Which option is more economical

Reference no: EM133471969

Question: Your options for shipping $100,000 worth of fridges from China to Mexico, are (1) use a ship that will take 20 days at a cost of $5,000 or (2) ship them to Los Angeles and then truck the fridges to Mexico at a total cost of $7,800. The second option will take only 13 days.

You are paid via a letter of credit the day the parts arrive. Your holding cost is estimated at 30% of the value per year. Which option is more economical?

Reference no: EM133471969

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