Truck or rail? Holding costs vs shipping cost.
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A shipment of parts valued at $75,000 needs to be shipped from Georgia to Alabama. They could be shipped by rail taking 15 days at a cost of $1575 or by truck taking 4 days at a cost of $2640. The annual holding cost rate for this type of item has been estimated at 22%. What option(s) is (are) more economical? There are more than one answer.
a. Daily cost of holding the time is $45.21
b. Days saved by using truck is 11
c. Cost to hold the time si $497.27
d. Extra shipping costs are $1065
e. The savings do not offset the extra shipping cost. Send the shipment by rail.
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Solution Summary
This post solves a question pertaining to shipping from Georgia to Alabama. Whether it is beneficial to hold or ship.
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a) Daily cost of holding = 75000*22%/365=$45.205
B) Days saved = 15-4=11
c) ...
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