When transportation costs are based on the product price, you need to calculate Revenue before you get the cost.
Revenue = Price Per Unit * Daily demand * Days.

 

Questions

1. For the current mode mix, what is the percent days in transit compared to the total days that ABC owns the inventory? (5 points)

2. What is the percent change in the percent of days in transit from the current mode mix to the proposed mode mix for when ABC owns the inventory? (10 points)

3. What is the difference in inventory carrying cost between the current and proposed mode mixes? What is the percent change in inventory carrying cost between the two mode mixes? (10 points)

4. What is the difference in freight cost (transportation cost) between the two mode mixes? What is the percent change in freight cost between the two mode mixes? (10 points)

5. What is the total change in cash flow between the two mode mixes? (5 points)

Transcribed Image Text:

Activity 1. ABC plant to ABC DC 2. Through ABC DC 3. ABC DC to cust. DC 4, Through customer DC 5. Customer DC to store Proposed Mode Mix Days 1 2 5 2 1 Mode motor motor motor Activity 1. ABC plant to ABC DC 2. Through ABC DC 3. ABC DC to cust. DC 4, Through customer DC 5. Customer DC to store Proposed Mode Mix Days 1 2 5 2 1 Mode motor motor motor

Answer rating: 100% (QA)

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