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What is the total cost of delivering to all customers

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Reference no: EM132795234

OPERATIONS MANAGEMENT QUESTION - XYZ Company is rethinking the way it ships to its 58 customers in another city 216 miles away.

Current Shipping/Delivery Method

They currently hire an LTL (less-than-truckload) carrier to pick up and deliver these shipments. Each customer order shipped via LTL carrier costs $193.

Alternate Shipping/Delivery Method

A 3PL (third-party logistics provider) has approached XYZ Company and suggested that they make full truckload (TL) shipments from their facility to the 3PL's warehouse in the customers' city. The 3PL would then break the bulk shipment (TL or truckload shipment) into individual customer orders to be shipped locally by an LTL carrier. The relative data for this alternate shipping method are as follows:

Full TL shipment cost (216 miles) = $885

Average weight per customer order = 530 lbs.

Warehouse break-bulk fee (per 100 lbs., a.k.a. per "hundred weight") = $16

Local LTL delivery fee (per customer order) = $42

Required -

What is the total cost of delivering to all customers via LTL carrier (current method)? (whole number.)

How much money would XYZ company save by using the alternate shipping/delivery method for delivery to all customers? (whole number.)

At what number of customers would the cost of these two methods be the same? (whole number.)

Reference no: EM132795234

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