A manager must make a decision on shipping. There are two shippers, A and B. Both offer a two-day rate: A for $540 and B for $523. In addition, A offers a three-day rate of $474 and a nine-day rate of $403, and B offers a four-day rate of $451 and a seven-day rate of $422. Annual holding costs are 36 percent of unit price. Four hundred and twenty boxes are to be shipped, and each box has a price of $150. Which shipping alternative would you recommend? (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the $ sign in your response.) A B Option Cost Option Cost 2days $ 2days $ 3days $ 4days $ 9days $ 7days $ Ship two-day using B Ship four-day using B Ship seven-day using B OShip two-day using A Ship three-day using A Solution Particulars A 2 Day A 3 Day A 9 Day B 2 Day B 4 Day B 7 Day Price 150.00 150.00 150.00 150.00 150.00 150.00 Annual Holding Costs@36% 54.00 54.00 54.00 54.00 54.00 54.00 No of boxes to be shipped 420.00 420.00 420.00 420.00 420.00 420.00 Per day holding cost of 420 boxes 62.14 62.14 62.14 62.14 62.14 62.14 Total holding cost 124.27 186.41 559.23 124.27 248.55 434.96 Shipment Rates 540.00 474.00 403.00 523.00 451.00 422.00 Total cost(Holding cost + Rate) 664.27 660.41 962.23 647.27 699.55 856.96 Assumption - 365 days in a year 2 day alternative from B i.e. ship 2 day using B.

1. A manager must make a decision on shipping. There are two shippers, A and B. Both offer a
two-day rate: A for $540 and B for $523. In addition, A offers a three-day rate of $474 and a
nine-day rate of $403, and B offers a four-day rate of $451 and a seven-day rate of $422. Annual
holding costs are 36 percent of unit price. Four hundred and twenty boxes are to be shipped, and
each box has a price of $150. Which shipping alternative would you recommend? (Round your
intermediate calculations to 3 decimal places and final answers to 2 decimal places. Omit the $
sign in your response.) A B Option Cost Option Cost 2days $ 2days $ 3days $ 4days $ 9days $
7days $ Ship two-day using B Ship four-day using B Ship seven-day using B OShip two-day
using A Ship three-day using A
Solution
Particulars A 2 Day A 3 Day A 9 Day B 2 Day B 4 Day B 7 Day Price 150.00
150.00 150.00 150.00 150.00 150.00 Annual
Holding Costs@36% 54.00 54.00 54.00 54.00
54.00 54.00 No of boxes to be shipped 420.00
420.00 420.00 420.00 420.00 420.00 Per day holding cost
of 420 boxes 62.14 62.14 62.14 62.14
62.14 62.14 Total holding cost 124.27 186.41
559.23 124.27 248.55 434.96 Shipment Rates
540.00 474.00 403.00 523.00 451.00
422.00 Total cost(Holding cost + Rate) 664.27 660.41
962.23 647.27 699.55 856.96 Assumption - 365 days in a
year 2 day alternative from B i.e. ship 2 day using B