The Maxim Packing Company is considering a freight consolidation program for serving the Kansas market. The program

Question:

The Maxim Packing Company is considering a freight consolidation program for serving the Kansas market. The program would involve the small-volume customers located at Hays, Manhattan, Salina, and Great Bend. The proposal is to hold all orders from these areas for several weeks in order to realize lower transportation charges. Assume all orders are now shipped LTL directly from Fort Worth, Texas, to their destination in Kansas. Average biweekly orders from the Kansas territory are as follows:
Hays ........................ 200 cases
Manhattan ................. 350
Salina ....................... 325
Great Bend ............... 125
The average case weighs 40 pounds. Orders could be shipped in the biweekly period that they are received, held, and shipped after two biweekly order periods, or held and shipped after three biweekly order periods. The potential loss of sales has been estimated at $1.05 per case for each additional biweekly period that orders are held. Transportation rates to Kansas are given in Table 7-7.
Should the program be implemented? If so, how long should orders be held before shipment?
The Maxim Packing Company is considering a freight consolidation program
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: