Amanager must make a decision on shipping. there are two shippers, a and b. both offer a two-day rate: a for $526 and b for $532. in addition, a offers a three-day rate of $470 and a nine-day rate of $411, and b offers a four-day rate of $459 and a seven-day rate of $412. annual holding costs are 34 percent of unit price. three hundred and fourty boxes are to be shipped, and each box has a price of $148.
required:
1. which shipping alternative would you recommend? (round your intermediate calculations to 3 decimal places and final answers to 2 decimal places. omit the "$" sign in your response.)

Shipper A with 100.50 rate per day

Explanation: To find the best shipping option, we have to calculate the average cost per shipper.

Shipper A:                                                   Shipper B:

2-day rate = $526                                      2-day rate = $532

3-day rate = $470                                       4-day rate = $459

9-day rate=$411                                           7-day rate = $412

Average rate per day                                  Average rate per day

= 526+470+411                                             =532+459+412

=1407/14days                                                 =1403/13days

=100.50                                                             =107.92

From the above calculation, holding cost for shipper A= 100.50*0.34=34.17 while holding cost for shipper B= 107.92*0.34 = 36.69

From the above calculation shipper A will be preferred as it has the lowest price per unit and holding cost.

The answer is 2,719.17 since EOQ is achieved when the total ordering cost and holding cost is at the lowest, Alternative B will be the best alternative

Explanation:

Using the formula EOQ = √2DS/H where D = Demand in unit, S = Ordering cost, H = Holding Cost

Demand = 340 × 148 = 50,320, Ordering cost = Alternative A two day lead time $526, Alternative B two day lead time $532, Alternative A three days lead time $470, Alternative B nine days lead time $411, Alternative A four-day lead time $459, Alternative B seven days lead time $412, Holding Cost = 34% of unit cost = 34/100 × 148 = $50.32

Alternative A

EOQ =√2×50,320 × 526/50.32

√52,936,460/50.32

√1,051,996.42

= 1,025.67

√2×50,320×532/50.32

√53,540,840/53.32

√1,064,000

= 1,031.50

√2×50,320×470/50.32

√47,300,800/50.32

√940,000

=969.54

AlternativeB

√2×50,320×411/50.32

√41,363,040/50.32

√822,000

=906.64

√2×50,320×459/50.32

√46,193,760/50.32

√818,635.93

=904.79

√2×50,320×412/50.32

√41,463,680/50.32

√824,000

=907.74

Total Alternative A = 1,025.67 + 1,031.50 + 969.54

= 3,026.71

Total Alternative B = 906.64 + 904.79 + 097.74

= 2,719.17

Since EOQ is achieved when the total ordering cost and holding cost are at the lowest point. Therefore, shipping alternative B will be the best alternative