Respuesta :
Answer:
2 day freight
Explanation:
Given:
Number of units = 2,000
Primary holding cost = $10 per unit a year
Computation of Extra 3 days (five-day freight - two-day freight) holding cost:
Holding cost for 3 days = Number of units ├Ч Primary holding cost ├Ч (Number of days / 365)
= 2,000 ├Ч $10 ├Ч (3/365) ┬а
= $20,000 ├Ч (3/365)
= $164.39
Holding cost for 3 day of extra freight is $164.39.
This cost is higher than saving cost so, 2 days freight will be chosen.
The alternative that would be recommended is the 2-days freight.
The first thing to do is to calculate the holding cost. This will be:
= 2000 ├Ч 10
= 20000
Then, the holding cost for three days extra freight will be:
= 20000 ├Ч (3/655)
= 164.38
Therefore, this is more than $135 and it's not advisable.
Therefore, it's advisable to go for 2-days freight.
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