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Question 1 A hypothetical company needs make choice between two transportation modes (rail or motor) and the following information is available. Compare the total annual cost of these two transportation modes. The equations should be indicated in the answers. (20 marks) Total Annual Cost (TAC) = inventory carrying cost + order cost + transportation cost + in-transit inventory carrying cost R = 3,840 units (annual demand) (cwt = hundredweight) A= $200 ($ per order or setup) W 20 % (carrying cost per dollar value of inventory per year)% of product value) V = $100 ($ per unit) Q = 240 units (quantity ordered lot size) (cwt) Y = 15 %(cost of carrying inventory in transit)% of product value) t = 24 days (time of order cycle) Rail: 10 days in transit time, $4 per hundred pounds (cwt) Motor: 6 days transit time, $5 per hundred pounds (cwt) Question 1 A hypothetical company needs make choice between two transportation modes (rail or motor) and the following information is available. Compare the total annual cost of these two transportation modes. The equations should be indicated in the answers. (20 marks) Total Annual Cost (TAC) = inventory carrying cost + order cost + transportation cost + in-transit inventory carrying cost R = 3,840 units (annual demand) (cwt = hundredweight) A= $200 ($ per order or setup) W 20 % (carrying cost per dollar value of inventory per year)% of product value) V = $100 ($ per unit) Q = 240 units (quantity ordered lot size) (cwt) Y = 15 %(cost of carrying inventory in transit)% of product value) t = 24 days (time of order cycle) Rail: 10 days in transit time, $4 per hundred pounds (cwt) Motor: 6 days transit time, $5 per hundred pounds (cwt)