CH11hw - Since the daily holding cost ($82.20) is more than...

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11 11.8 (a) Daily holding cost = (annual holding cost × cost)/days in year = (.3 × $100,000)/365 = $82.19. Difference in cost per day between shipping options = ($4,800 – $3,800)/10 days = $100. Since the daily holding cost ($82.20) is less than the daily cost of faster shipping with option b ($100), use the slower shipping, option a. (b) Implications of added in-transit time to the customer: delivery of this product or of a major product of which this is a component may have repercussion well beyond the cost savings and a very unhappy customer. 11.9 Daily holding cost = (annual holding cost × cost)/days in year = (.3 × $100,000)/365 = $82.20. Difference in cost per day between shipping options = ($4,000 – $3,800)/10 days = $20.
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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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This note was uploaded on 09/08/2010 for the course BUS 140 at San Jose State.

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