unit. If the company forecasts annual demand at $200,000$ units, how much will they save annually?

Answer. Annual saving $=$$$600,000$

$14\mathrm{.}8.$ A company ships LTL to customers in a market in the Midwest at an average cost of $$40$ per cwt$.$ It proposes establishing a distribution center in this market. TL shipment costs to the DC would be $$20$ per cwt$.,$ the estimated inventory carrying costs are $$5$ per cwt$.,$ and the local cartage $($LTL$)$ cost is estimated at $$10$ per cwt$.$ If the annual shipped volume is $100,000$ cwt$.,$ what will the annual savings be by establishing the distribution center?

$4\mathrm{.}9.$ A company has a central supply facility and a distribution center located $400$ miles away. The central supply product cost is $$75,$ TL transportation rates from central supply to the DC are $$60$ per unit, and handling costs at the DC are $$4$ per unit. Calculate the market boundary location and the landed cost at the market boundary. LTL rates are $$2$ per unit per mile.

Answer. Market boundary is $216$ miles from central supply. Landed cost $=$$$507$