You manage the shipping of item #A452 from your supplier. Theshipments for this item...

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Accounting

You manage the shipping of item #A452 from your supplier. Theshipments for this item are delivered to the nearest port, and youhave to transport them to the distribution center. You have twooptions, truck load (TL) and less than truck load (LTL).
Your company needs 5000 units of #A452 per year and it ispurchased at a price of $36 per unit. Each order costs $90. Yourcompany uses a holding charge of 0.1, a cycle service level of 90%and 365 days per year for planning purposes.
The truck load (TL) option costs $1200 per load. It takes 4 daysto deliver and each truck can carry up to 1300 items.
The less than truck (LTL) load option costs $2.0 per item. Ittakes 6 days to deliver.
You have three options,
OPTION A: to use the TL option and delivery full truckloads,
OPTION B: to use the TL option and delivery the economic orderquantity
OPTION C: to use LTL option and deliver the economic orderquantity.
For all following parts, consider transportation costs as anitem cost unless otherwise specified. i.e., the total variable costof #A452 in the Full truckload is $1200/1300items + $36/item =$36.9230769231/item.
What is the sum of average pipeline and cycle inventory,ordering, and purchase costs for option A? Please provide youranswers rounded to the closest dollar. (Please note that the answeris 184828, or near, is just i do not know how to compute it. Pleasekindly show your working here.)

Answer & Explanation Solved by verified expert

4.4 Ratings (683 Votes)

Only the option A is calculated as asked in the question Innventory holding charge of 01 given which is 10 of value of the product 36 Inventory cost per unit See Answer

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In: AccountingYou manage the shipping of item #A452 from your supplier. Theshipments for this item are...You manage the shipping of item #A452 from your supplier. Theshipments for this item are delivered to the nearest port, and youhave to transport them to the distribution center. You have twooptions, truck load (TL) and less than truck load (LTL).Your company needs 5000 units of #A452 per year and it ispurchased at a price of $36 per unit. Each order costs $90. Yourcompany uses a holding charge of 0.1, a cycle service level of 90%and 365 days per year for planning purposes.The truck load (TL) option costs $1200 per load. It takes 4 daysto deliver and each truck can carry up to 1300 items.The less than truck (LTL) load option costs $2.0 per item. Ittakes 6 days to deliver.You have three options,OPTION A: to use the TL option and delivery full truckloads,OPTION B: to use the TL option and delivery the economic orderquantityOPTION C: to use LTL option and deliver the economic orderquantity.For all following parts, consider transportation costs as anitem cost unless otherwise specified. i.e., the total variable costof #A452 in the Full truckload is $1200/1300items + $36/item =$36.9230769231/item.What is the sum of average pipeline and cycle inventory,ordering, and purchase costs for option A? Please provide youranswers rounded to the closest dollar. (Please note that the answeris 184828, or near, is just i do not know how to compute it. Pleasekindly show your working here.)