Reference no: EM133356958
Tsaltz orthotics Inc is a operating a new plant in Hamilton, Ontario. Easton, distribution manager, has been asked to find the lowest cost outbound logistics system. Given an annual sales of 61,000 othrotic products, determine the costs associated with each option below:
1. Build a private warehouse near the plant for $250,000. The variable costs, including warhouse maintenance and labour, is estimated at $3.50 per unit. Contract carrier transportation costs $12.75 per unit on average. No external transportation services are necessary for shipment of orthotic products from the plant to the warehouse in this scenario. The fixed warehouse investment can be depreciated evenly over 12 years.
Total cost of private warehouse =
Enter numbers only, no dollar sign, no decimal point, no cents
2. Rent space in a public warehouse 10 miles from the plant. The public warehouse requires no fixe investment but has variable costs of $5.80 per unit to deliver the othotic products to the warhouse from the plant
Total cost of public warehouse =
Enter numbers only, no dollar sign, no decimal point, no cents
3. Contract the warehousing and transportation serices to the Haul Logistics Company, an integrated logistics firm with a warhouse location 25 miles from the plant. Haul Logistics Company requires a fixed investment of $120,000 and charges $15.50 per unit for all services originating at the plant. The fixed investment covers a 9 year agreement with Haul Logistics Company
Total cost of outsourced logistics =
Enter numbers only, no dollar sign, no decimal point, no cents
4. Which of the 3 options is the lowest cost you would recommend
Answer =
Enter number 1, 2 or 3
5. Name one advantage aside from cost that the low cost alternative above may have over the other alternatives.