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Supply Chain Management for shipping machine parts

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Your options for shipping $100,000 of machine parts from Baltimore to Kuala Lumpur, Malaysia, are

(1) use a ship that will take 30 days at a cost of $3,800, or
(2) truck the parts to Los Angeles and then ship at a total cost of $4,800.

The second option will only take 20 days. You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at 30% of the value per year.

a) Which option is more economical?

b) What customer issues are not included in the data presented?

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Solution Summary

The supply chain management for shipping machine parts are examined.

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1. Total cost of option 1 = 3800 + 30000/360*10 =4622 which is less than ...

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