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ABC Co. is procuring $600000 worth of materials from a vndor in Canada. The following table gives details of transportation cost for the two options:
Option1
Option 2
(By Sea)
(By road)
Freight Cost
$40,000
$30,000
Delivery Time(days)
25
15
Assume inventory in transit holding cost is 40% of the shipment value per year.
Assume 365 days per year. Which option would you recommend and why.
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