## Question

###### Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Handfield has daily shipments...

Monczka-Trent Shipping is the logistics vendor for Handfield Manufacturing Co. in Ohio. Handfield has daily shipments of a power steering pump from its Ohio plant to an auto assembly line in Alabama. The value of the standard shipment is $255,790. Monczka-Trent has two options: (1) its standard 2-day shipment or (2) a subcontractor who will team drive overnight with an effective delivery of 1 day. The extra driver costs $180. Handfield's holding cost is 35% annually for this kind of inventory. a) Alternative 2 is more economical, with a daily cost of $ 245.28. (Enter your response as a whole number.)

## Answers

pl rate

- - 3 Shipment value is $255,790 Yearly holding cast is 35% of Shipment value yearly holding cost - 0.35 x 255,7908699265 365 - one day holding cost - Yeauly cost = $89526.5 - = 245.77 - Extra cost of subcontracting is $180 (given) Thus we con sobre observe that sub contracting is less than Each day holding cast thus Alternaling 2 is mare economical Savings - 205.27- 180 = 65.27 or$65 unge So Economically with Alternaling 2 is daily cost of mane $65

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