Purchase Solution

Minimize total transportation and carrying costs

Not what you're looking for?

Ask Custom Question

An appliance manufacturer has a plant near Toronto that receives small electric motors from a manufacturer located in Winnipeg. The demand for motors is 120,000 units per year. The cost of each motor is $120. The motors are purchased in lots of 3,000 units. The supplier has these motors in stock and usually ships them the next day. The ownership of motors transfers to the appliance manufacturer in Winnipeg. The question is which mode of transportation, truck or train, the appliance manufacturer should use to bring the motors from Winnipeg to Toronto. The railroad company changes $0.65 per motors (based on its weight) as long as there are at least 2,000 motors in the rail car, and it takes four days by train. The trucking company charges $0.75 per motor (based on weight) for lots of at least 1,000 motors, and it takes only two days. If the carring cost rate is 25 percent of unit cost per year, and the appliance manufacturer transports 3,000 motors at a time, which mode of transportation will minimize total transportation and carrying costs?

Purchase this Solution
Solution Summary

This explains the ways of minimizing total transportation and carrying costs for the organization

Solution Preview

mode of transportation, truck

The trucking company charges $0.75 per motor (based on weight) for lots of at least 1,000 motors,
and ...

Purchase this Solution
Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Basics of corporate finance

These questions will test you on your knowledge of finance.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

View More Free Quizzes
Related BrainMass Solutions

  • Widget producer: Production Plan that minimizes cost using t

    Inventory Carrying cost $0 $0 $0 $0 Total Cost $1,186,810.00 <- Minimize this

  • Operations Research

    169142 Minimize the total transportation costs Please see the attached file. Please see the attached file. The expert determines how to minimize the total transportation costs.

  • Production & Operation Management Problem

    Hint: use four nodes each for the production and the demand during the four quarters. Connect them with arcs representing the flow from sources to sinks. "Transportation" along those arcs involves the corresponding production and carrying costs.

  • Placement of Departments in Operations Management

    342767 Placement of departments to minimize transportation cost Determine the placement of departments for a newly designed facility that will minimize total transportation costs using the data in the attached tables.

  • Logistics - Transport Strategy

    What are the annual ordering and annual carrying costs if your design is used? c. Suppose that the lead time stretches to three weeks, so that the ROP > Q*. What adjustments would you suggest making in the control policy?

  • Minimize functions for total transportation costs

    Ignoring any other costs, find the optimal number of facilities with the minimum total transportation cost.

  • Increasing Order Fill Rates and Develop Strategic Profit Model

    The total profit is calculated by adding the Revenue and subtracting all of the costs: (Inventory Carrying costs, Operating Costs, Annual Interest Payment, Warehouse Costs, Transportation Costs, Total Invoice Reduction for Rehandled Orders and Total Rehandling

  • Hungarian method and EOQ.

    401444 Demonstrate Hungarian method and EOQ. In making inventory decisions, the purpose of the basic EOQ model is to minimize a. carrying costs. b. ordering costs. c. stock on hand. d. the sum of carrying costs and ordering costs.

  • Economic order quantity and annual costs

    We calculate the economic order quantity (EOQ) so as to minimize the total inventory carrying costs EOQ = Square root ((2Xannual requirementXorder cost)/carrying cost) Here annual requirement is 1,000 order cost is 10 carrying cost is $2 EOQ = Square

View More Related Solutions