Unformatted text preview: Since the daily holding cost ($82.20) is more than the daily cost of faster shipping ($20), use the faster shipping, option a. 11.10 (a) Daily holding cost = (annual holding cost × cost)/days in year = (.35 × $250,000)/365 = $239.73. Difference in cost per day between shipping options = $175. Since the daily holding cost ($239.73) is more than the cost of faster shipping ($175), use the faster sub-contractor. (b) Implications of added in-transit time to the production process: potential delay in activity for which the component is destined (new product development, quality test, the production process, etc.). 1...
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- Options, new product development, $4,000, $4,800, $3,800, daily holding cost