Inventory transfers to the west coast move by truck

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Reference no: EM13947082

Elmer’s Glues are produced in upstate New York and sold throughout the country. Shipment is either direct from the factory or via regional warehouses, including one in the Los Angeles area. The peak season begins in spring for the Back-To-School demand. Inventory transfers to the West Coast move by truck. The key information for this routing is: Average value per container is $40,000 at standard cost. Truck transportation is $2,500 per container including all fuel surcharges, taxes, etc. Transit time averages 5 days to the Los Angeles warehouse The company’s investment hurdle rate of 15% is used as a cost of capital. A U.S. flag carrier of containerized cargo offers a 10% freight discount to handle similar-sized containers by sea. The routing via the Panama Canal requires a transit time of 25 days. Is this a better deal for Elmer’s?

Reference no: EM13947082

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