What are cost characteristics of each delivery option

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Reference no: EM131375415

Spartan Plastics provides components to assembly plants in the automobile industry. Currently, they ship directly from their plant in St. Louis, Missouri, to plants in Lansing, Michigan; Toledo, Ohio; and eight assembly plants surrounding Detroit, Michigan. In total, there are 10 assembly plants that each receives approximately 3,000 pounds per day in shipments. Currently, the company ships LTL from its plant to each assembly plant for a cost of $0.0013 per pound per mile. The company is considering two transportation alternatives to reduce cost.The first alternative is using a milk-run approach where a truckload begins in St.Louis, stops in Lansing, then the Detroit plants, and finally Toledo. The transportation cost for the milk-run approach would be $1.30 per truck mile plus $100/stop, not including the final stop in Toledo. The second alternative is to consolidate a truckload to Ypsilanti, Michigan, and then cross-dock the components for delivery to the assembly plant by the logistics provider. The truckload cost is still $l.30 per mile, and the cost per delivery to each assembly plant from Ypsilanti is $200.

a. What are the cost characteristics of each delivery option? Ignore the distance

b. What are the qualitative and service characteristics of each delivery option?

Reference no: EM131375415

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