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Determine a threshold for annual demand

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Reference no: EM13945997

Flanger is an industrial distributor that source from hundreds of supplier. The two modes of transportation available for inbound shipping are LTL (less-than-truckload) and TL (truck-load). LTL shipping cost $1 per unit, whereas TL shipping cost $400 per truck. Each truck can carry up to 1,000 units. Flanger wants a rules assigning products to shipping mode (TL or LTL) based on annual demand. Each unit costs $50 and Flanger uses holding cost 20%.Flanger incurs a fixed cost of $100 for each order placed with a supplier. Determine a threshold for annual demand above which TL is preferred and below which LTL is preferred?

Reference no: EM13945997

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