Problem $11-8($Algo$)$

The table below provides shipping rates for packages using UPS next$-$day air or ground service options. The rates vary according to both the weight of the package and the distance of the shipment $($larger numbered zones are farther away$).$ Note that the zone number also indicates the number of days required to deliver a package using ground service. For example, it would take three days and cost $$7\mathrm{.}40$ to send a $10-$pound package to zone $3$ using ground service.

Click here for the Excel Data File

Suppose you have a package weighing $4$ pounds that needs to be shipped to zone $5.$ The value of the material is $$7,000$ and the annual inventory holding rate is $30$ percent of the product value.

$0-1.$ Calculate the total shipping and transit inventory cost using the air and ground transportations.

a$-2.$ Which transportation mode $($air or ground$)$ minimizes the total shipping and transit inventory cost, and by what amount?

b$.$ How high would the inventory holding rate have to be in order to justify next$-$day air service?

Complete this question by entering your answers in the tabs below.

$\backslash$table$[[$Req $A1,$Req $A2$